44142 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

1 15 U.S.C. 78k–1. 

2 17 CFR 242.608. 

3See Notice of Filing of a National Market System 

Plan Regarding Consolidated Equity Market Data, 

Securities Exchange Act Release No. 90096 (Oct. 6, 

2020), 85 FR 64565 (Oct. 13, 2020) (‘‘Notice’’). 

4 17 CFR 242.608(b)(2)(i). 

5See Order Instituting Proceedings to Determine 

Whether to Approve or Disapprove a National 

Market System Plan Regarding Consolidated Equity 

Market Data, Securities Exchange Act Release No. 

90885 (Jan. 11, 2021), 86 FR 4142 (Jan. 15, 2021) 

(File No. 4–757) (‘‘Order Instituting Proceedings’’). 

Comments received in response to the Notice and 

Order Instituting Proceedings can be found on the 

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

comments/4-757/4-757.htm. 

6See Securities Exchange Act Release No. 91504 

(Apr. 8, 2021), 86 FR 19667 (Apr. 14, 2021). 

7See Securities Exchange Act Release No. 92130 

(June 9, 2021), 86 FR 31543 (June 14, 2021). 

8See Order Directing the Exchanges and the 

Financial Industry Regulatory Authority to Submit 

a New National Market System Plan Regarding 

Consolidated Equity Market Data, Securities 

Exchange Act Release No. 88827 (May 6, 2020), 85 

FR 28702 (May 13, 2020) (File No. 4–757). 

9The three equity data plans that currently 

govern the collection, consolidation, processing, 

and dissemination of SIP data are (1) the 

Consolidated Tape Association Plan (‘‘CTA Plan’’), 

(2) the Consolidated Quotation Plan (‘‘CQ Plan’’), 

and (3) the Joint Self-Regulatory Organization Plan 

Governing the Collection, Consolidation, and 

Dissemination of Quotation and Transaction 

Information for Nasdaq-Listed Securities Traded on 

Exchanges on an Unlisted Trading Privileges Basis 

(‘‘UTP Plan’’) (collectively, the ‘‘Equity Data 

Plans’’). See Governance Order, supra note 8, 85 FR 

at 28703 & n.34. 

10See Governance Order, supra note 8, 85 FR at 

28702. 

11See id. at 28704. 

12 Id. at 28702. 

13See id. at 28729–31. 

14 15 U.S.C. 78k–1(c)(1)(B). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92586; File No. 4–757] 

Joint Industry Plan; Order Approving, 

as Modified, a National Market System 

Plan Regarding Consolidated Equity 

Market Data 

August 6, 2021. 

I. Introduction 

On August 11, 2020, pursuant to 

Section 11A of the Securities Exchange 

Act of 1934 (‘‘Act’’) 1 and Rule 608 of 

Regulation NMS thereunder,2 Cboe BYX 

Exchange, Inc., Cboe BZX Exchange, 

Inc., Cboe EDGA Exchange, Inc., Cboe 

EDGX Exchange, Inc., Cboe Exchange, 

Inc., Investors Exchange LLC (‘‘IEX’’), 

Long Term Stock Exchange, Inc. 

(‘‘LTSE’’), MEMX LLC (‘‘MEMX’’), 

Nasdaq BX, Inc., Nasdaq ISE, LLC, 

Nasdaq PHLX LLC, Nasdaq Stock 

Market LLC (‘‘Nasdaq’’), New York 

Stock Exchange LLC (‘‘NYSE’’), NYSE 

American LLC, NYSE Arca, Inc., NYSE 

Chicago, Inc., NYSE National, Inc., and 

Financial Industry Regulatory 

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

the ‘‘SROs’’ or ‘‘Participants’’) filed with 

the Securities and Exchange 

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

a proposed new national market system 

plan governing the public dissemination 

of real-time consolidated equity market 

data for national market system 

(‘‘NMS’’) stocks (the ‘‘CT Plan or 

‘‘Plan’’). The CT Plan was published for 

comment in the Federal Register on 

October 13, 2020.3

On January 11, 2021, the Commission 

instituted proceedings, under Rule 

608(b)(2)(i) of Regulation NMS,4 to 

determine whether to approve the CT 

Plan, disapprove the CT Plan, or 

approve the CT Plan with any changes 

or subject to any conditions the 

Commission deems necessary or 

appropriate after considering public 

comment.5 On April 8, 2021, the 

Commission extended the deadline for 

Commission action on the CT Plan and 

designated June 10, 2021, as the new 

date by which the Commission would 

be required to take action.6 On June 9, 

2021, the Commission further extended 

the deadline for Commission action on 

the CT Plan and designated August 9, 

2021, as the date by which the 

Commission would be required to take 

action.7

This Order approves the CT Plan, 

with modifications that are described in 

detail below. The Commission 

concludes that the CT Plan, as modified, 

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 mechanism of a national 

market system, or is otherwise in 

furtherance of the purposes of the Act. 

A copy of the CT Plan, marked to reflect 

the modifications the Commission has 

made, is Attachment A to this Order. 

II. Discussion and Commission 

Findings 

A. Background 

On May 6, 2020, the Commission 

ordered the SROs to act jointly in 

developing and filing with the 

Commission a proposed new national 

market system plan to govern the public 

dissemination of real-time, consolidated 

equity market data for NMS stocks 

(‘‘Governance Order’’) 8 to replace the 

existing equity data plans.9 The 

Commission sought to address with the 

Governance Order, among other things, 

the inherent conflicts of interest 

between the self-regulatory 

organizations’ role in collecting and 

disseminating consolidated equity 

market data and their interests in selling 

proprietary data products. As the 

Commission stated in the Governance 

Order, since the adoption of Regulation 

NMS in 2005, 

developments in technology and changes in 

the equities markets have heightened an 

inherent conflict of interest between the 

Participants’ collective responsibilities in 

overseeing the Equity Data Plans and their 

individual interests in maximizing the 

viability of proprietary data products that 

they sell to market participants. This conflict 

of interest, combined with the concentration 

of voting power in the Equity Data Plans 

among a few large ‘‘exchange groups’’— 

multiple exchanges operating under one 

corporate umbrella—has contributed to 

significant concerns regarding whether the 

consolidated feeds meet the purposes for 

them set out by Congress and by the 

Commission in adopting the national market 

system. Additionally, the Commission 

believes that the continued existence of three 

separate NMS plans for equity market data 

creates inefficiencies and unnecessarily 

burdens ongoing improvements in the 

provision of equity market data to market 

participants. Addressing the issues with the 

current governance structure of the Equity 

Data Plans . . . is a key step in responding 

to broader concerns about the consolidated 

data feeds.10

Moreover, as stated in the Governance 

Order, ‘‘[t]he Commission believes that 

the demutualization of the exchanges 

and the proliferation of proprietary 

exchange data products have heightened 

the conflicts between the SROs’ 

business interests in proprietary data 

offerings and their obligations as SROs 

under the national market system to 

ensure prompt, accurate, reliable, and 

fair dissemination of core data through 

the jointly administered Equity Data 

Plans.’’ 11

Thus, the Commission determined 

that the current governance structure of 

the existing Equity Data Plans is 

‘‘inadequate to respond to changes in 

the market and in the ownership of 

exchanges, and to the evolving needs of 

investors and other market 

participants,’’ 12 and the Commission 

ordered the SROs to develop and file 

with the Commission a proposed new 

NMS plan regarding equity market data 

with a set of specified governance 

provisions designed to address the 

issues identified by the Commission,13

and to ensure the ‘‘prompt, accurate, 

reliable, and fair collection, processing, 

distribution, and publication of 

information with respect to quotations 

for and transactions in such securities 

and the fairness and usefulness of the 

form and content of such 

information.’’ 14

The Commission also acknowledged 

in the Governance Order that the SROs, 

‘‘as the parties that have been operating 

the NMS plans, can provide unique 


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15 Governance Order, supra note 8, 85 FR at 

28711. 

16See id. at 28705, 28718 n.244. 

17See Letter from Patrick Sexton, EVP, General 

Counsel & Corporate Secretary, Cboe Global 

Markets, Inc. (Nov. 12, 2020) (‘‘Cboe Letter’’), at 9. 

This commenter argues that any changes to the 

governance of the SIP operating committees should 

be made through amendments to the current plans. 

See id. at 6 n.13. As the Commission explained in 

the Governance Order, one of its goals was to 

reduce redundancies, inefficiencies, and 

inconsistencies among the three existing Equity 

Data Plans by replacing them with a new, single 

plan. See Governance Order, supra note 8, 85 FR 

at 28710. 

18See Letter from Elizabeth K. King, Chief 

Regulatory Officer, ICE, General Counsel and 

Corporate Secretary, NYSE (Nov. 16, 2020) (‘‘NYSE 

Letter I’’), at 5, 32. 

19See NYSE Letter I, supra note 18, at 32. This 

commenter also generally asserts that the 

Commission cannot make a finding that the CT Plan 

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 Act. See Letter from Elizabeth K. 

King, Chief Regulatory Officer, ICE, General 

Counsel and Corporate Secretary, NYSE (Feb. 4, 

2021) (‘‘NYSE Letter II’’), at 2. As explained 

throughout this Order, the Commission disagrees 

and finds that, as modified, the CT Plan meets these 

standards. 

20See Letter from Joan C. Conley, Senior Vice 

President and Corporate Secretary, Nasdaq (Nov. 

12, 2020) (‘‘Nasdaq Letter I’’), at 3. 

21 Id. 

22 Id. at 7. 

23 17 CFR 242.608(b)(2). 

24See CSX Transp. v. Surface Transp. Bd., 584 

F.3d 1076, 1081 (D.C. Cir. 2009); City of Portland 

v. EPA, 507 F.3d 706, 715 (D.C. Cir. 2007). 

25See 17 CFR 242.608(b)(2). 

insight in formulating the specific terms 

and provisions’’ of the new NMS plan 

for consolidated equity market data.15

Accordingly, the Governance Order did 

not dictate all of the specific terms of 

the new NMS plan and contemplated 

that the operational and other terms of 

the plan not directed by the Governance 

Order would be proposed by the SROs 

and considered by the Commission after 

public comment.16 The CT Plan filed by 

the SROs includes both provisions 

directed by the Commission in the 

Governance Order and other provisions 

that have been proposed by the SROs. 

Below, this Order first addresses the 

threshold issue of the Commission’s 

authority to modify the CT Plan 

proposed by the SROs, and then it 

separately addresses each of the 

proposed provisions of the Plan, 

discussing the comments received and 

explaining the modifications, if any, 

that the Commission is making. 

B. The Commission’s Authority To 

Modify the CT Plan 

As noted above, the Commission is 

modifying the CT Plan proposed by the 

SROs. Several commenters argued that, 

before modifying the CT Plan, the 

Commission should publish notice for 

public comment of the specific changes 

it proposes. One commenter urges the 

Commission not to make substantial 

modifications to the CT Plan in an order 

purporting to approve the plan without 

providing the opportunity for public 

comment, asserting that public 

comment is required by the 

Administrative Procedure Act 

(‘‘APA’’).17 One commenter asserts that 

the Notice provides an insufficient 

opportunity for comment, arguing that 

the Commission has not stated its 

position regarding any of the 62 separate 

topics of interest identified in the Notice 

or proposed any specific textual changes 

upon which the SROs and other persons 

can meaningfully comment.18 This 

commenter further argues that this 

approach does not comply with notice 

and comment obligations under the Act, 

Rule 608, or the APA.19

Another commenter also asserts that, 

if the Commission determines to 

approve the CT Plan with modifications, 

it should first publish the exact text of 

its proposed amendments and seek 

comment on them.20 This commenter 

argues that the need to publish 

proposed modifications for comment is 

evidenced by the ‘‘numerous errors and 

potential unintended consequences 

visited on the current Equity Data Plans 

by the Commission’s hasty issuance’’ of 

the conflicts and confidentiality 

orders.21 This commenter argues that if 

the Commission does not publish the 

specific proposed modifications of the 

CT Plan, the SROs and other interested 

persons will be ‘‘deprived of the 

opportunity to comment that is afforded 

them by the Administrative Procedure 

Act.’’ 22

The Commission does not agree that 

it is required to publish notice of 

specific proposed plan language in 

order to modify a proposed NMS plan. 

Under Rule 608, the Commission can 

approve a proposed NMS plan ‘‘with 

such changes or subject to such 

conditions as the Commission may 

deem necessary or appropriate, if it 

finds that such plan . . . 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 Act.’’ 23 As set forth 

below, the Commission finds that each 

of its modifications of the CT Plan is 

necessary or appropriate. Moreover, the 

Commission asked extensive and 

detailed questions in the Notice that 

encompass each of the areas of the Plan 

the Commission is modifying and 

provided an opportunity for the public 

to comment on each of these topics as 

well as the Plan as a whole. As 

discussed throughout this Order, the 

Commission has carefully considered 

the comments received in response to 

these questions, as well as all other 

comments received, before finding that 

each of the modifications made is 

necessary or appropriate in order to 

sufficiently address the core problem 

identified in the Governance Order.24

The Commission believes that this 

process has provided the public 

sufficient notice of, and an opportunity 

to comment on, the areas of 

modification and it was not necessary to 

provide a second round of comment on 

the specific language of the 

modifications approved in this Order. 

And the Commission finds that, as 

modified, the CT Plan 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.25

C. The Provisions of the CT Plan 

1. Recitals 

The Recitals of the CT Plan set forth 

the procedural history of the CT Plan, 

the proposed schedule for 

implementation of the CT Plan, and the 

SROs’ acknowledgement of their 

regulatory obligations with respect to 

the CT Plan. As discussed below, the 

Commission is modifying certain of the 

Recitals with respect to the timeline for 

implementation of the CT Plan, as well 

as the Recital of the regulatory 

obligations of the SROs to the CT Plan. 

(a) Implementation of the CT Plan 

Paragraphs (b) and (c) of the Recitals 

set forth the implementation schedule 

for the CT Plan that the SROs have 

proposed. Paragraph (b) of the Recitals 

defines the ‘‘Effective Date’’ of the CT 

Plan as the later of the date that the 

Commission has approved the CT Plan 

or the date that the SROs have filed a 

certificate of formation with the State of 

Delaware to form the Company as a 

limited liability company (‘‘LLC’’). 

Paragraph (c) of the Recitals provides 

that the CT Plan will become operative 

as an NMS plan that governs the public 

dissemination of real-time consolidated 

equity market data on the ‘‘Operative 

Date,’’ which is defined as the first day 

of the month that is at least 90 days after 

the latest of five specified tasks has been 

accomplished: 


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26See Notice, supra note 3, 85 FR at 64567 

(Question 1). 

27 Id. 

28See Notice, supra note 3, 85 FR at 64567 

(Question 2). 

29 Id. 

30See, e.g., Letter from Ellen Greene, Managing 

Director, Equity and Options Market Structure, 

SIFMA (Nov. 12, 2020) (‘‘SIFMA Letter I’’), at 3; 

Letter from Ellen Greene, Managing Director, Equity 

and Options Market Structure, SIFMA (Feb. 18, 

2021) (‘‘SIFMA Letter II’’), at 2; Letter from Michael 

Blasi, SVP, Enterprise Infrastructure, and Krista 

Ryan, VP, Associate General Counsel, Fidelity 

Investments (Nov. 12, 2020) (‘‘Fidelity Letter’’), at 

2–3; Letter from John Ramsay, Chief Market Policy 

Officer, IEX (Nov. 13, 2020) (‘‘IEX Letter’’), at 1–2; 

Letter from Rich Steiner, Head of Client Advocacy 

and Market Innovation, RBC Capital Markets (Nov. 

12, 2020) (‘‘RBC Letter’’), at 4; Letter from Thomas 

M. Merritt, Deputy General Counsel, Virtu 

Financial, Inc. (Nov. 11, 2020) (‘‘Virtu Letter’’), at 

2; Letter from Jeffrey T. Brown, Senior Vice 

President, Legislative and Regulatory Affairs, 

Charles Schwab & Co., Inc. (Nov. 12, 2020) 

(‘‘Schwab Letter I’’), at 2; Letter from Jeffrey T. 

Brown, Senior Vice President, Legislative and 

Regulatory Affairs, Charles Schwab & Co., Inc. (Feb. 

11, 2021) (‘‘Schwab Letter II’’), at 5; Letter from Joe 

Wald, Managing Director, Co-Head of Electronic 

Trading, and Ray Ross, Managing Director, Co-Head 

of Electronic Trading, BMO Capital Markets Group 

(Nov. 18, 2020) (‘‘BMO Letter I’’), at 2–3; Letter from 

Joe Wald, Managing Director, Co-Head of Electronic 

Trading, and Ray Ross, Managing Director, Co-Head 

of Electronic Trading, BMO Capital Markets Group 

(Feb. 19, 2021) (‘‘BMO Letter II’’), at 2; Letter from 

Anders Franzon, General Counsel, MEMX (Feb. 5, 

2021) (‘‘MEMX Letter’’), at 2–3; Letter from Hubert 

De Jesus, Managing Director, Global Head of Market 

Structure and Electronic Trading, and Samantha 

DeZur, Director, Global Public Policy, BlackRock 

(Feb. 5, 2021) (‘‘BlackRock Letter II’’), at 2; Letter 

from Jennifer W. Han, Managing Director & 

Counsel, Regulatory Affairs, Managed Funds 

Association (Nov. 18, 2020) (‘‘MFA Letter’’), at 4– 

5. 

31See, e.g., IEX Letter, supra note 30, at 1; MFA 

Letter, supra note 30, at 5; BMO Letter I, supra note 

30, at 2; BMO Letter II, supra note 30, at 2; Fidelity 

Letter, supra note 30, at 3; Letter from Dorothy 

Donohue, Deputy General Counsel, Securities 

Regulation, Investment Company Institute (Nov. 12, 

2020) (‘‘ICI Letter I’’), at 6–7; Letter from Dorothy 

Donohue, Deputy General Counsel, Securities 

Regulation, Investment Company Institute (Feb. 5, 

2021) (‘‘ICI Letter II’’), at 2; RBC Letter, supra note 

30, at 3; Letter from Kelvin To, Founder and 

President, Data Boiler Technologies, LLC (Nov. 12, 

2020) (‘‘Data Boiler Letter I’’), at 20. 

32BMO Letter II, supra note 30, at 2. 

33 IEX Letter, supra note 30, at 1. 

34See RBC Letter, supra note 30, at 3. 

35SIFMA Letter I, supra note 30, at 3. 

36See ICI Letter I, supra note 31, at 7; ICI Letter 

II, supra note 31, at 2. This commenter urges the 

Commission to provide financial incentives to the 

SROs either through fines or through not allowing 

the SROs to collect SIP fees for some period of time. 

See ICI Letter I, supra note 31, at 7. 

37See Virtu Letter, supra note 30, at 2. 

38See Fidelity Letter, supra note 30, at 3. 

39See SIFMA Letter I, supra note 30, at 3; SIFMA 

Letter II, supra note 30, at 2; Virtu Letter, supra note 

30, at 2. 

40RBC Letter, supra note 30, at 3. 

41See Fidelity Letter, supra note 30, at 2–3. 

42See SIFMA Letter I, supra note 30, at 3; SIFMA 

Letter II, supra note 30, at 2; Fidelity Letter, supra 

note 30, at 4; IEX Letter, supra note 30, at 2; RBC 

Letter, supra note 30, at 4; Virtu Letter, supra note 

30, at 2; Schwab Letter I, supra note 30, at 2; 

Schwab Letter II, supra note 30, at 5; BMO Letter 

I, supra note 30, at 2; MEMX Letter, supra note 30, 

at 2–3; BlackRock Letter II, supra note 30, at 2. 

(i) SRO Voting Representatives and 

Non-SRO Voting Representatives of the 

Operating Committee have been 

selected; 

(ii) Fees have been established by the 

Operating Committee, are effective as an 

amendment to the CT Plan pursuant to 

Rule 608 of Regulation NMS, and are 

ready to be implemented; 

(iii) Agreements have been entered 

with the Processors currently 

performing under the CQ Plan, CTA 

Plan, and UTP Plan; 

(iv) Agreements have been entered 

with an Administrator and all required 

contracts with vendors and subscribers 

have been finalized and systems to 

administer distributions and fees are in 

place; and 

(v) The Operating Committee and, if 

applicable, the Commission have 

approved all policies and procedures 

that are necessary or appropriate. 

In the Notice, the Commission sought 

comment on whether the timing 

provisions might result in undue delay 

in the effectiveness of the CT Plan.26

The Commission asked whether the CT 

Plan should require that the certificate 

of formation be filed within a certain 

period of time, and whether 10 days 

would be an appropriate amount of 

time.27 The Commission also asked 

several questions about the actions that 

would be required to be taken before the 

CT Plan becomes operative. 

Specifically, the Commission sought 

comment on, among other things, 

whether the CT Plan should set 

deadlines for completion of each of the 

requisite actions, whether the Operating 

Committee should be required by the CT 

Plan to provide updates on the status of 

implementation, and, if so, whether 

such updates should be made public.28

The Commission also sought comment 

on whether the CT Plan should require 

that the selection of the Operating 

Committee be the first action 

undertaken after the Effective Date.29

In response to the Notice, the 

Commission received a number of 

comments supporting changes to the CT 

Plan to establish specified timeframes 

within which the requisite actions must 

occur for the CT Plan to be effective or 

operative.30 These commenters express 

concern that the absence of specified 

deadlines in the CT Plan will cause the 

SROs to unduly delay its 

implementation.31 Specifically, one 

commenter argues that it would be 

‘‘nonsensical to rely on the SROs, many 

of whom have no incentive to change 

the current governance structure, to take 

actions on a timely basis to ensure the 

implementation of the Plan.’’ 32 Another 

commenter acknowledges that the SROs 

will have significant control and 

influence over how and when the 

necessary steps to implement the CT 

Plan are completed and asserts that, 

without a reasonable deadline or target 

date for completion, there is a 

‘‘significant risk’’ that implementation 

will be delayed indefinitely, 

undermining important public policy 

goals.33 Another commenter similarly 

argues that the CT Plan fails to meet the 

core objectives of the Commission’s 

Governance Order because the required 

number of steps would delay full 

implementation of the plan for an 

indefinite period, possibly years.34

One commenter acknowledges that 

there will be ‘‘some work’’ in 

implementing the CT Plan, but states 

that the lack of deadlines and the 

number of conditions associated with 

the effective and operative dates are 

‘‘very concerning.’’ 35 Another 

commenter recommends that the 

Commission closely monitor 

implementation and potentially 

penalize the SROs for unwarranted 

delays.36 One commenter points to the 

National Market System Plan Governing 

the Consolidated Audit Trail (‘‘CAT 

NMS Plan’’) as a cautionary tale 

resulting from a lack of deadlines or 

accountability in meeting them,37 while 

another commenter favorably promotes 

the CAT NMS Plan’s use of target 

deadlines for critical implementation 

deadlines, quarterly progress reports, 

and financial incentives.38

Two commenters recommend making 

the Effective Date of the CT Plan the 

date of the Commission’s approval 

order,39 without regard to the proposed 

delay for the administrative step of 

filing the LLC agreement with Delaware. 

One commenter does not express a view 

about the propriety of a 10 day 

requirement, but recommends that the 

SROs be required to file the LLC’s 

certificate of formation with Delaware 

‘‘as promptly as the Commission 

determines is practicable following 

Commission approval’’ of the plan.40

Another commenter anticipates no 

difficulty with filing the certificate of 

formation as an LLC and recommends 

ten business days as an appropriate 

timeframe.41

A number of commenters support 

imposing a one-year deadline for the 

Operative Date for the CT Plan.42 One 

commenter suggests that a deadline for 

implementation of one year from the 

date of Commission approval of the CT 

Plan is reasonable and states that, if 

additional time proves necessary, the 


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43See IEX Letter, supra note 30, at 2. 

44RBC Letter, supra note 30, at 4. 

45See MEMX Letter, supra note 30, at 3. 

46See id. 

47See id. 

48See BlackRock Letter II, supra note 30, at 2. 

49See Nasdaq Letter I, supra note 20, at 10; Letter 

from Erika Moore, Vice President and Corporate 

Secretary, Nasdaq (Feb. 5, 2021) (‘‘Nasdaq Letter 

II’’), at 2; NYSE Letter I, supra note 18, at 33; Cboe 

Letter, supra note 17, at 5. 

50Cboe Letter, supra note 17, at 6. 

51Nasdaq Letter I, supra note 20, at 11. 

52See NYSE Letter I, supra note 18, at 33. 

53See id. at 33–35. This commenter further states 

that the 90-day period between the finalization of 

earlier actions and the operational date is 

‘‘prudent’’ and is the current industry standard for 

announcing the implementation of changes to 

market data plans. See id. at 35–36. 

54NYSE Letter I, supra note 18, at 35. As 

examples, this commenter points out that OPRA’s 

process to select a processor took two years even 

though OPRA ultimately decided to retain the same 

processor and cites the CAT NMS Plan for the risk 

that a selected administrator might be unable to 

perform the necessary functions, requiring that the 

RFP process be repeated. See id. 

55See Fidelity Letter, supra note 30, at 2–3; IEX 

Letter, supra note 30, at 2. 

56See Fidelity Letter, supra note 30, at 3; IEX 

Letter, supra note 30, at 2; BMO Letter I, supra note 

30, at 3; BMO Letter II, supra note 30, at 2; ICI Letter 

I, supra note 31, at 7. 

57See IEX Letter, supra note 30, at 2. 

58See ICI Letter I, supra note 31, at 7. 

59See BMO Letter I, supra note 30, at 3; BMO 

Letter II, supra note 30, at 2. 

60 Data Boiler Letter I, supra note 31, at 20. For 

example, this commenter argues against an overly 

prescriptive timeframe, suggesting that the process 

for nomination and selection of Non-SRO Voting 

Representatives should not take more than 90 days, 

with a 30-day extension in case of an 

unprecedented event, such as a pandemic. See id. 

at 28. 

61See id. at 20. 

62SIFMA Letter I, supra note 30, at 3; IEX Letter, 

supra note 30, at 2. 

63See Nasdaq Letter I, supra note 20, at 10–11. 

64 Governance Order, supra note 8, 85 FR at 

28711. 

65See, e.g., id. at 28713. 

66See Cboe Letter, supra note 17, at 6. 

67See supra notes 42–48 and accompanying text. 

CT Plan can provide for obtaining an 

extension based on a showing of good 

cause.43 One commenter states that, 

because the changes required of the plan 

are ‘‘primarily organizational rather 

than operational,’’ a period of no more 

than one year from the effective date to 

the operational date would be 

reasonable.44 Another commenter 

supports a one-year deadline for the 

completion of the necessary steps to 

fully transition to operating under the 

CT Plan, subject to an extension only for 

good cause shown.45 This commenter 

suggests that, immediately upon 

approval of the CT Plan, the Operating 

Committee, including the Non-SRO 

Voting Representatives, should be 

formed and begin meeting to complete 

the remaining prerequisites, including 

the adoption of fees.46 This commenter 

acknowledges the timing complexity of 

adopting fees under the new CT Plan 

and selecting and onboarding a new 

Administrator, emphasizing that the one 

year deadline is an ‘‘ambitious project’’ 

that will require a commitment from 

both the SROs and industry participants 

to ensure a smooth transition.47 Another 

commenter also supports requiring the 

CT Plan to become operational within 

one year and urges the Commission to 

finalize the proposal expeditiously.48

Other commenters argue that there is 

no reasonable way to impose deadlines 

on any part of the process.49 One of 

these commenters expresses concern 

that the Commission is ‘‘vastly 

underestimating’’ the amount of time 

needed to implement the new CT Plan, 

particularly given the Commission’s 

requirements with respect to an 

Administrator and a new fee schedule.50

Another of these commenters argues 

that any deadline the Commission sets 

at this point would be ‘‘inherently 

arbitrary’’ and would do nothing to 

move the project forward, cautioning 

that, ‘‘rushing to complete an inherently 

complex project may result in costly 

errors.’’ 51

In highlighting the difficulty in 

specifying deadlines for completing the 

Operative Date prerequisites, another 

commenter states that, because neither 

the SROs nor the Commission has 

jurisdiction over the individuals that 

constitute the Advisory Committee, any 

timeframes imposed on the Advisory 

Committee members to select the NonSRO Voting Representatives would be 

unenforceable and the Operating 

Committee cannot function until the 

Non-SRO Voting Representatives have 

been selected.52 This commenter further 

emphasizes the complexity and 

uncertainty of determining fees, 

selecting an independent Administrator 

through a request-for-proposal (‘‘RFP’’) 

process, and negotiating new contracts 

with processors, data vendors and 

subscribers.53 This commenter states 

that because the RFP process is ‘‘so 

specialized and idiosyncratic,’’ there is 

‘‘no way to reasonably impose time 

limits on any part of that process, let 

alone a time limit for the entire process 

overall.’’ 54

Other commenters recommend that 

the CT Plan require a detailed project 

plan with interim dates,55 and public 

progress reports.56 One of these 

commenters states that because 

implementation will be a complex 

undertaking, it will be important for 

both the Commission and outside 

stakeholders to have reasonable 

visibility into progress.57 Another of 

these commenters argues that the SROs 

should be required to provide a detailed 

implementation plan with timeframes 

for each step and the rationale for each 

timeframe.58 One of these commenters 

states that it will be important for the 

CT Plan to require the Operating 

Committee to provide periodic public 

updates on the status of 

implementation.59 One commenter 

agrees, recommending that the CT Plan 

set ‘‘milestone dates while remaining 

flexible depending on progress.’’ 60 This 

commenter favors periodic public 

updates on implementation from the 

Operating Committee.61

Additionally, two commenters suggest 

that the Commission should ‘‘clarify’’ 

that the fee schedules for the current 

Equity Data Plans will remain in effect 

and apply to the CT Plan until the CT 

Plan Operating Committee files a new 

schedule with the Commission and the 

Commission approves that schedule.62

Finally, one commenter also asserts 

that the implementation of the new CT 

Plan before the existing contracts 

between the Equity Data Plans and the 

Administrators and Processors expire 

would constitute a Fifth Amendment 

‘‘taking.’’ 63

While the Commission recognizes the 

challenges associated with completing 

the actions required for implementation 

of the CT Plan, the Commission also 

believes that the SROs have the relevant 

expertise and experience—both with 

respect to operating NMS plans 

generally and with respect to the 

dissemination of equity market data 

specifically—to implement the CT Plan. 

In particular, the Commission found in 

the Governance Order that the SROs 

could provide ‘‘unique insight in 

formulating the terms and conditions of 

the New Consolidated Data Plan,’’ 64

even as it also highlighted the inherent 

conflicts of interest faced by SROs in the 

operation of the existing plans.65 The 

Commission disagrees with the 

comment that it is ‘‘vastly 

underestimating’’ the time needed to 

implement the CT Plan,66 and instead 

believes, consistent with the views of 

other market participants,67 that the 

SROs should be able to use their 

extensive experience in operating the 

existing Equity Data Plans to complete 

the specific actions needed to 

implement the CT Plan within the 

timeframes specified below. Moreover, 

the Commission believes that fully 

implementing the CT Plan within 

prescribed deadlines is important, 

because implementation of the CT Plan 

is critical to reducing existing 

redundancies, inefficiencies, and 

inconsistencies in the current Equity 


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68See Governance Order, supra note 8, 85 FR at 

28703–05, 28711. 

69See IEX Letter, supra note 30, at 2; see also 

MEMX Letter, supra note 30, at 3 (supporting a oneyear deadline with an extension only for good cause 

shown). 

70There are well-known mechanisms in existing 

law by which affected parties make such requests. 

If such a request were made at some point in the 

future, the Commission would decide whether to 

grant or deny the relief sought under the facts and 

circumstances applicable at that time. 

71See NYSE Letter I, supra note 18, at 33. 

72See, e.g., IEX Letter, supra note 30, at 2; ICI 

Letter II, supra note 31, at 1; BMO Letter I, supra 

note 30, at 3; BMO Letter II, supra note 30, at 2. 

73See Nasdaq Letter I, supra note 20, at 10–11. 

74See Letter from Joan C. Conley, Senior Vice 

President and Corporate Secretary, Nasdaq (Feb. 28, 

2020), at 13–14 (responding to the Commission’s 

Proposed Order, infra note 483); see also Nasdaq 

Letter I, supra note 20, at 10–11. 

75 Governance Order, supra note 8, 85 FR at 

28725, 28727. 

76See id. at 28727. 

77 Id. at 28725. 

78See SIFMA Letter I, supra note 30, at 3; SIFMA 

Letter II, supra note 30, at 2; Virtu Letter, supra note 

30, at 2. 

79See, e.g., Fidelity Letter, supra note 30, at 2– 

3. 

80Section 1.1(w) of Article I of the proposed CT 

Plan defines the term ‘‘Eligible Securities’’ as ‘‘(i) 

any equity security, as defined in Section 3(a)(11) 

of the Act, or (ii) a security that trades like an equity 

security, in each case that is listed on a national 

securities exchange.’’ 

81 17 CFR 242.608. 

82See SIFMA Letter I, supra note 30, at 3; SIFMA 

Letter II, supra note 30, at 2; Fidelity Letter, supra 

note 30, at 4; IEX Letter, supra note 30, at 2; RBC 

Letter, supra note 30, at 4; Virtu Letter, supra note 

30, at 2; Schwab Letter I, supra note 30, at 2; 

Schwab Letter II, supra note 30, at 5; BMO Letter 

I, supra note 30, at 2; MEMX Letter, supra note 30, 

at 2–3; BlackRock Letter II, supra note 30, at 2. 

83While one commenter states that the proposed 

90-day testing period is consistent with the current 

industry standard of announcing changes to market 

data plans before implementation, see NYSE Letter 

I, supra note 18, at 35–36, the Commission’s 

concern is not with the 90-day period itself, but 

with the lack of any deadlines to determine when 

the 90-day period would begin. The Commission 

believes that any such testing period should take 

place within a prescribed period for 

Data Plans and to modernizing plan 

governance.68 Although one commenter 

recommends that the CT Plan explicitly 

provide for obtaining an extension 

based on a showing of good cause, in 

case good faith efforts by the Operating 

Committee are nonetheless unable to 

meet one or more of the specified 

deadlines,69 the Commission does not 

believe that it is necessary or 

appropriate to add a provision to the CT 

Plan regarding an extension of these 

deadlines. Further, the Commission 

does not believe that it is necessary or 

appropriate to suggest at this time how 

it might view a future request for an 

extension from the Operating 

Committee or other affected parties.70

Additionally, the Commission 

disagrees with the commenter’s 

statement that, because neither the 

Commission nor the SROs have 

jurisdiction over Non-SRO Voting 

Representatives, placing timeframes on 

the selection of Non-SRO Voting 

Representatives by the existing 

Advisory Committee of the Equity Data 

Plans will be unenforceable and 

therefore futile.71 The Commission fully 

expects, based on the widespread 

support among market participants for 

providing voting power to non-SROs,72

that the Advisory Committee members 

will willingly undertake the task of 

selecting Non-SRO Voting 

Representatives. Moreover, the twomonth deadline imposed on the 

selection of SRO and Non-SRO Voting 

Representatives in this provision is 

consistent with the timeframe set forth 

in the procedures proposed by the SROs 

in Section 4.2(b)(v) of the CT Plan for 

selection of Non-SRO Voting 

Representatives, and there is 

considerable overlap between the 

categories of market participants 

represented on the Advisory Committee 

and the categories of market participants 

who would be Non-SRO Voting 

Representatives. 

Finally, the Commission disagrees 

with one commenter’s statement that 

the timing of implementation of the CT 

Plan prior to the expiration of the 

existing contracts between the current 

Equity Data Plans and the 

Administrators and Processors would 

constitute a ‘‘taking’’ without just 

compensation under the Fifth 

Amendment of the U.S. Constitution.73

As the Commission stated in the 

Governance Order in response to similar 

concerns previously expressed by the 

same commenter,74 the commenter fails 

to demonstrate how the proposal would 

‘‘impermissibly interfere with a 

protected property interest.’’ 75 Nor does 

the Commission anticipate any 

economic harm to the processors of the 

current Equity Data Plans.76 And 

operation of the Equity Data Plans is a 

‘‘fundamental component’’ of the 

national market system, which is itself 

highly regulated pursuant to the broad 

authority provided the Commission by 

Congress.77 The Commission continues 

to believe that the commenter’s 

argument that the implementation of the 

CT Plan would constitute a Fifth 

Amendment taking lacks merit. 

Accordingly, the Commission finds 

that, to facilitate the implementation of 

the CT Plan on a timely basis, it is 

appropriate to modify the CT Plan, as 

discussed below, to add specified 

deadlines to paragraphs (b) and (c) of 

the Recitals of the CT Plan and to add 

new paragraph (d) to the Recitals. 

First, with respect to the proposed 

definition of the Effective Date of the CT 

Plan, set forth in paragraph (b) of the 

Recitals, the Commission shares 

concerns raised by commenters about 

the uncertainty of the timing associated 

with defining the Effective Date as the 

later of the date of Commission approval 

or the SROs’ filing of the required 

certificate with the State of Delaware.78

The Commission agrees with 

commenters that the act of filing the 

certificate of formation of the LLC is 

administrative and can be accomplished 

expeditiously.79 Accordingly, the 

Commission is modifying paragraph (b) 

of the Recitals of the CT Plan to define 

the Effective Date as the date of 

Commission approval of the CT Plan as 

an NMS plan governing the public 

dissemination of real-time consolidated 

market data for Eligible Securities 80

pursuant to Rule 608 of Regulation 

NMS.81 The Commission finds that the 

modification of this provision is 

appropriate because Commission 

approval of the CT Plan, as modified, 

will finalize all of the terms of the CT 

Plan and because defining the Effective 

Date in this way will support timely 

implementation of the CT Plan and 

reduce the potential for unnecessary 

delay. 

In addition, the Commission is 

modifying paragraph (b) of the Recitals 

of the CT Plan to require that the 

documents needed to create the LLC be 

filed by the SROs with the State of 

Delaware within 10 business days of the 

Effective Date. The Commission finds 

that this modification is appropriate 

because, once the language of the CT 

Plan as modified by the Commission is 

available to the SROs, 10 business days 

is a sufficient period of time for the 

SROs to execute the modified CT Plan 

and undertake the administrative step of 

filing the necessary formation 

documents for the CT Plan LLC with the 

State of Delaware. 

With respect to the proposed 

definition of the Operative Date, the 

Commission agrees with commenters 

that the CT Plan should set forth a date 

certain for the CT Plan to become 

operational and should also specify 

deadlines for interim steps to be 

completed.82 The Commission believes 

that the language of paragraph (c) of the 

Recitals—which provides that the CT 

Plan will be operative on the first day 

of the month that is at least 90 days after 

the specified actions—could serve to 

unnecessarily delay implementation of 

the CT Plan because it fails to impose 

deadlines that will help ensure the 

completion of the requisite actions in a 

timely manner.83


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implementation of the CT Plan, not simply at the 

end of an indefinite period in which other 

preliminary steps take place. 84See IEX Letter, supra note 30, at 2; MEMX 

Letter, supra note 30, at 2–3. See also SIFMA Letter 

I, supra note 30, at 3; SIFMA Letter II, supra note 

30, at 2; Fidelity Letter, supra note 30, at 4; RBC 

Letter, supra note 30, at 4; Virtu Letter, supra note 

30, at 2; Schwab Letter I, supra note 30, at 2; 

Schwab Letter II, supra note 30, at 5; BMO Letter 

I, supra note 30, at 2; BlackRock Letter II, supra 

note 30, at 2. 

85MEMX Letter, supra note 30, at 3. 

86Nasdaq Letter I, supra note 20, at 11. 

87See IEX Letter, supra note 30, at 2; MEMX 

Letter, supra note 30, at 2–3. See also SIFMA Letter 

I, supra note 30, at 3; SIFMA Letter II, supra note 

30, at 2; Fidelity Letter, supra note 30, at 4; RBC 

Letter, supra note 30, at 4; Virtu Letter, supra note 

30, at 2; Schwab Letter I, supra note 30, at 2; 

Schwab Letter II, supra note 30, at 5; BMO Letter 

I, supra note 30, at 2; BlackRock Letter II, supra 

note 30, at 2. 

88See Governance Order, supra note 8, 85 FR at 

28714–20. 

89 17 CFR 242.608. 

90Several commenters express views with respect 

to the interaction of the CT Plan with Commission 

Rule 614(e), the recently adopted Market Data 

Continued 

In addition, the Commission shares 

the view of commenters, particularly 

those with experience with the 

operation of the current Equity Data 

Plans, that it is not unreasonable to 

require the CT Plan to become 

operational within one year of the date 

of Commission approval.84 The 

Commission further agrees that meeting 

these deadlines is an ‘‘ambitious 

project’’ that will undoubtedly require a 

commitment from both the SROs and 

other industry participants.85 As 

discussed below, while implementation 

of the CT Plan would, among other 

things, require selecting a new 

Administrator (which would in turn 

require new contracts with vendors and 

subscribers, as well as new billing 

systems) and would also require 

entering into new contracts with the 

existing Processors, the Commission 

believes that the SROs have the 

expertise and experience, with diligence 

and commitment, to enable the 

Operating Committee of the CT Plan to 

complete all of the required actions 

within one year while avoiding costly 

errors. Although the CT Plan would be 

a new NMS plan, significant expertise 

and experience would be directly 

transferrable from the operation of the 

Equity Data Plans to the implementation 

of the CT Plan. Not only have the SROs 

run the Equity Data Plans for decades, 

but the current processors for the Equity 

Data Plan would, as proposed by the 

SROs, be the processors for the CT Plan. 

Therefore, the Commission disagrees 

that setting deadlines would be 

‘‘inherently arbitrary’’ or ‘‘may result in 

costly errors.’’ 86 A number of market 

participants, including market 

participants that have experience with 

the operation of the current Equity Data 

Plans,87 have commented that it is 

appropriate for the Commission to set 

deadlines for implementation of the CT 

Plan and that the specific actions 

required to fully implement the CT 

Plan, described below, can be 

accomplished within the timeframe that 

the Commission is prescribing. The 

Commission agrees with these 

commenters and believes, for the 

reasons discussed below, that the 

prescribed timeframes are achievable 

and that costly errors can be avoided. 

Therefore, the Commission is modifying 

paragraph (c) of the Recitals to the CT 

Plan to require the LLC Agreement to 

become operative as an NMS plan 

governing the public dissemination of 

real-time consolidated equity market 

data for Eligible Securities within 12 

months of the Effective Date. The 

Commission finds that the modification 

to paragraph (c) of the Recitals of the CT 

Plan is appropriate because it will create 

a certain and achievable date for 

implementation and require the SROs to 

implement the CT Plan in a timely 

manner for the benefit of all market 

participants. 

Paragraph (c) of the Recitals of the CT 

Plan also sets forth the five specified 

actions that must be completed before 

the Operative Date. The Commission is 

concerned that the sequence for 

completion of the required actions is not 

expressly clear from the CT Plan. If, for 

example, certain actions required prior 

to the Operative Date were taken before 

the selection of the entire Operating 

Committee, including Non-SRO Voting 

Representatives, those initial decisions 

would be made by the SROs alone, in 

a manner inconsistent with the 

Commission’s Governance Order.88

To address this uncertainty, the 

Commission is modifying paragraph (c) 

of the Recitals by renumbering it as 

paragraph (d) and adding a specific 

deadline for each of the required 

actions. The Commission has modified 

renumbered paragraph (d) to add the 

following language: ‘‘[i]n support of 

ensuring that the CT Plan is fully 

operational by the Operative Date, the 

following actions shall be completed 

within the specified periods.’’ As 

discussed below, the Commission is 

modifying each of the requisite actions 

now set forth in subparagraphs (i)–(iv) 

of renumbered paragraph (d) of the 

Recitals to add specificity. The new 

language is intended to set forth the 

sequence for completion of the required 

actions, as well as to prescribe deadlines 

for completion. In addition, the 

Commission is adding new 

subparagraphs (v) and (vi) of 

renumbered paragraph (d) of the 

Recitals to specify the obligations of the 

Operating Committee. The Commission 

finds that the modifications to 

renumbered paragraph (d) of the 

Recitals are appropriate because they 

will provide clear timelines for the 

Operating Committee and greater 

certainty for other industry participants 

and because they will establish 

achievable objectives to facilitate CT 

Plan implementation. 

Specifically, the Commission is 

modifying subparagraph (i) of 

renumbered paragraph (d) of the 

Recitals to provide that the SRO Voting 

Representatives and Non-SRO Voting 

Representatives of the Operating 

Committee must be determined 

pursuant to the requirements of Section 

4.2 of Article IV of the CT Plan within 

two months of the Effective Date. This 

timeframe is consistent with 

subparagraph (v) of Section 4.2(b) of 

Article IV of the CT Plan, which, as 

proposed by the SROs, contemplates a 

process for selecting Non-SRO Voting 

Representatives that could be completed 

within two months. In light of these 

provisions of Section 4.2(b)(v) of the CT 

Plan, as well as the Commission’s belief 

that the Advisory Committee members 

have an incentive to facilitate non-SROs 

having a vote on plan governance, the 

Commission believes that the Advisory 

Committee of the current Equity Data 

Plans will proceed promptly to select, 

pursuant to Section 4.2 of the CT Plan, 

the Non-SRO Voting Representatives to 

serve on the Operating Committee. The 

Commission also believes that the SROs, 

who have already selected their 

representatives to the operating 

committees of the existing Equity Data 

Plans, and who have extensive 

experience in doing so, should be able 

to select their Voting Representatives to 

the CT Plan Operating Committee 

within the timeframe provided. 

Accordingly, the Commission finds that 

the modification to this provision is 

appropriate because it will establish a 

reasonable timeframe for selecting the 

Non-SRO and SRO Voting 

Representatives to form the Operating 

Committee—an indispensable first step 

of the implementation process. 

The Commission is further modifying 

subparagraph (ii) of renumbered 

paragraph (d) of the Recitals to provide 

that the Operating Committee must file 

with the Commission pursuant to Rule 

608 of Regulation NMS 89 an 

amendment to the CT Plan governing 

proposed fees with respect to the 

existing exclusive SIP model 90 within 


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Infrastructure Rule. 17 CFR 242.614(e). One of these 

commenters states, ‘‘[t]he timely implementation of 

the CT Plan would undoubtedly facilitate the 

success of any new market data infrastructure 

regime and, at the very least, will be important to 

ensure that, upon Commission approval, the 

implementation of any such regime is not 

impeded.’’ BMO Letter I, supra note 30, at 3. 

Another commenter, pointing to the lack of analysis 

of the impact of the Infrastructure rulemaking, 

suggests that the SROs acknowledge that the CT 

Plan may need to be amended to accommodate the 

competing consolidator model. See SIFMA Letter I, 

supra note 30, at 3. Other commenters express the 

view that the two initiatives are ‘‘inextricably 

intertwined.’’ Nasdaq Letter I, supra note 20, at 34– 

36 (incorporating its brief filed jointly with NYSE 

and CBOE); see also NYSE Letter I, supra note 18, 

at 3. Because the existing exclusive SIP model will 

continue to operate during the transition to the 

competing consolidator model, the participation of 

Non-SRO Voting Representatives in Operating 

Committee deliberations on the fee filing required 

by subparagraph (ii) of renumbered paragraph (d) of 

the Recitals would facilitate the determination of 

the fee schedule that will be needed to commence 

consolidated equity market data dissemination 

under the new CT Plan. In addition, the Non-SRO 

Voting Representatives’ participation would likely 

provide valuable perspectives on fees that may 

serve as a reference point for, among other things, 

future fees under the competing consolidator 

model. 91NYSE Letter, supra note 18, at 34. 

92See Nasdaq Letter I, supra note 20, at 10; 

Nasdaq Letter II, supra note 49, at 2; NYSE Letter 

I, supra note 18, at 33; Cboe Letter, supra note 17, 

at 5–6. 

93See NYSE Letter I, supra note 18, at 35. 

four months of the Effective Date, which 

is two months after the deadline for the 

formation of the Operating Committee. 

The Commission believes that the fourmonth period to file a proposed CT Plan 

fee schedule with the Commission is a 

reasonable and appropriate timeframe 

for several reasons. First, given the 

importance of market data fees to both 

SROs and other market participants, the 

Commission believes that the 

determination of CT Plan fees will be a 

critical priority for both SROs and NonSRO Voting Representatives. Assessing 

fees to subscribers for access to the SIP 

data is one of the fundamental 

responsibilities of the Operating 

Committee and one of the issues most 

consequential to both SROs and other 

market participants. Second, the 

Commission believes that a number of 

persons selected to be members of the 

Operating Committee are likely to have 

detailed and substantial pre-existing 

knowledge and experience with the 

content and pricing of the equity data 

products that are disseminated under 

the current centralized SIP model. 

Third, the four-month period is a 

deadline solely for filing the proposed 

fees with the Commission and not a 

requirement that the fee schedule be 

approved by the Commission and 

implemented within the four month 

period. Instead, the required fee filing 

would commence the process for 

Commission consideration of the 

proposed fees, which will include an 

opportunity for public comment. 

Accordingly, the Commission finds that 

the modification to this provision is 

appropriate because it provides 

sufficient time after the formation of the 

Operating Committee for proposed fees 

to be discussed by knowledgeable and 

experienced persons, agreed upon, and 

filed with the Commission. 

The Commission is also modifying 

subparagraph (iii) of renumbered 

paragraph (d) of the Recitals to provide 

that the Operating Committee must 

enter into agreements with the 

Processors performing under the current 

Equity Data Plans within eight months 

of the Effective Date. The Processors 

performing under the current Equity 

Data Plans are performing pursuant to 

existing contracts, and the CT Plan as 

submitted by the SROs provides that the 

Operating Committee shall enter into 

agreements with those same Processors. 

While one commenter states that 

retaining the existing Processors would 

require, at a minimum, ‘‘negotiation of 

new contracts and related service level 

agreements,’’ 91 the Commission 

believes that concerns about the need to 

renegotiate all of the terms of the 

existing contracts are not well founded 

because the CT Plan does not by its 

terms change any of the technical 

provisions of the existing Equity Data 

Plans with respect to the dissemination 

of consolidated equity market data. And 

the SROs have not suggested that the 

terms of the new contracts of the 

Processors will be materially different 

than the existing contracts under the 

Equity Data Plans. Consequently, the 

Commission believes that the technical 

and business terms of the new Processor 

contracts with the CT Plan are likely to 

be substantially identical to the existing 

contracts. Therefore, the Commission 

finds that the modification to this 

provision is appropriate because the 

Operating Committee should encounter 

little unavoidable difficulty in executing 

agreements with the Processors within 

the prescribed timeframe, and the 

change will facilitate timely 

implementation for the benefit of market 

participants. 

Moreover, the Commission is 

modifying subparagraph (iv) of 

renumbered paragraph (d) of the 

Recitals to require that the proposed 

actions relating to the selection and 

duties of an Administrator, discussed in 

greater detail below, pursuant to Section 

6.4 of Article VI and Section 4.3 of 

Article IV of the CT Plan, be completed 

within eight months of the Effective 

Date. The amended provision provides 

that the Administrator must be prepared 

to transition to the CT Plan, by 

finalizing new contracts with vendors 

and subscribers and having in place 

systems to administer distributions and 

fees, before the Operative Date. 

While commenters argue that 

deadlines could not reasonably be 

imposed on the process of selecting an 

Administrator and preparing to 

implement the CT Plan,92 the 

Commission disagrees. One commenter 

points to the difficulties attendant in 

selecting a processor for the CAT NMS 

Plan,93 but the Commission does not 

view the circumstances to be analogous. 

In the case of the CAT NMS Plan, the 

SROs were tasked with implementing 

the first-ever consolidated audit trail for 

equities trading, a complex NMS system 

without precedent. Here, by contrast, 

the Operating Committee will be 

conducting an RFP process to select an 

Administrator to perform functions with 

which market participants, whether 

SROs or market data consumers, have 

extensive familiarity. Thus, the 

Commission believes that crafting the 

necessary requirements for the RFP and 

evaluating proposals submitted in 

response should be a substantially less 

complicated and time-consuming 

process than searching for a processor to 

build an entirely new and 

comprehensive database. Moreover, 

with respect to certain commenters’ 

concerns that it will be difficult to find 

an Administrator with the necessary 

expertise, the Commission understands 

that a number of different types of 

entities, such as accounting firms, 

market data administration firms, or 

consulting firms, would be capable of 

serving as Administrator to the CT Plan 

and providing the requisite billing, 

auditing, and licensing services. The 

Commission finds that the 

modifications to the provision are 

appropriate because, given the extensive 

experience of the SROs over several 

decades in supervising—or serving as— 

the administrators of the Equity Data 

Plans, the process of selecting an 

Administrator, as well as the duties 

assigned to the firm selected pursuant to 

the provisions of the CT Plan, should be 

able to be completed within the 

established timeframes. 

In addition, the Commission is adding 

new subparagraph (v) of renumbered 

paragraph (d) of the Recitals to 

explicitly impose responsibility on the 

Operating Committee to ensure that all 

of the requirements set forth in the 

preceding subparagraphs of renumbered 

paragraph (d) have been satisfied prior 

to the Operative Date. In particular, the 


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94This provision is designed to require the 

Operating Committee to oversee the Administrator’s 

and Processors’ efforts to test all pertinent systems 

prior to the transition from the existing Equity Data 

Plans to the CT Plan. 

95See Fidelity Letter, supra note 30, at 3; IEX 

Letter, supra note 30, at 2; BMO Letter I, supra note 

30, at 3; BMO Letter II, supra note 30, at 2; ICI Letter 

I, supra note 31, at 7. While one of these commenter 

urges the Commission to provide financial 

incentives to the SROs either through fines or 

through not allowing the SROs to collect SIP fees 

for some period of time, see ICI Letter I, supra note 

31, at 7, the Commission believes that the required 

quarterly progress reports and the involvement of 

the Operating Committee, including the Non-SRO 

Voting Representatives, should be sufficient to 

ensure timely implementation of the CT Plan. 

96See infra notes 443–454 and accompanying 

text. 

97See MFA Letter, supra note 30, at 1–2. 

98See Nasdaq Letter I, supra note 20, at 16–17. 

99The ‘‘Members’’ of the LLC Agreement, as 

defined in the first paragraph of the LLC 

Agreement, are the SROs identified in Exhibit A to 

the LLC Agreement. 

100See Notice, supra note 3, 85 FR at 64567–68 

(Questions 4–8). 

provision provides that ‘‘before the 

Operative Date, the Operating 

Committee will be required to ensure 

that the Administrator and the 

Processors have developed, 

implemented, and suitably tested the 

systems necessary with respect to the 

existing exclusive SIP model 94— 

including dissemination systems, billing 

and audit systems, and appropriate 

contracts with Vendors and 

Subscribers—and, if applicable, the 

Operating Committee has expeditiously 

filed any necessary policies and 

procedures with the Commission. This 

new language is designed to impose on 

the Operating Committee not only the 

initial obligation to select an 

Administrator and Processors, but also 

the explicit ongoing responsibility to 

oversee the Administrator and 

Processors’ specific efforts to implement 

the CT Plan. The Commission finds that 

this modification is appropriate because 

the inclusion of this language 

establishes that the Operating 

Committee’s obligation to oversee the 

development of all systems, agreements, 

and policies and procedures necessary 

to facilitate the implementation of the 

CT Plan within the prescribed 

timeframe continues beyond the time 

when the Administrator and Processors 

have been selected. 

Finally, the Commission is adding 

new subparagraph (vi) to renumbered 

paragraph (d) of the Recitals to impose 

on the Operating Committee the 

obligation to provide quarterly written 

progress reports to the Commission, and 

to make these reports publicly available, 

beginning three months after the 

Effective Date and continuing every 

three months until the Operative Date. 

These quarterly reports would be 

required to address the actions 

undertaken and the progress made 

toward completing each of the required 

actions listed in paragraph (d) with 

respect to implementation of the CT 

Plan. The Commission shares 

commenters’ views that transparency 

with respect to the progress made to 

satisfy the requirements of the CT Plan 

would benefit not only the Commission 

but also interested market 

participants.95 The requirement to 

provide progress reports in writing to 

the Commission on a quarterly basis and 

to make them publicly available is 

designed to help ensure that affected 

market participants are informed about 

the status of the steps that are taken to 

implement the CT Plan within the 

prescribed time periods. Providing 

periodic updates to the Commission 

should also facilitate holding the 

Operating Committee accountable for its 

progress in completing the interim steps 

towards satisfying the longer-range 

requirements. 

The Commission believes that the 

required frequency of the progress 

reports, one report every three months, 

should be sufficient to identify for the 

Commission any notable delays in 

completing the interim steps needed to 

satisfy the deadlines established for CT 

Plan implementation without imposing 

unnecessary burdens on efforts to 

implement the CT Plan. The 

Commission believes that this 

requirement should not be overly 

burdensome to the Operating Committee 

or distract from its performance of the 

specified actions required by the CT 

Plan, because the quarterly reports 

would essentially reflect the analysis 

the Operating Committee would need to 

undertake in any event for its diligent 

oversight of the implementation 

process. The Commission finds that the 

modifications to renumbered paragraph 

(d) of the Recitals of the CT Plan are 

appropriate because the specified 

deadlines and sequence for completion 

prescribed by the provision will provide 

greater certainty regarding timeframes 

for the Operating Committee and other 

market participants and will establish 

achievable objectives to facilitate 

implementation of the CT Plan. 

For the reasons discussed above, the 

Commission is approving paragraph (b), 

which has been renumbered as 

paragraph (c), and renumbered 

paragraph (d) of the Recitals of the CT 

Plan, as modified. 

(b) SRO Duties to the CT Plan 

Paragraph (f) of the Recitals, 

renumbered as paragraph (g) as a result 

of the modifications discussed above, 

sets forth the SROs’ statement of their 

regulatory obligations to the CT Plan. 

With respect to several provisions of the 

CT Plan discussed below,96 a 

commenter expresses concern that the 

SROs are disclaiming any duty or 

obligation to the CT Plan.97 The 

Commission agrees with another 

commenter that the regulatory 

obligations of SROs with respect to the 

CT Plan are set by the federal securities 

laws and regulations,98 but finds that it 

is appropriate to reiterate that the 

provisions of the CT Plan do not lessen 

any of the SROs’ regulatory obligations. 

Accordingly, the Commission is 

modifying this provision to add the 

following sentence, ‘‘No provision of 

this Agreement shall be construed to 

limit or diminish the obligations and 

duties of the Members as self-regulatory 

organizations under the federal 

securities laws and the regulations 

thereunder.’’ 99 The Commission finds 

that the modification to renumbered 

paragraph (g) of the Recitals of the CT 

Plan is appropriate because it ensures 

that the text of the CT Plan reflects the 

relationship between the CT Plan’s 

provisions and the SROs’ regulatory 

obligations. For the reasons discussed 

above, the Commission is approving this 

provision as modified. 

(c) Other Provisions of the Recitals 

Paragraph (a) of the Recitals 

establishes that the CT Plan is filed with 

the Commission in response to the 

Commission’s Governance Order. 

Paragraphs (d) and (e) of the Recitals as 

proposed establish that the current 

Equity Data Plans will continue to 

operate until the Operative Date. 

The Commission received no 

comment on paragraphs (a), (d), and (e) 

of the Recitals as proposed. The 

Commission is approving paragraph (a) 

as proposed, and paragraphs (d) and (e), 

renumbered as paragraphs (e) and (f), 

otherwise as proposed. 

2. Definitions 

Article I of the CT Plan sets forth the 

defined terms used throughout the CT 

Plan and its Exhibits. In the Notice, the 

Commission sought comment on several 

of the proposed definitions.100

Specifically, the Commission requested 

comment on the proposed scope and 

use of the following defined terms: ‘‘CT 

Feeds,’’ ‘‘Covered Persons,’’ ‘‘Fees,’’ 

‘‘Member Observer,’’ and ‘‘Public 

Information.’’ After considering the 

comments received, the Commission 


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101While one commenter suggests that the 

definition of ‘‘fees’’ should be ‘‘similar to the 

comprehensiveness in defining ‘royalties for 

copyright works’ in the music industry,’’ Data 

Boiler Letter I, supra note 31, at 22–23; Letter from 

Kelvin To, Founder and President, Data Boiler 

Technologies, LLC (Jul. 20, 2021) (‘‘Data Boiler 

Letter II’’), at 2, the commenter has not provided 

specific suggestions as to how this high-level 

analogy would be appropriately applied in the 

context of consolidated equity market data. Further, 

the Commission does not believe that the analogy 

is apt in the context of data that the SROs have a 

regulatory obligation to disseminate through an 

NMS plan. 

102As proposed, Section 1.1(k) defines the term 

‘‘Company Indemnified Party’’ as ‘‘a Person, and 

any other Person of whom such Person is the legal 

representative, that is or was a Member or an SRO 

Voting Representative.’’ 

103The term ‘‘Company Indemnified Party’’ is 

also referred to in Section 1.1(kk) (‘‘Losses’’) and 

Section 1.1(ccc) (‘‘Party to a Proceeding’’) of Article 

I of the CT Plan. 

104As proposed, Section 1.1(n) of Article I defines 

the term ‘‘Covered Persons’’ as ‘‘representatives of 

the Members, the Non-SRO Voting Representatives, 

SRO Applicants, the Administrator, and the 

Processors; affiliates, employees, and agents of the 

Operating Committee, a Member, the Administrator, 

and the Processors; any third parties invited to 

attend meetings of the Operating Committee or 

subcommittees; and the employers of Non-SRO 

Voting Representatives. Covered Persons do not 

include staff of the SEC.’’ 

105The term ‘‘Covered Persons’’ is also referred to 

in Section 1.1(l) (‘‘Confidential Information’’) of 

Article I of the CT Plan. 

106As proposed, Section 1.1(z) of Article I defines 

the term, ‘‘Executive Session,’’ as a meeting of the 

Operating Committee pursuant to Section 4.4(g), 

which includes SRO Voting Representatives, 

Member Observers, SEC staff, and other persons as 

deemed appropriate by the SRO Voting 

Representatives. 

107As proposed, Section 1.1(oo) of Article I 

defines the term ‘‘Member Observer’’ as any 

individual, other than a Voting Representative, that 

a Member, in its sole discretion, determines is 

necessary in connection with such Member’s 

compliance with its obligations under Rule 608(c) 

of Regulation NMS to attend Operating Committee 

and subcommittee meetings.’’ 

108The term ‘‘Member Observer’’ is also referred 

to in Section 1.1(z) (‘‘Executive Session’’) of Article 

I of the CT Plan. 

109The term ‘‘Highly Confidential Information’’ is 

also referred to in Section 1.1(l) (‘‘Confidential 

Information’’), and Section 1.1(kkk) (‘‘Public 

Information’’) of Article I of the CT Plan. 

110The term, ‘‘Party to a Proceeding,’’ is also 

referred to in Section 1.1(kk) (‘‘Losses’’) of Article 

I of the CT Plan. 

111As proposed, Section 1.1(eee) of Article I 

defines the term, ‘‘Party to a Proceeding,’’ as a 

‘‘Company Indemnified Party that is, was, or is 

threatened to be made, a party to a Proceeding, or 

is involved in a Proceeding, by reason of the fact 

that such Company Indemnified Party is or was a 

Member and/or an SRO Voting Representative.’’ 

112See Article II, Section 2.1 of the CT Plan. 

113See Article III, Section 3.1 of the CT Plan. The 

names and addresses of each Member are set forth 

in Exhibit A to the CT Plan. 

114Section 1.1(yyy) of Article I of the proposed 

CT Plan defines the term ‘‘System’’ as ‘‘all data 

processing equipment, software, communications 

facilities, and other technology and facilities, 

utilized by the Company or the Processors in 

connection with the collection, consolidation, and 

dissemination of Transaction Reports, Quotation 

Information, and other information concerning 

Eligible Securities.’’ 

115See Article II, Section 2.4 of the CT Plan. 

finds that it is appropriate to modify 

several of the proposed definitions.101

First, for the reasons discussed below 

in Section II.C.11(a) of this Order, the 

Commission is expanding the definition 

of ‘‘Company Indemnified Party,’’ 102 set 

forth in Article I, Section 1.1(k) and 

referred to in Article XII, Section 12.2, 

Section 12.3, and Section 12.4 of the CT 

Plan,103 to include Non-SRO Voting 

Representatives. 

Second, for the reasons discussed 

below in Section II.C.5(k)(iii) of this 

Order, the Commission is modifying 

Article I, Section 1.1(n), of the CT 

Plan—the proposed definition of 

‘‘Covered Persons’’ 104—to define the 

phrase ‘‘representatives of the 

Members’’ to include SRO Voting 

Representatives, alternate SRO Voting 

Representatives, and Member Observers, 

to expand the definition of Covered 

Persons to include SRO Applicant 

Observers, and to delete the phrase, 

‘‘and the employers of Non-SRO Voting 

Representatives.’’ The term, Covered 

Persons, is referred to in Section 4.11 of 

Article IV of the CT Plan and Exhibit C 

to the CT Plan.105

Third, for the reasons discussed 

below in Section II.C.5(d)(iii) of this 

Order, the Commission is modifying the 

definition of ‘‘Executive Session,’’ 106 set 

forth in Article I, Section 1.1(z), to 

require that the other persons as deemed 

appropriate to attend Executive Session 

will be determined by ‘‘majority vote 

of’’ the SRO Voting Representatives. The 

term ‘‘Executive Session’’ is referred to 

in Article IV, Section 4.2(d), Section 

4.3(c), and Section 4.4(g) of the CT Plan 

and Exhibit C to the CT Plan. 

Fourth, for the reasons discussed 

below in Section II.C.5(j)(ii) of this 

Order, the Commission is modifying the 

definition of ‘‘Member Observer,’’ 107 set 

forth in Article I, Section 1.1(oo), to 

require that a Member Observer be an 

employee of a Member or any attorney 

to a Member, and to provide that a 

Member’s designation of a Member 

Observer is subject to the limitation 

contained in Article IV, Section 

4.10(b)(i) of the CT Plan. The term 

‘‘Member Observer’’ is referred to in 

Article IV, Section 4.4 and Section 4.7 

of the CT Plan and Exhibit C to the CT 

Plan.108

Fifth, for the reasons discussed below 

in Section II.C.5(k)(ii) of this Order, the 

Commission is modifying the definition 

of ‘‘Highly Confidential Information,’’ as 

set forth in Article I, Section 1.1(ii),109

to replace the phrase, ‘‘personnel 

matters’’ with the phrase ‘‘personnel 

matters that affect the employees of the 

SROs or the Company.’’ The term 

‘‘Highly Confidential Information’’ is 

referred to in Article IV, Section 4.4 and 

Section 4.10 of the CT Plan and Exhibit 

B to the CT Plan. 

Finally, for the reasons discussed 

below in Section II.C.11(a) of this Order, 

the Commission is modifying Section 

1.1(eee) of Article I of the CT Plan, 

referred to in Article XII, Section 12.2 of 

the CT Plan,110 to expand the definition 

of the term ‘‘Party to a Proceeding,’’ 111

to include Non-SRO Voting 

Representatives. 

Except for the modifications 

identified above, the Commission is 

approving Article I of the CT Plan as 

proposed. 

3. Organization of LLC 

The SROs propose to organize the 

new NMS plan for consolidated equity 

market data in the form of a Delaware 

limited liability company pursuant to a 

limited liability company agreement, 

entitled the Limited Liability Company 

Agreement (‘‘LLC Agreement’’) of CT 

Plan LLC (‘‘Company’’ or ‘‘LLC’’).112

The Members (i.e., the equity owners) of 

the LLC will be the 17 national 

securities exchanges for equities and 

FINRA,113 each of which will be a 

‘‘Participant’’ of the CT Plan as an 

effective NMS plan for the 

dissemination of consolidated equity 

market data. 

The CT Plan states that the purposes 

of the LLC are to engage in the following 

activities on behalf of the Members: (i) 

The collection, consolidation, and 

dissemination of Transaction Reports, 

Quotation Information, and such other 

information concerning Eligible 

Securities as the Members shall agree as 

provided therein; (ii) contracting for the 

distribution of such information; (iii) 

contracting for and maintaining 

facilities to support any activities 

permitted in the LLC Agreement and 

guidelines adopted thereunder, 

including the operation and 

administration of the System; 114 (iv) 

providing for those other matters set 

forth in the LLC Agreement and in all 

guidelines adopted thereunder; (v) 

operating the System to comply with 

Applicable Laws; and (vi) engaging in 

any other business or activity that now 

or thereafter may be necessary, 

incidental, proper, advisable, or 

convenient to accomplish any of the 

foregoing purposes and that is not 

prohibited by the Delaware Limited 

Liability Company Act (‘‘Delaware 

Act’’), the Act, or other Applicable 

Law.115 The LLC Agreement itself, 

including its appendices, is the CT Plan. 

Under the CT Plan, the governing body 


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116See Article IV, Section 4.1(a) of the CT Plan. 

117See Transmittal Letter, supra at 2. 

118See id. 

119See Data Boiler Letter I, supra note 31, at 4, 

23, 25, 49; MFA Letter, supra note 30, at 1–2, 3; 

RBC Letter, supra note 30, at 10; BMO Letter II, 

supra note 30, at 2. 

120 Data Boiler Letter I, supra note 31, at 25. This 

commenter also states that because of CT Plan’s role 

and public purpose, it should be a non-profit rather 

than LLC. See id. at 24. The commenter opines that 

a non-profit structure would be ‘‘better than an LLC 

in preserving an independent status when dealing 

with the establishment of fees, manners in entering 

into contracts with an Administrator and 

Processor(s), and other applicable policies and 

procedures. . . .’’ Id. at 19; see also Data Boiler 

Letter II, supra note 101, at 2. 

121See Data Boiler Letter I, supra note 31, at 21, 

24, 30; see also RBC Letter, supra note 30, at 10. 

122MFA Letter, supra note 30, at 3. 

123See MFA Letter, supra note 30, at 1–2 (stating, 

CT Plan as proposed is likely to ‘‘preserve the 

misaligned incentives that gave rise to the Order.’’); 

see also BMO Letter II, supra note 30, at 2. 

124MFA Letter, supra note 30, at 3. 

125See id. at 2. 

126See id. 

127See Data Boiler Letter I, supra note 31, at 25. 

128 Virtu Letter, supra note 30, at 5. 

129See Nasdaq Letter I, supra note 20, at 14. 

130 Id. at 14–15. 

131As noted above, however, the terms of the CT 

Plan shall not be construed to limit or diminish the 

obligations and duties of the Members of the LLC 

as SROs under the federal securities laws. See text 

accompanying note 99, supra. 132See Securities Exchange Act Release No. 

79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) 

(Order Approving the National Market System Plan 

Governing the Consolidated Audit Trail). 133See Securities Exchange Act Release No. 

61367 (Jan. 15, 2010), 75 FR 3765 (Jan. 22, 2010) 

(Notice of Immediate Effectiveness of Proposed 

Amendment To Revise the Plan for Reporting of 

Consolidated Options Last Sale Reports and 

Quotation Information To Serve as the Operating 

Agreement for OPRA LLC). 

of the LLC would be the Operating 

Committee, which would comprise 

representatives of the Members and the 

Non-SRO Voting Representatives.116

In their Transmittal Letter, the SROs 

assert that, while the Governance Order 

requires Operating Committee approval 

for actions other than the selection of 

Non-SRO Voting Representatives and 

the decision to enter into Executive 

Session, certain provisions of the CT 

Plan that concern solely the operation of 

the LLC as an LLC and that are 

unrelated to consolidation and 

distribution of equity market data 

should require only a majority vote of 

the Members. Specifically, the SROs 

propose that the following actions 

require only a majority vote of the 

Members: (1) The selection of Officers of 

the LLC (other than the Chair and 

Secretary), if needed, and (2) certain 

decisions concerning the operation of 

the LLC as an LLC and approval of 

amendments to LLC-related provisions 

of the CT Plan, including provisions 

related to indemnification, dissolution 

of the LLC, and tax-related matters.117

The SROs assert that neither of these 

topics would affect the consolidation 

and distribution of equity market data 

and that, therefore, the Members should 

have the sole authority to make 

decisions related to these topics, with 

Commission approval where 

necessary.118

Several commenters raise concerns 

with the proposed LLC structure and the 

Members’ exclusive powers 

thereunder.119 One commenter states 

that the LLC structure is ‘‘flawed’’ and 

‘‘defies America’s ‘Free Enterprise’ 

concept.’’ 120 The commenter further 

states that, under the LLC structure 

proposed, the Members of the LLC will 

retain control over the actions under the 

CT Plan.121 Another commenter asserts 

that the CT Plan ‘‘appears perfectly 

designed to facilitate the continued 

neglect of the distribution of 

consolidated market data in order to 

benefit the sale of SROs’ proprietary 

market data feeds,’’ 122 and states that 

the CT Plan would allow the SROs to 

prioritize the sale of their proprietary 

market data products over the interests 

and statutory purposes of the CT 

Plan.123 This commenter asserts that the 

Plan ‘‘incentivizes the SROs to run the 

Plan and the LLC poorly to the extent 

they believe it is in their self-interest’’ 

and there is ‘‘no downside for an SRO 

to act in its self-interest contrary to the 

Plan as they are exculpated in taking 

any such action.’’ 124 This commenter 

states that it fears that the CT Plan 

structure will not promote the goals of 

Section 11A, given the absence of any 

obligations on the SROs to operate the 

plan consistent with its statutory 

purpose,125 and suggests that a balance 

must be struck with the principle of 

creating a governing arrangement that is 

reasonably designed to ensure that the 

CT Plan will carry out its statutory 

purpose.126

One commenter states that the CT 

Plan does not include all of the 

necessary provisions for an LLC 

agreement to function appropriately as 

an NMS plan, but does not provide 

further details about what is missing.127

Another commenter states that more 

detail needs to be provided on the types 

of decisions that would fall under ‘‘the 

operation of the CT Plan as an LLC’’ and 

‘‘modifications to the LLC-related 

provisions of the CT Plan’’ in order to 

ensure that non-SRO representatives 

have an opportunity to participate in 

any material decisions related to the 

regulatory operations of the CT Plan.128

Another commenter, however, 

supports the LLC structure as proposed, 

arguing that the Non-SRO Voting 

Representatives do not need to be 

members of the LLC in order to fulfill 

their role on the Operating 

Committee,129 and that providing the 

Non-SRO Voting Representatives with 

an economic interest in the CT Plan is 

inappropriate because ‘‘it would 

provide individuals with a claim on 

revenues that they did nothing to 

generate and expose them to funding 

obligations that they would not be 

prepared to support.’’ 130

The Governance Order did not specify 

the form or structure of the plan, and for 

the reasons discussed below, the 

Commission finds that it is appropriate 

for the SROs to organize this NMS plan 

as an LLC agreement. Foremost, an LLC 

agreement provides a formal legal 

structure through which the SROs will 

fulfill their obligations with respect to 

consolidated equity market data, which 

will necessarily entail, among other 

things, entering into contracts with the 

Administrator and the Processors, as 

well as, in all likelihood, outside 

counsel, accountants, and other parties. 

The Commission believes that 

structuring the CT Plan as an LLC will 

reduce ambiguities with respect to 

rights and obligations related to such 

contracts and with respect to the 

financial rights responsibilities of each 

SRO to the CT Plan and to each other.131

Moreover, the use of an LLC structure 

for a NMS plan is not novel. The most 

recent NMS plan approved by the 

Commission, CAT NMS Plan, employs 

an LLC structure,132 as does the Options 

Price Reporting Authority Plan (‘‘OPRA 

Plan’’),133 and the Commission does not 

believe that it is necessary to prescribe 

a different legal structure here. 

As described above, some 

commenters are concerned that the LLC 

Agreement as proposed would allow the 

SROs to continue to act exclusively in 

their own self-interest, rather than in the 

interest of the Plan, as significant 

powers would rest exclusively with the 

SROs. The Commission, however, does 

not believe that the choice of an LLC 

structure over other structures for the 

CT Plan will permit the SROs to act 

exclusively in their own self-interest. 

First, the terms of the LLC agreement 

must be consistent with the regulatory 

obligations of the SROs as set by the 

federal securities laws and regulations, 

and SROs also have direct obligations 

under the federal securities laws and 

regulations. And second, as required by 

the Governance Order, the CT Plan 

provides Non-SRO Voting 

Representatives with voting rights on 

the Operating Committee that is 

responsible for managing the activities 


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134 Governance Order, supra note 8, 85 FR at 

28707, 28715–16. 

135See, e.g., Governance Order, supra note 8, 85 

FR at 28707. 

136See Data Boiler Letter I, supra note 31, at 25 

137See Article III, Section 3.2(a) of the CT Plan. 

138See id. 

139See Article III, Section 3.2(b) of the CT Plan. 

The proposed CT Plan provides that Participants of 

the CQ Plan, CTA Plan, and UTP Plan are not 

required to pay the Membership Fee. See Article III, 

Section 3.2(c) of the CT Plan. 

140See Article III, Section 3.3 of the CT Plan. 

141Any withdrawal will not be effective until an 

amendment to the Agreement is approved by the 

Commission. See Article III, Section 3.4(c) of the CT 

Plan. 

142See Article III, Section 3.4(a) of the CT Plan. 

143See Article III, Section 3.4(b) of the CT Plan. 

Article III, Section 3.5 of the CT Plan provides that 

a Member’s bankruptcy under Section 18–304 of the 

Delaware Act shall not itself cause a withdrawal of 

such Member from the Company. 

144See Article III, Section 3.4(d)(i) of the CT Plan. 

145See Article III, Section 3.4(d)(ii) of the CT 

Plan. 

146See Article III, Section 3.7(d) of the CT Plan. 

of the CT Plan, which will provide a 

means to mitigate the inherent conflicts 

of interests between the SROs’ 

‘‘collective responsibilities in 

overseeing the Equity Data Plans and 

their individual interest in maximizing 

the viability of proprietary data 

products that they sell to market 

participants.’’ 134 Though one 

commenter suggests that a non-profit 

structure for the CT Plan would better 

ensure independence in decisions 

relating to fees and administrator 

contracts than, for example, an LLC, the 

Commission believes that the 

requirement of the Governance Order 

that non-SROs have a vote on matters 

before the Operating Committee, 

together with the SROs’ obligations 

under the federal securities laws and 

regulations, is sufficient at this time to 

mitigate conflicts of interests in making 

such decisions, regardless of the 

corporate structure used. 

Moreover, the Commission is 

modifying certain other provisions of 

the CT Plan to help ensure that the CT 

Plan meaningfully includes non-SROs 

in Operating Committee decisionmaking, consistent with the Governance 

Order.135 Each of the following 

modifications is discussed in greater 

detail below. 

First, as discussed below in Section 

II.C.5(d)(iii), the Commission is 

modifying the CT Plan to limit the 

circumstances under which the SRO 

Voting Representatives may meet 

outside the presence of the Non-SRO 

Voting Representatives in Executive 

Session. Second, as discussed below in 

Section II.C.5(g)(iii), the Commission is 

modifying the CT Plan to limit the 

topics that may be addressed in a legal 

subcommittee without the Non-SRO 

Voting Representatives present and to 

require certain records of legal 

subcommittee meetings be kept to 

enhance transparency and 

accountability regarding the use of that 

subcommittee. Third, as discussed 

below in Section II.C.5(h), the 

Commission is modifying the CT Plan to 

require that the creation and assignment 

of any officer positions and duties be 

subject to a vote of the Operating 

Committee, rather than by a majority 

vote of the SROs. Fourth, as discussed 

below in Section II.C.5(g)(iii), the 

Commission is modifying the CT Plan to 

apply the Exculpation provisions 

available to the SROs to Non-SRO 

Voting Representatives. And fifth, as 

discussed below in Section II.C.12(e), 

the Commission is modifying the CT 

Plan to remove the provision that would 

allow the SROs to modify Article IX 

(Allocations), Article X (Records and 

Accounting; Reports), Article XI 

(Dissolution and Termination), and 

Article XII (Exculpation and 

Indemnification) by a majority vote of 

Members. 

Finally, one commenter states that the 

CT Plan does not include all of the 

necessary provisions for an LLC 

agreement to function appropriately as 

an NMS plan.136 The commenter does 

not, however, identify the areas in 

which it believes the agreement is 

deficient. 

For the reasons stated above, the 

Commission finds that it is appropriate 

for the CT Plan to be structured as an 

LLC Agreement, and is approving 

Article II as proposed. 

4. Membership (Obligations and 

Liabilities) 

Pursuant to Article III, Section 3.2(a) 

of the CT Plan, any national securities 

association or national securities 

exchange whose market, facilities, or 

members, as applicable, trades Eligible 

Securities may become a Member by (i) 

providing written notice to the 

Company; (ii) executing a joinder to the 

LLC Agreement; (iii) paying a 

Membership Fee to the Company as 

determined pursuant to Section 3.2(b) 

(‘‘Membership Fee’’); and (iv) executing 

a joinder to any other agreements to 

which all of the other Members have 

been made party in connection with 

being a Member.137 Membership Fees 

paid will be added to the general 

revenues of the Company.138

Article III, Section 3.2 of the CT Plan 

specifies that the factors that will be 

considered in determining a 

Membership Fee are: (1) The portion of 

costs previously paid by the Company 

(or by the Members prior to the 

formation of the Company) for the 

development, expansion and 

maintenance of the System which, 

under generally accepted accounting 

principles (‘‘GAAP’’), would have been 

treated as capital expenditures and 

would have been amortized over the 

five years preceding the admission of 

the new member; and (2) an assessment 

of costs incurred and to be incurred by 

the LLC for modifying the System or any 

part thereof to accommodate the new 

member, which costs are not otherwise 

required to be paid or reimbursed by the 

new Member.139 The CT Plan prohibits 

a Member’s transfer of its Membership 

Interest in the LLC, except in 

connection with the withdrawal of a 

Member from the LLC, as discussed 

below.140

Pursuant to Article III, Section 3.4, 

any Member may voluntarily withdraw 

from the LLC by: (i) Providing not less 

than 30 days’ prior written notice of 

such withdrawal to the LLC, (ii) causing 

the LLC to file with the Commission an 

amendment to effectuate the 

withdrawal,141 and (iii) transferring 

such Member’s Membership Interest to 

the LLC.142 If a Member ceases to be a 

registered national securities association 

or registered national securities 

exchange, that Member automatically 

withdraws from the LLC.143 Section 3.4 

further provides that after withdrawal 

from Membership, the Member will 

remain liable for any obligations arising 

prior to withdrawal.144 A withdrawing 

Member is entitled to receive a portion 

of the Net Distributable Operating 

Income attributable to the period prior 

to the Member’s withdrawal.145

Pursuant to proposed Sections 

3.4(d)(iii) and (iv), a Member that has 

withdrawn from the LLC will no longer 

have the right to have its Transaction 

Reports, Quotation Information, or other 

information disseminated over the 

System, and the Capital Account of that 

Member will not be allocated profits 

and losses of the LLC. In addition, 

Article III of the CT Plan provides that 

no Member, unless authorized by the 

Operating Committee, has the authority 

to represent the LLC or to make any 

expenditure on behalf of the LLC; 

provided, however, that the Tax Matters 

Partner may represent, act for, sign for 

or bind the LLC as permitted under 

Sections 10.2 and 10.3 of the LLC 

Agreement.146 In addition, the CT Plan 

provides that, following the Operative 

Date, each Member will be required to 

comply with the provisions of the Plan 


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147See Article III, Section 3.6 of the CT Plan. 

148See, e.g., CAT NMS Plan, Article III. 

149However, in the event that the Processors or 

the Administrator have not been paid pursuant to 

the terms of the Processor Services Agreements and 

Administrative Services Agreement, the proposed 

CT Plan requires each Member to return to the 

Company its pro rata share of any moneys 

distributed to it by the Company until an aggregated 

amount equal to the amount owed has been 

recontributed to the Company. The Company will 

pay the amount(s) owed. See Article III, Section 

3.7(b) of the CT Plan. 

150See Article III, Section 3.7(c) of the CT Plan. 

The proposed CT Plan further provides that if any 

court of competent jurisdiction holds that any 

Member is obligated to make any such payment, 

such obligation shall be the obligation of such 

Member and not of the Operating Committee. See 

id. 

151See Notice, supra note 3, 85 FR at 64568 

(Question 11). 152See RBC Letter, supra note 30, at 9. This 

commenter recommends that the CT Plan should 

make clear that the liability protection and 

indemnification provisions apply to non-SRO 

representatives acting in their role on the Operating 

Committee. See id. at 10. See also infra Section 

II.C.11 (discussing modification to the proposed CT 

Plan to provide indemnity to the Non-SRO Voting 

Representatives). 

153See Virtu Letter, supra note 30, at 3. 154 Id. 155See Data Boiler Letter I, supra note 31, at 24. 156See id. 157See NYSE Letter I, supra note 18, at 37. This 

commenter points to Section 4.8 of the CAT NMS 

Plan as precedent for including the limitation on 

liability provisions at Section 3.7(b) and (e) and 

states that, similar to the proposed CT Plan, the 

CAT NMS Plan extends liability protection and 

indemnification coverage only to SROs that created 

the LLC. See id. at 37–38. Another commenter notes 

that the OPRA Plan is an LLC with similar 

limitation on liability provisions. See Nasdaq Letter 

I, supra note 20, at 16 n.26. 

158See NYSE Letter I, supra note 18, at 38. 

159See Nasdaq Letter I, supra note 20, at 15 

(citing Section 18–303 of the Delaware Act). 

160 Id. at 16. 161 Id. 162See RBC Letter, supra note 30, at 9; Virtu 

Letter, supra note 30, at 3; see also Data Boiler 

Letter I, supra note 31, at 24. 163See supra Section II.C.1(b). 164See NYSE Letter I, supra note 18, at 38. 

and enforce compliance with the Plan 

by its members.147

These provisions relating to joining 

and withdrawing from the CT Plan as a 

Member and enforcing compliance with 

the Plan are similar to those existing in 

other NMS Plans.148 The Commission 

received no comments addressing these 

provisions. Accordingly, the 

Commission is approving Section 3.4, as 

proposed. 

Article III of the CT Plan also sets 

forth the obligations and liabilities of 

the Members. Article III, Section 3.7(b) 

provides that Members will not be 

required to contribute capital or make 

loans to the LLC, nor will Members have 

any liability for the debts and liabilities 

of the LLC.149 This section also states 

that it is the intent of the Members that 

no distribution to any Member pursuant 

to the LLC Agreement will be 

considered a return of money or other 

property paid or distributed in violation 

of the Delaware Act, and that any such 

payment will be considered a 

compromise within the meaning of 

Delaware Act, and the Member 

receiving any payment will not be 

required to return any payment to any 

person, provided that a Member will be 

required to return any payment made 

due to a clear accounting or similar 

error or as otherwise provide in Section 

3.7(b).150 Finally, Section 3.7(e) 

provides that no Member owes any duty 

(fiduciary or otherwise) to the LLC or to 

any other Member other than the duties 

expressly set forth in the LLC 

Agreement. 

In the Notice, the Commission sought 

comment on Article III, Section 3.7 and 

the provision that states that SROs shall 

have no liability for the debt, liabilities, 

commitments, or any other obligations 

of the CT Plan or for any losses of the 

CT Plan. The Commission asked if the 

provision is consistent with the SROs’ 

obligations to, and purposes of, the CT 

Plan. Several commenters express 

concern with this provision.151 One 

commenter states that the Members 

should not receive special liability 

protections.152 Another commenter 

states that the liability carve-out for 

SROs is too broad.153 This commenter 

states that the provisions in Article III, 

Section 3.7 would ‘‘significantly 

increase the likelihood that Plan 

activities would be contrary to the role 

and public purpose of the Plan as part 

of the national market system,’’ thereby 

creating a conflict of interest with SROs’ 

obligations with respect to the Plan 

under federal securities rules and 

regulations.154 Another commenter 

views the provisions of Article III, 

Section 3.7 as allowing the LLC to have 

upside profit, but relieving the SROs of 

responsibility for any debt, liabilities, 

commitment, or any other 

obligations.155 This commenter further 

states that the SROs have significant 

influence on how the LLC operates 

through control of the Operating 

Committee, but no consequence for that 

control, and recommends that Article 

III, Section 3.7(e) be removed from the 

CT Plan.156

In contrast, one commenter states that 

the liability protections in Article III, 

Sections 3.7(b) and (e) are standard 

protections for the members of an LLC 

and are commonly included in LLC 

agreements.157 This commenter further 

argues that the Non-SRO Voting 

Representatives do not need similar 

protection since they are not members 

of the LLC.158 Another commenter states 

that the provisions in Article III are 

consistent with Delaware business 

organization law.159 This commenter 

also argues that including the principle 

that no Member of the CT Plan is liable 

for the obligations of the CT Plan ‘‘is not 

an attempt to avoid appropriate funding 

for the CT Plan,’’ 160 and states that the 

requirements in CT Plan that each 

Member make capital contributions for 

‘‘reasonable administrative and other 

reasonable expenses’’ of the CT Plan 

and that each Member return its pro rata 

share of distributions from the CT Plan 

in the one year period prior to a default 

in payment to the Processors or 

Administrator are evidence of 

appropriate funding responsibilities for 

the CT Plan.161

While certain commenters object to 

the provisions that would absolve the 

Members of financial liabilities incurred 

by the LLC, arguing that the provisions 

are too broad and would allow the 

Members to act in their own selfinterest, contrary to the purpose of the 

CT Plan,162 after careful consideration 

of the comments, the Commission is not 

modifying these provisions. As the 

Commission stated above, the SROs’ 

regulatory obligations pursuant to the 

CT Plan flow from the federal securities 

laws and regulations, and the 

Commission has, as noted above, 

modified the language of the Recitals of 

the CT Plan to reiterate that the terms 

of the CT Plan cannot act to diminish 

those obligations.163 Further, the 

language proposed by the SROs for 

Section 3.7(b) states that an SRO shall 

not have liability to the CT Plan as a 

Member except as provided in the 

Agreement or ‘‘Applicable Law’’ (a 

defined term in the CT Plan), which 

means that the express terms of this 

provision of the LLC agreement do not 

contemplate limiting any regulatory 

obligations SROs might have under the 

federal securities laws and regulations 

with respect to the operation of the CT 

Plan. Finally, the Commission does not 

believe that it is necessary to extend 

these provisions to apply to Non-SRO 

Voting Representatives, as one 

commenter suggests,164 because while 

these persons serve on the Operating 

Committee, they have no financial 

obligation under the CT Plan and thus 

do not require the protections afforded 

to the Members in Article III. 

Accordingly, the Commission is 

approving Article III, Section 3.7 as 

proposed. 

In the Notice, the Commission 

specifically sought comment on Article 

III, Section 3.7(e) of the CT Plan, which 

absolves Members of any duty to the 


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165See Notice, supra note 3, 85 FR at 64568 

(Question 12). 166See MFA Letter, supra note 30, at 2; RBC 

Letter, supra note 30, at 9. 167MFA Letter, supra note 30, at 2 (also stating 

that the SROs cannot both disclaim any duty to the 

LLC and maintain the current level of control over 

the LLC if the CT Plan is to function properly.). 168See id. 169See id. 170See RBC Letter, supra note 30, at 9. 

171See Nasdaq Letter I, supra note 20, at 16–17. 

172See id. 

173See id. 

174See id. 

175 Id. 

176See id. at 16. This commenter further states 

that ‘‘since the Plan is a product of federal law, it 

would be inappropriate to subject its Members to 

state fiduciary duties, as this would give rise to a 

potential conflict between state and federal law.’’ 

Id. 

177See id. at 17. 

178 Id. at 17; see also NYSE Letter I, supra note 

18, at 7. 

179See supra Section II.C.1(b). 

180 15 U.S.C. 78k–1(c)(1)(B). 

181See MFA Letter, supra note 30, at 2; RBC 

Letter, supra note 30, at 9. 

182See supra Section II.C.1(b). 

183See Nasdaq Letter I, supra note 20, at 16–17. 

184See Article IV, Section 4.1(a) of the CT Plan. 

185See Article IV, Section 4.1(a)(i) of the CT Plan. 

186See Article IV, Section 4.1(a)(ii) of the CT 

Plan. This section further provides that any 

expenditure for professional services paid by the 

Company must be authorized by the Operating 

Committee and must be for activities consistent 

with the CT Plan. See id. 

187See Article IV, Section 4.1(a)(iii) of the CT 

Plan. 

188See Article IV, Section 4.1(a)(iv) of the CT 

Plan. See also infra Section II.C.6. 

LLC or other Members, and on the 

provision’s potential impact on the CT 

Plan’s responsibilities for the collection, 

processing, and dissemination of equity 

market data.165 Two commenters object 

to the provision that relieves Members 

of a duty (fiduciary or otherwise) to the 

CT Plan or each other.166 One of these 

commenters asserts that the SROs’ 

disclaimer of duty or obligation to the 

CT Plan appears to be a ‘‘complete 

abdication’’ of responsibility to ensure 

that the Plan carries out its intended 

function, and that it is ‘‘unclear’’ why 

an SRO’s representative to the CT Plan 

would not have a fiduciary duty to the 

LLC.167 This commenter states that the 

SROs should, at a minimum, establish a 

duty in the CT Plan to promote the 

plan’s function of assuring the 

widespread availability of equity market 

data on terms that are fair and 

reasonable, consistent with statutory 

requirements, or to promote the 

interests of fair and orderly markets and 

the protections of investors and the 

public interest.168 This commenter 

encourages the SROs to adopt a 

fiduciary duty as well as to affirmatively 

articulate the duties that are owed to the 

CT Plan.169 Another commenter 

similarly believes that the SROs should 

assume fiduciary duties to the LLC.170

One commenter disagrees that the CT 

Plan should impose a fiduciary duty on 

Members.171 This commenter states 

that, while individuals or entities that 

manage a limited liability company may 

have fiduciary duties under Delaware 

law, a member generally does not have 

fiduciary duties so long as it does not 

exercise control over the company.172

This commenter argues that under the 

CT Plan, the Operating Committee, not 

the Members, have managerial 

responsibility for the operations of the 

CT Plan and the Members only have 

limited rights to take actions.173 Further, 

the commenter explains, no individual 

Member of the CT Plan has the ability 

to control the actions of the CT Plan.174

The commenter concludes that ‘‘it is 

unlikely that under Delaware law the 

Members of the CT Plan, when acting in 

such capacity, would owe fiduciary 

duties to the CT Plan or the 

Members.’’ 175 This commenter also 

argues that the proposed language of the 

CT Plan has no effect on the SROs’ 

obligations under federal securities laws 

and that it is those obligations, rather 

than the SROs’ obligations to the CT 

Plan and each other, that will ensure 

that the SROs comply with their 

responsibilities regarding the 

dissemination of real-time consolidated 

equity market data.176

With respect to providing a disclaimer 

of fiduciary duty for Non-SRO Voting 

Representatives, this commenter states 

that there would be some logic in 

expanding the disclaimer of fiduciary 

duties to cover Non-SRO Voting 

Representatives, but that this would not 

address the discrepancy between the 

federal law obligations of the Members 

and the Non-SRO Voting 

Representatives.177 This commenter 

states that Rule 608 of Regulation NMS 

‘‘would require the Members to comply 

with the Plan, and enforce compliance 

by their broker members, but that 

neither that rule, nor any other 

provision of law, imposes 

corresponding duties on the Non-SRO 

Voting Representatives.’’ 178

The Commission agrees that the 

proposed language of the CT Plan has 

no effect on the SROs’ obligations under 

the federal securities laws, and that it is 

those obligations than will ensure 

compliance with SRO responsibilities 

regarding consolidated equity market 

data. As discussed above,179 any 

disclaimer of fiduciary duty to the LLC 

cannot dilute, diminish, or otherwise 

alter the Members’ regulatory 

responsibilities under the federal 

securities laws and rules because, as 

SROs and pursuant to the requirements 

under the national market system, the 

Members are prohibited from acting in 

contravention of Commission rules and 

regulations, which include rules for the 

protection of investors to ensure the 

‘‘prompt, accurate, reliable, and fair 

collection, processing, distribution, and 

publication of information with respect 

to quotations for and transactions in 

such securities and the fairness and 

usefulness of the form and content of 

such information.’’ 180 However, the 

Commission understands the concerns 

raised by commenters that the terms of 

the CT Plan fail to impose any express 

duty on the Members to act to promote 

the purpose of the Plan and expressly 

disclaim any such duty.181 To address 

this concern, as discussed above, the 

Commission is modifying the terms in 

the CT Plan’s Recitals to explicitly state 

that no provision of the CT Plan shall 

be construed to limit or diminish the 

obligations of SRO Members to the CT 

Plan that arise pursuant to federal 

securities laws and regulations.182 The 

Commission is not, however, modifying 

the Plan to include a disclaimer of 

fiduciary duty for the Non-SRO Voting 

Representatives who serve on the 

Operating Committee, a possibility 

raised by one commenter,183 because 

Non-SRO Voting Representatives will 

not have the same legal obligations as 

the SRO Voting Representatives and 

because they may also have separate 

legal duties to their employers. 

5. Management of the LLC 

(a) Duties and Powers of the Operating 

Committee 

Article IV of the CT Plan establishes 

the overall governance structure for the 

management of the LLC. Article IV, 

Section 4.1(a) proposes that the LLC be 

managed by the Operating 

Committee.184 Article IV, Section 4.1 

also provides that the Operating 

Committee has the authority to take 

actions it deems necessary to 

accomplish the purposes of the LLC, 

including: (1) Proposing amendments or 

implementing policies and 

procedures; 185 (2) selecting, overseeing, 

specifying the role and responsibilities 

of, and evaluating the performance of 

the Administrator, the Processor, an 

auditor, and any other professional 

service providers; 186 (3) developing fair 

and reasonable fees for equity market 

data 187; (4) reviewing the performance 

of the Processor and ensuring public 

reporting of the Processors’ performance 

and other metrics and information about 

the processors; 188 (5) assessing the 

marketplace for equity data products 


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189See Article IV, Section 4.1(a)(v) of the CT Plan. 

190See Article IV, Section 4.1(a)(vi) of the CT 

Plan. 

191See Article IV, Section 4.1(a)(vii) of the CT 

Plan. 

192See Article IV, Section 4.1(a)(viii) of the CT 

Plan. 

193 Virtu Letter, supra note 30, at 3. 

194See id. 

195See id. 

196Nasdaq Letter I, supra note 20, at 17 (internal 

citations omitted). Another commenter similarly 

states that interpretation of the CT Plan is a 

decision for the SROs to make, not the Commission. 

See NYSE Letter I, supra note 18, at 38–39. 

197See Nasdaq Letter I, supra note 20, at 17–18. 

198RBC Letter, supra note 30, at 6. 

199See Virtu Letter, supra note 30, at 3. 

200 17 CFR 242.608(b)(2). As proposed, Article 

XIII, Section 13.5(b) of the CT Plan, would permit 

the Members to implement amendments that relate 

to the functioning of Company as an LLC. As 

discussed below, the Commission is modifying this 

provision such that all amendments to the CT Plan 

must be filed with the Commission. See supra 

Section II.C.12(e). 

201See RBC Letter, supra note 30, at 6. 

202See supra Recitals paragraph (d)(ii) (requiring 

that within four months of the Effective Date of the 

CT Plan, the Operating Committee file proposed 

fees). 

203 17 CFR 242.608(b)(2). 

204 Data Boiler Letter I, supra note 31, at 26. 

205See id. This commenter further states, ‘‘having 

members dominating the Legislative branch and 

assigning an ‘observer’ to scrutinize everything the 

Operating Committee may try to do, [would] indeed 

tie the hands of Executive branch.’’ Id. 

206See Virtu Letter, supra note 30, at 5; Data 

Boiler Letter I, supra note 31, at 29–30. 

207See Virtu Letter, supra note 30, at 5. 

208See id. 

and ensuring that the CT Feeds are 

priced in a manner that is fair and 

reasonable, and designed to ensure the 

widespread availability of CT Feeds 

data to investors and market 

participants 189; (6) designing a fair and 

reasonable formula to be applied by the 

Administrator for allocating revenue, 

and reviewing and revising the formula 

as needed; 190 (7) interpreting the LLC 

Agreement and its provisions; 191 and 

(8) other specific responsibilities 

provided for in the LLC Agreement.192

One commenter expresses general 

support for the provision of the CT Plan 

that states that the responsibilities of the 

Operating Committee include 

interpreting the LLC Agreement and its 

provisions, with the caveats that ‘‘the 

Non-SRO Voting Representatives have 

the opportunity to meaningfully 

participate in the process of interpreting 

a provision of the plan’’ 193 and that the 

CT Plan should provide more detail on 

what role the Non-SRO representatives 

would have with respect to such 

decisions.194 This commenter also 

recommends that the Operating 

Committee adopt policies and 

procedures distinguishing operational 

interpretations of the CT Plan from 

amendments required to be submitted to 

the Commission under Rule 608 of 

Regulation NMS.195

One commenter states that the 

Operating Committee has ‘‘full and 

complete control over the business and 

affairs of the CT Plan, including 

interpretations of the CT Plan.’’ 196 This 

commenter argues that any 

interpretation of the CT Plan would be 

subject to a discussion at a meeting of 

the Operating Committee and that the 

minutes of such a meeting would 

include sufficient detail to inform the 

public of the matters under discussion 

and the views expressed (without 

attribution).197 Another commenter 

states that the CT Plan’s language 

describing the power of the Operating 

Committee to ‘‘develop[ ] and 

maintain[ ] fair and reasonable Fees and 

consistent terms for the distribution, 

transmission, and aggregation of core 

data’’ is confusing and recommends that 

‘‘[i]f the intent of this language is to 

empower the Operating Committee to 

set fees, after public notice and 

comment, and subject to Commission 

approval, it should clearly say as 

much.’’ 198

In response to the comment 

addressing the Operating Committee’s 

authority to interpret the provisions of 

the CT Plan and stating that the NonSRO Voting Representatives should 

participate in any interpretations,199 the 

Commission notes that the terms of the 

CT Plan provide that the Non-SRO 

Voting Representatives, as members of 

the Operating Committee, will be able to 

participate in any discussions regarding 

interpretations and will have a vote on 

whether to adopt an interpretation. 

Further, the Commission believes that, 

while operational interpretations in 

order to implement the CT Plan are 

appropriately within the authority of the 

Operating Committee, any such 

interpretations must be consistent with 

terms of the CT Plan and may not in any 

way modify the CT Plan. Any change to 

a provision of the CT Plan would 

require an amendment pursuant to Rule 

608 of Regulation NMS.200

Another commenter argues that the 

provision granting power to the 

Operating Committee to develop and 

maintain fair and reasonable fees is 

confusing and suggests that the 

provision expressly state that the 

Operating Committee has the authority 

to set fees, after public notice and 

comment, and subject to Commission 

approval.201 The Commission does not 

believe such a clarification is necessary. 

Market Data Fees will be established at 

a later date as proposed amendments to 

the CT Plan.202 Rule 608(b) under 

Regulation NMS sets forth the 

requirements for amending an NMS 

plan,203 and includes specific 

provisions relating to establishing and 

amending fees set forth in an NMS plan. 

Therefore, the Commission does not 

believe that this requirement needs to be 

restated in the CT Plan. 

Finally, one commenter states that the 

Operating Committee should function as 

a legislature, with management to 

execute the Plan and ‘‘the SIP’s public 

purpose.’’ 204 This commenter further 

states that the diversified Operating 

Committee will be ill-equipped to run 

daily operation management functions 

to the detriment of the LLC.205 The 

terms of the proposed CT Plan do, 

however, contemplate that the 

Operating Committee will act as a 

general decision-making body, while the 

Administrator and the Processors will 

be responsible for the day-to-day 

operational decisions. 

For the reasons stated above, the 

Commission is approving Article IV, 

Section 4.1(a) as proposed. 

Article IV, Section 4.1(b) proposes to 

permit the Operating Committee to 

delegate all or part of its administrative 

functions to (1) a subcommittee; (2) one 

or more of the Members; (3) one or more 

Non-SRO Voting Representatives; or (4) 

any other Persons (including the 

Administrator), provided that a 

delegation would not convey the 

authority to take action on behalf of the 

CT Plan. 

Two commenters state that the CT 

Plan should clearly state the scope and 

nature of an ‘‘administrative 

function.’’ 206 One commenter states that 

it supports allowing administrative 

functions to be delegated, as long as the 

Non-SRO Voting Representatives have 

an opportunity to participate in the 

decision to delegate the matter and any 

delegation to an SRO Voting 

Representative or subcommittee 

controlled by SRO Voting 

Representatives is subject to an 

augmented majority vote of the 

Operating Committee.207 This 

commenter also expresses concern 

about delegating undefined 

administrative functions solely to SRO 

Voting Representatives.208 The second 

commenter expresses similar concerns 

and suggests that administrative 

functions should not be permitted to be 

delegated to a subcommittee composed 

only of either SRO Voting 

Representatives or Non-SRO Voting 

Representatives, and that both groups 

should be represented on any 


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209See Data Boiler Letter I, supra note 31, at 29– 

30. 

210See Nasdaq Letter I, supra note 20, at 22. 

211See id. 

212See NYSE Letter I, supra note 18, at 38–39. 

213See Virtu Letter, supra note 30, at 5. 

214See Data Boiler Letter I, supra note 31, at 26– 

27. 

215See Nasdaq Letter I, supra note 20, at 22. 

216For example, NYSE, NYSE American, NYSE 

Chicago, and NYSE National would be one SRO 

Group for purposes of the proposed CT Plan and 

would select one individual to represent the SRO 

Group on the Operating Committee. 

217Currently, the Non-Affiliated SROs are FINRA, 

IEX, LTSE, and MEMX. 

218See Article IV, Section 4.2(a) of the CT Plan. 

Each SRO Group and each Non-Affiliated SRO may 

designate an alternate individual or individuals 

who shall be authorized to vote on its behalf if the 

SRO Voting Representative is unable. Each SRO 

Voting Representative may serve as such at the 

discretion of the SRO Group or Non-Affiliated SRO 

that it represents. See id. 

219 Discussion of the allocation of SRO votes by 

SRO Group appears in Section II.C.5(c)(i), infra. 

220See Article IV, Section 4.2(b) of the CT Plan. 

221See IEX Letter, supra note 30, at 2; ICI Letter 

II, supra note 31, at 1; BMO Letter I, supra note 30, 

at 3; BMO Letter II, supra note 30, at 2. See also 

Letter from Kenneth E. Bentsen, Jr., President and 

CEO, SIFMA (June 9, 2021), at 2. 

222 IEX Letter, supra note 30, at 2 (quoting the 

Commission’s Governance Order, supra note 8, 85 

FR at 28707). 

223See BMO Letter I, supra note 30, at 3; BMO 

Letter II, supra note 30, at 2. 

224 Data Boiler Letter I, supra note 31, at 30. 

225Schwab Letter II, supra note 30, at 6. 

226See Cboe Letter, supra note 17, at 2, 3–4 

(arguing that only SROs have the authority to act 

jointly to file, amend, implement, and administer 

an NMS plan); NYSE Letter I, supra note 18, at 6– 

subcommittee to which administrative 

functions are delegated.209

One commenter rejects these 

concerns, explaining that there would 

be no delegation of the Operating 

Committee’s voting authority, but 

instead solely a delegation of the 

authority to implement a decision by 

the Operating Committee, to develop a 

proposal for Operating Committee 

consideration, or to perform other 

ministerial functions on the Operating 

Committee’s behalf.210 This commenter 

further explains that an Operating 

Committee vote is necessary for any 

delegation of administrative functions 

and that this should mitigate concerns 

about undue delegation of authority to 

an SRO Voting Representative or NonSRO Voting Representative.211 Finally, 

another commenter states that decisions 

relating to the administrative functions 

are for the SROs alone to make.212

The Commission agrees with 

commenters that the concept of 

‘‘administrative functions’’ of the 

Operating Committee should be limited 

to prohibit certain delegations of 

authority and is therefore modifying 

Section 4.1(b) to exclude from the 

functions that may be delegated those 

administrative functions to be 

performed by the independent 

Administrator pursuant to Section 6.1. 

The Commission finds that this 

modification is appropriate because the 

functions delegated to the independent 

Administrator, particularly those that 

involve administering Vendor and 

Subscribers contracts, performing 

audits, or assessing fees, necessarily 

involve access to sensitive information 

of significant commercial or competitive 

value and therefore raise heightened 

concerns about conflicts of interest that 

can be adequately addressed only if 

these functions are performed by the 

independent Administrator. 

In response to the comment that 

suggests that any delegation to an SRO 

Voting Representative or subcommittee 

controlled by SRO Voting 

Representatives should be subject to a 

vote of the Operating Committee,213 the 

Commission agrees and notes that the 

terms of the CT Plan state that 

delegations of administrative functions 

under this provision are subject to a 

vote of the Operating Committee. 

Additionally, in response to the 

comment that argues that administrative 

functions should not be delegated to a 

subcommittee composed only of either 

SRO Voting Representatives or NonSRO Voting Representatives,214 the 

Commission recognizes the concern that 

SRO Voting Representatives or NonSRO Voting Representatives could have 

exclusive control of an administrative 

function delegated under this provision. 

However, the Commission believes that 

this concern is mitigated by the 

requirement that a vote of the Operating 

Committee is required to approve any 

delegation of administrative functions. 

Further, the modification discussed 

above limits the types of functions that 

are eligible for delegation. The 

Commission agrees with the comment 

that states that a delegation under this 

provision does not convey any authority 

to take action.215 Such authority resides 

with the Operating Committee, and 

Article IV, Section 4.1(b) of the CT Plan 

permits the Operating Committee to 

delegate authority only to implement a 

decision by the Operating Committee, 

develop a proposal for Operating 

Committee consideration, or perform 

other ministerial functions on the 

Operating Committee’s behalf. 

For the reasons discussed above, the 

Commission is approving Section 4.1(b) 

as modified. 

Finally, Article IV, Section 4.1(c) 

provides that neither the Company nor 

the Operating Committee will have 

authority over any Member’s proprietary 

systems or the collection and 

dissemination of quotation or 

transaction information in Eligible 

Securities in any Member’s Market, or, 

in the case of FINRA, from FINRA 

Participants. The Commission received 

no comments on this provision of the 

CT Plan and is approving it as proposed. 

(b) Composition and Selection of the 

Operating Committee 

Article IV, Section 4.2 of the CT Plan 

addresses the composition and selection 

of the Operating Committee members. 

(i) SRO Voting Representatives 

Section 4.2(a) provides that each 

group of Members that are Affiliates (an 

‘‘SRO Group’’) 216 and each NonAffiliated SRO 217 will select an SRO 

Voting Representative to serve on the 

Operating Committee and vote on its 

behalf.218 The Commission is approving 

this Section as proposed.219

(ii) Non-SRO Voting Representatives 

(A) Inclusion of Non-SRO Voting 

Representatives 

Section 4.2(b) provides that Non-SRO 

Voting Representatives will also be 

permitted to serve and vote on 

Operating Committee matters.220

Several commenters express support for 

including Non-SRO Voting 

Representatives on the Operating 

Committee.221 One commenter states 

that the requirement for voting 

representation by a diverse set of 

stakeholders is ‘‘a core element of the 

Governance Order, with the purpose of 

reducing conflicts of interest and 

providing ‘more meaningful inclusion of 

key stakeholders’ views in New 

Consolidated Data Plan decision 

making.’’ 222 Another commenter 

similarly states that it supports 

expanding voting representation to nonSROs and having them participate as 

full voting members of the Operating 

Committee to allow non-SROs to have a 

role in the CT Plan’s decision-making 

process and therefore help address 

conflicts of interest.223 Another 

commenter states that allowing only 

SROs to have a vote ‘‘would impair [the] 

credibility of CT Plan as a public 

utility.’’ 224 Another commenter states 

that giving Non-SRO Voting 

Representatives a vote on the Operating 

Committee will ‘‘break the current SRO 

voting monopoly.’’ 225

Other commenters oppose the CT 

Plan’s provisions that grant non-SROs 

voting rights on the Operating 

Committee. Three commenters state that 

these provisions are contrary to Section 

11A of the Act.226 These commenters 


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7 (arguing that neither Section 11A nor Rule 

608(a)(3) authorize non-SROs to act jointly along 

with SROs with respect to NMS plans); Nasdaq 

Letter I, supra note 20, at 1–2 (attaching and 

incorporating by reference all arguments made by 

Petitioners in their opening brief challenging the 

Order). The Commission has responded to the 

arguments made by Nasdaq in its brief. See Brief for 

the Respondent, Securities and Exchange 

Commission, The Nasdaq Stock Market, et al. v. 

Securities and Exchange Commission (Case No. 20– 

1181) (DC Cir. 2020). 

227See Cboe Letter, supra note 17, at 2; Nasdaq 

Letter I, supra note 18, at 1–2. See also NYSE Letter 

I, supra note 18, at 6–7; NYSE Letter II, supra note 

19, at 3. 

228Cboe Letter, supra note 17, at 3. 

229See id. at 4. 

230See NYSE Letter I, supra note 18, at 7. 

231See id. 

232See id. at 7–8. 

233See NYSE Letter I, supra note 18, at 7 (‘‘While 

these individuals are intended to ‘represent’ each of 

the six enumerated categories of non-SRO market 

participants, such individuals would not even have 

the obligation to further the purportedly 

represented non-SROs’ interest nor the public 

interest when voting on the Operating Committee, 

leaving each free to act in his or her own personal 

self-interest.’’). 

234See Governance Order, supra note 8, 85 FR at 

28715–16. 

235See 15 U.S.C. 78k–1(a)(3)(B). 

236 Id. 

237See 15 U.S.C. 78k–1(c) (prohibiting any SRO 

‘‘securities information processor, broker or dealer’’ 

from collecting, processing, distributing, or 

publishing market data in contravention of 

Commission rules). 

238See Governance Order, supra note 8, 85 FR at 

28715–16. 

239 Id. at 28716. 

240See id. at 28706. 

241To the contrary, Section 11A expressly 

contemplates the involvement of non-SROs. See, 

e.g., Section 11A(b), 15 U.S.C. 78k–1(b) (regarding 

Securities Information Processors); Section 11A(c), 

15 U.S.C. 78k–1(c) (prohibiting any SRO ‘‘securities 

information processor, broker or dealer’’ from 

collecting, processing, distributing, or publishing 

market data in contravention of Commission rules); 

Section 11A(d)(3), 15 U.S.C. 78k–1(d)(3) (listing 

brokers, dealers, securities information processors, 

issuers, and investors with ‘‘other persons 

interested in or likely to participate in the 

establishment, operation, or regulation of the 

national market system’’). 

242 Indeed, history indicates that there is a 

different congressional intent behind the inclusion 

of this language. As the Commission has explained, 

the ‘‘act jointly’’ provision ‘‘enables the 

Commission to require joint activity that otherwise 

might be asserted to have an impact on competition, 

where the activity serves the public interest and the 

interests of investors.’’ Order Directing the 

Exchanges and the National Association of 

Continued 

state that Section 11A of the Act 

authorizes the Commission to direct 

only the SROs to jointly develop and 

operate NMS plans, and does not 

provide the authority to give non-SROs 

voting power on the operating 

committee of an NMS plan.227 While 

acknowledging that the non-SROs 

should have some voice in the 

operations of the CT Plan, one 

commenter argues that Congress 

‘‘determined to entrust the planning, 

development, operation, and regulation 

of NMS plans to SROs that have specific 

regulatory obligations to act in 

furtherance of the public interest.’’ 228

This commenter also argues that, 

because Rule 608 provides that only 

SROs have the authority to act jointly to 

file and amend NMS plans, providing 

voting rights to non-SROs violates Rule 

608.229 Another commenter argues that 

the Act leaves no discretion for the 

Commission to grant votes to nonSROs,230 and that providing votes to 

non-SROs would conflict with the 

design and purpose of the Act, which 

entrusted responsibility for the 

planning, development, operation, and 

regulation of the national market system 

to SROs, which are subject to 

comprehensive regulation,231 rather 

than to non-SROs, whose 

representatives would have no 

obligation to act in the public interest 

and would be free to act in their own 

personal self-interest.232 This 

commenter further states that the NonSRO Voting Representatives would not 

have an obligation to protect investors 

or further the public interest, or to 

comply with the terms of the CT Plan, 

despite being voting members of the 

Operating Committee.233

The Commission specifically 

considered and addressed these 

arguments in the Governance Order.234

As stated therein, the Commission 

believes that it is within its authority 

under Section 11A to require the 

operating committee to include voting 

rights for non-SROs. In Section 

11A(a)(2), Congress directed the 

Commission to use its authority under 

the Act to facilitate the establishment of 

the NMS in accordance with and in 

furtherance of its specific findings and 

objectives. Here, the Commission is 

acting pursuant to its authority under 

Section 11A(a)(3)(B) to further 

Congress’s express objective of assuring 

the availability to brokers, dealers, and 

investors of information with respect to 

quotations for and transactions in 

securities.235 Section 11A(a)(3)(B) 

expressly permits the Commission to 

require SROs to ‘‘act jointly’’ with 

respect to a ‘‘matter[ ]’’ as to which 

they ‘‘share authority in planning, 

developing, operating, or regulating the 

national market system (or a subsystem 

thereof).’’ 236 But Congress left to the 

Commission’s discretion the 

determination of which ‘‘matters’’ to 

require joint action and how such joint 

action should occur. The requirement 

for the CT Plan to include minority 

voting rights for non-SROs on the 

Operating Committee falls comfortably 

within that discretion. 

The particular ‘‘matter’’ as to which 

the Commission is requiring joint action 

here—the planning, development, and 

operation of an NMS plan governing 

dissemination of consolidated equity 

market data—is designed to achieve the 

goals of Section 11A(c), in particular by 

ensuring the prompt, accurate, reliable, 

and fair collection, processing, 

distribution, and publication of 

information with respect to quotations 

for and transactions in securities and 

the fairness and usefulness of the form 

and content of such information. Not 

only does that provision expressly 

contemplate the involvement of nonSROs,237 but as the Commission 

explained in the Governance Order, an 

operating committee that takes into 

account views from non-SRO members 

that are charged with carrying out the 

objectives of the CT Plan will have an 

overall improved governance structure 

that better supports those goals, because 

it will reflect a more diverse set of 

perspectives from a range of market 

participants, including significant 

subscribers of SIP core data products.238

As the Commission further stated, 

‘‘including representatives from nonSROs alongside the SROs on the 

operating committee will enhance the 

ability of all relevant constituencies to 

work together to facilitate the goals of 

Section 11A of the Act.’’ 239 These 

findings had substantial support in the 

comment file for the Governance Order, 

as a diverse set of commenters 

expressed the view that the governance 

of market data plans should include a 

broader array of viewpoints.240 And the 

Commission reiterates those findings 

here. 

The Commission disagrees with 

comments that argue that because 

Section 11A of the Act and Rule 608 of 

Regulation NMS authorize the 

Commission to permit or require SROs 

to ‘‘act jointly’’ in planning, developing, 

and operating the NMS plans, the 

Commission has no authority to 

mandate that SROs provide minority 

voting rights for certain non-SROs on 

the operating committee of the new 

plan. Nothing in Section 11A precludes 

the involvement of non-SROs in the 

national market system.241 Nor do the 

text or structure of Section 11A 

demonstrate that in permitting the 

Commission to authorize or require 

SROs to ‘‘act jointly’’ with respect to 

matters over which they share authority, 

Congress intended to entrust the 

development or operation of the NMS 

exclusively to SROs. ‘‘Act jointly’’ does 

not clearly connote ‘‘act jointly and 

exclusively.’’ 242 Likewise, the 


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Securities Dealers, Inc. to Submit a Phase-in Plan 

to Implement Decimal Pricing in Equity Securities 

and Options, Securities Exchange Act Release No. 

42914 (June 8, 2000), 65 FR 38010, 38012 (June 19, 

2000); see also Application Pursuant to Section 

11A(a)(3)(B) of the Securities Exchange Act of 1934, 

Securities Exchange Act Release No. 41843 (Sept. 

8, 1999), 64 FR 50126, 50127 (Sept. 15, 1999); Order 

Directing Options Exchanges To Submit an InterMarket Linkage Plan, Securities Exchange Act 

Release No. 42029 (Oct. 19, 1999), 64 FR 57674, 

57675 (Oct. 26, 1999). In other words, Congress 

permitted the Commission to authorize SROs to 

engage in joint action that may otherwise give rise 

to antitrust concerns in circumstances in which 

they are acting ‘‘with respect to matters as to which 

they share authority . . . in planning, developing, 

operating, or regulating a national market system (or 

a subsystem thereof) or one of more facilities 

thereof.’’ 

243See Governance Order, supra note 8, 85 FR at 

28715. 

244See Article IV, Section 4.2(b) of the CT Plan. 

For purposes of the CT Plan, a Retail Representative 

is an individual who (1) represents the interests of 

retail investors, (2) has experience working with or 

on behalf of retail investors, (3) has the requisite 

background and professional experience to 

understand the interests of retail investors, the work 

of the Operating Committee of the Company, and 

the role of market data in the U.S. equity market, 

and (4) is not affiliated with a Member or brokerdealer. See id. 

245 Data Boiler Letter I, supra note 31, at 28. 

246See ICI Letter II, supra note 31, at 1. 

247See Letter from Hubert De Jesus, Managing 

Director, Global Head of Market Structure and 

Electronic Trading, and Samantha DeZur, Director, 

Global Public Policy, BlackRock (Nov. 12, 2020) 

(‘‘BlackRock Letter I’’), at 3. 

248 Id. 

249See Letter from Sherry Madera, Chief Industry 

& Government Affairs Officer, Refinitiv (Nov. 12, 

2020) (‘‘Refinitiv Letter’’), at 1–2. 

250See id. 

251See BlackRock Letter I, supra note 247, at 3; 

Refinitiv Letter, supra note 249, at 1–2. 

Commission’s grant of authority to SROs 

in Rule 608(a)(3) authorizes SROs to act 

jointly but, in doing so, does not by 

implication limit the Commission’s 

authority to set forth a governance 

structure that includes non-SROs with 

some measure of voting power on an 

NMS plan operating committee. Rather, 

as the Governance Order notes, both 

Section 11A and Rule 608 are silent as 

to the participation of non-SROs in the 

operation of the plan. 

Further, the Commission does not 

believe, as suggested by some 

commenters, that permitting non-SROs 

to serve on the Operating Committee 

will impede the SROs’ ability to act 

jointly or interfere with their ability to 

operate the national market system. The 

CT Plan simply requires the SROs to 

include Non-SRO Voting 

Representatives in the decision-making 

process for plan action.243 Additionally, 

nothing in the legislative history of 

Section 11A indicates that Congress 

sought to preclude the Commission 

from directing the SROs to provide nonSROs with a voice in NMS plan 

governance, particularly where, as here, 

the Commission has reasonably 

concluded that doing so will promote 

the Plan’s effectiveness, consistent with 

Section 11A’s enumerated goals. 

Further, the Commission does not 

believe that allowing a broader 

representation of market participants in 

the governance of the CT Plan by 

including non-SROs as voting members 

on the Operating Committee will 

diminish the SROs’ ability to ensure 

that the CT Plan meets the requirements 

of Section 11A of the Act and Rule 608 

of Regulation NMS. As discussed below, 

the proposed voting structure, provides 

the SROs, by themselves, sufficient 

voting power to ensure that the Plan 

meets the requirements of Section 11A 

and Rule 608. In addition, the inclusion 

of non-SROs as voting members does 

not create a risk that the CT Plan could 

be amended in a manner inconsistent 

with the SROs’ regulatory obligations or 

with the Act, as any substantive 

amendments to the CT Plan would 

require Commission approval, and the 

Commission would determine if each 

such amendment was consistent with 

the Act and Rule 608. Therefore, the 

Commission continues to believe that 

inclusion of Non-SRO Voting 

Representatives on the Operating 

Committee would not interfere with the 

Commission’s ability to exercise its 

oversight over the CT Plan. 

(B) Categories of Non-SRO Voting 

Representatives 

Article IV, Section 4.2(b) provides 

that one Non-SRO Voting 

Representative will be chosen from each 

of the following categories to serve on 

the Operating Committee, with the right 

to vote on Operating Committee matters: 

(A) An institutional investor; (B) a 

broker-dealer with a predominantly 

retail investor customer base; (C) a 

broker-dealer with a predominantly 

institutional investor customer base; (D) 

a securities market data vendor that is 

not affiliated or associated with a 

Member, broker-dealer, or investment 

adviser with third-party clients; (E) an 

issuer of NMS stock that is not affiliated 

or associated with a Member, brokerdealer, or investment adviser with thirdparty clients; and (F) a Retail 

Representative.244

One commenter states it is ‘‘not 

against’’ the proposed categories of NonSRO Voting Representatives, but argues 

that the representatives’ ability to 

introduce new and useful innovation to 

reform the SIP should be 

emphasized.245 Another commenter 

expresses support, in particular, for the 

inclusion of an institutional investor, 

such as an asset manager, on the 

Operating Committee.246 One 

commenter opposes the proposed 

restriction that would prohibit the NonSRO Voting Representative representing 

issuers from being affiliated with an 

SRO, a broker-dealer, or an investment 

adviser.247 This commenter argues that 

such a limitation would ‘‘eliminate a 

significant portion of qualified issuer 

representatives with the industry 

experience necessary to be effective 

non-SRO members,’’ and would 

unreasonably discriminate against ETF 

issuers as they are typically affiliated 

with a broker-dealer or investment 

adviser, denying representation to a 

significant segment of the market.248

Another commenter disagrees with 

the proposed restriction that would 

prohibit the Non-SRO Voting 

Representative representing Market Data 

Vendors from being affiliated or 

associated with a Member, brokerdealer, or investment adviser with thirdparty clients.249 The commenter 

explains that many market data vendors 

partner with broker-dealers to create, 

and have available, technology that will 

complement traditional vending 

technology. The commenter argues that 

if these vendors are excluded from the 

pool of possible adviser candidates, no 

employees of major vendors would be 

eligible to serve, and that would 

eliminate many candidates that have the 

depth and breadth of understanding that 

comes from working for a large vendor. 

The commenter suggests that the 

restriction on who is eligible to serve as 

the securities Market Data Vendor NonSRO Voting Representative be revised so 

that the individual representing the 

vendor community may not be 

associated with or in a direct control 

relationship with a broker-dealer.250

Although some commenters object to 

the restriction that the securities market 

data vendor representative and the 

issuer representative cannot be affiliated 

with SROs, broker-dealers, and 

investment advisers with third-party 

clients,251 the Commission continues to 

believe that these restrictions are 

appropriate. These restrictions would 

operate to prevent certain affiliates of 

SROs, broker-dealers, or investment 

advisers from gaining additional 

representation on the Operating 

Committee by virtue of their affiliations. 

Under the CT Plan, SROs would have 

two-thirds of the votes on the Operating 

Committee, broker-dealers would have 

two representatives on the Operating 

Committee, and institutional investors 

would have one representative on the 

Operating Committee. Allowing a 

person from an issuer or market data 


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252See Governance Order, supra note 8, 85 FR at 

28718. 

253See Article IV, Section 4.2(b) of the CT Plan. 

254See Article IV, Section 4.2(b)(i) and (ii) of the 

CT Plan. See also infra Section II.C.5(b)(ii)(D). 

255Specifically, the proposed CT Plan provides 

that the terms for the Issuer Representative, the 

Retail Representative, and the Institutional 

Representative would begin at the First Quarterly 

Operating Committee Meeting and the Securities 

Market Data Vendor Representative, the BrokerDealer with a predominantly retail customer base 

Representative and the Broker-Dealer with a 

predominantly institutional investor base 

Representative would begin at the Third Quarterly 

Operating Committee Meeting. See Article IV, 

Section 4.2(b)(i) of the CT Plan. 

256See Article IV, Section 4.2(b) of the CT Plan. 

257See RBC Letter, supra note 30, at 8; MFA 

Letter, supra note 30, at 3–4; BlackRock Letter I, 

supra note 247, at 2; ICI Letter I, supra note 31, at 

3–4; SIFMA Letter I, supra note 30, at 3; SIFMA 

Letter II, supra note 30, at 2; Virtu Letter, supra note 

30, at 4; Letter from Marcia E. Asquith, Executive 

Vice President, Board and External Relations, 

FINRA (Nov. 12, 2020) (‘‘FINRA Letter I’’), at 7–8; 

MEMX Letter, supra note 30, at 3. 

258See RBC Letter, supra note 30, at 8. 

259See BlackRock Letter I, supra note 247, at 2. 

260 Id. 

261See MFA Letter, supra note 30, at 3–4. 

262See ICI Letter I, supra note 31, at 3–4. 

263See id. 

264See SIFMA Letter I, supra note 30, at 3; 

SIFMA Letter II, supra note 30, at 2. 

265SIFMA Letter I, supra note 30, at 3; see also 

SIFMA Letter II, supra note 30, at 2. FINRA 

similarly supports a longer maximum term to 

‘‘ensure that Non-SRO Voting Representatives are 

able to gain knowledge and experience with the 

specifics of SIP operations, which can be very 

technical in nature, and allow them to provide more 

meaningful input into the CT Plan’s operations.’’ 

FINRA Letter I, supra note 257, at 7–8. 

vendor affiliated with an SRO to serve 

as a Non-SRO Voting Representative 

would increase SRO representation and 

correspondingly diminish the 

representation of non-SROs on the 

Operating Committee. 

The Commission also believes that it 

is important that the securities market 

data vendor representative and the 

issuer representative not be affiliated 

with a broker-dealer or an investment 

adviser with third-party clients so that 

there are entities with potentially 

diverse views on the Operating 

Committee. The Commission believes 

that adding an issuer representative that 

is not affiliated with an investment 

adviser would be more likely to add a 

different and valuable perspective than 

a second representative affiliated with 

an investment adviser. Similarly, the 

Commission believes that, although it is 

likely that the affiliation restrictions for 

a market data vendor representative 

would prevent at least some qualified 

and experienced persons from serving 

in that role, the Commission believes 

that this disadvantage is justified by the 

benefits of having a non-affiliated 

market data vendor, because the nonaffiliated market data vendor would be 

more likely to add a different and 

valuable perspective to the deliberations 

of the Operating Committee than a third 

Non-SRO Voting Representative that is 

affiliated with a broker-dealer and 

would also be less likely to be affected 

by the same potential conflicts of 

interest. Moreover, as stated in the 

Governance Order, the Commission 

believes that even with these 

restrictions, the Operating Committee 

will be able to attract knowledgeable 

representatives of securities market data 

vendors and issuers, as the CT Plan will 

address issues and make important 

decisions that will impact these 

constituencies.252 The Commission 

believes that the opportunity to have a 

voice on the operating committee of an 

NMS plan responsible for issues related 

to market data will be highly coveted 

and that there will be qualified 

nominees willing to serve as 

representatives from organizations that 

are not affiliated with SROs, brokerdealers, or institutional investors. 

The Commission therefore concludes 

that including representatives from 

these categories of Non-SRO Voting 

Representatives, as set forth in the CT 

Plan as proposed, will provide a 

diversity of views on the Operating 

Committee such that perspectives from 

key stakeholders in matters related to 

equity market data are heard. 

Accordingly, the Commission is 

approving the provision of Article IV, 

Section 4.2(b) that enumerates the 

categories of Non-SRO Voting 

Representatives as proposed. 

(C) Term Limits 

Article IV, Section 4.2(b) of the CT 

Plan provides that Non-SRO Voting 

Representatives are eligible to serve for 

two-year terms for a maximum of two 

terms total, whether consecutive or nonconsecutive.253 Under this provision, 

after the expiration of a Non-SRO Voting 

Representative’s term, a replacement 

will be selected by a majority of the 

then-serving Non-SRO Voting 

Representatives.254 The CT Plan 

provides for a staggered start of the NonSRO Voting Representatives official 

terms,255 but provides that those NonSRO Voting Representatives whose 

official terms would not begin until the 

Third Quarterly Operating Committee 

Meeting after the Effective Date, would 

temporarily serve as a Non-SRO Voting 

Representative upon their selection and 

would still be eligible to be selected for 

another two-year term.256

Several commenters express views on 

the term limits proposed in Article IV, 

Section 4.2(b).257 One commenter states 

that the maximum term limit imposed 

on Non-SRO Voting Representatives in 

the CT Plan could adversely affect the 

operations of the Operating Committee 

by barring members with more 

experience from serving on it and by 

making it more difficult to attract 

qualified candidates for all the 

categories of Non-SRO Voting 

Representatives.258 Another commenter 

recommends allowing Non-SRO Voting 

Representatives to serve two two-year 

terms and then take a break for two 

years before being eligible to serve 

again.259 The commenter believes that 

this term structure will ‘‘promote 

qualified participation by non-SROs, 

while preserving an egalitarian process 

which allows for a rotation of 

representatives and provides any 

interested candidate the opportunity to 

serve.’’ 260 Another commenter 

recommends that Non-SRO Voting 

Representatives be permitted to serve 

two consecutive terms and then serve 

again after a one-term break, arguing 

that there is a limited pool of 

individuals with adequate experience 

and knowledge that can serve and that 

there are benefits from institutional 

knowledge gained from serving on the 

Operating Committee.261 In addition, 

one commenter believes that a Non-SRO 

Voting Representative should be 

permitted to serve more than two terms, 

provided there is a sufficiently lengthy 

(e.g., two years) cooling-off process.262

This commenter believes that the 

cooling-off process should provide a 

check on any firm’s or individual’s 

influence and would foster a sufficiently 

deep pool of candidates.263

Similarly, another commenter that 

supports a maximum term limit for 

Non-SRO Voting Representatives to 

allow for fresh perspectives from new 

industry representatives recommends 

that Non-SRO Voting Representatives be 

permitted to serve three consecutive 

two-year terms with ability to serve the 

same term limits after a two-year 

break.264 This commenter believes that 

the maximum term of four years 

proposed in the CT Plan would ‘‘impede 

meaningful and informed participation 

of Non-SRO Representatives’’ and ‘‘does 

not allow sufficient time for the 

representative to provide meaningful 

contribution as it may take new 

members . . . some time to get up to 

speed on the many diverse and complex 

issues.’’ 265 Another commenter states 

that it supports term limits to 

‘‘incentivize a healthy rotation of 

industry experts on the [Operating] 

Committee,’’ but it does not believe that 

the term limits proposed ‘‘offer enough 

runway for experts to get up to speed 


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266 Virtu Letter, supra note 30, at 4. 

267See Fidelity Letter, supra note 30, at 4. 

268See id. 

269See RBC Letter, supra note 30, at 4; BlackRock 

Letter II, supra note 30, at 1–2; ICI Letter II, supra 

note 31, at 2; Data Boiler Letter I, supra note 31, 

at 31. 

270See BlackRock Letter II, supra note 30 at 1– 

2; see also Data Boiler Letter I, supra note 31, at 

31 (stating that Non-SRO Voting Representatives 

should be selected before the Effective Date so they 

can assist with implementation of governance 

policies and procedures). 

271See ICI Letter II, supra note 31, at 2. 

272See Data Boiler Letter I, supra note 31, at 31. 

273See MEMX Letter, supra note 30, at 3. To 

accomplish this, the commenter suggests modifying 

the initial term of three of the Non-SRO Voting 

Representatives. See id. 

274BlackRock Letter I, supra note 247, at 2; see 

also Virtu Letter, supra note 30, at 4. 

275See RBC Letter, supra note 30, at 8; Virtu 

Letter, supra note 30, at 4; MFA Letter, supra note 

30, at 3–4. 

276See RBC Letter, supra note 30, at 8. 

277See MFA Letter, supra note 30, at 3–4. 

278 Virtu Letter, supra note 30, at 4. 

279See FINRA Letter I, supra note 257, at 7–8; 

Nasdaq Letter I, supra note 20, at 23. 

280See Nasdaq Letter I, supra note 20, at 23. This 

commenter also argues that imposing term limits on 

SRO Voting Representatives would interfere with 

the SRO’s ability to discharge its responsibilities 

under the Act through the individual that it 

believes best able to exercise those functions. See 

id. 

281See NYSE Letter I, supra note 18, at 38–39. 

282See Governance Order, supra note 8, 85 FR at 

28720. 

283See id. 

284See RBC Letter, supra note 30, at 8; MFA 

Letter, supra note 30, at 3–4; BlackRock Letter I, 

supra note 247, at 2; SIFMA Letter I, supra note 30, 

at 3; SIFMA Letter II, supra note 30, at 2; Virtu 

Letter, supra note 30, at 4; Fidelity Letter, supra 

note 30, at 4; FINRA Letter I, supra note 257, at 7– 

8. Some of these commenters proposed alternative 

terms. See SIFMA Letter I, supra note 30, at 3; 

SIFMA Letter II, supra note 30, at 2; Virtu Letter, 

supra note 30, at 4; Fidelity Letter, supra note 30, 

at 4; FINRA Letter I, supra note 257, at 7–8; MEMX 

Letter, supra note 30, at 3. 

285The Commission is modifying references to 

the Non-SRO Voting Representatives’ term limits in 

Article IV, Sections 4.2(b)(iii) and (b)(vii) of the CT 

Plan to reflect this modification for consistency. See 

infra Section II.C.5(b)(ii)(C). 

286See supra note 281. See also Brief for the 

Respondent, Securities and Exchange Commission, 

The Nasdaq Stock Market, et al. v. Securities and 

Exchange Commission (Case No. 20–1181) (DC Cir. 

2020). 

and to participate meaningfully in the 

work of the [Operating] Committee,’’ 

and recommends permitting Non-SRO 

Voting Representatives to serve three 

two-year terms.266 Another commenter 

states that there is a sufficient number 

of qualified people to serve on the 

Operating Committee such that it is not 

necessary to have any person serve for 

more than six years, whether terms are 

consecutive or not.267 This commenter 

supports allowing Non-SRO Voting 

Representatives to serve for two threeyear terms, arguing that such a term 

would provide continuous fresh ideas to 

the Operating Committee.268

Other commenters address when the 

Non-SRO Voting Representatives should 

commence their duties on the Operating 

Committee.269 One commenter suggests 

that the Operating Committee be 

established with both SRO and non-SRO 

voting representation before the CT Plan 

becomes effective to allow non-SROs 

the ability to participate in the process 

of operationalizing the CT Plan.270

Another commenter recommends that 

the Non-SRO Voting Representatives’ 

terms begin at the first meeting of the 

Operating Committee and that the terms 

be staggered such that three Non-SRO 

Voting Representatives would serve for 

three years and three Non-SRO Voting 

Representatives would serve for two 

years to allow all representatives to be 

present from the start.271 Other 

commenters similarly support staggered 

terms. One commenter argues that 

staggered terms would reduce the 

distractions that could occur if all the 

Non-SRO Voting Representatives were 

replaced every two to four years.272

Another commenter believes that the 

terms for Non-SRO Voting 

Representatives should be staggered so 

that no more than half of the 

representatives are elected in one 

year.273 Similarly, another commenter 

recommends staggering terms ‘‘by at 

least one or two years to ensure 

sufficient continuity and consistency in 

representation.’’ 274

Several commenters recommend 

imposing term limits on SRO Voting 

Representatives.275 One commenter 

believes that by applying term limits to 

Non-SRO Voting Representatives only, 

the CT Plan could advantage SROs 

relative to non-SROs with respect to 

relevant information and experience.276

Another commenter states that SRO 

Voting Representatives should be 

subject to the same term limits as NonSRO Voting Representatives.277 Another 

commenter similarly states that 

allowing SRO Voting Representatives to 

serve indefinitely may be 

‘‘counterproductive.’’ 278

Other commenters disagree that SRO 

Voting Representatives should be 

subject to term limits. Two commenters 

objecting to term limits for SRO Voting 

Representatives explain that these 

representatives do not serve as 

individuals, but as representatives of a 

legal entity, and must vote based on that 

entity’s position.279 Therefore, one 

commenter argues, changing the 

individual would not serve to bring new 

perspectives to the Operating 

Committee.280 Another commenter 

stated that whether term limits apply to 

either Non-SRO Voting Representatives 

or SRO Voting Representatives is a 

decision for the SROs to make, not the 

Commission.281

In the Governance Order, the 

Commission explained that term limits 

for Non-SRO Voting Representatives 

must balance the advantages of 

institutional knowledge with the 

potential benefits to be derived from 

new perspectives.282 Further, the 

Commission stated that it believed that 

a term of two years, with the potential 

for additional terms, would provide 

sufficient time for a member to become 

familiar with the issues dealt with by 

the operating committee.283 Several 

commenters, however, argue that NonSRO Voting Representatives would need 

to be permitted to serve for longer than 

two two-year terms to get fully up to 

speed on all the complex matters 

covered by the CT Plan before rotating 

off the Operating Committee.284

After considering the concerns raised 

by commenters, the Commission is 

modifying Section 4.2(b) of the CT Plan 

to provide that Non-SRO Voting 

Representatives shall serve no more 

than two consecutive three-year terms, 

but shall be eligible, after a period of 

three years of non-service, to serve 

additional terms, subject to the 

requirement that three years of nonservice must follow every set of two 

three-year terms of service.285 The 

Commission finds that the modification 

from two two-year terms to two threeyear terms is appropriate because the 

Commission believes that these longer 

terms will better allow Non-SRO Voting 

Representatives to obtain sufficient 

experience with the operation of the CT 

Plan and to make informed 

contributions as members of the 

Operating Committee. The Commission 

also finds that—in order to preserve an 

appropriate balance between retaining 

institutional knowledge and allowing 

new perspectives to be heard—it is 

appropriate to require that, after serving 

a defined amount of time, Non-SRO 

Voting Representatives should be 

required to observe a ‘‘cooling-off’’ 

period before serving again so as to 

allow others the opportunity to serve. In 

response to a commenter’s claim that 

the SROs should have discretion to set 

Non-SRO Voting Representatives’ term 

limits, the Commission believes, as it 

stated in the Governance Order, that the 

determination of term limits for NonSROs falls within its statutory authority 

under Section 11A of the Act.286

Moreover, the Commission believes that 

full participation by the Non-SRO 

Voting Representatives on the Operating 

Committee is a critical component of the 


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287See RBC Letter, supra note 30, at 8; Virtu 

Letter, supra note 30, at 4; MFA Letter, supra note 

30, at 3–4. 

288See RBC Letter, supra note 30, at 4; BlackRock 

Letter I, supra note 247, at 2; BlackRock Letter II, 

supra note 30, at 1–2; ICI Letter II, supra note 31, 

at 2; Data Boiler Letter I, supra note 31, at 31. 

289See BlackRock Letter I, supra note 247, at 2; 

MEMX Letter, supra note 30, at 3; Data Boiler Letter 

I, supra note 31, at 28. 

290See RBC Letter, supra note 30, at 4. 

291See supra Section II.C.1(a). 

292See Article IV, Section 4.2(b)(i) of the CT Plan. 

governance of the CT Plan and that 

permitting the SROs to set the terms of 

Non-SRO Voting Representatives would 

grant the SROs influence over the NonSRO Voting Representatives and 

diminish the independence and 

effectiveness of Non-SRO Voting 

Representatives as they serve on the 

Operating Committee. 

The Commission, however, disagrees 

with comments suggesting that term 

limits should also apply to SRO Voting 

Representatives.287 Rather, the 

Commission agrees with those 

comments that argue that the SRO 

Voting Representatives serve on the 

Operating Committee as representatives 

of a legal entity and vote at the direction 

of that entity. The SROs are, by virtue 

of their status as SROs, permanent 

participants in the CT Plan, and the 

Commission does not expect that 

varying the identity of the individuals 

representing a given SRO Group or NonAffiliated SRO on the Operating 

Committee is likely to vary the views 

expressed or the votes cast by that SRO 

Group or Non-Affiliated SRO on the 

Operating Committee. The Non-SRO 

Voting Representatives, by contrast, will 

vary over time, and most will be 

employees of a set of firms that will vary 

over time, and the Commission expects 

that these individuals may have 

different perspectives regarding market 

data issues. Therefore, the Commission 

finds that imposing term limits on SRO 

Voting Representatives would not be 

appropriate, because it does not believe 

that doing so would bring fresh 

perspectives to the Operating 

Committee or further promote the goals 

of the CT Plan in the same manner as 

it would for Non-SRO Voting 

Representatives. 

The Commission agrees with 

comments that suggest that all Non-SRO 

Voting Representatives should 

commence their duties upon selection 

and that the terms of Non-SRO Voting 

Representatives should be staggered,288

and the Commission believes that 

Sections 4.2(b)(ii) and (iii) of the CT 

Plan allow for both. Specifically, 

Section 4.2(b)(ii) provides that the terms 

of the Non-SRO Voting Representatives 

will begin on a staggered basis with half 

of the Non-SRO Voting Representatives 

beginning their term with the First 

Quarterly Meeting of the Operating 

Committee and half beginning their 

term with the Third Quarterly Meeting. 

However, Section 4.2(b)(iii) also states 

that, although the official term for 

certain of the Non-SRO Voting 

Representatives will not begin until the 

Third Quarterly Meeting, these NonSRO Voting Representatives will 

temporarily serve on the Operating 

Committee, including having voting 

rights, before the official 

commencement of their terms and may 

be selected for a second full term. 

Therefore, all Non-SRO Voting 

Representatives will participate in, and 

have votes on, the Operating Committee 

as of the First Quarterly Meeting, even 

though the official term for half of the 

Non-SRO Voting Representatives will 

not begin to run until the Third 

Quarterly Meeting. Thus, the expiration 

of the Non-SRO Voting Representatives’ 

terms will be staggered by 

approximately six months pursuant to 

this scheme. 

In response to comments 

recommending that the terms of NonSRO Voting Representatives be 

staggered by at least one or two years to 

ensure continuity and consistency in 

representation,289 the Commission 

believes that the scheme for staggered 

terms proposed in the CT Plan, in 

combination with the Commission’s 

modifications to the CT Plan’s 

provisions regarding term length and 

term limits for Non-SRO Voting 

Representatives, as discussed above, 

appropriately balances the goal of 

continuity of service among Non-SRO 

Voting Representatives with the goal of 

providing for a rotation of Non-SRO 

Voting Representatives over time to help 

ensure a diversity of non-SRO 

viewpoints on the CT Plan Operating 

Committee. While it is possible that 

every Non-SRO Voting Representative 

would serve two three-year terms, 

leading to complete turnover among 

those representatives over the course of 

a single year in the future, it is also 

possible that the terms of Non-SRO 

Voting Representatives will, over time, 

naturally become staggered as some 

representatives serve single terms or, for 

personal or business reasons, do not 

complete a full term. Moreover, 

prescribing a significant staggering of 

terms at the outset of CT Plan operations 

would require granting materially longer 

initial terms to certain categories of 

Non-SRO Voting Representatives and 

materially shorter initial terms to others, 

without a meaningful distinction on 

which to base that disparity. Therefore, 

the Commission is not modifying the 

approach proposed in the CT Plan. 

Finally, one commenter argues that 

the Non-SRO Voting Representatives 

should be empowered to participate in 

the governance of the current Equity 

Data Plans, as soon as those 

representatives are selected.290 While 

the Commission believes that adding the 

perspectives of Non-Voting SRO 

Representatives will be an important 

improvement to the governance 

structure for equity market data, the 

Commission does not believe that 

adding the Non-SRO Voting 

Representatives to the operating 

committees of the currently existing 

Equity Data Plans can be accomplished 

in the context of approving the 

proposed CT Plan or under the auspices 

of the Governance Order. The 

Commission agrees, however, that the 

input of Non-SRO Voting 

Representatives should be included in 

the governance of consolidated equity 

market data plans as soon as practicable, 

and the Commission has, as discussed 

above,291 sought to address this issue by 

adding deadlines to the CT Plan for the 

achievement of the steps necessary for 

implementation. 

For the reasons discussed above, the 

Commission is approving the provisions 

of Article IV, Section 4.2(b) of the CT 

Plan that govern the terms of members 

of the Operating Committee as modified. 

(D) Process for Selecting Non-SRO 

Voting Representatives 

Article IV, Section 4.2(b)(i) provides 

that the initial Non-SRO Voting 

Representatives will be selected by a 

majority vote of the then-current 

members of the Advisory Committee. 

This section further provides that the 

Advisory Committee Members will 

follow the procedures set forth in the CT 

Plan applicable for selection of NonSRO Voting Representatives for those 

whose terms are expiring for selection of 

the initial Non-SRO Voting 

Representatives.292

The Commission is modifying this 

Section to expressly permit Advisory 

Committee Members to nominate 

themselves to serve as Non-SRO Voting 

Representatives regardless of their 

length of service on the Advisory 

Committee, as well as to nominate other 

candidates. As proposed, under the 

procedure in Section 4.2(b)(v), although 

the Advisory Committee Members 

would be permitted to nominate 

themselves, only Members would be 

permitted to nominate other candidates. 


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293See Article IV, Section 4.2(b)(v)(A) of the CT 

Plan. 

294See Article IV, Section 4.2(b)(v)(B) of the CT 

Plan. 

295See Article IV, Section 4.2(b)(v)(C) of the CT 

Plan. The Non-SRO Voting Representative will 

screen the comments for appropriateness prior to 

their posting on the LLC’s website. See id. 

296See id. Non-SRO Voting Representatives 

whose terms are expiring may vote in an election 

for an open position, provided they are not 

nominees for the position. See Article IV, Section 

4.2(b)(v)(D) of the CT Plan. 

297See Article IV, Section 4.2(b)(v)(E) of the CT 

Plan. 

298See Article IV, Section 4.2(b)(vi) of the CT 

Plan. The proposed CT Plan provides that if a NonSRO Voting Representative resigns or is removed 

from the Operating Committee, a replacement will 

be selected by a majority vote of the then-serving 

Non-SRO Voting Representatives, and will serve out 

the remainder of the term. If the remainder of the 

term is less than a year, the individual will serve 

an additional two-year term, and if the remainder 

of the term is more than one year, the selection 

process outlined in Section 4.2(b)(v) will be 

followed. See Article IV, Section 4.2(b)(vii) of the 

CT Plan. 

299See Article IV, Section 4.10 and Exhibit B of 

the CT Plan. 

300See Exhibit C of the CT Plan. 

301The Commission is also making a nonsubstantive change to this Section of the CT Plan 

to insert ‘‘the names of’’ before ‘‘individuals’’ for 

clarity. 

302See supra Section II.C.5(b)(ii)(C). 

303See Data Boiler Letter I, supra note 31, at 31, 

32. This commenter also questions whether there 

would be a bias toward top elite firms, see Data 

Boiler Letter II, supra note 101, at 1, and states NonSRO Voting Representatives should earn their seats 

by bringing in new and useful innovation, and if 

they do not do so, they should not be granted a seat 

regardless of how many terms or years they have 

served. See id. at 32. 

The Commission finds that it is 

appropriate to allow the Advisory 

Committee Members to nominate 

candidates, in addition to themselves, 

because the Advisory Committee 

Members have the background, based on 

their experience with the Equity Data 

Plans, to select nominees from the 

industry who have the knowledge that 

is essential to effectively serve on the 

Operating Committee. The Commission 

also finds that it is appropriate to the 

modify the CT Plan to expressly state 

that Advisory Committee Members may 

nominate themselves, regardless of the 

length of their prior service, because 

service in an advisory capacity under 

the Equity Data Plans should not 

preclude a person’s eligibility to serve 

on the CT Plan’s Operating Committee 

as a voting representative under the CT 

Plan. To provide otherwise could 

prevent candidates who have direct 

experience with the operation of an 

NMS plan for consolidated equity 

market data, and who could provide 

continuity of ideas on the initial CT 

Plan Operating Committee, from being 

considered for Non-SRO Voting 

Representative positions. For these 

reasons, the Commission is approving 

Article IV, Section 4.2(b)(i) as modified. 

Article IV, Section 4.2(b)(v) proposes 

a procedure for nominating and electing 

Non-SRO Voting Representatives 

following their initial selection. 

Pursuant to the proposed procedure, the 

Operating Committee must post a notice 

on its website seeking nominations from 

the public for an upcoming position at 

least two months prior to the expiration 

of a Non-SRO Voting Representative’s 

term. Members may submit individuals 

for consideration, and Non-SRO Voting 

Representatives may nominate 

themselves if they have not already 

served their maximum term.293 The 

Non-SRO Voting Representatives will 

review the nominations and confirm by 

majority vote that a nominated 

individual meets the requirements for 

the category up for election at least one 

month prior to expiration of the term for 

the position to be filled.294 Within a 

week of the Non-SRO Voting 

Representatives’ confirmation of eligible 

nominees, the Operating Committee 

must post the list of nominees on its 

website and solicit comment from the 

public.295 The Non-SRO Voting 

Representatives will then consider and 

discuss the comments received and 

elect an individual by majority vote.296

In the event that no nominee receives a 

majority vote, the individual with the 

lowest number of votes will be 

eliminated from consideration, and a 

new vote will be taken. The Non-SRO 

Voting Representatives will repeat this 

process until an individual receives a 

majority vote.297 Because Non-SRO 

Voting Representatives are elected to 

represent a category of market 

participants, in the event 

representatives leave their jobs or 

change duties such that they are in a 

position unrelated to the category that 

they represent, they must submit their 

resignation to the Chair of the Operating 

Committee. If representatives do not 

tender their resignation under such 

circumstances, they may be removed 

upon a vote of the Operating 

Committee.298 Each Non-SRO Voting 

Representative must agree in writing to 

comply with the provisions of the CT 

Plan relating to conflicts of interests 299

and confidentiality.300

The Commission is modifying Article 

IV, Section 4.2(b)(v)(A) of the CT Plan 

in three respects. First, the Commission 

modifying this section to provide that 

SRO Voting Representatives, rather than 

Members, will be permitted to submit 

names for consideration for open NonSRO Voting Representative positions.301

The Commission finds that this 

modification is appropriate because, 

while the Members of the CT Plan are 

the SRO entities, the CT Plan generally 

is organized such that it is the SRO 

Voting Representatives that act on 

behalf of the SROs in the operation of 

the CT Plan. 

Second, the Commission is modifying 

this provision to permit Non-SRO 

Voting Representatives to submit the 

names of individuals for consideration 

during the nominating process. The 

Commission finds that this modification 

is appropriate because it permits the 

Non-SRO Voting Representatives to use 

the same process as SRO Voting 

Representatives to nominate candidates 

for consideration to fill open Non-SRO 

Voting Representative positions. 

Without this modification, Non-SRO 

Voting Representatives would need to 

use the public process to nominate 

candidates, while the SRO Voting 

Representatives could directly nominate 

candidates. The Commission does not 

believe that such asymmetrical 

treatment of members of the Operating 

Committee is justified. 

Third, the Commission is modifying 

this provision to replace the language 

that permits Non-SRO Voting 

Representatives to nominate themselves 

‘‘if they have not served the maximum 

number of terms’’ with the phrase ‘‘if 

they are not then completing a second 

consecutive term.’’ The Commission 

finds that this modification is 

appropriate because Non-SRO Voting 

Representatives cannot serve more than 

two consecutive three-year terms and 

they therefore cannot nominate 

themselves to serve if they are 

completing a second consecutive 

term.302

One commenter states that Non-SRO 

Voting Representative seats should go to 

whoever can contribute to positive 

innovations in market data 

infrastructure, and questions whether 

allowing Non-SRO Voting 

Representatives to nominate themselves 

would further this end.303 The 

Commission does not share this concern 

because it believes that non-SRO market 

participants—for whom equity market 

data is a crucial aspect of business 

operations—will have a strong interest 

in the prompt, accurate, reliable, and 

fair collection, processing, distribution, 

and publication of consolidated equity 

market data. Thus, the Commission 

believes that it will be in the Non-SRO 

Voting Representatives’ interest to select 

persons to serve on the Operating 

Committee who will further advance 

improvements and innovations in 

market data infrastructure. And the 

Commission further believes that the 


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304See Nasdaq Letter I, supra note 20, at 19; 

Nasdaq Letter II, supra note 49, at 1. See also MFA 

Letter, supra note 30, at 3. The Commission 

believes that in its comment letter, MFA may have 

misunderstood the proposed CT Plan to permit the 

SROs to exclusively select the Non-SRO Voting 

Representatives. As a result, MFA opposes 

providing such authority to the SROs and suggests 

alternatives for more equitable selection of NonSRO Voting Representatives. See id. at 3. However, 

in fact, it is the Non-SRO Voting Representatives 

that exclusively select the Non-SRO Voting 

Representatives. See Article IV, Section 4.2(b)(iv) of 

the CT Plan. 

305See Article IV, Section 4.2(c) of the CT Plan. 

The SRO Applicant may select an alternate to act 

on behalf of the SRO Applicant in his or her 

absence. See id. 

306See id. 

307See Article IV, Section 4.2(d) of the CT Plan. 

308See id. 

309Article IV, Section 4.3(a)(i) of the CT Plan 

defines ‘‘consolidated equity market share’’ as the 

average daily dollar equity trading volume of 

Eligible Securities of an SRO Group or NonAffiliated SRO as a percentage of the average daily 

trading volume of all the SRO Groups and NonAffiliated SROs. 

310Article IV, Section 4.3(a)(i) of the CT Plan 

states that FINRA is not considered a market center 

under this section of the proposed CT Plan solely 

by virtue of facilitating trades through any trade 

reporting facility that FINRA operates in affiliation 

with a national securities designed to report 

transactions otherwise than on an exchange. 

311See Cboe Letter, supra note 17, at 4; NYSE 

Letter I, supra note 18, at 8; NYSE Letter II, supra 

note 19, at 3; Nasdaq Letter I, supra note 20, at 1– 

2 (attaching and incorporating by reference all 

arguments made by Petitioners in their opening 

brief challenging the Governance Order). The 

Commission has responded to the arguments made 

by Nasdaq in their brief in its own brief before the 

U.S. Circuit Court for the District of Columbia 

Circuit. See Brief for the Respondent, Securities and 

Exchange Commission, The Nasdaq Stock Market, 

et al. v. Securities and Exchange Commission (Case 

No. 20–1181) (D.C. Cir. 2020). 

312See Cboe Letter, supra note 17, at 4. 

313See NYSE Letter I, supra note 18, at 8; NYSE 

Letter II, supra note 19, at 3. 

314See NYSE Letter I, supra note 18, at 10. 

public process for nominations, and the 

turnover of Non-SRO Voting 

Representatives required by the term 

limits included in the CT Plan, will help 

ensure that no set of individuals 

becomes permanently entrenched as 

Non-SRO Voting Representatives by 

virtue of the ability to nominate 

themselves. 

Another commenter states that the 

ability of Non-SRO Voting 

Representatives to select themselves 

without SRO approval is inconsistent 

with the statutory authorization for the 

national market system under Section 

11A and Rule 608, as well as with the 

authority granted to SROs under 

Sections 6 and 19 of the Act.304 As 

previously stated, the Commission 

believes that it has broad authority 

under Section 11A of the Act to grant 

non-SROs voting rights with regard to 

the governance of the CT Plan. The 

Commission believes that the 

requirement that non-SRO members of 

the Operating Committee collectively 

select replacement non-SRO members 

will help to ensure that the individuals 

selected will represent their 

constituencies’ views on important 

market data issues, and that the most 

effective and knowledgeable advocates 

for their views will serve on the 

Operating Committee. 

For the reasons discussed above, the 

Commission is approving the provisions 

of Article IV, Section 4.2(b)(v) as 

modified. 

(iii) SRO Applicant Observers 

Article IV, Section 4.2(c) of the CT 

Plan provides that entities that have not 

yet been registered with the 

Commission as national securities 

exchanges may appoint an individual to 

attend regularly scheduled Operating 

Committee Meetings (an ‘‘SRO 

Applicant Observer’’) if such an entity 

has submitted, and the Commission has 

published, a Form 1 to be registered as 

a national securities exchange or 

national securities association, or if 

such an entity is a national securities 

exchange that is not a Member and the 

Commission has published the 

exchange’s proposed rule change to 

operate a Market.305 The CT Plan further 

provides that if the SRO Applicant’s 

Form 1 or proposed rule change is 

withdrawn, returned, or otherwise not 

actively pending before the 

Commission, the SRO Applicant will no 

longer be permitted to attend Operating 

Committee meetings.306

The Commission finds that is 

reasonable to allow an entity to attend 

meetings of the Operating Committee as 

a non-voting observer when it has filed 

a Form 1 or proposed rule change to 

operate a Market and the Commission 

has published notice of that filing. The 

Commission believes that attending 

meetings of the Operating Committee as 

an observer will allow an equities 

market pending registration to be aware 

of and familiarize itself with issues 

before the Operating Committee before 

it becomes a national securities 

exchange or national securities 

association. The Commission received 

no comments on Section 4.2(c) of the CT 

Plan and is approving this Section as 

proposed. 

(iv) Prohibiting Voting by NonOperational Equity Trading Venues 

The CT Plan provides that in the 

event that a Non-Affiliated SRO, or that 

all national securities exchanges in an 

SRO Group, cease operations as a 

market (or have not commenced 

operation of a market), those entities 

will not be permitted to appoint an SRO 

Voting Representative. Such a NonAffiliated SRO or SRO Group will, 

however, be permitted to attend 

meetings of the Operating Committee as 

an observer, except for Executive 

Sessions.307 If such a Non-Affiliated 

SRO or SRO Group does not commence 

operations within six months of 

attending the first Operating Committee 

as a non-operational exchange(s), it will 

no longer be permitted to attend 

Operating Committee meetings until it 

resumes operations as a market.308

The Commission did not receive any 

comments on this provision of the CT 

Plan. The Commission believes that this 

provision will help ensure that only 

those SROs that are contributing to the 

generation or collection of the core data 

disseminated by the CT Plan will have 

a vote on CT Plan decisions. 

Accordingly, the Commission is 

approving the provision as proposed. 

(c) Operating Committee Action/Voting 

Structure 

Article IV, Section 4.3 of the CT Plan 

sets forth the voting allocation and 

voting structure for actions of the 

Operating Committee. 

(i) Allocation of Votes to the SROs 

Article IV, Section 4.3(a)(i) provides 

that each SRO Voting Representative 

will have one vote to cast on behalf of 

the SRO Group or Non-Affiliated SRO 

that he or she represents with a second 

vote provided if the SRO Group or NonAffiliated SRO has a market center or 

centers that trade more than 15 percent 

of consolidated equity market 

share 309 for four of the six consecutive 

months preceding a vote of the 

Operating Committee.310

Several commenters object to the 

proposed allocation of voting rights.311

One commenter argues that the CT 

Plan’s provisions for SRO group voting 

violate the Act and that the concept of 

‘‘exchange groups’’ is found nowhere in 

the Act.312 Another commenter argues 

that the proposed exchange-group 

structure for SRO voting would 

impermissibly impair the ability of 

SROs to act jointly in administering the 

CT Plan and is inconsistent with both 

the Act and Rule 608.313 This 

commenter further argues that the 

proposed allocation would dilute each 

affiliated exchange’s voting power 

relative to unaffiliated exchanges 314 and 

that limiting votes to exchange groups 

would be a change from the 

Commission’s ‘‘long-standing practice of 

treating each SRO individually for 

regulatory purposes, regardless of its 


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315 Id. at 9. NYSE provides examples of the 

Commission’s practice of treating individual 

exchanges separately, including its requirements for 

separate pools of liquidity, separate fee schedules, 

and separate proposed rule changes. See id. at 9– 

10. 

316 Id. at 9 (‘‘An SRO with 1% market share has 

the same obligations as one with 18% market share, 

yet under the [CT] Plan’s voting structure, the latter 

SRO would have double the votes of the former.’’). 

317 Id. 

318See supra note 312 and accompanying text. 

319 Governance Order, supra note 8, 85 FR at 

28713. 

320 Id. 

321 15 U.S.C. 78f; 15 U.S.C. 78o–3; 15 U.S.C. 78q; 

15 U.S.C. 78s. 322See, e.g., Securities Exchange Act Release Nos. 

90209 (Oct. 15, 2020), 85 FR 67044, 67047–48 (Oct. 

21, 2020), pet. for review docketed, No. 20–1470 

(D.C. Cir. 2021) (Commission action concluding that 

an asset, service, or function may be a ‘‘facility’’ of 

an exchange despite being owned or operated by a 

legal entity other than the particular entity holding 

the exchange license); 39086 (Sept. 17, 1997), 62 FR 

50036 (Sept. 24, 1997) (similar). 

323See Brief for the Respondent, Securities and 

Exchange Commission, The Nasdaq Stock Market, 

et al. v. Securities and Exchange Commission (Case 

No. 20–1181) (D.C. Cir. 2021). 

324See NYSE Letter I, supra note 18, at 9. 

325See also supra Section II.C.5(b)(ii) (discussing 

Non-SRO Voting Representatives’ participation on 

the Operating Committee). 

326See ICI Letter II, supra note 31, at 1–2. 

327 Data Boiler Letter I, supra note 31, at 28. 

corporate affiliation with other 

SROs.’’ 315 This commenter also opposes 

tying the number of votes cast by each 

Non-Affiliated SRO and SRO Group to 

market share, arguing that an SRO’s 

statutory responsibilities ‘‘bear no 

relationship to its market share,’’ 316 and 

specifically opposes the proposed 15% 

threshold as well, stating that it is 

‘‘arbitrary and may quickly become 

meaningless.’’ 317

While one commenter argues that the 

concept of an exchange group is not 

created by statute or rule,318 there is no 

statutory or regulatory provision that 

mandates ‘‘one SRO, one vote’’ either. 

Individual exchanges that historically 

had only one vote on NMS plans are 

now a part of groups that can control 

blocs of four or five votes. As the 

Commission stated in the Governance 

Order, ‘‘in its oversight of the Equity 

Data Plans, [it] is unaware of an 

individual affiliated exchange member’’ 

ever having ‘‘cast its vote differently 

than the votes cast by its affiliated 

exchanges.’’ 319 Further, in response to 

the comment that the proposed 

allocation would dilute each affiliated 

exchange’s voting power relative to 

unaffiliated exchanges, the Commission 

believes that this bloc voting has diluted 

the voting power of unaffiliated SROs 

over time, and that this concentration of 

‘‘voting power in a small number of 

exchange group stakeholders, which 

also have inherent conflicts of interest,’’ 

has ‘‘perpetuated disincentives for the 

Equity Data Plans to make 

improvements to the SIP data 

products.’’ 320

The Commission also disagrees with 

the comment that the Commission has 

treated affiliated exchanges as separate 

entities for regulatory purposes in the 

past, and therefore, should not treat 

them as a group for purposes of voting 

on the CT Plan’s Operating Committee. 

The Commission agrees that each SRO 

has individual obligations with respect 

to compliance with its responsibility 

pursuant to Sections 6, 15A, 17, and 19 

of the Act to comply with the statutory 

and regulatory requirements that apply 

to its operation and self-regulation of its 

individual market center.321 But both 

the applicable legal requirements and 

the function being performed here by 

the SROs differ in the context of the 

responsibility of the SROs to jointly 

operate the NMS plans pursuant to 

Section 11A of the Act and to 

disseminate consolidated market data, 

to which different SROs may contribute 

in varying degrees. The Commission 

therefore believes that it is appropriate 

to approach this circumstance 

differently. And, for the reasons 

discussed, the Commission finds it 

appropriate to treat affiliated exchanges 

under common management and control 

as one SRO Group limited to one vote, 

or at most two, in the context of NMS 

plan governance. 

Moreover, the Commission’s 

treatment of corporate affiliations varies 

based on the particular facts and 

circumstances and regulatory 

implications and concerns. Sometimes, 

the Commission treats affiliated entities 

independently. Other times, the 

Commission takes into account 

corporate relationships when deciding 

how to regulate.322 Because of the 

concentrated power affiliated SROs 

exert in the governance structure of 

consolidated equity market data, as 

demonstrated by the indisputable fact 

that affiliated SROs vote as blocs, the 

Commission has determined that 

affiliated exchanges under common 

management and control should be 

treated as one SRO Group limited to one 

vote, or at most two votes, in the context 

of NMS plan governance. 

The Commission believes that 

reallocating votes by SRO Group should 

help to ensure the prompt, accurate, 

reliable, and fair collection, processing, 

distribution, and publication of 

information with respect to quotations 

for and transactions in NMS stocks and 

the fairness and usefulness of the form 

and content of that information. The 

Commission disagrees that the proposed 

exchange-group structure for SRO 

voting would impermissibly impair the 

ability of SROs to act jointly in 

administering the CT Plan and is 

inconsistent with both the Act and Rule 

608. The Commission believes, as it 

stated in the Governance Order, that the 

allocation of voting power to exchanges, 

either individually or in groups, based 

on common management or control falls 

within its statutory authority under 

Section 11A of the Act.323

In response to the comment that 

objects to tying market share to the 

number of votes an SRO Group or NonAffiliated SRO is allocated, arguing that 

an SRO’s regulatory responsibilities 

have no bearing on market share of the 

SRO,324 the Commission disagrees, 

because using a threshold amount of 

consolidated equity market share of 

more than 15 percent over a specified 

period of time to provide a second vote 

to an SRO Group or Non-Affiliated SRO 

reflects the significance within the 

national market system of those 

exchanges that, in their roles as SROs, 

oversee trading activity that generates a 

significant amount of equity market 

data. 

For the reasons stated above, the 

Commission is approving Sections 

4.3(a)(i) as proposed. 

(ii) Allocation of Votes to Non-SROs 325

Article IV, Section 4.3(a)(ii) provides 

that, at all times, the Non-SRO Voting 

Representatives will have one-half the 

aggregate number of votes that the SRO 

Voting Representatives have. In other 

words, the SRO Voting Representatives 

will, in aggregate, have two-thirds of the 

voting power on the Operating 

Committee, and the Non-SRO Voting 

Representatives will, in aggregate, have 

one-third of the voting power. The 

number of votes attributed to the NonSRO Voting Representatives will 

increase or decrease as necessary to 

preserve this ratio, in fractional share if 

necessary. 

One commenter expresses support for 

the allocation of voting power on the 

Operating Committee as proposed in 

Sections 4.3(a)(i) and (ii), stating that 

the proposed allocation of voting power 

between the Non-SRO Voting 

Representatives and SRO Voting 

Representatives is consistent with the 

Act and the Governance Order.326

Another commenter suggests that there 

should be ‘‘consideration to increase 

Non-SRO representation if SROs on the 

[Operating Committee] increases or 

perhaps adjusted if the ‘weight’ of the 

user community increase/decreases in 

certain categories.’’ 327 In response, the 

Commission notes that the number of 


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328See Article IV, Section 4.2(b) of the CT Plan 

(providing that Non-SRO Voting Representatives 

will be selected by a majority vote of the thenserving Non-SRO Voting Representatives). 

329See Article IV, Section 4.4(g) of the CT Plan 

(providing that the decision to enter into Executive 

Session will be subject to a majority vote of the SRO 

Voting Representatives). 

330See Article X, Section 10.3 of the CT Plan 

(providing that any compromise or settlement of 

any tax audit or litigation affecting members, as 

well as any material proposed inaction or election 

to be taken by the Partnership Representative, 

require a majority vote of Members); and Article XI, 

Section 11.2 of the CT Plan (providing that the 

distribution of proceeds from the liquidation of the 

Company to Members is subject to a majority vote 

of the Members). 

331See Article XIII, Section 13.5(b) of the CT Plan 

(providing that Articles IX, X, XI, and XII may be 

modified upon approval by a majority of Members). 

332See Article IV, Section 4.8 of the CT Plan 

(providing that, the Members may, from time to 

time, designate and appoint one or more persons as 

an Officer of the Company by a majority vote of the 

Members). 

333See Data Boiler Letter I, supra note 31, at 30. 

This commenter, however, expresses concern that 

‘‘numbers are always a problem as SRO counts 

increase as exchanges are added or merged, whereas 

Non-SRO counts stay at six.’’ Id. at 30. This 

commenter also states that dividing the voting 

rights two-thirds and one-third between SROs and 

Non-SROs ‘‘may result in a divide along partisan 

line . . . only passing trivia matters’’ and the 

‘‘division would lead the SIP to run astray because 

of the bureaucracy.’’ Id. at 4, 13, 30. See also Data 

Boiler Letter II, supra note 101, at 1. 

334See RBC Letter, supra note 30, at 4. 

335 Virtu Letter, supra note 30, at 7. 

336See RBC Letter, supra note 30, at 6–7. 

337See id. This commenter further suggests that 

‘‘the proposed Plan specify the limited matters 

requiring augmented voting, and state that all other 

matters—including procedural votes thereon—are 

to be decided by majority vote of the Operating 

Committee. This simple majority standard should 

also extend to any votes requiring a quorum. 

Otherwise, the SROs would have the ability to 

thwart decisions of the Operating Committee by 

denying the Operating Committee a quorum.’’ Id. 

338See Nasdaq Letter I, supra note 20, at 1–2 

(attaching and incorporating by reference all 

arguments made by Petitioners in their opening 

brief challenging the Governance Order). The 

Commission responded to the arguments made by 

Nasdaq in their brief. See Brief for the Respondent, 

Securities and Exchange Commission, The Nasdaq 

Stock Market, et al. v. Securities and Exchange 

Commission (Case No. 20–1181) (D.C. Cir. 2021). 

339Cboe Letter, supra note 17, at 4 (emphasis in 

original). 

340NYSE Letter I, supra note 18, at 8–9; see also 

NYSE Letter II, supra note 19, at 3. 

341See NYSE Letter I, supra note 18, at 9; NYSE 

Letter II, supra note 19, at 3. 

votes for Non-SRO Voting 

Representatives will always be one-half 

of the SRO Voting Representatives’ 

votes. Therefore, if the number of SRO 

Voting Representatives, and their 

aggregates votes, increases, the votes of 

the Non-SRO Voting Representatives 

will similarly increase. 

The Commission believes that the 

proposed allocation of votes to NonSRO Voting Representatives will 

provide the Non-SRO Voting 

Representatives a meaningful presence 

and opportunity to vote on Operating 

Committee matters, while assuring that 

their voting power does not equal or 

exceed that of the SRO Voting 

Representatives. Accordingly, the 

Commission is approving Article IV, 

Sections 4.3(a)(ii) as proposed. 

(iii) Operating Committee Actions and 

Voting 

Article IV, Section 4.3(b) of the CT 

Plan provides that, with limited 

exceptions, action by the Operating 

Committee requires an ‘‘augmented 

majority vote,’’ meaning a two-thirds 

majority of all votes on the Operating 

Committee, provided that this vote also 

includes a majority of the SRO Voting 

Representative votes. And Article IV, 

Section 4.3(c) provides that the only 

Operating Committee actions that would 

not require an augmented majority vote 

are: (1) The selection of Non-SRO 

Voting Representatives 328; (2) the 

decision to enter into Executive 

Session 329; (3) decisions concerning the 

operation of the Company as an LLC330; 

(4) modifications to LLC-related 

provisions of the Agreement pursuant to 

Section 13.5 of the CT Plan 331; and (5) 

the selection of Officers of the 

Company, other than the Chair, 

pursuant to Section 4.8.332

The Commission received comments 

on this aspect of the CT Plan. One 

commenter expressly supports requiring 

an augmented majority vote that 

requires at least two-thirds of the votes 

of SRO Voting Representatives and NonSRO Voting Representatives, and a 

majority of the SRO Voting 

Representatives’ votes.333 Another 

commenter recommends that the 

Commission amend the existing Equity 

Data Plans to adopt augmented majority 

voting.334 One commenter states that the 

CT Plan does not address instances 

where recusal of a Non-SRO Voting 

Representative would result in the NonSROs having less than one third of the 

aggregate votes of the Operating 

Committee and ‘‘strongly suggest[s]’’ 

that the CT Plan be amended to provide 

that the votes of the Non-SROs will 

always equal one-third of the votes of 

the Operating Committee, even if one or 

more Non-SRO representatives has 

recused.335 Another commenter 

expresses concern about the proposed 

augmented majority voting scheme, 

particularly as it would be applied to 

Operating Committee actions, such as 

interpreting the CT Plan’s provisions.336

This commenter believes that the 

augmented voting requirement should 

apply to the SROs only to the extent 

needed to carry out their explicit 

regulatory obligations under the law, 

rather than to meet general 

responsibilities under the Plan.337

Other commenters state that the 

augmented majority vote will interfere 

with the SROs ability to comply with 

the Act.338 One commenter argues that 

the ‘‘Commission’s mandate that votes 

be allocated by exchange group would 

prevent SROs from fulfilling their duty 

under the Act to act jointly to 

implement the CT Plan. This is because 

that voting structure could result in a 

situation where actions and plan 

amendments might be approved by the 

individuals representing non-SROs and 

a minority of the SROs, even if those 

actions or amendments were opposed 

by a majority of the individual 

SROs.’’ 339 Another commenter echoes 

this concern stating, ‘‘it is feasible that 

a minority of individual SROs would be 

able to adopt proposals over the 

objection of a majority of individual 

SROs’’ under the proposed augmented 

majority voting scheme, and 

consequently, ‘‘it would be possible for 

the non-SRO voting representatives and 

a minority of Non-Affiliated SROs to 

force through plan actions and 

amendments without the assent of a 

majority of individual SROs.’’ 340 This 

commenter further states that allowing 

the CT Plan Operating Committee to act 

with only the concurrence of a minority 

of the individual SROs would subvert 

the ability of the SROs to act jointly 

pursuant to Section 11A.341

Contrary to commenters’ concerns, 

and as explained in the Governance 

Order, the Commission believes that the 

requirement for an augmented majority 

vote strikes an appropriate balance 

between the plan receiving meaningful 

input from a broad range of stakeholders 

while also providing the SROs with 

voting power to help ensure that Plan 

actions meet the requirements of 

Section 11A of the Act and Rule 608 of 

Regulation NMS. Specifically, the 

proposed augmented majority voting 

structure provides the SROs in the 

aggregate with two-thirds of the voting 

power on the operating committee—and 

non-SRO members of the Operating 

Committee in aggregate with one-third 

of the voting power—with proportionate 

fractional votes allocated to non-SRO 

members of the Operating Committee as 

necessary to preserve this ratio at all 

times. Further, as proposed, an 

‘‘augmented majority vote,’’ requires a 

two-thirds majority of all votes on the 

Operating Committee, provided that this 

vote also includes a majority of the 

votes allocated to the SROs. 

In response to those comments that 

the augmented majority vote could 


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342See Cboe Letter, supra note 17, at 4; NYSE 

Letter I, supra note 18, at 9; NYSE Letter II, supra 

note 19, at 3. 

343See Governance Order, supra note 8, 85 FR at 

28713. 

344See Virtu Letter, supra note 30, at 7; Data 

Boiler Letter I, supra note 31, at 30. 

345See Article IV, Section 4.4(c) of the CT Plan. 

346The time and location of meetings will be 

determined by the Operating Committee. See 

Article IV, Section 4.4(a) of the CT Plan. The 

location of meetings will be in a location capable 

of holding the number of attendees of such 

meetings, or such other locations as may from time 

to time be determined by the Operating Committee. 

See Article IV, Section 4.4(e) of the CT Plan. 

347See Article IV, Section 4.4(a) of the CT Plan. 

348See supra Section II.C.2. 

349See Notice, supra note 3, 85 FR at 64576. 

350See id. at 64568. 351See id. 352See id. 353See FINRA Letter I, supra note 257, at 4; 

Nasdaq Letter I, supra note 18, at 6, 13–14; NYSE 

Letter I, supra note 18, at 38; ICI Letter I, supra note 

31, at 4; BMO Letter I, supra note 30, at 4; SIFMA 

Letter I, supra note 30, at 4–5; MFA Letter, supra 

note 30, at 4; Schwab Letter I, supra note 30, at 5; 

BlackRock Letter I, supra note 247, at 4–5; Fidelity 

Letter, supra note 30, at 5; RBC Letter, supra note 

30, at 7; Data Boiler Letter I, supra note 31, at 5. 

354See FINRA Letter I, supra note 257, at 2–3; 

Nasdaq Letter I, supra note 20, at 26–27; Fidelity 

Letter, supra note 30, at 5; ICI Letter I, supra note 

31, at 4; SIFMA Letter I, supra note 30, at 4. 

355FINRA Letter I, supra note 257, at 3. 

356See id. 

357See Nasdaq Letter I, supra note 20, at 14. 

result in a scenario in which a proposal 

is adopted with the support of a 

supermajority of votes on the Operating 

Committee and a majority of the votes 

allocated to the SROs, but without the 

support of a majority of the individual 

exchanges,342 the Commission notes, as 

it did in the Governance Order,343 that 

this outcome is intended to be 

permissible. The Commission believes 

that in order to break the voting 

monopoly currently held by the three 

SRO Groups, and give non-SROs a 

meaningful voice on the Operating 

Committee, requiring that plan action be 

supported by a supermajority of the 

Operating Committee (which would 

include a majority of the votes allocated 

to SROs along with sufficient non-SRO 

votes to achieve the supermajority), and 

that it not be constrained by the votes 

of one or two SRO Groups, is 

appropriate. 

In response to comments that suggest 

modifications to the voting allocation 

between SRO Voting Representatives 

and Non-SRO Voting Representatives to 

account for a recusal by a Non-SRO 

Voting Representative or a change in the 

number of SROs Members,344 the 

Commission does not believe it is 

necessary to modify the CT Plan. In the 

event a Non-SRO Voting Representative 

must recuse itself pursuant to the terms 

of the CT Plan, proposed Article IV, 

Section 4.4(c) provides that if a Voting 

Representative is recused, he or she will 

not count in the calculation to 

determine if there is a quorum necessary 

for the Operating Committee to vote.345

For the reasons stated above, the 

Commission is approving Article IV, 

Section 4.3(b) of the CT Plan as 

proposed. The Commission is, however, 

modifying Section 4.3(c) of the CT Plan 

to limit the circumstances in which the 

Operating Committee could act without 

an augmented majority vote. 

Specifically, for the reasons discussed 

in Section II.C.5(d)(iii), infra, the 

Commission is modifying Section 

4.3(c)(ii) of the CT Plan to provide that 

an augmented majority vote is required 

before a topic not specifically listed in 

Section 4.4(g)(i) of the CT Plan as 

appropriate for discussion in Executive 

Session may be discussed in Executive 

Session. In addition, for the reasons 

discussed in Section II.C.12(e), infra, the 

Commission is modifying Section 4.3(c) 

of the CT Plan to delete the reference to 

modifications to LLC-related provisions 

of the Agreement pursuant to Section 

13.5(b) of the CT Plan, as well as, for the 

reasons discussed in Section II.C.5(h), 

infra, the reference to the selection of 

Officers, other than the Chair, pursuant 

to Section 4.8 of the CT Plan, as 

circumstances where an augmented 

majority vote is not required. 

For the reasons discussed, the 

Commission is approving Section 4.3 of 

the CT Plan as modified. 

(d) Meetings of the Operating 

Committee 

Article IV, Section 4.4 of the CT Plan 

addresses meetings of the Operating 

Committee. 

(i) Conduct of Meetings and Attendance 

Section 4.4(a) provides that meetings 

of the Operating Committee may be 

attended by the Voting Representatives, 

Member Observers, SRO Applicant 

Observers, SEC staff, and other persons 

as deemed appropriate by the Operating 

Committee.346 As proposed, Member 

Observers would be entitled to receive 

notice of all meetings of the Company 

and to attend and participate in any 

discussion, but would not be entitled to 

vote on any matter.347

As discussed above,348 in Article I, 

Section 1.1(oo) of the CT Plan, the 

exchanges have proposed to define a 

new type of individual, a Member 

Observer, who may attend meetings of 

the CT Plan. As proposed, a Member 

Observer would be an ‘‘individual other 

than a Voting Representative, that a 

Member, in its sole discretion, 

determines is necessary in connection 

with such Member’s compliance with 

its obligations under Rule 608(c) of 

Regulation NMS to attend Operating 

Committee and subcommittee 

meetings.’’ 349 In the Notice, the 

Commission solicited commenters’ 

views on whether an SRO would 

reasonably find it necessary to select a 

Member Observer to comply with its 

obligations under Rule 608(c) of 

Regulation NMS and under what 

circumstances, if any, the representation 

of an SRO on the Operating Committee 

by its selected SRO Voting 

Representative would be an insufficient 

means for the SRO to fulfill its 

obligations under Rule 608 of 

Regulation NMS.350 The Commission 

also asked whether persons who hold 

certain positions within an SRO should 

be prohibited from serving as Member 

Observers, and whether, if Member 

Observers are necessary, only persons 

who perform certain roles within an 

SRO (e.g., legal or compliance 

personnel) should be able to serve as 

Member Observers.351 Lastly, the 

Commission solicited further comment 

on whether the CT Plan should limit the 

number of Member Observers that each 

SRO would be permitted to name or the 

frequency with which the person 

serving as a Member Observer can be 

changed.352

In response to the questions in the 

Notice, the Commission received several 

comment letters regarding the proposed 

inclusion of Member Observers.353

Several commenters support including 

Member Observers in the CT Plan.354

Specifically, one commenter supports 

including Member Observers to 

‘‘account for the practical realities 

involved with the day-to-day operation 

of, and the SROs’ participation in, the 

Equity Market Data Plans, which will be 

equally as relevant for the CT Plan if it 

is approved.’’ 355 The commenter 

explains that Member Observers are 

necessary because the SRO Voting 

Representative collaborates with others 

within their organization to make the 

best and most informed decisions, 

acknowledging that, while the SRO 

Voting Representative may cast the vote, 

staff and senior management from 

various departments within the 

organization provide input into 

decisions made, as needed.356 Another 

commenter that supports permitting 

SROs to designate Member Observers 

describes the SRO Voting 

Representative as a generalist and states 

that the SRO Voting Representative may 

be asked to opine on a wide variety of 

topics (legal, technical, regulatory, 

system, and business matters) that 

require the expertise of specialists in 

those areas.357 This commenter states 


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358See id. at 27. 

359See id. 

360See NYSE Letter I, supra note 18, at 38–39. 

361See FINRA Letter I, supra note 257, at 4; 

Nasdaq Letter I, supra note 20, at 27; ICI Letter I, 

supra note 31, at 5. 

362See FINRA Letter I, supra note 257, at 4; 

Nasdaq Letter I, supra note 20, at 27. 

363See Nasdaq Letter I, supra note 20, at 14. 

364See ICI Letter I, supra note 31, at 5. 

365See ICI Letter I, supra note 31, at 4–5; BMO 

Letter, supra note 30, at 3–4; SIFMA Letter I, supra 

note 30, at 4; MFA Letter, supra note 30, at 4; 

BlackRock Letter I, supra note 247, at 4; Fidelity 

Letter, supra note 30, at 5; RBC Letter, supra note 

30, at 7; Data Boiler Letter I, supra note 31, at 5. 

366See MFA Letter, supra note 30, at 4. 

367 Data Boiler Letter I, supra note 31, at 6, 38. 

368See RBC Letter, supra note 30, at 8. 

369See ICI Letter I, supra note 31, at 5; ICI Letter 

II, supra note 31, at 2; Schwab Letter I, supra note 

30, at 2; BlackRock Letter I, supra note 247, at 3; 

Fidelity Letter supra note 30, at 5; RBC Letter, supra 

note 30, at 7–8. 

370See BlackRock Letter I, supra note 247, at 3. 

371See RBC Letter, supra note 30, at 8–9. 

372The Commission further notes that Sections 

4.4(a) and 4.7(b) of the CT Plan, respectively, permit 

other persons as deemed appropriate by the 

Operating Committee to attend general session 

meetings and subcommittee meetings. 

373See Section 1.1(oo) of the CT Plan, as 

modified. 

374Section 1.1(fff) of Article I defines the term 

‘‘PDP’’ as ‘‘a Member or non-Member’s proprietary 

market data product that includes Transaction 

Reports and Quotation Information data in Eligible 

Securities from a Member’s Market or a Trading 

Center, and if from a Member, is filed with the 

Commission.’’ 

375See infra Section II.C.5(j)(iii). 

that most Member Observers would be 

employees of the Member charged with 

that Member’s compliance obligations 

under Rule 608(c).358 This commenter 

also states that other Member Observers 

may be outside counsel, experts 

reporting to counsel, or other 

individuals advising the Member on 

compliance or other obligations.359

Another commenter contends that 

whether the SROs should be permitted 

to have Member Observers is a decision 

for the SROs to make, not the 

Commission, stating that, while the 

Commission has a role in supervising 

and enforcing SRO obligations, 

Commission rules establish that the 

SROs make operational decisions such 

as these.360

Some commenters state that it would 

be inappropriate to restrict Member 

Observers to those who serve a 

particular role in the SRO, to limit the 

number of Member Observers that an 

SRO could name, or to limit the 

frequency with which such 

appointment of Member Observers 

could be changed.361 Two commenters 

argue that such limitations would be 

arbitrary, as there is no way to predict 

when expert assistance may be 

necessary, and they further assert that 

such restrictions would not provide any 

benefit and would otherwise restrict the 

SROs’ ability to make decisions about 

how to fulfill their regulatory 

responsibilities.362 One commenter 

argues that any restrictions on the 

ability to call on such expertise when 

needed would interfere with the ability 

of the Operating Committee to address 

complex legal, regulatory, and technical 

issues as they arise.363 While one 

commenter does not recommend 

limiting the number of Member 

Observers permitted, it suggests that the 

Operating Committee members provide 

a reasonable basis for inviting Member 

Observers, taking into account criteria 

such as the person’s area of expertise, 

potential or actual conflicts of interest, 

and the Operating Committee’s agenda 

for the meeting.364

The Commission also received several 

comment letters expressing concerns 

regarding Member Observers as 

proposed in the CT Plan.365 One 

commenter states that without 

reasonable constraints, Member 

Observers may dilute the voice of NonSRO Voting Representatives and 

enhance the SROs’ ability to operate the 

CT Plan in their own interests instead 

of consistent with the statutory 

purposes for which the Plan exists.366

One commenter states that Member 

Observers should be limited so that an 

SRO cannot ‘‘stack the deck’’ with 

multiple Member Observers.367 Another 

commenter expresses concern that if 

Member Observers participate in 

Operating Committee meetings, it could 

exacerbate or create conflicts of interest 

and place the Non-SRO Voting 

Representatives at a competitive 

disadvantage, as they would not have a 

similar ability to consult with outside 

persons who have expertise in the 

matter being discussed.368

Several commenters state that NonSRO Voting Representatives should also 

be permitted to invite observers to 

attend Operating Committee meetings, 

Executive Sessions, and subcommittee 

meetings.369 These commenters argue 

that better informed colleagues could 

advise Non-SRO Voting Representatives 

before, during, and after Operating 

Committee meetings, resulting in more 

informed discussions. Specifically, one 

commenter states that permitting NonSRO observers would provide for 

broader participation, improve 

transparency, and enhance the quality 

of guidance, as well as assist in creating 

a pool of potential Non-SRO Voting 

Representatives.370 One commenter 

recommends that the CT Plan provide 

all Voting Representatives with the 

ability to request an observer to 

participate in Operating Committee 

meetings, so long as the Voting 

Representative specifies the purpose for 

their inclusion, including the relevancy 

to the topic under discussion, and 

subject to the Operating Committee’s 

approval.371

After careful consideration of the 

comments received, the Commission 

believes that it is appropriate for SROs 

to be permitted to designate Member 

Observers under the CT Plan. The 

Commission agrees that there may be 

instances in which an SRO Voting 

Representative will require input from, 

or benefit from collaboration with, 

individuals with specialized views, 

experience with day-to-day operations, 

or expertise (including legal, regulatory, 

and technical knowledge) who are not 

designated as the SRO Voting 

Representative in order to facilitate an 

SRO’s compliance with its regulatory 

obligations with respect to the CT 

Plan.372

The Commission also finds that it is 

appropriate to modify the definition of 

Member Observer because the role of a 

Member Observer is intended to include 

certain individuals employed by the 

Member, or its counsel. Specifically, the 

Commission is modifying the definition 

of ‘‘Member Observer’’ in Section 

1.1(oo) of CT Plan to remove the 

reference to ‘‘individual’’ and replace it 

with ‘‘employee of a Member’’ and 

adding ‘‘or any attorney to a Member’’ 

to provide for an employee or counsel 

that a Member determines is necessary 

in connection with the Member’s 

compliance under Rule 608(c).373

Additionally, because Member 

Observers are permitted to attend 

Operating Committee meetings and 

subcommittee meetings, the 

Commission is deleting ‘‘in its sole 

discretion’’ from the definition of 

Member Observer and adding language 

that would prohibit a Member from 

designating as a Member Observer an 

individual who is responsible for or 

involved with the procurement for, or 

development, modeling, pricing, 

licensing, or sale of, proprietary equity 

market data products (called ‘‘PDP’’ in 

the CT Plan) 374 offered to customers of 

the CT Feeds, consistent with the 

Commission’s modifications to Section 

4.10(b)(i).375 Specifically, the 

Commission is adding the following 

clause to the definition of Member 

Observer: ‘‘provided that the 

designation of the Member Observer is 

consistent with the prohibition in 

Section 4.10(b)(i).’’ The Commission 

finds that this modification is 

appropriate to mitigate the effect of an 

SRO’s conflicts of interests on the 


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376Section 1.1(oo) of the CT Plan, as modified. 

377See Article IV, Section 4.10(b) of the CT Plan. 

See also infra Section II.C.5(j) (discussing the 

Commission’s modification to the proposed CT Plan 

to make the recusal provisions of Article IV, Section 

4.10(b) applicable to Member Observers and the 

rationale therefore). 

378See Article IV, Sections 4.4(a) and 4.7(b) of the 

CT Plan. 

379See Article IV, Section 4.4(e) of the CT Plan. 

380See id. 

381See Article IV, Section 4.4(e)(i) of the CT Plan. 

382See Article IV, Section 4.4(e)(ii) of the CT 

Plan. 

383See id. 

384See Article IV, Section 4.4(e) of the CT Plan. 

385See id. 

operation of the CT Plan. Specifically, to 

the extent that a Member offers 

proprietary market data products and 

designates an employee that has a 

financial interest that is tied directly to 

the Member’s proprietary data business, 

that individual has an inherent conflict 

of interest and cannot be designated as 

a Member Observer. 

In response to comments regarding 

Member Observer limitations, the 

Commission believes that, because it is 

difficult to predict who, when, and how 

many individuals may be called upon to 

assist with CT Plan related matters, it is 

appropriate not to limit the number of 

Member Observers an SRO may appoint. 

However, the Commission believes that 

participation of Member Observers in 

CT Plan meetings is appropriately 

limited by the requirement that 

appointment of a Member Observer be 

‘‘necessary in connection with a 

Member’s compliance with its 

obligations under Rule 608(c) of 

Regulation NMS to attend Operating 

Committee and subcommittee 

meetings.’’ 376 The Commission further 

believes that this requirement, in 

addition to the provisions permitting 

other persons to attend CT Plan 

meetings as discussed below and the 

non-voting status of Member Observers, 

would reasonably preclude the SROs 

from diluting the role and contributions 

of Non-SRO Voting Representatives and 

bolstering their own agendas. 

While the Commission believes it is 

appropriate to allow Member Observers 

to participate in Operating Committee 

meetings, the Commission is modifying 

Article IV, Section 4.4(a) to eliminate 

the requirement that the Operating 

Committee provide notice of all 

meetings of the Company to Member 

Observers. The Commission finds that 

this modification is appropriate because 

the proposed requirement would place 

an unnecessary burden on the Operating 

Committee, and believes that it is 

appropriate instead for the SROs, on 

whose behalf the Member Observers 

will attend Operating Committee 

meetings, to provide notice of meetings 

to their Member Observers. 

Additionally, the Commission is 

modifying this subsection to provide 

that Member Observers may not attend 

or participate in Operating Committee 

meetings if their attendance or 

participation would be inconsistent 

with the conflicts of interest provisions 

requiring recusal. The Commission 

finds that this modification is 

appropriate because it is consistent 

with, and serves the same purposes as, 

modifications the Commission is 

making to Article IV, Section 4.10(b), 

discussed below, which make the CT 

Plan’s conflicts of interest provisions 

applicable to Member Observers, just as 

they apply to SRO Voting 

Representatives and any alternate SRO 

Voting Representative.377

Finally, because Non-SRO Voting 

Representatives will serve on the 

Operating Committee in their individual 

capacity and do not have regulatory 

obligations paralleling those of the 

SROs, the Commission does not believe 

that Non-SRO Voting Representatives 

require a similar observer provision in 

the CT Plan. However, the Commission 

notes that Section 4.4(a) of the CT Plan 

permits other persons as deemed 

appropriate by the Operating Committee 

to attend Operating Committee meetings 

and that Section 4.7(b) of the CT Plan 

similarly permits other persons as 

deemed appropriate by the Operating 

Committee to attend subcommittee 

meetings.378 The Commission believes 

that a Non-SRO Voting Representative 

may draw upon these provisions to seek 

the approval of the Operating 

Committee to permit attendance by an 

informed colleague or other person at a 

CT Plan meeting when the Non-SRO 

Voting Representative believes that 

discussion of a matter may benefit from 

that person’s additional expertise or 

input. 

For the reasons stated above, the 

Commission is approving Section 4.4(a), 

as modified. 

(ii) The Chair of the Operating 

Committee 

Article IV, Section 4.4(e) provides for 

the selection of a Chair of the Operating 

Committee. As proposed, a Chair will be 

elected from among the SRO Voting 

Representatives to serve a one-year term 

beginning on the date of the first 

quarterly meeting of the Operating 

Committee following the Operative 

Date.379 An election to select the Chair 

of the Operating Committee will be held 

every year.380 Pursuant to the CT Plan, 

to elect a Chair, the Operating 

Committee will elicit nominations for 

individuals to be considered for the 

Chair position.381 If no candidate is 

elected by an augmented majority vote 

of the Operating Committee, the 

candidate with the lowest number of 

votes will be eliminated from 

consideration, and the Operating 

Committee will take another vote and 

repeat this process until a candidate is 

elected by an augmented majority vote 

of the Operating Committee.382 In the 

event two candidates remain and 

neither is elected by an augmented 

majority vote of the Operating 

Committee, the candidate receiving the 

most votes from SRO Voting 

Representatives will be elected.383 The 

Chair of the Operating Committee will 

have the authority to enter into 

contracts on the Company’s behalf and 

otherwise bind the Company, but only 

as directed by the Operating 

Committee.384 In addition, the Chair 

will designate a person to serve as 

Secretary of the Operating Committee to 

record minutes of each meeting.385

The Commission finds that the 

provisions governing the nomination of 

candidates and the selection of a Chair 

of the Operating Committee, as well as 

the proposed term for service as Chair, 

are appropriate. These provisions 

provide for a nomination and selection 

process that allows input from all 

members of the Operating Committee. 

The Commission further believes that a 

one-year term will allow for frequent 

rotation of the duties and 

responsibilities that are associated with 

the Chair position. Additionally, the 

Commission finds that the specified 

authority of the Chair of the Operating 

Committee is appropriate in that it 

allows the Chair to enter into 

agreements on behalf of the Company, 

thus streamlining the process of 

contracting with the Company, but does 

not permit the Chair to act except as 

directed by the Operating Committee. 

The Commission also finds that because 

the Chair has authority to act only at the 

direction of the Operating Committee, it 

is not unreasonable to require that the 

Chair be an SRO Voting Representative, 

as this will not undermine the voting 

power that the Non-SRO Voting 

Representatives have with respect to 

action by the Operating Committee. The 

Commission received no comments 

addressing these provisions and is 

approving Article IV, Section 4.4(e) as 

proposed. 

(iii) Executive Session 

Article IV, Section 4.4(g) of the CT 

Plan provides that, notwithstanding any 

other provision of the CT Plan, the SRO 


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386See Article IV, Section 4.4(g) of the CT Plan. 

The rationale provided may be that the topic falls 

within the list of topics in Section 4.4(g)(i). See id. 

387See Article IV, Section 4.4(g) of the CT Plan. 

388See id. 

389See Article IV, Section 4.4(g)(i)(A)–(C) of the 

CT Plan. 

390Article IV, Section 4.4(g)(ii) of the CT Plan. 

391See id. 

392See Article IV, Section 4.4(g)(iv) of the CT 

Plan. 

393Notice, supra note 3, 85 FR at 64569 (Question 

21). 

394See RBC Letter, supra note 30, at 9; Schwab 

Letter I, supra note 30, at 2; Schwab Letter II, supra 

note 30, at 5–6; Virtu Letter, supra note 30, at 5; 

SIFMA Letter I, supra note 30, at 4; SIFMA Letter 

II, supra note 30, at 4; MEMX Letter, supra note 30, 

at 4. 

395See ICI Letter I, supra note 31, at 6; ICI Letter 

II, supra note 31, at 2; BMO Letter I, supra note 30, 

at 5; SIFMA Letter I, supra note 30, at 4; SIFMA 

Letter II, supra note 30, at 4; BlackRock Letter I, 

supra note 247, at 5; Fidelity Letter, supra note 30, 

at 4. 

396RBC Letter, supra note 30, at 9. 

397 Id. 

398See id. at 10–11. This commenter also believes 

that the Commission should amend the existing 

Equity Data Plans to adopt the same Executive 

Session policies it includes in the CT Plan. See id. 

at 4. 

399See Schwab Letter I, supra note 30, at 2; 

Schwab Letter II, supra note 30, at 5–6. 

400 Virtu Letter, supra note 30, at 5. This 

commenter also questions why Non-SRO Voting 

Representatives should be excluded from 

discussions of litigation matters if they sign a nondisclosure agreement. See id.; see also RBC Letter, 

supra note 30, at 11 (stating that information of a 

sensitive nature can be addressed by the 

confidentiality policies of the CT Plan). 

401See Virtu Letter, supra note 30, at 5. 

402See ICI Letter I, supra note 31, at 6; ICI Letter 

II, supra note 31, at 2. 

403See Fidelity Letter, supra note 30, at 4. 

404See id. 

405See MEMX Letter, supra note 30, at 4. 

406See id.; see also Fidelity Letter, supra note 30, 

at 4. 

407See MEMX Letter, supra note 30, at 4. 

408See ICI Letter I, supra note 31, at 6; ICI Letter 

II, supra note 31, at 2. 

409BMO Letter I, supra note 30, at 5; see also 

SIFMA Letter I, supra note 30, at 4; SIFMA Letter 

II, supra note 30, at 4. Additionally, one commenter 

asserts that ‘‘personnel matters’’ under the 

definition of Highly Confidential Information, 

which, as proposed, the SROs can discuss in 

Executive Session, should be limited to matters that 

exclusively affect the employees of SROs or the 

LLC. See SIFMA Letter I, supra note 30, at 4. 

Voting Representatives, Member 

Observers, SEC staff, and other persons 

as deemed appropriate by the SRO 

Voting Representatives may meet in an 

Executive Session to discuss an item of 

business for which it is appropriate to 

exclude Non-SRO Voting 

Representatives. A request to meet in 

Executive Session must be included on 

the written agenda for an Operating 

Committee meeting, along with 

identification of the item to be 

discussed and a clearly stated rationale 

as to why that item would be 

appropriate for discussion in Executive 

Session.386 A majority vote of the SRO 

Voting Representatives would be 

required to create an Executive 

Session.387 The SRO Voting 

Representatives would be permitted to 

discuss only the topic for which the 

Executive Session was created and 

would disband upon fully discussing 

the topic.388

Article IV, Section 4.4(g)(i) of the CT 

Plan also provides that topics discussed 

in Executive Session should be limited 

to the following: (1) Any topic that 

requires discussion of Highly 

Confidential Information; (2) Vendor or 

Subscriber Audit Findings; and (3) 

Litigation matters.389 Section 4.4(g)(ii) 

adds a catch-all provision stating that 

this list of enumerated items ‘‘is not 

dispositive of all matters that may by 

their nature require discussion in an 

Executive Session,’’ adding, however, 

that ‘‘the mere fact that a topic is 

controversial or a matter of dispute does 

not, by itself, make a topic appropriate 

for Executive Session.’’ 390 This section 

further provides that the minutes for an 

Executive Session must include the 

reason for including any item in 

Executive Session.391 As proposed, any 

action that requires a vote in Executive 

Session would require a majority of the 

vote of the SRO Voting Representatives 

eligible to vote on such action.392

In the Notice, the Commission sought 

comment on whether the specified 

items proposed in the CT Plan are 

appropriate topics for Executive 

Session, including whether the 

proposed provision that the topics 

identified in the CT Plan are ‘‘not 

dispositive of all matters that may by 

their nature require discussion in an 

Executive Session’’ would allow the 

SROs excessive discretion to meet in 

Executive Session.393 In response, the 

Commission received numerous 

comments. In particular, certain 

commenters express the view that the 

topics proposed as appropriate for 

Executive Session are too broad,394 and 

recommend eliminating the language in 

Section 4.4(g)(ii) that would permit the 

SROs to enter into Executive Session for 

matters that by their nature require 

discussions in Executive Session.395

One commenter believes that the ‘‘broad 

and open-ended use of Executive 

Sessions’’ proposed in the CT Plan is 

inconsistent with the SEC’s goals of 

transparency, effective operations of the 

Plan, and eliminating conflicts of 

interest.396 This commenter states that 

‘‘[s]anctioning the ability of competitors 

to meet in secret to discuss confidential 

business raises antitrust concerns,’’ 397

and believes that there should be a 

presumption against use of Executive 

Session except upon a showing of need 

and explanation why Non-SRO Voting 

Representatives should not be 

included.398

One commenter states that the 

proposed list of topics for discussion in 

Executive Session is too broad and 

should be tightened to ensure that such 

sessions are not abused and used to cut 

non-SROs out of discussions.399

Another commenter asserts that the 

broad list of topics proposed for 

Executive Session ‘‘essentially grants 

the SROs unfettered discretion about 

what topics are appropriate for 

Executive Session.’’ 400 This commenter 

believes that the determination of what 

belongs in Executive Session should not 

be left to the discretion of the SROs.401

One commenter states that Executive 

Sessions could be used to circumvent 

the policy underlying the Market Data 

Structure reforms.402 Another 

commenter believes that use of 

Executive Sessions should be narrowly 

tailored given that Executive Session 

presents an exception to the general rule 

that non-SROs will participate with 

SROs in operation of the CT Plan.403

This commenter believes that Executive 

Sessions should be reserved for 

instances where there is a direct conflict 

of interest for participation by Non-SRO 

Voting Representatives.404 Another 

commenter states that it recognizes that 

there may be circumstances for SROonly deliberations in Executive Session, 

but is concerned that overuse of 

Executive Session would limit 

transparency of the CT Plan’s 

governance.405 This commenter 

supports either limiting the topics that 

can be discussed to the three 

enumerated topics 406 or changing the 

mechanism for approval of a topic as 

appropriate for Executive Session.407

One commenter recommends 

eliminating the broad language in the 

CT Plan that would permit Executive 

Sessions for ‘‘matters that by their 

nature require discussions in Executive 

Session.’’ 408 Another commenter states 

that this provision risks providing SROs 

with ‘‘excessive discretion to limit or 

prevent the participation of Non-SRO 

Voting Representative in certain CT 

Plan matters’’ and thus believes that the 

list of permissible topics for Executive 

Session should be listed specifically in 

the CT Plan.409 Another commenter 

states that this provision gives the SROs 

too much latitude to meet outside the 

presence of the Non-SRO Voting 

Representatives and creates inherent 

conflicts of interest, and recommends 


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410See BlackRock Letter I, supra note 247, at 5; 

see also Data Boiler Letter II, supra note 101, at 1. 

411See Fidelity Letter, supra note 30, at 4. 

412See Data Boiler Letter I, supra note 31, at 31. 

413See Nasdaq Letter I, supra note 20, at 25–26. 

414See RBC Letter, supra note 30, at 9; Schwab 

Letter I, supra note 30, at 2; Schwab Letter II, supra 

note 30, at 5–6; Virtu Letter, supra note 30, at 5; 

SIFMA Letter I, supra note 30, at 4; SIFMA Letter 

II, supra note 30, at 4; MEMX Letter, supra note 30, 

at 4. 

415See Nasdaq Letter I, supra note 20, at 25–26. 

416The Commission is also modifying Article IV, 

Section 4.4(g)(i) of the CT Plan to state that the 

items for discussion within an Executive Session 

shall be limited to the topics enumerated in 

subsections 4.4(g)(i)(A)–(E) and for which it is 

appropriate to exclude Non-SRO Voting 

Representatives. So, for example, as an enumerated 

topic eligible for discussion in Executive Session, 

a litigation matter may be discussed in Executive 

Session if it involves a matter for which it is 

appropriate to exclude the Non-SRO Voting 

Representatives. The Commission believes that, as 

a practical matter, it is likely that discussions of 

litigation matters that are not appropriate to include 

Non-SRO Voting Representatives will take place in 

the forum of a legal subcommittee of the Operating 

Committee. See infra Section II.C.5(k)(iii). 

417See Article IV, Section 4.4(g)(i)(A) of the CT 

Plan. 

418See Article I, Section 1.1(ii) of the CT Plan 

(defining ‘‘Highly Confidential Information’’ as 

‘‘any highly sensitive Member-specific, customerspecific, individual-specific, or otherwise sensitive 

information relating to the Operating Committee, 

Members, Vendors, Subscribers, or customers that 

is not otherwise Restricted Information’’). 

eliminating it.410 One commenter states 

that the presence of the Commission 

staff at Executive Session meetings, as 

well as the requirement that a written 

agenda for an Executive Session must be 

provided at an Operating Committee 

meeting, will help ensure that Executive 

Sessions are used properly, but 

continues to have concerns that use of 

Executive Sessions will limit 

information available to Non-SRO 

Voting Representatives and impair the 

effectiveness of their participation on 

the Operating Committee.411 Another 

commenter believes that in order to 

preserve the independence of Voting 

Representatives, Member Observers 

should not participate in Executive 

Sessions unless a Voting Representative 

requests the Member Observer to testify 

on a particular matter during the 

Executive Session.412

One commenter, however, supports 

the use of Executive Sessions as 

proposed in the CT Plan and states that 

Executive Sessions have been used 

rarely in recent years and that the 

requirement that the basis for using 

Executive Session must be publicly 

disclosed in the Operating Committee 

Agenda will ensure that Executive 

Sessions will be used only when 

necessary.413

The Commission agrees with 

comments that the scope of matters that 

could be discussed in Executive 

Session, outside the presence of the 

Non-SRO Voting Representatives, is too 

broad as proposed in the CT Plan.414

While the Commission acknowledges 

that, as stated by one commenter,415

Executive Sessions are rarely used 

today, the Commission believes that the 

CT Plan must be clearer regarding the 

scope of topics eligible for discussion in 

Executive Session and that the CT Plan 

language should be narrowly tailored to 

permit the SRO Voting Representatives 

to meet outside the presence of the NonSRO Voting Representatives—who are 

full members of the Operating 

Committee—to discuss only limited 

matters that exclusively concern the 

SROs or that pose direct conflicts of 

interest with respect to non-SRO 

participation. In particular, the 

Commission believes that the proposed 

‘‘catch-all’’ language in Section 

4.4(g)(ii)—providing that certain matters 

may, by their nature, require discussion 

in an Executive Session—is too broad to 

serve the limited purpose of Executive 

Sessions. In addition, though the 

Commission believes that the 

requirement for a written agenda and 

the presence of Commission staff at 

Executive Sessions may curb the 

potential misuse of Executive Sessions, 

the Commission believes that the topics 

that may be discussed in Executive 

Session should be specifically 

enumerated in the CT Plan to provide 

transparent and clear boundaries. 

Accordingly, the Commission is 

modifying Article IV, Section 4.4(g) in 

several ways to clarify who may attend 

Executive Sessions and to explicitly 

state the topics regarding which SRO 

Voting Representatives may meet in 

Executive Session. 

First, the Commission is deleting the 

phrase in Section 4.4(g) that provides 

that Executive Sessions may be held 

‘‘[n]otwithstanding any other provision’’ 

of the CT Plan. The Commission finds 

that this modification is appropriate 

because it will serve to make all other 

provisions of the CT Plan—most 

importantly the provisions regarding 

conflicts of interest and 

confidentiality—applicable to Executive 

Sessions. Permitting the SROs to meet 

in Executive Session without the 

conflicts of interest and the 

confidentiality policies being applicable 

would substantially undermine the 

effectiveness of those policies and the 

Commission’s goals in reforming the 

governance of the Equity Data Plans. 

This concern is magnified where, as 

here, the SROs have proposed an openended set of topics that could be 

discussed in Executive Session. 

Second, the Commission is modifying 

Section 4.4(g) to require that the ‘‘other 

persons’’ authorized to attend Executive 

Sessions will be determined collectively 

‘‘by majority vote of the SRO Voting 

Representatives.’’ The Commission 

finds that this modification is 

appropriate because it is unclear how 

the SRO Voting Representatives would 

‘‘deem appropriate’’ other persons to 

attend Executive Session as proposed; 

this modification will resolve that 

ambiguity. Further, this modification 

will ensure that any selection of ‘‘other 

persons’’ authorized to attend Executive 

Sessions will be made in a manner 

consistent with the allocation of voting 

power by SRO Group, as set forth in 

Section 4.3(a)(i) of the CT Plan. 

Third, the Commission is modifying 

Section 4.4(g) to provide that topics 

appropriate for discussion in Executive 

Session must not only be topics for 

which it is appropriate to exclude NonSRO Voting Representatives, as the CT 

Plan proposes, but must also fall within 

a list of enumerated topics, as discussed 

below.416 The Commission finds that 

this modification is appropriate because 

coupling the requirement that Non-SRO 

Voting Representatives may only be 

excluded from discussions of an item of 

business for which it is appropriate to 

exclude them with a list of specific 

topics appropriate for discussion in 

Executive Session will appropriately 

narrow the discussions that may be held 

in Executive Session so that Non-SRO 

Voting Representatives are not excluded 

from Operating Committee discussions 

without sufficient justification. 

Fourth, the Commission is modifying 

the list of topics appropriate for 

discussion in Executive Session in 

Section 4.4(g)(i) of the CT Plan to 

exclude discussions regarding contract 

negotiations with Processors or the 

Administrator. The CT Plan as proposed 

provides that any topic that requires 

discussion of Highly Confidential 

Information is appropriate for Executive 

Session,417 which would include 

discussions regarding the Company’s 

contract negotiations with the 

Processors or Administrator; personnel 

matters; information concerning the 

intellectual property of Members or 

customers; and any document subject to 

the Attorney-Client Privilege or Work 

Product Doctrine.418 The Commission 

finds that this modification is 

appropriate because discussions 

regarding contract negotiations with 

Processors or the Administrator are 

integral to the management and 

operation of the CT Plan, for which the 

Operating Committee, including the 

Non-SRO Voting Representatives, is 

responsible. The Commission believes 

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419See RBC Letter, supra note 30, at 9; Schwab 

Letter I, supra note 30, at 2; Schwab Letter II, supra 

note 30, at 5–6; Virtu Letter, supra note 30, at 5; 

SIFMA Letter I, supra note 30, at 4; SIFMA Letter 

II, supra note 30, at 4; MEMX Letter, supra note 30, 

at 4. 

420See supra note 400. 

421See Article IV, Section 4.4(b) of the CT Plan. 

422See Article IV, Section 4.4(c)(ii) of the CT 

Plan. 

423See Article IV, Section 4.4(c)(i) of the CT Plan. 

SRO Voting Representatives at this 

critical stage of development of CT Plan 

operations is important, as decisions 

made in these contracts negotiations 

may have important consequences for 

the categories of market participants 

whose views Non-SRO Voting 

Representatives represent on the 

Operating Committee. Further, with 

respect to these contract negotiations, 

there are not issues that would uniquely 

affect the SROs and warrant excluding 

the Non-SRO Voting Representatives 

from such discussions. 

Fifth, the Commission is modifying 

Section 4.4(g)(i) to add two topics to the 

list of items eligible for discussion in 

Executive Session. The Commission is 

adding discussion of ‘‘[r]esponses to 

regulators with respect to inquiries, 

examinations, or findings’’ as new 

Section 4.4(g)(i)(D). The Commission 

believes that it is appropriate to permit 

the SRO Voting Representatives to 

discuss responses to regulators with 

respect to inquiries, examinations, or 

findings in Executive Session, because 

the SROs have unique regulatory 

obligations with respect to the operation 

of the CT Plan. However, this provision 

is not intended to prevent or limit the 

Non-SRO Voting Representatives from 

receiving copies of any regulatory 

inquiries, examinations, or findings 

directed to the Operating Committee of 

CT Plan (as opposed to those directed 

solely to one or more SROs). As voting 

members of the Operating Committee 

that is charged with the operation of the 

CT Plan, Non-SRO Voting 

Representatives need to be informed of 

inquiries, examinations, and findings 

that are directed to the Operating 

Committee in order to be active and 

informed participants on the Operating 

Committee with respect to ongoing and 

future operations of the CT Plan. For 

example, a regulatory inquiry, 

examination, or finding might identify 

areas of non-compliance with the terms 

of the Plan, shortcomings in the 

performance of the Administrator or 

Processors, or areas in which 

amendments to the CT Plan might be 

necessary or appropriate, and the full 

Operating Committee should be aware 

of such issues because the full 

Operating Committee will vote on any 

CT Plan actions taken or proposed in 

response. The Commission believes, 

however, that because the SROs have 

unique obligations for, and potential 

liability for, meeting regulatory 

obligations in the operation of the CT 

Plan, SRO Voting Representatives 

should be permitted to discuss outside 

the presence of the Non-SRO Voting 

Representatives any reply by the SROs 

to regulators regarding any inquiry, 

examination, or finding. 

The Commission is also adding 

Section 4.4(g)(i)(E), which would permit 

discussion in Executive Session of 

‘‘[o]ther discrete matters approved by a 

vote of the Operating Committee.’’ The 

Commission finds that this modification 

is appropriate because it recognizes that 

not every topic that may be appropriate 

for Executive Session can be foreseen, 

and because some provision must 

therefore be made in the CT Plan for 

unanticipated topics suitable for 

Executive Session. The Commission 

believes that allowing matters that have 

been presented to, and approved by, the 

Operating Committee for discussion in 

Executive Session strikes a balance by 

providing leeway for unanticipated 

topics to be discussed in Executive 

Session, while also giving the Non-SRO 

Voting Representatives an opportunity 

to review the topic being considered 

and vote as part of the Operating 

Committee on whether the topic is 

appropriate for discussion in Executive 

Session. 

Finally, as recommended by several 

commenters,419 the Commission is 

modifying Section 4.4(g)(ii) to remove 

the language that states the list of topics 

considered appropriate for Executive 

Session ‘‘is not dispositive of all matters 

that may by their nature require 

discussion in an Executive Session.’’ 

The Commission finds that this 

modification is appropriate because the 

language in Section 4.4(g)(ii) of the CT 

Plan is too broad and leaves it to the 

SRO Voting Representatives’ discretion 

which additional topics would require 

discussion in Executive Session. This 

provision has the potential to be used by 

the SRO Voting Representatives to limit 

transparency to discuss significant 

topics outside the presence of the NonSRO Voting Representatives. For this 

reason, the Commission is approving 

Section 4.4(g) of the CT Plan as 

modified. 

While one commenter suggests that 

Non-SRO Voting Representatives should 

be permitted to attend Executive 

Sessions if they sign a non-disclosure 

agreement,420 the Commission is 

declining to include such a provision in 

light of the other modifications the 

Commission has made to the Executive 

Session provisions of the CT Plan, 

which are discussed above. These 

modifications are designed to limit the 

permissible topics for Executive 

Sessions to those for which it 

appropriate to exclude Non-SRO Voting 

Representatives, such as matters that 

exclusively concern the SROs or that 

pose direct conflicts of interest with 

respect to non-SRO participation. 

Because the reason for excluding NonSRO Voting Representatives in such 

instances would not be a concern about 

confidentiality, a non-disclosure 

agreement would not sufficiently 

resolve the underlying concerns. 

(iv) Other Provisions 

The CT Plan provides that the Chair 

of the Operating Committee may call a 

special meeting of the Operating 

Committee on at least 24 hours’ notice 

to each Voting Representative and all 

persons eligible to attend Operating 

Committee meetings.421

Article IV, Section 4.4(c) of the CT 

Plan sets forth quorum requirements for 

a vote of the Operating Committee. 

Specifically, the CT Plan requires that a 

quorum of all Voting Representatives be 

present for a vote of the Operating 

Committee, and that a quorum is equal 

to the minimum votes necessary to 

obtain approval under Section 4.3(b), 

i.e., Voting Representatives reflecting 

two-thirds of Operating Committee 

votes eligible to vote on an action and 

Non-SRO Voting Representatives 

reflecting 50% of SRO Voting 

Representative votes eligible to vote on 

that action. A Voting Representative 

will only be considered present if he or 

she is either in physical attendance at 

the meeting or participating by 

conference telephone or other electronic 

means that enables each Voting 

Representative to hear and be heard by 

all others present at the meeting.422 This 

section further provides that if a Voting 

Representative has been recused from 

voting on a particular action, he or she 

will not be considered for purposes of 

determining whether a quorum is 

present.423

Article IV, Section 4.4(d) of the CT 

Plan requires that at least one week 

prior to a meeting, a summary of any 

action sought to be resolved at a meeting 

must be sent to each Voting 

Representative entitled to vote on the 

matter via electronic mail, portal 

notification, or regular U.S. or private 

mail (or if one week is not practicable, 

then with as much time as may be 

reasonably practicable under the 


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424This requirement may be waived by a vote of 

the Operating Committee. See id. 425See Notice, supra note 3, 85 FR at 64569 

(Question 22). 426See id. at 64569–70 (Question 22). 427See id. at 64570 (Question 22). 

428See id. 

429RBC Letter, supra note 30, at 9. 

430See Virtu Letter, supra note 30, at 6. 

431See id. 

432See Data Boiler Letter I, supra note 31, at 32– 

33. 

433See BMO Letter I, supra note 30, at 4. 

434See id. 

435See id. The Commission notes that this 

comment letter applies to both the discussion 

regarding Certain Transactions, as well as Article 

IV, Section 4.6 (Company Opportunities) of the CT 

Plan. 

436See Nasdaq Letter I, supra note 20, at 23. 

437See id. 

438See id. 

439See id. 

circumstances).424 Finally, Article IV, 

Section 4.4(f) of the CT Plan provides 

that meetings may be held by 

conference telephone or other electronic 

means that enables each Voting 

Representative to hear and be heard by 

all others present at the meeting. 

The Commission believes that the 

provisions in Article IV, Sections 

4.4(b)–(d) and (f) of the CT Plan relating 

to special meetings of the Operating 

Committee, quorum requirements, 

notice of actions to be resolved at 

Operating Committee meetings, and the 

mediums through which meetings may 

be held, are reasonable. The 

Commission received no comments 

addressing these Sections and is 

approving these provisions as proposed. 

(e) Certain Transactions 

Article IV, Section 4.5 of the CT Plan 

states that the CT Plan is not prohibited 

from employing or dealing with persons 

in which an SRO or any of its affiliates 

has a connection or a direct or indirect 

interest. Specifically, the section 

provides that the fact that a Member or 

any of its affiliates is directly or 

indirectly interested in or connected 

with any person employed by the 

Company to render or perform a service, 

or from which or to whom the Company 

may buy or sell any property, shall not 

prohibit the Company from employing 

or dealing with such person. 

In the Notice, the Commission sought 

comment on this provision, asking, 

among other things, if there are specific 

types of employment relationships or 

business dealings that should be 

permitted, and similarly if there are 

ones that should be prohibited.425 The 

Commission also asked for commenters’ 

views regarding whether the CT Plan 

should require the relevant SROs to 

maintain information barriers between 

themselves and the affiliates or persons 

that have employment relationships or 

business dealings with the CT Plan, and 

if so, what type of information barriers 

would be appropriate.426 The 

Commission further asked whether 

Section 4.5 could permit conflicts of 

interests that should be disclosed under 

the conflicts of interest policy, and if so, 

what modifications to that policy, if 

any, should be made.427 Finally the 

Commission asked if commenters 

thought that any additional disclosure, 

recusal, or voting procedures should be 

required before the CT Plan employs or 

deals with persons in which an SRO or 

any of its affiliates has a direct or 

indirect interest or connection.428

In response to the questions posed in 

the Notice, one commenter states that 

permitting the LLC to engage with a 

person with whom a Member or its 

affiliate may have a connection would 

‘‘significantly increase the likelihood 

that Plan activities would be contrary to 

the role and public purpose of the Plan 

as part of the national market system,’’ 

and would create a conflict of interest 

with the SROs’ obligations with respect 

to the CT Plan under federal securities 

rules and regulations.429 While another 

commenter expresses a similar concern, 

it acknowledges that there may be 

limited circumstances in which it 

would be appropriate for Members of 

the CT Plan to employ or transact with 

its affiliates.430 This commenter 

suggests that there be robust disclosures 

of, and guardrails around, the terms of 

such activity to ensure that no further 

conflicts arise. Specifically, the 

commenter recommends, in addition to 

the disclosure requirements, that the CT 

Plan adopt detailed policies and 

procedures that articulate the specific 

circumstances where it would be 

appropriate for the Member to employ 

an SRO-affiliated entity, and that 

mandate recusals when there is a 

potential conflict of interest.431 Another 

commenter also supports a clearly 

defined conflicts of interest policy and 

recusal for certain transactions and 

prefers that structure to prohibiting the 

CT Plan from transacting with a Member 

or its affiliate.432

In response to the Commission’s 

question regarding information barriers, 

one commenter states that, while the 

disclosure requirements may, to an 

extent, elicit relevant information to 

mitigate conflicts of interest resulting 

from certain business activities, it 

recommends additional measures to 

address such conflicts.433 The 

commenter recommends that the SROs 

be required to maintain information 

barriers between themselves and the 

affiliates or persons that have 

employment relationships or business 

dealing with the CT Plan.434

Additionally, the commenter suggests 

that any necessary recusals should be 

required before the CT Plan employs or 

deals with persons in which an SRO or 

any of its affiliates has a direct or 

indirect interest or connection.435

Regarding the types of employment 

relationships or business dealings that 

Section 4.5 may permit, one commenter 

argues that the provision allows for the 

Company to employ a Member or its 

affiliate to continue to serve as a 

Processor of the CT Plan.436 The 

commenter states that selecting an SRO 

to serve as a Processor of the Plan would 

allow the Operating Committee to apply 

the cutting-edge technology that 

Members have developed to the 

dissemination of consolidated data, 

which could result in a beneficial 

relationship.437 The commenter opposes 

any limitation on the CT Plan’s ability 

to contract with a Member, arguing that 

it would jeopardize this relationship.438

Thus, the commenter recommends that 

any potential conflicts of interest 

concerns be addressed in the CT Plan’s 

related policies or contractual 

agreements, rather than by prohibiting 

the Plan’s ability to engage with an 

entity that, in the commenter’s view, 

may be best equipped to provide the 

service.439

The Commission recognizes that an 

SRO or its affiliates may at times, and 

based on its experience or expertise, 

provide the best (or only) option in 

supporting the business operations of 

the CT Plan. In particular, the current 

processors for the existing Equity Data 

Plans are affiliates of SROs. 

Accordingly, the Commission believes 

that prohibiting the employment or 

dealings with an individual or entity 

because of a direct or indirect affiliation 

or connection with a Member could be 

detrimental to the CT Plan, despite the 

potential conflict of interest. The 

Commission, however, agrees with 

comments that conflicts of interest 

should be managed by the CT Plan’s 

policies, and the Commission believes 

that Section 4.10 of the CT Plan, 

discussed below, provides the 

framework for handling conflicts of 

interest and recusals. In particular, 

Section 4.10(b)(iii) requires a Member’s 

recusal, including the recusal of its 

representatives and its affiliates and 

their representatives, from voting on 

matters in which it or its affiliates is (i) 

seeking a position or contract with the 

Company or (ii) has a position or 

contract with the Company, and whose 


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440See supra Section II.C.1(b). 

441See Notice, supra note 3, 85 FR at 64570 

(Question 23). 

442See id. (Question 24). 

443See id. (Question 25). 

444MFA Letter, supra note 30, at 2. 

445 Id. 

446See SIFMA Letter I, supra note 30, at 4–5; 

SIFMA Letter II, supra note 30, at 2. 

447See Nasdaq Letter I, supra note 20, at 23. 

448See id. at 24. 

449See id. 

450 Id. 

451 Id. 

performance is being evaluated by the 

Company. As discussed below, the 

Commission believes that the recusal 

policy appropriately balances the 

potential influence a Member may have 

in employing or dealing with an 

affiliated person or entity, while also 

permitting the CT Plan to consider a 

broad range of individuals or entities 

that would best support the CT Plan’s 

interests. Additionally, the Commission 

believes that the Administrator of the 

CT Plan, which will be required to be 

independent of any entity that offers for 

sale its own proprietary data products 

for Eligible Securities, can play an 

important role in reducing the effect of 

conflicts of interest on the operation of 

the CT Plan. Further, as noted above, 

the Commission is modifying the CT 

Plan to make explicit that no provision 

of the CT Plan shall be construed to 

limit or diminish the obligations and 

duties of the Members as self-regulatory 

organizations under the federal 

securities laws and the regulations 

thereunder.440 As discussed above, the 

Commission believes that the provisions 

of Section 4.10 and the requirement for 

an independent Administrator 

sufficiently address the concerns raised 

by commenters with respect to the 

transactions permitted by Section 4.5, 

and is approving Article IV, Section 4.5 

as proposed. 

(f) Company Opportunities 

Article IV, Section 4.6(a) of the CT 

Plan provides that each Member, its 

affiliates, and each of its respective 

equity holders, controlling persons, and 

employees may have business interests 

and engage in business activities in 

addition to those relating to the 

Company. Section 4.6(b) provides that 

none of the SROs shall be obligated to 

recommend or take any action that 

prefers the interest of the CT Plan or any 

other Member over its own interests, 

and it also provides that none of the 

SROs will be obligated to inform or 

present to the CT Plan any opportunity, 

relationship, or investment. This 

provision defines investments or other 

business relationships with persons 

engaged in the business of the CT Plan 

other than through the CT Plan as 

‘‘Other Business.’’ Separately, Exhibit B 

of the CT Plan provides a list of 

questions and instructions tailored to 

elicit responses that disclose potential 

conflicts of interest. 

In the Notice, the Commission asked 

whether, in response to the questions 

set forth in Exhibit B, the SROs would 

be required to disclose certain 

opportunities, relationships, or 

investments, and whether these 

disclosures would sufficiently mitigate 

any conflicts of interest. In the Notice, 

the Commission also requested 

comment on, among other things, the 

specific types of business activities that 

would be covered by the provision, and 

whether any of these business activities 

could create a conflict of interest with 

an SRO’s obligations with respect to the 

CT Plan under the federal securities 

laws, rules, and regulations. The 

Commission also asked if any potential 

conflicts of interest are sufficiently 

mitigated by the conflicts of interest 

policy and, if not, how the CT Plan 

should address such conflicts of 

interest.441

The Commission further solicited 

comment on whether the CT Plan 

should require that an SRO’s 

representatives (i.e., SRO Voting 

Representative or Member Observer, as 

applicable) be recused from discussion 

of, or voting on, matters relating to 

opportunities, relationships, or 

investments when the SRO’s interests 

may be in conflict with the goals of the 

CT Plan.442 Lastly, the Commission 

asked if commenters believe that 

Section 4.6(b) could be interpreted in a 

manner that could result in the SROs 

acting inconsistently with their 

obligations under the federal securities 

laws, rules, and regulations, and 

whether the language could result in an 

SRO voting against needed 

improvements to the provision of 

consolidated equity market data.443

In response to the questions presented 

in the Notice, one commenter argues 

that the provisions would permit the 

SROs to disclaim a duty or obligation to 

the CT Plan and appear to be a 

‘‘complete abdication’’ of responsibility 

in ensuring that the CT Plan carries out 

its intended function.444 The 

commenter suggests that the SROs 

should, at a minimum, establish a duty 

in the CT Plan to promote the plan’s 

function of ‘‘assuring the widespread 

availability of equity market data on 

terms that are fair and reasonable, 

consistent with statutory requirements, 

or to promote the interests of fair and 

orderly markets and the protections of 

investors and the public interest.’’ 445

Another commenter asserts that the 

CT Plan does not address situations in 

which an SRO’s interest conflicts with 

its obligations to the Plan, and 

recommends that an SRO Voting 

Representative be recused from voting 

on matters relating to opportunities, 

relationships or investments when the 

interests of the SRO Voting 

Representative conflict with the 

interests of the CT Plan.446

Regarding SRO engagement in Other 

Business that may be in competition 

with the CT Plan, one commenter argues 

that imposing limits on the business 

activities of the SROs is not within the 

scope of the CT Plan, is unwarranted, 

and would require specific rulemaking 

by the Commission. The commenter 

further asserts that the CT Plan is not an 

appropriate vehicle for substantive 

regulation of SRO operations.447 In 

response to the Commission’s question 

regarding whether Other Business 

activities would create a conflict of 

interest with an SRO’s obligations 

pursuant to federal securities laws, the 

commenter affirms that each Member 

has obligations under the federal 

securities laws, and states that it is those 

requirements, rather than obligations to 

the CT Plan, that will ensure that 

Members comply with their 

responsibilities regarding the 

dissemination of real-time consolidated 

equity market data.448 Additionally, the 

commenter maintains that the required 

disclosures set forth in Exhibit B are 

adequate to identify and mitigate any 

potential conflict of interest.449

In response to whether Section 4.6(b) 

could be interpreted in a manner that 

results in an SRO acting inconsistently 

with its obligations under the federal 

securities laws, rules, and regulations, 

one commenter contends that the 

subsection is intended to be a waiver of 

the corporate opportunities doctrine. 

According to the commenter, the 

doctrine generally provides ‘‘that a 

person with fiduciary duties may not 

divert to themselves or their affiliates 

any business opportunity that belongs to 

the company.’’ 450 The commenter 

claims that the Members ‘‘likely do not 

have fiduciary duties to the CT Plan 

under default Delaware law, and 

Section 3.7(e) further clarifies that the 

Member do not have such duties.’’ 451

For these reasons, the commenter 

believes that, while the Members likely 

are not subject to the corporate 

opportunities doctrine, because the 

Members are large companies with 

complex business dealings, the CT Plan 

should be explicit that a Member cannot 


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452See id. at 25. 

453See id. 

454See supra Section.II.C.1(b). 

455See Conflicts of Interest Approval Orders, 

infra note 509, 85 FR at 28120 and 85 FR at 28047. 

456See Notice, supra note 3, 85 FR at 64570 

(Question 26). 457See, e.g., RBC Letter, supra note 30, at 9, 

Schwab Letter I, supra note 30, at 3; Schwab Letter 

II, supra note 30, at 5; Virtu Letter, supra note 30, 

at 6. 458See RBC Letter, supra note 30, at 9. 459See Virtu Letter, supra note 30, at 5. 460See Data Boiler Letter I, supra note 31, at 35. 461See NYSE Letter I, supra note 18, at 38–39. 462See SIFMA Letter I, supra note 30, at 5; 

SIFMA Letter II, supra note 30, at 2; MEMX Letter, 

supra note 30, at 4; Schwab Letter I, supra note 30, 

at 3; Schwab Letter II, supra note 30, at 5. 463Nasdaq Letter I, supra note 20, at 25. 

464See Governance Order, supra note 8, 85 FR at 

28714–20. 

465See Nasdaq Letter I, supra note 20, at 25. 

466See text accompanying notes 486–490, infra. 

467See Governance Order, supra note 8, 85 FR at 

28714–20. 

be sued for breach of the corporate 

opportunities doctrine by the Plan or 

the Members of the CT Plan.452 The 

commenter further asserts that an 

express waiver does not affect any of the 

obligations that the SROs have under 

the federal securities laws.453

The Commission agrees that no 

provision of the CT Plan, as modified, 

dilutes or diminishes any Member’s 

regulatory obligations under the federal 

securities laws, rules, and regulations. 

While Section 4.6 may permit a Member 

to engage in Other Business that may be 

complementary or competitive with the 

Company, SROs must act consistently 

with their statutory and regulatory 

obligations. Accordingly, the 

Commission does not believe it is 

necessary to include a fiduciary duty 

provision in the CT Plan. However as 

discussed above, the Commission is 

modifying the Recitals of the CT Plan to 

explicitly state that no provision of the 

CT Plan shall be construed to limit or 

diminish the obligations and duties of 

the Members as SROs under the federal 

securities laws and the regulations 

thereunder.454

The Commission further believes the 

conflicts of interest provisions set forth 

in Section 4.10 of the CT Plan, along 

with the required disclosures in Exhibit 

B, would serve to mitigate potential 

conflicts of interest arising from Other 

Business activities. As the Commission 

has previously stated, the Commission 

believes that by requiring full disclosure 

of all material facts necessary to identify 

the nature of a potential conflict of 

interest and the effect it may have on 

the CT Plan action, all parties, including 

the Commission and the public, will be 

better positioned to evaluate competing 

interests among any of the parties 

involved in governing, operating, and 

overseeing the CT Plan, as those 

competing interests could materially 

affect the ability to carry out the 

purposes of the CT Plan.455

Accordingly, the Commission is 

approving Article IV, Section 4.6 as 

proposed. 

(g) Subcommittees 

Section 4.7 of Article IV of the CT 

Plan governs the Operating Committee’s 

discretion to create and disband 

subcommittees, as well as the selection 

of subcommittee chairs, permissible 

attendees at subcommittee meetings and 

special provisions applicable to 

meetings of a legal subcommittee. 

(i) Selection of Subcommittee Chairs 

Paragraph (a) of Section 4.7 permits 

the Operating Committee to determine 

the duties, responsibilities, powers, and 

composition of any of its 

subcommittees. This paragraph also 

grants the Chair of the Operating 

Committee the authority to select the 

chair of any subcommittee from SRO 

Voting Representatives or Member 

Observers, with input from the 

Operating Committee. 

In the Notice, the Commission sought 

comment on, among other things, 

whether Non-SRO Voting 

Representatives should be permitted to 

serve as the chair of a subcommittee.456

In response, most commenters 

addressing this issue agree that NonSRO Voting Representatives should be 

permitted to serve as the chair of a 

subcommittee.457 One commenter states 

that chairs should be selected from all 

Operating Committee members.458

Another commenter states that it is 

appropriate for Non-SRO Voting 

Representatives to serve as 

subcommittee chairs, and that 

subcommittees should be chaired by the 

individual who is the most qualified 

and an expert in the area of the 

subcommittee.459 One commenter states 

that subcommittee chairs should be 

selected by the members of the 

subcommittee,460 while another 

commenter states that decisions about 

whether Non-SRO Voting 

Representatives should be permitted to 

chair a subcommittee should be left to 

the discretion of the SROs.461 Several 

other commenters also express the view 

that a Non-SRO Voting Representative 

should be permitted to serve as the chair 

of a subcommittee.462 Another 

commenter states that it does not object 

to Non-SRO Voting Representatives 

serving as the chair of a subcommittee, 

but, as discussed below, argues that 

Non-SRO Voting Representatives should 

be prohibited from serving on the legal 

subcommittee, as that would 

‘‘potentially waive the attorney-client 

privilege.’’ 463

The Commission believes that NonSRO Voting Representatives should be 

eligible to serve as the chair of a 

subcommittee of the CT Plan’s 

Operating Committee. Non-SRO Voting 

Representatives are full members of the 

Operating Committee and should not be 

excluded from serving as subcommittee 

chairs, particularly in light of the 

expertise that a specific Non-SRO 

Voting Representative might bring to a 

given subcommittee. In addition, the 

proposed exclusion of Non-SRO Voting 

Representatives from serving as 

subcommittee chairs would be contrary 

to the objectives of the Commission’s 

Governance Order to broaden 

participation in the governance of the 

NMS plan for consolidated equity 

market data.464 Further, apart from 

objecting to the participation of NonSRO Voting Representatives on the legal 

subcommittee,465 which is addressed 

below,466 the SROs provide no rationale 

for limiting the Non-SRO Voting 

Representatives’ participation in this 

categorical manner. Accordingly, the 

Commission is modifying Section 4.7(a) 

of the CT Plan to expressly provide that 

Non-SRO Voting Representatives are 

eligible to serve as chairs of 

subcommittees to the Operating 

Committee. The Commission finds that 

this modification to Section 4.7(a) is 

appropriate because it supports the 

objective of broader participation in 

Plan governance as set forth in the 

Governance Order.467

In the Commission’s view, however, 

Member Observers should not be 

eligible to serve as subcommittee chairs, 

and the Commission is therefore 

modifying Section 4.7(a) of the CT Plan 

to preclude Member Observers from 

serving as subcommittee chairs. The 

Commission finds this modification to 

be appropriate because, based on its 

observation of the operation of the 

existing Equity Data Plans, the 

Commission expects that important, 

substantive decisions of the CT Plan 

Operating Committee are likely to be 

based on work discussed and developed 

through subcommittees. Accordingly, 

the Commission believes that the chairs 

of those subcommittees should be 

selected from among the voting 

members of the Operating Committee, 

rather than delegated to persons who 

may be serving as a Member Observer 

on an ad hoc basis and for limited 

purposes. The Commission also notes 

that the CT Plan permits Members 

Observers to attend and participate in 


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468See id. 469See Notice, supra note 3, 85 FR at 64570 

(Question 26). 470See RBC Letter, supra note 30, at 8. 471 Id. 472See ICI Letter I, supra note 31, at 6. 

473See id. 

474See NYSE Letter I, supra note 18, at 38–39. 

475See infra Section II.C.5(g)(iii). 

476See NYSE Letter I, supra note 18, at 38–39. 

477See Governance Order, supra note 8, 85 FR at 

28714–20. 

478See Notice, supra note 3, 85 FR at 64570 

(Question 27). 

479See Nasdaq Letter I, supra note 20, at 25. 

480 Id. at 26. 

481See Virtu Letter, supra note 30, at 5. 

482See FINRA Letter I, supra note 257, at 6. 

483See Notice of Proposed Order Directing the 

Exchanges and the Financial Industry Regulatory 

Authority to Submit a New National Market System 

Plan Regarding Consolidated Equity Market Data, 

Securities Exchange Act Release No. 87906 (Jan. 8, 

2020), 85 FR 2164 (Jan. 14, 2020) (‘‘Proposed 

Order’’). 

484See Letter from Joseph Kinahan, Managing 

Director, Client Advocacy and Market Structure, TD 

Ameritrade, Inc. (Feb. 24, 2020), at 7; see also 

Schwab Letter I, supra note 30, at 2. 

meetings of CT Plan subcommittees, as 

well as meetings of the Operating 

Committee, and the Commission 

therefore believes that precluding 

Member Observers from serving as 

subcommittee chairs will not limit the 

ability of the CT Plan to benefit from the 

specific expertise that persons selected 

as Member Observers possess. 

Finally, the Commission believes that, 

along with the authority to determine 

the duties, responsibilities, powers, and 

composition of any subcommittees, the 

Operating Committee, rather than solely 

the Chair of the Operating Committee, 

should have the authority to select 

subcommittee chairs. Accordingly, the 

Commission is modifying Section 4.7(a) 

of the CT Plan to provide that the 

Operating Committee, rather than the 

Chair of the Operating Committee, will 

select the chair of each subcommittee, 

and to delete the phrase, ‘‘with input 

from the Operating Committee,’’ to 

conform to this change. The 

Commission finds that this modification 

is appropriate because it further aligns 

the CT Plan with the objectives of the 

Governance Order to foster broader 

participation in plan governance.468

For the reasons discussed above, the 

Commission is approving Section 4.7(a) 

of the CT Plan as modified. 

(ii) Permissible Attendees of 

Subcommittee Meetings 

Paragraph (b) of Section 4.7 of the CT 

Plan states that SRO Voting 

Representatives, Non-SRO Voting 

Representatives, Member Observers, 

SEC staff, and other persons as deemed 

appropriate by the Operating Committee 

may attend subcommittee meetings. 

The Commission sought comment on 

whether the relative balance of 

membership should be the same in the 

subcommittees.469 In response, the 

Commission received several comments 

on this proposed provision. One 

commenter suggests there should be 

balanced participation among all Voting 

Representatives.470 This commenter 

expresses concern that subcommittees 

‘‘could conceivably make decisions 

without input from or regard for the 

Operating Committee as a whole, 

including non-SRO Voting 

Representatives.’’ 471 Another 

commenter states that, generally, both 

Non-SRO Voting Representatives and 

SRO Voting Representatives should be 

permitted to serve on subcommittees.472

This commenter expresses the view that 

Non-SRO Voting Representative input 

may not always be essential, but is 

concerned that an SRO-only 

subcommittee could discuss important 

administrative matters without non-SRO 

input.473 One commenter states that 

decisions about the composition 

requirements for subcommittees should 

be left to the discretion of the SROs.474

The Commission agrees that both SRO 

Voting Representatives and Non-SRO 

Voting Representatives should be 

permitted to serve on any 

subcommittees of the Operating 

Committee, albeit, as discussed below, 

with some provision to limit 

participation on a legal 

subcommittee.475 The Commission 

disagrees, however, with the view that 

it is necessary to require balanced 

participation on any subcommittees to 

prevent a subcommittee from making 

decisions without input or regard for the 

Operating Committee as a whole. First, 

any SRO Voting Representative or NonSRO Voting Representative can 

voluntarily participate on any 

subcommittee, other than a legal 

subcommittee, as discussed below. 

Second, a subcommittee would have no 

decision making authority under the 

terms of the CT Plan—subcommittees 

would be permitted to make 

recommendations, but all actions of the 

CT Plan are subject to the vote of the 

Operating Committee. The Commission 

further disagrees with the view that the 

composition of subcommittees should 

be left to the discretion of the SROs,476

because the potential exclusion of the 

Non-SRO Voting Representatives who 

would like to participate on a 

subcommittee would not be consistent 

with the objectives of the Commission’s 

Governance Order.477

The Commission finds that Section 

4.7(b), which permits SRO Voting 

Representatives, Non-SRO Voting 

Representatives, Member Observers, 

SEC staff, and other persons as deemed 

appropriate by the Operating Committee 

to attend subcommittee meetings, is 

reasonably designed to help ensure that 

all interested participants of Operating 

Committee meetings are provided an 

opportunity to participate in 

subcommittee meetings if they so 

choose. Accordingly, the Commission is 

approving Section 4.7(b) as proposed. 

(iii) Legal Subcommittee 

Article IV, Section 4.7(c) provides that 

SRO Voting Representatives, Member 

Observers, and other persons as deemed 

appropriate by the SRO Voting 

Representatives may meet in a 

subcommittee to discuss an item subject 

to attorney-client privilege of the CT 

Plan or that is attorney work product of 

the CT Plan. 

The Commission requested comment 

in the Notice on the scope of the ‘‘other 

persons’’ who may be deemed 

appropriate by the SRO Voting 

Representatives to discuss an item that 

is subject to attorney-client privilege of 

the CT Plan or that is attorney work 

product of the CT Plan, including 

whether there should there be any 

limitations.478 One commenter 

expresses the view that Non-SRO Voting 

Representatives should not serve on a 

legal subcommittee as their presence 

could result in a waiver of attorneyclient privilege.479 This commenter 

further states that ‘‘[p]lacing any sort of 

limitation on the ability of the Members 

to consult with counsel or the persons 

whom counsel may consult in order to 

provide legal advice to the Members 

would place an arbitrary and capricious 

limitation on the attorney-client 

relationship, and is beyond the power of 

the Commission.’’ 480

One commenter questions why NonSRO Voting Representatives should be 

excluded from discussions of litigation 

matters if they sign a non-disclosure 

agreement.481 Another commenter 

believes that the same considerations 

that apply to subcommittee 

deliberations generally also would 

apply to subcommittee discussions that 

may be subject to attorney-client 

privilege or the attorney-work-product 

doctrine.482 Further, commenters 

responding to the Commission’s Notice 

of Proposed Order,483 raise related 

points. One of these commenters 

expresses concerns that the Executive 

Session could be used to shield 

discussions by invoking privilege,484


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485See Refinitiv Letter, supra note 249, at 3. 

486The Commission notes that while Commission 

staff historically have attended Executive Sessions, 

staff have not attended legal subcommittee 

meetings. 

487Of course, nothing in the CT Plan would 

prevent an SRO from seeking advice from its own 

internal or external legal counsel regarding any 

matter of CT Plan business. 

488The Notice, in the context of the CT Plan 

provisions regarding Executive Session, sought 

comment about the circumstances under which it 

would be appropriate to exclude Non-SRO Voting 

Representatives from CT Plan meetings. See Notice, 

supra note 3, 85 FR at 64569 (Question 21). 

Moreover, the Governance Order contemplated that 

a valid use of Executive Session might be attorneyclient communications relating to matters that 

exclusively affect the SROs with respect to the 

Commission’s oversight of the CT Plan. See 

Governance Order, supra note 8, 85 FR at 28727. 

489See supra Section II.C.5(d)(iii). 

490See Governance Order, supra note 8, 85 FR at 

28714–20. 

and another states that one of the few 

legitimate uses of Executive Session 

would be to discuss legal issues.485

The Commission believes the NonSRO Voting Representatives must 

participate as full members of the CT 

Plan’s Operating Committee. The 

Commission thus shares the concern 

some commenters have raised that the 

legal subcommittee may, if a blanket 

prohibition on Non-SRO Voting 

Representative participation applies, be 

used as a forum for SROs to 

inappropriately make decisions relating 

to plan business under the pretext that 

all such discussions necessarily invoke 

the attorney-client privilege. The 

Commission believes that, while the 

Operating Committee of the CT Plan 

should be able to engage in discussions 

regarding legal advice of plan counsel 

outside the presence of Commission 

staff, it does not believe that all matters 

involving the plan’s attorney-client 

privilege are necessarily appropriate for 

discussion outside the presence of the 

Non-SRO Voting Representatives, who 

are full members of the Operating 

Committee. To the extent that the 

Operating Committee retains legal 

counsel to advise it with respect to the 

operation of the CT Plan—for example, 

to provide advice on whether proposed 

Operating Committee actions are 

consistent with or required by the Plan, 

or whether proposed actions or Plan 

amendments are consistent with or 

required by the federal securities laws— 

the Commission believes that Non-SRO 

Voting Representatives, as full members 

of the Operating Committee, must 

participate in those discussions with 

Plan counsel and be informed by the 

advice counsel provides to the 

Operating Committee. Moreover, 

commenters do not explain how the 

presence of Non-SRO Voting 

Representatives would waive the Plan’s 

attorney-client privilege when the NonSRO Voting Representatives themselves 

are full members of the Operating 

Committee of the CT Plan. 

The Commission recognizes, however, 

that even though Non-SRO Voting 

Representatives should be permitted to 

attend legal subcommittee meetings 

unless there is a legitimate reason to 

preclude their attendance, there are 

specific circumstances in which it 

would be appropriate for the SROs to 

meet collectively with counsel outside 

the presence of the Non-SRO Voting 

Representatives to discuss CT Plan 

business. The Commission further finds 

that it is appropriate to apply limits to 

the ability of the SROs to exclude NonSRO Voting Representatives from legal 

subcommittee meetings and discussions 

so that those subcommittee meetings do 

not become the equivalent of an 

Executive Session meeting that 

inappropriately excludes Non-SRO 

Voting Representatives.486

The Commission therefore believes 

that the CT Plan should explicitly state 

the basis on which Non-SRO Voting 

Representatives could be excluded from 

the legal subcommittee meetings so that 

these circumstances are narrowly drawn 

to help ensure that such meetings are 

called on an appropriate basis. The 

Commission believes that such meetings 

should be limited to those that bear on 

matters that exclusively affect the SROs 

with respect to: (1) Litigation matters or 

responses to regulators with respect to 

inquiries, examinations, or findings; and 

(2) other discrete legal matters approved 

by the Operating Committee.487

Accordingly, in an effort to reflect the 

status of Non-SRO Voting 

Representatives as full members of the 

Operating Committee, while also 

reflecting the unique responsibilities of 

the SROs under the federal securities 

laws, the Commission is modifying 

paragraph (c) of Section 4.7 of the CT 

Plan to provide that Non-SRO Voting 

Representatives may be excluded from 

legal subcommittee meetings and 

discussions only under specified 

circumstances. As modified, Section 

4.7(c) of the CT Plan would permit the 

SROs to exclude Non-SRO Voting 

Representatives from discussions within 

the legal subcommittee only to the 

extent that those meetings and 

discussions bear on matters that 

exclusively affect the SROs with respect 

to: (1) Litigation matters or responses to 

regulators with respect to inquiries, 

examinations, or findings; and (2) other 

discrete legal matters approved by the 

Operating Committee.488 The 

Commission believes that litigation 

matters or responses to regulators with 

respect to inquiries, examinations, or 

findings affect the SROs uniquely, given 

that the SROs have not only the express 

regulatory obligation as SROs for 

operation of the CT Plan, but they also, 

unlike the Non-SRO Voting 

Representatives, have financial 

responsibility for the CT Plan itself. As 

noted above with respect to a similar 

provision relating to the use of 

Executive Session,489 the Commission 

believes that—while Non-SRO Voting 

Representatives could be precluded 

from participating in legal 

subcommittee discussions regarding 

SRO responses to regulatory inquiries, 

examinations, or findings—to serve as 

active and informed participants on the 

Operating Committee, Non-SRO Voting 

Representatives would need to be 

informed about any regulatory inquiries, 

examinations, or findings that relate to 

the CT Plan. Consequently, this 

provision is not intended to prevent or 

limit the Non-SRO Voting 

Representatives’ access to regulatory 

inquiries, examinations, or findings 

directed to the CT Plan or its Operating 

Committee. 

Moreover, the Commission is mindful 

that not every appropriate use of an 

SRO-only legal subcommittee meeting 

can be precisely foreseen, so the 

Commission’s modification to this 

section of the CT Plan also provides that 

other discrete legal matters may be 

approved by the Operating Committee 

for SRO-only consideration in the legal 

subcommittee on a case-by-case basis. 

The Commission believes that this 

provision is designed to help ensure 

that the Operating Committee is 

sufficiently informed and can make 

reasonable decisions about unforeseen 

matters that may arise and exclusively 

affect the SROs. The Commission finds 

that these modifications to Section 

4.7(c) of the CT Plan are appropriate 

because they are consistent with the 

objective of the Governance Order to 

include Non-SRO Voting 

Representatives as full members of the 

Operating Committee,490 while also 

recognizing, given the SROs’ unique 

regulatory responsibilities, that certain 

legal matters relevant to the operating of 

the CT Plan may exclusively affect the 

SROs. 

Additionally, the Commission is 

modifying paragraph (c) of Section 4.7 

of Article IV, to require that the ‘‘other 

persons as deemed appropriate by the 

SRO Voting Representatives’’ to attend 

meetings of the legal subcommittee will 

be determined collectively ‘‘by majority 

vote of the SRO Voting 

Representatives.’’ The Commission 


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491See RBC Letter, supra note 30, at 8. 

492 Id. 

493See Governance Order, supra note 8, 85 FR at 

28714–20. 

494Separately, Section 4.9 of the proposed CT 

Plan provides that nothing in the LLC Agreement 

shall limit or impede the rights of the Commission 

to access information of the Company or any of the 

Members pursuant to the federal securities laws 

and, as discussed below, the Commission is 

modifying Section 4.9 to provide that the 

Commission shall have access to all information 

‘‘and records.’’ See infra Section II.C.5(i). 

495See Notice, supra note 3, 85 FR at 64570 

(Question 28). 

496See Virtu Letter, supra note 30, at 6; MFA 

Letter, supra note 30, at 2; Data Boiler Letter I, 

supra note 31, at 26. 

497See Virtu Letter, supra note 30, at 5. 

498 Id. at 6. 

499 Id. at 5. 

500See MFA Letter, supra note 30, at 2. 

501See NYSE Letter I, supra note 18, at 36. 

502See id. 

503See Nasdaq Letter I, supra note 20, at 11–12. 

504 Id. at 10. 

finds that this modification is 

appropriate because it is designed 

ensure that any vote taken pursuant to 

Section 4.7(c) will be taken in a manner 

consistent with the allocation of voting 

power by SRO Group, as set forth in 

Section 4.3(a)(i) of the CT Plan. 

For the reasons discussed above, the 

Commission is approving Section 4.7(c) 

of the CT Plan as modified. 

(iv) Transparency of Subcommittee 

Meetings 

One commenter expresses concern 

that the work of subcommittees under 

the CT Plan lacks transparency and 

accountability.491 To address these 

failings, this commenter recommends 

that all subcommittees should: ‘‘(1) have 

a clearly identified purpose; (2) 

balanced participation among all Voting 

Representatives; (3) Chairs drawn from 

all Operating Committee members; (4) 

be required to keep minutes and 

distribute those minutes to the 

Operating Committee; and (5) be timeand product-limited.’’ 492

The Commission believes that the 

activities of the CT Plan’s Operating 

Committee’s subcommittees, if any, 

should be transparent to the Operating 

Committee. Transparency should help 

to ensure that the subcommittee 

meetings, including the legal 

subcommittee meetings, further the 

objectives of the CT Plan, as discussed 

in the Commission’s Governance 

Order,493 particularly with respect to 

the full participation of Non-SRO Voting 

Representatives in the operation of the 

CT Plan. The Commission therefore is 

modifying the CT Plan, by adding new 

paragraph (d) to Section 4.7, to require 

that all subcommittees prepare minutes 

of all meetings and make those minutes 

available to all members of the 

Operating Committee.494 In addition, for 

each meeting of a legal subcommittee, 

discussed above, the Commission is 

modifying the CT Plan by including 

language in new paragraph (d) to 

Section 4.7 to require that the minutes 

include (i) attendance at the meeting; 

(ii) the subject matter of each item 

discussed; (iii) sufficient non-privileged 

information to identify the rationale for 

referring the matter to the legal 

subcommittee, (iv) the privilege or 

privileges claimed with respect to that 

item; and (v) for each matter, if 

applicable, sufficient non-privileged 

information to identify the basis on 

which the matter was determined to 

exclusively affect the SROs. The 

Commission finds that modifying 

Section 4.7 to add new paragraph (d) is 

appropriate because these elements of 

information—similar to those required 

for privilege logs, with respect to legal 

subcommittee meetings—will provide 

for transparency and accountability, 

particularly regarding the use of the 

legal subcommittee, while preserving 

the attorney-client privilege with 

respect to discussions at legal 

subcommittee meetings. For the reasons 

discussed above, the Commission is 

approving new Section 4.7(d) of the CT 

Plan. 

(h) Officers 

Section 4.8 of Article IV of the CT 

Plan governs the selection of CT Plan 

Officers by the SROs, with such 

authority and duties as the SROs may 

delegate to them. Paragraph (a) of 

Section 4.8 provides that, other than the 

Chair and the Secretary, the SROs may, 

from time to time, designate and 

appoint one or more persons as Officers 

of the LLC by a majority vote of the 

SROs. This provision further provides 

the SROs with sole discretion by 

majority vote to assign titles, determine 

compensation, if any, and revoke the 

delegation of authority at any time. 

In the Notice, the Commission sought 

comment on, among other things, 

whether it is appropriate for decisions 

about Officers and their attendant duties 

to be made solely by the SROs.495 The 

Commission received several comments 

on this issue. Some commenters 

criticize the proposed provision that 

grants the power to select Officers solely 

to the SROs,496 and one of these 

commenters argues that the selection 

(including appointment and removal) of 

Officers should be subject to an 

augmented majority vote.497

One commenter states that the 

‘‘selection of Officers of the plan is one 

of the most important functions of the 

Participants, and it is vital that NonSRO representatives have a voice in this 

critical and material decision.’’ 498 This 

commenter further states that 

‘‘permitting only the SROs to control the 

appointment of Officers would be 

inconsistent with the CT Plan’s 

objective of providing a meaningful role 

to Non-SROs in the governance of the 

collection, processing, and 

dissemination of equity market 

data.’’ 499 Another commenter states that 

the absence of SRO duties and 

obligations in the CT Plan is particularly 

problematic in light of the significant 

control the SROs would retain over 

control of the Company and the CT 

Plan, including the ability to select 

Officers.500

One commenter counters that matters 

relating to Officers would have no 

bearing on the governance of the CT 

Plan or the collection, processing, and 

dissemination of equity market data.501

This commenter states, instead, that 

these matters pertain solely to the LLC 

form and structure and, because only 

the SROs are Members of the LLC, only 

the SROs can vote on such matters.502

Another commenter argues that the 

power to appoint and remove persons as 

Officers of the CT Plan, delegate duties 

to such persons, and approve salary or 

other compensation for such persons 

belongs solely to the SROs.503

The Commission disagrees that 

decisions regarding the selection, 

appointment, and removal of Officers of 

the CT Plan, as well as Officers’ 

authority, duties, and compensation, 

have no bearing on the governance or 

operation of the CT Plan. The SROs 

have proposed to structure the new 

NMS plan for consolidated equity 

market data as an LLC and to conduct 

all operations of that NMS plan directly 

through or under the auspices of that 

LLC. Thus, particularly depending on 

the nature, breadth, and scope of 

authority and duties assigned to the 

Officers of the LLC, those Officers could 

be, and would likely be, directly 

involved in the fulfillment by the SROs 

of their duties with respect to 

consolidated market data through the 

operation of the CT Plan. In addition, 

the SROs do not identify any LLCspecific functions for which an Officer 

might be selected that do not relate to 

the operation of the CT Plan and there 

is nothing in the CT Plan, as proposed 

by the SROs, that expressly limits the 

functions of any Officers selected to 

‘‘organizational aspects of the LLC’s 

existence.’’ 504 The SROs’ unilateral 

decision to propose the CT Plan in the 

form of an LLC Agreement of which the 

SROs alone are members does not in 


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505See Governance Order, supra note 8, 85 FR at 

28714–20. 

506See id. at 28716. 

507The Commission is also modifying Section 4.8 

to substitute the phrase, ‘‘Except as provided for in 

Section 4.4(e)’’ for the language, ‘‘In addition to the 

Chair and Secretary,’’ that was proposed by the 

SROs. This modification is intended to make clear 

that the annual election of the Chair (from among 

the SRO Voting Representatives) and the selection 

of the Secretary (by the Chair) as set forth in Section 

4.4(e) would not be affected by the Commission’s 

modifications to Section 4.8. 

508See Governance Order, supra note 8, 85 FR at 

28716. 

509See Securities Exchange Act Release Nos. 

88823 (May 6, 2020), 85 FR 28046 (May 12, 2020); 

88824 (May 6, 2020), 85 FR 28119 (May 12, 2020) 

(collectively, the ‘‘Conflicts of Interest Approval 

Orders’’). In the Governance Order, the Commission 

ordered the SROs to incorporate into the CT Plan 

provisions consistent with the Conflicts of Interest 

Approval Orders. See Governance Order, supra note 

8, 85 FR at 28726. 

510See infra Section II.C.5(k). 

511See Article IV, Section 4.10(a) of the CT Plan. 

512See Article IV, Section 4.10 of the CT Plan. 

513See Cboe Letter, supra note 17; BlackRock 

Letter I, supra note 247; RBC Letter, supra note 30; 

Virtu Letter, supra note 30; Fidelity Letter, supra 

note 30; Nasdaq Letter I, supra note 20; Data Boiler 

Letter I, supra note 31; ICI Letter I, supra note 31; 

FINRA Letter I, supra note 30; SIFMA Letter I, 

supra note 30; NYSE Letter I, supra note 18; BMO 

Letter, supra note 30; MFA Letter, supra note 30; 

NYSE Letter II, supra note 19; ICI Letter II, supra 

note 31; Schwab Letter II, supra note 30; SIFMA 

Letter II, supra note 30; Letter from Patrick 

Flannery, Chief Executive Officer and Co-Founder, 

MayStreet (Feb. 19, 2021) (‘‘MayStreet Letter’’); 

BMO Letter II, supra note 30. 

514See Virtu Letter, supra note 30, at 6. 

515See id. 

any way justify reserving to the SROs 

alone the ability to direct operations of 

the CT Plan by selecting the Officers of 

the CT Plan. Such a structure would 

significantly undermine the 

Commission’s objective to broaden 

participation in the plan governance, 

with Non-SRO Voting Representatives 

serving as full members of the Operating 

Committee, as set forth in the 

Commission’s Governance Order.505 In 

addition, the provision of decision 

making authority in Section 4.8 based 

on the vote of the majority of Members, 

rather than on the vote of the majority 

of SRO Voting Representatives, is 

inconsistent with the voting structure 

reflected in the Commission’s 

Governance Order, which allocates 

voting rights by SRO Group, rather than 

by exchange license.506

Consequently, the Commission 

believes that it is imperative that it be 

the Operating Committee by augmented 

majority vote, and not solely the SRO 

Members by majority vote, that decides 

on the creation and assignment of any 

officer positions and duties under the 

CT Plan. Accordingly, the Commission 

is modifying Section 4.8 of the CT 

Plan 507 to require that the designation, 

appointment, delegation of authority 

and duties, and removal of Officers, and 

the revocation of any officer positions 

and duties, be subject to a vote of the 

Operating Committee. As discussed in 

the Governance Order, the voting 

scheme directed by the Commission, 

while it grants votes to Non-SRO Voting 

Representatives, nonetheless preserves 

for the SROs sufficient voting power at 

all times to act jointly on behalf of the 

CT Plan, which would include the 

selection of Officers of the CT Plan.508

The Commission therefore finds that 

modification of Section 4.8 of the CT 

Plan is appropriate because it should 

help to ensure meaningful participation 

in the governance of the CT Plan by 

Non-SRO Voting Representatives, 

including with respect to the selection 

of Officers who may be tasked to 

implement significant decisions of the 

Operating Committee. For the reasons 

discussed above, the Commission is 

approving Section 4.8, as modified. 

(i) Commission Access to Information 

and Records 

Section 4.9 of Article IV of the CT 

Plan, as proposed, provides that the CT 

Plan ‘‘shall not be interpreted to limit or 

impede the rights of the Commission to 

access information of the Company or 

any of the Members (including their 

employees) pursuant to U.S. federal 

securities laws and the rules and 

regulations promulgated thereunder.’’ 

The Commission received no comment 

on this provision. Because the term 

‘‘information’’ is not defined in the CT 

Plan, the Commission is modifying 

Section 4.9 of Article IV of the CT Plan 

to add the phrase, ‘‘and records,’’ to 

state explicitly that this Agreement does 

not in any manner limit the 

Commission’s existing rights under the 

federal statutes, regulations, and rules to 

access such records. Accordingly, the 

Commission finds that this modification 

to Section 4.9 of the CT Plan is 

appropriate because it is consistent with 

the Commission’s statutory authority for 

oversight of the governance and 

operation of the CT Plan. For the 

reasons discussed above, the 

Commission is approving Section 4.9 of 

the CT Plan, as modified. 

(j) Disclosure of Potential Conflicts of 

Interest; Recusal 

(i) General Provisions 

Article IV, Section 4.10 of the CT Plan 

sets forth the disclosure requirements 

with respect to conflicts of interest, and 

the provisions for recusal, as approved 

by the Commission.509 Specifically, 

Section 4.10(a) provides that the 

Members, the Processors, the 

Administrator, the Non-SRO Voting 

Representatives, and each service 

provider or subcontractor (each a 

‘‘Disclosing Party’’) engaged in 

Company business that has access to 

Restricted or Highly Confidential 

Information, as defined in the Plan,510

shall be subject to the disclosure 

requirements as described in Section 

4.10(c) and Exhibit B to the Plan. 

Exhibit B to the CT Plan provides a list 

of questions and instructions tailored to 

elicit responses that disclose potential 

conflicts of interest. Section 4.10(a) also 

states that the Operating Committee, a 

Member, Processors, or Administrator 

may not use a service provider or 

subcontractor unless that service 

provider or subcontractor has agreed in 

writing to provide the disclosures. 

Section 4.10(a)(i) states that a conflict of 

interest may exist when personal, 

business, financial, or employment 

relationships could be perceived by a 

reasonable, objective observer to affect 

the ability of a person to be impartial.511

Section 4.10(a)(ii) requires that the 

disclosures be updated following a 

material change in information and that 

a Disclosing Party update annually any 

inaccurate information prior to the first 

quarterly meeting. Section 4.10(a)(iii) 

requires that the Disclosing Parties 

provide the Administrator with their 

disclosures and any required updates 

and that the Administrator will ensure 

that the disclosures are posted to the 

Company’s website. Finally, Section 

4.10(a)(iv) requires that the Company 

arrange for Disclosing Parties that are 

not Members or Non-SRO Voting 

Representatives to comply with the 

required disclosures and recusal 

pursuant to Section 4.10 and Exhibit B 

of the CT Plan.512

The Commission received a number 

of comment letters addressing the 

conflicts of interest policy in general.513

Most commenters support including 

conflicts of interest provisions. 

Specifically, one commenter states that 

the CT Plan should require the 

Operating Committee to adopt detailed 

policies and procedures articulating, 

among other things, specific 

circumstances where it is appropriate 

for the Plan to deal with or employ an 

SRO affiliated entity, disclosure 

requirements, and a process mandating 

recusal of an individual SRO in 

circumstances where there is a potential 

conflict of interest.514 This commenter 

argues that the policies should also 

apply to transactions with Non-SRO 

Voting Representatives or any of their 

affiliates.515 Another commenter states 

that a conflicts of interest policy must 


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516See BMO Letter II, supra note 30, at 2. 

517See BMO Letter I, supra note 30, at 3. 

518See Data Boiler Letter I, supra note 31, at 5, 

49. 

519See Cboe Letter, supra note 17; NYSE Letter 

I, supra note 18; Nasdaq Letter I, supra note 20. 

520See NYSE Letter I, supra note 18, at 12, 15; 

NYSE Letter II, supra note 19, at 4; Nasdaq Letter 

I, supra note 20, at 1–2; Cboe Letter, supra note 17, 

at 2–4. 

521See NYSE Letter I, supra note 18, at 15, 20. 

522See Nasdaq Letter I, supra note 20, at 2–3, 7, 

13. 

523See Cboe Letter, supra note 17, at 6–7. See 

also Nasdaq Letter I, supra note 20, at 6–7 (stating 

that the policy is unclear whether certain SRO 

employees are barred from attending meetings). 

524Cboe Letter, supra note 17, at 7. 

525See NYSE Letter I, supra note 18, at 30. 526See id. at 30–32. 527See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28120 and 85 FR at 28047 

(agreeing with the Members that potential conflicts 

of interest are inherent in the current market data 

governance structure where exchanges can offer 

proprietary market data products while they also 

act as Members in running the public market data 

stream). 

528See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28126 and 85 FR at 28053. 

529See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28121 and 85 FR at 28048. 

530See 15 U.S.C. 78k-1(a)(1). 

531See Governance Order, supra note 8, 85 FR at 

28704. 

532See id. at 28726. 

be rigorous enough to ensure that SROs 

take actionable steps to mitigate such 

conflicts.516 The commenter also 

contends that the policy cannot be 

based solely on disclosure and 

recommends additional steps, such as 

recusal and explicit prohibition of 

certain action and certain persons.517

Another commenter agrees, stating that 

the proposed disclosures are not 

sufficiently transparent and that selfdisclosure to mitigate conflicts would 

not be effective.518

In contrast, several commenters 

oppose including the conflicts of 

interest policy in the CT Plan.519 The 

commenters argue that the conflicts of 

interest policy is inconsistent with 

Section 11A of the Act and Rule 608.520

Specifically, one commenter states that 

the proposed policy would preclude the 

SROs from fulfilling their obligations 

under securities laws, in particular Rule 

608, and is inconsistent with Rule 

608(b)(2), and that therefore the CT Plan 

cannot be approved by the 

Commission.521 Another commenter 

requests that, if the Commission 

approves the CT Plan, it exclude the 

conflicts of interest policy from the 

Plan. Alternatively, the commenter 

suggests that the Commission publish 

the exact text of its intended 

amendments and seek comment before 

issuing any approval.522

One commenter argues that the 

policies, as amended by the 

Commission, are vague and onerous and 

impede the ability of the Operating 

Committee to conduct its business.523 In 

support of its concern, the commenter 

states that ‘‘representatives for the 

current equity data plans have been 

engaged in ongoing discussions with 

Commission staff for six months to 

establish how the policies applicable to 

those plans should be interpreted.’’ 524

Another commenter states that the 

required disclosures of the SRO Voting 

Representative, Processors, and the 

Administrator under the conflicts of 

interest policy would impose 

substantial costs without any benefit, as 

those parties do not have any regulatory 

obligations under the Act, and that, as 

the Processors and Administrator are 

agents of the CT Plan, they are obligated 

contractually and not under the Plan.525

The commenter further states that 

required disclosures of service providers 

and subcontractors would also impose 

onerous and burdensome requirements, 

while providing few, if any, benefits. In 

particular, the commenter claims that 

the service providers and subcontractors 

that would have access to Restricted or 

Highly Confidential Information would 

likely be accounting or legal firms, both 

of which have no role or responsibilities 

in the governance of the CT Plan.526

The Commission agrees with the 

comments that support a robust 

conflicts of interest and recusal policy 

in the CT Plan. As the Commission 

stated in the Conflicts of Interest 

Approval Orders, detailed, clear, and 

meaningful disclosures that provide 

insight into otherwise non-transparent 

structures and operations can raise 

awareness of potential conflicts of 

interest inherent in the current equity 

market data structure, and increased 

access to information can facilitate 

public confidence in Plan operations.527

The Commission continues to believe 

that full disclosure of all material facts 

necessary for market participants and 

the public to understand the conflicts of 

interest is one important approach to 

dealing with those conflicts. 

In response to commenters’ objections 

to the conflicts of interest policy, the 

Commission continues to believe, as it 

stated in the Conflicts of Interest 

Approval Orders, that because 

Administrators and Processors will have 

access to highly sensitive and 

commercially valuable non-public 

information that would be of substantial 

value to a Member’s proprietary data 

business, it is appropriate to provide 

insight into some of the key potential 

conflicts of interest faced by the parties 

engaged in Plan business.528 Similarly, 

the Commission has also stated that 

service providers and subcontractors 

can be affiliated with a Member that 

offers proprietary data products and 

connectivity services and that, because 

they may have access to competitively 

sensitive and commercially valuable 

Plan-related information, the potential 

for competitive harm exists if they share 

such information with the Member or its 

affiliates. Thus, the Commission 

continues to find that it is appropriate 

to include service providers and 

subcontractors within the conflicts of 

interest policies, as they would be under 

the direction of a Member, engaged in 

Plan business, and have access to 

Restricted or Highly Confidential 

Information.529

Further, the Commission disagrees 

with commenters’ assertions that the 

proposed conflicts of interest policy is 

inconsistent with Section 11A of the Act 

and Rule 608. Section 11A of the Act 

directs the Commission to facilitate the 

establishment of a national market 

system for trading in securities,530

under which consolidated data about 

quotations for and transactions in 

securities is collected and disseminated 

by the Equity Data Plans governed and 

operated by the SROs. As the 

Commission stated in the Governance 

Order, the demutualization of exchanges 

and the proliferation of proprietary 

exchange data products have heightened 

the conflicts between the SROs’ 

business interests in proprietary data 

offerings and their obligations as SROs 

under the national market system to 

ensure the prompt, accurate, reliable, 

and fair dissemination of core data 

through the jointly administered Equity 

Data Plans.531 In requiring that the CT 

Plan include the particular disclosure 

provisions identified in the Governance 

Order,532 the Commission reasonably 

exercised its authority under Section 

11A to address the conflicts inherent in 

the dual responsibilities exchange 

representatives have with respect to 

proprietary data products and 

consolidated equity data products. 

Furthermore, the Commission 

reasonably required additional 

disclosure of the relevant conflicts of 

interest, as well as safeguards to 

mitigate the possibility that a Member’s 

proprietary data business could benefit 

from commercially valuable data 

obtained by its SRO Voting 

Representative or other employees that 

have responsibilities to the Plan. 

Additionally, with respect to Rule 

608, that rule provides that the 

Commission shall approve a proposed 

plan or plan amendment, ‘‘with such 

changes or subject to such conditions as 


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533 17 CFR 242.608(b)(2). 

534See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28120 and 85 FR at 28047. 

535See Cboe Letter, supra note 17, at 6–7; Nasdaq 

Letter I, supra note 20, at 28–29 (stating that the 

policies are unlawful and that the proposed Plan 

would perpetuate the arbitrary and capricious 

rulemaking undertaken by the Commission when it 

failed to provide notice or seek comment on its own 

modifications to the policy language proposed by 

the Equity Data Plans); NYSE Letter I, supra note 

18, at 14 (stating that both policies are subject to 

pending litigation and that it would be 

inappropriate to mandate continued effectiveness 

following a judicial determination that they are 

contrary to law). These commenters also undertook 

a legal challenge to the Conflicts of Interest 

Approval Orders. 

536See Governance Order, supra note 8, 85 FR at 

28726. 

537See id. 

538See Notice, supra note 3, 85 FR at 64583–84. 

539See Order Instituting Proceedings, supra note 

5. 

540See Notice, supra note 3, 85 FR at 64570–71. 

541See RBC Letter, supra note 30; ICI Letter I, 

supra note 31; Fidelity Letter, supra note 30. 

542See RBC Letter, supra note 30, at 8–9; ICI 

Letter I, supra note 31, at 5; Fidelity Letter, supra 

note 30, at 5. 

543See Nasdaq Letter I, supra note 20, at 27. 

544See id. 

545See supra Section II.C.5(d)(i). 

546See Article I, Sections 1.1(z) & 1.1(oo) of the 

CT Plan. 

the Commission may deem necessary or 

appropriate.’’ 533 The Commission 

provided a notice and comment period 

with respect to the proposed CT Plan 

and has acted within its discretion in 

determining that certain modifications 

are appropriate after considering 

comments received in response to the 

Notice. Further, the Commission does 

not believe that the conflict of interest 

policies are vague or onerous. 

Consistent with its findings in the 

Conflicts of Interest Approval Orders,534

the Commission concludes that the 

conflicts of interest policy of the CT 

Plan, as modified, would facilitate 

detailed, clear, and meaningful 

disclosures that would provide insight 

into otherwise non-transparent 

structures and operations of the Plan. 

Finally, certain commenters argue 

that the Conflicts of Interest Approval 

Orders constituted impermissible 

rulemaking that required notice and 

comment because the Commission made 

substantial and material changes to the 

conflicts of interest policies proposed by 

the SROs for the Equity Data Plans,535

and that therefore the conflicts of 

interest policy should not be included 

in the CT Plan. The Commission 

disagrees with the assertion that the 

separate Conflicts of Interest Approval 

Orders constituted impermissible 

rulemaking, and the Commission 

responded to these objections both in 

the Conflicts of Interest Approval 

Orders and in subsequent litigation. In 

any event, those procedural objections 

have no bearing on the adequacy of the 

procedure resulting in this Order. The 

Governance Order required the SROs to 

include in the CT Plan provisions 

consistent with the Conflicts of Interest 

Approval Orders,536 and the public has 

had the opportunity to consider and 

comment on the provisions proposed for 

the CT Plan on multiple occasions. The 

provisions were published in the 

Conflicts of Interest Approval Orders, 

and the Governance Order issued the 

same day required that similar 

provisions be included in the New 

Consolidated Data Plan.537

Additionally, the CT Plan, including the 

proposed conflicts of interest policy was 

published for comment,538 providing 

interested persons with a further 

opportunity to consider the proposed 

language of the conflicts of interest 

policy and to express their views. 

Furthermore, the Order Instituting 

Proceedings provided yet another 

opportunity to comment on the relevant 

provisions of the proposed CT Plan.539

(ii) Applicability to Member Observers 

In the Notice, the Commission 

solicited comment on whether the same 

disclosure requirements and recusal 

provisions that apply to Members and 

other identified persons would 

sufficiently mitigate any conflicts of 

interest faced by Member Observers, 

and if not, what additional disclosures 

or recusal provisions commenters 

believe would be appropriate.540

In response, several commenters 

support extending the policies to 

include Member Observers.541

Specifically, these commenters 

recommend that all observers be subject 

to the conflicts of interest policy and 

procedures of the CT Plan.542 In 

contrast, one commenter objects to the 

application of the conflicts of interest 

policy to Member Observers, stating that 

most Member Observers are employees 

of the Member charged with that 

Member’s compliance obligations under 

Rule 608(c), and as such are already 

included in the disclosures of the 

Member.543 The commenter further 

argues that the identity and affiliation of 

a Member Observer would be disclosed 

in meeting minutes and that reasonable 

questions regarding the Member 

Observer’s affiliation could be 

addressed at the Operating Committee 

meeting.544

After considering the comments 

received, the Commission believes that 

the provisions regarding disclosures of 

potential conflicts of interest and 

recusal should be modified to apply to 

all Member Observers. Specifically, 

because Member Observers, under the 

definition modified by the Commission, 

will be an employee of a Member or any 

attorney to a Member,545 the 

Commission believes that the potential 

conflicts of interests that apply to the 

Member would equally apply to the 

Member Observer. The Commission 

does not agree with the assertion that all 

relevant information regarding a 

Member Observer would necessarily be 

included in the disclosures as the 

proposed Member disclosures require 

only the names of the Voting 

Representative and any alternate Voting 

Representative designated by the 

Member. As required in Exhibit B, a 

Member is also required to provide the 

name of each designated individual and 

a narrative description of each such 

persons’ role within the Member 

organization, and the Commission 

believes that these disclosures should 

include Member Observers. 

Additionally, because Member 

Observers are by definition permitted to 

attend Operating Committee meetings, 

subcommittee meetings, and Executive 

Sessions,546 they may have access to 

competitively sensitive and 

commercially valuable information 

related to the CT Plan. 

The Commission believes that 

Member Observers should also be 

subject to Section 4.10, the disclosures 

pursuant to Exhibit B, and the recusal 

requirements of the conflicts of interest 

policy. Specifically, the Commission 

finds that it is appropriate to modify 

Section 4.10(a) of the CT Plan to 

expressly require that all Member 

Observers be included in the Members’ 

disclosures because Member Observers 

may face conflicts of interest similar to 

those faced by SRO Voting 

Representatives. The Commission is 

also making a corresponding 

modification to Exhibit B of the CT Plan 

to expressly include Member Observers. 

The Commission finds that these 

modifications are appropriate because a 

Member Observer can have his or her 

own conflicts of interest, and 

consequently, a Member should also be 

required to respond to questions 

regarding whether its Member Observers 

have additional relationships or 

material economic interests that could 

be perceived by a reasonable objective 

observer to present a potential conflict 

of interest with their responsibilities to 

the Company and to provide a detailed 

narrative discussion of all material facts 

necessary to identify the potential 

conflicts of interest and the effects they 

may have on the CT Plan. Additionally, 

because the Commission is requiring 


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547See Article IV, Section 4.10(b) of the CT Plan. 

548See Article IV. Section 4.10(b)(ii) of the CT 

Plan. 

549See Article IV, Section 4.10(b)(iii) of the CT 

Plan. 

550See Article IV, Section 4.10(b)(iv) of the CT 

Plan. 

551See SIFMA Letter I, supra note 30, at 4; 

SIFMA Letter II, supra note 30, at 2. 

552See BMO Letter, supra note 30, at 4; ICI Letter 

I, supra note 31, at 5; ICI Letter II, supra note 31, 

at 2, Fidelity Letter, supra note 30, at 5; FINRA 

Letter I, supra note 257, at 5; BlackRock Letter I, 

supra note 247, at 4–5. 

553See BlackRock Letter I, supra note 247, at 4– 

5. 

554See NYSE Letter I, supra note 18, at 18. 

555See id. 

556See id. at 19. 

557See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28128 and 85 FR at 28054. 

558See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28128 and 85 FR at 28055. 

559See supra Section II.C.5(d)(i). 

560Pursuant to Article IV, Section 4.10(b) of the 

CT Plan, a Member is prohibited from appointing 

as its Voting Representative a person that is 

responsible for or involved with the procurement 

for, or development, modeling, pricing, licensing, or 

sale of, PDP offered to customers of the CT Feeds 

if the person has a financial interest (including 

compensation) that is tied directing to the Member’s 

market data business or the procurement of market 

data and if that compensation would cause a 

reasonable objective observer to expect the 

compensation to affect the impartiality of the 

representative. Accordingly, the Commission is 

specifying that a Member would similarly be 

prohibited from appointing such a person as an 

alternate Voting Representative. 

that Member Observers be included in 

a Member’s conflicts disclosures, and 

because the Member disclosures as 

proposed would have required the name 

and narrative description of only the 

Voting Representative and alternate 

SRO Voting Representative, the 

Commission finds that it is appropriate 

to modify Exhibit B (a)(iii) to replace 

references to ‘‘representatives’’ with 

‘‘persons’’ to account for the new 

category of Member Observer, in 

addition to the Voting Representative 

and alternate SRO Voting 

Representative. 

(iii) Recusals 

Article IV, Section 4.10(b) of the CT 

Plan discusses recusals and expressly 

prohibits a Member from appointing as 

its Voting Representative a person that 

is responsible for or involved with 

procurement for, or development, 

modeling, pricing, licensing, or sale of, 

PDP offered to customers of the CT 

Feeds, if the person has a financial 

interest (including compensation) that is 

tied directly to the Disclosing Party’s 

market data business or the 

procurement of market data, and if that 

compensation would cause a reasonable 

objective observer to expect the 

compensation to affect the impartiality 

of the representative.547 Section 

4.10(b)(ii) further requires recusal of a 

Disclosing Party from participating in 

Company activities if the individual has 

not submitted the required 

disclosure,548 and Section 4.10(b)(iii) 

states that a Disclosing Party, including 

its representatives(s), and its Affiliates 

and their representatives(s), is recused 

from voting on matters in which it or its 

Affiliate is seeking a position or contract 

with the Company or has a position or 

contract with the Company and whose 

performance is being evaluated.549 The 

subsection also states that all recusals 

will be reflected in the meeting 

minutes.550

The Commission received several 

comments regarding the recusal 

provisions. One commenter expresses 

the view that the CT Plan as proposed 

is unclear regarding whether 

individuals that work on the proprietary 

operations of an SRO would be required 

to be recused from acting as a Member 

Observer. The commenter suggests that 

there be a clear approach to Member 

Observers that limits those individuals 

eligible for appointment to persons who 

are not involved in the management, 

marketing, sale or development of 

proprietary equity data products at the 

SRO.551 Several commenters made 

similar statements, recommending that 

persons who hold positions with an 

SRO, particularly those who are 

responsible for equity data products 

offered separately by the SRO, or who 

receive compensation tied to the sale of 

proprietary market data, should be 

prohibited from serving as a Member 

Observer, which in turn would help to 

address potential conflicts of interest.552

In support of this recommendation, one 

commenter believes that, because 

Member Observers are permitted to 

attend Executive Sessions and receive 

highly confidential information, an 

individual responsible for the sale of 

proprietary market data would face an 

inherent conflict of interest.553

In contrast, one commenter argues 

that the recusal provisions of the 

conflicts of interest policy would impair 

the SROs’ abilities to choose how to 

manage their businesses and fulfill their 

regulatory responsibilities.554 The 

commenter is particularly concerned 

with the standard of ‘‘impartiality’’ 

regarding appointment of a potential 

Voting Representative, stating that the 

Commission does not define 

impartiality in this context and assumes 

that the SRO is only appropriately 

impartial when there is a total 

separation between its involvement in 

an NMS plan and its proprietary data 

activities.555 The commenter further 

argues that there is no requirement 

under Section 11A of the Act or Rule 

608 for an SRO to be impartial when 

discharging its obligations to act jointly 

in the planning, development, 

operation, and regulations of an NMS 

plan.556

The Commission continues to believe 

that, while it is an SRO rather than an 

individual SRO employee that has 

obligations to the CT Plan, to the extent 

an exchange that offers proprietary 

equity market data products appoints as 

its representative to the CT Plan an 

individual responsible for the sale of 

proprietary market data, that person has 

an inherent conflict of interest arising 

from his or her financial interest in the 

exchange’s proprietary data business.557

The Commission believes that such an 

individual’s financial interest in the 

exchange’s proprietary data businesses, 

as well as the exchange’s own 

commercial interest, could influence the 

individual’s and the exchange’s 

decision-making regarding the CT Plan’s 

operations. As the Commission has 

previously stated, in light of this 

conflict, even if such individuals have 

the requisite expertise, the Commission 

believes that it is appropriate to prohibit 

a Member from appointing such an 

individual as its SRO Voting 

Representative to the CT Plan.558

Separately, as discussed above,559 the 

Commission believes that certain 

discussions under the CT Plan may 

include Member Observers. The 

Commission believes that because 

Member Observers may attend CT Plan 

meetings and potentially receive and 

assess Highly Confidential Information, 

a Member Observer who is responsible 

for and has a financial interest 

(including compensation) in an 

exchange’s proprietary market data 

products has an inherent conflict of 

interest. Thus, the Commission believes 

that Member Observers should be 

subject to the same restriction as SRO 

Voting Representatives and is therefore 

modifying the text of Section 4.10(b)(i) 

of the CT Plan to include any Members 

Observer, as well as any alternate SRO 

Voting Representative.560 The 

Commission finds that this modification 

is appropriate because it will prohibit a 

Member from appointing to either role 

a person that is responsible for or 

involved with the procurement for, or 

development, modeling, pricing, 

licensing, or sale of, PDP offered to 

customers of the CT Feeds if the person 

has a financial interest (including 

compensation) that is tied directly to the 

Member’s market data business or the 

procurement of market data, and if that 

compensation would cause a reasonable 


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561See Notice, supra note 3, 85 FR at 64571. 

562See SIFMA Letter I, supra note 30, at 4–5; 

SIFMA Letter II, supra note 30, at 2; Nasdaq Letter 

I, supra note 20, at 24. 

563See supra Section II.C.5(f). 

564See Article IV, Section 4.10(d) of the CT Plan. 

565See Notice, supra note 3, 85 FR at 64571 

(Question 32). 

566See RBC Letter, supra note 30, at 11. 

567See Conflicts of Interest Approval Orders, 

supra note 509, 85 FR at 28120 and 85 FR at 28047. 

568See New York Stock Exchange, et al. vs. 

Securities and Exchange Commission, Nos. 20– 

1242, 20–1243, 20–1244, —F.4th—, 2021 WL 

2654987, *1–4 (D.C. Cir., June 29, 2021). 

569See Securities Exchange Act Release Nos. 

88825 (May 6, 2020), 85 FR 28090 (May 12, 2020); 

88826 (May 6, 2020), 85 FR 28069 (May 12, 2020) 

(collectively, the ‘‘Confidentiality Policy Approval 

Orders’’). In the Governance Order, the Commission 

ordered the SROs to incorporate into the CT Plan 

provisions consistent with the Confidentiality 

Policy Approval Orders. See Governance Order, 

supra note 8, 85 FR at 28726. 

570See Article IV, Section 4.11(b) of the CT Plan. 

571See infra Section II.C.5(k)(iv) (discussing the 

effect of pending petitions for review). 

572See infra Section II.C.5(k)(iii) (discussing the 

defined term Covered Persons). 

573See Exhibit C to the CT Plan. 

574Article I, Section 1.1(mmm) of the CT Plan 

defines Restricted Information as highly sensitive 

customer-specific financial information, customerspecific audit information, other customer financial 

information, and personal identifiable information. 

575Article I, Section 1.1(ii) of the CT Plan defines 

Highly Confidential Information as highly sensitive 

Member-specific, customer-specific, individualspecific, or otherwise sensitive information relating 

to the Operating Committee, Members, Vendors, 

Subscribers, or customers that is not otherwise 

Restricted Information. Highly Confidential 

Information includes: the Company’s contract 

negotiations with the Processors or Administrator; 

personnel matters; information concerning the 

objective observer to expect the 

compensation to affect the impartiality 

of the representative. 

Separately, in the Notice, the 

Commission asked whether the 

disclosure requirements under Section 

4.10 and Exhibit B would elicit 

sufficient relevant information to 

mitigate conflicts of interest that may 

result from Members engaging in certain 

business activities outside of the 

business activities of the CT Plan as 

provided for in Section 4.6.561 Although 

the Commission received comment 

letters acknowledging that the 

disclosure requirements may elicit 

relevant information to identify and 

mitigate potential conflicts of interest, 

one commenter recommends that an 

SRO Voting Representative be recused 

from voting on matters relating to 

opportunities, relationships, or 

investments when the interests of the 

Member employing the voting 

representative conflicts with the 

interests of the CT Plan.562 This Order 

addresses these comments in Section 

II.C.5(f) above, regarding Company 

Opportunities.563

(iv) Effect of Pending Petitions for 

Review 

Finally, the Commission also solicited 

comment on Section 4.10(d) of the CT 

Plan, which provides that if the 

Commission’s Conflicts of Interest 

Approval Orders are stayed or 

overturned by a court, the requirements 

of Section 4.10 and Exhibit B shall not 

apply.564 The Commission sought 

commenters’ views on whether such a 

provision is necessary or appropriate for 

the CT Plan and whether the CT Plan 

should, at a minimum, contain 

provisions for addressing conflicts of 

interests that are not subject to 

elimination, or provisions specifying 

that the CT Plan must be amended to 

include a new policy with respect to 

conflicts of interest before the existing 

policy can be removed.565 One 

commenter supports retaining the 

current provisions of Section 4.10 in the 

event that the Conflicts of Interest 

Approval Orders are stayed or 

overturned so that conflicts remain 

disclosed.566

As the Commission previously stated 

in the Conflicts of Interest Approval 

Orders, the Commission believes that by 

requiring full disclosure of all material 

facts necessary to identify the nature of 

a potential conflict of interest and the 

effect it may have on Plan action, all 

parties, including the Commission and 

the public, will be better positioned to 

evaluate competing interests among any 

of the parties involved in governing, 

operating, and overseeing the CT Plan, 

as those competing interests could 

materially affect their ability to carry out 

the purposes of the Plan.567

The Commission is modifying Section 

4.10 to remove subsection (d), which 

provides that if the Commission’s 

Conflicts of Interest Approval Orders are 

stayed or overturned, the requirements 

of Section 4.10 and Exhibit B would not 

be applicable. The Commission finds 

that it is appropriate to remove this 

provision from the CT Plan. The U.S. 

Court of Appeals for the D.C. Circuit has 

dismissed the petitions for review of the 

Conflicts of Interest Approval Orders 

that were pending when the SROs filed 

the proposed CT Plan.568 Moreover, 

even if a court were to vacate the 

Conflicts of Interest Approval Orders, 

the CT Plan would be able to file an 

amendment with the Commission to 

align the policy with the court’s 

decision, and the Commission could, on 

its own initiative, propose an 

amendment as well. 

For the reasons discussed above, the 

Commission is approving Article IV, 

Section 4.10 of the CT Plan and Exhibit 

B, as modified. 

(k) Confidentiality Policy 

(i) General Provisions 

Article IV, Section 4.11 of the CT Plan 

sets forth the proposed confidentiality 

policy.569 As proposed, Section 4.11(a) 

provides that the Members and NonSRO Voting Representatives are subject 

to the policy as set forth in Exhibit C to 

the Plan (the ‘‘Confidentiality Policy’’). 

The provision further states that the 

Company will arrange for Covered 

Persons that are neither Members nor 

Non-SRO Voting Representatives to 

comply with the Confidentiality Policy 

under their respective agreements with 

the Company, a Member, the 

Administrator, or the Processors. 

Section 4.11(b) states that if the 

Commission’s Confidentiality Policy 

Approval Orders are stayed or 

overturned by a court, the requirements 

of Section 4.11 and related 

Confidentiality Policy in Exhibit C shall 

not apply.570

For the reasons discussed below, the 

Commission is modifying the CT Plan to 

delete Section 4.11(b) from the CT 

Plan,571 and the Commission is 

therefore renumbering Section 4.11(a) of 

the CT Plan as Section 4.11. As 

discussed below, the requirements of 

the Confidentiality Policy apply to all 

Covered Persons. For consistency with 

Exhibit C, the Commission finds that it 

is appropriate to modify the first 

sentence of renumbered Section 4.11 to 

replace the phrase ‘‘The Members and 

Non-SRO Voting Representatives’’ with 

the phrase ‘‘All Covered Persons.’’ 

Additionally, because the defined term 

Covered Persons, as modified by the 

Commission 572 will include Member 

Observers, the Commission finds that it 

is appropriate to modify the second 

sentence of renumbered Section 4.11 to 

replace the term ‘‘Members’’ with the 

phrase ‘‘SRO Voting Representatives 

and Member Observers.’’ As modified, 

Section 4.11 of the CT Plan will state 

that the Company ‘‘will arrange for 

Covered Persons that are not SRO 

Voting Representatives, Member 

Observers, or Non-SRO Voting 

Representatives to comply with the 

Confidentiality Policy under their 

respective agreements with either the 

Company, a Member, the Administrator, 

or the Processors.’’ 

Separately, Exhibit C to the CT 

Plan 573 describes the purpose and scope 

of the Confidentiality Policy, the 

procedures regarding the custodian and 

designations of all documents, and the 

procedures concerning Restricted 

Information,574 Highly Confidential 

Information,575 and Confidential 


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intellectual property of Members or customers; and 

any document subject to the Attorney-Client 

Privilege or Work Product Doctrine. 576Article I, Section 1.1(l) of the CT Plan 

describes Confidential Information to mean, except 

to the extent covered by the definitions for 

Restricted Information, Highly Confidential 

Information, or Public Information: (i) any nonpublic data or information designated as 

Confidential by the Operating Committee pursuant 

to Section 4.3; (ii) any document generated by a 

Member or Non-SRO Voting Representative and 

designated by that Member or Non-SRO Voting 

Representative as Confidential; and (iii) the 

individual views and statements of Covered Persons 

and SEC staff disclosed during a meeting of the 

Operating Committee or any subcommittees 

thereunder. 

577Article I, Section 1.1(n) of the CT Plan defines 

Covered Persons. 578See Cboe Letter, supra note 17, at 6–8; 

BlackRock Letter I, supra note 247, at 5; RBC Letter, 

supra note 30, at 9–11; Fidelity Letter, supra note 

30, at 5; Nasdaq Letter I, supra note 20, at 2–7, 28– 

29; Data Boiler Letter I, supra note 31, at 38; ICI 

Letter I, supra note 31, at 4; FINRA Letter I, supra 

note 257, at 5–6; SIFMA Letter I, supra note 30, at 

4; NYSE Letter I, supra note 18, at 12, 15–18, 20– 

29; BMO Letter, supra note 30, at 4; MFA Letter, 

supra note 30, at 4; NYSE Letter II, supra note 19, 

at 4–5; ICI Letter II, supra note 31, at 2; Schwab 

Letter I, supra note 30, at 2; MayStreet Letter, supra 

note 513, at 4. 

579See RBC Letter, supra note 30, at 11. 

580See id. In support, this commenter also 

suggests that Non-SRO Voting Representatives 

could be required to sign non-disclosure 

agreements. See id. 

581See Cboe Letter, supra note 17, at 6–8; NYSE 

Letter I, supra note 18, at 12; NYSE Letter II, supra 

note 19, at 4; Nasdaq Letter I, supra note 20, at 2– 

3. 

582See Cboe Letter, supra note 17, at 6; NYSE 

Letter I, supra note 18, at 12, 15; NYSE Letter II, 

supra note 19, at 4; Nasdaq Letter I, supra note 20, 

at 1–2. 

583See NYSE Letter I, supra note 18, at 20; NYSE 

Letter II, supra note 19, at 2; Nasdaq Letter I, supra 

note 20, at 1–2, 7; Cboe Letter, supra note 17, at 2, 

6. 

584See Cboe Letter, supra note 17, at 8; NYSE 

Letter I, supra note 18, at 17. 

585See NYSE Letter I, supra note 18, at 15, 17; 

NYSE Letter II, supra note 19, at 4; Nasdaq Letter 

I, supra note 20, at 3; Cboe Letter, supra note 17, 

at 8. 

586Nasdaq Letter I, supra note 20, at 3. 

587See NYSE Letter I, supra note 18, at 24 & 

Attachment A. 

588See Nasdaq Letter I, supra note 20, at 3. 589See infra Section II. C. 5(k)(ii) (discussing 

modifications to Treatment of Highly Confidential 

Information). 590See NYSE Letter I, supra note 18, at 27; NYSE 

Letter II, supra note 19, at 5. 

Information.576 Section (a)(ii) of Exhibit 

C states that the Confidentiality Policy 

applies to all Covered Persons,577 and 

provides that Covered Persons must 

adhere to the policy and may not 

receive Company data and information 

until they affirm in writing that they 

have read and undertake to abide by the 

terms of the Confidentiality Policy. 

The Commission received several 

comments regarding the Confidentiality 

Policy.578 Generally, commenters 

support having a confidentiality policy 

in the CT Plan. Specifically, one 

commenter states that not all 

confidential information is the same and 

favors having tailored procedures for 

Restricted, Highly Confidential, and 

Confidential Information.579 The 

commenter further states that the 

specified procedures should also permit 

all Voting Representatives, and not just 

SRO Voting Representatives, to have 

access to Restricted and Highly 

Confidential Information so that they 

are able to make informed decisions, 

and that a strong confidentiality policy 

would improve the flow of information 

to decision-makers, including all Voting 

Representatives, which in turn would 

improve those decisions.580

In contrast, several commenters 

oppose having such a policy in the CT 

Plan.581 These commenters state that the 

Confidentiality Policy is inconsistent 

with Section 11A of the Act and Rule 

608,582 and that the Confidentiality 

Policy would frustrate the purposes of 

the Act and the national market 

system.583 Generally, these commenters 

state that by restricting an SRO Voting 

Representative from sharing CT Plan 

information with other personnel at an 

SRO—in the commenters’ words, 

putting the SRO Voting Representative 

on an ‘‘informational island’’ 584—the 

Confidentiality Policy would preclude 

Members from fulfilling their 

obligations under the securities laws, 

including Rule 608.585 One of these 

commenters argues that if the 

Commission determines to approve the 

Plan with amendments, it should 

publish the exact text of the intended 

amendments and seek comment prior to 

issuing an approval. The commenter 

states that the necessity of seeking 

comment is demonstrated by the 

‘‘numerous errors and potential 

unintended consequences’’ in the 

Conflicts of Interest Approval Orders 

and Confidentiality Policy Approval 

Orders currently applicable to the 

Equity Data Plans.586

Both here and in the Confidentiality 

Policy Approval Orders, the 

Commission has followed the 

procedures in Rule 608 for approval of 

an NMS plan. Moreover, what one 

commenter describes as ‘‘errors’’ and 

‘‘unintended consequences’’ in the 

Confidentiality Policy Approval Orders 

of the Equity Data Plans reflect instead 

a fundamental disagreement over 

whether any restrictions may be 

imposed on the use by SROs of 

commercially sensitive information 

garnered through their participation in 

the Equity Data Plans. And what one 

commenter 587 asserts is guidance from 

Commission staff that is inconsistent 

with the Confidentiality Policy 

Approval Orders reflects instead the 

staff’s good faith efforts to engage with 

the SROs and their counsel regarding 

their proposed ‘‘interpretations’’ of the 

Confidentiality Policy Approval Orders. 

One commenter also states that the 

Confidentiality Policy imposes 

unreasonable burdens and risks upon 

the SROs, their representatives, and 

their senior management by failing to 

recognize that the SRO, not its voting 

representative, is the CT Plan’s Member 

and that the SRO itself and its senior 

management are ultimately responsible 

for all aspects of the SRO’s operations, 

including participating in national 

market system plans and compliance 

with Rule 608.588

In response to commenters’ concerns, 

the Commission notes that the SRO 

Voting Representative may, subject to 

certain conditions, share confidential 

information with individuals within the 

SRO. Depending on the type of 

confidential information, the provisions 

provide that Confidential Information 

may be disclosed ‘‘in furtherance of the 

interests of the Company,’’ Highly 

Confidential Information may be 

disclosed when employees are 

‘‘authorized to receive it,’’ or when 

‘‘required by law,’’ 589 and Restricted 

Information may be disclosed by the 

Administrator when it determines that it 

is appropriate to share a customer’s 

financial information with the 

Operating Committee after redacting the 

customer’s name and other personal 

information. Accordingly, if the SRO’s 

Voting Representative has a legitimate 

need to share Plan information with, for 

example, the SRO’s senior management, 

the CT Plan’s provisions provide the 

means to do so. 

Separately, one commenter claims 

that Section (b)(i)(B) of Exhibit C— 

which provides that the Administrator 

may, under delegated authority, 

designate documents as Restricted, 

Highly Confidential, or Confidential—is 

unlawful. Specifically, this commenter 

argues that, because the Administrator 

has no obligations under the securities 

laws and would only be acting as an 

agent of the Members, the 

Administrator’s obligations are solely to 

the Operating Committee pursuant to its 

contract to perform functions required 

to allow the Members to meet their 

obligations under the securities laws.590

The commenter further contends that 

the Confidentiality Policy is unclear as 

to how the Operating Committee could 

provide oversight of the Administrator’s 

designation of documents as Restricted, 

Highly Confidential, or Confidential, 

given the restrictions on sharing 

Restricted, Highly Confidential, and 


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591See NYSE Letter I, supra note 18, at 27. 

592See id. at 28. 

593Nasdaq Letter I, supra note 20, at 3. 

594See Section (b)(ii)(B) of Exhibit C of the CT 

Plan. 

595Confidentiality Policy Approval Orders, supra 

note 569, 85 FR at 28103 and 85 FR at 28081. 

596Confidentiality Policy Approval Orders, supra 

note 569, 85 FR at 28098 and 85 FR at 28077. 

597See NYSE Letter I, supra note 18, at 15, 23; 

Nasdaq Letter I, supra note 20, at 4–6. 

Confidential Information.591

Accordingly, the commenter 

recommends that the Commission 

propose and publish for comment 

provisions authorizing the Operating 

Committee to direct the Administrator 

and Processors to apply confidentiality 

designations to such documents, which 

the Members could jointly administer 

and implement through CT Plan 

contracts with the Administrator and 

Processors.592

The provisions of the CT Plan and 

Confidentiality Policy define and 

specify the types of Restricted, Highly 

Confidential, and Confidential 

Information. The Commission notes that 

the Administrator would be required to 

adhere to the defined terms and policy 

provisions as discussed below, rather 

than having unfettered discretion to 

categorize information under the 

Confidentiality Policy. Moreover, the 

Commission believes that permitting the 

Operating Committee, rather than the 

Administrator, to determine what 

information should be treated as 

Restricted, Highly Confidential, or 

Confidential would both fatally 

undermine the Confidentiality Policy 

and wholly defeat the purpose of having 

an independent Administrator that is 

not compromised by the core conflict 

faced by SROs that sell their own 

proprietary equity data products. 

Finally, one commenter argues that, 

while Exhibit C to the CT Plan includes 

the same provisions as the 

Confidentiality Policy Approval Orders, 

the CT Plan, if approved, would 

‘‘perpetuate the arbitrary and capricious 

rulemaking undertaken by the 

Commission when it failed to provide 

notice or seek comment on its own 

modifications to the policy language 

proposed by the Equity Data Plans.’’ 593

Accordingly, the commenter 

recommends that the confidentiality 

provisions be excluded from the Plan. 

The Commission, however, disagrees 

with the procedural objections raised to 

the separate Confidentiality Policy 

Approval Orders, and the Commission 

has responded to the procedural 

objections both in the Confidentiality 

Policy Approval Orders and in 

subsequent litigation. In any event, 

those procedural objections have no 

bearing on the adequacy of the 

procedure resulting in this Order. Here, 

the Commission noticed the SROs’ 

proposed CT Plan, provided an 

opportunity for comment, and posed 

detailed and specific questions with 

respect to particular issues raised by the 

proposed CT Plan’s provisions, 

including the Confidentiality Policy. 

Moreover, because the Confidentiality 

Policy Approval Orders were issued on 

the same day as the Governance Order, 

the language of the confidentiality 

policies of the Equity Data Plans as 

approved was available to commenters 

when discussing whether similar 

provisions should be included in the CT 

Plan. The Commission’s modifications 

here both directly respond to the public 

comments received and more fully 

accomplish the CT Plan’s stated 

purpose, consistent with the changes 

made by the Commission in the 

Confidentiality Policy Approval Orders. 

These changes are well within the 

Commission’s discretion in deciding 

that additional measures are necessary 

or appropriate to address the conflict 

between an SRO both selling proprietary 

data in its commercial capacity and 

discharging its obligation to collect and 

disseminate consolidated data through a 

national market system plan. 

(ii) Treatment of Restricted, Highly 

Confidential, and Confidential 

Information 

Restricted Information. 

Section (b)(ii) of Exhibit C provides 

the procedures concerning Restricted 

Information, generally prohibiting a 

Covered Person in possession of 

Restricted Information from disclosing it 

to others, including Agents, and 

provides that this prohibition does not 

apply to disclosures to the staff of the 

SEC or as otherwise required by 

Applicable Law, or to other Covered 

Persons as expressly provided for by the 

policy. Section (b)(ii) further states that 

Restricted Information will be kept in 

confidence by the Administrator and 

Processors and will not be disclosed to 

the Operating Committee or any 

subcommittee thereof or during 

Executive Session. However, Restricted 

Information may be shared if the 

Administrator determines that it is 

appropriate to share a customer’s 

financial information with the 

Operating Committee and first 

anonymizes the information. The 

Administrator may disclose the identity 

of a customer in Executive Session if, in 

good faith, the Administrator 

determines that it is necessary to 

disclose the customer’s identity in order 

to obtain input or feedback from the 

Operating Committee or a subcommittee 

thereof about a matter of importance to 

the Company. In such case, the 

Administrator will change the 

designation from Restricted Information 

to Highly Confidential Information.594

As proposed, Section (b)(ii) of Exhibit 

C does not include a clause that is 

present in the Confidentiality Policy 

Approval Orders. That clause permits 

the Administrators of the existing 

Equity Data Plans to share with the staff 

of the SEC Restricted Information 

related to any willful, reckless, or 

grossly negligent conduct by a customer 

discovered by an Administrator, upon 

majority vote of the Operating 

Committee in Executive Session, and 

that clause served as a specific 

exception to the general provision in 

that same paragraph that ‘‘Restricted 

Information will be kept in confidence 

by the Administrator and Processor and 

will not be disclosed to the Operating 

Committee or any subcommittee thereof, 

or during Executive Session, or to the 

Advisory Committee.’’ 595 The 

Commission in the Confidentiality 

Policy Approval Orders also modified 

Section 3(b)(i) of the Equity Data Plans’ 

confidentiality policies to more broadly 

provide that ‘‘Covered Persons in 

possession of Restricted Information are 

prohibited from disclosing it to others, 

including Agents,’’ but specifically 

further provided that this prohibition 

‘‘does not apply to disclosure to the staff 

of the SEC or as otherwise required by 

law, or to Covered Persons as expressly 

provided for by this Policy.’’ 596

Although the CT Plan as proposed does 

not contain the specific exception that 

appears in the Equity Data Plans 

regarding the sharing by the 

Administrator of Restricted Information 

regarding certain customer conduct, the 

Commission believes that the broader 

language of Section (b)(ii) of Exhibit C 

to the CT Plan, which provides that the 

restrictions on sharing of Restricted 

Information do not apply to disclosure 

to the staff of the Commission, is 

sufficient to ensure that Restricted 

Information regarding any willful, 

reckless or grossly negligent conduct by 

a customer can be shared with the 

Commission. 

Some commenters oppose the 

language in Sections (b)(ii) and 

(b)(iii)(A)(1) of Exhibit C that limits a 

Covered Person’s ability to disclose 

Restricted Information and Highly 

Confidential Information to others, 

‘‘including agents.’’ 597 Generally, these 

commenters are concerned that the 


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598See NYSE Letter I, supra note 18, at 23–24; 

NYSE Letter II, supra note 19, at 4–5; Nasdaq Letter 

I, supra note 20, at 5–6; Cboe Letter, supra note 17, 

at 8 (stating that policy could be read to prohibit 

the sharing of certain types of confidential 

information with outside legal counsel, auditors, or 

other service providers that have a need to access 

that information). 

599See NYSE Letter I, supra note 18, at 23–24. 

See also Nasdaq Letter I, supra note 20, at 6 (stating 

that its auditors have expressed concerns about 

whether the policy is consistent with professional 

obligations that require them to subject their work 

to peer review and that may therefore require 

making Restricted or Highly Confidential 

Information available to persons who are not 

Covered Persons). 

600See Cboe Letter, supra note 17, at 7–8 (arguing 

that the policies would limit access to certain 

confidential information to the particular 

individual who is representing an SRO and would 

further limit the ability of an individual SRO 

representative to share information and consult 

with other employees of the SRO that is the actual 

plan participant). 

601See NYSE Letter I, supra note 18, at 23. 

602See NYSE Letter I, supra note 18, at 24; NYSE 

Letter II, supra note 19, at 5. 603 15 U.S.C. 78k–1(c)(1)(B). 

604Exhibit C, Section (b)(iii)(B) of the CT Plan. 

605See NYSE Letter I, supra note 18, at 16–17; 

NYSE Letter II, supra note 19, at 4–5; Nasdaq Letter 

I, supra note 20, at 3. 

606See Nasdaq Letter I, supra note 20, at 3. 

restriction is broad and impedes the 

ability of the Plan Administrator and 

Processors to perform tasks—such as 

hiring independent auditors and outside 

counsel to perform administrative 

functions—necessary for a Member to 

comply with its obligations pursuant to 

Rule 608.598 For example, these 

commenters argue that for the 

Administrator to provide services to the 

CT Plan, such as audited financial 

statements, the Administrator must be 

able to provide Restricted Information 

and Highly Confidential Information to 

an independent auditor, but would be 

restricted from doing so under the 

Confidentiality Policy.599 One 

commenter argues that the policies are 

impermissibly vague and states that it 

has had ongoing discussions with 

Commission staff to establish how the 

policies should be interpreted.600

Another commenter similarly states that 

it has raised policy interpretation 

questions with Commission staff.601 The 

commenter argues that the staff‘s 

response to the questions is not 

sufficiently clear and is inconsistent 

with the plain language of the 

Confidentiality Policy Approval Orders, 

and the commenter recommends that 

the Commission eliminate or 

substantially modify the prohibition on 

providing confidential information to 

agents and publish a new proposal for 

comment.602

After considering comments received, 

the Commission finds that it is 

appropriate to modify Exhibit C to the 

CT Plan to provide for additional 

sharing of protected information in 

certain circumstances. As discussed 

above, commenters raise concerns that 

the Confidentiality Policy improperly 

limits the Administrator’s and 

Processors’ ability to share Restricted 

Information with others, including 

agents, impeding the ability of an agent 

to perform its specific services to the CT 

Plan. The Commission has carefully 

considered these commenters’ concerns 

and finds that it is appropriate to permit 

such disclosure when the Operating 

Committee, consistent with the 

purposes and goals of the CT Plan, 

determines that it is appropriate to do 

so, because there may be instances in 

which Restricted Information is 

required to be disclosed to a Covered 

Person or third party in the service of 

the CT Plan. Accordingly, the 

Commission is adding new 

subparagraph (C) to Section (b)(ii) of 

Exhibit C to provide that the Operating 

Committee may authorize the disclosure 

of specified Restricted Information to 

specific Covered Persons or third 

parties, if it determines that doing so is 

in furtherance of the interests of the 

Plan, which is to ensure the prompt, 

accurate, reliable, and fair collection, 

processing, distribution, and 

publication of information with respect 

to quotations for and transactions in 

such securities and the fairness and 

usefulness of the form and content of 

such information, consistent with 

Section 11A of the Act.603

The new subparagraph (C) also 

requires that Covered Persons and third 

parties authorized by the Operating 

Committee that receive or have access to 

Restricted Information must segregate 

the information, retain it in confidence, 

and use it only in a manner consistent 

with the terms of the Confidentiality 

Policy. The Commission finds that this 

modification is appropriate because it 

will provide additional safeguards to 

ensure that highly sensitive customer 

and personally identifiable information 

is properly protected and not misused. 

Finally, new subparagraph (C) provides 

that such authorization will be granted 

on a case-by-case basis, unless the 

Operating Committee grants standing 

approval to allow disclosure of specified 

recurring information to specific 

Covered Persons. The Commission finds 

that this modification is appropriate 

because it promotes efficiency by 

allowing for the disclosure of Restricted 

Information to specific Covered Persons 

on an ongoing basis, where appropriate, 

without having to continually seek 

Operating Committee approval. 

Highly Confidential Information. 

As proposed, Section (b)(iii)(A) of 

Exhibit C permits Highly Confidential 

Information to be disclosed in Executive 

Session or to the subcommittee 

established pursuant to Section 4.7(c) of 

the CT Plan, and provides that Covered 

Persons in possession of Highly 

Confidential Information are prohibited 

from disclosing it to others, including 

Agents, except to other Covered Persons 

who need the information to fulfill their 

responsibilities to the Company. The 

prohibition does not apply to 

disclosures to the SEC staff or as 

otherwise required by law, or to other 

Covered Persons authorized to receive 

it. Thus, Highly Confidential 

Information may be disclosed to 

Commission staff unless it is protected 

by the Attorney-Client Privilege or the 

Work Product Doctrine. This section 

further states that the Operating 

Committee cannot authorize any other 

disclosure of Highly Confidential 

Information. 

Section (b)(iii)(B) provides that in the 

event that a Covered Person is 

determined by an affirmative vote of the 

Operating Committee to have disclosed 

Highly Confidential Information, ‘‘the 

Operating Committee will determine the 

appropriate remedy for the breach based 

on the facts and circumstances of the 

event. For an SRO Voting 

Representative or Member Observer, 

remedies include a letter of complaint to 

the SEC, which may be made public by 

the Operating Committee. For a NonSRO Voting Representative, remedies 

include removal of that Non-SRO Voting 

Representative.’’ 604

As noted above, some commenters 

express concerns that the 

Confidentiality Policy would preclude 

Members from fulfilling their 

obligations under the securities laws. 

Specifically, commenters argue that the 

SROs—not the individual Voting 

Representatives—have responsibilities 

under the Act and rules of the 

Commission and must be able to 

determine what information is available 

to individuals within an SRO in order 

to satisfy the SRO’s regulatory 

obligations.605 Another commenter 

agrees, arguing that the Confidentiality 

Policy, as written, wrongly assumes that 

the SRO Voting Representative has sole 

responsibility for all CT Plan decisions 

without the ability of that individual to 

seek guidance from the SRO’s senior 

management, technical advice from 

other SRO employees, or legal advice 

from SRO corporate counsel.606 The 

commenter is concerned that under the 

proposed Confidentiality Policy an 

SRO’s senior management would not be 

able to access information that may be 


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607See NYSE Letter I, supra note 18, at 17. 

608See id.; NYSE Letter II, supra note 19, at 5. See 

also Nasdaq Letter I, supra note 20, at 3. 

609As defined in the CT Plan in Article I, Section 

1.1(e), ‘‘Applicable Law’’ means all applicable 

provisions of (a) constitutions, treaties, statutes, 

laws (including the common law), rules, 

regulations, decrees, ordinances, codes, 

proclamations, declarations or orders of any 

Governmental Authority; (b) any consents or 

approvals of any Governmental Authority; and (c) 

any orders, decisions, advisory or interpretative 

opinions, injunctions, judgments, awards, decrees 

of, or agreements with, any Governmental 

Authority. Article I, Section 1.1(hh) of the CT Plan 

defines ‘‘Governmental Authority’’ to mean (a) the 

U.S. federal government or government of any state 

of the U.S., (b) any instrumentality or agency of any 

such government, (c) any other individual, entity or 

organization authorized by law to perform any 

executive, legislative, judicial, regulatory, 

administrative, military or police functions of any 

such government, or (d) any intergovernmental 

organization of U.S. entities, but ‘‘Governmental 

Authority’’ excludes any self-regulatory 

organization registered with the Commission. 

Although one commenter asks for the 

Commission’s ‘‘endorsement’’ of the conclusion 

that a disclosure ‘‘required by law’’ would 

encompass the disclosure of financial information 

in connection with an audit, see Nasdaq Letter I, 

supra note 20, at 6, other provisions of the CT Plan 

as modified would permit sharing of information 

that is required for the preparation of an exchange’s 

financial statements. As discussed above, the 

Commission is modifying the CT Plan to provide 

that the Operating Committee may authorize 

disclosure of Restricted Information under certain 

circumstances. See text accompanying note 603, 

supra. And as discussed immediately below, the 

Commission is also modifying the proposed CT 

Plan to provide for disclosure of Highly 

Confidential Information by SRO Voting 

Representatives to officers of the Member they 

represent who have direct or supervisory 

responsibilities for the Member’s participation in 

the CT Plan. See also Section (b)(iii)(A)(4) of Exhibit 

C to the CT Plan, as modified. For the same reasons, 

the phrase ‘‘required by Applicable Law’’ does not 

authorize disclosure of Restricted Information or 

Highly Confidential Information on the basis of a 

determination by a Covered Person, or any other 

person, that disclosure of the information is 

required to ensure that a Member complies with its 

regulatory obligations. 

necessary to make decisions related to 

the Plan if that information is 

determined to be Highly Confidential 

Information or Confidential Information. 

For example, the commenter states that 

an SRO’s senior management would be 

denied access to privileged information 

and prevented from participating in 

decisions regarding legal strategy and 

litigation involving the CT Plan or 

regulatory interactions with the 

Commission.607 Thus, these 

commenters conclude that the 

Commission may not approve an NMS 

plan that prohibits SROs’ senior 

management from having access to 

information that may be necessary to 

their informed decision-making related 

to regulatory obligations.608

In response to commenters’ concerns 

regarding the provisions governing 

disclosure of Highly Confidential 

Information, the Commission finds that 

it is appropriate to modify Section 

(b)(iii)(A) of Exhibit C to the CT Plan to 

specify the instances in which Highly 

Confidential Information can be shared. 

Specifically, the Commission is 

removing the language in subparagraph 

(A)(1) that permits disclosure to 

‘‘Covered Persons who need the Highly 

Confidential Information to fulfill their 

responsibilities to the Company.’’ The 

Commission believes that this language 

is too general to provide a meaningful 

limitation on the sharing of 

commercially sensitive information or 

to provide useful guidance regarding 

what disclosures are permissible. The 

Commission therefore believes that the 

CT Plan should clearly specify the 

situations where Highly Confidential 

Information may be disclosed. 

Accordingly, the Commission is 

modifying the second sentence in 

Section (b)(iii)(A) of Exhibit C to state, 

‘‘Covered Persons in possession of 

Highly Confidential Information are 

prohibited from disclosing it to others, 

including Agents, except as provided 

below.’’ The Commission finds that this 

modification is appropriate because the 

general prohibition on sharing, paired 

with specific instances of permissible 

sharing, which are discussed below, 

would specify and establish clear and 

limited circumstances for permitted 

disclosure of Highly Confidential 

Information. 

In connection with these changes, the 

Commission is also modifying 

subparagraph (A)(1) of Section (b)(iii) of 

Exhibit C to remove the language that 

states that the prohibition does not 

apply to disclosures ‘‘or as otherwise 

required by law (such as those required 

to receive the information to ensure the 

Member complies with its regulatory 

obligations), or to other Covered Persons 

authorized to receive it.’’ In response to 

commenters’ request for greater clarity, 

the Commission finds that it is 

appropriate to remove this broad 

language. Accordingly, the Commission 

is adding, in new subparagraph (A)(2), 

that Highly Confidential Information 

may be disclosed as required by 

Applicable Law.609 The Commission 

believes that this modification is 

appropriate because it provides greater 

specificity as to when Highly 

Confidential Information may be 

disclosed, consistent with the defined 

term. 

The Commission is also modifying 

Exhibit C to the CT Plan to re-number 

the subparagraphs in Section (b)(iii) so 

that subparagraph (A)(2) will now be 

subparagraph (A)(3), and to add new 

Section (b)(iii)(A)(4), which specifies 

the circumstances under which SRO 

Voting Representatives are permitted to 

share Highly Confidential Information 

with officers of their SRO or agents of 

the Member. Specifically, new Section 

(b)(iii)(A)(4) provides that SRO Voting 

Representatives may share certain types 

of Highly Confidential Information with 

officers of their Member SRO who have 

direct or supervisory responsibility for 

the SRO’s participation in the Company, 

or with Agents for that Member, 

provided that such information may not 

be used in the development, modeling, 

pricing, licensing, or sale of, PDP. The 

Commission finds that this modification 

is appropriate because it recognizes that 

certain officers and agents of the SRO 

may require relevant CT Plan 

information in order to comply with 

regulatory obligations. However, the 

Commission believes that such 

individuals should be limited to officers 

of a Member who have a direct or 

supervisory responsibility for the SRO’s 

participation in the CT Plan, or with 

agents for the Member that support the 

SRO’s participation in the CT Plan, and 

that the information shared must not be 

used in the development, modeling, 

pricing, licensing, or sale of, PDP. 

New Section (b)(iii)(A)(4) also 

specifies certain types of Highly 

Confidential Information that an SRO 

Voting Representative may share. 

Specifically, the Commission believes it 

is appropriate to identify the types of 

Highly Confidential Information 

permitted to be disclosed by the SRO 

Voting Representative as: (i) The 

Company’s contract negotiations with 

the Processor(s) or Administrator; (ii) 

communications with, and work 

product of, counsel to the Company; 

and (iii) information concerning 

personnel matters that affect the 

employees of the SRO or of the 

Company. The Commission finds that it 

is appropriate for an SRO Voting 

Representative to share the contract 

negotiations with the Processor(s) or 

Administrator because the SRO will 

directly interact with the Processor(s) 

and Administrator pursuant to such 

contracts and would need to know the 

terms and conditions to ensure that it 

complies with the requirements of the 

CT Plan. Similarly, the Commission 

finds that it is appropriate for 

communications and work product of 

counsel to the Company to be shared 

because counsel would be representing 

the SROs, and SRO officers would need 

to be informed in order to provide 

relevant information to counsel or make 

decisions related to Plan matters. 

With respect to the definition of 

‘‘personnel matters’’ as used in the 

definition of Highly Confidential 

Information, two commenters raise 


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610See Schwab Letter I, supra note 30, at 2; 

SIFMA Letter I, supra note 30, at 4. 

611The Commission notes that Section 

(b)(iii)(A)(1) of Exhibit C to the CT Plan specifies 

that the prohibition of disclosing Highly 

Confidential Information does not apply to 

disclosures made to the staff of the Commission. 

Additionally, Section (b)(iii)(A)(2) of Exhibit C 

permits disclosure of Highly Confidential 

Information as required by Applicable Law. 

612For example, the Operating Committee, when 

granting access to Highly Confidential Information 

to a third party (other than the Commission), could 

accomplish this by requiring the recipient to sign 

an agreement to abide by these requirements for 

storage and restrictions on use. 

613NYSE Letter I, supra note 18, at 24. 

614See id. at 25. 

concerns that the definition is too broad 

and that the definition of Highly 

Confidential Information should include 

only those personnel matters that affect 

the employees of the SROs or of the 

Company.610 The Commission believes 

that it is appropriate to modify this 

aspect of the definition of Highly 

Confidential Information so that the 

definition of personnel matters is 

limited to personnel matters that affect 

the employees of the SROs or the 

Company and thus is not construed 

broadly to include, for example, the 

performance of outside persons under 

contract with the CT Plan, which may 

be significant matters in which NonSRO Voting Representatives, as full 

members of the Operating Committee, 

should be able to participate. The 

Commission further finds that it is 

appropriate for information regarding 

personnel matters that affect the 

employees of the SROs or of the 

Company to be shared with officers of 

the SROs because the SROs are the 

Members of the LLC and are responsible 

for compliance with the terms of the CT 

Plan and Rule 608. 

The Commission, however, does not 

believe that information concerning the 

intellectual property of Members or 

customers should be shared. For 

example, customer audit information is 

excluded and may not be shared as it 

contains highly sensitive information 

and could be commercially valuable. 

Additionally, the Commission does not 

believe that SRO officers require 

detailed audit information regarding 

individual customers’ use of and 

payment for consolidated data to 

comply with the provisions of the CT 

Plan or with their regulatory obligations 

under Plan. The policies that would 

support the prompt, accurate, reliable, 

and fair collection, processing, 

distribution, and publication of 

information with respect to quotations 

for and transactions in such securities 

and the fairness and usefulness of the 

form and content of such information 

would not require detailed knowledge 

about specific amounts of an individual, 

identified customer’s use of and 

payment for Plan data. Rather, 

appropriate policies for the CT Plan 

should be based on relevant information 

about the data usage and payments of 

different categories of customers. For 

similar reasons, the Commission does 

not believe that officers of an SRO 

would require information concerning 

the intellectual property of another 

Member, as SROs are in competition 

with each other, and sharing such 

information would not be in furtherance 

of the purposes of the CT Plan. 

The Commission’s modifications to 

this subparagraph also provide that, to 

the extent that an SRO Voting 

Representative discloses Highly 

Confidential Information pursuant to 

Section (b)(iii)(A)(4), the individual will 

be required to maintain a log 

documenting each instance of such 

disclosure, including the information 

shared, the persons receiving the 

information, and the date the 

information was shared. The 

Commission is further modifying this 

subparagraph to add a requirement that 

Covered Persons who receive or have 

access to Highly Confidential 

Information pursuant to the new 

subparagraph must segregate the 

information, retain it in confidence, and 

use it only in a manner consistent with 

the terms of the Confidentiality Policy. 

The Commission believes that the 

requirement to log Highly Confidential 

Information when it is shared and to 

segregate the shared information, retain 

it in confidence, and use it only in a 

manner consistent with the terms of the 

Confidentiality Policy will provide 

greater transparency and accountability 

regarding the sharing of Highly 

Confidential Information of the CT 

Plan.611 The Commission finds that 

these modifications are appropriate 

because they will help to guard against 

misuse of that information for 

commercial or other purposes. 

The Commission is similarly 

modifying Section (b)(iii)(A) of Exhibit 

C to add new subparagraph (5), which 

will allow the Operating Committee to 

authorize the disclosure of specified 

Highly Confidential Information to 

specific third parties that are acting as 

Agents of the Company. The 

Commission finds that this modification 

is appropriate because it recognizes that 

certain Agents of the Company may at 

times require necessary information to 

make informed decisions regarding the 

CT Plan and to assist a Member’s 

compliance with its regulatory 

obligations. Subparagraph (5) will also 

require that third parties that receive or 

have access to Highly Confidential 

Information must segregate the 

information, retain it in confidence, and 

use it only in a manner consistent with 

the terms of the Confidentiality 

Policy.612 The language further provides 

that authorization will be on a case-bycase basis, unless the Operating 

Committee grants standing approval to 

allow disclosure of specified recurring 

information to specific third parties. 

The Commission finds that these 

modifications are appropriate because 

they are designed to ensure that the 

disclosed information is properly 

protected and not misused and because 

they will promote an efficient process 

by allowing for the ongoing disclosure 

of Highly Confidential Information to a 

specific Agent without having to 

continually seek Operating Committee 

approval. 

Confidential Information. 

As proposed, Section (b)(iv) of Exhibit 

C provides that Confidential 

Information may be disclosed during a 

meeting of the Operating Committee or 

any subcommittee thereof, and a 

Covered Person may disclose 

Confidential Information to other 

persons to allow such other persons to 

fulfill their responsibilities to the 

Company. Section (b)(iv)(D) of Exhibit C 

provides that a Covered Person that is 

a representative of a Member may be 

authorized by the Operating Committee 

to disclose particular Confidential 

Information to other employees or 

agents of the Member or its affiliates 

only in furtherance of the interests of 

the Company as needed for that Covered 

Person to perform his or her function on 

behalf of the Company. 

One commenter raises concerns with 

Section (b)(iv)(A) of Exhibit C, arguing 

that no Covered Person other than 

Members has responsibilities to the CT 

Plan, and as such, the provision would 

imply that ‘‘Confidential Information 

cannot be shared at all, or at a 

minimum, casts substantial doubt on 

what can be shared.’’ 613 The commenter 

states that it has discussed with 

Commission staff how Confidential 

Information may be shared with service 

providers who need access to such 

information but have no such 

responsibilities to the Plan.614 The 

commenter acknowledges that, in 

response, Commission staff stated its 

view that sharing Confidential 

Information is permissible because the 

Operating Committee can authorize its 

disclosure if the disclosure is not 

inconsistent with the goals and aims of 


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615See id. 

616See id. 

617See Notice, supra note 3, 85 FR at 64571 

(Question 33). 

618See id. at 64567 (Question 5). 

619See id. at 64567 (Question 5). 

620See ICI Letter I, supra note 31, at 4 n.9; ICI 

Letter II, supra note 31, at 2; FINRA Letter I, supra 

note 257, at 3; MayStreet Letter, supra note 513, at 

4; Data Boiler Letter I, supra note 31, at 22; Nasdaq 

Letter I, supra note 20, at 4–5; NYSE Letter I, supra 

note 18, at 21. 

621See FINRA Letter I, supra note 257, at 3. 

622See id. 

623See ICI Letter I, supra note 31, at 4; ICI Letter 

II, supra note 31, at 2; Nasdaq Letter I, supra note 

20, at 13, BMO Letter, supra note 30, at 4; MFA 

Letter, supra note 30, at 4, MayStreet Letter, supra 

note 513, at 4. 

624See MayStreet Letter, supra note 513, at 4. 

625See RBC Letter, supra note 30, at 10–11. 

626See BMO Letter, supra note 30, at 4. 

627See NYSE Letter I, supra note 18, at 21. 

628See id. at 21–22. 

629See id. at 22. 

the Confidentiality Policy.615

Nonetheless, the commenter believes 

that the provision impedes the 

functioning of the national market 

system and requests that the 

Commission propose to eliminate or 

substantially modify the restriction and 

solicit comment.616

In response to the commenter’s 

concern, the Commission is modifying 

certain provisions of the Confidentiality 

Policy. Specifically, the Commission is 

modifying Section (b)(iv)(A) of Exhibit 

C, to state that Covered Persons may 

disclose Confidential Information only 

to other persons who need to receive 

such information to fulfill their 

responsibilities pursuant to the CT Plan, 

including oversight of the CT Plan. The 

Commission notes that, as defined in 

the CT Plan, Confidential Information 

may include non-public data or 

information designated as Confidential 

by the Operating Committee pursuant to 

Article IV, Section 4.3. The Commission 

finds that this modification is 

appropriate because, consistent with the 

current practices of the Equity Data 

Plans, financial information necessary 

for the leadership of an SRO to make 

decisions regarding the SRO’s 

participation in the Plan—namely, Plan 

expenses and revenues—will be 

designated as Confidential and thus 

permitted to be shared. Consistent with 

other provisions of the Confidentiality 

Policy as discussed above, the 

Commission is also modifying this 

section of the Confidentiality Policy to 

provide that recipients of Confidential 

Information must segregate the 

information, retain it in confidence, and 

use it only in a manner consistent with 

the terms of the Confidentiality Policy. 

The Commission is also modifying 

Section (b)(iv)(B) of Exhibit C, which 

authorizes disclosure of Confidential 

Information by an affirmative vote of the 

Operating Committee, to add language 

to clarify that such authorization must 

be on a case-by-case basis, unless the 

Operating Committee grants standing 

approval to allow disclosure of specified 

recurring information to specific 

Covered Persons. The Commission finds 

that these modifications are appropriate 

because expressly including these 

requirements for handling Confidential 

Information will provide additional 

safeguards regarding disclosure of 

Confidential Information and help to 

guard against misuse of this information 

for commercial or other purposes. 

(iii) Covered Persons 

In the Notice, the Commission 

solicited comment primarily focused on 

the applicability of the Confidentiality 

Policy to Member Observers. 

Specifically, the Commission asked 

whether Section 4.11(a) should be 

modified to expressly apply to Member 

Observers and if the definition of 

Member Observer should be more 

narrowly tailored to limit the 

individuals within an SRO that have 

access to Highly Confidential or 

Confidential Information.617 Among 

other questions, the Commission also 

asked if Member Observers should be 

prohibited from receiving Restricted or 

Highly Confidential Information, 

excluded from being present when such 

information is discussed, or required to 

demonstrate a legitimate or 

particularized need for specific 

Restricted or Highly Confidential 

Information before being granted 

access.618

Separately, in the Notice, the 

Commission also solicited comment on 

the definition of Covered Persons. As 

proposed, the CT Plan defines ‘‘Covered 

Persons’’ as the representatives of the 

Members, the Non-SRO Voting 

Representatives, SRO Applicants, the 

Administrator, and the Processors; 

affiliates, employees, and Agents of the 

Operating Committee, a Member, the 

Administrator, and the Processors; any 

third parties invited to attend meetings 

of the Operating Committee or 

subcommittees; and the employers of 

Non-SRO Voting Representatives. 

Covered Persons do not include staff of 

the SEC. Specifically, the Commission 

asked whether other types of 

representatives, such as Member 

Observers, should be specifically 

included in the definition.619

In response, the Commission received 

several comment letters discussing 

Covered Persons.620 One commenter 

notes that, as proposed, the definition of 

‘‘Covered Persons’’ includes 

representatives of the Members as well 

as employees of a Member, and states 

that Member Observers would be 

implicitly included in the definition.621

However, the commenter does not 

oppose explicitly adding Member 

Observers for clarity and agrees that 

individuals qualifying as Member 

Observers should be subject to the 

Confidentiality Policy.622 Other 

commenters also support expressly 

including Member Observers in the 

definition of Covered Persons, stating 

that the CT Plan’s Confidentiality Policy 

should apply to all Member 

Observers,623 particularly given the 

significant role a Member Observer may 

have in Plan deliberations and 

subcommittee recommendation 

formation.624

In response to the Commission’s 

question regarding whether Member 

Observers given access to confidential 

information should be required to 

demonstrate a legitimate or 

particularized need for such access, one 

commenter states that Members 

Observers and others given access to 

confidential information should be 

required to demonstrate the need for 

such access.625 Similarly, another 

commenter states that protecting 

confidential and proprietary 

information from misuse is important 

and believes that Member Observers 

should be required to demonstrate a 

legitimate or particularized need for 

Restricted or Highly Confidential 

Information before being granted access 

to such information.626

Separately, one commenter raises 

concerns regarding Section (a)(ii) of 

Exhibit C, which requires all Covered 

Persons that are natural persons to 

affirm in writing that they have read the 

policy and undertake to abide by its 

terms before receiving Company data 

and information.627 Specifically, the 

commenter argues that it imposes 

onerous and impractical burdens on 

agents of the Members that would be 

providing services to the Plan, including 

auditors, bankers, and outside counsel 

and that it conflicts with independent 

professional standards and obligations, 

and standard market practice.628 The 

commenter states that existing customer 

relationship documents, such as 

engagement letters, are more than 

sufficient to protect the confidentiality 

of Restricted, Highly Confidential, or 

Confidential Information that such 

agents may need to perform services for 

the CT Plan.629 Accordingly, the 


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630See id. at 22–23. See also Nasdaq Letter I, 

supra note 20, at 6 (acknowledging that while the 

Confidentiality Policy Approval Orders states that 

disclosures ‘‘required by law or professional ethics 

obligations’’ are permitted, the approved 

Confidentiality Policy included as Exhibit C to the 

Plan does not reference professional ethics 

obligations). 

631See NYSE Letter I, supra note 18, at 26; NYSE 

Letter II, supra note 19, at 5. 

632See NYSE Letter I, supra note 18, at 26. 

633See id. 

634See Article IV, Section 4.4(a) of the CT Plan. 

635See Confidentiality Policy Approval Orders, 

supra note 569, 85 FR at 28093 and 85 FR at 28071. 

636See Confidentiality Policy Approval Orders, 

supra note 569, 85 FR at 28093 and 85 FR at 28072. 

commenter recommends that the 

Commission propose and solicit 

comment on changes to the CT Plan that 

would eliminate the current 

requirement, or alternatively that the 

Commission propose revisions that 

would modify the undertaking such that 

Covered Persons must agree to abide 

with the Confidentiality Policy so long 

as it does not conflict with the 

applicable professional standards of 

conduct and such that a single 

representative may sign such an 

undertaking on behalf of an entire 

firm.630

One commenter states that while the 

Confidentiality Policy provisions 

purport to cover the Non-SRO Voting 

Representatives and their employers, 

such parties have no regulatory 

obligations under the CT Plan, and the 

commenter is concerned that Members 

do not have a way to monitor Non-SRO 

Voting Representatives’ and their 

employers’ compliance.631 The 

commenter thus questions whether 

Non-SRO Voting Representatives and 

their employers should be included in 

the definition of Covered Persons, and 

subsequently subject to the 

Confidentiality Policy. Specifically, the 

commenter states that Rule 608(c) 

would obligate the Members to monitor 

Non-SRO Voting Representatives and 

their employers, but SROs have no 

authority over the Non-SRO Voting 

Representatives, their employers, nor 

the ability to monitor or enforce 

compliance, and no authority to impose 

sanctions for violations.632 Accordingly, 

the commenter recommends removing 

both Non-SRO Voting Representatives 

and their employers from the definition 

of Covered Persons, and separately 

requiring that the Non-SRO Voting 

Representatives enter into contractual 

agreements with the CT Plan to protect 

the confidentiality of the CT Plan 

information.633

The Commission agrees that the 

definition of Covered Persons should 

specify the individuals that would be 

included in ‘‘representatives of the 

Members.’’ Specifically, the 

Commission believes that the definition 

should be clarified to include SRO 

Voting Representatives, alternate SRO 

Voting Representatives, and Member 

Observers. As any individual qualifying 

as one of these representatives may 

attend Operating Committee and 

subcommittee meetings and potentially 

receive and have access to confidential 

information, the Commission believes 

that they should be subject to the 

provisions of Section 4.11 and Exhibit C 

of the CT Plan and thus explicitly 

included as a Covered Person. Similarly, 

because the CT Plan also permits SRO 

Applicant Observers to attend Operating 

Committee meetings,634 the Commission 

likewise believes that the same 

provisions and policy should apply 

equally to this category of individuals. 

For the reasons stated above, the 

Commission finds that it is appropriate 

to modify Article I, Section 1.1(n), the 

proposed definition of Covered Persons, 

to clarify that the phrase 

‘‘representatives of the Members’’ 

includes SRO Voting Representatives, 

alternate SRO Voting Representatives, 

and Member Observers, and to expand 

the definition of Covered Persons to 

include SRO Applicant Observers. 

In response to comments regarding 

inclusion of Non-SRO Voting 

Representatives and their employers in 

the definition of Covered Persons, the 

Commission believes that Non-SRO 

Voting Representatives should be 

included in that definition, but agrees 

that the employers of Non-SRO Voting 

Representatives should not be included. 

As Non-SRO Voting Representatives 

will serve as full members of the 

Operating Committee and charged with 

carrying out the objectives of the CT 

Plan, Non-SRO Voting Representatives 

will have greater access to confidential 

information, including but not limited 

to contract negotiations with outsourced 

service providers, such as firms and 

persons that provide audit services, 

accounting services, or legal services to 

the CT Plan, Administrator, or 

Processors. As the Commission stated in 

the Confidentiality Policy Approval 

Orders, all parties that generate, receive, 

or have access to sensitive plan-related 

information by virtue of their service to 

the plan, or their affiliation with a party 

that has access, should be subject to the 

same standards to protect the 

confidentiality of that information.635

For the reasons stated above, the 

Commission finds that the inclusion of 

the Non-SRO Voting Representatives in 

the definition of Covered Persons, and 

in turn subjecting them to the 

Confidentiality Policy, is appropriate 

because it will strengthen the 

confidentiality of information 

protections afforded by the policy. 

By contrast, the Commission is 

modifying the CT Plan to delete 

‘‘employers of Non-SRO Voting 

Representatives’’ from the definition of 

Covered Persons because Non-SRO 

Voting Representatives will not be 

authorized to share non-public Plan 

information with their employers, and 

those employers will not otherwise be 

entitled to access non-public Plan 

information. Further, a Non-SRO Voting 

Representative’s employer will have no 

regulatory duties or responsibilities to 

the CT Plan and no corresponding need 

to receive confidential Plan information. 

Excluding the employers of Non-SRO 

Voting Representatives from the 

definition of Covered Persons would 

permit the sharing of Confidential 

Information with those employers only 

when specifically authorized by the 

Operating Committee in a manner 

permitted by the Confidentiality Policy. 

While the Commission previously 

modified the definition of Covered 

Persons under the existing Equity Data 

Plans to include the employer of an 

Advisory Committee member to protect 

the confidentiality of Plan information 

in a manner similar to how a Member’s 

SRO employer is required to protect the 

confidentiality of Plan information,636

the role of Non-SRO Voting 

Representatives as full members of the 

Operating Committee provides them 

with significantly greater access to 

confidential Plan information, and the 

Commission believes that this greater 

access to protected information makes it 

appropriate to modify the CT Plan. 

Accordingly, the Commission is 

modifying Article 1, Section 1.1 (n) to 

remove ‘‘employers of Non-SRO Voting 

Representative’’ from the definition of 

Covered Persons. The Commission finds 

that the modification to remove the 

employers of Non-SRO Voting 

Representatives from the definition of 

Covered Persons is appropriate, because 

Non-SRO Voting Representatives will 

participate on the operating committee 

in their individual capacity, and their 

employer will not be authorized to have 

access to confidential Plan information. 

(iv) Effect of Pending Petitions for 

Review 

The Commission also solicited 

comment on Section 4.11(b), which 

states that if the Commission’s 

Confidentiality Policy Approval Orders 

are stayed or overturned by a court, the 

requirements of Section 4.11 and related 

Confidentiality Policy in Exhibit C 


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637See Notice, supra note 3, 85 FR at 64571 

(Question 34). 

638See id. 

639See RBC Letter, supra note 30, at 11. 

640See Confidentiality Policy Approval Orders, 

supra note 569, 85 FR at 28092 and 85 FR at 28070. 

641See Confidentiality Policy Approval Orders, 

supra note 569, 85 FR at 28090 and 85 FR at 28069. 

642See New York Stock Exchange, et al. vs. 

Securities and Exchange Commission, Nos. 20– 

1242, 20–1243, 20–1244, —F.4th—, 2021 WL 

2654987, *1–4 (D.C. Cir., June 29, 2021). 

643See Article V, Section 5.1 of the CT Plan. 

644See id. 

645See Notice, supra note 3, 85 FR at 64571 

(Question 35). 

646See BlackRock Letter I, supra note 247, at 4. 

647See id. This commenter states that ‘‘[f]ull 

disclosure of performance standards improves 

transparency over the operation of the SIP and 

increases public confidence in the technical 

capability and operational resiliency of our market 

data system.’’ Id. 

648See Data Boiler Letter I, supra note 31, at 4, 

12, 40. 

649See Nasdaq Letter I, supra note 20, at 29. 

650 Id. 

651See NYSE Letter I, supra note 18, at 39. 

652 17 CFR 242.608(a)(3)(iii). 

653See NYSE Letter I, supra note 18, at 39. 

654See Notice, supra note 3, 85 FR at 64571 

(Question 36). 

655See Data Boiler Letter I, supra note 31, at 40; 

Virtu Letter, supra note 30, at 7. One of the 

commenters suggests that ‘‘mandating the use of 

time-lock encryption to make market data available 

securely in synchronized time’’ is a way to ensure 

the fairness and usefulness of SIP information. Data 

Boiler Letter I, supra note 31, at 40. 

656 Virtu Letter, supra note 30, at 7. 

would no longer be applicable.637 The 

Commission sought commenters’ views 

on whether such a provision is 

necessary or appropriate for the CT Plan 

and whether the CT Plan should, at a 

minimum, contain provisions for 

identifying and protecting confidential 

information that are not subject to 

elimination, or provisions specifying 

that the CT Plan must be amended to 

include a new policy with respect to 

confidential information before the 

existing policy can be removed.638 One 

commenter supports retaining the 

current provisions of the Confidentiality 

Policy in the event that the 

Confidentiality Policy Approval Orders 

are stayed or overturned so that 

information remains protected.639

As the Commission previously stated 

in the Confidentiality Policy Approval 

Orders, the Commission believes that 

the CT Plan should include a 

confidentiality policy.640 The 

Commission continues to believe that a 

confidentiality policy is necessary and 

that the policy must balance protection 

against the potential misuse of 

confidential information with the strong 

interest in public transparency of the 

operations of the CT Plan in light of the 

important function the CT Plan will 

serve in the national market system.641

Accordingly the Commission is 

modifying Section 4.11 to remove 

subsection (b), which provides that if 

the Commission’s Confidentiality Policy 

Approval Orders are stayed or 

overturned, the requirements of Section 

4.11 and Exhibit C would not be 

applicable. The Commission finds that 

it is appropriate to remove this 

provision in the CT Plan. The U.S. Court 

of Appeals for the D.C. Circuit has 

dismissed the petitions for review of the 

Confidentiality Policy Approval Orders 

that were pending when the SROs filed 

the proposed CT Plan.642 Moreover, 

even if a court were to vacate the 

Confidentiality Policy Approval Orders, 

the CT Plan would be able to file an 

amendment with the Commission to 

align the policy with the court’s 

decision, and the Commission could, on 

its own initiative, propose an 

amendment as well. 

For the reasons discussed above, the 

Commission is approving Article IV, 

Section 4.11 of the CT Plan and Exhibit 

C, as modified. 

6. The Processors; Information; 

Indemnification 

(a) General Functions of the Processors 

Article V of the CT Plan sets forth the 

provisions related to the Processors. 

Pursuant to Article V, Section 5.1, the 

Company, under the direction of the 

Operating Committee, shall be required 

to enter into agreements with the 

Processors obligating the Processors to 

perform certain processing functions on 

behalf of the Company (the ‘‘Processor 

Services Agreements’’).643 The CT Plan 

specifies that, among other things, the 

Company shall require the Processors to 

collect from the Members, and 

consolidate and disseminate to Vendors 

and Subscribers, Transaction Reports 

and Quotation Information in Eligible 

Securities in a manner designed to 

ensure the prompt, accurate, and 

reliable collection, processing, and 

dissemination of information with 

respect to all Eligible Securities in a fair 

and non-discriminatory manner.644

In the Notice, the Commission 

solicited comment on Article V, Section 

5.1 and, in particular, on whether 

further details on the terms and 

responsibilities of the Processors should 

be specified in the body of the CT 

Plan.645 One commenter states that the 

minimum technical and operational 

requirements for the Processors, along 

with any contractual terms and 

responsibilities, should either be 

detailed in the CT Plan or made 

publicly available (e.g., on the CT Plan 

website).646 This commenter argues 

that, today, public disclosure regarding 

Processor operations and standards of 

service is inadequate.647 Another 

commenter states that the Processor 

functions described in Section 5.1 are 

insufficient and suggests additional 

functions and responsibilities to be 

specified in the CT Plan, including 

provisions related to business 

continuity and disaster recovery for the 

SIPs and to providing analytical support 

for the consolidated audit trail 

project.648

In contrast, one commenter states that 

codifying technical standards of the 

Processors in the CT Plan would 

interfere with the Operating 

Committee’s ability to respond to 

changing technology conditions.649 This 

commenter states that ‘‘[i]t is the 

responsibility of the Operating 

Committee to establish standards and 

adjust them in light of changing 

technology.’’ 650 Another commenter 

argues that the decision to include 

detailed terms about the responsibilities 

of the Processors in the LLC Agreement 

itself, as opposed to in the Processor 

Services Agreements, is a decision that 

should be left to the SROs rather than 

the Commission.651 Citing to Rule 

608(a)(3)(iii) of Regulation NMS,652 this 

commenter states that it is the SROs— 

and not the Commission—that are 

authorized to act jointly in 

‘‘[i]mplementing or administering an 

effective [NMS] plan.’’ 653

In the Notice, the Commission also 

solicited comment on whether the terms 

of the CT Plan should require the 

Processors to ensure the ‘‘fairness and 

usefulness of the form and content’’ of 

consolidated and disseminated 

transaction and quotation 

information.654 Two commenters state 

that the terms of the CT Plan should 

require the Processors to ensure the 

‘‘fairness and usefulness of the form and 

content’’ of such information.655 One of 

these commenters states that including 

this obligation on Processors would 

‘‘add a layer of much needed 

accountability to the process.’’ 656

In response to commenters that seek 

additional detail in the CT Plan on the 

Processor operations and standards of 

service, the Commission believes that it 

is reasonable for detailed disclosures of 

the Processor functions to be addressed 

in the Processor Services Agreements 

rather than to be incorporated as 

requirements in the body of the CT Plan, 

which would require a formal 

amendment of the CT Plan each time 


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657See supra note 649. 

658See, e.g., Article V(c) of the CTA Plan, 

available at https://www.ctaplan.com/plans; Article 

V, Section 5.1 of the OPRA Plan, available at 

https://www.opraplan.com/document-library. 

659See Article IV, Section 4.1(a)(iv) of the CT 

Plan. 

660Proposed Order, supra note 7, 85 FR at 2183. 

661See id. 

662Article IV, Section 4.1(a)(i) of the CT Plan 

(emphasis added). 

663See Article V, Section 5.2 of the CT Plan. See 

also Article IV, Section 4.1(a)(ii) of the CT Plan, 

which requires the Operating Committee to ensure 

the public reporting of Processors’ performance and 

other metrics and information about the Processors. 

664See Article V, Section 5.2 of the CT Plan. 

665See id. 

666See Notice, supra note 3, 85 FR at 64571 

(Question 37). 

667 Data Boiler Letter I, supra note 31, at 40–41. 

668 Id. 669 Id. at 40. 

670See Section V.A of the UTP Plan and Section 

V(d) of the CT Plan. 

671See Data Boiler Letter I, supra note 31, at 40– 

41. 

672See Article IV, Section 4.1(a)(ii) of the CT 

Plan. 

the requirements changed. The 

Commission agrees with the comment 

that codifying technical standards of the 

Processors in the CT Plan would 

interfere with the Operating 

Committee’s ability to respond to 

changing technology conditions.657

Moreover, setting forth detailed rights 

and obligations of the Processors in 

service agreements outside of the CT 

Plan would be consistent with the 

framework utilized in the current NMS 

plans.658 Further, the Operating 

Committee of the CT Plan, including 

Non-SRO Voting Representatives, will 

have visibility into the process of setting 

the requirements in the Processor 

Services Agreements. The Commission 

also expects that establishing the 

technical and operational requirements 

of the Processors will be an iterative 

process between the Operating 

Committee and the Processors. Setting 

forth the requirements in the CT Plan 

itself may unnecessarily hinder the 

ability of the Operating Committee and 

the Processors to negotiate and modify 

the technical details of the functions 

and responsibilities of the Processors in 

response to, among other things, 

changing technology conditions. 

While one commenter argues that 

public disclosure of Processor 

operations and standards of service are 

currently inadequate, Article IV, Section 

4.1 of the CT Plan would expressly 

require the Operating Committee to 

ensure the public reporting of 

Processors’ performance and other 

metrics and information about the 

Processors.659 With respect to this 

public reporting requirement, the 

Commission continues to believe that, 

as it stated in the Proposed Order, 

‘‘making this information public would 

provide all market participants with a 

view of how well or poorly a processor 

is performing across various metrics, 

which would allow market participants 

to provide meaningful input to the 

operating committee and to the 

Commission.’’ 660 The Commission 

further continues to believe that, if 

performance metrics are made public, 

the Operating Committee of the CT Plan 

will have enhanced incentives to ensure 

that the Processors are functioning well 

and that the CT Plan is providing 

prompt, accurate, and reliable 

publication of information with respect 

to quotations for and transactions in 

NMS stocks.661

Regarding comments that the terms of 

the CT Plan should require the 

Processors to ensure the ‘‘fairness and 

usefulness of the form and content’’ of 

consolidated and disseminated 

transaction and quotation information, 

the Commission believes that Article IV, 

Section 4.1 of the CT Plan incorporates 

this requirement, as it requires the 

Operating Committee to implement 

‘‘policies and procedures as necessary to 

ensure prompt, accurate, reliable, and 

fair collection, processing, distribution, 

and publication of information with 

respect to Transaction Reports and 

Quotation Information in Eligible 

Securities and the fairness and 

usefulness of the form and content of 

that information.’’ 662 For the reasons 

discussed above, the Commission is 

approving Article V, Section 5.1, as 

proposed. 

(b) Evaluation of the Processors 

Article V, Section 5.2 of the CT Plan 

requires that the Processors’ 

performance of their functions under 

the Processor Services Agreements shall 

be subject to review at any time as 

determined by an affirmative vote of the 

Operating Committee, pursuant to 

Article IV, Section 4.3 of the CT Plan; 

provided, however, that a review will be 

conducted at least once every two 

calendar years but not more than once 

each calendar year.663 If the Processors 

have materially defaulted in their 

obligations under the Processor Services 

Agreements and such default has not 

been cured within the applicable cure 

period pursuant to the Processor 

Services Agreements, the CT Plan 

provides that the review period 

limitations will not apply.664

Furthermore, the CT Plan provides that 

the Operating Committee may review 

the Processors at staggered intervals.665

In the Notice, the Commission 

solicited comment on the Processors’ 

performance review process.666 One 

commenter states that Processor reviews 

are important and ‘‘should not be done 

out of formality.’’ 667 This commenter, 

without identifying a specific area of 

deficiency, believes that the review 

mechanism as proposed in the CT Plan 

‘‘would cause continuous arguments 

rather than concrete improvements of 

SIP performance.’’ 668 As a solution, the 

commenter suggests that the Processor 

assessment should ‘‘review potential 

implications/threats as a result of 

upcoming techs . . . and be used to 

plan ahead for the future.’’ 669

The Commission believes that the 

provisions of the CT Plan setting forth 

the Processors’ biennial review 

requirement, and the Operating 

Committee’ ability to change the 

frequency of the review for 

circumstances in which the Processors 

have materially defaulted in their 

obligations, are reasonably designed to 

ensure that the Processors meet their 

performance obligations under the 

Processor Services Agreements. Indeed, 

the biennial review requirement is 

similar to the long-standing review 

process under the current Equity Data 

Plans,670 and the Commission believes 

that the biennial review requirement has 

provided a sufficient sample time 

period for the operating committees of 

the existing Equity Data Plans to 

evaluate the performance of the 

Processors without overburdening the 

operating committees with frequent 

reviews that might produce little 

additional information. Regarding a 

commenter’s suggestion that the 

assessment should review technological 

developments in anticipation of future 

implications,671 the Commission 

believes that the CT Plan reasonably 

leaves the determination of the metrics 

used to evaluate the Processors to the 

discretion of the Operating Committee. 

Pursuant to Article IV, Section 4.1, the 

Operating Committee is expressly 

tasked with evaluating the performance 

of the Processors.672 Section 4.1 also 

requires the Operating Committee to 

assess the marketplace for equity data 

products and ensure that the CT Feeds 

are designed to ensure the widespread 

availability of CT Feeds data to 

investors and market participants. The 

Commission continues to believe that, 

as it stated in the Proposed Order, 

‘‘[i]mposing a direct responsibility on 

the operating committee to keep abreast 

of changes in the marketplace regarding 

demands for and pricing of equity 

market data, and to ensure that SIP data 

meets those demands and are widely 

distributed at fair and reasonable prices, 


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673Proposed Order, supra note 483, 85 FR at 

2183. 

674See Article V, Section 5.3 of the CT Plan. 

675See Article V, Section 5.3(a) of the CT Plan. 

676See Article V, Section 5.3(b) of the CT Plan. 

677See Article V, Section 5.3(a) of the CT Plan. 

678See Notice, supra note 3, 85 FR at 64571–72 

(Question 38). 

679 Data Boiler Letter I, supra note 31, at 41. 

680 Id. 

681See Article VI, Section 5.3(b)(iv) of the CT 

Plan. 

682See Article IV, Section 4.1(a)(ii) of the CT 

Plan. 

683See Section V.E of the UTP Plan, available at 

https://utpplan.com/utp_plan. 

684See Article V, Section 5.4(a)(i) of the CT Plan. 

should help ensure that the SIPs’ data 

feeds support the findings and goals of 

Section 11A of the Act.’’ 673 For the 

reasons discussed above, the 

Commission is approving Article V, 

Section 5.2, as proposed. 

(c) Process for Selecting New Processors 

Article V, Section 5.3 of the CT Plan 

requires that the Operating Committee, 

by an affirmative vote pursuant to 

Section 4.3 of the CT Plan, establish 

procedures for selecting a new Processor 

(the ‘‘Processor Selection 

Procedures’’).674 The CT Plan requires 

that the Processor Selection Procedures 

be established no later than upon the 

termination or withdrawal of a 

Processor or the expiration of a 

Processor Services Agreement with a 

Processor.675 The Processor Selection 

Procedures are required to set forth, at 

a minimum: (i) The minimum technical 

and operational requirements to be 

fulfilled by the Processor; (ii) the criteria 

for selecting the Processor; (iii) the 

entities (other than Voting 

Representatives) that are eligible to 

comment on the selection of the 

Processor; and (iv) the entity that will: 

(A) Draft the Operating Committee’s 

request for proposal for a new Processor; 

(B) assist the Operating Committee in 

evaluating bids for the new Processor; 

and (C) otherwise provide assistance 

and guidance to the Operating 

Committee in the selection process.676

The Operating Committee, as part of the 

process of establishing the Processor 

Selection Procedures, is permitted to 

solicit and consider the timely comment 

of any entity affected by the operation 

of the CT Plan.677

In the Notice, the Commission 

solicited comment on the requirement 

to establish the Processor Selection 

Procedures, including the ability to seek 

comment on the selection of the 

Processor and whether to require a 

subcommittee of disinterested members 

of the Operating Committee 

(‘‘disinterested subcommittee’’) to vote 

and select a new Processor.678 One 

commenter supports allowing the public 

to comment on the selection of a new 

Processor because this commenter 

expects the CT Plan to be ‘‘run as a 

public utility.’’ 679 This commenter also 

questions the value of including in the 

Processor Selection Procedures a 

requirement that a disinterested 

subcommittee vote and select a new 

Processor, asserting that this 

requirement ‘‘would add more hands in 

the pool asking for resources’’ and states 

that, at most, the subcommittee should 

be allowed only to ‘‘consult’’ and have 

no authority to vote.680

With respect to the comment in 

support of public comment on the 

selection of a new Processor, Section 5.3 

provides that the Operating Committee 

may solicit and consider public 

comment as part of the process of 

establishing the Processor Selection 

Procedures, and the Processor Selection 

Procedures are required to set forth the 

entities (other than the Voting 

Representatives) that are eligible to 

comment on the selection of the 

Processor.681 The Commission also 

believes that the inclusion of Non-SRO 

Voting Representatives as full members 

of the Operating Committee, together 

with the Commission’s modification of 

the proposed CT Plan in Section 

4.4(g)(i) to prohibit discussions 

regarding contract negotiations with 

Processors in Executive Session, will 

help ensure that the Operating 

Committee considers broad industry 

viewpoints in the process of 

establishing the Processor Selection 

Procedures. As a result, the Commission 

believes that the CT Plan, as modified, 

addresses this issue. 

With respect to the comment on the 

value of requiring a disinterested 

subcommittee to vote and select a new 

Processor, Section 5.3 provides the 

Operating Committee with the 

responsibility to establish the 

procedures for selecting a Processor, 

including whether to include a 

disinterested subcommittee as part of 

the Processor Selection Procedures. The 

Commission believes that this authority 

is reasonable and does not believe it is 

necessary to require the Operating 

Committee to use a disinterested 

subcommittee, because the inclusion of 

Non-SRO Voting Representatives on the 

Operating Committee will help address 

conflicts of interest in the decisionmaking process to select a new 

Processor (which could, if the Operating 

Committee so choses, include a 

disinterested subcommittee). 

Additionally, the Commission notes 

that, while the current Equity Data Plans 

do not require the use of a disinterested 

subcommittee in the selection of a new 

Processor, the use of a disinterested 

subcommittee regarding certain critical 

plan matters, including the selection of 

a Processor, is a common practice under 

the current Equity Data Plans. Finally, 

with respect to the comment that the 

disinterested subcommittee should have 

no authority to vote on the selection of 

the Processor and can only be consulted 

on the matter, it is the Operating 

Committee that is authorized by Article 

IV, Section 4.1 of the CT Plan to select 

the Processors,682 and the Commission 

does not believe that it is necessary to 

preclude any disinterested 

subcommittee formed by the Operating 

Committee from holding a vote to, for 

example, recommend a Processor 

candidate to the Operating Committee. 

The Commission believes that the 

provisions for the establishment of the 

Processor Selection Procedures are 

reasonably designed to ensure that the 

Operating Committee establishes a 

process that governs the selection of a 

new Processor through a fair, 

transparent, and competitive process. 

By setting forth the minimum 

requirements for Processor Selection 

Procedures, the CT Plan sets forth a 

reasonable outline of the Processor 

selection process without unnecessarily 

hindering the flexibility of the 

Operating Committee in determining the 

appropriate procedural requirements for 

future Processor selections. 

Additionally, the requirements of 

Section 5.3 of the CT Plan are similar to 

those of the UTP Plan.683 For the 

reasons discussed above, the 

Commission is approving Article V, 

Section 5.3, as proposed. 

(d) Transmission of Information to 

Processor by Members 

Article V, Section 5.4 of the CT Plan 

sets forth the manner in which each 

Member is responsible for promptly 

collecting and transmitting to the 

Processors accurate Quotation 

Information and Transaction Reports as 

set forth in the Processor Services 

Agreements.684 In particular, this 

section requires Members to include the 

following elements in their Quotation 

Information: (i) Identification of the 

Eligible Security, using the listing 

market’s symbol; (ii) the price bid and 

offered, together with size; (iii) for 

FINRA, the FINRA participant along 

with the FINRA participant’s market 

participant identification or Member 

from which the quotation emanates; (iv) 

appropriate timestamps; (v) 

identification of quotations that are not 

firm; and (vi) through appropriate codes 


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685See Article V, Section 5.4(a)(ii) of the CT Plan. 

686See Article V, Section 5.4(d)(iii)(A) of the CT 

Plan. 

687See Article V, Section 5.4(d)(iii)(B) of the CT 

Plan. The CT Plan specifies that if FINRA’s 

quotation facility provides a proprietary feed of its 

Quotation Information, then the quotation facility 

shall also furnish the Processors with the time of 

the quotation as published on the quotation 

facility’s proprietary feed. See id. FINRA shall 

convert any quotation times reported to it to 

nanoseconds and shall furnish such times to the 

Processors in nanoseconds since Epoch. See id. 

688See Article V, Section 5.4(b)(ii)(A)–(G) of the 

CT Plan. 

689See Article V, Section 5.4(d)(iv) of the CT 

Plan. 

690See id. 

691See Article V, Section 5.4(c) of the CT Plan. 

692See Article V, Section 5.4(b)(v)(A)–(G) of the 

CT Plan. 

693See Article V, Section 5.4(d)(i) of the CT Plan. 

Section 5.4(d)(ii) of the CT Plan specifies the 

procedures for addressing claims by a Member 

Indemnified Party. 

694See Notice, supra note 3, 85 FR at 64572 

(Question 39). 

695 Data Boiler Letter I, supra note 31, at 12. This 

commenter also suggested several minimum 

performance standards of the Processors related to 

the use of ‘‘time-lock encryption’’ that would enable 

both the proprietary data feeds and the SIPs to be 

available securely in synchronized time. See id. at 

42. 

696 Id. at 12. 

697See id. at 42. 

698 Id. at 7, 42. 

699See Section VIII.B of the UTP Plan and Section 

VIII(a) of the CTA Plan. 

700 Governance Order, supra note 8, 85 FR at 

28711. The Commission further stated in the 

Governance Order that the CT Plan ‘‘could retain 

the same SIP processors under the same terms and 

conditions, thereby eliminating what otherwise 

would be a significant burden for the development 

of the [CT] Plan.’’ Id. 

701Article V, Section 5.4(b)(iv) of the CT Plan. 

702See Article IV, Section 4.1(a)(i) of the CT Plan. 

and messages, withdrawals and similar 

matters.685 In the case of a national 

securities exchange, the Quotation 

Information includes the reporting 

Participant’s matching engine 

publication timestamp.686 In the case of 

FINRA, the Quotation Information 

includes the quotation publication 

timestamp that FINRA’s bidding or 

offering member reports to FINRA’s 

quotation facility in accordance with 

FINRA rules.687

In addition, Section 5.4 requires 

Members to report the following 

elements in their Transaction Reports: 

(i) Identification of the Eligible Security, 

using the listing market’s symbol; (ii) 

the number of shares in the transaction; 

(iii) the price at which the shares were 

purchased or sold; (iv) the buy/sell/ 

cross indicator; (v) appropriate 

timestamps; (vi) the market of 

execution; and (vii) through appropriate 

codes and messages, late or out-ofsequence trades, corrections, and 

similar matters.688 Each Member must 

also (a) transmit Transaction Reports to 

the Processors as soon as practicable, 

but not later than ten seconds, after the 

time of execution, (b) establish and 

maintain collection and reporting 

procedures and facilities reasonably 

designed to comply with this 

requirement, and (c) designate as ‘‘late’’ 

any last sale price not collected and 

reported as described above or as to 

which the Member has knowledge that 

the time interval after the time of 

execution is significantly greater than 

the time period referred to above.689 The 

CT Plan provides that Members shall 

seek to reduce the time period for 

reporting last sale prices to the 

Processors as conditions warrant.690 The 

CT Plan also sets forth the symbols used 

to denote the applicable Member.691

Section 5.4 excludes the following 

types of transactions from being 

required to be reported to the 

Processors: (i) Transactions that are part 

of a primary distribution by an issuer or 

of a registered secondary distribution or 

of an unregistered secondary 

distribution; (ii) transactions made in 

reliance on Section 4(a)(2) of the 

Securities Act of 1933; (iii) transactions 

in which the buyer and the seller have 

agreed to trade at a price unrelated to 

the current market for the security (e.g., 

to enable the seller to make a gift); (iv) 

the acquisition of securities by a brokerdealer as principal in anticipation of 

making an immediate exchange 

distribution or exchange offering on an 

exchange; (v) purchases of securities 

pursuant to a tender offer; (vi) purchases 

or sales of securities effected upon the 

exercise of an option pursuant to the 

terms thereof or the exercise of any 

other right to acquire securities at a preestablished consideration unrelated to 

the current market; and (vi) transfers of 

securities that are expressly excluded 

from trade reporting under FINRA 

rules.692

Furthermore, Section 5.4 provides 

that each Member agrees to indemnify 

the Company, each other Member, the 

Processors, the Administrator, the 

Operating Committee, and each of their 

respective directors, officers, employees, 

agents, and affiliates (each, a ‘‘Member 

Indemnified Party’’) against any 

liabilities as a result of a system error or 

disruption at a Member’s Market 

affecting the information reported to the 

Processor by such Member and 

disseminated by the Processor to 

vendors and subscribers.693

In the Notice, the Commission 

solicited comment on whether the CT 

Plan should set minimum standards for 

the timely dissemination of information 

applicable to the Processors and, if so, 

the minimum standards that would be 

appropriate.694 One commenter argues 

the maximum ten second transaction 

reporting requirement to the Processors 

under Section 5.4(b)(iv) of the CT Plan 

is ‘‘not acceptable’’ and has the 

‘‘potential to be frequently 

exploited.’’ 695 This commenter states 

that ‘‘thousands of trades can occur in 

50± milliseconds,’’ 696 and refers to the 

CAT NMS Plan as requiring brokerdealers to comply with a 50± 

milliseconds standard.697 The 

commenter further states that the ‘‘SROs 

should pledge to provide SIP(s) the 

fastest connection and be mandated to 

maintain a maximum connectivity 

disparity ratio not more than 2.5 

times.’’ 698

With respect to the comment on 

reducing the maximum ten-second 

transaction reporting limit, the 

Commission notes that the ten-second 

reporting requirement is consistent with 

the current Equity Data Plans.699 As 

stated in the Governance Order, the 

Commission believed that, ‘‘at least 

initially, most of the detailed provisions 

relating to the operation of the existing 

[NMS plans] could be imported into the 

[CT] Plan.’’ 700 The Commission also 

believes that the commenter fails to take 

into account that the language in 

Section 5.4 specifies that Members must 

transmit all Transaction Reports to the 

Processors ‘‘as soon as practicable,’’ 701

which means that transaction reporting 

to the Processors will in nearly all 

circumstances occur faster than the tensecond reporting limit. If the Operating 

Committee determines that the tensecond reporting limit, or any other 

provision related to the transmission of 

information to the Processors, needs to 

be amended, the Operating Committee 

may amend the CT Plan according to 

Article XIII, Section 13.5. Indeed, 

Article IV, Section 4.1 specifies that one 

of duties of the Operating Committee is 

proposing amendments to the CT Plan 

as necessary to ensure the prompt 

processing, distribution, and 

publication of information with respect 

to Transaction Reports in NMS 

stocks.702

Therefore, the Commission believes 

that the provisions of Section 5.4 

relating to each Member’s obligations to 

collect and transmit to the Processors 

accurate and reliable Quotation 

Information and Transaction Reports are 

reasonably designed to facilitate the 

collection and dissemination of 

consolidated equity market data for 

NMS stocks for the beneficial use of 

investors and the market. Accordingly, 

the Commission is approving Article V, 

Section 5.4, as proposed. 


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703See Article V, Section 5.5(a) of the CT Plan. 

Section 5.5 also provides that each Member may 

utilize a dedicated Member line into the Processors 

to transmit Transaction Reports and Quotation 

Information to the Processors. See Article V, 

Section 5.5(b) of the CT Plan. 

704See Article V, Section 5.5(c) of the CT Plan. 

705See id. 

706See id. 

707See id. 

708See Notice, supra note 3, 85 FR at 64572 

(Question 39). 

709 Data Boiler Letter I, supra note 31, at 42. This 

commenter also states that the proprietary data 

feeds and SIPs ‘‘ought to be in synch [sic] before, 

during, and after such event(s).’’ Id. 

710See Section VII.D of the UTP Plan. 

711See Article VI, Section 6.1 of the CT Plan. 

712See Notice, supra note 3, 85 FR at 64572 

(Question 40). 

713See SIFMA Letter I, supra note 30, at 3. This 

commenter further states that such minimum 

performance standards ‘‘will be needed if the 

competing consolidator model is adopted by the 

Commission.’’ Id. 

714See BlackRock Letter I, supra note 247, at 4. 715See id.; see also supra note 647. 716 Data Boiler Letter I, supra note 31, at 44. 717See NYSE Letter I, supra note 18, at 39. 718 17 CFR 242.608(a)(3)(iii). 719NYSE Letter I, supra note 18, at 39. 720See Notice, supra note 3, 85 FR at 64572 

(Question 41). 721 Data Boiler Letter I, supra note 31, at 4, 43. 722 Id. 723Moreover, the Commission notes that it did 

not receive any comments specifying the minimum 

technical and operational requirements for the 

Administrator. 

(e) Operational Issues 

Article V, Section 5.5 of the CT Plan 

requires each Member to be responsible 

for collecting and validating quotes and 

last sale reports within its own system 

prior to transmitting this data to the 

Processors.703 This section also requires 

each Member to promptly notify the 

Processors whenever a level of trading 

activity or unusual market conditions 

prevent such Member from collecting 

and transmitting Transaction Reports or 

Quotation Information to the Processor, 

or where a trading halt or suspension in 

an Eligible Security is in effect in its 

market.704 This provision further 

requires the Member to resume 

collecting and transmitting Transaction 

Reports and Quotation Information to 

the Processors as soon as the condition 

or event is terminated.705 In the event of 

a system malfunction that prevents a 

Member or its members from 

transmitting Transaction Reports or 

Quotation Information to the Processors, 

the Member is required to promptly 

notify the Processors of such event or 

condition.706 Upon receiving such a 

notification, Section 5.5 of the CT Plan 

requires the Processors to take 

appropriate action, including either 

closing the quotation or purging the 

system of the affected quotations.707

In the Notice, the Commission 

solicited comment on whether the CT 

Plan should set minimum standards for 

the timely dissemination of information 

applicable to the Processors.708 One 

commenter states that the requirement 

for Members to promptly notify the 

Processors of market events in Section 

5.5 is ‘‘insufficient as a performance 

standard’’ and states that ‘‘promptly’’ 

does not equal ‘‘immediacy’’ for 

reporting such events to the 

Processors.709

The Commission does not agree with 

the comment that prompt notification is 

insufficient as a performance standard 

for reporting market events to the 

Processors. The commenter did not 

explain the basis for its statement. The 

Commission believes that changing 

technology conditions mean that 

prescribing a specific definition of 

‘‘prompt’’ in this context might lead 

over time to an outdated standard for 

reporting market events to the 

Processors, and the Commission 

therefore believes that the prompt 

notification requirement, which is 

consistent with the UTP Plan, is a 

reasonable standard that is designed to 

provide the Processors with timely 

notice of any reporting issues by a 

Member.710 Accordingly, the 

Commission is approving Article V, 

Section 5.5, as proposed. 

7. The Administrator 

As discussed in detail below, the 

Commission is modifying Article VI of 

the CT Plan to create a new stand-alone 

Section 6.2 to govern the independence 

of the Administrator, which results in 

the renumbering of the sections of this 

Article. The modified numbering is as 

follows: Section 6.1, General Functions 

of the Administrator; Section 6.2, 

Independence of the Administrator; 

Section 6.3, Evaluation of the 

Administrator; and Section 6.4, Process 

for Selecting New Administrator. 

(a) General Functions of the 

Administrator 

Article VI of the CT Plan sets forth the 

provisions relating to the Administrator. 

Pursuant to Article VI, Section 6.1, the 

LLC, under the direction of the 

Operating Committee, will be required 

to enter into an agreement with the 

Administrator obligating the 

Administrator to perform certain 

administrative functions on behalf of 

the LLC, including: Recordkeeping; 

administering vendor and subscriber 

contracts; administering fees, including 

billing, collection, and auditing of 

vendors and subscribers; administering 

distributions; tax functions of the LLC; 

and the preparation of the LLC’s audited 

financial reports (the ‘‘Administrative 

Services Agreement’’).711

In the Notice, the Commission 

solicited comment on Article VI, 

Section 6.1 and whether further details 

on the terms and responsibilities of the 

Administrator should be specified in the 

CT Plan.712 One commenter states that 

the CT Plan should specify in detail the 

minimum performance standards 

applicable to the Administrator.713

Another commenter states that the 

minimum technical and operational 

requirements for the Administrator, 

along with any contractual terms and 

responsibilities, should either be 

detailed in the CT Plan or made 

publicly available (e.g., on the CT Plan 

website).714 This commenter argues 

that, today, public disclosure regarding 

Administrator operations and standards 

of service are inadequate.715 Finally, 

one commenter states that the CT Plan 

should clarify the level of discretion the 

Administrator has to ‘‘mobilize 

budget.’’ 716

In contrast, one commenter argues 

that the decision to include detailed 

terms about the responsibilities of the 

Administrator in the LLC Agreement 

itself, as opposed to in the 

Administrative Services Agreement, is a 

decision that should be left to the SROs 

rather than the Commission.717 Citing 

Rule 608(a)(3)(iii) of Regulation NMS,718

this commenter states that it is the 

SROs—and not the Commission—that 

are authorized to act jointly in 

‘‘[i]mplementing or administering an 

effective [NMS] plan.’’ 719

In the Notice, the Commission also 

solicited comment on whether the 

Administrator’s duties with respect to 

the preparation of the CT Plan’s audited 

financial reports should include 

unaudited reports.720 One commenter 

states that including the preparation of 

unaudited financial reports as a duty of 

the Administrator is unnecessary 

because ‘‘SROs may not care to discuss 

any unaudited matters with non-SROs, 

thereby pushing the matter down the 

road until actual audits are 

performed.’’ 721 This commenter further 

states that unaudited information may 

be claimed as confidential, thereby 

preventing appropriate access.722

The Commission believes that it is 

reasonable for detailed disclosures of 

the Administrator functions and 

standards of service to be addressed in 

the Administrative Services Agreement 

rather than incorporated as 

requirements in the CT Plan, which 

would require a formal amendment of 

the CT Plan each time the requirements 

changed.723 The Commission expects 

that establishing the technical and 


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724See Article VI, Section 6.3 of the CT Plan. 

725See Refinitiv Letter, supra note 249, at 3; ICI 

Letter II, supra note 31, at 1; Schwab Letter II, supra 

note 30, at 2; MFA Letter, supra note 30, at 1. 

726Refinitiv Letter, supra note 249, at 3. 

727 Id.; see also ICI Letter II, supra note 31, at 1. 

728Refinitiv Letter, supra note 249, at 3. 

729Schwab Letter II, supra note 30, at 6. 

730 Id. 

731See NYSE Letter I, supra note 18, at 11; NYSE 

Letter II, supra note 19, at 4; Cboe Letter, supra note 

17, at 5; Appendix B of Nasdaq Letter I, supra note 

20, at 52–57 (attaching and incorporating by 

reference all arguments made by Nasdaq and other 

petitioners in their opening brief challenging the 

Governance Order); see also Opening Brief for 

Petitioners, The Nasdaq Stock Market, et al. v. 

Securities and Exchange Commission (Case No. 20– 

1181) (DC Cir. 2020). The Commission responded 

to the arguments made by Nasdaq and other 

petitioners in their brief. See Brief for the 

Respondent, Securities and Exchange Commission, 

The Nasdaq Stock Market, et al. v. Securities and 

Exchange Commission (Case No. 20–1181) (D.C. Cir. 

2021). 

732See NYSE Letter I, supra note 18, at 11; NYSE 

Letter II, supra note 19, at 4; Appendix B of Nasdaq 

Letter I, supra note 20, at 53. 

733See NYSE Letter I, supra note 18, at 11; NYSE 

Letter II, supra note 19, at 4. 

734 17 CFR 242.608(b). 

735NYSE Letter I, supra note 18, at 11. 

736 Id. at 12; see also NYSE Letter II, supra note 

19, at 4. This commenter states that prior to the 

issuance of the Governance Order, the current 

Administrators to the existing Equity Data Plans 

had already implemented information barriers 

designed to protect SIP customer information, and 

‘‘the Commission has not articulated any 

deficiencies with this information barrier 

approach.’’ NYSE Letter I, supra note 18, at 12. 

737Nasdaq Letter I, supra note 20, at 23. 

738 Governance Order, supra note 8, 85 FR at 

28722. 

operational requirements of the 

Administrator will be an iterative 

process between the Operating 

Committee and the Administrator. 

Setting forth the requirements in the CT 

Plan itself may unnecessarily hinder the 

ability of the Operating Committee and 

the Administrator to negotiate and 

modify the technical details of the 

functions and responsibilities of the 

Administrator in response to, among 

other things, changing administrative 

needs of the CT Plan. 

While one commenter argues that 

public disclosure of Administrator 

operations and standards of service are 

currently inadequate, the Commission 

believes that fully setting forth the 

contractual relationship between the CT 

Plan and the Administrator in the 

Administrative Services Agreement 

would provide greater specificity and 

transparency regarding the functions of 

the Administrator as compared to the 

current Equity Data Plans, which do not 

specifically contemplate a separate 

Administrative Services Agreement. 

Moreover, the Operating Committee of 

the CT Plan, including Non-SRO Voting 

Representatives, will have visibility into 

the process of setting the requirements 

in the Administrative Services 

Agreement. Regarding the comment that 

the CT Plan should clarify the level of 

discretion for the Administrator to 

‘‘mobilize budget,’’ the Commission 

believes that Section 6.1, as proposed, 

reasonably addresses the general 

functions of the Administrator, which 

include administering financial matters 

of the CT Plan, and that further 

determinations of the specific functions 

of the Administrator should be subject 

to contractual negotiations between the 

Operating Committee and the 

Administrator in order not to impede 

the ability of the Operating Committee 

to negotiate terms and attract qualified 

administrative service providers for the 

role of Administrator. Accordingly, the 

Commission is approving Section 6.1 of 

the CT Plan as proposed. 

(b) Independence of the Administrator 

Article VI, Section 6.3 of the CT Plan 

as proposed requires that the 

Administrator selected by the Operating 

Committee may not be owned or 

controlled by a corporate entity that, 

either directly or via another subsidiary, 

offers for sale its own PDP.724

The Commission received a number 

of comments regarding the requirement 

that the CT Plan use an independent 

Administrator. A number of 

commenters express support for the 

independent Administrator 

requirement.725 One of these 

commenters states that, in order to 

eliminate conflicts of interest associated 

with the management of consolidated 

equity market data, there should be a 

‘‘complete separation of the 

administrator of CT [Plan] data from 

proprietary data interests.’’ 726 This 

commenter states that the CT Plan 

‘‘should be administered by a team that 

is completely unaffiliated with Member 

exchanges.’’ 727 This commenter further 

states that, in the past, there have been 

complaints that the exchange 

administrators ‘‘allowed their 

proprietary data interests to negatively 

influence the promotion and 

management of the consolidated 

tape.’’ 728 Another commenter argues 

that moving to an independent single 

plan Administrator will ‘‘minimize any 

real or perceived conflicts that exist 

today with the non-independent 

administrators.’’ 729 This commenter 

further states that under the 

independence requirement, the 

independent Administrator ‘‘should 

have no formal or informal role with 

any of the exchanges or their affiliates 

or subsidiaries, and no immediately 

past, present, or planned future business 

relationship with any of the exchanges 

or their affiliates or subsidiaries.’’ 730

In contrast, other commenters oppose 

the independent Administrator 

requirement and reiterate many of the 

same concerns these commenters 

expressed in response to the Proposed 

Order.731 First, commenters opposing 

the requirement states that the 

Commission fails to provide any 

evidence of problems in the current 

Administrator framework for the 

existing Equity Data Plans.732 One 

commenter argues that the 

Commission’s concern of conflicts of 

interest faced by the existing 

administrators is unsupported by 

evidence.733 This commenter argues 

that, as a result, the independent 

Administrator requirement is contrary 

to the purposes of the Act and Rule 

608(b) of Regulation NMS,734 as ‘‘it is 

not necessary or appropriate in the 

public interest, for the protection of 

investors, or the maintenance of fair and 

orderly markets; it would disrupt the 

mechanisms of the national market 

system; and it is contrary to the 

purposes of the Act.’’ 735 This 

commenter further states that the 

Commission ‘‘did not allow the SROs to 

consider other ways to address the 

potential conflict, such as through 

information barriers, which are 

commonly allowed under Commission 

rules, or the use of confidentiality 

requirements.’’ 736 Another commenter 

states that concerns about conflicts and 

confidentiality should be addressed in 

the context of the conflicts and 

confidentiality policies, or contractual 

agreements, not by limiting ‘‘the ability 

of the CT Plan to contract with the 

entity best able to provide the required 

services.’’ 737

The Commission disagrees with the 

commenters’ views that the Commission 

has not provided evidence of problems 

in the current Administrator framework 

for the existing Equity Data Plans. The 

Commission continues to believe, as it 

stated in the Governance Order, that ‘‘an 

entity that acts as the administrator 

while also offering for sale its own 

proprietary data products faces a 

substantial, inherent conflict of interest, 

because it would have access to 

sensitive SIP customer information of 

significant commercial value.’’ 738

Additionally, the Commission in the 

Governance Order described these 

issues and cited the concerns of market 

participants that the audit function of 

the Administrator creates special 

conflicts when managed by an affiliate 

of an SRO, with the potential for the 

misuse of audit data to advance the 


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739See id. at 28723. 

740Proposed Order, supra note 483, 85 FR at 

2185. 

741See Summary of CQ/CTA/UTP General 

Session, at 3 (Nov. 19, 2020), available at https:// 

www.utpplan.com/DOC/2020-11-19_Summary_

CTA-UTP_General_Session.pdf. 

742See Governance Order, supra note 8, 85 FR at 

28724. 

743 Id. at 28723. 

744See id. at 28722–23. 

745See id. at 28723. 

746See Schwab Letter II, supra note 30, at 6. 

747NYSE and Nasdaq currently act as 

Administrators of the existing Equity Data Plans. 

Under the independence provision, NYSE and 

Nasdaq will be excluded from operating as the 

Administrators of the CT Plan. 

748 Governance Order, supra note 8, 85 FR at 

28723. 

749See NYSE Letter I, supra note 18, at 11; NYSE 

Letter II, supra note 19, at 4; Cboe Letter, supra note 

17, at 5, Appendix B of Nasdaq Letter I, supra note 

20, at 54. 

750NYSE Letter I, supra note 18, at 11; see also 

NYSE Letter II, supra note 19, at 4. 

751NYSE Letter I, supra note 18, at 11. 

752 Id. 

753Cboe Letter, supra note 17, at 5. This 

commenter further states that ‘‘transitioning these 

administrative services to a new entity may require 

significant effort to ensure that the transition is 

seamless for market participants and does not create 

new potentially disruptive inefficiencies in the 

administration of the [CT] Plan.’’ Id. 

754 Governance Order, supra note 8, 85 FR at 

28723. 

755See Paragraph (d)(iv) of the Recitals to the CT 

Plan. 

756See Governance Order, supra note 8, 85 FR at 

28724. 

757See id. 

business objectives of the SROs.739 And 

as the Commission stated in the 

Proposed Order, ‘‘Participants and 

Participant representatives have been 

privy to confidential information of 

substantial commercial or competitive 

value, including, among other things, 

information about core data usage, the 

SIPs’ customer lists, financial 

information, and subscriber audit 

results.’’ 740 Indeed, during the general 

session of the Equity Data Plan meeting 

for the third quarter of 2020, a thirdparty auditor was suggested as an option 

for addressing a conflict of interest issue 

raised by the Advisory Committee 

members regarding the audit practices 

of the current non-independent 

Administrators.741 Furthermore, as it 

stated in the Governance Order, the 

Commission understands that the 

current Administrators to the existing 

Equity Data Plans have significant 

latitude with respect to the information 

they may request during contract 

approval process for use of SIP market 

data, some of which may be highly 

sensitive.742 The Commission continues 

to believe, as it stated in the Governance 

Order, that the ‘‘independent 

Administrator requirement would 

address concerns regarding the potential 

use of SIP subscriber audit data to 

pursue commercial interests outside of 

the [CT] Plan.’’ 743

The Commission also continues to 

believe that the conflicts of interest 

faced by a non-independent 

Administrator are so great that these 

conflicts cannot be sufficiently 

mitigated by policies and procedures 

alone.744 Unlike the exchanges that offer 

for sale their own proprietary equity 

market data products, an independent 

Administrator would not have the 

competing objective of maximizing its 

own proprietary data products’ 

profitability.745 The Commission 

therefore continues to believe that in 

order to mitigate conflicts of interest 

associated with the management of 

consolidated equity market data, the 

administration of the CT Plan must be 

separated from proprietary equity 

market data interests. Regarding the 

comment concerning past, present, and 

future business relationships between 

the Administrator and any of the 

exchanges or their affiliates,746 the 

independent Administrator requirement 

will address one inherent conflict of 

interest by removing SROs with 

proprietary data businesses that 

compete with the SIP from 

consideration in the role of the 

Administrator.747 Moreover, the 

Commission believes that the 

disclosures required under the CT 

Plan’s conflicts of interest policy will 

raise awareness of potential conflicts of 

interest between the Administrator and 

the Members and facilitate public 

confidence in the CT Plan operations. 

As it stated in the Governance Order, 

the Commission believes that ‘‘the 

independence requirement would 

separate the independent Administrator 

from an exchange’s commercial interests 

and allow it to focus on the regulatory 

objectives of Section 11A of the Act.’’ 748

Additionally, because the relevant 

conflict of interest for an Administrator 

would arise from administration of the 

SIPs while selling overlapping 

proprietary equity market data products, 

the Commission continues to believe 

that the independence requirement for 

the Administrator must prohibit an 

entity from serving as Administrator of 

the CT Plan if it is owned or controlled 

by a corporate entity that, either directly 

or via another subsidiary, offers for sale 

its own PDP. 

Second, commenters opposing the 

independence requirement state that 

adopting this requirement would be 

costly and disruptive to the 

administration of SIP data.749 One of 

these commenters states that the costs 

for SROs and market participant 

subscribers to switch to an independent 

administrator ‘‘clearly outweighs any 

benefits.’’ 750 This commenter describes 

the ‘‘decades of experience’’ the current 

Administrators bring to the existing 

Equity Data Plans and asserts that CT 

Plan would ‘‘throw away all of that 

experience and require the Operating 

Committee to hire as Administrator a 

new, unproven, inexperienced 

entity.’’ 751 This commenter further 

states that the ‘‘new Administrator 

would be starting from zero, and would 

have to build entirely new system 

infrastructure, train new personnel to 

perform tasks that the existing 

Administrators already perform, and 

create and then enter into new 

agreements with subscribers.’’ 752

Similarly, another commenter argues 

that identifying a new independent 

Administrator and transitioning the 

administrative services provided by the 

current Administrators to that entity 

‘‘will take a significant amount of time 

and resources.’’ 753

The Commission acknowledges, as it 

stated in the Governance Order, that the 

current Administrators have ‘‘significant 

experience and familiarity with the 

SIPs’ practices and systems,’’ and ‘‘that 

there will be a transition period with 

additional costs to onboard the new 

Administrator, including system 

infrastructure (e.g., network 

connectivity to exchanges, hosting, and 

database upgrades) and human capital 

(e.g., contract management, hiring 

personnel, service support, and 

consolidating policies).’’ 754 The 

Commission believes, however, that the 

relevant expertise that has been 

developed by the SROs currently 

serving as administrators of the existing 

Equity Data Plans can be leveraged by 

the CT Plan, since those SROs will 

continue to be members of the CT Plan 

Operating Committee and will be able to 

advise and facilitate the onboarding 

process of the new Administrator.755

Furthermore, as it stated in the 

Governance Order, the Commission 

continues to believe that any industry 

experience loss in the audit process due 

to the transition to an independent 

Administrator would be specific to the 

previous administrative policies and 

procedures under the existing Equity 

Data Plans instead of the CT Plan.756 On 

balance, the Commission continues to 

believe that eliminating the substantial 

conflict of interest presented by having 

an entity serve as Administrator while 

directly or indirectly offering for sale its 

own equity market data products 

justifies the independent Administrator 

requirement in the CT Plan.757


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758See Cboe Letter, supra note 17, at 5. 

759 Governance Order, supra note 8, 85 FR at 

28724. 

760See id. 

761 Id. 

762See id. 

763See NYSE Letter I, supra note 18, at 12; NYSE 

Letter II, supra note 19, at 4; Appendix B of Nasdaq 

Letter I, supra note 20, at 54. 

764NYSE Letter I, supra note 18, at 11; see also 

NYSE Letter II, supra note 19, at 4. 

765See Article IV, Section 4.1(a)(ii) of the CT 

Plan. 

766See supra Section II.C.6(a). 

767See Article VI, Section 6.2 of the CT Plan. 768See id. 769See id. 770See id. 771See id. 

772See Notice, supra note 3, 85 FR at 64572 

(Question 42). 

773See Data Boiler Letter I, supra note 31, at 44. 

774 Id. 

In response to the comment about 

search costs for identifying a new 

independent Administrator,758 the 

Commission continues to believe, as it 

stated in the Governance Order, ‘‘that 

there is a broad range of financial 

service firms, unaffiliated with an SRO, 

with specialized capabilities to oversee 

market data administrative functions of 

the CT Plan, such as licensing, billing, 

contract administration and client 

relationship management, and record 

keeping.’’ 759

The Commission also continues to 

believe that despite the implementation 

costs of selecting a new independent 

Administrator, the selection of an 

independent Administrator is an 

important step to help ensure that the 

CT Plan furthers the objectives of 

Section 11A of the Act.760 Further, the 

Commission continues to believe, as it 

stated in the Governance Order, ‘‘based 

on its oversight experience and as 

described by commenters,’’ that ‘‘these 

costs are justified because the inherent 

conflicts of interest identified by the 

Commission, whereby an entity acts as 

a plan administrator while also offering 

its own competing products to the SIPs, 

either directly or via a subsidiary, raises 

significant concerns regarding access to 

confidential subscriber information.’’ 761

Access to such confidential subscriber 

information and its use for purposes 

outside the scope of the CT Plan by an 

SRO-affiliated Administrator 

undermines the fair administration of 

equity market data in the public 

interest.762

Third, commenters opposing the 

independence requirement ask why this 

requirement would disqualify current 

exchange administrators to the Equity 

Data Plans but not similarly disqualify 

non-SRO data vendors from filling the 

Administrator role, when those entities 

might face conflict of interest concerns 

similar to those of exchange 

Administrators.763 One of the 

commenters argues that the 

independence requirement imposes an 

unfair burden on competition because 

‘‘it would not prohibit non-SRO data 

vendors from filling the Administrator 

role, even though such vendors may 

separately sell market data and could 

also theoretically benefit from access to 

subscriber lists.’’ 764 Regarding this 

concern, the Commission did not 

mandate in the Governance Order that 

non-SRO data vendors serve as the new 

independent Administrator. Nor are 

such entities the only viable alternative 

Administrator. As discussed above, the 

Commission chose to address one 

substantial, inherent conflict of interest 

when it decided that any plan 

Administrator cannot be owned or 

controlled by a corporate entity that 

offers for sale its own proprietary equity 

market data products. The CT Plan, 

under the direction of the Operating 

Committee, can exercise discretion in 

selecting the new Administrator.765

Furthermore, the Commission does not 

believe that the Operating Committee of 

the CT Plan would have any incentive 

to choose as the Administrator a nonSRO entity that would face a financial 

conflict of interest and act as a direct 

competitor to the SROs’ proprietary data 

business. 

Given the importance of the 

independent Administrator requirement 

as described above, the Commission is 

modifying CT Plan as proposed to 

relocate from Section 6.3 the language 

specifying the independent 

Administrator requirement to a new 

standalone section in Article VI, Section 

6.2. Accordingly, new Section 6.2 of the 

CT Plan will state that ‘‘[t]he 

Administrator may not be owned or 

controlled by a corporate entity that, 

either directly or via another subsidiary, 

offers for sale its own PDP.’’ The 

Commission believes that this 

modification will eliminate uncertainty 

as to the application of the independent 

Administrator requirement. This 

modification will specify that the 

requirement for the Administrator to be 

independent does not apply only at the 

time that the Operating Committee 

selects the Administrator, but is an 

ongoing requirement of the CT Plan. For 

the reasons described above, the 

Commission is approving the 

independent Administrator 

requirement, as modified, in 

renumbered Article VI, Section 6.2 of 

the CT Plan. 

(c) Evaluation of the Administrator 

Article VI, Section 6.2 of the CT Plan 

as proposed sets forth the provisions for 

the evaluation of an Administrator, 

which are substantially similar to the 

provisions relating to the evaluation of 

the Processors described above.766 This 

section specifies that the 

Administrator’s performance of its 

functions under the Administrative 

Services Agreement will be subject to 

review at any time as determined by an 

affirmative vote of the Operating 

Committee pursuant to Section 4.3 of 

the CT Plan; provided, however, that a 

review must be conducted at least once 

every two calendar years but not more 

frequently than once each calendar 

year.767 If the Administrator has 

materially defaulted in its obligations 

under the Administrative Services 

Agreement and that default has not been 

cured within the applicable cure period 

pursuant to the Administrative Services 

Agreement, the CT Plan provides that 

the review period limitations will not 

apply.768 Furthermore, the CT Plan 

provides that the Operating Committee 

must appoint a subcommittee or other 

persons to conduct the review of the 

Administrator and that the reviewer 

must provide the Operating Committee 

with a written report of its findings and 

recommendations, including with 

respect to the continuing operation of 

the Administrator.769 The CT Plan 

specifies that the Administrator must 

assist and participate in the process of 

the review.770 The CT Plan provides 

that the Operating Committee, upon 

completing a review of the 

Administrator, must notify the 

Commission of any recommendations it 

may approve as a result of the review 

and supply the Commission with copies 

of any related reports.771

In the Notice, the Commission 

solicited comment on Article VI, 

Section 6.2 of the CT Plan as proposed 

and the proposed frequency of reviews 

of the Administrator.772 One commenter 

states that the proposed review period 

of every two years is appropriate if there 

is no performance issue.773 This 

commenter also states that more clarity 

on the Administrator evaluation criteria 

would ‘‘improve the soundness the CT 

Plan.’’ 774

The Commission believes that the 

provisions for the evaluation of the 

Administrator are reasonably designed 

to ensure that the Administrator meets 

its performance obligations under the 

Administrative Service Agreement. The 

Commission also believes that the 

requirement for the Operating 

Committee to appoint a subcommittee 


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775See id. 

776See id. 

777See Article IV, Section 4.1(a)(ii) of the CT 

Plan. 

778See Article V, Section 5.3 of the CT Plan. 

779See Article VI, Section 6.4 of the CT Plan. The 

CT Plan requires that the Administrator Selection 

Procedures be established prior to the Operative 

Date, upon the termination or withdrawal of the 

Administrator, or upon the expiration of the 

Administrative Services Agreement. See id. See also 

paragraph (d)(iv) of the Recitals to the CT Plan, as 

modified by the Commission (stating that the 

Operating Committee shall enter into an agreement 

with the Administrator pursuant to Section 6.3 of 

the CT Plan within eight months of the Effective 

Date). 

780See Article VI, Section 6.4 of the CT Plan. 

781See id. 

782See Notice, supra note 3, 85 FR at 64572 

(Question 43). 

783See Data Boiler Letter I, supra note 31, at 44. 

784 Id. at 4, 44. 785See id. at 44. 786See supra Section II.C.1. 787See Data Boiler Letter I, supra note 31, at 44. 788Paragraph (d)(iv) of the Recitals of the CT Plan 

provides that within eight months of the Effective 

Date, the Operating Committee must have selected 

and entered into an agreement with an 

Administrator and such Administrator shall prepare 

to transition from prior the Administrators under 

the Equity Data Plans such that, before the 

Operative Date, it is able to provide services under 

the Administrative Services Agreement, as 

determined by the Operating Committee pursuant 

to Section 4.3, including that (1) new contracts 

between the CT Plan and Vendors and the CT Plan 

and Subscribers have been finalized such that all 

Vendors and Subscribers under the Equity Data 

Plans are ready to transition to such new contracts, 

(2) the Administrator has in place a system to 

administer distributions, and (3) the Administrator 

has in place a system to administer fees. 

or other persons to conduct the review 

is a commonly performed practice 

under the current Equity Data Plans and 

will promote efficient allocation of the 

Operating Committee’s time and 

resources. Furthermore, the Commission 

believes that the requirement that the 

Operating Committee notify the 

Commission of any recommendations it 

may approve as a result of a review of 

the Administrator and supply the 

Commission with copies of any related 

reports will promote transparency and 

enhance Commission oversight of the 

Administrator’s performance of its 

obligations to the CT Plan. 

The Commission agrees with the 

comment that the biennial review 

timeframe is appropriate if there are no 

Administrator performance issues.775 As 

described above, Section 6.2 as 

proposed provides that the timeframe 

limitations will not apply if the 

Administrator has materially defaulted, 

without cure, in its obligations under 

the Administrative Services Agreement. 

The Commission also believes that the 

biennial review timeframe provides a 

sufficient sample time period for the 

Operating Committee to evaluate the 

performance of the Administrator, 

without overburdening the Operating 

Committee with frequent reviews that 

might produce little additional 

information. Regarding the comment 

requesting additional clarity on the 

Administrator evaluation criteria,776 the 

Commission believes that the CT Plan 

appropriately assigns the responsibility 

of evaluating the performance of the 

Administrator to the Operating 

Committee, which is responsible for the 

operation of the CT Plan, and 

reasonably sets forth the parameters the 

Operating Committee must use to 

ensure that the Administrator meets its 

performance obligations under the 

Administrative Service Agreement, 

without prescribing the specific 

measurements of Administrator 

performance in a way that would 

require an amendment of the CT Plan to 

respond to market developments.777

Moreover, the commenter did not 

explain in detail the clarification it was 

seeking on the evaluation criteria. For 

the foregoing reasons, the Commission 

is approving Article VI, Section 6.2, as 

proposed, but is renumbering it as 

Section 6.3 of the CT Plan. 

(d) Process for Selecting New 

Administrator 

Article VI, Section 6.3 of the CT Plan 

as proposed sets forth the provisions for 

the selection of an Administrator, which 

are similar to the procedures for 

selecting a new Processor.778 In 

particular, Section 6.3 specifies that the 

Operating Committee shall establish 

procedures for selecting a new 

Administrator, by an affirmative vote 

pursuant to Section 4.3 of the CT Plan 

(the ‘‘Administrator Selection 

Procedures’’).779 Section 6.3 further 

provides that the Administrator 

Selection Procedures must set forth, at 

a minimum: (i) The minimum technical 

and operational requirements to be 

fulfilled by the Administrator; (ii) the 

criteria to be considered in selecting the 

Administrator; (iii) the entities (other 

than Voting Representatives) that are 

eligible to comment on the selection of 

the Administrator; and (iv) the entity 

that will: (A) Draft the Operating 

Committee’s request for proposal for a 

new Administrator; (B) assist the 

Operating Committee in evaluating bids 

for the new Administrator; and (C) 

otherwise provide assistance and 

guidance to the Operating Committee in 

the selection process.780 Finally, Section 

6.3 provides that the Operating 

Committee, as part of the process in 

establishing the Administrator Selection 

Procedures, is permitted to solicit and 

consider the timely comment of any 

entity affected by the operation of the 

CT Plan.781

In the Notice, the Commission 

solicited comment on Article VI, 

Section 6.3 of the CT Plan as proposed 

and whether the Administrator 

Selection Procedures should set forth 

additional terms, such as specifying a 

maximum time period to select a new 

Administrator.782 One commenter states 

that the CT Plan should clarify the 

protocols to transition to a new 

Administrator and specify the 

maximum time period to select a new 

Administrator.783 The commenter also 

states that the Administrator should not 

‘‘just be any major accounting, law, or 

consulting firm.’’ 784 Finally, the 

commenter states that the public should 

be allowed to comment on the selection 

of a new Administrator.785

In response to the comment regarding 

transition protocols for a new 

Administrator, the Commission believes 

that details regarding transition 

protocols are reasonably described in 

paragraph (d)(iv) of the Recitals to the 

CT Plan, which discusses the transition 

from the prior administrators under the 

existing Equity Data Plans to the new 

independent Administrator.786 With 

respect to future changeovers in the 

Administrator role, the Commission 

believes that it is appropriate for the 

Operating Committee to evaluate and 

determine the specific appropriate 

transition protocols in close partnership 

with the new independent 

Administrator, as transition protocols 

may be highly detailed and depend on 

the particular service provider selected 

as the Administrator. Therefore, the 

Commission believes that setting forth 

specific requirements in the CT Plan, at 

this stage, may unnecessarily hinder the 

ability of the CT Plan, under the 

direction of the Operating Committee, 

and the Administrator to determine the 

appropriate transition protocols. 

With respect to the comment on 

prescribing a maximum period of time 

to select a new Administrator,787 the 

Commission does not believe that it is 

necessary for Section 6.3 to set the 

maximum period of time for the 

Operating Committee to establish the 

Administrator Selection Procedures, 

because the Commission has separately 

modified the CT Plan to provide 

deadlines for implementation of the CT 

Plan, including for selecting, and 

entering into a contract with, an 

Administrator.788 Furthermore, the 

Commission did not receive any 

comments on a specific maximum 


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789See Data Boiler Letter I, supra note 31, at 4, 

44. 

790See id. 

791See Article VI, Section 6.3(d) of the CT Plan. 

792See Article IV, Section 4.1(a)(ii) of the CT 

Plan. 

793See Notice, supra note 3, 85 FR at 64572 

(Question 46). 

794 Data Boiler Letter I, supra note 31, at 45. 

795For example, Article VIII(a) of the CTA Plan 

does not prevent ‘‘any Participant that is an 

exchange from halting or suspending trading, or any 

Participant that is a national securities association 

from suspending the furnishing of quotation 

information, in any Eligible Security for any reason 

it deems adequate. Any Participant which does so 

halt or suspend trading or the furnishing of 

quotation information shall immediately advise the 

Processor of its actions and the reasons therefor, 

and also advise the Processor when such halt or 

suspension is terminated.’’ Moreover, Article X of 

the UTP Plan permits the Listing Market to declare 

a regulatory halt, ‘‘[w]henever, in the exercise of its 

regulatory functions, the Listing Market for an 

Eligible Security determines that a Regulatory Halt 

is appropriate’’ and to terminate a halt, ‘‘[w]henever 

the Listing Market determines.’’ 

796Securities Exchange Act Release Nos. 92070 

(May 28, 2021), 86 FR 29849, 29851 (June 3, 2021) 

(File No. SR–CTA/CQ–2021–01); and 92071 (May 

28, 2021), 86 FR 29846, 29848 (June 3, 2021) (File 

No. S7–24–89). 

period of time to select a new 

Administrator. 

With respect to the comment on 

limiting the type of professional service 

firms that may serve the role of the 

independent Administrator,789 the 

Commission believes that the CT Plan 

should not limit the scope of firms 

based solely on the type or size of the 

firm, but should instead use the criteria 

required to be considered in selecting 

the Administrator pursuant to the 

Administrator Selection Procedures 

adopted by the Operating Committee. 

Finally, regarding the commenter’s 

statement in support of public comment 

on the selection of a new 

Administrator,790 Section 6.3 provides 

that the Operating Committee may 

solicit and consider comment as part of 

the process of establishing the 

Administrator Selection Procedures, 

and the Administrator Selection 

Procedures are required to set forth the 

entities (other than the Voting 

Representatives) that are eligible to 

comment on the selection of the 

Administrator.791 The Commission also 

believes that the inclusion of Non-SRO 

Voting Representatives as full members 

of the Operating Committee, together 

with the Commission’s modification of 

the proposed CT Plan in Section 

4.4(g)(i) to prohibit discussions in 

Executive Session regarding contract 

negotiations with the Administrator, 

will help ensure that the Operating 

Committee considers broad industry 

viewpoints in the process of 

establishing the Administrator Selection 

Procedures. As a result, the Commission 

believes that the CT Plan, as modified, 

addresses this issue. 

Although the provisions for the 

establishment of the Administrator 

Selection Procedures are reasonably 

designed to ensure that the Operating 

Committee establishes a process that 

governs the selection of a new 

Administrator through a fair, 

transparent, and competitive process, 

the Commission is modifying a sentence 

in Article VI, Section 6.3 of the CT Plan. 

In particular, Section 6.3 states that the 

Administrator Selection Procedures 

shall be established by the Voting 

Representatives pursuant to Article IV, 

Section 4.3 of the CT Plan. The 

Commission is modifying Section 6.3 by 

replacing the phrase ‘‘Voting 

Representatives’’ with the phrase 

‘‘Operating Committee’’ in order to 

remove any inconsistency and potential 

confusion in this section regarding the 

vote that would be required to establish 

the Administrator Selection Procedures. 

As described above, Section 4.3 governs 

the action of the Operating Committee, 

which has the specific authority under 

the CT Plan for selecting, overseeing, 

and specifying the role and 

responsibilities of the Administrator.792

The reference to Voting Representatives 

is the only instance found in Section 6.3 

when discussing the body responsible 

for establishing the Administrator 

Selection Procedures, and modifying the 

provision to instead refer to the 

Operating Committee will make clear 

that an augmented majority vote of the 

Operating Committee is necessary to 

establish those procedures. Accordingly, 

for the reasons discussed above, the 

Commission is approving Article VI, 

Section 6.3, as modified and 

renumbered as Section 6.4 of the CT 

Plan. 

8. Regulatory Matters 

Article VII of the CT Plan sets forth 

the provisions governing regulatory 

matters. Section 7.1 of Article VII 

addresses regulatory and operational 

halts. Section 7.1(a) provides that a 

Member must notify the Processor if it 

has concerns about its ability to collect 

and transmit quotes, orders, or last sale 

prices, or where it has declared an 

Operational Halt or suspension of 

trading in one or more Eligible 

Securities, pursuant to the procedures 

adopted by the Operating Committee. 

Sections 7.1(b)–(f) provide procedures 

for the initiation of a regulatory halt and 

the resumption of trading following a 

regulatory halt. In particular, Section 

7.1(d) provides that the Primary Listing 

Market will determine when to resume 

trading. In making that determination, 

the Primary Listing Market will make a 

good-faith determination and consider 

the totality of information to determine 

whether resuming trading would 

promote a fair and orderly market. 

Section 7.1(d) further provides that the 

Primary Listing Market retains 

discretion to delay the resumption of 

trading if it believes that trading will not 

resume in a fair and orderly manner. 

In the Notice, the Commission sought 

comment on these provisions.793 One 

commenter argues that ‘‘good faith’’ is 

‘‘too loose of a requirement.’’ 794 The 

Commission, however, believes that the 

proposed good-faith standard set forth 

in Section 7.1 is appropriate because it 

addresses potential concerns that 

primary listing markets may be subject 

to commercial pressures in making 

decisions to call regulatory halts or 

resume trading thereafter and also 

because it is combined with the 

requirement that the primary listing 

markets consider the broader interests of 

the national market system with respect 

to declaring regulatory trading halts and 

resuming trading thereafter, thereby 

promoting the maintenance of fair and 

orderly markets and enhancing the 

protection of investors.795 Section 

7.1(b)(ii) of the CT Plan requires the 

primary listing market to also consider 

the severity of the issue, its expected 

duration, and potential impact on 

market participants. Section 7.1(b)(ii) 

also requires the primary listing market 

to consult with, or seek input from, as 

feasible, the affected trading centers, 

processors, and others when making any 

such determinations. Moreover, Section 

7.1(c)(iv) and Section 7.1(d)(1) each 

require the primary listing market to 

consider whether its determination 

would promote a fair and orderly 

market. Consequently, the Commission 

has determined that a good-faith 

determination, based on the totality of 

information and focusing on the 

promotion of fair and orderly markets, 

is reasonably designed to ensure that 

trading is halted and resumed in an 

appropriate manner. Additionally, 

consistent with its recent approval of 

the same provisions regarding trading 

halts in the existing Equity Data Plans, 

the Commission finds that the 

provisions of Section 7.1 are reasonably 

designed ‘‘to enhance the resiliency of 

the national market system by clearly 

memorializing the coordinated actions 

to be taken by the Participants during 

such events so that trading may resume 

in a fair and orderly manner.’’ 796

Accordingly, the Commission is 

approving Section 7.1 as proposed. 


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44200 Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 

797See Securities Exchange Act Release Nos. 

92070 (May 28, 2021), 86 FR 29849, 29851 (June 3, 

2021) (File No. SR–CTA/CQ–2021–01); and 92071 

(May 28, 2021), 86 FR 29846, 29848 (June 3, 2021) 

(File No. S7–24–89). 798See Article VIII, Section 8.1(a) of the CT Plan. 799See id. 800The CT Plan specifies that the fair market 

value of contributed, distributed, or revalued 

property shall be agreed to by the Operating 

Committee or, if there is no such agreement, by an 

appraisal. See Article VIII, Section 8.1(b) of the CT 

Plan. 

801See Article VIII, Section 8.1(a) of the CT Plan. 

802See id. 

803See Article VIII, Section 8.2 of the CT Plan. 

804See Article VIII, Section 8.3 of the CT Plan. 

805See id. 

806See id. 

807See Article IX, Section 9.2(b)–(d) of the CT 

Plan. 

808See Paragraph (a) of Exhibit D of the CT Plan. 

809See id. 

810See id. 

811Paragraph (b) of Exhibit D of the CT Plan 

defines ‘‘Security Income Allocation’’ as 

‘‘multiplying (i) the Net Distributable Operating 

Income under [Exhibit D] for the calendar year by 

(ii) the Volume Percentage for such Eligible 

Security (the ‘‘Initial Allocation’’), and then adding 

or subtracting any amounts specified in the 

reallocation set forth [in Exhibit D].’’ 

812Paragraph (c) of Exhibit D of the CT Plan 

defines ‘‘Volume Percentage’’ as ‘‘dividing (A) the 

square root of the dollar volume of Transaction 

Reports disseminated by the Processors in such 

Eligible Security during the calendar year by (B) the 

sum of the square roots of the dollar volume of 

Transaction Reports disseminated by the Processors 

in each Eligible Security during the calendar year.’’ 

Section 7.2 of Article VII of the CT 

Plan governs the hours of operation 

during which time quotations and 

Transaction Reports must be entered by 

Members and will be disseminated by 

the Processor. The Commission received 

no comment on Section 7.2. The 

Commission finds that the requirements 

of this provision with respect to 

regulatory halts are consistent with the 

provisions of the existing Equity Data 

Plans previously approved by the 

Commission,797 and that maintaining 

the same hours of operation for the CT 

Plan will avoid the need for market 

participants to adjust their systems to 

accept market data at other times, 

thereby reducing the risk of market 

disruption. For these reasons, the 

Commission is approving Section 7.2 as 

proposed. 

9. Financial Matters 

(a) Capital Contributions 

Article VIII of the CT Plan sets forth 

the provisions related to the 

maintenance of capital accounts for the 

Members, additional capital 

contributions to the LLC, and the 

distribution of revenues of the LLC to 

the Members. Specifically, Article VIII, 

Section 8.1 of the CT Plan requires a 

separate capital account to be 

established and maintained by the 

Company for each Member.798 In 

addition, the CT Plan specifies the 

formula for crediting and debiting a 

Member’s capital account.799 The CT 

Plan provides that a Member’s capital 

account will be credited for (i) the 

Member’s capital contributions (at fair 

market value in the case of contributed 

property),800 (ii) allocations of Company 

profits and gain to such Member 

pursuant to Section 10.2; and (iii) any 

recaptured tax credits, or portion 

thereof, to the extent such increase to 

the tax basis of a Member’s interest in 

the Company may be allowed pursuant 

to the federal tax code.801 Furthermore, 

the CT Plan provides that a Member’s 

capital account will be decreased by (x) 

the amount of distributions (at fair 

market value in the case of property 

distributed in kind) to such Member, (y) 

allocations of Company losses to such 

Member and (z) any tax credits as may 

be required to be charged to the tax 

basis of a Member’s interest pursuant to 

the federal income tax code.802

Article VIII, Section 8.2 of the 

proposed CT specifies that no Member 

will be obligated or permitted to make 

any additional contribution to the 

capital of the Company except with the 

approval of the Operating Committee. 

The CT Plan specifies that the Members 

agree to make additional capital 

contributions from time to time as 

appropriate in respect of reasonable 

administrative and other reasonable 

expenses of the Company.803

Article VIII, Section 8.3 of the CT Plan 

requires the distributions of revenues of 

the LLC to the Members at the times and 

in the aggregate amounts set forth in 

Exhibit D to the CT Plan. The CT Plan 

provides that distributions to Members 

may be made in cash or, if determined 

by the Operating Committee, in-kind.804

The CT Plan also specifies that the 

Operating Committee may reserve 

amounts for anticipated expenses or 

contingent liabilities of the LLC.805

Finally, the CT Plan provides that if 

additional capital contributions are 

called for, and any Member fails to 

provide the full amount of such 

additional capital contributions, any 

distributions to be made to such 

defaulting Member shall be reduced by 

the amount of any required but unpaid 

capital contribution due from such 

Member.806

The provisions in the CT Plan related 

to the maintenance of capital accounts 

for the Members, additional capital 

contributions to LLC, and the 

distribution of revenues of the LLC to 

the Members are reasonable and 

customary for LLC agreements, and the 

Commission received no comments 

addressing Article VIII. The 

Commission has, however, identified 

two incorrect cross references in Article 

VIII, Section 8.1. In particular, Section 

8.1(a) twice incorrectly cites to Section 

10.2 (Tax Status; Returns) instead of 

Section 9.2 (Allocation of Profits and 

Losses) of the CT Plan when describing 

provisions related to allocations of 

profits and losses. The Commission is 

therefore modifying Section 8.1(a) to 

correct these incorrect cross references. 

For the reasons discussed above, the 

Commission is approving Article VIII as 

modified. 

(b) Allocations 

Article IX of the CT Plan sets forth the 

provisions related to the allocation of 

profits and losses of the LLC to 

Members. Pursuant to Article XI, 

Section 9.1, the profits and losses of the 

Company must be determined for each 

fiscal year in a manner consistent with 

GAAP. Article XI, Section 9.2 further 

provides that all profits and losses of the 

Company must be allocated among the 

Members in accordance with Exhibit D 

of the CT Plan. Section 9.2 also specifies 

the procedures for certain allocation 

events in accordance with federal tax 

code regulations.807

Exhibit D of the CT Plan outlines the 

methodology for revenue sharing among 

Members. Specifically, paragraph (a) of 

Exhibit D specifies that each Member 

will receive an annual payment (if any) 

for each calendar year that is equal to 

the sum of the Member’s Trading Shares 

(as defined in the CT Plan) and Quoting 

Shares (as defined in the CT Plan), in 

each Eligible Security for such calendar 

year.808 In the event that total Net 

Distributable Operating Income (as 

defined below) is negative for a given 

calendar year, each Member will receive 

an annual bill for such calendar year in 

accordance with the same formula for 

determining annual payments to the 

Members.809 Moreover, the Company 

will cause the Administrator to provide 

the Members with written estimates of 

each Member’s percentage of total 

volume within five business days of the 

end of each calendar month.810

Paragraphs (b), (c), and (e) through (i) 

of Exhibit D set forth the definitions 

used for determining the revenue 

sharing among Members, including 

‘‘Security Income Allocation,’’ 811

‘‘Voting Percentage,’’ 812 ‘‘Trading 


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813Paragraph (e) of Exhibit D of the CT Plan 

defines ‘‘Trading Share’’ as ‘‘multiplying (i) an 

amount equal to fifty percent of the Security Income 

Allocation for the Eligible Security by (ii) the 

Member’s Trade Rating in the Eligible Security.’’ 

814Paragraph (f) of Exhibit D of the CT Plan 

defines ‘‘Trade Rating’’ as ‘‘taking the average of (A) 

the Member’s percentage of the total dollar volume 

of Transaction Reports disseminated by the 

Processors in the Eligible Security during the 

calendar year, and (B) the Member’s percentage of 

the total number of qualified Transaction Reports 

disseminated by the Processors in the Eligible 

Security during the calendar year.’’ 

815Paragraph (g) of Exhibit D of the CT Plan 

defines ‘‘Quoting Share’’ as ‘‘multiplying (A) an 

amount equal to fifty percent of the Security Income 

Allocation for the Eligible Security by (B) the 

Member’s Quote Rating in the Eligible Security.’’ 

816Paragraph (h) of Exhibit D of the CT Plan 

defines ‘‘Quote Rating’’ as ‘‘dividing (A) the sum of 

the Quote Credits earned by the Member in such 

Eligible Security during the calendar year by (B) the 

sum of the Quote Credits earned by all Members in 

such Eligible Security during the calendar year.’’ 

817Paragraph (i) of Exhibit D of the CT Plan states 

that a ‘‘Member shall earn one ‘Quote Credit’ for 

each second of time (with a minimum of one full 

second) multiplied by dollar value of size that an 

automated best bid (offer) transmitted by the 

Member to the Processors during regular trading 

hours is equal to the price of the National Best Bid 

and Offer in the Eligible Security and does not lock 

or cross a previously displayed ‘automated 

quotation’ (as defined under Rule 600 of Regulation 

NMS). The dollar value of size of a quote shall be 

determined by multiplying the price of a quote by 

its size.’’ 

818Paragraph (d) of Exhibit D of the CT Plan 

provides that ‘‘[a] Transaction Report with a dollar 

volume of: (i) $5,000 or more shall constitute one 

qualified Transaction Report’’ and that ‘‘[a] 

Transaction Report with a dollar volume of less 

than $5,000 shall constitute a fraction of a qualified 

Transaction Report that equals the dollar volume of 

the Transaction Report divided by $5,000.’’ 

819See Paragraph (d) of Exhibit D of the CT Plan. 

820See Paragraph (j) of Exhibit D of the CT Plan. 

821See Paragraph (k) of Exhibit D of the CT Plan. 

822Paragraph (l) of Exhibit D also specifies 

conditions for the quarterly payments or billings to 

Members and interest accrual procedures. 

823See Paragraph (l) of Exhibit D of the CT Plan. 

824Paragraph (m) of Exhibit D of the CT Plan also 

specifies that the ‘‘Net Distributable Operating 

Income shall be adjusted annually based solely on 

the quarterly itemized statement audited pursuant 

to the annual audit. The Company shall cause the 

Administrator to pay or bill Members for the audit 

adjustments within thirty days of completion of the 

annual audit.’’ 

825See Paragraph (m) of Exhibit D of the CT Plan. 

826See Notice, supra note 3, 85 FR at 64572 

(Question 47). 

827See id. at 64573 (Question 54). 

828Nasdaq Letter I, supra note 20, at 31. This 

commenter also briefly describes a history of the 

revenue allocation formula and shares its previous 

proposals for modifying the revenue allocation 

formula. See id. at 29–30. In particular, the 

commenter states that it (i) favors revising the 

revenue allocation formula to reward exchanges 

that display quotes that result in an execution; and 

(ii) proposes removing the Over-the-Counter 

Bulletin Board (‘‘OTCBB’’) data from the Nasdaq 

SIP to lower costs. See id. at 30. 

829See Letter from Marcia E. Asquith, Executive 

Vice President, Board and External Relations, 

FINRA (Nov. 24, 2020) (‘‘FINRA Letter II’’), at 4. 

830See FINRA Letter II, supra note 829, at 4–6 

(emphasizing that there are important benefits of 

including OTC equities data in the data feeds 

provided under the UTP Plan). 

831See Market Data Infrastructure, Securities 

Exchange Act Release No. 90610 (Dec. 9, 2020), 86 

FR 18596 (File No. S7–03–20) (Final Rule). 

832See id. at 18614–15. 

833See id. at 18681. 

Share,’’ 813 ‘‘Trading Rating,’’ 814

‘‘Quoting Share,’’ 815 ‘‘Quote Rating,’’ 816

and ‘‘Quote Credit.’’ 817

Paragraph (d) of Exhibit D specifies a 

cap on the Net Distributable Operating 

Income of the CT Plan. In particular, if 

the Initial Allocation of Net 

Distributable Operating Income equals 

an amount greater than $4.00 multiplied 

by the total number of qualified 

Transaction Reports 818 in such Eligible 

Security during the calendar year, the 

excess amount will be subtracted from 

the Initial Allocation for such Eligible 

Security and reallocated among all 

Eligible Securities in direct proportion 

to the dollar volume of Transaction 

Reports disseminated by the Processors 

in Eligible Securities during the 

calendar year.819

Paragraph (j) of Exhibit D specifies the 

formula for determining the Net 

Distributable Operating Income for any 

calendar year. Generally, the Net 

Distributable Operating Income is equal 

to: (1) All cash revenues, funds, and 

proceeds received by the Company 

during such calendar year, including all 

revenues from (A) the CT Feeds and (B) 

FINRA quotation data and last sale 

information for securities classified as 

OTC Equity Securities under FINRA’s 

Rule 6400 Series (‘‘FINRA OTC Data’’) 

((A) and (B) collectively, the ‘‘Data 

Feeds’’), and (C) any membership fees; 

less (2) 6.25% of the revenue received 

by the Company during such calendar 

year attributable to the segment of the 

Data Feeds reflecting the dissemination 

of information with respect to Network 

C Securities and FINRA OTC Data; less 

(3) reasonable working capital and 

contingency reserves for such calendar 

year, as determined by the Operating 

Committee, and all costs and expenses 

of the Company during such calendar 

year.820

Paragraph (k) of Exhibit D specifies 

that once a new Member implements a 

Processor-approved electronic interface 

with the Processors, the Member will 

become eligible to receive revenue.821

Paragraph (l) of Exhibit D specifies that, 

generally, all quarterly payments or 

billings must be made to each eligible 

Member within 45 days after the end of 

each calendar quarter in which the 

Member is eligible to receive 

revenue.822 Additionally, the Company 

will cause the Administrator to provide 

Members with written estimates of each 

Member’s quarterly Net Distributable 

Operating Income within 45 calendar 

days of the end of the quarter, and 

estimated quarterly payments or billings 

must be based on such estimates.823

Paragraph (m) of Exhibit D specifies 

that the Company will cause the 

Administrator to submit to the Members 

a quarterly itemized statement setting 

forth the basis upon which Net 

Distributable Operating Income was 

calculated.824 Finally, the Company, 

subject to the voting requirements 

pursuant to Article IV, Section 4.3, will 

cause the Administrator to engage an 

independent auditor to audit the 

Administrator’s costs or other 

calculation(s).825

In the Notice, the Commission 

solicited comment on Article IX, 

including allocations to the Members,826

and the definition of the term ‘‘Net 

Distributable Operating Income’’ in 

paragraph (j) of Exhibit D to the CT 

Plan.827 One commenter argues that the 

provision in paragraph (j) of Exhibit D 

the CT Plan, which provides that 6.25% 

of revenue received by the LLC be paid 

to FINRA as compensation for FINRA 

OTC Data, is an ‘‘antiquated revenue 

allocation provision’’ that serves no 

ongoing purpose and should be 

removed.828 In response, one 

commenter objects to the suggestion that 

FINRA OTC Data be removed from the 

CT Plan, arguing that the suggestion is 

outside the scope of the Commission’s 

proposal and related directive.829 This 

commenter further argues that it would 

be inappropriate to modify the CT Plan 

to restructure the data covered by the 

CT Plan or the revenue allocation 

provisions in response to that 

suggestion.830

While the Commission acknowledges 

the commenters’ concerns with respect 

to the inclusion in the CT Plan of the 

6.25% revenue allocation to FINRA, the 

Commission believes that the provisions 

of the Commission’s recently adopted 

Market Data Infrastructure Rule will 

ultimately resolve this issue.831 First, 

new Rule 614 does not include OTC 

data within the definition of ‘‘core data’’ 

to be disseminated by the effective NMS 

plan(s) for equity market data.832 And 

second, Rule 614(e) specifically requires 

the effective NMS plan(s) for equity 

market data to file an amendment 

conforming the plan(s) to the new 

consolidation model under the Market 

Data Infrastructure Rule.833 Thus, when 

the CT Plan becomes the effective NMS 

plan for dissemination of equity market 

data under the Market Data 

Infrastructure Rule, the CT Plan will no 

longer include OTC data within the 

definition of ‘‘core data,’’ and no 

revenue allocation of CT Plan revenues 


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834See Article X, Section 10.1(a), (b) of the CT 

Plan. 

835See Article X, Section 10.1(a) of the CT Plan. 

836See Article X, Section 10.2(a) of the CT Plan. 

The CT Plan specifies that all tax returns shall be 

prepared in a manner consistent with the 

Distributions made in accordance with Exhibit D of 

the CT Plan. See Article X, Section 10.2(b) of the 

CT Plan. 

837See Article X, Section 10.3(a) of the CT Plan. 

838See id. 

839See Article X, Section 10.3(b) of the CT Plan. 

840See id. 

841See Article X, Section 10.3(c) of the CT Plan. 

842See Article IX, Sections 9.2, 9.3, and 9.5 of the 

CAT NMS Plan; Article VIII, Sections 8.1, 8.2, and 

8.4 of the OPRA Plan. 

843See Notice, supra note 3, 85 FR at 64572 

(Question 48). 

844See Data Boiler Letter I, supra note 31, at 45. 

845Nasdaq Letter I, supra note 20, at 12. 

846 17 CFR 242.608(b)(1) and (2). 

847See Article X, Section 10.1 of the CAT NMS 

Plan; Article IX, Section 9.1 of the OPRA Plan. 

848See Article X, Section 10.2 of the CAT NMS 

Plan; Article IX, Section 9.2 of the OPRA Plan. 

for OTC data will be necessary or 

appropriate. Consequently, because the 

Commission believes that the other 

provisions of the CT Plan related to the 

allocation of profits and losses of the 

LLC to the Members are similar to the 

UTP Plan, the Commission does not 

believe it is necessary at this time to 

modify the CT Plan’s proposed revenue 

allocation. The Commission has, 

however, identified five incorrect cross 

references in Article IX, Section 9.2. In 

particular, Section 9.2(d) incorrectly 

cites to Section 10.2 (Tax Status; 

Returns) instead of Section 9.2 when 

describing provisions related to 

allocations. The Commission is 

therefore modifying Section 9.2(d) to 

correct these cross references. For the 

reasons discussed above, the 

Commission is approving Article IX as 

modified. 

(c) Records and Accounting 

Article X of the CT Plan sets forth the 

LLC’s obligations and policies related to 

accounting and tax matters. Article X, 

Section 10.1 of the CT Plan specifies 

that the Operating Committee shall 

determine all matters concerning 

accounting procedures of the Company 

and maintain an accounting system that 

enables the Company to produce 

accounting records and information 

substantially consistent with GAAP.834

The CT Plan also specifies that the fiscal 

year of the Company will be the 

calendar year unless applicable law 

requires a different fiscal year.835

Article X, Section 10.2 of the CT Plan 

specifies that the Company is intended 

to be treated as a partnership for federal, 

state, and local income tax purposes.836

Article X, Section 10.3 of the CT Plan 

sets forth provisions regarding the 

functions and duties of an entity 

appointed as the ‘‘Partnership 

Representative’’ of the Company as 

required by the federal tax code.837 This 

section requires that all federal, state, 

and local tax audits and litigation shall 

be conducted under the direction of the 

Partnership Representative.838 The 

Partnership Representative is required 

to use reasonable efforts to notify each 

Member of all significant matters that 

may come to its attention and to forward 

to each Member copies of all significant 

written communications it receives in 

such capacity.839 The Partnership 

Representative must also consult with 

the Members before taking any material 

actions with respect to tax matters and 

must not compromise or settle any tax 

audit or litigation affecting the Members 

without the approval of a majority of 

Members.840 Any material proposed 

action, inaction, or election to be taken 

by the Partnership Representative 

requires the prior approval of a majority 

of Members.841

The Commission received no 

comments addressing Article X and 

notes that these provisions of the CT 

Plan relating to accounting and tax 

matters of the LLC are similar to those 

existing in other NMS plans.842

Accordingly, the Commission is 

approving the provisions of Article X as 

proposed. 

10. Dissolution and Termination 

(a) Dissolution of the LLC 

Article XI, Section 11.1 of the CT Plan 

specifies the events that would trigger 

the dissolution of the LLC. In particular, 

Section 11.1 requires the dissolution of 

the Company as a result of one of the 

following events: (i) Unanimous written 

consent of the Members to dissolve the 

Company; (ii) the sale or other 

disposition of all or substantially all the 

Company’s assets outside the ordinary 

course of business; (iii) an event which 

makes it unlawful or impossible for the 

Company business to be continued; (iv) 

the withdrawal of one or more Members 

such that there is only one remaining 

Member; or (v) the entry of a decree of 

judicial dissolution under Section 18– 

802 of the Delaware Act. 

In the Notice, the Commission 

solicited comment on whether the terms 

for the dissolution and termination of 

the LLC should require consideration by 

or the consent of the Non-SRO Voting 

Representatives.843 One commenter 

states that the dissolution and 

termination of the LLC should require 

consideration and consent of the 

broader industry, beyond just Non-SRO 

Voting Representatives.844 Another 

commenter states that ‘‘[t]he existence 

and operation of the CT Plan is required 

by the Commission and therefore the 

dissolution of the CT Plan is only 

possible if the Commission is approving 

an alternative plan for the dissemination 

of information.’’ 845

With respect to the concern that the 

dissolution and termination of the LLC 

should require broader industry 

consideration and consent, any 

cessation of the operations of the LLC as 

the structure through which the SROs 

fulfill their regulatory obligations with 

respect to consolidated equity market 

data typically would require a filing 

with the Commission pursuant to Rule 

608(b)(1) and (2) of Regulation NMS,846

which would be noticed for public 

comment before Commission action to 

approve or disapprove the filing, 

providing an opportunity for all 

interested market participants to share 

their views with the Commission. 

Moreover, the triggering events for the 

dissolution of the LLC are similar to 

those existing in other NMS plans, and 

none of the terms of the existing NMS 

plans structured as an LLC agreement 

expressly specify broad industry 

consideration prior to dissolution and 

termination.847 For the reasons 

discussed above, the Commission is 

approving Article XI, Section 11.1 of the 

CT Plan as proposed. 

(b) Liquidation and Distribution 

Article XI, Section 11.2 of the CT Plan 

sets forth the procedures for the 

liquidation and distribution of assets 

following the dissolution of the LLC. 

Specifically, in the event of the 

dissolution of the LLC, Section 11.2 

requires the Members to appoint a 

liquidating trustee to wind up the affairs 

of the Company by (i) selling its assets 

in an orderly manner (so as to avoid the 

loss normally associated with forced 

sales), and (ii) applying and distributing 

the proceeds of such sale, together with 

other funds held by the Company: (a) 

First, to the payment of all debts and 

liabilities of the Company; (b) second, to 

the establishments of any reserves 

reasonably necessary to provide for any 

contingent recourse liabilities and 

obligations; (c) third, to the Members in 

accordance with Exhibit D 

(Distributions) of the CT Plan; and (d) 

fourth, to the Members as determined by 

a majority of Members. 

The procedures for the liquidation 

and distribution of assets following the 

dissolution of the LLC are similar to 

those existing in other NMS plans.848

The Commission received no comments 

addressing this provision and is 


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849See Article XI, Section 11.3 of the CT Plan. 

850See id. 

851See Article X, Section 10.3 of the CAT NMS 

Plan; Article IX, Section 9.3 of the OPRA Plan. 

852See Notice, supra note 3, 85 FR at 64572 

(Question 49). 

853See SIFMA Letter I, supra note 30, at 5; 

SIFMA Letter II, supra note 30, at 2. 

854See BlackRock Letter I, supra note 247, at 3; 

RBC Letter, supra note 30, at 10; ICI Letter I, supra 

note 31, at 6 (‘‘these protections are typically 

provided for the members of any governing body’’). 

855BlackRock Letter I, supra note 247, at 3–4. 

856 Id. at 4. 

857See id. 

858See Data Boiler Letter I, supra note 31, at 5, 

46. 

859See id. at 46, 49. 

860 Virtu Letter, supra note 30, at 3. 

861 Id. 

862 Id. 

863See RBC Letter, supra note 30, at 9. 

approving Article XI, Section 11.2 of the 

CT Plan as proposed. 

(c) Termination 

Article XI, Section 11.3 of the CT Plan 

sets forth termination procedures 

following the dissolution of the LLC. 

Specifically, Section 11.3 provides that 

each Member will receive a statement 

prepared by the independent 

accountants retained on behalf of the 

Company that sets forth (i) the assets 

and liabilities of the Company as of the 

date of the final distribution of 

Company’s assets under Section 10.2 of 

the CT Plan and (ii) the net profit or net 

loss for the fiscal period ending on such 

date. The CT Plan further specifies that, 

upon compliance with the distribution 

process set forth in Section 10.2 of the 

CT Plan, the Members will cease to be 

such, and the liquidating trustee is 

required to execute, acknowledge, and 

file a certificate of cancellation of the 

Company.849 Finally, the CT Plan 

provides that upon completion of the 

dissolution, winding up, liquidation, 

and distribution of the liquidation 

proceeds, the Company will 

terminate.850

The termination procedures following 

the dissolution of the LLC are similar to 

those existing in other NMS plans,851

and the Commission received no 

comments addressing this provision. 

The Commission has, however, 

identified two incorrect cross references 

in Article XI, Section 11.3. In particular, 

Section 11.3 incorrectly cites to Section 

10.2 (Tax Status; Returns) instead of 

Section 11.2 (Liquidation and 

Distribution) of the CT Plan when 

describing provisions related to the 

liquidation of the LLC. The Commission 

is therefore modifying Section 11.3 to 

correct these incorrect cross references. 

For the reasons discussed above, the 

Commission is approving Article XI, 

Section 11.3 as modified. 

11. Exculpation and Indemnification 

(a) Exculpation and Indemnification 

Article XII, Section 12.1 and Section 

12.2 of the CT Plan provide broad 

liability, exculpation, and 

indemnification protections for SROs 

and SRO Voting Representatives. 

Specifically, Section 12.1 provides that 

the liability of each Member and each 

individual currently or formerly serving 

as an SRO Voting Representative (each, 

an ‘‘Exculpated Party’’) will be limited 

to the maximum extent permitted by 

law ‘‘for any loss suffered in connection 

with a breach of any fiduciary duty, 

errors in judgment or other acts or 

omissions by such Exculpated Party.’’ 

The provision explicitly does not extend 

to ‘‘Non-Exculpated Items’’—acts or 

omissions that involve ‘‘gross 

negligence, willful misconduct or a 

knowing violation of law’’ or ‘‘losses 

resulting from such Exculpated Party’s 

Transaction Reports, Quotation 

Information or other information 

reported to the Processors by such 

Exculpated Party.’’ Moreover, Section 

12.1(b), among other things, explicitly 

permits an Exculpated Party, in making 

decisions authorized to be in its sole 

discretion, to ‘‘consider such interests 

and factors as it desires (including its 

own interests)’’ and asserts that the 

Exculpated Party ‘‘shall have no duty or 

obligation (fiduciary or otherwise) to 

give any consideration to any interest of 

or factors affecting the Company or the 

Members.’’ 

Section 12.2 provides indemnification 

to SROs and SRO Voting 

Representatives (‘‘Company 

Indemnified Party’’) for losses from 

being a Party to a Proceeding, so long as 

the CT Plan is not a claimant against the 

Company Indemnified Party and the 

claim does not involve Non-Exculpated 

Items. Paragraph (c) of Section 12.2 

expressly acknowledges that 

‘‘indemnification provided in this 

Article XII could involve 

indemnification for negligence or under 

theories of strict liability.’’ Paragraph (d) 

of Section 12.2 makes clear that the CT 

Plan is primarily responsible for 

‘‘advancement of expenses, or for 

providing insurance’’ for any Company 

Indemnified Party’s claim for 

indemnification. 

In the Notice, the Commission sought 

comment on whether the 

indemnification and exculpation 

provisions of the CT Plan should also 

cover Non-SRO Voting 

Representatives.852 In response, the 

Commission received several comments 

addressing this issue. Most commenters 

addressing the issue argue that the CT 

Plan should extend liability protection 

and indemnification coverage to NonSRO Voting Representatives acting in 

their role on the Operating Committee. 

One commenter recommends that the 

CT Plan should state that no liability 

can be imputed to Non-SRO Voting 

Representatives acting in their role on 

the Operating Committee and that NonSRO Voting Representatives would be 

entitled to indemnification against any 

claims made against them related to 

their role on the Operating 

Committee.853 Other commenters 

suggest that the exculpation and 

indemnification protections under 

Article XII of the CT Plan be extended 

to non-SRO representatives.854 One of 

these commenters states that it is 

‘‘customary and widespread in 

corporate situations to minimize 

potential personal liability for the 

directors of a company’’ and that NonSRO Voting Representatives ‘‘may be 

equally exposed to the risk of litigation 

and penalties.’’ 855 Further, this 

commenter is concerned that without 

comparable protection from liabilities, 

‘‘the CT Plan may find it difficult to 

attract and retain qualified 

representatives, decreasing the pool of 

interested candidates,’’ 856 and Non-SRO 

Voting Representatives may potentially 

be hindered from freely providing input 

on CT Plan matters.857

One commenter states that, since 

Non-SRO Voting Representatives are 

individuals, their ability to shoulder 

liability is of concern.858 This 

commenter also does not believe that 

the rights and responsibilities of an 

Exculpated Party under Article XII, 

Section 12.1(b) are consistent with the 

SROs’ obligations with respect to the 

operation of an NMS plan.859

One commenter states that the 

liability carve-out for SROs is too broad 

and supports a limitation on liability for 

SROs carrying out ‘‘quintessentially 

regulatory functions’’ of the CT Plan.860

This commenter argues that it is neither 

appropriate nor warranted for SROs to 

have a ‘‘blanket limitation on liability 

for non-regulatory activities.’’ 861 This 

commenter contends that the vast 

majority of activities carried out by the 

SROs—from technology services, to 

operations, to maintenance—would not 

involve ‘‘quintessentially regulatory 

functions’’ and SRO liability should not 

be limited for those functions.862

Another commenter argues that the 

SROs should be precluded from 

receiving any special liability 

protections.863 One commenter states 

the Plan ‘‘incentivizes the SROs to run 

the Plan and the LLC poorly to the 


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864MFA Letter, supra note 30, at 3. 

865See Nasdaq Letter I, supra note 20, at 15–16; 

NYSE Letter I, supra note 18, at 37–38. 

866See NYSE Letter I, supra note 18, at 37–38. 

867See id. at 38. 

868See Nasdaq Letter I, supra note 20, at 15–16; 

NYSE Letter I, supra note 18, at 37–38. 

869See NYSE Letter I, supra note 18, at 37–38. 

870See BlackRock Letter I, supra note 247, at 3– 

4. 

871See Governance Order, supra note 8, 85 FR at 

28714–20. 

872See id. 

873See supra Section II.C.1(b) (discussing 

paragraph (g) of the Recitals of the CT Plan). 

874See supra discussion in Section II.C.2. 

extent they believe it is in their selfinterest’’ and there is ‘‘no downside for 

an SRO to act in its self-interest contrary 

to the Plan as they are exculpated in 

taking any such action.’’ 864

Other commenters support the 

proposed provisions, arguing that the 

limitation of liability provisions are 

standard protections for members in 

LLC agreements.865 One of these 

commenters cites the OPRA and CAT 

LLC Plans as precedent for extending 

liability protection and indemnification 

coverage only to the SROs that created 

the LLC.866 These commenters argue 

that Non-SRO Voting Representatives do 

not need the same liability protections 

because they are not Members of the 

LLC.867

For several reasons, the Commission 

disagrees with the argument that NonSRO Voting Representatives do not need 

the liability, exculpation, and 

indemnification protections that the CT 

Plan provides solely to SROs.868 First, 

the Commission believes that the NonSRO Voting Representatives could have 

liability exposure arising from their 

service as voting members of the 

Operating Committee, for example, in 

the case of a third-party civil action for 

damages against the CT Plan, which 

might, among other things, require NonSRO Voting Representatives to engage 

the services of counsel. Thus, the 

Commission does not agree that liability 

exposure inures to the SROs solely as a 

result of their status as Members of the 

LLC. Instead, the Commission believes 

that the risk of liability also arises from 

the actions taken by the Operating 

Committee in its governance of the CT 

Plan and would, therefore, potentially 

affect both the SROs and the Non-SRO 

Voting Representatives of the Operating 

Committee. 

Second, the Commission believes that 

the commenter’s reliance on the OPRA 

Plan and the CAT NMS Plan as 

precedent for extending liability 

protection and indemnification coverage 

only to the SROs that created the LLC 

is misplaced.869 While the OPRA Plan 

and the CAT NMS Plan do, in fact, 

provide such protection only to the 

SROs as Members of the LLC, the 

comparison is inapt because neither of 

those NMS plans has any non-SRO 

voting members of its operating 

committee. Therefore, neither the OPRA 

Plan nor the CAT NMS Plan has had to 

address the issue in question. 

Third, the Commission shares the 

commenter’s view that it is customary to 

provide such protection to members of 

governing boards.870 More importantly, 

the Commission agrees that the failure 

to provide liability, exculpation, and 

indemnification protections to the NonSRO Voting Representatives could make 

it more difficult to attract qualified 

individuals to serve in the capacity of 

voting members of the Operating 

Committee and, further, could hinder 

such individuals’ meaningful 

participation, for example by hindering 

their ability to freely share ideas if they 

choose to serve. The Commission 

believes that this potential result would 

be inconsistent with the objectives of 

the Governance Order to broaden 

participation in Plan governance to 

addressing the core problem described 

above.871 Moreover, Delaware law 

permits non-Members of an LLC 

agreement to receive such protections. 

Specifically, Section 18–108 of the 

Delaware Act provides that subject to 

the standards and restrictions, if any, set 

forth in its LLC agreement, ‘‘a limited 

liability company may, and shall have 

the power to, indemnify and hold 

harmless any member or manager or 

other person from and against any and 

all claims and demands whatsoever.’’ 

(Emphasis added.) Consequently, 

Section 18–108 of the Delaware Act 

provides flexibility to the contracting 

parties to specify the rights and 

obligations with respect to 

indemnification provisions in an LLC 

agreement. 

Accordingly, the Commission believes 

that, to promote the objectives of the 

Governance Order to broaden 

participation in Plan governance,872 the 

CT Plan should explicitly provide the 

same protections to Non-SRO Voting 

Representatives that Article XII, Section 

12.1 and Section 12.2 of the CT Plan 

currently provide only to SROs as 

Members of the LLC. To that end, the 

Commission is modifying several 

proposed definitions to explicitly 

include Non-SRO Voting 

Representatives. First, the Commission 

is modifying Article I, Section 1.1(k) of 

the CT Plan to include Non-SRO Voting 

Representatives in the definition of 

‘‘Company Indemnified Party.’’ Next, 

the Commission is modifying Article 

XII, Section 12.1 of the CT Plan to 

include Non-SRO Voting 

Representatives in the definition of 

‘‘Exculpated Party.’’ In addition, the 

Commission is modifying Section 

1.1(eee) of Article I of the CT Plan to 

include Non-SRO Voting 

Representatives in the definition of the 

term, ‘‘Party to a Proceeding.’’ The 

Commission finds that each of these 

modifications is appropriate to provide 

Non-SRO Voting Representatives with 

the same indemnification protections 

that are available to SRO Voting 

Representatives, because the 

modifications will remove a significant 

disincentive for persons to serve as NonSRO Voting Representatives, thereby 

helping to support participation on the 

Operating Committee of a broad array of 

market participants. For these reasons, 

the Commission is approving Article I, 

Section 1.1(k), as modified; Article I, 

Section 1.1(eee), as modified; and 

Article XII, Section 12.1, as modified. 

Finally, with respect to paragraph (b) 

of Section 12.1, which (1) explicitly 

permits an Exculpated Party, in making 

decisions authorized to be in its sole 

discretion, to consider its own interests 

and (2) asserts that the Exculpated Party 

has ‘‘no duty or obligation (fiduciary or 

otherwise) to give any consideration to 

any interest of or factors affecting the 

Company or the Members,’’ the 

Commission reiterates its view, 

expressed above and added by the 

Commission to the Recitals of the CT 

Plan, that ‘‘no provision of this 

Agreement shall be construed to limit or 

diminish the obligations and duties of 

the Members as self-regulatory 

organizations under the federal 

securities laws and the regulations 

thereunder.’’ 873

Because the modified definition of 

‘‘Company Indemnified Party’’ in 

Section 1.1(k) of the CT Plan expands 

the indemnification provisions of 

Section 12.2 to include Non-SRO Voting 

Representatives,874 no further 

modification to Section 12.2 is 

necessary, and the Commission is 

approving Section 12.2 of the CT Plan 

as proposed. 

(b) Advance Payment 

Article XII, Section 12.3 of the CT 

Plan provides for the payment of 

reasonable expenses incurred by a 

Company Indemnified Party who is a 

named defendant or respondent to a 

Proceeding, except that such Company 

Indemnified Party must repay such 

amount if it is ultimately determined 

that he or she is not entitled to 

indemnification. The Commission 


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875See Governance Order, supra note 8, 85 FR at 

28729 (‘‘The New Consolidated Data Plan shall 

provide for the orderly transition of functions and 

responsibilities from the three existing Equity Data 

Plans and shall provide that dissemination of, and 

fees for, SIP data will continue to be governed by 

the provisions of the Equity Data Plans until the 

New Consolidated Data Plan is ready to assume 

responsibility for the dissemination of SIP data and 

fees of the New Consolidated Data Plan have 

become effective.’’). 

876See Notice, supra note 3, 85 FR at 64573 

(Question 51). 

877See Data Boiler Letter I, supra note 31, at 5, 

46. 

878See supra Section II.C.1(b). 

879With respect to the judicial doctrine of 

regulatory immunity, the Commission has taken the 

position that immunity from suit ‘‘is properly 

afforded to the exchanges when engaged in their 

traditional self-regulatory functions—where the 

exchanges act as regulators of their members,’’ 

including ‘‘the core adjudicatory and prosecutorial 

functions that have traditionally been accorded 

absolute immunity, as well as other functions that 

materially relate to the exchanges’ regulation of 

their members,’’ but should not ‘‘extend to 

functions performed by an exchange itself in the 

operation of its own market, or to the sale of 

products and services arising out of those 

functions.’’ Order Setting Aside Action by Delegated 

Authority and Approving a Proposed Rule Change, 

Securities Exchange Act Release No. 88008 (Jan. 21, 

2020), 85 FR 4726, 4735 (Jan. 27, 2020) (File No. 

SR–BatsBZX–2017–34) (citing Brief of the 

Securities and Exchange Commission, Amicus 

Curiae, No. 15–3057, City of Providence v. Bats 

Global Markets, Inc. (2d Cir. 2016), at 22). The 

Court of Appeals for the Second Circuit recently 

reached a similar conclusion. See City of 

Providence v. Bats Global Markets, Inc., 878 F.3d 

36, 48 (2d Cir. 2017) (‘‘When an exchange engages 

in conduct to operate its own market that is distinct 

from its oversight role, it is acting as a regulated 

entity—not a regulator. Although the latter warrants 

immunity, the former does not.’’). 

received no comment on this provision. 

As discussed above, the Commission is 

modifying Article I, Section 1.1(k) of the 

CT Plan to define the term, ‘‘Company 

Indemnified Person,’’ to include NonSRO Voting Representatives. This 

provision is approved as proposed. 

(c) Appearance as a Witnesses 

Article XII, Section 12.4 of the CT 

Plan provides for the payment or 

reimbursement of reasonable out-ofpocket expenses incurred by a Company 

Indemnified Party in connection with 

appearance as a witness or other 

participation in a Proceeding at a time 

when the Company Indemnified Party is 

not a named defendant or respondent in 

the Proceeding. The Commission 

received no comment on this provision. 

As the Commission is modifying Article 

I, Section 1.1(k) of the CT Plan to define 

the term, ‘‘Company Indemnified 

Person,’’ to include Non-SRO Voting 

Representatives, as discussed above, 

Section 12.4 is approved as proposed. 

(d) Nonexclusivity of Rights 

Article XII, Section 12.5 of the CT 

Plan provides that the right to 

indemnification and the advancement 

and payment of expenses conferred in 

Article XII shall not be exclusive of any 

other right a Company Indemnified 

Person may have or hereafter acquire. 

The Commission received no comment 

on this Section 12.5. As the Commission 

is modifying the CT Plan to define the 

term, ‘‘Company Indemnified Person,’’ 

to include Non-SRO Voting 

Representatives, as discussed above, 

this provision is approved as proposed. 

12. Miscellaneous Provisions 

(a) Expenses 

Article XIII, Section 13.1 of the CT 

Plan governs the payment of expenses 

by the CT Plan and requires that all 

such expenses must be paid before any 

allocations may be made to the 

Members. Section 13.1 further provides 

that Members will be responsible for 

reserves for contingent liabilities and 

that each Member shall be responsible 

for the costs of any technical 

enhancements ‘‘made at its request and 

solely for its use,’’ unless another 

Member subsequently makes use of the 

enhancement. The Commission received 

no comment on Section 13.1 and is 

approving the provision as proposed. 

(b) Entire Agreement 

Article XIII, Section 13.2 of the CT 

plan provides that the CT Plan will 

supersede the existing Equity Data Plans 

and all other prior agreements with 

respect to consolidated equity market 

data. The Commission received no 

comment on Section 13.2 and, because 

the provision is consistent with the 

requirements of the Commission’s 

Governance Order,875 is approving the 

provision as proposed. 

(c) Notices and Addresses 

Article XIII, Section 13.3 of the CT 

Plan provides that all communications 

must be written and sets forth the 

permissible methods of delivery. The 

Commission received no comment on 

Section 13.3 and is approving the 

provision as proposed. 

(d) Governing Law 

Article XIII, Section 13.4 of the CT 

Plan provides that Delaware law will be 

the governing law for the CT Plan. 

Specifically, the CT Plan states that the 

Agreement will be ‘‘governed by and 

construed in accordance with the 

Delaware Act and internal laws and 

decisions of the State of Delaware, 

without regard to the conflicts of laws 

principles thereof’’ but will also be 

subject to ‘‘any applicable provisions of 

the Act and any rules and regulations 

promulgated thereunder.’’ Section 13.4 

further states that, ‘‘[f]or the avoidance 

of doubt, nothing in this Agreement 

waives any protection or limitation of 

liability afforded any of the Members or 

any of their Affiliates by common law, 

including the doctrines of selfregulatory organization immunity and 

federal preemption.’’ 

In the Notice, the Commission sought 

comment on this provision.876 The 

Commission received one comment on 

Section 13.4. The commenter asks 

whether the language regarding the 

limitation of liability may be 

inconsistent with the exculpation and 

indemnification provisions of Article 

XII.877 The Commission does not 

believe that the provisions of Section 

13.4 are inconsistent either with the 

provisions of Article XII or with federal 

securities law. Article XII of the CT Plan 

speaks to the agreed exculpation and 

indemnification provisions of the LLC 

Agreement, but, as the Commission has 

discussed above, the provisions of the 

CT Plan cannot limit or diminish the 

obligations and duties of the Members 

as self-regulatory organizations under 

the federal securities laws and the 

regulations thereunder.878 Similarly, the 

general reference in Section 13.4 to the 

common law, including what the CT 

Plan describes as the ‘‘doctrines of selfregulatory organization immunity and 

federal preemption,’’ cannot enlarge or 

otherwise modify any case law that 

defines the scope of SRO liability.879

For the reasons discussed above, the 

Commission is approving this provision, 

as proposed. 

(e) Amendments 

Article XIII, Section 13.5 of the CT 

Plans governs amendments to the CT 

Plan. Paragraph (a) of Section 13.5 states 

that the CT Plan may be modified when 

authorized by the Operating Committee 

pursuant to Section 4.3, subject to the 

requirements of Section 11A of the Act 

and Rule 608 of Regulation NMS. 

Paragraph (b) of Section 13.5 carves out 

an exception to the general rule set forth 

in the preceding paragraph, stating, 

‘‘[n]otwithstanding Section 13.5(a), 

Articles IX, X, XI, and XII may be 

modified upon approval by a majority of 

Members; provided, however, that 

Operating Committee approval pursuant 

to Section 4.3 will be required for 

modifications to the allocation.’’ 

(Emphasis in original.) Paragraph (c) of 

Section 13.5 sets forth the process for 

Ministerial Amendments, in which the 

Chair of the Operating Committee may 

modify the CT Plan by filing an 

amendment with the Commission 

unilaterally, so long as 48-hours 

advance notice is provided to the 

Operating Committee. Paragraph (d) of 


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880See Notice, supra note 3, 85 FR at 64573 

(Question 52). 881See Data Boiler Letter I, supra note 31, at 47. 882 Virtu Letter, supra note 30, at 2. 883 Id. 884See id. 885See id. at 5. 886See id. at 3–4. 

887See Nasdaq Letter I, supra note 20, at 11. 

888See id. at 11–12. 

889See Governance Order, supra note 8, 85 FR at 

28714–20. 

890 17 CFR 242.608. In fact, neither the CAT NMS 

Plan nor the OPRA Plan contains a provision 

permitting the SROs to amend the LLC agreement 

for the plan outside of the Rule 608 process. 

Section 13.5 defines the term, 

‘‘Ministerial Amendment.’’ 

In the Notice, the Commission sought 

comment on whether amendments to 

Articles IX through XII of the CT Plan 

should be subject to the approval only 

of SROs, as provided for in Article XIII, 

Section 13.5(b), rather than the full 

Operating Committee.880 The 

Commission received several comments 

in response. One commenter opposes 

this provision, stating that amendments 

to Articles IX (Allocations), X (Records 

and Accounting; Reports), XI 

(Dissolution and Termination), and XII 

(Exculpation and Indemnification) 

should not be subject to the approval 

only of SROs.881

Another commenter agrees, 

expressing the concern that the CT Plan 

gives ‘‘nearly unfettered discretion’’ to 

the SROs to determine what decisions 

are appropriate for the Operating 

Committee and requests that the 

Commission require more detail in the 

Plan on the activities that will be solely 

decided by SROs.882 This commenter 

states, as an example, that decisions 

related to indemnification and the 

selection of Officers are ‘‘highly 

material’’ to the operation of the CT 

Plan and as proposed require only a 

simple majority vote of the SRO 

representatives.883 This commenter 

further argues that the CT Plan lacks 

sufficient detail regarding the nature 

and scope of decisions that are 

ministerial versus material.884

Consequently, this commenter argues 

that more detail needs to be provided on 

the types of decisions that would fall 

under ‘‘the operation of the CT Plan as 

an LLC’’ and ‘‘modifications to the LLCrelated provisions of the CT Plan’’ in 

order to ensure that non-SRO 

representatives have an opportunity to 

participate in any material decisions 

related to the regulatory operations of 

the CT Plan.885 This commenter 

supports a requirement for the 

Operating Committee to adopt policies 

and procedures distinguishing 

operational interpretations of the CT 

Plan from amendments required to be 

submitted to the Commission under 

Rule 608 of Regulation NMS.886

On the other hand, one commenter 

states that the amendment rights 

provided to the Members by this Section 

are limited to provisions of this 

Agreement that affect only the economic 

interests of the Members (Articles IX 

and X), the protections of the Members 

as among themselves (Article XII), and 

the ongoing existence of the CT Plan 

(Article XI).887 This commenter argues 

that the provisions relating to the 

economic interests of the Members, 

exculpations and indemnification, and 

the ongoing operation of the CT Plan do 

not affect the dissemination of public 

information.888

The Commission disagrees with the 

view that the amendments covered by 

Section 13.5(b) do not affect the 

dissemination of public information and 

thus may be appropriately decided by 

the SROs alone, without Non-SRO 

Voting Representative participation 

through Operating Committee 

consideration. Rather, the Commission 

believes that several of the provisions 

that the SROs propose should be subject 

to amendment without a filing with the 

Commission materially affect the NonSRO Voting Representatives that the 

Commission believes must be full 

members of the CT Plan’s Operating 

Committee. For example, for the reasons 

set forth above, the Commission finds 

that the exculpation and 

indemnification provisions of Article 

XII must be extended not only to the 

SROs, but to the Non-SRO Voting 

Representatives on the Operating 

Committee as well. As another example, 

Article X, Section 10.1 of the CT Plan 

sets forth the Operating Committee’s 

responsibilities with respect to the 

accounting procedures and records of 

the CT Plan, and the Commission 

believes that it is appropriate for the 

Operating Committee, including the 

Non-SRO Voting Representatives, to 

consider any proposed changes to those 

responsibilities. 

More generally, the Commission 

believes that, to help ensure that all 

amendments to the CT Plan are 

consistent with its goals and purposes, 

as well as with the objectives of the 

Commission’s Governance Order,889 the 

entire Operating Committee, rather than 

the SROs alone, should share in 

decision making relating to amendment 

of the CT Plan. And the Commission 

notes that all amendments to an NMS 

plan must be filed with the Commission 

pursuant to Rule 608 of Regulation 

NMS.890

Accordingly, the Commission is 

modifying the CT Plan by deleting 

proposed paragraph (b) of Section 13.5 

to remove the ability of the SRO 

members of the LLC to make 

amendments to certain provisions of the 

CT Plan without an augmented majority 

vote of the Operating Committee and to 

reiterate that all amendments to the CT 

Plan must be filed with the Commission 

under Rule 608 of Regulation NMS. To 

be consistent, the Commission is also 

modifying subparagraph (v) of 

renumbered Section 13.5(c) to delete the 

language that reads, ‘‘or upon approval 

by a majority of the Members pursuant 

to Section 13.5(b), as applicable.’’ The 

Commission finds that these 

modifications to Article XIII, Section 

13.5 of the CT Plan are appropriate 

because they will help to ensure that the 

Operating Committee, as a whole, 

participates in all aspects of the 

governance of the CT Plan and that all 

amendments to the CT Plan are filed 

with the Commission as required by 

Rule 608 of Regulation NMS. 

Finally, the Commission believes that 

the advance notice provided to the 

Operating Committee relating to any 

Ministerial Amendments filed with the 

Commission by the Chair of the 

Operating Committee pursuant to 

paragraph (c) of Section 13.5 should be 

provided in writing. Written notification 

should help to ensure that all members 

of the Operating Committee of the CT 

Plan are adequately informed in a 

timely manner regarding even 

ministerial actions taken on behalf of 

the Operating Committee. Consequently, 

the Commission is modifying the text of 

renumbered Section 13.5(b) of Article 

XIII to require that advance notice to the 

Operating Committee be in writing, and 

finds that this modification is 

appropriate because it will help to 

ensure informed governance of the CT 

Plan. For the reasons above, the 

Commission is approving Section 13.5, 

as modified. 

(f) Successors 

Article XIII, Section 13.6 of the CT 

Plan provides that the CT Plan shall 

bind and inure ‘‘to the benefit of the 

Members and their respective legal 

representatives and successors.’’ The 

Commission received no comment on 

Section 13.6, and is approving the 

provision as proposed. 

(g) Limitation on Rights of Others 

Article XIII, Section 13.7 of the CT 

Plan provides that the CT Plan shall not 

be enforceable by any creditor of the CT 

Plan and shall not create any legal 

rights, remedies, or claims. The 

Commission received no comment on 

Section 13.7, and is approving the 

provision as proposed. 


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891 15 U.S.C. 78k–1. 

892 17 CFR 242.608. 893 15 U.S.C. 78k–1. 

(h) Counterparts 

Article XIII, Section 13.8 of the CT 

Plan provides that the Members to the 

CT Plan may execute the CT Plan 

individually in ‘‘any number of 

counterparts.’’ The Commission 

received no comment on Section 13.8 

and, because this is the manner in 

which NMS plans are typically 

executed, the Commission is approving 

the provision as proposed. 

(i) Headings 

Article XIII, Section 13.9 of the CT 

Plan provides that CT Plan headings are 

for ‘‘reference purposes only and shall 

not be deemed to be a part of this 

Agreement or to affect the meaning or 

interpretation of any provisions of this 

Agreement.’’ The Commission received 

no comment on Section 13.9 and is 

approving the provision as proposed. 

(j) Validity and Severability 

Article XIII, Section 13.10 of the CT 

Plan provides that any determination 

that any provision of the CT Plan is 

invalid or unenforceable shall not affect 

the validity or enforceability of any 

other provisions of the CT Plan, all of 

which shall remain in full force and 

effect. The Commission received no 

comment on Section 13.10, and is 

approving the provision as proposed. 

(k) Statutory References 

Article XIII, Section 13.11 of the CT 

Plan provides that the references in the 

CT Plan to a particular statute or 

regulation, or a provision thereof, ‘‘shall 

be deemed to refer to such statute or 

regulation, or provision thereof, or to 

any similar or superseding statute or 

regulation, or provision thereof, as is 

from time to time in effect.’’ The 

Commission received no comment on 

Section 13.11, and is approving the 

provision as proposed. 

(l) Modifications To Be in Writing 

Article XIII, Section 13.12 of the CT 

Plan provides that any amendment, 

modification, or alteration of the CT 

Plan must in writing and must be 

adopted in accordance with the 

provisions of Section 13.5. The 

Commission received no comment on 

Section 13.12 and is approving the 

provision as proposed. 

III. Conclusion 

For the reasons discussed above, the 

Commission finds that the CT Plan, as 

modified, is consistent with the 

requirements of Section 11A of the 

Act,891 and Rule 608 thereunder,892 that 

the provisions of an NMS plan 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 mechanism of, a national 

market system, or otherwise in 

furtherance of the purposes of the Act. 

It is therefore ordered, that pursuant 

to Section 11A of the Act,893 and the 

rules and regulations thereunder, that 

the CT Plan (File No. 4–757), as 

modified, be and it hereby is approved 

and declared effective, and the 

Participants are authorized to act jointly 

to implement the CT Plan as a means of 

facilitating a national market system. 

By the Commission. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

Attachment A 

LIMITED LIABILITY COMPANY 

AGREEMENT 

OF 

CT PLAN LLC 

a Delaware limited liability company 

(As modified by the Commission; additions 

are italicized; deletions are [bracketed].) 

This LIMITED LIABILITY COMPANY 

AGREEMENT (this ‘‘Agreement’’) dated as of 

the [•] day of [•], [•] is made and entered into 

by and among the parties identified in 

Exhibit A, as Exhibit A may be amended 

from time to time (the ‘‘Members’’), which 

are the members of CT Plan LLC, a Delaware 

limited liability company (the ‘‘Company’’). 

The Members shall constitute the ‘‘members’’ 

(as that term is defined in the Delaware Act) 

of the Company. 

RECITALS 

(a) On May 6, 2020, the Commission 

ordered the Members to act jointly in 

developing and filing with the Commission 

by August 11, 2020, a proposed new single 

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

govern the public dissemination of real-time 

consolidated equity market data for NMS 

stocks. See Order Directing the Exchanges 

and the Financial Industry Regulatory 

Authority to Submit a New National Market 

System Plan Regarding Consolidated Equity 

Market Data, Release No. 34–88827 (May 6, 

2020), 85 FR 28702 (May 13, 2020) (File No. 

4–757) (the ‘‘Order’’). This Agreement is 

being filed with the Commission, as directed 

in the Order. 

(b) This Agreement will become effective 

[after the last of the following has occurred 

(the ‘‘Effective Date’’): 

(i) this Agreement is approved by the 

Commission pursuant to Rule 608 of 

Regulation NMS] as an NMS plan governing 

the public dissemination of real-time 

consolidated market data for Eligible 

Securities (the ‘‘Effective Date’’) on the date 

that it is approved by the Commission 

pursuant to Rule 608 of Regulation NMS. 

Within ten (10) business days of the Effective 

Date, [; and 

(ii) ]the Members [have]shall form[ed] the 

Company as a limited liability company 

pursuant to the Delaware Act by filing a 

certificate of formation (the ‘‘Certificate’’) 

with the Delaware Secretary of State. 

(c) [Following the Effective Date, t]This 

Agreement will become operative as an NMS 

Plan that governs the public dissemination of 

real-time consolidated equity market data for 

Eligible Securities [on the first day of the 

month that is at least 90 days after the last 

of the following have occurred]within twelve 

months of the Effective Date (the ‘‘Operative 

Date’’).[:] 

(d) In support of ensuring that the CT Plan 

is fully operational by the Operative Date, the 

following actions shall be completed within 

the specified periods: 

(i) Within two months of the Effective Date, 

the SRO Voting Representatives and NonSRO Voting Representatives of the Operating 

Committee shall be[have been] determined 

pursuant to Section 4.2 of the Agreement; 

(ii) [Fees have been established by]Within 

four months of the Effective Date, the 

Operating Committee[, are effective] shall file 

with the Commission proposed fees with 

respect to the existing exclusive SIP model as 

an amendment to this Agreement pursuant to 

Rule 608 of Regulation NMS[, and are ready 

to be implemented on the Operative Date]; 

(iii) Within eight months of the Effective 

Date, the Operating Committee shall 

enter[Company has entered] into an 

agreement with the Processors currently 

performing under the CQ Plan, CTA Plan, 

and UTP Plan; 

(iv) Within eight months of the Effective 

Date, the Operating Committee shall 

enter[Company has entered] into an 

agreement with an Administrator selected 

pursuant to Section 6.[3]4 of this Agreement 

and such Administrator [has completed 

the]shall prepare to transition from prior 

Administrators under the CQ Plan, CTA Plan, 

and UTP Plan such that, before the Operative 

Date, it is able to provide services under the 

Administrative Services Agreement, as 

determined by the Operating Committee 

pursuant to Section 4.3 of this Agreement, 

including that (1) new contracts between the 

Company and Vendors and the Company and 

Subscribers have been finalized such that all 

Vendors and Subscribers under the CQ Plan, 

CTA Plan, and UTP Plan are ready to 

transition to such new contracts[ by the 

Operative Date], (2) the Administrator has in 

place a system to administer Distributions, 

and (3) the Administrator has in place a 

system to administer Fees; [and] 

(v) Before the Operative Date, the 

Operating Committee [and, if applicable, the 

Commission, have approved all]will be 

required to ensure that the Administrator 

and the Processors have developed, 

implemented, and suitably tested the systems 

necessary with respect to the existing 

exclusive SIP model—including 

dissemination systems, billing and audit 

systems, and appropriate contracts with 

Vendors and Subscribers—and, if applicable, 

the Operating Committee has expeditiously 

filed any necessary policies and procedures 

[that are necessary or appropriate for the 


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operation of the Company ]with the 

Commission; and 

(vi) Beginning three months after the 

Effective Date, and continuing every three 

months thereafter until the Operative Date, 

the Operating Committee shall provide a 

written report to the Commission, and shall 

make that report publicly available, on the 

actions undertaken and progress made 

toward completing each of the actions listed 

above in this subsection (d). 

[(d)](e) Until the Operative Date, the 

Members will continue to operate pursuant 

to the CQ Plan, CTA Plan, and UTP Plan with 

respect to the public dissemination of realtime consolidated equity market data for 

Eligible Securities rather than this 

Agreement. 

[(e)](f) As of the Operative Date, the 

Members shall conduct, through the 

Company, the Processor and Administrator 

functions related to the public dissemination 

of real-time consolidated equity market data 

for Eligible Securities required by the 

Commission to be performed by the Members 

under the Exchange Act. 

[(f)](g) It is understood and agreed that, in 

performing their obligations and duties under 

this Agreement, the Members are performing 

and discharging functions and 

responsibilities related to the operation of the 

national market system for and on behalf of 

the Members in their capacities as selfregulatory organizations, as required under 

the Section 11A of the Exchange Act, and 

pursuant to Rule 603(b) of Regulation NMS 

thereunder. It is further understood and 

agreed that this Agreement and the 

operations of the Company shall be subject 

to ongoing oversight by the Commission. No 

provision of this Agreement shall be 

construed to limit or diminish the obligations 

and duties of the Members as self-regulatory 

organizations under the federal securities 

laws and the regulations thereunder. 

Article I. 

DEFINITIONS 

Section 1.1 Definitions. 

As used throughout this Agreement and 

the Exhibits: 

(a) ‘‘Administrator’’ means the Person 

selected by the Company to perform the 

administrative functions described in this 

Agreement pursuant to the Administrative 

Services Agreement. 

(b) ‘‘Advisory Committee Member’’ means 

an individual selected pursuant to Section 

III(e)(ii)(A) of the CTA Plan and Section 

IV(E)(b)(i) of the UTP Plan to be a member 

of the Advisory Committees of the CTA Plan 

and UTP Plan. 

(c) ‘‘Affiliate’’ means, as to any Person, any 

other Person that, directly or indirectly, 

Controls, is Controlled by, or is under 

common Control with such Person. Affiliate 

or Affiliated, when used as an adjective, shall 

have a correlative meaning. 

(d) ‘‘Agent’’ means, for purposes of Exhibit 

C, agents of the Operating Committee, a 

Member, the Administrator, and the 

Processors, including, but not limited to, 

attorneys, auditors, advisors, accountants, 

contractors or subcontractors. 

(e) ‘‘Applicable Law’’ means all applicable 

provisions of (a) constitutions, treaties, 

statutes, laws (including the common law), 

rules, regulations, decrees, ordinances, codes, 

proclamations, declarations or orders of any 

Governmental Authority; (b) any consents or 

approvals of any Governmental Authority; 

and (c) any orders, decisions, advisory or 

interpretative opinions, injunctions, 

judgments, awards, decrees of, or agreements 

with, any Governmental Authority. 

(f) ‘‘Best Bid and Offer’’ has the meaning 

ascribed to the term ‘‘best bid and best offer’’ 

by Rule 600(b)(8) of Regulation NMS. 

(g) ‘‘Capital Contributions’’ means any 

cash, cash equivalents, or other property that 

a Member contributes to the Company with 

respect to its Membership Interest. 

(h) ‘‘Chair’’ shall mean the individual 

elected pursuant to Section 4.4(e). 

(i) ‘‘Code’’ means the Internal Revenue 

Code of 1986, as amended. 

(j) ‘‘Commission’’ or ‘‘SEC’’ means the U.S. 

Securities and Exchange Commission. 

(k) ‘‘Company Indemnified Party’’ means a 

Person, and any other Person of whom such 

Person is the legal representative, that is or 

was a Member[ or], an SRO Voting 

Representative, or a Non-SRO Voting 

Representative. 

(l) ‘‘Confidential Information’’ means, 

except to the extent covered by the 

definitions for Restricted Information, Highly 

Confidential Information, or Public 

Information: (i) Any non-public data or 

information designated as Confidential by the 

Operating Committee pursuant to Section 

4.3; (ii) any document generated by a 

Member or Non-SRO Voting Representative 

and designated by that Member or Non-SRO 

Voting Representative as Confidential; and 

(iii) the individual views and statements of 

Covered Persons and SEC staff disclosed 

during a meeting of the Operating Committee 

or any subcommittees thereunder. 

(m) ‘‘Control’’ means, with respect to any 

Person, the possession, directly or indirectly, 

of the power to direct or cause the direction 

of the management and policies of such 

Person, whether through the ownership of 

voting securities (or other ownership 

interest), by contract or otherwise. 

(n) ‘‘Covered Persons’’ means 

representatives of the Members (including 

the SRO Voting Representative, alternate 

SRO Voting Representative, and Member 

Observers), the Non-SRO Voting 

Representatives, SRO Applicants, SRO 

Applicant Observers, the Administrator, and 

the Processors; A[a]ffiliates, employees, and 

Agents of the Operating Committee, a 

Member, the Administrator, and the 

Processors; and any third parties invited to 

attend meetings of the Operating Committee 

or subcommittees[; and the employers of 

Non-SRO Voting Representatives]. Covered 

Persons do not include staff of the SEC. 

(o) ‘‘CQ Plan’’ means the Restated CQ Plan. 

(p) ‘‘CT Feeds’’ means the CT Quote Data 

Feed(s) and the CT Trade Data Feed(s). 

(q) ‘‘CT Quote Data Feed(s)’’ means the 

service(s) that provides Vendors and 

Subscribers with (i) National Best Bids and 

Offers and their sizes and the Members’ 

identifiers providing the National Best Bids 

and Offers; (ii) each Member’s Best Bids and 

Offers and their sizes and the Member’s 

identifier; and (iii) in the case of FINRA, the 

identifier of the FINRA Participant(s) that 

constitute(s) FINRA’s Best Bids and Offers, in 

each case for Eligible Securities. 

(r) ‘‘CT Trade Data Feed(s)’’ means the 

service(s) that provides Vendors and 

Subscribers with Transaction Reports for 

Eligible Securities. 

(s) ‘‘CTA Plan’’ means the Second 

Restatement of the CTA Plan. 

(t) ‘‘Current’’ means, with respect to 

Transaction Reports or Quotation 

Information, such Transaction Reports or 

Quotation Information during the fifteen (15) 

minute period immediately following the 

initial transmission thereof by the Processors. 

(u) ‘‘Delaware Act’’ means the Delaware 

Limited Liability Company Act, Title 6, 

Chapter 18, §§ 18–101, et seq., and any 

successor statute, as amended. 

(v) ‘‘Distribution’’ means a distribution to 

the Members of revenues of the Company 

under this Agreement pursuant to Section 8.3 

and Exhibit D of the Agreement. 

(w) ‘‘Eligible Security’’ means (i) any 

equity security, as defined in Section 3(a)(11) 

of the Exchange Act, or (ii) a security that 

trades like an equity security, in each case 

that is listed on a national securities 

exchange. 

(x) ‘‘ET’’ means Eastern Time. 

(y) ‘‘Exchange Act’’ means the Securities 

Exchange Act of 1934, as amended. 

(z) ‘‘Executive Session’’ means a meeting of 

the Operating Committee pursuant to Section 

4.4(g), which includes SRO Voting 

Representatives, Member Observers, SEC 

Staff, and other persons as deemed 

appropriate by majority vote of the SRO 

Voting Representatives. 

(aa) ‘‘Extraordinary Market Activity’’ 

means a disruption or malfunction of any 

electronic quotation, communication, 

reporting, or execution system operated by, 

or linked to, the Processors or a Trading 

Center or a member of such Trading Center 

that has a severe and continuing negative 

impact, on a market-wide basis, on quoting, 

order, or trading activity or on the 

availability of market information necessary 

to maintain a fair and orderly market. For 

purposes of this definition, a severe and 

continuing negative impact on quoting, 

order, or trading activity includes (i) a series 

of quotes, orders, or transactions at prices 

substantially unrelated to the current market 

for the security or securities; (ii) duplicative 

or erroneous quoting, order, trade reporting, 

or other related message traffic between one 

or more Trading Centers or their members; or 

(iii) the unavailability of quoting, order, 

transaction information, or regulatory 

messages for a sustained period. 

(bb) ‘‘Fees’’ means fees charged to Vendors 

and Subscribers for Transaction Reports and 

Quotation Information in Eligible Securities. 

(cc) ‘‘Final Decision of the Operating 

Committee’’ means an action or inaction of 

the Operating Committee as a result of the 

vote of the Operating Committee, but will not 

include the individual votes of a Voting 

Representative. 

(dd) ‘‘FINRA’’ means the Financial 

Industry Regulatory Authority, Inc. 

(ee) ‘‘FINRA Participant’’ means a FINRA 

member that utilizes the facilities of FINRA 

pursuant to applicable FINRA rules. 


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(ff) ‘‘Fiscal Year’’ means the fiscal year of 

the Company adopted pursuant to Section 

10.1(a) of this Agreement. 

(gg) ‘‘GAAP’’ means United States 

generally accepted accounting principles in 

effect from time to time, consistently applied. 

(hh) ‘‘Governmental Authority’’ means (a) 

the U.S. federal government or government of 

any state of the U.S., (b) any instrumentality 

or agency of any such government, (c) any 

other individual, entity or organization 

authorized by law to perform any executive, 

legislative, judicial, regulatory, 

administrative, military or police functions of 

any such government, or (d) any 

intergovernmental organization of U.S. 

entities, but ‘‘Governmental Authority’’ 

excludes any self-regulatory organization 

registered with the Commission. 

(ii) ‘‘Highly Confidential Information’’ 

means any highly sensitive Member-specific, 

customer-specific, individual-specific, or 

otherwise sensitive information relating to 

the Operating Committee, Members, Vendors, 

Subscribers, or customers that is not 

otherwise Restricted Information. Highly 

Confidential Information includes: The 

Company’s contract negotiations with the 

Processors or Administrator; personnel 

matters that affect the employees of SROs or 

the Company; information concerning the 

intellectual property of Members or 

customers; and any document subject to the 

Attorney-Client Privilege or Work Product 

Doctrine. 

(jj) ‘‘Limit Up Limit Down’’ means the Plan 

to Address Extraordinary Market Volatility 

pursuant to Rule 608 of Regulation NMS 

under the Exchange Act. 

(kk) ‘‘Losses’’ means losses, judgments, 

penalties (including excise and similar taxes 

and punitive damages), fines, settlements, 

and reasonable expenses (including 

reasonable attorneys’ fees) actually incurred 

by such Company Indemnified Party as a 

Party to a Proceeding. 

(ll) ‘‘Market’’ means (i) in respect of FINRA 

or a national securities association, the 

facilities through which FINRA Participants 

display quotations and report transactions in 

Eligible Securities to FINRA and (ii) in 

respect of each national securities exchange, 

the marketplace for Eligible Securities that 

such exchange operates. 

(mm) ‘‘Market-Wide Circuit Breaker’’ 

means a halt in trading in all stocks in all 

Markets under the rules of a Primary Listing 

Market. 

(nn) ‘‘Material SIP Latency’’ means a delay 

of quotation or last sale price information in 

one or more securities between the time data 

is received by the Processors and the time the 

Processors disseminate the data, which delay 

the Primary Listing Market determines, in 

consultation with, and in accordance with, 

publicly disclosed guidelines established by 

the Operating Committee, to be (a) material 

and (b) unlikely to be resolved in the near 

future. 

(oo) ‘‘Member Observer’’ means any 

[individual,]employee of a Member (other 

than a Voting Representative), or any 

attorney to a Member, that a Member[, in its 

sole discretion,] determines is necessary in 

connection with such Member’s compliance 

with its obligations under Rule 608(c) of 

Regulation NMS to attend Operating 

Committee and subcommittee meetings, 

provided that the designation of the Member 

Observer is consistent with the prohibition in 

Section 4.10(b)(i). 

(pp) ‘‘Membership Fee’’ means the fee to be 

paid by a new Member pursuant to Section 

3.2. 

(qq) ‘‘Membership Interest’’ means an 

interest in the Company owned by a Member. 

(rr) ‘‘Nasdaq’’ means The Nasdaq Stock 

Market LLC. 

(ss) ‘‘National Best Bid and Offer’’ has the 

meaning ascribed to the term ‘‘national best 

bid and national best offer’’ by Rule 

600(b)(43) of Regulation NMS. 

(tt) ‘‘National securities association’’ means 

a securities association that is registered 

under Section 15A of the Exchange Act. 

(uu) ‘‘National securities exchange’’ means 

a securities exchange that is registered under 

Section 6 of the Exchange Act. 

(vv) ‘‘Network A Security’’ means an 

Eligible Security for which NYSE is the 

Primary Listing Market. 

(ww) ‘‘Network B Security’’ means an 

Eligible Security for which a national 

securities exchange other than NYSE or 

Nasdaq is the Primary Listing Market. 

(xx) ‘‘Network C Security’’ means an 

Eligible Security for which Nasdaq is the 

Primary Listing Market. 

(yy) ‘‘Non-Affiliated SRO’’ means a 

Member that is not affiliated with any other 

Member. 

(zz) ‘‘Non-SRO Voting Representative’’ 

means an individual selected pursuant to 

Section 4.2(b) to serve on the Operating 

Committee. 

(aaa) ‘‘NYSE’’ means the New York Stock 

Exchange LLC. 

(bbb) ‘‘Officer’’ means each individual 

designated as an officer of the Company 

pursuant to Section 4.8. 

(ccc) ‘‘Operating Committee’’ means the 

committee established under Article IV of 

this Agreement, each member of which shall 

be deemed a ‘‘manager’’ (as defined in the 

Delaware Act) and shall be referred to herein 

as a Voting Representative. 

(ddd) ‘‘Operational Halt’’ means a halt in 

trading in one or more securities only on a 

Member’s Market declared by such Member 

and is not a Regulatory Halt. 

(eee) ‘‘Party to a Proceeding’’ means a 

Company Indemnified Party that is, was, or 

is threatened to be made, a party to a 

Proceeding, or is involved in a Proceeding, 

by reason of the fact that such Company 

Indemnified Party is or was a Member[ and/ 

or], an SRO Voting Representative, or a NonSRO Voting Representative. 

(fff) ‘‘PDP’’ means a Member or nonMember’s proprietary market data product 

that includes Transaction Reports and 

Quotation Information data in Eligible 

Securities from a Member’s Market or a 

Trading Center, and if from a Member, is 

filed with the Commission. 

(ggg) ‘‘Person’’ means an individual, 

corporation, partnership, joint venture, 

limited liability company, Governmental 

Authority, unincorporated organization, 

trust, association, or other entity. 

(hhh) ‘‘Primary Listing Market’’ means the 

national securities exchange on which an 

Eligible Security is listed. If an Eligible 

Security is listed on more than one national 

securities exchange, Primary Listing Market 

means the exchange on which the security 

has been listed the longest. 

(iii) ‘‘Proceeding’’ means any threatened, 

pending or completed suit, proceeding, or 

other action, whether civil, criminal, 

administrative, or arbitrative, or any appeal 

in such action or any inquiry or investigation 

that could lead to such an action. 

(jjj) ‘‘Processor(s)’’ means the entity(ies) 

selected by the Company to perform the 

processing functions described in this 

Agreement and pursuant to the Processor 

Services Agreement(s), including the 

operation of the System. 

(kkk) ‘‘Public Information’’ means: (i) any 

information that is not either Restricted 

Information or Highly Confidential 

Information or that has not been designated 

as Confidential Information; (ii) any 

Confidential Information that has been 

approved by the Operating Committee for 

release to the public; (iii) the duly approved 

minutes of the Operating Committee with 

detail sufficient to inform the public on 

matters under discussion and the views 

expressed thereon (without attribution); (iv) 

Vendor, Subscriber and performance metrics; 

(v) Processor transmission metrics; and (vi) 

any information that is otherwise publicly 

available, except for information made public 

as a result of a violation of the Company’s 

Confidentiality Policy or Applicable Law. 

Public Information includes, but is not 

limited to, any topic discussed during a 

meeting of the Operating Committee, an 

outcome of a topic discussed, or a Final 

Decision of the Operating Committee. 

(lll) ‘‘Regulatory Halt’’ means a halt 

declared by the Primary Listing Market in 

trading in one or more securities on all 

Trading Centers for regulatory purposes, 

including for the dissemination of material 

news, news pending, suspensions, or where 

otherwise necessary to maintain a fair and 

orderly market. A Regulatory Halt includes a 

trading pause triggered by Limit Up Limit 

Down, a halt based on Extraordinary Market 

Activity, a trading halt triggered by a MarketWide Circuit Breaker, and a SIP Halt. 

(mmm) ‘‘Restricted Information’’ means 

highly sensitive customer-specific financial 

information, customer-specific audit 

information, other customer financial 

information, and personal identifiable 

information. 

(nnn) ‘‘Quotation Information’’ means all 

bids, offers, displayed quotation sizes, market 

center identifiers and, in the case of FINRA, 

the identifier of the FINRA Participant that 

entered the quotation, all withdrawals, and 

all other information pertaining to quotations 

in Eligible Securities required to be collected 

and made available to the Processors 

pursuant to this Agreement. 

(ooo) ‘‘Regular Trading Hours’’ has the 

meaning provided in Rule 600(b)(68) of 

Regulation NMS. Regular Trading Hours can 

end earlier than 4:00 p.m. ET in the case of 

an early scheduled close. 

(ppp) ‘‘Retail Representative’’ means an 

individual who (1) represents the interests of 

retail investors, (2) has experience working 

with or on behalf of retail investors, (3) has 


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the requisite background and professional 

experience to understand the interests of 

retail investors, the work of the Operating 

Committee of the Company, and the role of 

market data in the U.S. equity market, and (4) 

is not affiliated with a Member or brokerdealer. 

(qqq) ‘‘Self-regulatory organization’’ or 

‘‘SRO’’ has the meaning provided in Section 

3(a)(26) of the Exchange Act. 

(rrr) ‘‘SIP Halt’’ means a Regulatory Halt to 

trading in one or more securities that a 

Primary Listing Market declares in the event 

of a SIP Outage or Material SIP Latency. 

(sss) ‘‘SIP Halt Resume Time’’ means the 

time that the Primary Listing Market 

determines as the end of a SIP Halt. 

(ttt) ‘‘SIP Outage’’ means a situation in 

which a Processor has ceased, or anticipates 

being unable, to provide updated and/or 

accurate quotation or last sale price 

information in one or more securities for a 

material period that exceeds the time 

thresholds for an orderly failover to backup 

facilities established by mutual agreement 

among the Processors, the Primary Listing 

Market for the affected securities, and the 

Operating Committee unless the Primary 

Listing Market, in consultation with the 

affected Processor and the Operating 

Committee, determines that resumption of 

accurate data is expected in the near future. 

(uuu) ‘‘SRO Applicant’’ means (1) any 

Person that is not a Member and for which 

the Commission has published a Form 1 to 

be registered as a national securities 

exchange or national securities association to 

operate a Market, or (2) a national securities 

exchange that is not a Member and for which 

the Commission has published a proposed 

rules change to operate a Market. 

(vvv) ‘‘SRO Group’’ means a group of 

Members that are Affiliates. 

(www) ‘‘SRO Voting Representative’’ 

means an individual designated by each SRO 

Group and each Non-Affiliated SRO pursuant 

to Section 4.2(a) to vote on behalf of such 

SRO Group or such Non-Affiliated SRO. 

(xxx) ‘‘Subscriber’’ means a Person that 

receives Current Transaction Reports or 

Quotation Information from the Processors or 

a Vendor and that itself is not a Vendor. 

(yyy) ‘‘System’’ means all data processing 

equipment, software, communications 

facilities, and other technology and facilities, 

utilized by the Company or the Processors in 

connection with the collection, 

consolidation, and dissemination of 

Transaction Reports, Quotation Information, 

and other information concerning Eligible 

Securities. 

(zzz) ‘‘Taxes’’ means taxes, levies, imposts, 

charges, and duties (including withholding 

tax, stamp, and transaction duties) imposed 

by any taxing authority together with any 

related interest, penalties, fines, and 

expenses in connection with them. 

(aaaa) ‘‘Trading Center’’ has the same 

meaning as that term is defined in Rule 

600(b)(82) of Regulation NMS. 

(bbbb) ‘‘Transaction Reports’’ means 

reports required to be collected and made 

available pursuant to this Agreement 

containing the stock symbol, price, and size 

of the transaction executed, the Market in 

which the transaction was executed, and 

related information, including a buy/sell/ 

cross indicator, trade modifiers, and any 

other required information reflecting 

completed transactions in Eligible Securities. 

(cccc) ‘‘Transfer’’ means to directly sell, 

transfer, assign, pledge, encumber, 

hypothecate, or similarly dispose of, either 

voluntarily or involuntarily, by operation of 

law or otherwise, or to enter into any 

contract, option, or other arrangement or 

understanding with respect to the sale, 

transfer, assignment, pledge, encumbrance, 

hypothecation, or similar disposition of any 

Membership Interests owned by a Person or 

any interest (including a beneficial interest) 

in any Membership Interests owned by a 

Person. ‘‘Transfer’’ when used as a noun 

shall have a correlative meaning. 

(dddd) ‘‘UTP Plan’’ means the Joint SelfRegulatory Organization Plan Governing the 

Collection, Consolidation and Dissemination 

of Quotation and Transaction Information for 

Nasdaq-Listed Securities Traded on 

Exchanges on an Unlisted Trading Privileges 

Basis. 

(eeee) ‘‘Vendor’’ means a Person that the 

Administrator has approved to re-distribute 

Current Transaction Reports or Quotation 

Information to the Person’s employees or to 

others. 

(ffff) ‘‘Voting Representative’’ means an 

SRO Voting Representative or a Non-SRO 

Voting Representative. 

Section 1.2 Interpretation. 

For purposes of this Agreement: (a) the 

words ‘‘include,’’ ‘‘includes,’’ and 

‘‘including’’ shall be deemed to be followed 

by the words ‘‘without limitation’’; (b) the 

word ‘‘or’’ is not exclusive; and (c) the words 

‘‘herein,’’ ‘‘hereof,’’ ‘‘hereby,’’ ‘‘hereto,’’ and 

‘‘hereunder’’ refer to this Agreement as a 

whole. The definitions given for any defined 

terms in this Agreement shall apply equally 

to both the singular and plural forms of the 

terms defined. Whenever the context may 

require, any pronoun shall include the 

corresponding masculine, feminine, and 

neuter forms. Unless the context otherwise 

requires, references herein: (x) to Articles, 

Sections, and Exhibits mean the Articles and 

Sections of, and Exhibits attached to, this 

Agreement; (y) to an agreement, instrument, 

or other document mean such agreement, 

instrument, or other document as amended, 

supplemented, and modified from time to 

time to the extent permitted by the 

provisions thereof; and (z) to a statute mean 

such statute as amended from time to time 

and includes any successor legislation 

thereto and any rules and regulations 

promulgated thereunder. This Agreement 

shall be construed without regard to any 

presumption or rule requiring construction or 

interpretation against the party drafting an 

instrument or causing any instrument to be 

drafted. The Exhibits referred to herein shall 

be construed with, and as an integral part of, 

this Agreement to the same extent as if they 

were set forth verbatim herein. 

Article II. 

ORGANIZATION 

Section 2.1 Formation. 

(a) The Members formed the Company as 

a limited liability company on [•], [•] 

pursuant to the Delaware Act by filing a 

certificate of formation (the ‘‘Certificate’’) 

with the Delaware Secretary of State. 

(b) This Agreement shall constitute the 

‘‘limited liability company agreement’’ (as 

that term is used in the Delaware Act) of the 

Company. The rights, powers, duties, 

obligations, and liabilities of the Members 

shall be determined pursuant to the Delaware 

Act and this Agreement. To the extent that 

the rights, powers, duties, obligations, and 

liabilities of any Member are different by 

reason of any provision of this Agreement 

than they would be under the Delaware Act 

in the absence of such provision, this 

Agreement shall, to the extent permitted by 

the Delaware Act, control. 

Section 2.2 Name. 

The name of the Company is ‘‘CT Plan 

LLC’’ and all Company business shall be 

conducted in that name or such other name 

or names as the Operating Committee may 

designate; provided, that the name shall 

always contain the words ‘‘Limited Liability 

Company’’ or the abbreviation ‘‘L.L.C.’’ or the 

designation ‘‘LLC.’’ 

Section 2.3 Registered Office; Registered 

Agent; Principal Office; Other Offices. 

(a) The registered office of the Company 

required by the Delaware Act to be 

maintained in the State of Delaware shall be 

the office of the initial registered agent 

named in the Certificate or such other office 

(which need not be a place of business of the 

Company) as the Operating Committee may 

designate from time to time in the manner 

provided by the Delaware Act and 

Applicable Law. 

(b) The registered agent for service of 

process of the Company in the State of 

Delaware shall be the initial registered agent 

named in the Certificate or such other Person 

or Persons as the Operating Committee may 

designate from time to time in the manner 

provided by the Delaware Act and 

Applicable Law. 

(c) The principal office of the Company 

shall be located at such place as the 

Operating Committee may designate from 

time to time, which need not be in the State 

of Delaware, and the Company shall maintain 

its books and records there. The Company 

shall give prompt notice to each of the 

Members of any change to the principal 

office of the Company. 

(d) The Company may have such other 

offices as the Operating Committee may 

designate from time to time. 

Section 2.4 Purpose; Powers. 

(a) The purposes of the Company are to 

engage in the following activities on behalf 

of the Members: 

(i) the collection, consolidation, and 

dissemination of Transaction Reports, 

Quotation Information, and such other 

information concerning Eligible Securities as 

the Members shall agree as provided herein; 

(ii) contracting for the distribution of such 

information; 

(iii) contracting for and maintaining 

facilities to support any activities permitted 

in this Agreement and guidelines adopted 

hereunder, including the operation and 

administration of the System; 


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(iv) providing for those other matters set 

forth in this Agreement and in all guidelines 

adopted hereunder; 

(v) operating the System to comply with 

Applicable Laws; and 

(vi) engaging in any other business or 

activity that now or hereafter may be 

necessary, incidental, proper, advisable, or 

convenient to accomplish any of the 

foregoing purposes and that is not prohibited 

by the Delaware Act, the Exchange Act, or 

other Applicable Law. 

(b) The Company shall have all the powers 

necessary or convenient to carry out the 

purposes for which it is formed, including 

the powers granted by the Delaware Act. 

(c) It is expressly understood that each 

Member shall be responsible for the 

collection of Transaction Reports and 

Quotation Information within its Market and 

that nothing in this Agreement shall be 

deemed to govern or apply to the manner in 

which each Member does so. 

Section 2.5 Term. 

The term of the Company commenced as 

of the date the Certificate was filed with the 

Secretary of State of the State of Delaware, 

and shall continue in existence perpetually 

until the Company is dissolved in accordance 

with the provisions of the Certificate or this 

Agreement. Notwithstanding the foregoing, 

this Agreement shall not become effective 

until the Effective Date. 

Section 2.6 No State-Law Partnership. 

The Members intend that the Company not 

be a partnership (including a limited 

partnership) or joint venture, and that no 

Member be a partner or joint venturer of any 

other Member by virtue of this Agreement for 

any purposes other than as set forth in 

Sections 10.2 and 10.3, and neither this 

Agreement nor any other document entered 

into by the Company or any Member relating 

to the subject matter of this Agreement shall 

be construed to suggest otherwise. 

Article III. 

MEMBERSHIP 

Section 3.1 Members. 

The Members of the Company shall consist 

of the Persons identified in Exhibit A, as 

updated from time to time to reflect the 

admission of new Members pursuant to this 

Agreement. 

Section 3.2 New Members. 

(a) Any national securities association or 

national securities exchange whose market, 

facilities, or members, as applicable, trades 

Eligible Securities may become a Member by 

(i) providing written notice to the Company, 

(ii) executing a joinder to this Agreement, at 

which time Exhibit A shall be amended to 

reflect the addition of such association or 

exchange as a Member, (iii) paying a 

Membership Fee to the Company as 

determined pursuant to Section 3.2(b), and 

(iv) executing a joinder to any other 

agreements to which all of the other Members 

have been made party in connection with 

being a Member. Membership Fees paid shall 

be added to the general revenues of the 

Company. 

(b) The Membership Fee shall be based 

upon the following factors: 

(i) the portion of costs previously paid by 

the Company (or by the Members prior to the 

formation of the Company) for the 

development, expansion, and maintenance of 

the System which, under GAAP, would have 

been treated as capital expenditures and 

would have been amortized over the five 

years preceding the admission of the new 

Member (and for this purpose all such capital 

expenditures shall be deemed to have a fiveyear amortizable life); and 

(ii) an assessment of costs incurred and to 

be incurred by the Company for modifying 

the System or any part thereof to 

accommodate the new Member, which are 

not otherwise required to be paid or 

reimbursed by the new Member. 

[(a)](c) Participants of the CQ Plan, CTA 

Plan, and UTP Plan are not be required to 

pay the Membership Fee. 

Section 3.3 Transfer of Membership 

Interests. 

Except as set forth in Section 3.4, a 

Member shall not have the right to Transfer 

(whether in whole or in part) its Membership 

Interest in the Company. 

Section 3.4 Withdrawal From Membership. 

(a) Any Member may voluntarily withdraw 

from the Company at any time on not less 

than 30 days’ prior written notice (the 

‘‘Withdrawal Date’’), by (i) providing such 

notice of such withdrawal to the Company, 

(ii) causing the Company to file with the 

Commission an amendment to effectuate the 

withdrawal and (iii) Transferring such 

Member’s Membership Interest to the 

Company. 

(b) A Member shall automatically be 

withdrawn from the Company upon such 

Member no longer being a registered national 

securities association or registered national 

securities exchange. Such Member’s 

Membership Interest will automatically 

transfer to the Company. The Company shall 

file with the Commission an amendment to 

effectuate the withdrawal. 

(c) A withdrawal of a Member shall not be 

effective until approved by the Commission 

after filing an amendment to the Agreement 

in accordance with Section 13.5. 

(d) From and after the Withdrawal Date of 

such Member: 

(iii) Such Member shall remain liable for 

any obligations under this Agreement of such 

Member (including indemnification 

obligations) arising prior to the Withdrawal 

Date (but such Member shall have no further 

obligations under this Agreement or to any of 

the other Members arising after the 

Withdrawal Date); 

(iv) Such Member shall be entitled to 

receive a portion of the Net Distributable 

Operating Income (if any) in accordance with 

Exhibit D attributable to the period prior to 

the Withdrawal Date of such Member; 

(v) Such Member shall cease to have the 

right to have its Transaction Reports, 

Quotation Information, or other information 

disseminated over the System; and 

(vi) Profits and losses of the Company shall 

cease to be allocated to the Capital Account 

of such Member. 

Section 3.5 

Member Bankruptcy. 

In the event a Member becomes subject to 

one or more of the events of bankruptcy 

enumerated in Section 18–304 of the 

Delaware Act, that event by itself shall not 

cause a withdrawal of such Member from the 

Company so long as such Member continues 

to be a national securities association or 

national securities exchange. 

Section 3.6 Undertaking by All Members. 

Following the Operative Date, each 

Member shall be required, pursuant to Rule 

608(c) of Regulation NMS, to comply with 

the provisions hereof and enforce compliance 

by its members with the provisions hereof. 

Section 3.7 Obligations and Liability of 

Members. 

(a) Except as otherwise provided in this 

Agreement or Applicable Law, no Member 

shall be obligated to contribute capital or 

make loans to the Company. 

(b) Except as provided in this Agreement 

or Applicable Law, no Member shall have 

any liability whatsoever in its capacity as a 

Member, whether to the Company, to any of 

the Members, to the creditors of the Company 

or to any other Person, for the debts, 

liabilities, commitments or any other 

obligations of the Company or for any losses 

of the Company. Notwithstanding the 

foregoing, to the extent that amounts have 

not been paid to the Processors or 

Administrator under the terms of the 

Processor Services Agreements and 

Administrative Services Agreement, 

respectively, or this Agreement, as and when 

due, (i) each Member shall be obligated to 

return to the Company its pro rata share of 

any moneys distributed to such Member in 

the one year period prior to such default in 

payment (such pro rata share to be based 

upon such Member’s proportionate receipt of 

the aggregate distributions made to all 

Members in such one year period) until an 

aggregate amount equal to the amount of any 

such defaulted payments has been recontributed to the Company and (ii) the 

Company shall promptly pay such amount to 

the Processors or Administrator, as 

applicable. 

(c) In accordance with the Delaware Act, a 

member of a limited liability company may, 

under certain circumstances, be required to 

return amounts previously distributed to 

such member. It is the intent of the Members 

that no distribution to any Member pursuant 

to this Agreement shall be deemed a return 

of money or other property paid or 

distributed in violation of the Delaware Act. 

The payment of any such money or 

distribution of any such property to a 

Member shall be deemed to be a compromise 

within the meaning of the Delaware Act, and 

the Member receiving any such money or 

property shall not be required to return any 

such money or property to any Person; 

provided, however, that a Member shall be 

required to return to the Company any 

money or property distributed to it in clear 

and manifest accounting or similar error or 

as otherwise provided in Section 3.7(b). 

However, if any court of competent 

jurisdiction holds that, notwithstanding the 


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provisions of this Agreement, any Member is 

obligated to make any such payment, such 

obligation shall be the obligation of such 

Member and not of the Operating Committee. 

(d) No Member (unless duly authorized by 

the Operating Committee) has the authority 

or power to represent, act for, sign for or bind 

the Company or to make any expenditure on 

behalf of the Company; provided, however, 

that the Tax Matters Partner may represent, 

act for, sign for or bind the Company as 

permitted under Sections 10.2 and 10.3 of 

this Agreement. 

(e) To the fullest extent permitted by law, 

no Member shall, in its capacity as a 

Member, owe any duty (fiduciary or 

otherwise) to the Company or to any other 

Member other than the duties expressly set 

forth in this Agreement. 

Article IV. 

MANAGEMENT OF THE COMPANY 

Section 4.1 Operating Committee. 

(a) Except for situations in which the 

approval of the Members is required by this 

Agreement, the Company shall be managed 

by the Operating Committee. Unless 

otherwise expressly provided to the contrary 

in this Agreement, no Member shall have 

authority to act for, or to assume any 

obligation or responsibility on behalf of, the 

Company, without the prior approval of the 

Operating Committee. Without limiting the 

generality of the foregoing and except as 

otherwise expressly provided in this 

Agreement, the Operating Committee shall 

have full and complete discretion to manage 

and control the business and affairs of the 

Company, to make all decisions affecting the 

business and affairs of the Company, and to 

take all such actions as it deems necessary or 

appropriate to accomplish the purposes of 

the Company, including the following: 

(i) proposing amendments to this 

Agreement or implementing other policies 

and procedures as necessary to ensure 

prompt, accurate, reliable, and fair collection, 

processing, distribution, and publication of 

information with respect to Transaction 

Reports and Quotation Information in 

Eligible Securities and the fairness and 

usefulness of the form and content of that 

information; 

(ii) selecting, overseeing, specifying the 

role and responsibilities of, and evaluating 

the performance of, the Administrator, the 

Processors, an auditor, and other professional 

service providers, provided that any 

expenditures for professional services that 

are paid for from the Company’s revenues 

must be for activities consistent with the 

terms of this Agreement and must be 

authorized by the Operating Committee; 

(iii) developing and maintaining fair and 

reasonable Fees and consistent terms for the 

distribution, transmission, and aggregation of 

core data; 

(iv) reviewing the performance of the 

Processors and ensuring the public reporting 

of Processors’ performance and other metrics 

and information about the Processors; 

(v) assessing the marketplace for equity 

market data products and ensuring that the 

CT Feeds are priced in a manner that is fair 

and reasonable, and designed to ensure the 

widespread availability of CT Feeds data to 

investors and market participants; 

(vi) designing a fair and reasonable revenue 

allocation formula for allocating plan 

revenues to be applied by the Administrator, 

and overseeing, reviewing, and revising that 

formula as needed; 

(vii) interpreting the Agreement and its 

provisions; and 

(viii) carrying out such other specific 

responsibilities as provided under this 

Agreement. 

(b) The Operating Committee may delegate 

all or part of its administrative functions 

under this Agreement, excluding those 

administrative functions to be performed by 

the Administrator pursuant to Section 6.1, to 

a subcommittee, to one or more of the 

Members, to one or more Non-SRO Voting 

Representatives, or to other Persons 

(including the Administrator), and any 

Person to which administrative functions are 

so delegated shall perform the same as agent 

for the Company, in the name of the 

Company. For the avoidance of doubt, no 

delegation to a subcommittee shall 

contravene Section 4.3 and no subcommittee 

shall take actions requiring approval of the 

Operating Committee pursuant to Section 4.3 

unless such approval shall have been 

obtained. Any authority delegated hereunder 

is subject to the provisions of Section 4.3 

hereof. 

(c) It is expressly agreed and understood 

that neither the Company nor the Operating 

Committee shall have authority in any 

respect of any Member’s proprietary systems. 

Neither the Company nor the Operating 

Committee shall have any authority over the 

collection and dissemination of quotation or 

transaction information in Eligible Securities 

in any Member’s Market, or, in the case of 

FINRA, from FINRA Participants. 

Section 4.2 Composition and Selection of 

Operating Committee. 

(a) SRO Voting Representatives. The 

Operating Committee shall include one SRO 

Voting Representative designated by each 

SRO Group and each Non-Affiliated SRO to 

vote on behalf of such SRO Group or such 

Non-Affiliated SRO. Each SRO Group and 

each Non-Affiliated SRO may designate an 

alternate individual or individuals who shall 

be authorized to vote on behalf of such SRO 

Group or such Non-Affiliated SRO, 

respectively, in the absence of the designated 

SRO Voting Representative. 

(b) Non-SRO Voting Representatives. The 

Operating Committee shall include one NonSRO Voting Representative from each of the 

following categories: (A) An institutional 

investor; (B) a broker-dealer with a 

predominantly retail investor customer base; 

(C) a broker-dealer with a predominantly 

institutional investor customer base; (D) a 

securities market data vendor that is not 

affiliated or associated with a Member, 

broker-dealer, or investment adviser with 

third-party clients; (E) an issuer of NMS stock 

that is not affiliated or associated with a 

Member, broker-dealer, or investment adviser 

with third-party clients; and (F) a Retail 

Representative. Non-SRO Voting 

Representatives shall serve [for]no more than 

two consecutive three-year terms[ for a 

maximum of two terms total, whether 

consecutive or non-consecutive], but shall be 

eligible after a period of three years of nonservice to serve additional terms, subject to 

the same term limit requirements. Non-SRO 

Voting Representatives will be selected 

pursuant to the following procedures: 

(i) The initial Non-SRO Voting 

Representative for each category shall be 

selected by a majority vote of the Advisory 

Committee Members. The Advisory 

Committee Members shall follow the 

procedure set forth in subparagraph (b)(v) 

below, except that in addition to nominating 

others, Advisory Committee Members may 

nominate themselves, regardless of the length 

of their service on the Advisory Committees. 

(ii) Although the Non-SRO Voting 

Representatives will be selected at the same 

time, the Non-SRO Voting Representatives’ 

terms will be staggered to allow for 

continuity of representation. The Non-SRO 

Voting Representatives’ terms will begin in 

accordance with the following timeline after 

the Effective Date of the Agreement: 

(A) Issuer Representative: First Quarterly 

Operating Committee Meeting after Effective 

Date; 

(B) Retail Representative: First Quarterly 

Operating Committee Meeting after Effective 

Date; 

(C) Institutional investor: First Quarterly 

Operating Committee Meeting after Effective 

Date; 

(D) Securities market data vendor: Third 

Quarterly Operating Committee Meeting after 

Effective Date; 

(E) Broker-dealer with a predominantly 

retail investor customer base: Third Quarterly 

Operating Committee Meeting after Effective 

Date; and 

(F) Broker-dealer with a predominantly 

institutional investor customer base: Third 

Quarterly Operating Committee Meeting 

Effective Date. 

(iii) Although certain Non-SRO Voting 

Representatives’ official, [two]three-year 

terms will not begin until the Third Quarterly 

Operating Committee Meeting after the 

Effective Date, such Non-SRO Voting 

Representatives will temporarily serve as a 

Non-SRO Voting Representative as of their 

selection. Such Non-SRO Voting 

Representatives may still be selected for 

another [two]three-year term. 

(iv) After the expiration of a Non-SRO 

Voting Representative’s term, an individual 

will be selected by a majority of the thenserving Non-SRO Voting Representatives to 

fill the position. 

(v) Procedure for Nominating and Electing 

Non-SRO Voting Representatives. 

(A) At least two months prior to the 

expiring term of a Non-SRO Voting 

Representative, the Operating Committee 

shall post a notice on its website requesting 

nominations from the public for the 

upcoming open position. [Members]Each 

SRO Voting Representative and Non-SRO 

Voting Representative may submit the names 

of individuals for consideration during the 

nomination process, and the Non-SRO Voting 

Representative may nominate themselves as 

long as they [have not served the maximum 

number of terms]are not then completing a 

second consecutive term. 


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(B) At least one month prior to the expiring 

term of a Non-SRO Voting Representative, 

the Non-SRO Voting Representatives shall 

review the nominated individuals to confirm, 

by a majority vote, the nominated individuals 

that meet the requirements of the category up 

for election. 

(C) Within a week of the Non-SRO Voting 

Representatives finalizing the list of eligible 

individuals, the Operating Committee shall 

post a notice on the Company website listing 

the individuals nominated for the open 

position and requesting comment from the 

public. After the Non-SRO Voting 

Representatives screen comments for 

appropriateness, the public comments will be 

posted on the Company’s website. Prior to 

electing an individual from the list of 

nominations, the Non-SRO Voting 

Representatives will consider and discuss the 

public comments. 

(D) The Non-SRO Voting Representatives 

whose terms are expiring may vote in the 

election for an open position; provided, 

however, that a Non-SRO Voting 

Representative may not vote in the election 

for an open position for which they are 

nominated. 

(E) In the event that no nominated 

individual receives a majority of votes, the 

individual(s) with the lowest number of votes 

will be eliminated from consideration. The 

Non-SRO Voting Representatives will repeat 

this process until an individual receives a 

majority of votes. In the event two candidates 

remain, the Person receiving the most votes 

will be elected. 

(vi) A Non-SRO Voting Representative may 

resign from the Operating Committee by 

tendering their resignation to the Chair of the 

Operating Committee. In the event a NonSRO Voting Representative leaves his or her 

employment or changes his or her duties 

within the firm to a position unrelated to the 

category he or she represents before the 

expiration of his or her term, the Non-SRO 

Voting Representative shall tender his or her 

resignation to the Chair of the Operating 

Committee or be removed upon an 

affirmative vote of the Operating Committee 

pursuant to Section 4.3. 

(vii) In the event a Non-SRO Voting 

Representative resigns or is removed from the 

Operating Committee, the Operating 

Committee shall, as soon as practicable, 

follow the procedure set forth in 

subparagraph (b)(v). The individual selected 

shall serve out the remaining term of the 

resigning Non-SRO Voting Representative 

and, if the remaining term after selection is 

less than one year, such individual will 

automatically serve an additional [two]threeyear term. If the remaining term after 

selection is greater than one year, the 

Operating Committee shall follow the 

procedure set forth in subparagraph (b)(v) at 

the end of the term. Under either 

circumstance, such individual may be 

elected for one additional [two]three-year 

term before reaching the term limit. 

(viii) Each Non-SRO Voting Representative 

will agree in writing to comply with the 

requirements of Section 4.10 and Exhibit B 

thereto and the Confidentiality Policy set 

forth in Exhibit C. 

(c) An SRO Applicant will be permitted to 

appoint one individual to attend (subject to 

Section 4.4(i)) regularly scheduled Operating 

Committee meetings in the capacity of a nonvoting observer (each, an ‘‘SRO Applicant 

Observer’’). Each SRO Applicant may 

designate an alternate individual or 

individuals who shall be authorized to act as 

the SRO Applicant Observer on behalf of the 

SRO Applicant in the absence of the 

designated SRO Applicant Observer. If the 

SRO Applicant’s Form 1 petition or Section 

19(b)(1) filing is withdrawn, returned, or is 

otherwise not actively pending with the 

Commission for any reason, then the SRO 

Applicant will no longer be eligible to have 

an SRO Applicant Observer attend Operating 

Committee meetings. 

(d) Notwithstanding anything to the 

contrary herein, (i) a national securities 

exchange that has ceased operations as a 

Market (or has yet to commence operation as 

a Market) and that is a Non-Affiliated SRO 

will not be permitted to designate an SRO 

Voting Representative and (ii) an SRO Group 

in which all national securities exchanges 

have ceased operations as a Market (or have 

yet to commence operation as a Market) will 

not be permitted to designate an SRO Voting 

Representative. Such SRO Group or NonAffiliated SRO may attend the Operating 

Committee as an observer but may not attend 

the Executive Session of the Operating 

Committee. In the event such an SRO Group 

or Non-Affiliated SRO does not commence 

operation as a Market for six months after 

first attending an Operating Committee 

meeting, such SRO Group or Non-Affiliated 

SRO may no longer attend the Operating 

Committee until it commences/recommences operation as a Market. 

Section 4.3 Action of Operating Committee. 

(a) The SRO Voting Representatives and 

Non-SRO Voting Representatives shall be 

allocated votes as follows: 

(i) Each SRO Voting Representative shall 

be authorized to cast one vote on behalf of 

the SRO Group or Non-Affiliated SRO that he 

or she represents, provided, however, that 

each SRO Voting Representative representing 

an SRO Group or Non-Affiliated SRO whose 

combined market center(s) have consolidated 

equity market share of more than fifteen (15) 

percent during four of the six calendar 

months preceding an Operating Committee 

vote shall be authorized to cast two votes. For 

purposes of this Section 4.3(a)(i), 

‘‘consolidated equity market share’’ means 

the average daily dollar equity trading 

volume of Eligible Securities of an SRO 

Group or Non-Affiliated SRO as a percentage 

of the average daily dollar equity trading 

volume of all of the SRO Groups and NonAffiliated SROs, as reported under this 

Agreement. For the avoidance of doubt, 

FINRA shall not be considered to operate a 

market center within the meaning of this 

Section 4.3(a)(i) solely by virtue of 

facilitating trade reporting of Eligible 

Securities through the FINRA/Nasdaq Trade 

Reporting Facility Carteret, the FINRA/ 

Nasdaq Trade Reporting Facility Chicago, the 

FINRA/NYSE Trade Reporting Facility, or 

any other trade reporting facility that FINRA 

may operate from time to time in affiliation 

with a registered national securities exchange 

to provide a mechanism for FINRA 

Participants to report transactions in Eligible 

Securities effected otherwise than on an 

exchange. 

(ii) With respect to any action on which the 

Non-SRO Voting Representatives may vote, 

the aggregate number of votes attributed to 

the Non-SRO Voting Representatives eligible 

to vote on such action shall at all times equal 

one half of the aggregate number of votes 

attributed to the votes of the SRO Voting 

Representatives who are eligible to vote on 

such action, and the number of Non-SRO 

Voting Representative votes shall increase or 

decrease as necessary to maintain the ratio 

between votes attributed to the SRO Voting 

Representatives and votes attributed to the 

Non-SRO Voting Representatives. Votes 

attributed to Non-SRO Voting 

Representatives will be allocated equally 

among Non-SRO Voting Representatives 

eligible to vote, in fractional shares if 

necessary. 

(b) All actions of the Operating Committee 

will require an augmented majority vote 

consisting of the affirmative vote of not less 

than (2/3rd) two-thirds of all votes allocated 

in the manner described in Section 4.3(a) to 

Voting Representatives who are eligible to 

vote on such action, combined with a 

majority (greater than (50) fifty percent of the 

votes) of all votes allocated in the manner 

described in Section 4.3(a) to SRO Voting 

Representatives who are eligible to vote on 

such action. 

(c) Notwithstanding Section 4.3(b), the 

following actions will not require an 

augmented majority vote of the Operating 

Committee: 

(i) the selection of Non-SRO Voting 

Representatives pursuant to Section 4.2(b); 

(ii) the decision to enter Executive Session 

pursuant to Section 4.4(g)[;], except for 

matters considered pursuant to Section 

4.4(g)(i)(E); and 

(iii) decisions concerning the operation of 

the Company as an LLC as specified in 

Section 10.3 and Section 11.2[; 

(iv) modifications to LLC-related 

provisions of the Agreement pursuant to 

Section 13.5(b); and 

(v) the selection of Officers of the 

Company, other than the Chair, pursuant to 

Section 4.8]. 

Section 4.4 Meetings of the Operating 

Committee. 

(a) Subject to Section 4.4(g), meetings of 

the Operating Committee may be attended by 

each Voting Representative, Member 

Observers, SRO Applicant Observers, SEC 

staff, and other persons as deemed 

appropriate by the Operating Committee. 

Meetings shall be held at such times and 

locations as shall from time to time be 

determined by the Operating Committee. 

Member Observers shall be entitled to 

[receive notice of all meetings of the 

Company and to] attend and participate in 

any discussion at any such meeting, unless 

attendance or participation would be 

inconsistent with the provisions of Section 

4.10(b), but shall not be entitled to vote on 

any matter. 

(b) Special meetings of the Operating 

Committee may be called by the Chair on at 

least 24 hours’ notice to each Voting 


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Representative and all persons eligible to 

attend Operating Committee meetings. 

(c) Any action requiring a vote can be taken 

at a meeting only if a quorum of all Voting 

Representatives is present. A quorum is equal 

to the minimum votes necessary to obtain 

approval under Section 4.3(b), i.e., Voting 

Representatives reflecting 2/3rd of Operating 

Committee votes eligible to vote on such 

action and SRO Voting Representatives 

reflecting 50% of SRO Voting Representative 

votes eligible to vote on such action. 

(i) Any Voting Representative recused from 

voting on a particular action (i) mandatorily 

pursuant to Section 4.10(b) or (ii) upon a 

Voting Representative’s voluntary recusal, 

shall not be considered in the numerator or 

denominator of the calculations in paragraph 

(c) for determining whether a quorum is 

present. 

(ii) A Voting Representative is considered 

present at a meeting only if such Voting 

Representative is either in physical 

attendance at the meeting or participating by 

conference telephone or other electronic 

means that enables each Voting 

Representative to hear and be heard by all 

others present at the meeting. 

(d) A summary of any action sought to be 

resolved at a meeting shall be sent to each 

Voting Representative entitled to vote on 

such matter at least one week prior to the 

meeting via electronic mail, portal 

notification, or regular U.S. or private mail 

(or if one week is not practicable, then with 

as much time as may be reasonably 

practicable under the circumstances); 

provided, however, that this requirement to 

provide a summary of any action prior to a 

meeting may be waived by the vote of the 

percentage of the Committee required to vote 

on any particular matter, under Section 4.3 

above. 

(e) Beginning with the first quarterly 

meeting of the Operating Committee 

following the Operative Date, the Chair of the 

Operating Committee shall be elected for a 

one-year term from the constituent SRO 

Voting Representatives (and an election for 

the Chair shall be held every year). Subject 

to the requirements of Section 4.3 hereof, the 

Chair shall have the authority to enter into 

contracts on behalf of the Company and 

otherwise bind the Company, but only as 

directed by the Operating Committee. The 

Chair shall designate a Person to act as 

Secretary to record the minutes of each 

meeting. The location of meetings shall be in 

a location capable of holding the number of 

attendees of such meetings, or such other 

locations as may from time to time be 

determined by the Operating Committee. 

(i) To elect a Chair, the Operating 

Committee will elicit nominations for those 

individuals to be considered for Chair. 

(ii) In the event that no nominated Person 

is elected by an affirmative vote of the 

Operating Committee pursuant to Section 

4.3, the Person(s) with the lowest number of 

votes will be eliminated from consideration. 

The Operating Committee will repeat this 

process until a Person is elected by 

affirmative vote of the Operating Committee 

pursuant to Section 4.3. In the event two 

candidates remain and neither is elected by 

an affirmative vote of the Operating 

Committee pursuant to Section 4.3, the 

Person receiving the most votes from SRO 

Voting Representatives will be elected. 

(f) Meetings may be held by conference 

telephone or other electronic means that 

enables each Voting Representative to hear 

and be heard by all others present at the 

meeting. 

(g) [Notwithstanding any other provision of 

this Agreement, ]SRO Voting 

Representatives, Member Observers, SEC 

Staff, and other persons as deemed 

appropriate by a majority vote of the SRO 

Voting Representatives may meet in 

Executive Session of the Operating 

Committee to discuss an item of business 

that falls within the topics identified in 

subsection (i) below and for which it is 

appropriate to exclude Non-SRO Voting 

Representatives. A request to create an 

Executive Session must be included on the 

written agenda for an Operating Committee 

meeting, along with the clearly stated 

rationale as to why such item to be discussed 

would be appropriate for Executive Session. 

The creation of an Executive Session will be 

by a majority vote of SRO Voting 

Representatives with votes allocated 

pursuant to Section 4.3(a)(1). The Executive 

Session shall only discuss the topic for 

which it was created and shall be disbanded 

upon fully discussing the topic. 

(i) Items for discussion within an Executive 

Session [should]shall be limited to [such]the 

following topics[ as]: 

(A) Any topic that requires discussion of 

Highly Confidential Information, except for 

discussions regarding contract negotiations 

with the Processors or the Administrator; 

(B) Vendor or Subscriber Audit Findings;[ 

and] 

(C) Litigation matters[.]; 

(D) Responses to regulators with respect to 

inquiries, examinations, or findings; and 

(E) Other discrete matters approved by the 

Operating Committee. 

(ii) [The list provided in subparagraph (i) 

is not dispositive of all matters that may by 

their nature require discussion in an 

Executive Session. ]The mere fact that a topic 

is controversial or a matter of dispute does 

not, by itself, make a topic appropriate for 

Executive Session. The minutes for an 

Executive Session shall include the reason 

for including any item in Executive Session. 

(iii) Requests to discuss a topic in 

Executive Session must be included on the 

written agenda for the Operating Committee 

meeting, along with the clearly stated 

rationale for each topic as to why such 

discussion is appropriate for Executive 

Session. Such rationale may be that the topic 

to be discussed falls within the list provided 

in subparagraph (g)(i). 

(iv) Any action that requires a vote in 

Executive Session will require a majority of 

the votes allocated in the manner described 

in Section 4.3(a) to SRO Voting 

Representatives eligible to vote on such 

action. 

Section 4.5 Certain Transactions. 

The fact that a Member or any of its 

Affiliates is directly or indirectly interested 

in or connected with any Person employed 

by the Company to render or perform a 

service, or from which or to whom the 

Company may buy or sell any property, shall 

not prohibit the Company from employing or 

dealing with such Person. 

Section 4.6 Company Opportunities. 

(a) Each Member, its Affiliates, and each of 

their respective equity holders, controlling 

persons and employees may have business 

interests and engage in business activities in 

addition to those relating to the Company. 

Neither the Company nor any Member shall 

have any rights by virtue of this Agreement 

in any business ventures of any such Person. 

(b) Each Member expressly acknowledges 

that (i) the other Members are permitted to 

have, and may presently or in the future 

have, investments or other business 

relationships with Persons engaged in the 

business of the Company other than through 

the Company (an ‘‘Other Business’’), (ii) the 

other Members have and may develop 

strategic relationships with businesses that 

are and may be competitive or 

complementary with the Company, (iii) the 

other Members shall not be obligated to 

recommend or take any action that prefers 

the interests of the Company or any Member 

over its own interests, (iv) none of the other 

Members will be prohibited by virtue of their 

ownership of equity in the Company or 

service on the Operating Committee (or body 

performing similar duties) from pursuing and 

engaging in any such activities, (v) none of 

the other Members will be obligated to 

inform or present to the Company any such 

opportunity, relationship, or investment, (vi) 

such Member will not acquire or be entitled 

to any interest or participation in any Other 

Business as a result of the participation 

therein of any of the other Members, and (vii) 

the involvement of another Member in any 

Other Business in and of itself will not 

constitute a conflict of interest by such 

Person with respect to the Company or any 

of the Members. 

Section 4.7 Subcommittees. 

(a) Subject to Section 4.1, the Operating 

Committee shall have the power and right, 

but not the obligation, to create and disband 

subcommittees of the Operating Committee 

and to determine the duties, responsibilities, 

powers, and composition of such 

subcommittees. Subcommittee chairs will be 

selected by [the Chair of ]the Operating 

Committee from SRO Voting Representatives 

or [Member Observers with input from the 

Operating Committee]Non-SRO Voting 

Representatives. 

(b) SRO Voting Representatives, Non-SRO 

Voting Representatives, Member Observers, 

SEC Staff, and other persons as deemed 

appropriate by the Operating Committee may 

attend meetings of any subcommittees. 

(c) Notwithstanding paragraph (b), SRO 

Voting Representatives, Member Observers, 

and other persons as deemed appropriate by 

majority vote of the SRO Voting 

Representatives may meet in a subcommittee 

to discuss an item [subject to the attorneyclient privilege of the Company or that is 

attorney work product of the Company]that 

exclusively affects the Members with respect 

to: (1) litigation matters or responses to 

regulators with respect to inquiries, 


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examinations, or findings; and (2) other 

discrete legal matters approved by the 

Operating Committee. 

(d) All subcommittees shall prepare 

minutes of all meetings and make those 

minutes available to all members of the 

Operating Committee. In the case of the legal 

subcommittee, those minutes shall include (i) 

attendance at the meeting; (ii) the subject 

matter of each item discussed; (iii) the 

rationale for referring the matter to the legal 

subcommittee; (iv) the privilege or privileges 

claimed with respect to that item; and (v) for 

each matter, if applicable, the basis on which 

the matter was determined to exclusively 

affect the SROs. 

Section 4.8 Officers. 

(a) [In addition to the Chair and Secretary, 

the Members]Except as provided in Section 

4.4(e), the Operating Committee may (but 

need not), from time to time, designate and 

appoint one or more persons as an Officer of 

the Company[ by a majority vote of the 

Members]. Other than the Chair, no Officer 

need be a Voting Representative. Any 

Officers so designated shall have such 

authority and perform such duties as the 

[Members]Operating Committee may, from 

time to time, delegate to them. Any such 

delegation may be revoked at any time by [a 

majority vote of the Members in their sole 

discretion. The Members]the Operating 

Committee. The Operating Committee may 

assign titles to particular Officers. Each 

Officer shall hold office until such Officer’s 

successor shall be duly designated or until 

such Officer’s death, resignation, or removal 

as provided in this Agreement. Any number 

of offices may be held by the same 

individual. Officers shall not be entitled to 

receive salary or other compensation, unless 

approved by the [Members by a majority 

vote]Operating Committee. 

(b) Any Officer may resign at any time. 

Such resignation shall be made in writing 

and shall take effect at the time specified in 

the notice, or if no time be specified, at the 

time of its receipt by the [Members]Operating 

Committee. The acceptance of a resignation 

shall not be necessary to make it effective. 

(c) Any Officer may be removed at any 

time [upon the majority vote of the 

Members]by the Operating Committee. 

Section 4.9 Commission Access to 

Information and Records. 

Nothing in this Agreement shall be 

interpreted to limit or impede the rights of 

the Commission to access information and 

records of the Company or any of the 

Members (including their employees) 

pursuant to U.S. federal securities laws and 

the rules and regulations promulgated 

thereunder. 

Section 4.10 Disclosure of Potential 

Conflicts of Interest; Recusal. 

(a) Disclosure Requirements. The Members 

(including any Member Observers), the 

Processors, the Administrator, the Non-SRO 

Voting Representatives, and each service 

provider or subcontractor engaged in 

Company business (including the audit of 

Subscribers’ data usage) that has access to 

Restricted or Highly Confidential information 

(for purposes of this section, ‘‘Disclosing 

Parties’’) shall complete the applicable 

questionnaire to provide the required 

disclosures set forth in subsection (c) below 

to disclose all material facts necessary to 

identify potential conflicts of interest. The 

Operating Committee, a Member, Processors, 

or Administrator may not use a service 

provider or subcontractor on Company 

business unless that service provider or 

subcontractor has agreed in writing to 

provide the disclosures required by this 

section and has submitted completed 

disclosures to the Administrator prior to 

starting work. If state laws, rules, or 

regulations, or applicable professional ethics 

rules or standards of conduct, would act to 

restrict or prohibit a Disclosing Party from 

making any particular required disclosure, a 

Disclosing Party shall refer to such law, rule, 

regulation, or professional ethics rule or 

standard and include in response to that 

disclosure the basis for its inability to 

provide a complete response. This does not 

relieve the Disclosing Party from disclosing 

any information it is not restricted from 

providing. 

(i) A potential conflict of interest may exist 

when personal, business, financial, or 

employment relationships could be 

perceived by a reasonable objective observer 

to affect the ability of a person to be 

impartial. 

(ii) Updates to Disclosures. Following a 

material change in the information disclosed 

pursuant to Section 4.10(a), a Disclosing 

Party shall promptly update its disclosures. 

Additionally, a Disclosing Party shall update 

annually any inaccurate information prior to 

the Operating Committee’s first quarterly 

meeting of a calendar year. 

(iii) Public Dissemination of Disclosures. 

The Disclosing Parties shall provide the 

Administrator with its disclosures and any 

required updates. The Administrator shall 

ensure that the disclosures are promptly 

posted to the Company’s website. 

(iv) The Company will arrange for 

Disclosing Parties that are not Members or 

Non-SRO Voting Representatives to comply 

with the required disclosures and recusals 

under this Section 4.10 and Exhibit B in their 

respective agreements with either the 

Company, a Member, the Administrator, or 

the Processors. 

(b) Recusal. 

(i) A Disclosing Party that is a Member may 

not appoint as its Voting Representative, 

alternate SRO Voting Representative, or 

Member Observer, a person that is 

responsible for or involved with the 

procurement for, or development, modeling, 

pricing, licensing, or sale of, PDP offered to 

customers of the CT Feeds if the person has 

a financial interest (including compensation) 

that is tied directly to the Disclosing Party’s 

market data business or the procurement of 

market data and if that compensation would 

cause a reasonable objective observer to 

expect the compensation to affect the 

impartiality of the representative. 

(ii) A Disclosing Party (including its 

representative(s), employees, and agents) will 

be recused from participating in Company 

activities if it has not submitted a required 

disclosure form or the Operating Committee 

votes that its disclosure form is materially 

deficient. The recusal will be in effect until 

the Disclosing Party submits a sufficiently 

complete disclosure form to the 

Administrator. 

(iii) A Disclosing Party, including its 

representative(s), and its Affiliates and their 

representative(s), are recused from voting on 

matters in which it or its Affiliate (i) is 

seeking a position or contract with the 

Company or (ii) have a position or contract 

with the Company and whose performance is 

being evaluated by the Company. 

(iv) All recusals, including a person’s 

determination of whether to voluntarily 

recuse himself or herself, shall be reflected in 

the meeting minutes. 

(c) Required Disclosures. As part of the 

disclosure regime, the Members, the 

Processors, the Administrator, Non-SRO 

Voting Representatives, and service providers 

and subcontractors must respond to 

questions that are tailored to elicit responses 

that disclose the potential conflicts of interest 

as set forth in Exhibit B. 

[(d) If the Commission’s approval order of 

the conflicts of interest policies filed by the 

CQ Plan, CTA Plan, or UTP Plan is stayed or 

overturned by a Governmental Authority, the 

requirements of this Section 4.10 and Exhibit 

B shall not apply.] 

Section 4.11 Confidentiality Policy. 

[(a) The Members and Non-SRO Voting 

Representatives]All Covered Persons are 

subject to the Confidentiality Policy set forth 

in Exhibit C to the Plan. The Company will 

arrange for Covered Persons that are not 

[Members]SRO Voting Representatives, 

Member Observers, or Non-SRO Voting 

Representatives to comply with the 

Confidentiality Policy under their respective 

agreements with either the Company, a 

Member, the Administrator, or the 

Processors. 

[(b) If the Commission’s approval order of 

the confidentiality policy filed by the CQ 

Plan, CTA Plan, or UTP Plan is stayed or 

overturned by a Governmental Authority, the 

requirements of this Section 4.11 and Exhibit 

C shall not apply.] 

Article V. 

THE PROCESSORS; INFORMATION; 

INDEMNIFICATION 

Section 5.1 General Functions of the 

Processors. 

Subject to the general direction of the 

Operating Committee, as more fully set forth 

in the agreement to be entered into between 

the Company and the Processors (the 

‘‘Processor Services Agreements’’), the 

Company shall require the Processors to 

perform certain processing functions on 

behalf of the Company. Among other things, 

the Company shall require the Processors to 

collect from the Members, and consolidate 

and disseminate to Vendors and Subscribers, 

Transaction Reports and Quotation 

Information in Eligible Securities in a 

manner designed to assure the prompt, 

accurate, and reliable collection, processing, 

and dissemination of information with 

respect to all Eligible Securities in a fair and 

non-discriminatory manner. 


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Section 5.2 Evaluation of the Processors. 

The Processors’ performance of their 

functions under the Processor Services 

Agreements shall be subject to review at any 

time as determined by a vote of the Operating 

Committee pursuant to Section 4.3; provided, 

however, that a review shall be conducted at 

least once every two calendar years but not 

more frequently than once each calendar year 

(unless the Processors have materially 

defaulted in their obligations under the 

Processor Services Agreements and such 

default has not been cured within the 

applicable cure period set forth in the 

Processor Services Agreements, in which 

event such limitation shall not apply). The 

Operating Committee may review the 

Processors at staggered intervals. 

Section 5.3 Process for Selecting New 

Processors. 

(a) No later than upon the termination or 

withdrawal of a Processor or the expiration 

of a Processor Services Agreement with a 

Processor, the Operating Committee shall 

establish procedures for selecting a new 

Processor (the ‘‘Processor Selection 

Procedures’’). The Operating Committee, as 

part of the process of establishing Processor 

Selection Procedures, may solicit and 

consider the timely comment of any entity 

affected by the operation of this Agreement. 

(b) The Processor Selection Procedures 

shall be established by the affirmative vote of 

the Operating Committee pursuant to Section 

4.3, and shall set forth, at a minimum: 

(i) the entity that will: 

(A) draft the Operating Committee’s 

request for proposal for bids on a new 

Processor; 

(B) assist the Operating Committee in 

evaluating bids for the new Processor; and 

(C) otherwise provide assistance and 

guidance to the Operating Committee in the 

selection process; 

(ii) the minimum technical and operational 

requirements to be fulfilled by the Processor; 

(iii) the criteria to be considered in 

selecting the Processor; and 

(iv) the entities (other than Voting 

Representatives) that are eligible to comment 

on the selection of the Processor. 

Section 5.4 Transmission of Information to 

Processors by Members. 

(a) Quotation Information. 

(i) Each Member shall, during the time it 

is open for trading, be responsible for 

promptly collecting and transmitting to the 

Processors accurate Quotation Information in 

Eligible Securities through any means set 

forth in the Processor Services Agreements to 

ensure that the Company complies with its 

obligations under the Processor Services 

Agreements. 

(ii) Quotation Information shall include: 

(A) identification of the Eligible Security, 

using the Listing Market’s symbol; 

(B) the price bid and offered, together with 

size; 

(C) for FINRA, the FINRA Participant along 

with the FINRA Participant’s market 

participant identification or Member from 

which the quotation emanates; 

(D) appropriate timestamps; 

(E) identification of quotations that are not 

firm; and 

(F) through appropriate codes and 

messages, withdrawals and similar matters. 

(iii) In addition, Quotation Information 

shall include: 

(A) in the case of a national securities 

exchange, the reporting Participant’s 

matching engine publication timestamp; or 

(B) in the case of FINRA, the quotation 

publication timestamp that FINRA’s bidding 

or offering member reports to FINRA’s 

quotation facility in accordance with FINRA 

rules. In addition, if FINRA’s quotation 

facility provides a proprietary feed of its 

quotation information, then the quotation 

facility shall also furnish the Processors with 

the time of the quotation as published on the 

quotation facility’s proprietary feed. FINRA 

shall convert any quotation times reported to 

it to nanoseconds and shall furnish such 

times to the Processors in nanoseconds since 

Epoch. 

(b) Transaction Reports. 

(i) Each Member shall, during the time it 

is open for trading, be responsible for 

promptly transmitting to the Processor 

Transaction Reports in Eligible Securities 

executed in its Market by means set forth in 

the Processor Services Agreements. 

(ii) Transaction Reports shall include: 

(A) identification of the Eligible Security, 

using the Listing Market’s symbol; 

(B) the number of shares in the transaction; 

(C) the price at which the shares were 

purchased or sold; 

(D) the buy/sell/cross indicator; 

(E) appropriate timestamps; 

(F) the Market of execution; and 

(G) through appropriate codes and 

messages, late or out-of-sequence trades, 

corrections, and similar matters. 

(iii) In addition, Transaction Reports shall 

include the time of the transaction as 

identified in the Participant’s matching 

engine publication timestamp. However, in 

the case of FINRA, the time of the transaction 

shall be the time of execution that a FINRA 

member reports to a FINRA trade reporting 

facility in accordance with FINRA rules. In 

addition, if the FINRA trade reporting facility 

provides a proprietary feed of trades reported 

by the trade reporting facility to the 

Processor, then the FINRA trade reporting 

facility shall also furnish the Processors with 

the time of the transmission as published on 

the facility’s proprietary feed. The FINRA 

trade reporting facility shall convert times 

that its members report to it to nanoseconds 

and shall furnish such times to the 

Processors in nanoseconds since Epoch. 

(iv) Each Member shall (a) transmit all 

Transaction Reports in Eligible Securities to 

the Processors as soon as practicable, but not 

later than 10 seconds, after the time of 

execution, (b) establish and maintain 

collection and reporting procedures and 

facilities reasonably designed to comply with 

this requirement, and (c) designate as ‘‘late’’ 

any last sale price not collected and reported 

in accordance with the above-referenced 

procedures or as to which the Member has 

knowledge that the time interval after the 

time of execution is significantly greater than 

the time period referred to above. The 

Members shall seek to reduce the time period 

for reporting last sale prices to the Processors 

as conditions warrant. 

(v) The following types of transactions are 

not required to be reported to the Processors 

pursuant to this Agreement: 

(A) transactions that are part of a primary 

distribution by an issuer or of a registered 

secondary distribution or of an unregistered 

secondary distribution; 

(B) transactions made in reliance on 

Section 4(a)(2) of the Securities Act of 1933; 

(C) transactions in which the buyer and the 

seller have agreed to trade at a price 

unrelated to the current market for the 

security (e.g., to enable the seller to make a 

gift); 

(D) the acquisition of securities by a 

broker-dealer as principal in anticipation of 

making an immediate exchange distribution 

or exchange offering on an exchange; 

(E) purchases of securities pursuant to a 

tender offer; 

(F) purchases or sales of securities effected 

upon the exercise of an option pursuant to 

the terms thereof or the exercise of any other 

right to acquire securities at a pre-established 

consideration unrelated to the current 

market; and 

(G) transfers of securities that are expressly 

excluded from trade reporting under FINRA 

rules. 

(c) The following symbols shall be used to 

denote the applicable Member: 

Code Member 

A ......... NYSE American LLC. 

Z ......... Cboe BZX Exchange, Inc. 

Y ......... Cboe BYX Exchange, Inc. 

B ......... Nasdaq BX, Inc. 

W ........ Cboe Exchange, Inc. 

M ........ NYSE Chicago, Inc. 

J ......... Cboe EDGA Exchange, Inc. 

K ......... Cboe EDGX Exchange, Inc. 

I .......... Nasdaq ISE, LLC. 

V ......... Investors’ Exchange LLC. 

D ........ Financial Industry Regulatory Authority, 

Inc. 

Q ........ The Nasdaq Stock Market LLC. 

C ........ NYSE National, Inc. 

N ........ New York Stock Exchange LLC. 

P ......... NYSE Arca, Inc. 

X ......... Nasdaq PHLX LLC. 

L ......... Long-Term Stock Exchange Inc. 

U ........ MEMX LLC. 

(d) Indemnification. 

(i) Each Member agrees, severally and not 

jointly, to indemnify and hold harmless and 

defend the Company, each other Member, the 

Processors, the Administrator, the Operating 

Committee, and each of their respective 

directors, officers, employees, agents, and 

Affiliates (each, an ‘‘Member Indemnified 

Party’’) from and against any and all loss, 

liability, claim, damage, and expense 

whatsoever incurred or threatened against 

such Member Indemnified Party as a result 

of a system error or disruption at such 

Member’s Market affecting any Transaction 

Reports, Quotation Information, or other 

information reported to the Processors by 

such Member and disseminated by the 

Processors to Vendors and Subscribers. This 

indemnity shall be in addition to any liability 

that the indemnifying Member may 

otherwise have. 

(ii) Promptly after receipt by a Member 

Indemnified Party of notice of the 

commencement of any action, such Member 

Indemnified Party will, if it intends to make 


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a claim in respect thereof against an 

indemnifying Member, notify the 

indemnifying Member in writing of the 

commencement thereof; provided, however, 

that the failure to so notify the indemnifying 

Member will only relieve the indemnifying 

Member from any liability which it may have 

to any Member Indemnified Party to the 

extent such indemnifying Member is actually 

prejudiced by such failure. In case any such 

action is brought against any Member 

Indemnified Party and it promptly notifies an 

indemnifying Member of the commencement 

thereof, the indemnifying Member will be 

entitled to participate in, and, to the extent 

that it elects (jointly with any other 

indemnifying Member similarly notified), to 

assume and control the defense thereof with 

counsel chosen by it. After notice from the 

indemnifying Member of its election to 

assume the defense thereof, the indemnifying 

Member will not be liable to such 

Indemnified Party for any legal or other 

expenses subsequently incurred by such 

Member Indemnified Party in connection 

with the defense thereof but the Member 

Indemnified Party may, at its own expense, 

participate in such defense by counsel 

chosen by it without, however, impairing the 

indemnifying Member’s control of the 

defense. If the indemnifying Member has 

assumed the defense in accordance with the 

terms hereof, the indemnifying Member may 

enter into a settlement or consent to any 

judgment without the prior written consent 

of the Member Indemnified Party if (i) such 

settlement or judgment involves monetary 

damages only, all of which will be fully paid 

by the indemnifying Member and without 

admission of fault or culpability on behalf of 

any Member Indemnified Party, and (ii) a 

term of the settlement or judgment is that the 

Person or Persons asserting such claim 

unconditionally and irrevocably release all 

Member Indemnified Parties from all liability 

with respect to such claim; otherwise, the 

consent of the Member Indemnified Party 

shall be required in order to enter into any 

settlement of, or consent to the entry of a 

judgment with respect to, any claim (which 

consent shall not be unreasonably withheld, 

delayed, or conditioned). 

Section 5.5 Operational Issues. 

(a) Each Member shall be responsible for 

collecting and validating quotes and last sale 

reports within its own system prior to 

transmitting this data to the Processors. 

(b) Each Member may utilize a dedicated 

Member line into the Processors to transmit 

Transaction Reports and Quotation 

Information to the Processors. 

(c) Whenever a Member determines that a 

level of trading activity or other unusual 

market conditions prevent it from collecting 

and transmitting Transaction Reports or 

Quotation Information to the Processor, or 

where a trading halt or suspension in an 

Eligible Security is in effect in its Market, the 

Member shall promptly notify the Processors 

of such condition or event and shall resume 

collecting and transmitting Transaction 

Reports and Quotation Information to it as 

soon as the condition or event is terminated. 

In the event of a system malfunction 

resulting in the inability of a Member or its 

members to transmit Transaction Reports or 

Quotation Information to the Processors, the 

Member shall promptly notify the Processors 

of such event or condition. Upon receiving 

such notification, the Processors shall take 

appropriate action, including either closing 

the quotation or purging the system of the 

affected quotations. 

Article VI. 

THE ADMINISTRATOR 

Section 6.1 General Functions of the 

Administrator. 

Subject to the general direction of the 

Operating Committee, as more fully set forth 

in the agreement entered into between the 

Company and the Administrator (the 

‘‘Administrative Services Agreement’’), the 

Administrator shall perform administrative 

functions on behalf of the Company 

including recordkeeping; administering 

Vendor and Subscriber contracts; 

administering Fees, including billing, 

collection, and auditing of Vendors and 

Subscribers; administering Distributions; tax 

functions of the Company; and the 

preparation of the Company’s audited 

financial reports. 

Section 6.2 Independence of the 

Administrator. 

The Administrator may not be owned or 

controlled by a corporate entity that, either 

directly or via another subsidiary, offers for 

sale its own PDP. 

Section 6.[2]3 Evaluation of the 

Administrator. 

The Administrator’s performance of its 

functions under the Administrative Services 

Agreement shall be subject to review at any 

time as determined by an affirmative vote of 

the Operating Committee pursuant to Section 

4.3; provided, however, that a review shall be 

conducted at least once every two calendar 

years but not more frequently than once each 

calendar year (unless the Administrator has 

materially defaulted in its obligations under 

the Administrative Services Agreement and 

such default has not been cured within the 

applicable cure period set forth in the 

Administrative Services Agreement, in which 

event such limitation shall not apply). The 

Operating Committee shall appoint a 

subcommittee or other Persons to conduct 

the review. The Company shall require the 

reviewer to provide the Operating Committee 

with a written report of its findings and to 

make recommendations (if necessary), 

including with respect to the continuing 

operation of the Administrator. The 

Administrator shall be required to assist and 

participate in such review. The Operating 

Committee shall notify the Commission of 

any recommendations it may approve as a 

result of the review of the Administrator and 

shall supply the Commission with a copy of 

any reports that may be prepared in 

connection therewith. 

Section 6.[3]4 Process for Selecting New 

Administrator 

Prior to the Operative Date, upon the 

termination or withdrawal of the 

Administrator, or upon the expiration of the 

Administrative Services Agreement, the 

Operating Committee shall establish 

procedures for selecting a new Administrator 

(the ‘‘Administrator Selection Procedures’’).[ 

The Administrator selected by the Operating 

Committee may not be owned or controlled 

by a corporate entity that, either directly or 

via another subsidiary, offers for sale its own 

PDP.] The Operating Committee, as part of 

the process of establishing Administrator 

Selection Procedures, may solicit and 

consider the timely comment of any entity 

affected by the operation of this Agreement. 

The Administrator Selection Procedures shall 

be established by the [Voting 

Representatives]Operating Committee 

pursuant to Section 4.3, and shall set forth, 

at a minimum: 

(a) the entity that will: 

(i) draft the Operating Committee’s request 

for proposal for bids on a new Administrator; 

(ii) assist the Operating Committee in 

evaluating bids for the new Administrator; 

and 

(iii) otherwise provide assistance and 

guidance to the Operating Committee in the 

selection process. 

(b) the minimum technical and operational 

requirements to be fulfilled by the 

Administrator; 

(c) the criteria to be considered in selecting 

the Administrator; and 

(d) the entities (other than Voting 

Representatives) that are eligible to comment 

on the selection of the Administrator. 

Article VII. 

REGULATORY MATTERS 

Section 7.1 Regulatory and Operational 

Halts. 

(a) Operational Halts. A Member shall 

notify the Processors if it has concerns about 

its ability to collect and transmit quotes, 

orders, or last sale prices, or where it has 

declared an Operational Halt or suspension 

of trading in one or more Eligible Securities, 

pursuant to the procedures adopted by the 

Operating Committee. 

(b) Regulatory Halts. 

(i) The Primary Listing Market may declare 

a Regulatory Halt in trading for any security 

for which it is the Primary Listing Market: 

(A) as provided for in the rules of the 

Primary Listing Market; 

(B) if it determines there is a SIP Outage, 

Material SIP Latency, or Extraordinary 

Market Activity; or 

(C) in the event of national, regional, or 

localized disruption that necessitates a 

Regulatory Halt to maintain a fair and orderly 

market. 

(ii) In making a determination to declare a 

Regulatory Halt under subparagraph (b)(i), 

the Primary Listing Market will consider the 

totality of information available concerning 

the severity of the issue, its likely duration, 

and potential impact on Member Firms and 

other market participants and will make a 

good-faith determination that the criteria of 

subparagraph (b)(i) have been satisfied and 

that a Regulatory Halt is appropriate. The 

Primary Listing Market will consult, if 

feasible, with the affected Trading Center(s), 

the other Members, or the Processors, as 

applicable, regarding the scope of the issue 

and what steps are being taken to address the 


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issue. Once a Regulatory Halt under 

subparagraph (b)(i) has been declared, the 

Primary Listing Market will continue to 

evaluate the circumstances to determine 

when trading may resume in accordance with 

the rules of the Primary Listing Market. 

(c) Initiating a Regulatory Halt. 

(i) The start time of a Regulatory Halt is 

when the Primary Listing Market declares the 

halt, regardless of whether an issue with 

communications impacts the dissemination 

of the notice. 

(ii) If a Processor is unable to disseminate 

notice of a Regulatory Halt or the Primary 

Listing Market is not open for trading, the 

Primary Listing Market will take reasonable 

steps to provide notice of a Regulatory Halt, 

which shall include both the type and start 

time of the Regulatory Halt, by dissemination 

through: 

(A) PDP; 

(B) posting on a publicly-available Member 

website; or 

(C) system status messages. 

(iii) Except in exigent circumstances, the 

Primary Listing Market will not declare a 

Regulatory Halt retroactive to a time earlier 

than the notice of such halt. 

(iv) Resumption of Trading After 

Regulatory Halts Other Than SIP Halts. The 

Primary Listing Market will declare a 

resumption of trading when it makes a goodfaith determination that trading may resume 

in a fair and orderly manner and in 

accordance with its rules. 

(v) For a Regulatory Halt that is initiated 

by another Member that is a Primary Listing 

Market, a Member may resume trading after 

the Member receives notification from the 

Primary Listing Market that the Regulatory 

Halt has been terminated. 

(d) Resumption of Trading After SIP Halt. 

(i) The Primary Listing Market will 

determine the SIP Halt Resume Time. In 

making such determination, the Primary 

Listing Market will make a good-faith 

determination and consider the totality of 

information to determine whether resuming 

trading would promote a fair and orderly 

market, including input from the Processors, 

the other Members, or the operator of the 

system in question (as well as any Trading 

Center(s) to which such system is linked), 

regarding operational readiness to resume 

trading. The Primary Listing Market retains 

discretion to delay the SIP Halt Resume Time 

if it believes trading will not resume in a fair 

and orderly manner. 

(ii) The Primary Listing Market will 

terminate a SIP Halt with a notification that 

specifies a SIP Halt Resume Time. The 

Primary Listing Market shall provide a 

minimum notice of a SIP Halt Resume Time, 

as specified by the rules of the Primary 

Listing Market, during which period market 

participants may enter quotes and orders in 

the affected securities. During Regular 

Trading Hours, the last SIP Halt Resume 

Time before the end of Regular Trading 

Hours shall be an amount of time as specified 

by the rules of the Primary Listing Market. 

The Primary Listing Market may stagger the 

SIP Halt Resume Times for multiple symbols 

in order to reopen in a fair and orderly 

manner. 

(iii) During Regular Trading Hours, if the 

Primary Listing Market does not open a 

security within the amount of time as 

specified by the rules of the Primary Listing 

Market after the SIP Halt Resume Time, a 

Member may resume trading in that security. 

Outside Regular Trading Hours, a Member 

may resume trading immediately after the 

SIP Halt Resume Time. 

(e) Member to Halt Trading During 

Regulatory Halt. A Member will halt trading 

for any security traded on its Market if the 

Primary Listing Market declares a Regulatory 

Halt for the security. 

(f) Communications. Whenever, in the 

exercise of its regulatory functions, the 

Primary Listing Market for an Eligible 

Security determines it is appropriate to 

initiate a Regulatory Halt, the Primary Listing 

Market will notify all other Members and the 

affected Processors of such Regulatory Halt as 

well as provide notice that a Regulatory Halt 

has been lifted using such protocols and 

other emergency procedures as may be 

mutually agreed to between the Members and 

the Primary Listing Market. The affected 

Processors shall disseminate to Members 

notice of the Regulatory Halt (as well as 

notice of the lifting of a Regulatory Halt) (i) 

through the CT Feeds or (ii) any other means 

the affected Processors, in its sole discretion, 

considers appropriate. Each Member shall be 

required to continuously monitor these 

communication protocols established by the 

Operating Committee and the Processors 

during market hours, and the failure of a 

Member to do so shall not prevent the 

Primary Listing Market from initiating a 

Regulatory Halt in accordance with the 

procedures specified herein. 

Section 7.2 Hours of Operation of the 

System. 

(a) Quotation Information shall be entered, 

as applicable, by Members as to all Eligible 

Securities in which they make a market 

during Regular Trading Hours on all days the 

Processors are in operation. Transaction 

Reports shall be entered between 9:30 a.m. 

and 4:00:10 p.m. ET by Members as to all 

Eligible Securities in which they execute 

transactions during Regular Trading Hours 

on all days the Processors are in operation. 

(b) Members that execute transactions in 

Eligible Securities outside of Regular Trading 

Hours, shall report such transactions as 

follows: 

(i) transactions in Eligible Securities 

executed between 4:00 a.m. and 9:29:59 a.m. 

ET and between 4:00:01 p.m. and 8:00 p.m. 

ET, shall be designated with an appropriate 

indicator to denote their execution outside 

normal market hours; 

(ii) transactions in Eligible Securities 

executed after 8:00 p.m. and before 12:00 

a.m. (midnight) shall be reported to the 

Processors between the hours of 4:00 a.m. 

and 8:00 p.m. ET on the next business day 

(T+1), and shall be designated ‘‘as/of’’ trades 

to denote their execution on a prior day, and 

be accompanied by the time of execution; 

(iii) transactions in Eligible Securities 

executed between 12:00 a.m. (midnight) and 

4:00 a.m. ET shall be transmitted to the 

Processors between 4:00 a.m. and 9:30 a.m. 

ET, on trade date, shall be designated with 

an appropriate indicator to denote their 

execution outside normal market hours, and 

shall be accompanied by the time of 

execution; and 

(iv) transactions reported pursuant to this 

Section 7.3 shall be included in the 

calculation of total trade volume for purposes 

of determining Net Distributable Operating 

Revenue, but shall not be included in the 

calculation of the daily high, low, or last sale. 

(c) Late trades shall be reported in 

accordance with the rules of the Member in 

whose Market the transaction occurred and 

can be reported between the hours of 4:00 

a.m. and 8:00 p.m. ET. 

(d) The Processors shall collect, process 

and disseminate Quotation Information in 

Eligible Securities at other times between 

4:00 a.m. and 9:30 a.m. ET, and after 4:00 

p.m. ET, when any Member or FINRA 

Participant is open for trading, until 8:00 

p.m. ET (the ‘‘Additional Period’’); provided, 

however, that the National Best Bid and Offer 

quotation will not be disseminated before 

4:00 a.m. or after 8:00 p.m. ET. Members that 

enter Quotation Information or submit 

Transaction Reports to the Processors during 

the Additional Period shall do so for all 

Eligible Securities in which they enter 

quotations. 

Article VIII. 

CAPITAL CONTRUBITIONS; CAPITAL 

ACCOUNTS 

Section 8.1 Capital Accounts. 

(a) A separate capital account (‘‘Capital 

Account’’) shall be established and 

maintained by the Company for each Member 

in accordance with section 704(b) of the Code 

and Treasury Regulation section 1.704–1 

(b)(2)(iv). There shall be credited to each 

Member’s Capital Account (i) the Capital 

Contributions (at fair market value in the case 

of contributed property) made by such 

Member (which shall be deemed to be zero 

for the initial Members), (ii) allocations of 

Company profits and gain (or items thereof) 

to such Member pursuant to Section [10]9.2 

and (iii) any recaptured tax credits, or 

portion thereof, to the extent such increase to 

the tax basis of a Member’s interest in the 

Company may be allowed pursuant to the 

Code. Each Member’s Capital Account shall 

be decreased by (x) the amount of 

distributions (at fair market value in the case 

of property distributed in kind) to such 

Member, (y) allocations of Company losses to 

such Member (including expenditures which 

can neither by capitalized nor deducted for 

tax purposes, organization and syndication 

expenses not subject to amortization and loss 

on sale or disposition of the Company’s 

assets, whether or not disallowed under 

sections 267 or 707 of the Code) pursuant to 

Section [10]9.2 and (z) any tax credits, or 

portion thereof, as may be required to be 

charged to the tax basis of a Membership 

Interest pursuant to the Code. Capital 

Accounts shall not be adjusted to reflect a 

Member’s share of liabilities under section 

752 of the Code. 

(b) The fair market value of contributed, 

distributed, or revalued property shall be 

agreed to by the Operating Committee or, if 

there is no such agreement, by an appraisal. 

(c) The foregoing provisions and the other 

provisions of this Agreement relating to the 


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maintenance of Capital Accounts are 

intended to comply with Treasury Regulation 

section 1.704–1(b) promulgated under 

section 704(b) of the Code, and shall be 

interpreted and applied in a manner 

consistent with such Treasury Regulations. 

Section 8.2 Additional Capital 

Contributions. 

Except with the approval of the Operating 

Committee or as otherwise provided in this 

Section 8.2, no Member shall be obligated or 

permitted to make any additional 

contribution to the capital of the Company. 

The Members agree to make additional 

Capital Contributions from time to time as 

appropriate in respect of reasonable 

administrative and other reasonable expenses 

of the Company. 

Section 8.3 Distributions. 

Except as set forth in this Section 8.3 and 

Section 11.2, and subject to the provisions of 

Section 13.1, Distributions shall be made to 

the Members at the times and in the aggregate 

amounts set forth in Exhibit D. 

Notwithstanding any provisions to the 

contrary contained in this Agreement, the 

Company shall not make a Distribution to a 

Member on account of its interest in the 

Company if such Distribution would violate 

Section 18–607 of the Delaware Act or other 

Applicable Law. Distributions may be made 

in cash or, if determined by the Operating 

Committee, in-kind. The Operating 

Committee may reserve amounts for 

anticipated expenses or contingent liabilities 

of the Company. In the event that additional 

Capital Contributions are called for, and any 

Member fails to provide the full amount of 

such additional Capital Contributions as set 

forth in the relevant resolution of the 

Operating Committee, any Distributions to be 

made to such defaulting Member shall be 

reduced by the amount of any required but 

unpaid Capital Contribution due from such 

Member. 

Article IX. 

ALLOCATIONS 

Section 9.1 Calculation of Profits and 

Losses. 

To the fullest extent permitted by 

Applicable Law, the profits and losses of the 

Company shall be determined for each fiscal 

year in a manner consistent with GAAP. 

Section 9.2 Allocation of Profits and 

Losses. 

(a) Except as otherwise set forth in this 

Section 9.2, for Capital Account purposes, all 

items of income, gain, loss, and deduction 

shall be allocated among the Members in 

accordance with Exhibit D. 

(b) For federal, state and local income tax 

purposes, items of income, gain, loss, 

deduction, and credit shall be allocated to 

the Members in accordance with the 

allocations of the corresponding items for 

Capital Account purposes under this Section 

9.2, except that items with respect to which 

there is a difference between tax and book 

basis will be allocated in accordance with 

Section 704(c) of the Code, the Treasury 

Regulations thereunder and Treasury 

Regulations Section 1.704–1(b)(4)(i). 

(c) Notwithstanding any provision set forth 

in this Section 9.2, no item of deduction or 

loss shall be allocated to a Member to the 

extent the allocation would cause a negative 

balance in such Member’s Capital Account 

(after taking into account the adjustments, 

allocations and distributions described in 

Treasury Regulations Sections 1.704– 

1(b)(2)(ii)(d)(4), (5) and (6)) that exceeds the 

amount that such Member would be required 

to reimburse the Company pursuant to this 

Agreement or Applicable Law. 

(d) In the event any Member unexpectedly 

receives any adjustments, allocations, or 

distributions described in Treasury 

Regulations Sections 1.704–1(b)(2)(ii)(d)(4), 

(5) and (6), items of the Company’s income 

and gain shall be specially allocated to such 

Member in an amount and manner sufficient 

to eliminate as quickly as possible any deficit 

balance in its Capital Account created by 

such adjustments, allocations or distributions 

in excess of that permitted under Section 

[10]9.2(c). Any special allocations of items of 

income or gain pursuant to this Section 

[10]9.2(d) shall be taken into account in 

computing subsequent allocations pursuant 

to this Section [10]9.2 so that the net amount 

of any items so allocated and all other items 

allocated to each Member pursuant to this 

Section [10]9.2 shall, to the extent possible, 

be equal to the net amount that would have 

been allocated to each such Member 

pursuant to the provisions of this Section 

[10]9.2 if such unexpected adjustments, 

allocations or distributions had not occurred. 

Article X. 

RECORDS AND ACCOUNTING; REPORTS 

Section 10.1 Accounting. 

(a) The Operating Committee shall 

maintain a system of accounting which 

enables the Company to produce accounting 

records and information substantially 

consistent with GAAP. The Fiscal Year of the 

Company shall be the calendar year unless 

Applicable Law requires a different Fiscal 

Year. 

(b) All matters concerning accounting 

procedures shall be determined by the 

Operating Committee. 

Section 10.2 Tax Status; Returns. 

(a) It is the intent of this Company and the 

Members that this Company shall be treated 

as a partnership for federal, state and local 

income tax purposes. Neither the Company 

nor any Member shall make an election for 

the Company to be classified as other than a 

partnership pursuant to Treasury Regulations 

Section 301.7701–3 or otherwise. 

(b) The Company shall cause federal, state, 

and local income tax returns for the 

Company to be prepared and timely filed 

with the appropriate authorities and shall 

arrange for the timely delivery to the 

Members of such information as is necessary 

for such Members to prepare their federal, 

state and local tax returns. All tax returns 

shall be prepared in a manner consistent 

with the Distributions made in accordance 

with Exhibit D. 

Section 10.3 Partnership Representative. 

(a) The Operating Committee shall appoint 

an entity as the ‘‘Partnership Representative’’ 

of the Company for purposes of Section 6223 

of the Code and the Treasury Regulations 

promulgated thereunder, and all federal, 

state, and local Tax audits and litigation shall 

be conducted under the direction of the 

Partnership Representative. 

(b) The Partnership Representative shall 

use reasonable efforts to inform each Member 

of all significant matters that may come to its 

attention by giving notice thereof and to 

forward to each Member copies of all 

significant written communications it may 

receive in such capacity. The Partnership 

Representative shall consult with the 

Members before taking any material actions 

with respect to tax matters, including actions 

relating to (i) an IRS examination of the 

Company commenced under Section 6231(a) 

of the Code, (ii) a request for administrative 

adjustment filed by the Company under 

Section 6227 of the Code, (iii) the filing of 

a petition for readjustment under Section 

6234 of the Code with respect to a final 

notice of partnership adjustment, (iv) the 

appeal of an adverse judicial decision, and 

(v) the compromise, settlement, or dismissal 

of any such proceedings. 

(c) The Partnership Representative shall 

not compromise or settle any tax audit or 

litigation affecting the Members without the 

approval of a majority of Members. Any 

material proposed action, inaction, or 

election to be taken by the Partnership 

Representative, including the election under 

Section 6226(a)(1) of the Code, shall require 

the prior approval of a majority of Members. 

Article XI. 

DISSOLUTION AND TERMINATION 

Section 11.1 Dissolution of Company. 

The Company shall dissolve, and its assets 

and business shall be wound up, upon the 

occurrence of any of the following events: 

(a) Unanimous written consent of the 

Members to dissolve the Company; 

(b) The sale or other disposition of all or 

substantially all the Company’s assets 

outside the ordinary course of business; 

(c) An event which makes it unlawful or 

impossible for the Company business to be 

continued; 

(d) The withdrawal of one or more 

Members such that there is only one 

remaining Member; or 

(e) The entry of a decree of judicial 

dissolution under § 18–802 of the Delaware 

Act. 

Section 11.2 Liquidation and Distribution. 

Following the occurrence of an event 

described in Section 11.1, the Members shall 

appoint a liquidating trustee who shall wind 

up the affairs of the Company by (i) selling 

its assets in an orderly manner (so as to avoid 

the loss normally associated with forced 

sales), and (ii) applying and distributing the 

proceeds of such sale, together with other 

funds held by the Company: (a) first, to the 

payment of all debts and liabilities of the 

Company; (b) second, to the establishments 

of any reserves reasonably necessary to 

provide for any contingent recourse liabilities 

and obligations; (c) third, to the Members in 

accordance with Exhibit D; and (d) fourth, to 

the Members as determined by a majority of 

Members. 


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Section 11.3 Termination. 

Each of the Members shall be furnished 

with a statement prepared by the 

independent accountants retained on behalf 

of the Company, which shall set forth the 

assets and liabilities of the Company as of the 

date of the final distribution of Company’s 

assets under Section [10]11.2 and the net 

profit or net loss for the fiscal period ending 

on such date. Upon compliance with the 

distribution plan set forth in Section 

[10]11.2, the Members shall cease to be such, 

and the liquidating trustee shall execute, 

acknowledge, and cause to be filed a 

certificate of cancellation of the Company. 

Upon completion of the dissolution, winding 

up, liquidation, and distribution of the 

liquidation proceeds, the Company shall 

terminate. 

Article XII. 

EXCULPATION AND INDEMNIFICATION 

Section 12.1 Exculpation. 

Each Member, by and for itself, each of its 

Affiliates and each of its and their respective 

equity holders, directors, officers, controlling 

persons, partners, employees, successors and 

assigns, hereby acknowledges and agrees that 

it is the intent of the Company and each 

Member that the liability of each Member 

and each individual currently or formerly 

serving as an SRO Voting Representative or 

Non-SRO Voting Representative (each, an 

‘‘Exculpated Party’’) be limited to the 

maximum extent permitted by Applicable 

Law or as otherwise expressly provided 

herein. In accordance with the foregoing, the 

Members hereby acknowledge and agree that: 

(a) To the maximum extent permitted by 

Applicable Law or as otherwise expressly 

provided herein, no present or former 

Exculpated Party or any of such Exculpated 

Party’s Affiliates, heirs, successors, assigns, 

agents or representatives shall be liable to the 

Company or any Member for any loss 

suffered in connection with a breach of any 

fiduciary duty, errors in judgment or other 

acts or omissions by such Exculpated Party; 

provided, however, that this provision shall 

not eliminate or limit the liability of such 

Exculpated Party for (i) acts or omissions 

which involve gross negligence, willful 

misconduct or a knowing violation of law, or 

(ii) as provided in Section 5.4(d) hereof, 

losses resulting from such Exculpated Party’s 

Transaction Reports, Quotation Information 

or other information reported to the 

Processors by such Exculpated Party 

(collectively ‘‘Non-Exculpated Items’’). Any 

Exculpated Party may consult with counsel 

and accountants in respect of Company 

affairs, and provided such Person acts in 

good faith reliance upon the advice or 

opinion of such counsel or accountants, such 

Person shall not be liable for any loss 

suffered in reliance thereon. 

(b) Notwithstanding anything to the 

contrary contained herein, whenever in this 

Agreement or any other agreement 

contemplated herein or otherwise, an 

Exculpated Party is permitted or required to 

take any action or to make a decision in its 

‘‘sole discretion’’ or ‘‘discretion’’ or that it 

deems ‘‘necessary,’’ or ‘‘necessary or 

appropriate’’ or under a grant of similar 

authority or latitude, the Exculpated Party 

may, insofar as Applicable Law permits, 

make such decision in its sole discretion 

(regardless of whether there is a reference to 

‘‘sole discretion’’ or ‘‘discretion’’). The 

Exculpated Party (i) shall be entitled to 

consider such interests and factors as it 

desires (including its own interests), (ii) shall 

have no duty or obligation (fiduciary or 

otherwise) to give any consideration to any 

interest of or factors affecting the Company 

or the Members, and (iii) shall not be subject 

to any other or different standards imposed 

by this Agreement, or any other agreement 

contemplated hereby, under any Applicable 

Law or in equity. 

Section 12.2 Right to Indemnification. 

(a) Subject to the limitations and 

conditions provided in this Article XII and to 

the fullest extent permitted by Applicable 

Law, the Company shall indemnify each 

Company Indemnified Party for Losses as a 

result of the Company Indemnified Party 

being a Party to a Proceeding. 

Notwithstanding the foregoing, no such 

indemnification shall be available in the 

event the Company is a claimant against the 

Company Indemnified Party. 

(b) Indemnification under this Article XII 

shall continue as to a Company Indemnified 

Party who has ceased to serve in the capacity 

that initially entitled such Company 

Indemnified Party to indemnity hereunder; 

provided, however, that the Company shall 

not be obligated to indemnify a Company 

Indemnified Party for the Company 

Indemnified Party’s Non-Exculpated Items. 

(c) The rights granted pursuant to this 

Article XII shall be deemed contract rights, 

and no amendment, modification, or repeal 

of this Article XII shall have the effect of 

limiting or denying any such rights with 

respect to actions taken or Proceedings 

arising prior to any amendment, 

modification, or repeal. It is expressly 

acknowledged that the indemnification 

provided in this Article XII could involve 

indemnification for negligence or under 

theories of strict liability. 

(d) The Company shall be the primary 

obligor in respect of any Company 

Indemnified Party’s claim for 

indemnification, for advancement of 

expenses, or for providing insurance, subject 

to this Article XII. The obligation, if any, of 

any Member or its Affiliates to indemnify, to 

advance expenses to, or provide insurance 

for any Company Indemnified Party shall be 

secondary to the obligations of the Company 

under this Article XII (and the Company’s 

insurance providers shall have no right to 

contribution or subrogation with respect to 

the insurance plans of such Member or its 

Affiliates). 

Section 12.3 Advance Payment. 

Reasonable expenses incurred by a 

Company Indemnified Party who is a named 

defendant or respondent to a Proceeding 

shall be paid by the Company in advance of 

the final disposition of the Proceeding upon 

receipt of an undertaking by or on behalf of 

such Company Indemnified Party to repay 

such amount if it shall ultimately be 

determined that he or she is not entitled to 

be indemnified by the Company. 

Section 12.4 Appearance as a Witness. 

Notwithstanding any other provision of 

this Article XII, the Company shall pay or 

reimburse reasonable out-of-pocket expenses 

incurred by a Company Indemnified Party in 

connection with his appearance as a witness 

or other participation in a Proceeding at a 

time when he is not a named defendant or 

respondent in the Proceeding. 

Section 12.5 Nonexclusivity of Rights. 

The right to indemnification and the 

advancement and payment of expenses 

conferred in this Article XII shall not be 

exclusive of any other right which any 

Company Indemnified Person may have or 

hereafter acquire under any law (common or 

statutory), provision of the Certificate or this 

Agreement or otherwise. 

Article XIII. 

MISCELLANEOUS 

Section 13.1 Expenses. 

The Company shall pay all current 

expenses, including any Taxes payable by the 

Company, whether for its own account or 

otherwise required by law (including any 

costs of complying with applicable tax 

obligations), third-party service provider fees, 

and all administrative and processing 

expenses and fees, as well as any other 

amounts owing to the Processors under the 

Processor Services Agreements, to the 

Administrator under the Administrative 

Services Agreement, or to the Processors, 

Administrator, or FINRA under Exhibit D to 

this Agreement, before any allocations may 

be made to the Members. Appropriate 

reserves, as unanimously determined by the 

Members, may be charged to the Capital 

Account of the Members for (i) contingent 

liabilities, if any, as of the date any such 

contingent liabilities become known to the 

Operating Committee, or (ii) amounts needed 

to pay the Company’s operating expenses, 

including administrative and processing 

expenses and fees, before any allocations are 

made to the Member. Each Member shall bear 

the cost of implementation of any technical 

enhancements to the System made at its 

request and solely for its use, subject to 

reapportionment should any other Member 

subsequently make use of the enhancement, 

or the development thereof. 

Section 13.2 Entire Agreement. 

Upon the Operative Date, this Agreement 

supersedes the CQ Plan, the CTA Plan, and 

the UTP Plan and all other prior agreements 

among the Members with respect to the 

subject matter hereof. This instrument 

contains the entire agreement with respect to 

such subject matter. 

Section 13.3 Notices and Addresses. 

Unless otherwise specified herein, all 

notices, consents, approvals, reports, 

designations, requests, waivers, elections, 

and other communications (collectively, 

‘‘Notices’’) authorized or required to be given 

pursuant to this Agreement shall be in 

writing and may be delivered by certified or 

registered mail, postage prepaid, by hand, by 

any private overnight courier service, or 

notification through the Company’s web 


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portal. Such Notices shall be mailed or 

delivered to the Members at the addresses set 

forth on Exhibit A or such other address as 

a Member may notify the other Members of 

in writing. Any Notices to be sent to the 

Company shall be delivered to the principal 

place of business of the Company or at such 

other address as the Operating Committee 

may specify in a notice sent to all of the 

Members. Notices shall be effective (i) if 

mailed, on the date three days after the date 

of mailing, (ii) if hand delivered or delivered 

by private courier, on the date of delivery, or 

(iii) if sent by through the Company’s web 

portal, on the date sent; provided, however, 

that notices of a change of address shall be 

effective only upon receipt. 

Section 13.4 Governing Law. 

This Agreement shall be governed by and 

construed in accordance with the Delaware 

Act and internal laws and decisions of the 

State of Delaware, without regard to the 

conflicts of laws principles thereof; provided, 

however, that the rights and obligations of 

the Members, the Processors and the 

Administrator, and of Vendors, Subscribers, 

and other Persons contracting with the 

Company in respect of the matters covered by 

this Agreement, shall at all times also be 

subject to any applicable provisions of the 

Exchange Act and any rules and regulations 

promulgated thereunder. For the avoidance 

of doubt, nothing in this Agreement waives 

any protection or limitation of liability 

afforded any of the Members or any of their 

Affiliates by common law, including the 

doctrines of self-regulatory organization 

immunity and federal preemption. 

Section 13.5 Amendments. 

(a) Except as this Agreement otherwise 

provides, this Agreement may be modified 

from time to time when authorized by the 

Operating Committee pursuant to Section 

4.3, subject to the approval of the 

Commission or when such modification 

otherwise becomes effective pursuant to 

Section 11A of the Exchange Act and Rule 

608 of Regulation NMS. 

(b) [Notwithstanding Section 13.5(a), 

Articles IX, X, XI, and XII may be modified 

upon approval by a majority of Members; 

provided, however, that Operating 

Committee approval pursuant to Section 4.3 

will be required for modifications to the 

allocation of all items of income, gain, loss, 

and deduction in accordance with Exhibit D. 

(c) ]In the case of a Ministerial 

Amendment, the Chair of the Company’s 

Operating Committee may modify this 

Agreement by submitting to the Commission 

an appropriate amendment that sets forth the 

modification; provided, however, that 48- 

hours advance notice of the amendment to 

the Operating Committee in writing is 

required. Such an amendment shall become 

effective upon filing with the Commission in 

accordance with Section 11A of the Exchange 

Act and Rule 608 of Regulation NMS. 

[(d)](c) ‘‘Ministerial Amendment’’ means 

an amendment to this Agreement that 

pertains solely to any one or more of the 

following: 

(i) admitting a new Member to the 

Company; 

(ii) changing the name or address of a 

Member; 

(iii) incorporating a change that the 

Commission has implemented by rule and 

that requires no conforming language to the 

text of this Agreement; 

(iv) incorporating a change (A) that the 

Commission has implemented by rule, (B) 

that requires conforming language to the text 

of this Agreement, and (C) whose conforming 

language to the text of this Agreement has 

been approved by the affirmative vote of the 

Operating Committee pursuant to Section 

4.3; 

(v) incorporating a change (A) that a 

Governmental Authority requires relating to 

the governance or operation of an LLC, (B) 

that requires conforming language to the text 

of this Agreement, and (C) whose conforming 

language to the text of this Agreement has 

been approved by the affirmative vote of the 

Operating Committee pursuant to Section 

4.3[ or upon approval by a majority of 

Members pursuant to Section 13.5(b), as 

applicable]; or 

(vi) incorporating a purely technical 

change, such as correcting an error or an 

inaccurate reference to a statutory provision, 

or removing language that has become 

obsolete. 

Section 13.6 Successors. 

This Agreement shall be binding upon and 

inure to the benefit of the Members and their 

respective legal representatives and 

successors. 

Section 13.7 Limitation on Rights of 

Others. 

None of the provisions of this Agreement 

shall be for the benefit of or enforceable by 

any creditor of the Company. Furthermore, 

except as provided in Section 3.7(b), the 

Members shall not have any duty or 

obligation to any creditor of the Company to 

make any contribution to the Company or to 

issue any call for capital pursuant to this 

Agreement. Nothing in this Agreement shall 

be deemed to create any legal or equitable 

right, remedy or claim in any Person not a 

party hereto (other than any Person 

indemnified under Article XII). 

Section 13.8 Counterparts. 

This Agreement may be executed by the 

Members in any number of counterparts, no 

one of which need contain the signature of 

all Members. As many such counterparts as 

shall together contain all such signatures 

shall constitute one and the same instrument. 

Section 13.9 Headings. 

The section and other headings contained 

in this Agreement are for reference purposes 

only and shall not be deemed to be a part of 

this Agreement or to affect the meaning or 

interpretation of any provisions of this 

Agreement. 

Section 13.10 Validity and Severability. 

If any provision of this Agreement shall be 

held invalid or unenforceable, that shall not 

affect the validity or enforceability of any 

other provisions of this Agreement, all of 

which shall remain in full force and effect. 

Section 13.11 Statutory References. 

Each reference in this Agreement to a 

particular statute or regulation, or a provision 

thereof, shall be deemed to refer to such 

statute or regulation, or provision thereof, or 

to any similar or superseding statute or 

regulation, or provision thereof, as is from 

time to time in effect. 

Section 13.12 Modifications to be in 

Writing. 

This Agreement constitutes the entire 

understanding of the parties hereto with 

respect to the subject matter hereof, and no 

amendment, modification or alteration shall 

be binding unless the same is in writing and 

adopted in accordance with the provisions of 

Section 13.5. 

[Signature Pages Follow] 

IN WITNESS WHEREOF, the undersigned 

Members have executed this Agreement as of 

the day and year first above written. 

EXHIBIT A 

Members of CT Plan LLC 

Member Name and Address 

Cboe BYX Exchange, Inc., 400 South LaSalle 

Street, Chicago, Illinois 60605. 

Cboe BZX Exchange, Inc., 400 South LaSalle 

Street, Chicago, Illinois 60605. 

Cboe EDGA Exchange, Inc., 400 South LaSalle 

Street, Chicago, Illinois 60605. 

Cboe EDGX Exchange, Inc., 400 South LaSalle 

Street, Chicago, Illinois 60605. 

Cboe Exchange, Inc., 400 South LaSalle Street, 

Chicago, Illinois 60605. 

Financial Industry Regulatory Authority, Inc., 1735 K 

Street NW, Washington, DC 20006. 

Investors’ Exchange LLC, 3 World Trade Center 

58th Floor, New York, New York 10007. 

Long-Term Stock Exchange, Inc., 300 Montgomery 

St., Ste. 790, San Francisco, CA 94104. 

MEMX LLC, 111 Town Square Place, Suite 520, 

Jersey City, New Jersey 07310. 

Nasdaq BX, Inc., One Liberty Plaza, 165 Broadway, 

New York, New York 10006. 

Nasdaq ISE, LLC, One Liberty Plaza, 165 Broadway, New York, New York 10006. 

Nasdaq PHLX LLC, FMC Tower, Level 8, 2929 

Walnut Street, Philadelphia, Pennsylvania 19104. 

The Nasdaq Stock Market LLC, One Liberty Plaza, 

165 Broadway, New York, NY 10006. 

New York Stock Exchange LLC, 11 Wall Street, 

New York, New York 10005. 

NYSE American LLC, 11 Wall Street, New York, 

New York 10005. 

NYSE Arca, Inc., 11 Wall Street, New York, New 

York 10005. 

NYSE Chicago, Inc., 11 Wall Street, New York, 

New York 10005. 

NYSE National, Inc., 11 Wall Street, New York, NY 

10005. 

Exhibit B 

Disclosures 

(a) The Members must respond to the 

following questions and instructions: 

(i) Is the Member for profit or not-forprofit? If the Member is for profit, is it 

publicly or privately owned? If privately 

owned, list any owner with an interest of 5% 

or more of the Member, where to the 

Member’s knowledge, such owner, or any 

affiliate controlling, controlled by, or under 

common control with the owner, subscribes, 


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directly or through a third-party vendor, to 

CT Feeds and/or Member PDP. 

(ii) Does the Member offer PDP? If yes, list 

each product, describe its content, and 

provide a link to where fees for each product 

are disclosed. 

(iii) Provide the names of the Voting 

Representative[ and], any alternate Voting 

Representatives, and any Member Observers 

designated by the Member. Also provide a 

narrative description of such 

[representatives]persons’ roles within the 

Member organization, including the title of 

each individual as well as any direct 

responsibilities related to the development, 

dissemination, sales, or marketing of the 

Member’s PDP, and the nature of those 

responsibilities sufficient for the public to 

identify the nature of any potential conflict 

of interest that could be perceived by a 

reasonable objective observer as having an 

effect on the operation of the Company. If 

such [representatives]persons work in or 

with the Member’s PDP business, describe 

such [representatives]persons’ roles and 

describe how that business and such 

[representatives]persons’ Company 

responsibilities impacts their compensation. 

In addition, describe how such 

[representatives]persons’ responsibilities 

with the PDP business may present a conflict 

of interest with their responsibilities to the 

Company. 

(iv) Does the Member, its Voting 

Representative, [or ]its alternate Voting 

Representative, its Member Observers, or any 

affiliate have additional relationships or 

material economic interests that could be 

perceived by a reasonable objective observer 

to present a potential conflict of interest with 

their responsibilities to the Company? If so, 

provide a detailed narrative discussion of all 

material facts necessary to identify the 

potential conflicts of interest and the effects 

they may have on the Company. 

(b) The Processors must respond to the 

following questions and instructions: 

(i) Is the Processor an affiliate of or 

affiliated with any Member? If yes, disclose 

the Member(s) and describe the nature of the 

affiliation. Include an entity-level 

organizational chart depicting the Processor 

and its affiliates. 

(ii) Provide a narrative description of the 

functions directly performed by senior staff, 

the manager employed by the Processor to 

provide Processor services to the Company, 

and the staff that reports to that manager. 

(iii) Does the Processor provide any 

services for any Member’s PDP, other NMS 

Plans, or creation of consolidated equity data 

information for its own use? If Yes, disclose 

the services the Processor performs and 

identify which NMS Plans. Does the 

Processor have any profit or loss 

responsibility for a Member’s PDP or any 

other professional involvement with persons 

the Processor knows are engaged in a 

Member’s PDP business? If so, describe. 

(iv) List the policies and procedures 

established to safeguard Restricted 

Information, Highly Confidential 

Information, and Confidential Information 

that is applicable to the Processor. 

(v) Does the Processor, or its 

representatives, have additional relationships 

or material economic interests that could be 

perceived by a reasonable objective observer 

to present a potential conflict of interest with 

the representatives’ responsibilities to the 

Company? If so, provide a detailed narrative 

discussion of all material facts necessary to 

identify the potential conflicts of interest and 

the effects they may have on the Company. 

(c) The Administrator must respond to the 

following questions and instructions: 

(i) Provide a narrative description of the 

functions directly performed by senior staff, 

the administrative services manager, and the 

staff that reports to that manager. 

(ii) Does the Administrator provide any 

services for any Member’s PDP? If yes, what 

services? Does the Administrator have any 

profit or loss responsibility, or licensing 

responsibility, for a Member’s PDP or any 

other professional involvement with persons 

the Administrator knows are engaged in the 

Member’s PDP business? If so, describe. 

(iii) List the policies and procedures 

established to safeguard Restricted 

Information, Highly Confidential 

Information, and Confidential Information 

that is applicable to the Administrator. 

(iv) Does the Administrator, or its 

representatives, have additional relationships 

or material economic interests that could be 

perceived by a reasonable objective observer 

to present a potential conflict of interest with 

the representatives’ responsibilities to the 

Company? If so, provide a detailed narrative 

discussion of all material facts necessary to 

identify the potential conflicts of interest and 

the effects they may have on the Company. 

(d) The Non-SRO Voting Representatives 

must respond to the following questions and 

instructions: 

(i) Provide the Non-SRO Voting 

Representative’s title and a brief description 

of the Non-SRO Voting Representative’s role 

within the firm as well as any direct 

responsibilities related to the procurement of 

PDP or CT Feeds or the development, 

dissemination, sales, or marketing of PDP, 

and the nature of those responsibilities 

sufficient for the public to identify the nature 

of any potential conflict of interest that could 

be perceived by a reasonable objective 

observer as having an effect on the operation 

of the Company. If such representatives work 

in or with their employer’s market data 

business, describe such Non-SRO Voting 

Representative’s roles and describe how that 

business impacts their compensation. In 

addition, describe how such representatives’ 

responsibilities with the market data 

business may present a conflict of interest 

with their responsibilities to the Company. 

(ii) Does the Non-SRO Voting 

Representative have responsibilities related 

to the firm’s use or procurement of market 

data? 

(iii) Does the Non-SRO Voting 

Representative have responsibilities related 

to the firm’s trading or brokerage services? 

(iv) Does the Non-SRO Voting 

Representative’s firm use the CT Feeds? Does 

the Non-SRO Voting Representative’s firm 

use a Member’s PDP? 

(v) Does the Non-SRO Voting 

Representative’s firm offer PDP? If yes, list 

each product, described its content, and 

provide information about the fees for each 

product. 

(vi) Does the Non-SRO Voting 

Representative’s firm have an ownership 

interest of 5% or more in one or more 

Members? If yes, list the Member(s). 

(vii) Does the Non-SRO Voting 

Representative actively participate in any 

litigation against the CQ Plan, CTA Plan, 

UTP Plan, or the Company? 

(viii) Does the Non-SRO Voting 

Representative or the Non-SRO Voting 

Representative’s firm have additional 

relationships or material economic interests 

that could be perceived by a reasonable 

objective observer to present a potential 

conflict of interest with their responsibilities 

to the Company. If so, provide a detailed 

narrative discussion of all material facts 

necessary to identify the potential conflicts of 

interest and the effects they may have on the 

Company. 

(e) Each service provider or subcontractor 

that has agreed in writing to provide required 

disclosures and be treated as a Disclosing 

Party shall respond to the following 

questions and instructions: 

(i) Is the service provider or subcontractor 

affiliated with a Member, Processor, 

Administrator, or employer of a Non-SRO 

Voting Representative? If yes, disclose with 

whom the person is affiliated and describe 

the nature of the affiliation. 

(ii) If the service provider’s or 

subcontractor’s compensation is on a 

commission basis or is tied to specific 

metrics, provide a detailed narrative 

summary of how compensation is 

determined for performing work on behalf of 

the Company. 

(iii) Is the service provider or subcontractor 

subject to policies and procedures (including 

information barriers) concerning the 

protection of confidential information that 

includes affiliates? If so, describe. If not, 

explain their absence. 

(iv) Does the service provider or 

subcontractor, or its representative, have 

additional relationships or material economic 

interests that could be perceived by a 

reasonable objective observer to present a 

potential conflict of interest with its 

responsibilities to the Company? If so, 

provide a detailed narrative discussion of all 

material facts necessary to identify the 

potential conflicts of interest and the effects 

they may have on the Company. 

(f) The responses to these questions will be 

posted on the Company’s website. If a 

Disclosing Party has any material changes in 

its responses, the Disclosing Party must 

promptly update its disclosures. 

Additionally, the Disclosing Parties must 

update the disclosures on an annual basis to 

reflect any changes. This annual update must 

be made before the first quarterly session 

meeting of each calendar year, which is 

generally held in mid-February. 

Exhibit C 

Confidentiality Policy 

(a) Purpose and Scope. 

(i) The purpose of this Confidentiality 

Policy is to provide guidance to the 

Operating Committee, and all subcommittees 

thereof, regarding the confidentiality of any 

data or information (in physical or electronic 

form) generated by, accessed by, or 


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transmitted to the Operating Committee or 

any subcommittee, as well as discussions 

occurring at a meeting of the Operating 

Committee or any subcommittee. 

(ii) This Policy applies to all Covered 

Persons. All Covered Persons must adhere to 

the principles set out in this Policy and all 

Covered Persons that are natural persons may 

not receive Company data and information 

until they affirm in writing that they have 

read this Policy and undertake to abide by its 

terms. 

(iii) Covered Persons may not disclose 

Restricted, Highly Confidential, or 

Confidential information except as consistent 

with this Policy and directed by the 

Operating Committee. 

(iv) The Administrator and Processors will 

establish written confidential information 

policies that provide for the protection of 

information under their control and the 

control of their Agents, including policies 

and procedures that provide systemic 

controls for classifying, declassifying, 

redacting, aggregating, anonymizing, and 

safeguarding information, that is in addition 

to, and not less than, the protection afforded 

herein. Such policies will be reviewed and 

approved by the Operating Committee 

pursuant to Section 4.3, publicly posted, and 

made available to the Operating Committee 

for review and approval every two years 

thereafter or when changes are made, 

whichever is sooner. 

(v) Information will be classified solely 

based on its content. 

(b) Procedures. 

(i) General 

(A) The Administrator and Processors will 

be the custodians of all documents discussed 

by the Operating Committee and will be 

responsible for maintaining the classification 

of such documents pursuant to this Policy. 

(B) The Administrator may, under 

delegated authority, designate documents as 

Restricted, Highly Confidential, or 

Confidential, which will be determinative 

unless altered by an affirmative vote of the 

Operating Committee pursuant to Section 

4.3. 

(C) The Administrator will ensure that all 

Restricted, Highly Confidential, or 

Confidential documents are properly labeled 

and, if applicable, electronically safeguarded. 

(D) All contracts between the Company 

and its Agents shall require Company 

information to be treated as Confidential 

Information that may not be disclosed to 

third parties, except as necessary to effect the 

terms of the contract or as required by law, 

and shall incorporate the terms of this Policy, 

or terms that are substantially equivalent or 

more restrictive, into the contract. 

(ii) Procedures Concerning Restricted 

Information. Except as provided below, 

Covered Persons in possession of Restricted 

Information are prohibited from disclosing it 

to others, including Agents. This prohibition 

does not apply to disclosures to the staff of 

the SEC or as otherwise required by 

Applicable Law, or to other Covered Persons 

as expressly provided for by this Policy. 

Restricted Information will be kept in 

confidence by the Administrator and 

Processors and will not be disclosed to the 

Operating Committee or any subcommittee 

thereof, or during Executive Session, except 

as follows: 

(A) If the Administrator determines that it 

is appropriate to share a customer’s financial 

information with the Operating Committee or 

a subcommittee thereof, the Administrator 

will first anonymize the information by 

redacting the customer’s name and any other 

information that may lead to the 

identification of the customer. 

(B) The Administrator may disclose the 

identity of a customer that is the subject of 

Restricted Information in Executive Session 

only if the Administrator determines in good 

faith that it is necessary to disclose the 

customer’s identity in order to obtain input 

or feedback from the Operating Committee or 

a subcommittee thereof about a matter of 

importance to the Company. In such an 

event, the Administrator will change the 

designation of the information at issue from 

‘‘Restricted Information’’ to ‘‘Highly 

Confidential Information,’’ and its use will be 

governed by the procedures for Highly 

Confidential Information in subparagraph 

(iii) below. 

(C) If it determines that doing so is in 

furtherance of the interests of the Plan, the 

Operating Committee may authorize the 

disclosure of specified Restricted Information 

to specific Covered Persons or third parties. 

Covered Persons and third parties authorized 

by the Operating Committee that receive or 

have access to Restricted Information must 

segregate the information, retain it in 

confidence, and use it only in a manner 

consistent with the terms of this policy. 

Authorization shall be on a case-by-case 

basis, unless the Operating Committee grants 

standing approval to disclose specified 

recurring information to specific Covered 

Persons. 

(iii) Procedures Concerning Highly 

Confidential Information 

(A) Disclosure of Highly Confidential 

Information: 

(1) Highly Confidential Information may be 

disclosed in Executive Session of the 

Operating Committee or to the subcommittee 

established pursuant to Section 4.7(c). 

Covered Persons in possession of Highly 

Confidential Information are prohibited from 

disclosing it to others, including Agents, 

except [to other Covered Persons who need 

the Highly Confidential Information to fulfill 

their responsibilities to the Company]as 

provided below. This prohibition does not 

apply to disclosures to the staff of the SEC[ 

or as otherwise required by law (such as 

those required to receive the information to 

ensure the Member complies with its 

regulatory obligations), or to other Covered 

Persons authorized to receive it]. 

(2) Highly Confidential Information may be 

disclosed, as required by Applicable Law. 

(3) Highly Confidential Information may be 

disclosed to the staff of the SEC, unless it is 

protected by the Attorney-Client Privilege or 

the Work Product Doctrine. Any disclosure of 

Highly Confidential Information to the staff 

of the SEC will be accompanied by a FOIA 

Confidential Treatment request. 

(4) SRO Voting Representatives may share 

the following types of Highly Confidential 

Information with officers of their Member 

SRO who have direct or supervisory 

responsibility for the SRO’s participation in 

the Company—or with Agents for that 

Member—provided that such information 

may not be used in the development, 

modeling, pricing, licensing, or sale of PDP: 

Information regarding the Company’s 

contract negotiations with the Processor(s) or 

Administrator; communications with, and 

work-product of, counsel to the Company; 

and information concerning personnel 

matters that affect the employees of the SRO 

or of the Company. Each SRO Voting 

Representative that shares Highly 

Confidential Information pursuant to this 

subparagraph (4) shall maintain a log 

reflecting each instance of such sharing, 

including the information shared, the 

persons receiving the information, and the 

date the information was shared. Covered 

Persons who receive or have access to Highly 

Confidential Information pursuant to this 

subparagraph (4) must segregate the 

information, retain it in confidence, and use 

it only in a manner consistent with the terms 

of this policy. 

(5) The Operating Committee may 

authorize the disclosure of specified Highly 

Confidential Information to specific third 

parties acting as Agents of the Company. 

Third parties authorized by the Operating 

Committee that receive or have access to 

Highly Confidential Information must 

segregate the information, retain it in 

confidence, and use it only in a manner 

consistent with the goals of this policy. 

Authorization shall be on a case-by-case 

basis, unless the Operating Committee grants 

standing approval to allow disclosure of 

specified recurring information to specific 

third parties. 

[(3)](6) Apart from the foregoing, the 

Operating Committee has no power to 

authorize any other disclosure of Highly 

Confidential Information. 

(B) In the event that a Covered Person is 

determined by an affirmative vote of the 

Operating Committee pursuant to this Policy 

to have disclosed Highly Confidential 

Information, the Operating Committee will 

determine the appropriate remedy for the 

breach based on the facts and circumstances 

of the event. For an SRO Voting 

Representative or Member Observer, 

remedies include a letter of complaint 

submitted to the SEC, which may be made 

public by the Operating Committee. For a 

Non-SRO Voting Representative, remedies 

include removal of that Non-SRO Voting 

Representative. 

(iv) Procedures Concerning Confidential 

Information 

(A) Confidential Information may be 

disclosed during a meeting of the Operating 

Committee or any subcommittee thereof. 

Additionally, a Covered Person may disclose 

Confidential Information only to other 

persons who need to [allow such other 

persons]receive such information to fulfill 

their responsibilities to the [Company]Plan, 

including oversight of the Plan. The recipient 

must segregate the information, retain it in 

confidence, and use it only in a manner 

consistent with the terms of this policy. A 

Covered Person also may disclose 

Confidential Information to the staff of the 

SEC, as authorized by the Operating 


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Committee as described below, or as may be 

otherwise required by law. 

(B) The Operating Committee may 

authorize the disclosure of Confidential 

Information by an affirmative vote of the 

Operating Committee pursuant to Section 

4.3. Authorization shall be on a case-by-case 

basis, unless the Operating Committee grants 

standing approval to allow disclosure of 

specified recurring information to specific 

Covered Persons. Notwithstanding the 

foregoing, the Operating Committee will not 

authorize the disclosure of Confidential 

Information that is generated by a Member or 

Non-SRO Voting Representative and 

designated by such Member or Non-SRO 

Voting Representative as Confidential, unless 

such Member or Non-SRO Voting 

Representative consents to the disclosure. 

(C) Non-SRO Voting Representatives may 

be authorized by the Operating Committee to 

disclose particular Confidential Information 

only in furtherance of the interests of the 

Company, to enable them to consult with 

industry representatives or technical experts, 

provided that the Non-SRO Voting 

Representatives take any steps requested by 

the Operating Committee to prevent further 

dissemination of that Confidential 

Information, including providing the 

individual(s) consulted with a copy of this 

Policy and requesting that person to maintain 

the confidentiality of such information in a 

manner consistent with this policy. 

(D) A Covered Person that is a 

representative of a Member may be 

authorized by the Operating Committee to 

disclose particular Confidential Information 

to other employees or agents of the Member 

or its affiliates only in furtherance of the 

interests of the Company as needed for such 

Covered Person to perform his or her 

function on behalf of the Company. A copy 

of this Policy will be made available to 

recipients of such information who are 

employees or agents of a Member or its 

affiliates that are not Covered Persons, who 

will be required to abide by this 

Confidentiality Policy. 

(E) A Covered Person may disclose their 

own individual views and statements that 

may otherwise be considered Confidential 

Information without obtaining authorization 

of the Operating Committee, provided that in 

so disclosing, the Covered Person is not 

disclosing the views or statements of any 

other Covered Person or Member that are 

considered Confidential Information. 

(F) A person that has reason to believe that 

Confidential Information has been disclosed 

by another without the authorization of the 

Operating Committee or otherwise in a 

manner inconsistent with this Policy may 

report such potential unauthorized 

disclosure to the Chair of the Operating 

Committee. In addition, a Covered Person 

that discloses Confidential Information 

without the authorization of the Operating 

Committee will report such disclosure to the 

Chair of the Operating Committee. Such selfreported unauthorized disclosure of 

Confidential Information will be recorded in 

the minutes of the meeting of the Operating 

Committee and will contain: (a) The name(s) 

of the person(s) who disclosed such 

Confidential Information, and (b) a 

description of the Confidential Information 

disclosed. The name(s) of the person(s) who 

disclosed such Confidential Information will 

also be recorded in any publicly available 

summaries of Operating Committee minutes. 

Exhibit D 

Distributions 

Cost Allocation and Revenue Sharing 

(a) PAYMENTS. In accordance with 

Paragraph (l) of this Exhibit D, each Member 

will receive an annual payment (if any) for 

each calendar year that is equal to the sum 

of the Member’s Trading Shares and Quoting 

Shares (each as defined below), in each 

Eligible Security for such calendar year. In 

the event that total Net Distributable 

Operating Income (as defined below) is 

negative for a given calendar year, each 

Member will receive an annual bill for such 

calendar year to be determined according to 

the same formula (described in this 

paragraph) for determining annual payments 

to the Members. Unless otherwise stated in 

this agreement, a year shall run from January 

1st to December 31st and quarters shall end 

on March 31st, June 30th, September 30th, 

and December 31st. The Company shall 

cause the Administrator to provide the 

Members with written estimates of each 

Member’s percentage of total volume within 

five business days of the end of each calendar 

month. 

(b) SECURITY INCOME ALLOCATION. The 

‘‘Security Income Allocation’’ for an Eligible 

Security shall be determined by multiplying 

(i) the Net Distributable Operating Income 

under this Agreement for the calendar year 

by (ii) the Volume Percentage for such 

Eligible Security (the ‘‘Initial Allocation’’), 

and then adding or subtracting any amounts 

specified in the reallocation set forth below. 

(c) VOLUME PERCENTAGE. The ‘‘Volume 

Percentage’’ for an Eligible Security shall be 

determined by dividing (A) the square root of 

the dollar volume of Transaction Reports 

disseminated by the Processors in such 

Eligible Security during the calendar year by 

(B) the sum of the square roots of the dollar 

volume of Transaction Reports disseminated 

by the Processors in each Eligible Security 

during the calendar year. 

(d) CAP ON NET DISTRIBUTABLE OPERATING

INCOME. If the Initial Allocation of Net 

Distributable Operating Income in 

accordance with the Volume Percentage of an 

Eligible Security equals an amount greater 

than $4.00 multiplied by the total number of 

qualified Transaction Reports in such 

Eligible Security during the calendar year, 

the excess amount shall be subtracted from 

the Initial Allocation for such Eligible 

Security and reallocated among all Eligible 

Securities in direct proportion to the dollar 

volume of Transaction Reports disseminated 

by the Processors in Eligible Securities 

during the calendar year. A Transaction 

Report with a dollar volume of $5,000 or 

more shall constitute one qualified 

Transaction Report. A Transaction Report 

with a dollar volume of less than $5,000 shall 

constitute a fraction of a qualified 

Transaction Report that equals the dollar 

volume of the Transaction Report divided by 

$5,000. 

(e) TRADING SHARE. The ‘‘Trading Share’’ of 

a Member in an Eligible Security shall be 

determined by multiplying (i) an amount 

equal to fifty percent of the Security Income 

Allocation for the Eligible Security by (ii) the 

Member’s Trade Rating in the Eligible 

Security. 

(f) TRADE RATING. A Member’s ‘‘Trade 

Rating’’ in an Eligible Security shall be 

determined by taking the average of (A) the 

Member’s percentage of the total dollar 

volume of Transaction Reports disseminated 

by the Processors in the Eligible Security 

during the calendar year, and (B) the 

Member’s percentage of the total number of 

qualified Transaction Reports disseminated 

by the Processors in the Eligible Security 

during the calendar year. 

(g) QUOTING SHARE. The ‘‘Quoting Share’’ of 

a Member in an Eligible Security shall be 

determined by multiplying (A) an amount 

equal to fifty percent of the Security Income 

Allocation for the Eligible Security by (B) the 

Member’s Quote Rating in the Eligible 

Security. 

(h) QUOTE RATING. A Member’s ‘‘Quote 

Rating’’ in an Eligible Security shall be 

determined by dividing (A) the sum of the 

Quote Credits earned by the Member in such 

Eligible Security during the calendar year by 

(B) the sum of the Quote Credits earned by 

all Members in such Eligible Security during 

the calendar year. 

(i) QUOTE CREDITS. A Member shall earn one 

‘‘Quote Credit’’ for each second of time (with 

a minimum of one full second) multiplied by 

dollar value of size that an automated best 

bid (offer) transmitted by the Member to the 

Processors during regular trading hours is 

equal to the price of the National Best Bid 

and Offer in the Eligible Security and does 

not lock or cross a previously displayed 

‘‘automated quotation’’ (as defined under 

Rule 600 of Regulation NMS). The dollar 

value of size of a quote shall be determined 

by multiplying the price of a quote by its 

size. 

(j) NET DISTRIBUTABLE OPERATING INCOME. 

The ‘‘Net Distributable Operating Income’’ 

for any particular calendar year shall mean: 

(i) all cash revenues, funds and proceeds 

received by the Company during such 

calendar year (other than Capital 

Contributions by the Members or amounts 

paid pursuant to Section 3.7(b) of this 

Agreement), including all revenues from (A) 

the CT Feeds, which includes the 

dissemination of information with respect to 

Eligible Securities to foreign marketplaces, 

and (B) FINRA quotation data and last sale 

information for securities classified as OTC 

Equity Securities under FINRA’s Rule 6400 

Series (the ‘‘FINRA OTC Data’’) ((A) and (B) 

collectively, the ‘‘Data Feeds’’), and (C) any 

Membership Fees; less 

(ii) 6.25% of the revenue received by the 

Company during such calendar year 

attributable to the segment of the Data Feeds 

reflecting the dissemination of information 

with respect to Network C Securities and 

FINRA OTC Data (but, for the avoidance of 

doubt, not including revenue attributable to 

the segment of the Data Feeds reflecting the 

dissemination of information with respect to 

Network A Securities and Network B 

Securities), which amount shall be paid to 


jbell on DSKJLSW7X2PROD with NOTICES2
Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices 44225 

1All costs associated with collecting, 

consolidating, validating, generating, and 

disseminating the FINRA OTC Data are borne 

directly by FINRA and not the Company and the 

Members. 

FINRA as compensation for the FINRA OTC 

Data; 1 less 

(iii) reasonable working capital reserves 

and reasonable reserves for contingencies for 

such calendar year, as determined by the 

Operating Committee, and all costs and 

expenses of the Company during such 

calendar year, including: 

(A) all amounts payable during such 

calendar year to the Administrator pursuant 

to the Administrative Services Agreement or 

this Agreement; 

(B) all amounts payable during such 

calendar year to the Processors pursuant to 

the Processor Services Agreements or this 

Agreement; and 

(C) all amounts payable during such 

calendar year to third-party service providers 

engaged by or on behalf of the Company. 

(k) INITIAL ELIGIBILITY. At the time a Member 

implements a Processor-approved electronic 

interface with the Processors, the Member 

will become eligible to receive revenue. 

(l) QUARTERLY DISTRIBUTIONS. The Company 

shall cause the Administrator to provide 

Members with written estimates of each 

Member’s quarterly Net Distributable 

Operating Income within 45 calendar days of 

the end of the quarter, and estimated 

quarterly payments or billings shall be made 

on the basis of such estimates. All quarterly 

payments or billings shall be made to each 

eligible Member within 45 days following the 

end of each calendar quarter in which the 

Member is eligible to receive revenue; 

provided, that each quarterly payment or 

billing shall be reconciled against a Member’s 

cumulative year-to-date payment or billing 

received to date and adjusted accordingly; 

further, provided, that the total of such 

estimated payments or billings shall be 

reconciled at the end of each calendar year 

and, if necessary, adjusted by March 31st of 

the following year. Interest shall be included 

in quarterly payments and in adjusted 

payments made on March 31st of the 

following year. Such interest shall accrue 

monthly during the period in which revenue 

was earned and not yet paid and will be 

based on the 90-day Treasury bill rate in 

effect at the end of the quarter in which the 

payment is made. Monthly interest shall start 

accruing 45 days following the month in 

which it is earned and accrue until the date 

on which the payment is made. 

(m) ITEMIZED STATEMENTS. In conjunction 

with calculating estimated quarterly and 

reconciled annual payments under this 

Exhibit D, the Company shall cause the 

Administrator to submit to the Members a 

quarterly itemized statement setting forth the 

basis upon which Net Distributable 

Operating Income was calculated. Such Net 

Distributable Operating Income shall be 

adjusted annually based solely on the 

quarterly itemized statement audited 

pursuant to the annual audit. The Company 

shall cause the Administrator to pay or bill 

Members for the audit adjustments within 

thirty days of completion of the annual audit. 

Upon the affirmative vote of Voting 

Representatives pursuant to Section 4.3, the 

Company shall cause the Administrator to 

engage an independent auditor to audit the 

Administrator’s costs or other calculation(s). 

Exhibit E 

Fees 

To be determined by the Operating 

Committee under this Agreement 

[FR Doc. 2021–17113 Filed 8–10–21; 8:45 am] 

BILLING CODE 8011–01–P 


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