Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50403 

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

2 17 CFR 240.19b–4. 

3Unless otherwise specified, capitalized terms 

used in this rule filing are defined as set forth 

herein, or in LTSE CAT Compliance Rules (LTSE 

Rule Series 11.600) or in the CAT NMS Plan. 

4 15 U.S.C. 78s(b)(3)(A). 

5 17 CFR 240.19b–4(f)(6). 

order granted pursuant to the 

Application. In addition, each 

Subadvised Fund will hold itself out to 

the public as employing the multimanager structure described in the 

Application. The prospectus will 

prominently disclose that the Adviser 

has the ultimate responsibility, subject 

to oversight by the Board, to oversee the 

Subadvisers and recommend their 

hiring, termination, and replacement. 

3. The Adviser will provide general 

management services to each 

Subadvised Fund, including overall 

supervisory responsibility for the 

general management and investment of 

the Subadvised Fund’s assets, and 

subject to review and oversight of the 

Board, will (i) set the Subadvised 

Fund’s overall investment strategies, (ii) 

evaluate, select, and recommend 

Subadvisers for all or a portion of the 

Subadvised Fund’s assets, (iii) allocate 

and, when appropriate, reallocate the 

Subadvised Fund’s assets among 

Subadvisers, (iv) monitor and evaluate 

the Subadvisers’ performance, and (v) 

implement procedures reasonably 

designed to ensure that Subadvisers 

comply with the Subadvised Fund’s 

investment objective, policies and 

restrictions. 

4. Subadvised Funds will inform 

shareholders of the hiring of a new 

Subadviser within 90 days after the 

hiring of the new Subadviser pursuant 

to the Modified Notice and Access 

Procedures. 

5. At all times, at least a majority of 

the Board will be Independent Trustees, 

and the selection and nomination of 

new or additional Independent Trustees 

will be placed within the discretion of 

the then-existing Independent Trustees. 

6. Independent Legal Counsel, as 

defined in Rule 0–1(a)(6) under the Act, 

will be engaged to represent the 

Independent Trustees. The selection of 

such counsel will be within the 

discretion of the then-existing 

Independent Trustees. 

7. Whenever a Subadviser is hired or 

terminated, the Adviser will provide the 

Board with information showing the 

expected impact on the profitability of 

the Adviser. 

8. The Board must evaluate any 

material conflicts that may be present in 

a subadvisory arrangement. Specifically, 

whenever a subadviser change is 

proposed for a Subadvised Fund 

(‘‘Subadviser Change’’) or the Board 

considers an existing Subadvisory 

Agreement as part of its annual review 

process (‘‘Subadviser Review’’): 

(a) the Adviser will provide the 

Board, to the extent not already being 

provided pursuant to section 15(c) of 

the Act, with all relevant information 

concerning: 

(i) Any material interest in the 

proposed new Subadviser, in the case of 

a Subadviser Change, or the Subadviser 

in the case of a Subadviser Review, held 

directly or indirectly by the Adviser or 

a parent or sister company of the 

Adviser, and any material impact the 

proposed Subadvisory Agreement may 

have on that interest; 

(ii) any arrangement or understanding 

in which the Adviser or any parent or 

sister company of the Adviser is a 

participant that (A) may have had a 

material effect on the proposed 

Subadviser Change or Subadviser 

Review, or (B) may be materially 

affected by the proposed Subadviser 

Change or Subadviser Review; 

(iii) any material interest in a 

Subadviser held directly or indirectly by 

an officer or Trustee of the Subadvised 

Fund, or an officer or board member of 

the Adviser (other than through a 

pooled investment vehicle not 

controlled by such person); and 

(iv) any other information that may be 

relevant to the Board in evaluating any 

potential material conflicts of interest in 

the proposed Subadviser Change or 

Subadviser Review. 

(b) the Board, including a majority of 

the Independent Trustees, will make a 

separate finding, reflected in the Board 

minutes, that the Subadviser Change or 

continuation after Subadviser Review is 

in the best interests of the Subadvised 

Fund and its shareholders and, based on 

the information provided to the Board, 

does not involve a conflict of interest 

from which the Adviser, a Subadviser, 

any officer or Trustee of the Subadvised 

Fund, or any officer or board member of 

the Adviser derives an inappropriate 

advantage. 

9. Each Subadvised Fund will 

disclose in its registration statement the 

Aggregate Fee Disclosure. 

10. In the event that the Commission 

adopts a rule under the Act providing 

substantially similar relief to that in the 

order requested in the Application, the 

requested order will expire on the 

effective date of that rule. 

11. Any new Subadvisory Agreement 

or any amendment to an existing 

Investment Advisory Agreement or 

Subadvisory Agreement that directly or 

indirectly results in an increase in the 

aggregate advisory fee rate payable by 

the Subadvised Fund will be submitted 

to the Subadvised Fund’s shareholders 

for approval. 

For the Commission, by the Division of 

Investment Management, under delegated 

authority. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19289 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92847; File No. SR–LTSE– 

2021–05] 

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

Filing and Immediate Effectiveness of 

a Proposed Rule Change To Eliminate 

LTSE Rule 11.420 (Order Audit Trail 

System (‘‘OATS’’) Requirements) 

September 1, 2021. 

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

Securities Exchange Act of 1934 

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

notice is hereby given that on August 

30, 2021, Long-Term Stock Exchange, 

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

with the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I and II below, which Items have 

been prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

LTSE proposes to eliminate LTSE 

Rule 11.420 (Order Audit Trail System 

(‘‘OATS’’) Requirements) to reflect that 

as of September 1, 2021, the Financial 

Industry Regulatory Authority, Inc. 

(‘‘FINRA’’) will have retired OATS, and 

Industry Members will be effectively 

reporting to the consolidated audit trail 

(‘‘CAT’’) adopted pursuant to the 

National Market System Plan Governing 

the Consolidated Audit Trail (the ‘‘CAT 

NMS Plan’’ or ‘‘Plan’’).3 LTSE has filed 

the proposed rule change pursuant to 

Section 19(b)(3)(A) of the Act,4 and Rule 

19b4(f)(6) thereunder,5 which renders 

the proposed rule change effective upon 

filing with the Commission. 


jbell on DSKJLSW7X2PROD with NOTICES
50404 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

6For a complete list of Participants, see Exhibit 

A to the Limited Liability Company Agreement of 

Consolidated Audit Trail, LLC, available at 

www.catnmsplan.com/sites/default/files/2020-07/ 

LLC-Agreement-of-Consolidated-Audit-Trail-LLCas-of-7.24.20.pdf. 

7 15 U.S.C. 78k–1. 

8 17 CFR 242.608. 

9See Letter from the Participants to Brent J. 

Fields, Secretary, Commission, dated September 30, 

2014; and Letter from Participants to Brent J. Fields, 

Secretary, Commission, dated February 27, 2015. 

On December 24, 2015, the Participants submitted 

an amendment to the CAT NMS Plan. See Letter 

from Participants to Brent J. Fields, Secretary, 

Commission, dated December 23, 2015. 

10 17 CFR 242.613. 

11See Securities Exchange Act Rel. No. 77724 

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

12See Securities Exchange Act Rel. No. 79318 

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

13See LTSE Rule 1.160(w). 

14See, e.g., Securities Exchange Act Release No. 

67457 (July 18, 2012), 77 FR 45722, 45723 (August 

1, 2012). 

15See CAT NMS Plan, Appendix C, Section C.9. 

LTSE notes that the current filing addresses only 

the elimination of the OATS rule. Any amendments 

to the Electronic Blue Sheets rules (LTSE Rule 

8.220) would be subject to a separate rule filing 

made in conjunction with SEC rulemaking to 

amend Rule 17a–25 under the Exchange Act. 17 

CFR 240.17a–25. 

16See CAT NMS Plan, Appendix C, Section C.9. 

17 ‘‘Small Industry Member’’ is defined in LTSE 

Rule 11.610(pp) as an Industry Member that 

qualifies as a small broker-dealer as defined in Rule 

0–10(c) of the Exchange Act. On April 20, 2020, the 

Commission granted exemptive relief from certain 

provisions of the CAT NMS Plan related to brokerdealers that do not qualify as Small Industry 

Members solely because such broker-dealers satisfy 

Rule 0–10(i)(2) under the Exchange Act in that they 

introduce transactions on a fully disclosed basis to 

clearing firms that are not small businesses or small 

organizations (referred to as ‘‘Introducing Industry 

Members’’). Specifically, the Commission provided 

exemptive relief from requiring Introducing 

Industry Members to comply with the requirements 

of the CAT NMS Plan that apply to Industry 

Members other than Small Industry Members 

(‘‘Large Industry Members’’), provided that the 

Participants require such Introducing Industry 

Members to comply with the requirements of the 

CAT NMS Plan that apply to Small Industry 

Members. See Securities Exchange Act Release No. 

88703 (April 20, 2020), 85 FR 23115 (April 24, 

2020) (Order Granting Limited Exemptive Relief 

Related to Certain Introducing Brokers From the 

Requirements of the CAT NMS Plan) (the 

‘‘Introducing Brokers Exemptive Order’’). As used 

herein, the term ‘‘Small Industry Member’’ includes 

Introducing Industry Members in accordance with 

the Introducing Brokers Exemptive Order. 

18See supra note 16. 

19See Securities Exchange Act Release No. 90535 

(November 30, 2020), 85 FR 78395 (December 4, 

2020) (SR–FINRA–2020–024) (‘‘OATS Retirement 

Plan Order’’). 

20As set forth in the OATS Retirement Plan 

Order, the 180 day ‘‘applicable period’’ ran from 

October 26, 2020 to April 26, 2021. October 26, 

2020 was the date that Industry Members were 

required to begin correcting all errors for inter-firm 

linkages and exchange/TFR/ORF match validations. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

LTSE is filing with the Commission a 

proposed rule change to eliminate LTSE 

Rule 11.420 to reflect that as of 

September 1, 2021, FINRA will have 

retired OATS, and Industry Members 

will be effectively reporting to the CAT 

adopted pursuant to the CAT NMS Plan. 

I Background 

LTSE, FINRA, and the other national 

securities exchanges (collectively, the 

‘‘Participants’’) 6 filed with the 

Commission, pursuant to Section 11A of 

the Exchange Act 7 and Rule 608 of 

Regulation NMS thereunder,8 the CAT 

NMS Plan.9 The Participants filed the 

Plan to comply with Rule 613 of 

Regulation NMS under the Exchange 

Act.10 The Plan was published for 

comment in the Federal Register on 

May 17, 2016,11 and approved by the 

Commission, as modified, on November 

15, 2016.12 LTSE Rule Series 11.600 

implements provisions of the CAT NMS 

Plan that are applicable to LTSE 

Members.13

The CAT NMS Plan is intended to 

create, implement, and maintain a 

consolidated audit trail that will capture 

in a single consolidated data source 

customer and order event information 

for orders in NMS Securities and OTC 

Equity Securities, across all markets, 

from the time of order inception through 

routing, cancellation, modification, or 

execution.14 Among other things, the 

CAT NMS Plan, as modified by the 

Commission, requires each Participant 

to ‘‘file with the SEC the relevant rule 

change filing to eliminate or modify its 

duplicative rules within six (6) months 

of the SEC’s approval of the CAT NMS 

Plan.’’ 15 The Plan notes that ‘‘the 

elimination of such rules and the 

retirement of such systems [will] be 

effective at such time as CAT Data meets 

minimum standards of accuracy and 

reliability.’’ 16 Specifically, the Plan 

requires the rule filing to discuss the 

following: 

• Specific accuracy and reliability 

standards that will determine when 

duplicative systems will be retired, 

including, but not limited to, whether 

the attainment of a certain Error Rate 

should determine when a system 

duplicative of the CAT can be retired; 

• whether the availability of certain 

data from Small Industry Members 17

two years after the Effective Date would 

facilitate a more expeditious retirement 

of duplicative systems; and 

• whether individual Industry 

Members can be exempted from 

reporting to duplicative systems once 

their CAT reporting meets specified 

accuracy and reliability standards, 

including, but not limited to, ways in 

which establishing cross-system 

regulatory functionality or integrating 

data from existing systems and the CAT 

would facilitate such Individual 

Industry Member exemptions.18

On November 30, 2020, the 

Commission approved a FINRA rule 

filing proposing to eliminate the FINRA 

OATS system once FINRA members are 

effectively reporting to the CAT and the 

CAT’s accuracy and reliability meet 

certain standards.19 Specifically, FINRA 

proposed that before OATS could be 

retired, the CAT generally must achieve 

a sustained error rate for Industry 

Member reporting in five categories for 

a period of at least 180 days 20 of 5% or 

lower on a pre-correction basis, and 2% 

or lower on a post-correction basis 

(measured at T+5). In addition to the 

maximum error rates and matching 

thresholds (hereafter the ‘‘threshold 

requirements’’), FINRA’s use of CAT 

Data must confirm that (i) there are no 

material issues that have not been 

corrected, (ii) the CAT includes all data 

necessary to allow FINRA to continue to 

meet its surveillance obligations, and 

(iii) the Plan Processor is sufficiently 

meeting its obligations under the CAT 

NMS Plan relating to the reporting and 

linkage in the initial phase of reporting 

(‘‘Phase 2a’’) of Industry Member Data. 

In the OATS Retirement Plan Order, 

the Commission approved FINRA’s 

proposal for how it would measure the 

CAT Data’s accuracy and reliability. 

Specifically, the Commission endorsed 

FINRA’s proposal that FINRA’s review 

of CAT Data and error rates would be 

based on data and linkages in Phase 2a, 

which replicate the data in OATS today 

and thus are most relevant for OATS 

retirement purposes. Phase 2a Data 

includes all events and scenarios 

covered by OATS and applies only to 

equities. And FINRA would not 

consider options order events or Phase 

2c data and validations, which are not 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50405 

21See supra note 19. 

22See Securities Exchange Act Release No. 92239 

(June 23, 2021), 86 FR 34293 (June 29, 2021) (SR– 

FINRA–2021–017) (‘‘OATS Retirement Filing’’). 

23Appendix D of the CAT NMS Plan, Section 7.2, 

for example, requires that certain file validations 

(e.g., file transmission and receipt are in the correct 

formats, confirmation of a valid SRO-Assigned 

Market Participant Identifier, etc.), and syntax and 

context checks (e.g., format checks, data type 

checks, consistency checks, etc.) be performed on 

all submitted records. 

24See Letter from Lisa C. Horrigan, Associate 

General Counsel, FINRA, to Vanessa Countryman, 

Secretary, Commission, dated October 29, 2020. 

25See supra note 22. 

26FINRA conducts surveillance on behalf of 

LTSE pursuant to the Regulatory Service Agreement 

entered into by LTSE and FINRA (‘‘RSA’’). 

Therefore, any references in this rule filing to 

FINRA surveillance include FINRA’s use of either 

OATS or CAT Data in furtherance of the regulatory 

services it provides on behalf of LTSE. 

27For example, according to the CAT Reporting 

Technical Specification for Participants (version 

4.0.0–r4 dated April 20, 2021), additional linkage 

error feedback for off-exchange trade reports was 

effective as of June 1, 2021. The Technical 

Specifications can be found on the CAT NMS Plan 

website at www.catnmsplan.com/sites/default/files/ 

2021-04/04.20.2021-CAT-Reporting-TechnicalSpecifications-for-Participants-4.0.0-r4.pdf. 

in OATS today, for purposes of OATS 

retirement.21

On June 17, 2021, FINRA made an 

immediately effective filing setting forth 

the basis for its determination that the 

accuracy and reliability of the CAT met 

the standards approved by the 

Commission in the OATS Retirement 

Plan Order and designating September 

1, 2021 as the date on which FINRA 

would retire OATS.22 Specifically, 

FINRA determined that the CAT met the 

threshold requirements endorsed by the 

Commission in the OATS Retirement 

Plan Order for Industry Member 

reporting in each of the following 

categories: 

A. Rejection Rates and Data Validations 

As described in the OATS Retirement 

Filing, the Plan Processor must perform 

certain basic data validations, and if a 

record does not pass these basic data 

validations, it must be rejected and 

returned to the CAT Reporter to be 

corrected and resubmitted.23 FINRA 

determined that for the applicable 

period, aggregate rejection rates across 

all Industry Member Reporters were 

0.03% pre-correction and 0.01% postcorrection, which far exceeds the 

threshold requirements of a 5% or lower 

pre-correction error rate and a 2% or 

lower post-correction error rate. 

B. Intra-Firm Linkages 

As described in the OATS Retirement 

Filing, the Plan Processor must be able 

to link all related order events from all 

CAT Reporters involved in the lifecycle 

of an order. At a minimum, this 

requirement includes the creation of an 

order lifecycle between all order events 

handled within an individual CAT 

Reporter, including orders routed to 

internal desks or departments with 

different functions (e.g., an internal 

ATS). FINRA determined that for the 

applicable period, the intra-firm linkage 

accuracy rates across all Industry 

Member Reporters were 99.07% precorrection and 99.99% post-correction, 

which far exceeds the threshold 

requirements of 95% or higher precorrection and 98% or higher postcorrection (in other words, the intrafirm linkages accuracy far exceeds the 

threshold requirement that there be less 

than 5% inaccuracy pre-correction and 

less than 2% inaccuracy postcorrection). 

C. Inter-Firm Linkages 

As described in the OATS Retirement 

Filing, the Plan Processor must be able 

to create the lifecycle between orders 

routed between broker-dealers. FINRA 

determined that for the applicable 

period, the intra-firm linkage accuracy 

rates across all Industry Member 

Reporters were 99.08% pre-correction 

and 99.84% post-correction, which far 

exceed the threshold requirements of 

95% or higher pre-correction and 98% 

or higher post-correction (in other 

words, the inter-firm linkages accuracy 

far exceeds the threshold requirement 

that there be less than 5% inaccuracy 

pre-correction and less than 2% 

inaccuracy post-correction). 

D. Order Linkage Rates 

As described in the OATS Retirement 

Filing, in addition to creating linkages 

within and between broker-dealers, the 

Plan Processor must be able to create 

lifecycles to link various pieces of 

related orders. For example, the Plan 

requires linkages of order information to 

create an order lifecycle from 

origination or receipt to cancellation or 

execution. This category essentially 

combines all of the order-related 

linkages to capture an overall snapshot 

of order linkages in the CAT.24 FINRA 

determined that for the applicable 

period, the order-related linkage 

accuracy rates across all Industry 

Member Reporters were 99.66% precorrection and 99.93% post-correction, 

which far exceed the threshold 

requirements of 95% or higher precorrection and 98% or higher postcorrection (in other words, the order 

linkages accuracy far exceeds the 

threshold requirement that there be less 

than 5% inaccuracy pre-correction and 

less than 2% inaccuracy postcorrection). 

E. Exchange and TRF/ORF Match Rates 

As described in the OATS Retirement 

Filing, an order lifecycle must be 

created to link orders routed from 

broker-dealers to exchanges and 

executed orders and trade reports. 

FINRA determined that for the 

applicable period, the match rate across 

all equity exchanges for orders routed 

from Industry Members to an exchange 

was 99.51% pre-correction and 99.87% 

post-correction. This match rate far 

exceeds the threshold requirements of 

95% or higher pre-correction and 98% 

or higher post-correction (in other 

words, the match rate accuracy far 

exceeds the threshold requirement that 

there be less than 5% inaccuracy precorrection and less than 2% inaccuracy 

post-correction). 

Based upon the accuracy and 

reliability of the above five categories of 

CAT Data, FINRA determined that the 

CAT Data met the accuracy and 

reliability standards required for OATS 

retirement.25

II. FINRA’s Use of CAT Data 

Additionally, the OATS Retirement 

Plan Order set forth that before retiring 

OATS, FINRA’s use of CAT data must 

confirm that (i) there are no material 

issues that have not been corrected (e.g., 

delays in the processing of data, issues 

with query functions, etc.); (ii) the CAT 

includes all data necessary to allow 

FINRA to continue to meet its 

surveillance obligations 26; and (iii) the 

Plan Processor is sufficiently meeting its 

obligations under the CAT NMS Plan 

relating to the reporting and linkage of 

Phase 2a Data. 

As set forth in FINRA’s OATS 

Retirement Filing, by September 1, 

2021, FINRA will be ready to retire its 

use of OATS data for cross-market 

surveillance, and replace it with a 

newly created surveillance data mart, 

the Pattern Optimized Datamart 

(‘‘POD’’), which incorporates equities 

(and options) data submitted by both 

Participants such as LTSE and Industry 

Members. LTSE has been reporting via 

the CAT technical specifications since 

its launch on August 28, 2020. Full 

Participant equities reporting and 

linkage validations commenced on June 

1, 2021.27 Successful completion of the 

transition to the CAT specification for 

Participants was a prerequisite for 

FINRA to retire the OATS-based cross 

market surveillance patterns and 

leverage CAT Data and linkages in POD 

for its surveillance patterns. FINRA has 

completed all planned activities on 

schedule, including substantially 

completing the process of integrating 


jbell on DSKJLSW7X2PROD with NOTICES
50406 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

28See supra note 22. 

29As noted in the FINRA OATS Retirement 

Filing, user acceptance testing is the final stage of 

any software development lifecycle and enables 

actual users to test the system to confirm it is able 

to carry out the required tasks it was designed to 

address in real-world situations. 

30See supra note 22. 

31For example, for the month of July 2021, 

LTSE’s compliance error rate for CAT Data 

reporting was 1.7% (i.e., 98.3% of records were 

successfully reported). However, this monthly 

average error rate was impacted by a single day; for 

all other days in that month, LTSE’s compliance 

error rate ranged between 0.00% and 0.05%. 

32See supra note 22. 

33See supra note 22. 

34See supra note 22. 

35See CAT NMS Plan, Appendix D, Section 6.2. 

36See CAT NMS Plan, Appendix C, Section 

A.2(a). 

37See CAT NMS Plan, Appendix C, Section 

A.1(b). 

38See CAT NMS Plan, Section 6.10(c). 

39See supra note 20. 

40The Implementation Plan and Quarterly 

Progress Reports are available at 

www.catnmsplan.com/implementation-plan. 

41See FINRA Regulatory Notice 21–21 (June 

2021). 

CAT Data into POD and successfully 

running large amounts of production 

CAT Data for the month of May through 

POD.28 FINRA anticipates completing 

additional activities before the proposed 

OATS retirement date of September 1, 

2021, including planned user 

acceptance testing.29

Additionally, FINRA has confirmed 

that all of the data required to support 

the transition from OATS to CAT is 

available in CAT.30 Specifically, FINRA, 

supported by the Participants, 

conducted a mapping of all OATS data 

to CAT data, and then completed a ‘‘gap 

analysis’’ to address any issues with the 

field-level mapping of OATS to CAT 

data. Furthermore, LTSE, along with 

other Participants, has had a very high 

compliance rate in reporting CAT Data 

using the CAT specifications (both in 

the testing and production 

environments).31 Reviewing the 

Participant submitted CAT Data and 

matching it with Industry Member data, 

FINRA determined that the data 

linkages in CAT are ‘‘comparable to the 

linkages between RSA exchange data 

and OATS data’’ currently used by 

FINRA.32 Accordingly, the CAT NMS 

Plan Operating Committee approved the 

cutover from the RSA specification to 

the CAT specification as the official 

source of Participant data as of June 1, 

2021, and today, all Industry Member 

and Participant equities data reported 

via the CAT specification is linked in 

the CAT production environment. 

Thus, FINRA will use OATS data for 

surveillance patterns run through the 

end of the second quarter of 2021 and 

has already begun using CAT Data for 

its surveillance patterns for review 

periods beginning in the third quarter of 

2021.33 As detailed in the OATS 

Retirement Filing, FINRA will continue 

to conduct regular reviews to ensure 

confidence in the completeness and 

accuracy of Industry Member reporting, 

along with the ability to remediate any 

issues in a timely manner.34

III. OATS May Be Retired in Light of the 

Accuracy and Reliability of the CAT 

Data 

LTSE, like FINRA, believes that the 

three additional standards set forth in 

the OATS Retirement Order for retiring 

OATS have been satisfied. With respect 

to the first factor, LTSE, like FINRA, 

does not believe that there are any 

material issues that have not been 

corrected (or could not be corrected in 

the course of operation of CAT, as 

approved by the Operating Committee) 

that would impact FINRA’s ability to 

incorporate and use CAT Data in 

FINRA’s surveillance program, which it 

conducts on behalf of LTSE pursuant to 

the RSA. For example, the Plan requires 

that raw unprocessed data that has been 

ingested by the Plan Processor must be 

available to Participant regulatory staff 

and the SEC prior to 12:00 p.m. Eastern 

Time on T+1, and access to all iterations 

of processed data must be available to 

Participant regulatory staff and the SEC 

between 12:00 p.m. Eastern Time on 

T+1 and T+5.35 The Plan Processor also 

must ensure that regulators have access 

to corrected and linked order data by 

8:00 a.m. Eastern Time on T+5.36

Additionally, after ingestion by the 

Central Repository, the raw unprocessed 

data must be transformed into a format 

appropriate for data querying and 

regulatory output.37 The user-defined 

direct queries and bulk extracts must 

provide authorized users with the 

ability to retrieve CAT Data via a query 

tool or language that allows users to 

query all available attributes and data 

sources.38 FINRA’s use of the CAT Data 

has not uncovered any processing 

delays or other material issues 

impacting the availability of, and 

FINRA’s access to, the data.39

With respect to the second factor, 

LTSE, like FINRA, believes that the CAT 

includes all data necessary for FINRA to 

meet its surveillance obligations after 

the retirement of OATS. FINRA must 

ensure that the CAT, as the single 

source of order and trade data, can 

enable FINRA to conduct accurate and 

effective market surveillance in 

accordance with its regulatory 

obligations. As noted above, Phase 2a 

Data includes all events and scenarios 

covered by OATS and is the most 

relevant for OATS retirement purposes. 

FINRA’s testing, analysis and use of the 

CAT Data (including integration into 

POD), as described above, has 

confirmed that the CAT includes all 

data necessary for FINRA to meet its 

surveillance obligations and that CAT is 

a reliable substitute for OATS. In 

addition, based on its qualitative data 

reviews, FINRA has concluded that 

Industry Member CAT Data, in the 

aggregate, is a sufficient replacement for 

OATS for purposes of FINRA’s 

surveillance program. 

With respect to the third factor, LTSE, 

like FINRA, believes that the Plan 

Processor is sufficiently meeting its 

obligations under the CAT NMS Plan 

relating to the reporting and linkage of 

Phase 2a Data. As detailed in the 

Implementation Plan and Quarterly 

Progress Reports submitted by the Plan 

Participants, the Plan Processor has met 

its targeted completion dates for the 

milestones for Phase 2a, including, for 

example, production Go-Live for 

Equities 2a file submission and data 

integrity validation (Large Industry 

Members and Small OATS Reporters) 

on June 22, 2020; Production Go-Live 

for Equities 2a Intrafirm Linkage 

validations on July 27, 2020; and 

production go-live for firm-to-firm 

linkage validations for equities (Large 

Industry Members and Small OATS 

Reporters) and exchange and TRF/ORF 

linkage validations for equities (Large 

Industry Members and Small OATS 

Reporters) on October 26, 2020.40

Based on the foregoing, LTSE agrees 

with FINRA’s determination that the 

CAT meets the accuracy and reliability 

standards approved by the Commission 

in the OATS Retirement Order for 

purposes of eliminating OATS. FINRA 

has determined to retire OATS effective 

September 1, 2021.41 Firms must 

continue to report to OATS all order 

events that occur on or prior to August 

31, 2021. Reports submitted to OATS for 

order events that occur after August 31, 

2021 will be rejected. In other words, 

August 31, 2021 will be the last ‘‘OATS 

Business Day,’’ as defined under FINRA 

Rule 7450(b)(3), for which OATS will 

accept order events and perform routine 

processing (including incorporation of 

corrections and repairs of rejections) 

occurring within the normal OATS 

timeframe for such activities. OATS will 

continue to accept reports for order 

events that occur on or prior to August 

31, 2021 (including, but not limited to, 

late and corrected reports for such order 

events) through September 16, 2021. 

Firms must ensure that their OATS 


jbell on DSKJLSW7X2PROD with NOTICES
Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 50407 

42 In the unlikely event that FINRA determines it 

is unable to retire OATS effective September 1, 

2021, LTSE will delay the retirement of LTSE Rule 

11.420 pending the actual retirement of FINRA 

OATS. 

43 15 U.S.C. 78f(b)(5). 

44 15 U.S.C. 78s(b)(3)(A)(iii). 

45 17 CFR 240.19b–4(f)(6). 

46 15 U.S.C. 78s(b)(3)(A). 

47 17 CFR 240.19b–4(f)(6). In addition, Rule 19b– 

4(f)(6)(iii) requires the Exchange to give the 

Commission written notice of the Exchange’s intent 

to file the proposed rule change, along with a brief 

description and text of the proposed rule change, 

at least five business days prior to the date of filing 

of the proposed rule change, or such shorter time 

as designated by the Commission. The Exchange 

has satisfied this requirement. 

48 15 U.S.C. 78s(b)(3)(A). 

49 17 CFR 240.19b–4. 

50 17 CFR 240.19b–4(f)(6). 

51 17 CFR 240.19b–4(f)(6)(iii). 

52 In the unlikely event that FINRA determines it 

is unable to retire OATS effective September 1, 

2021, LTSE will delay the retirement of LTSE Rule 

11.420 pending the actual retirement of FINRA 

OATS. 

reporting is accurate and complete for 

all order events that occur on or prior 

to August 31, 2021. LTSE Rule 11.420, 

like the FINRA OATS Rules, will be 

deleted from the LTSE rulebook 

effective September 1, 2021.42

In light of the foregoing, LTSE, like 

FINRA, believes that retiring OATS as of 

September 1, 2021 is appropriate, 

particularly given the potential risks of 

continuing to run OATS and CAT in 

parallel for an additional period of time. 

Such potential risks may include, for 

example, on an industry-wide basis: (1) 

Processing and storage capacity issues 

from operating two systems (particularly 

in the event of extraordinary market 

volume); (2) cybersecurity risks from 

having data flow through two separate 

systems for a longer time period; (3) 

systems issues from reporting 

infrastructure that is near end-of-life; 

and (4) the expense and burden on CAT 

Reporters of dual reporting, particularly 

in the event of systems issues requiring 

correction and/or resubmission of data 

and competing resource priorities 

between OATS and CAT reporting and 

repair activities. 

LTSE has filed the proposed rule 

change for immediate effectiveness and 

is seeking a waiver of the 30 day 

operative delay to allow its OATS rules 

to be retired concurrent with the 

September 1, 2021 retirement of 

FINRA’s OATS Rules. LTSE will also 

announce the retirement of OATS via a 

trader alert to its Members. 

2. Statutory Basis 

LTSE believes that the proposed rule 

change is consistent with the provisions 

of Section 6(b)(5) of the Act, 43 which 

require, among other things, that LTSE’s 

rules must be designed to prevent 

fraudulent and manipulative acts and 

practices, to promote just and equitable 

principles of trade, and, in general, to 

protect investors and the public interest. 

LTSE believes that the proposed 

retirement of LTSE Rule 11.420 fulfills 

the obligation in the CAT NMS Plan for 

LTSE to submit a proposed rule change 

to eliminate or modify duplicative rules, 

and that the CAT NMS Plan has 

achieved the accuracy and reliability 

standards required by the Commission 

in the OATS Retirement Order. 

Additionally, as discussed in the 

Purpose section, LTSE believes that the 

use of CAT Data, whether by LTSE 

directly, or by FINRA pursuant to the 

RSA, will continue to allow for accurate 

and effective surveillance of market 

activity on LTSE. Therefore, LTSE will 

continue to be able to fulfill its statutory 

obligation to protect investors and the 

public interest after the retirement of 

OATS. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

LTSE does not believe that the 

proposed rule change will result in any 

burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. LTSE notes 

that the proposed rule change 

implements provisions of the CAT NMS 

Plan, facilitates the retirement of certain 

existing regulatory systems, and is 

designed to assist the Exchange in 

meeting its regulatory obligations 

pursuant to the Plan. LTSE also notes 

that the proposed rule change will apply 

equally to all firms that trade NMS 

Securities. In addition, all national 

securities exchanges and FINRA are 

proposing substantially similar rule 

filings. Therefore, this is not a 

competitive rule filing, and, therefore, it 

does not impose a burden on 

competition. 

Furthermore, LTSE notes that FINRA 

undertook an economic impact 

assessment of the potential costs and 

benefits associated with OATS 

retirement and determined that CAT 

meets or exceeds the OATS standards. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

Written comments were neither 

solicited nor received. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The Exchange has filed the proposed 

rule change pursuant to Section 

19(b)(3)(A)(iii) of the Act 44 and Rule 

19b–4(f)(6) thereunder.45 Because the 

proposed rule change does not: (i) 

Significantly affect the protection of 

investors or the public interest; (ii) 

impose any significant burden on 

competition; and (iii) become operative 

prior to 30 days from the date on which 

it was filed, or such shorter time as the 

Commission may designate, if 

consistent with the protection of 

investors and the public interest, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 46 and Rule 19b–4(f)(6)(iii) 

thereunder.47

The proposed rule change would not 

significantly affect the protection of 

investors or the public interest because 

it seeks to align LTSE’s retirement of its 

OATS rule with FINRA’s September 1, 

2021 retirement of the OATS system 

itself. Thus, this rule change would 

facilitate the retirement of certain 

existing, duplicative, regulatory 

systems. Additionally, all national 

securities exchanges that currently have 

OATS rules are proposing substantially 

similar regulatory filings retiring their 

respective OATS rules. Therefore, this is 

not a competitive rule filing, and it does 

not impose a burden on competition. 

Accordingly, the Exchange has filed this 

rule change under Section 19(b)(3)(A) of 

the Act 48 and paragraph (f)(6) of Rule 

19b–4 thereunder.49

A proposed rule change filed under 

Rule 19b–4(f)(6) 50 normally does not 

become operative prior to 30 days after 

the date of the filing. However, pursuant 

to Rule 19b–4(f)(6)(iii),51 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. The Exchange has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative by September 1, 2021, 

the first day in which FINRA will no 

longer accept OATS data.52 As 

discussed above, LTSE believes that it is 

appropriate for FINRA to retire OATS 

effective September 1, 2021. LTSE states 

that the use of CAT Data, whether by 

LTSE or by FINRA pursuant to LTSE’s 

RSA with FINRA, will allow for 

accurate and effective surveillance of 

market activity on LTSE. In addition, 

August 31, 2021, will be the last ‘‘OATS 

Business Day,’’ as defined under FINRA 

Rule 7450(b)(3), for which OATS will 

accept order events and perform routine 

processing, and reports submitted to 

OATS for order events that occur after 

August 31, 2021, will be rejected. The 

Commission believes that it is 


jbell on DSKJLSW7X2PROD with NOTICES
50408 Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices 

53For purposed only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. See 15 U.S.C. 78c(f). 

54 17 CFR 200.30–3(a)(12). 

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

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4See Securities Exchange Act Release No. 57785 

(May 6, 2008), 73 FR 27597 (May 13, 2008) (SR– 

NYSE–2008–17). 

consistent with the protection of 

investors and the public interest for 

LTSE to delete its OATS reporting rules 

at the same time that FINRA retires 

OATS. Accordingly, the Commission 

hereby waives the 30-day operative 

delay and designates the proposal 

operative on September 1, 2021.53

At any time within 60 days of the 

filing of this proposed rule change, the 

Commission summarily may 

temporarily suspend such rule change if 

it appears to the Commission that such 

action is necessary or appropriate in the 

public interest, for the protection of 

investors, or otherwise in furtherance of 

the purposes of the Act. If the 

Commission takes such action, the 

Commission will institute proceedings 

to determine whether the proposed rule 

change should be approved or 

disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s internet 

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

rules/sro.shtml); or 

• Send an email to rule-comments@

sec.gov. Please include File Number SR– 

LTSE–2021–05 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE, 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–LTSE–2021–05. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of LTSE and on its internet 

website at https://

longtermstockexchange.com/. All 

comments received will be posted 

without change. Persons submitting 

comments are cautioned that we do not 

redact or edit personal identifying 

information from comment submissions. 

You should submit only information 

that you wish to make available 

publicly. All submissions should refer 

to File Number SR–LTSE–2021–05, and 

should be submitted on or before 

September 29, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.54

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–19296 Filed 9–7–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–92839; File No. SR–NYSE– 

2021–42] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing of Proposed Rule Change To 

Amend the Requirements of Section 

102.06 of the NYSE Listed Company 

Manual To Allow an Acquisition 

Company To Contribute a Portion of Its 

Trust Account to a New Acquisition 

Company and Spin-Off the New 

Acquisition Company to Its 

Shareholders 

September 1, 2021. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on August 

23, 2021, New York Stock Exchange 

LLC (‘‘NYSE’’ or ‘‘Exchange’’) filed with 

the Securities and Exchange 

Commission (‘‘Commission’’) the 

proposed rule change as described in 

Items I, II, and III below, which Items 

have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend the 

requirements of Section 102.06 of the 

NYSE Listed Company Manual 

(‘‘Manual’’) for the listing of acquisition 

companies and the provisions of Section 

802.01B with respect to the qualification 

of an acquisition company after its 

business combination. The proposed 

rule change is available on the 

Exchange’s website at www.nyse.com, at 

the principal office of the Exchange, and 

at the Commission’s Public Reference 

Room. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to modify 

Section 102.06 of the Manual to allow 

an acquisition company listed under 

that rule to contribute a portion of the 

amount held in its trust account to a 

trust account of a new AC and spin off 

the new AC to its shareholders in 

certain situations where the new AC 

will be subject to all of the same 

requirements as the original AC. 

In 2008, the Exchange adopted a rule 

to allow companies that have no 

specific business plan or that have 

indicated their business plan is to 

consummate the acquisition of one or 

more operating businesses or assets (a 

‘‘Business Combination’’) to list if they 

meet all applicable initial listing 

requirements, as well as additional 

conditions designed to provide investor 

protections to address specific concerns 

about the structure of such companies 

(‘‘Acquisition Companies’’ or ‘‘ACs’’).4


jbell on DSKJLSW7X2PROD with NOTICES