33226 Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 

1The CAT NMS Plan is a national market system 

plan approved by the Commission pursuant to 

Section 11A of the Exchange Act and the rules and 

regulations thereunder. See Securities Exchange Act 

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

84696 (November 23, 2016). 

2 15 U.S.C 78k–1(a)(3). 

3 17 CFR 242.608. 

4See Letter from Michael Simon, CAT NMS Plan 

Operating Committee Chair, to Vanessa 

Countryman, Secretary, Commission, dated May 13, 

2022 (‘‘Transmittal Letter’’). 

5 17 CFR 242.608. 

6See 17 CFR 242.608(a). 

7See Transmittal Letter, supra note 4. Unless 

otherwise defined herein, capitalized terms used 

herein are defined as set forth in the CAT NMS 

Plan. 

8The use of CAT Data in the Executed Share 

Model is discussed in more detail in Section A.5.k 

below. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11677 Filed 5–31–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94984; File No. 4–698] 

Joint Industry Plan; Notice of Filing of 

Amendment to the National Market 

System Plan Governing the 

Consolidated Audit Trail 

May 25, 2022. 

I. Introduction 

On May 13, 2022, the Operating 

Committee for Consolidated Audit Trail, 

LLC (‘‘CAT LLC’’), on behalf of the 

following parties to the National Market 

System Plan Governing the 

Consolidated Audit Trail (the ‘‘CAT 

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

LLC; Cboe BYX Exchange, Inc., Cboe 

BZX Exchange, Inc., Cboe EDGA 

Exchange, Inc., Cboe EDGX Exchange, 

Inc., Cboe C2 Exchange, Inc., Cboe 

Exchange, Inc., Financial Industry 

Regulatory Authority, Inc., Investors 

Exchange LLC, Long-Term Stock 

Exchange, Inc., MEMX, LLC, Miami 

International Securities Exchange LLC, 

MIAX Emerald, LLC, MIAX PEARL, 

LLC, Nasdaq BX, Inc., Nasdaq GEMX, 

LLC, Nasdaq ISE, LLC, Nasdaq MRX, 

LLC, Nasdaq PHLX LLC, The NASDAQ 

Stock Market LLC, New York Stock 

Exchange LLC, NYSE American LLC, 

NYSE Arca, Inc., NYSE Chicago, Inc., 

and NYSE National, Inc. (collectively, 

the ‘‘Participants,’’ ‘‘self-regulatory 

organizations,’’ or ‘‘SROs’’) filed with 

the Securities and Exchange 

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

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’),2 and Rule 608 

thereunder,3 a proposed amendment to 

the CAT NMS Plan to implement a 

revised funding model (‘‘Executed Share 

Model’’) for the consolidated audit trail 

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

for Participant CAT fees in accordance 

with the Executed Share Model.4

Exhibit A, attached hereto, contains 

proposed revisions to Articles I and XI 

of the CAT NMS Plan as well as 

proposed Appendix B to the Plan 

containing the fee schedule setting forth 

the CAT fees to be paid by the 

Participants. In addition, the Operating 

Committee provided an example of how 

the Executed Share Model would 

operate for illustrative purposes only, as 

attached hereto as Exhibit B. The 

example is provided in two charts that, 

according to the Participants, set forth 

illustrative CAT fees for each 

Participant, Industry Member that is the 

clearing member for the seller in the 

transaction, and Industry Member that 

is the clearing member for the buyer in 

the transaction. The Commission is 

publishing this notice to solicit 

comments from interested persons on 

the amendment.5

II. Description of the Plan 

Set forth in this Section II is the 

statement of the purpose and summary 

of the amendment, along with 

information required by Rule 608(a) 

under the Exchange Act,6 substantially 

as prepared and submitted by the 

Participants to the Commission.7

A. Description of the Amendments to 

the CAT NMS Plan 

The Operating Committee proposes to 

replace the funding model set forth in 

Article XI of the CAT NMS Plan (the 

‘‘Original Funding Model’’) with the 

Executed Share Model. The Original 

Funding Model involves a bifurcated 

approach, where costs associated with 

building and operating the CAT would 

be borne by (1) Industry Members (other 

than alternative trading systems 

(‘‘ATSs’’) that execute transactions in 

Eligible Securities (‘‘Execution Venue 

ATSs’’)) through fixed tiered fees based 

on message traffic for Eligible Securities, 

and (2) Participants and Industry 

Members that are Execution Venue 

ATSs for Eligible Securities through 

fixed tiered fees based on market share. 

The Operating Committee proposes to 

amend the CAT NMS Plan to adopt the 

Executed Share Model. The Executed 

Share Model would impose fees on CAT 

Reporters based on the executed 

equivalent share volume of transactions 

in Eligible Securities rather than based 

on market share and message traffic. 

The Operating Committee also proposes 

to adopt a fee schedule to establish the 

CAT fees applicable to Participants 

based on the Executed Share Model. 

The Participants separately intend to 

file rule filings under Section 19(b) to 

establish the CAT fees applicable to 

Industry Members based on the 

Executed Share Model set forth in the 

CAT NMS Plan. 

1. Description of the Executed Share 

Model 

The Operating Committee proposes to 

amend the CAT NMS Plan to describe 

the Executed Share Model. Under the 

Executed Share Model, the Operating 

Committee would establish a fee 

structure in which the fees charged to 

Participants and Industry Members are 

based on the executed equivalent share 

volume of transactions in Eligible 

Securities using CAT Data.8

For each transaction in Eligible 

Securities based on CAT Data, the 

Industry Member that is the clearing 

member for the seller in the transaction 

(‘‘Clearing Broker for the Seller’’ or 

‘‘CBS’’), the Industry Member that is the 

clearing member for the buyer in the 

transaction (‘‘Clearing Broker for the 

Buyer’’ or ‘‘CBB’’), and the applicable 

Participant for the transaction each 

would pay a fee calculated by 

multiplying the number of executed 

equivalent shares in the transaction and 

the applicable Fee Rate (as defined 

below) and dividing the product by 

three. The applicable Participant for the 

transaction would be the national 

securities exchange on which the 

transaction was executed, or FINRA for 

each transaction executed otherwise 

than on an exchange. Accordingly, for 

each transaction, the Clearing Broker for 

the Buyer would pay one-third of the fee 

obligation, the Clearing Broker for the 

Seller would pay one-third of the fee 

obligation, and the relevant Participant 

for the transaction would pay the 

remaining one-third of the fee 

obligation. 

Both Participants and Industry 

Members would be required to pay CAT 

fees with regard to CAT costs not 

previously paid by the Participants 

(‘‘Prospective CAT Costs’’). These are 

the ongoing budgeted costs for the CAT 

after the CAT fees become operative. 

The Fee Rate for the CAT fees related to 

Prospective CAT Costs would be 

calculated by dividing the budgeted 

CAT costs for the relevant period (as 

determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 


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9Past CAT Costs are discussed in more detail in 

Section A.3.b below. 

10The Commission notes that Appendix B 

contains the proposed Consolidated Audit Trail 

Funding Fees for Participants. Exhibit B sets forth 

an illustrative example of CAT fees calculated 

under the Executed Share Model. 

11 In contrast, as discussed in more detail below, 

the Participants would propose to implement CAT 

fees for Industry Members to reimburse the 

Participants for certain Past CAT Costs as well as 

to pay for a share of ongoing CAT costs. 

12 In contrast, the Participants will file a fee filing 

pursuant to Section 19(b) and Rule 19b–4 

thereunder with regard to Fee Rate changes 

applicable to Industry Members. 

13Participants do not intend to file a new separate 

amendment to the CAT NMS Plan for Participants 

each time a new Fee Rate is approved by the 

Operating Committee. 

14As defined in the CAT NMS Plan, the Company 

is the Consolidated Audit Trail, LLC. 

transactions in Eligible Securities for the 

relevant period based on CAT Data. The 

Fee Rate for these CAT fees would be 

the same for the calculation of fees for 

Participants, CBBs and CBSs. 

Industry Members also would be 

required to pay CAT fees with regard to 

certain CAT costs previously paid by 

the Participants (‘‘Past CAT Costs’’).9 To 

date, Participants have paid for all costs 

of the CAT incurred. Accordingly, 

Participants would not be required to 

pay a CAT fee related to Past CAT Costs. 

However, Participants would remain 

responsible for one-third of Past CAT 

Costs, and would remain responsible for 

100% of certain other CAT costs 

incurred in the past (as discussed in 

more detail below) which are excluded 

from Past CAT Costs. The Fee Rate for 

the CAT fees related to Past CAT Costs 

would be calculated by dividing the 

Past CAT Costs for the relevant period 

(as determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data. 

2. Participant CAT Fees 

The proposed fee schedule in Exhibit 

B [sic] 10 to the CAT NMS Plan, entitled 

Consolidated Audit Trail Funding Fees 

for Participants, would establish the 

CAT fees to be paid by Participants. 

These CAT fees are designed to operate 

in accordance with the Executed Share 

Model as described in proposed Article 

XI of the CAT NMS Plan. Accordingly, 

for each transaction in Eligible 

Securities based on CAT Data, the 

applicable Participant for the 

transaction would pay a fee calculated 

by multiplying the number of executed 

equivalent shares in the transaction and 

the applicable Fee Rate and dividing the 

product by three. The applicable 

Participant for the transaction would be 

the national securities exchange on 

which the transaction was executed, or 

FINRA for each transaction executed 

otherwise than on an exchange. The 

proposed fee schedule provides 

additional detail as to how the 

Participant fees would be calculated. 

Because the Participants have paid all 

CAT costs to date, the Participants 

would not make any additional 

payments to the CAT with regard to 

CAT costs incurred in the past. The 

Participants would only pay CAT fees 

on a going forward basis with regard to 

new CAT costs. Accordingly, the 

proposed fee schedule describes these 

forward-looking CAT fees for 

Participants.11

a. Calculation of Fee Rate 

The Operating Committee would set 

the Fee Rate used in determining the 

CAT fees at the beginning of each year. 

The Fee Rate would be calculated by 

dividing the CAT costs budgeted for the 

upcoming year by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

year. The Operating Committee may, but 

is not required to, adjust the Fee Rate 

once during the year to seek to more 

closely coordinate the CAT fees with 

any adjustments to the budgeted or 

actual CAT costs or to volume 

projections during the year. The 

Operating Committee may only adjust 

the Fee Rate once during the year to 

avoid changing the Fee Rate too 

frequently for CAT Reporters. 

Once the Operating Committee has 

established a Fee Rate, it will remain in 

effect until the Operating Committee 

adjusts the Fee Rate during the year or 

adopts a new Fee Rate for the next year. 

The proposal does not contemplate that 

any Fee Rate would automatically 

terminate. This approach would avoid 

periods in which no CAT fees are 

collected, as such a cessation in the 

collection of CAT fees would adversely 

affect the ability of the CAT to fund its 

operations and, therefore, would have a 

significant negative effect on the CAT’s 

ability to fulfill its regulatory purpose. 

This approach also recognizes the 

practical timing issues of ensuring that 

the Operating Committee has the 

appropriate CAT budget and CAT Data 

to calculate the CAT fees. 

Once any Fee Rate has been 

established by a majority vote of the 

Operating Committee in accordance 

with the Executed Share Model set forth 

in the CAT NMS Plan, each Participant 

would be required to pay the applicable 

CAT fee calculated in accordance with 

the proposed fee schedule in the CAT 

NMS Plan. The Operating Committee 

does not plan to submit an amendment 

to the CAT NMS Plan each time that the 

Fee Rate is established or adjusted.12

The Operating Committee would 

announce the Fee Rate at the beginning 

of the year, and any adjustment to the 

Fee Rate during the year via a CAT 

alert.13 In addition, the Operating 

Committee would provide the Fee Rate 

and any adjustments, as well as the 

budget and projection information, on a 

dedicated web page on the CAT NMS 

Plan website to make it readily 

accessible to CAT Reporters. 

i. Budgeted CAT Costs 

The calculation of the Fee Rate 

requires the determination of the 

budgeted CAT costs for the upcoming 

year. The budgeted CAT costs for the 

upcoming year would be the costs set 

forth in the annual operating budget for 

the Company 14 required pursuant to 

Section 11.1(a) of the CAT NMS Plan. 

Section 11.1(a) states that ‘‘[o]n an 

annual basis the Operating Committee 

shall approve an operating budget for 

the Company. The budget shall include 

the projected costs of the Company, 

including the costs of developing and 

operating the CAT for the upcoming 

year, and the sources of all revenue to 

cover such costs, as well as the funding 

of any reserve that the Operating 

Committee reasonably deems 

appropriate for prudent operation of the 

Company.’’ Using budgeted CAT costs, 

rather than CAT costs already incurred, 

allows the Company to collect fees prior 

to when bills become payable. 

The CAT costs budgeted for the year 

would be comprised of all fees, costs 

and expenses estimated to be incurred 

by or for the Company in connection 

with the development, implementation 

and operation of the CAT during the 

year. These CAT costs would include, 

but not be limited to, Plan Processor 

costs, insurance costs, third-party 

support costs and an operational 

reserve. Plan Processor costs would 

consist of the Plan Processor’s ongoing 

costs, including development costs. 

This amount would be based upon the 

fees due to the Plan Processor pursuant 

to the Company’s agreement with the 

Plan Processor. Insurance costs would 

include cyber insurance and director 

liability insurance. Third-party support 

costs would include legal fees, 

consulting fees, vendor fees and audit 

fees. In addition, the Operating 

Committee aims to accumulate the 

necessary funds to establish an 

operating reserve for the Company 

through the CAT fees charged to CAT 

Reporters. As set forth in Section 11.1(a) 

of the CAT NMS Plan, the Operating 

Committee may include in the budget 


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15Although the Operating Committee may 

determine at its discretion that a different level of 

reserves is appropriate in the future, the Operating 

Committee proposes to include in the budget for 

purposes of determining CAT fees an operational 

reserve comprised of three months of ongoing CAT 

costs, such as Plan Processor costs, third party 

support costs and insurance costs. 

16CAT NMS Plan Approval Order at 84792. 

17The CAT budget, as of April 6, 2022, is 

currently available on the CAT website at https:// 

www.catnmsplan.com/cat-financial-and-operatingbudget. 

18For example, although the six month look back 

will depend on the circumstances of the filing, one 

example of such a six month look back would be 

the use of CAT Data from July through December 

2022 for a fee filing in January 2023. 

19For example, although the six month look back 

will depend on the circumstances of the filing, one 

example of such a six month look back for a July 

2023 filing of an adjusted Fee Rate would be the 

use of CAT Data from the prior January through 

June. 

20For example, based on data from 2021, (1) the 

average price per executed share of OTC Equity 

Securities was $0.072 and the average price per 

executed share for NMS Stocks was $49.51; and (2) 

the average trade size for OTC Equity Securities was 

63,474 and the average trade size for NMS Stocks 

was 166 shares. Trades in OTC Equity Securities 

‘‘funding of any reserve that the 

Operating Committee reasonably deems 

appropriate for prudent operation of the 

Company.’’ 15 As required by Section 

11.1(c) of the CAT NMS Plan, any 

surpluses collected will be treated as an 

operational reserve to offset future fees 

and will not be distributed to the 

Participants as profits.16

To address potential changes related 

to the CAT during the year, the 

Operating Committee may adjust the 

budgeted CAT costs for the year as it 

reasonably deems appropriate for the 

prudent operation of the Company. For 

example, the Operating Committee may 

determine that an adjustment to the 

budget is necessary if actual costs 

during the year are more or less than the 

budget, or if unanticipated expenditures 

are necessary. To the extent that the 

Operating Committee adjusts the 

budgeted CAT costs during the year and 

determines to adjust the Fee Rate, the 

adjusted budgeted CAT costs would be 

used in calculating the new Fee Rate for 

the remaining months of the year. 

The Operating Committee has 

determined to publicly provide the 

annual operating budget for the 

Company as well as any updates to the 

budget that occur during the year. This 

publicly available budget information 

describes in detail the budget for the 

Company. For example, among other 

things, the budget provides specific 

budgeted technology costs (including 

cloud hosting services, operating fees, 

Customer and Account Information 

System (‘‘CAIS’’) operating fees and 

change request fees) and general and 

administrative costs (including legal, 

consulting, insurance, professional and 

administration, and public relations). 

The Company provides such budget 

information on a dedicated web page on 

the CAT NMS Plan website to make it 

readily accessible for CAT Reporters 

and others.17

ii. Projected Total Executed Equivalent 

Share Volume 

The calculation of the Fee Rate also 

requires the determination of the 

projected total executed equivalent 

share volume of transactions in Eligible 

Securities for the year. Each year, the 

Operating Committee would determine 

this projection based on the total 

executed equivalent share volume of 

transactions in Eligible Securities from 

the prior six months.18 The projection 

for the year would be calculated by 

doubling the total executed equivalent 

share volume from the prior six months. 

The Operating Committee determined 

that the use of the data from the prior 

six months provides an appropriate 

balance between using data from a 

period that is sufficiently long to avoid 

short term fluctuations while providing 

data close in time to the upcoming year. 

During the year, the Operating 

Committee will monitor actual total 

executed equivalent share volume on a 

regular basis to determine whether the 

projected volume is deviating from the 

actual volume. 

To address potential deviations of the 

projections from actual transactions 

during the year, the projected total 

executed equivalent share volume for 

transactions in Eligible Securities may 

be adjusted as the Operating Committee 

reasonably deems appropriate for the 

prudent operation of the Company. Any 

adjusted projection would be based on 

the total executed equivalent share 

volume of transactions in Eligible 

Securities from the six months prior to 

the date of the determination of the new 

projection.19 To the extent that the 

Operating Committee adjusts this 

projection during the year and 

determines to adjust the Fee Rate, the 

adjusted projection would be used in 

calculating the new Fee Rate for the 

remaining months of the year. 

The Operating Committee will 

publicly provide the projected total 

executed equivalent share volume for 

transactions in Eligible Securities as 

well as any adjustment to the 

projections that occurs during the year. 

The Company would include such 

projection information on a dedicated 

web page on the CAT NMS Plan website 

to make it readily accessible for CAT 

Reporters and others. 

b. Transactions in Eligible Securities 

Under the Executed Share Model, a 

CAT fee would be imposed with regard 

to each transaction in Eligible Securities 

as reported in CAT Data. As set forth in 

Section 1.1 of the CAT NMS Plan, 

‘‘Eligible Securities’’ are defined to 

include all NMS Securities and all OTC 

Equity Securities. Section 1.1 of the 

CAT NMS Plan, in turn, defines an 

‘‘NMS Security’’ as ‘‘any security or 

class of securities for which transaction 

reports are collected, processed, and 

made available pursuant to an effective 

transaction reporting plan, or an 

effective national market system plan 

for reporting transactions in Listed 

Options.’’ In addition, Section 1.1 of the 

CAT NMS Plan defines an ‘‘OTC Equity 

Security’’ as ‘‘any equity security, other 

than an NMS Security, subject to 

prompt last sale reporting rules of a 

registered national securities association 

and reported to one of such 

association’s equity trade reporting 

facilities.’’ A CAT fee would be imposed 

with regard to each transaction in 

Eligible Securities regardless of whether 

the trade is executed on an exchange or 

otherwise than on an exchange. 

The Executed Share Model uses the 

concept of executed equivalent shares as 

the transactions subject to a CAT fee 

involve NMS Stocks, Listed Options and 

OTC Equity Securities, each of which 

have different trading characteristics. 

NMS Stocks. Under the Executed 

Share Model, each executed share for a 

transaction in NMS Stocks will be 

counted as one executed equivalent 

share. 

Listed Options. Recognizing that 

Listed Options trade in contracts rather 

than shares, each executed contract for 

a transaction in Listed Options will be 

counted using the contract multiplier 

applicable to the specific Listed Option 

in the relevant transaction. Typically, a 

Listed Option contract represents 100 

shares; however, it may also represent 

another designated number of shares. 

OTC Equity Securities. Similarly, in 

recognition of the different trading 

characteristics of OTC Equity Securities 

as compared to NMS Stocks, the 

Executed Share Model would discount 

the share volume of OTC Equity 

Securities when calculating the CAT 

fees. Many OTC Equity Securities are 

priced at less than one dollar—and a 

significant number are priced at less 

than one penny—per share and lowpriced shares tend to trade in larger 

quantities. Accordingly, a 

disproportionately large number of 

shares are involved in transactions 

involving OTC Equity Securities versus 

NMS Stocks.20 Because the Executed 


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accounted for 77% of the number of all equity 

shares traded, but only 0.51% of the notional value 

of all equity shares traded. 

21See Securities Exchange Act Rel. No. 88890 

(May 15, 2020), 85 FR 31322 (May 22, 2020) 

(‘‘Financial Accountability Milestone Release’’). 

22Participants would be responsible for a fee each 

month in which they are a CAT Reporter. If a 

Participant ceases to the meet the definition of a 

CAT Reporter during a month, the Participant will 

still be responsible for CAT fees associated with its 

transactions during that month. 

23The Participants anticipate providing advance 

notice of Fee Rate changes prior to implementing 

such changes in the Fee Rate. Such notice would 

provide additional transparency regarding the Fee 

Rate and would assist in planning to implement a 

new Fee Rate. 

Share Model would calculate CAT fees 

based on executed share volume, CAT 

Reporters trading OTC Equity Securities 

would likely be subject to higher fees 

than their market activity may warrant. 

To address this potential concern, the 

Executed Share Model would count 

each executed share for a transaction in 

OTC Equity Securities as 0.01 executed 

equivalent shares. 

The discount to 1% was selected 

based on a reasoned analysis of a variety 

of different metrics for comparing the 

markets for OTC Equity Securities and 

NMS Stocks, rather than a simple 

calculation. For example, using 2021 

data, the Operating Committee 

calculated the following metrics: (1) The 

ratio of total notional dollar value 

traded for OTC Equity Securities to OTC 

Equity Securities and NMS Stocks was 

0.051%; (2) the ratio of total trades in 

OTC Equity Securities to total trades in 

OTC Equity Securities and NMS Stocks 

was 0.90%; and (3) the ratio of average 

share price per trade of OTC Equities to 

average share price per trade for OTC 

Equity Securities and NMS Stocks was 

0.065%. In recognition of the fact that 

these calculations involve averages and 

for ease of application, the Operating 

Committee determined to round these 

metrics to 1%. 

c. Monthly Fees 

Participants would be required to pay 

monthly fees in accordance with the 

proposed fee schedule. A Participant’s 

fee for each month would be calculated 

based on the Participant’s transactions 

in Eligible Securities from the prior 

month. The CAT fees for each 

Participant will be calculated by the 

Plan Processor using the transaction 

data for such Participant as set forth in 

the CAT Data. Specifically, each 

Participant would pay a fee for each 

month, where the fee would be 

calculated by multiplying the 

Participant’s transactions in Eligible 

Securities from the prior month by the 

Fee Rate determined by the Operating 

Committee for that period and dividing 

the product by three. The Operating 

Committee proposes to require the 

commencement of the payment of the 

Participant CAT fees in the first month 

after the conclusion of the period 

covered by the Financial Accountability 

Milestones,21 subject to SEC approval of 

this Plan amendment and the CAT fees 

becoming effective for both Participants 

and Industry Members. 

d. Collection of Fees 

Pursuant to Section 11.4 of the CAT 

NMS Plan, the Operating Committee 

proposes to establish a system for the 

collection of CAT fees from Participants 

and Industry Members. As set forth in 

Section 11.4 of the CAT NMS Plan, each 

Participant would be required to pay its 

CAT fees authorized under the CAT 

NMS Plan as required by Section 3.7(b) 

of the CAT NMS Plan.22 Section 3.7(b) 

of the CAT NMS Plan provides the 

following: 

Each Participant shall pay all fees or 

other amounts required to be paid under 

this Agreement within thirty (30) days 

after receipt of an invoice or other 

notice indicating payment is due (unless 

a longer payment period is otherwise 

indicated) (the ‘‘Payment Date’’). The 

Participant shall pay interest on the 

outstanding balance from the Payment 

Date until such fee or amount is paid at 

a per annum rate equal to the lesser of: 

(i) The Prime Rate plus 300 basis points; 

or (ii) the maximum rate permitted by 

applicable law. If any such remaining 

outstanding balance is not paid within 

thirty (30) days after the Payment Date, 

the Participants shall file an amendment 

to this Agreement requesting the 

termination of the participation in the 

Company of such Participant, and its 

right to any Company Interest, with the 

SEC. Such amendment shall be effective 

only when it is approved by the SEC in 

accordance with SEC Rule 608 or 

otherwise becomes effective pursuant to 

SEC Rule 608. 

3. Implementation of Industry Member 

CAT Fees 

Both Participants and Industry 

Members would be obligated to pay 

CAT fees under the Executed Share 

Model as described in proposed Article 

XI of the CAT NMS Plan. The Operating 

Committee has voted to charge CBBs 

and CBSs fees related to CAT costs in 

accordance with the Executed Share 

Model as described in proposed Article 

XI of the CAT NMS Plan. To implement 

CAT fees applicable to Industry 

Members, Section 11.1(b) of the CAT 

NMS Plan requires that the Participants 

‘‘file with the SEC under Section 19(b) 

of the Exchange Act any such fees on 

Industry Members that the Operating 

Committee approves, and such fees 

shall be labeled as ‘Consolidated Audit 

Trail Funding Fees.’ ’’ Accordingly, each 

Participant would submit a fee filing 

pursuant to Section 19(b) of the 

Exchange Act to propose to add a 

section entitled ‘‘Consolidated Audit 

Trail Funding Fees’’ to its fee schedule, 

and to describe the CAT fees applicable 

to Industry Members in that section, 

including the applicable Fee Rate. To 

implement any new Fee Rates or 

adjustments thereto for Industry 

Members during the year, each 

Participant would submit a fee filing 

under Section 19(b) of the Exchange 

Act. Participants plan to submit fee 

filings for two categories of Industry 

Member CAT fees: CAT fees related to 

Prospective CAT Costs and CAT fees 

related to Past CAT Costs.23 Although 

the proposed Industry Member CAT fees 

will be described in detail in the 

Participant fee filings pursuant to 

Section 19(b) of the Exchange Act, the 

following summarizes these fees. 

a. Industry Member Prospective CAT 

Fees 

Under the Executed Share Model, 

CBBs and CBSs would be required to 

pay CAT fees related to Prospective 

CAT Costs. These are the ongoing 

budgeted costs for the CAT after the 

implementation of the CAT fees. For 

each transaction in Eligible Securities, 

the CBB would pay one-third of the fee 

obligation, the CBS would pay one-third 

of the fee obligation, and the relevant 

Participant for the transaction would 

pay the remaining one-third of the fee 

obligation. To implement the CAT fees 

applicable to CBBs and CBSs related to 

Prospective CAT Costs, the Participants 

would file fee filings under Section 

19(b) of the Exchange Act. The fee 

filings would require each CBB and 

each CBS to pay a fee for each 

transaction they clear in Eligible 

Securities from the prior month, where 

the fee for each transaction will be 

calculated by multiplying the number of 

executed equivalent shares in the 

transaction by one-third and by the Fee 

Rate approved by the Operating 

Committee of the CAT NMS Plan for the 

relevant time period. CBBs and CBSs 

would be required to pay CAT fees 

related to Prospective CAT Costs 

calculated using the same Fee Rate, 

including any adjustments to the Fee 

Rate, that is applicable to the Participant 

CAT fees as described above. In 

addition, like with the calculation of the 

Participant CAT fee, the CAT fees for 


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24The SEC has emphasized that the CAT provides 

a benefit to all market participants. See generally 

Securities Exchange Act Rel. No. 67457 (Jul. 18, 

2012), 77 FR 45722 (Aug. 1, 2012) (‘‘Rule 613 

Adopting Release’’). 

each CBB and CBS would be calculated 

by the Plan Processor using the 

transaction data for such Industry 

Members as set forth in the CAT Data. 

b. Industry Member CAT Fees for Past 

CAT Costs 

The Operating Committee also has 

determined to collect CAT fees from 

Industry Members to recover certain 

Past CAT Costs. The Industry Member 

CAT fees for Past CAT Costs would be 

calculated in accordance with the 

Executed Share Model as set forth in 

proposed Article XI of the CAT NMS 

Plan. The Fee Rate for the CAT fees 

related to Past CAT Costs would be 

calculated by dividing the Past CAT 

Costs for the relevant period (as 

determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data. To 

implement the CAT fees related to Past 

CAT Costs applicable to CBBs and 

CBSs, the Participants would file a fee 

filing or fee filings under Section 19(b) 

of the Exchange Act. The fee filing(s) 

would require each CBB and each CBS 

to pay a fee for each transaction in 

Eligible Securities from the prior month, 

where the fee for each transaction 

would be calculated by multiplying the 

number of executed equivalent shares in 

the transaction by one-third and by the 

Fee Rate approved by the Operating 

Committee of the CAT NMS Plan. CBBs 

and CBSs would be responsible for any 

CAT fee related to Past CAT Costs in 

addition to any CAT fee related to 

Prospective CAT Costs. 

i. Participant Responsibility for Past 

CAT Costs 

Because the Participants have paid all 

CAT costs to date, the Participants 

would not make any additional 

payments to the CAT with regard to 

CAT costs incurred prior to the 

effectiveness of the CAT fees via CAT 

fees; only Industry Members would be 

required to pay CAT fees related to such 

costs. Proposed Section 11.3(a)(iv) 

would clarify the Participant’s 

responsibility with regard to CAT costs 

incurred prior to the effectiveness of the 

CAT fees by stating that 

‘‘[n]otwithstanding anything to contrary, 

Participants will not be required to a 

pay a CAT fee related to CAT costs 

previously paid by the Participants in a 

manner determined by the Operating 

Committee (‘Past CAT Costs’).’’ 

However, Participants would remain 

responsible for the one-third of Past 

CAT Costs allocated to Participants 

under the Executed Share Model, as 

well as 100% of certain other past CAT 

Costs (as discussed in more detail 

below). 

The CAT fees related to included Past 

CAT Costs would recoup two-thirds of 

the included Past CAT Costs; the 

Participants have paid for and would 

not be reimbursed for the remaining 

one-third of the included Past CAT 

Costs. The CAT fees related to included 

Past CAT Costs paid by the Industry 

Members would be used to reimburse 

the Participants for the two-thirds of 

included Past CAT Costs allocated to 

Industry Members. The CAT fees for the 

included Past CAT Costs collected from 

Industry Members will be allocated to 

Participants for repayment of the 

outstanding loan notes of the 

Participants to the Company on a pro 

rata basis; such fees would not be 

allocated to Participants based on the 

executed equivalent share volume of 

transactions in Eligible Securities. 

ii. Past CAT Costs 

The Fee Rate for CAT fees related to 

Past CAT Costs would be calculated 

based on actual past costs incurred by 

the CAT (except for certain costs that 

the Operating Committee has 

determined to exclude from the 

calculation), rather than budgeted costs. 

The CAT fees related to Past CAT Costs 

would be designed to collect from 

Industry Members certain costs paid by 

the Participants prior to the 

effectiveness of the CAT fees pursuant 

to the Executed Share Model. 

The Past CAT Costs would include a 

portion of certain costs incurred prior to 

January 1, 2022 as well as costs incurred 

after January 1, 2022 but prior to the 

effectiveness of the CAT fees pursuant 

to the Executed Share Model. With 

regard to costs incurred prior to January 

1, 2022, the Participants would remain 

responsible for 100% of $48,874,937 of 

Excluded Costs and certain costs related 

to the conclusion of the relationship 

with the Initial Plan Processor. The 

Excluded Costs are all CAT costs 

incurred from November 15, 2017 

through November 15, 2018 due to the 

delay in the start of reporting to the 

CAT. With these costs excluded, the 

CAT costs prior to January 1, 2022 are 

$337,688,610. Under the Executed Share 

Model, Industry Members would be 

responsible for two-thirds of these CAT 

costs. Specifically, one-third of these 

costs ($112,562,870) would be paid by 

CBBs, and one-third ($112,562,870) 

would be paid by CBSs, for a total of 

$225,125,740. The remaining one-third 

($112,562,870) has previously been paid 

by the Participants, and the Participants 

would remain responsible for that third 

of the costs. These costs are set forth in 

detail in the audited financial 

statements for the Company and its 

predecessor CAT NMS, LLC, which are 

available on the CAT website. 

CBBs and CBSs similarly would pay 

CAT fees related to CAT costs incurred 

after January 1, 2022 but prior to the 

implementation of the CAT fees 

pursuant to the Executed Share Model. 

Budgeted CAT costs for 2022 are 

currently available on the CAT website; 

actual CAT costs for 2022 will be 

available in audited financial statements 

for the Company after year end. 

iii. Fee Calculation and Obligation 

The CAT fees related to Past CAT 

Costs would be calculated based on 

current transactions, not transactions 

that occurred in the past when the costs 

were incurred, and collected from 

current Industry Members, not Industry 

Members active in the past when the 

costs were incurred. For example, if the 

CAT fee were in place for June 2022, 

each CBB and CBS with transactions in 

Eligible Securities in May 2022 would 

pay a CAT fee related to Past CAT Costs 

calculated by multiplying the executed 

equivalent share volume of the 

transactions they cleared in May 2022 

by the applicable Fee Rate (calculated 

based on Past CAT Costs and current 

projected total equivalent share volume) 

and by one-third. 

The Operating Committee believes 

that it is appropriate to collect fees from 

current Industry Members based on 

current activity because current market 

participants are the beneficiaries of the 

regulatory value provided by the CAT to 

the securities markets.24 In addition, the 

approach recognizes the practical 

difficulties of imposing fees 

retroactively on Industry Members’ 

market activity from the past, sometimes 

years in the past. For example, the 

practical difficulties may include the 

following: (1) Some Industry Members 

may no longer be in business; (2) it may 

be difficult to accurately establish the 

transactions for the past years; and (3) 

retroactive fees could not have been 

taken into consideration by market 

participants when they decided to enter 

into the transactions in the past. 

4. Example of Application of the 

Executed Share Model 

The Operating Committee has 

prepared an example of how the 

Executed Share Model would operate 

for illustrative purposes only. 

Specifically, the Operating Committee 

has prepared an example of CAT fees 


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25See, e.g., Section 3 of Schedule A of FINRA’s 

By-Laws. 

26Section 1 of Schedule A of FINRA’s By-Laws. 27See Securities Exchange Act Rel. No. 46416 

(Aug. 23, 2002), 67 FR 55901 (Aug. 30, 2002). 28Securities Exchange Act Rel. No. 47946 (May 

30, 2003), 68 FR 34021, 34023 (June 6, 2003) (‘‘TAF 

Release’’). 

29 Id. 

30See, e.g., Cboe Fee Schedule, MIAX Fee 

Schedule, and NYSE Arca Fee Schedule. 

calculated under the Executed Share 

Model based on the projected annual 

CAT costs for 2022 and actual total 

executed equivalent share volume of 

transactions in Eligible Securities in 

2021. Set forth in Exhibit B to this letter 

is a chart setting forth illustrative CAT 

fees for each Participant, CBS and CBB 

for this period. Note Exhibit B only 

provides an illustrative example of how 

the Executed Share Model would 

operate; the calculation of actual fees 

will differ from this example in various 

ways. For example, the Participants 

have paid or will have paid some or all 

of these costs up to the time of any SEC 

approval of the Executed Share Model, 

and, as a result, Participants would not 

be obligated to pay CAT fees related to 

2022 CAT costs to the extent the 

Participants have already paid such 

costs. In addition, the illustrative 

example calculates the fee rate using the 

total executed equivalent share 

transactions in Eligible Securities for 

2021, rather than the projected volume 

for 2022 based on the previous six 

months. Furthermore, the CAT 

Reporters’ monthly CAT fee is not based 

on the CAT Reporters’ transactions from 

the prior month; instead, it is calculated 

by using each CAT Reporter’s 

transactions in 2021 and dividing the 

result by twelve. 

5. Advantages of the Executed Share 

Model 

The Executed Share Model provides a 

variety of advantages as discussed in 

more detail below. The Executed Share 

Model is similar to existing funding 

approaches employed by the SEC and 

the Participants. The Executed Share 

Model is also straightforward to 

understand and to administer; it 

provides for predictable fees for CAT 

Reporters; and it provides equal or 

equivalent treatment of different trading 

venues and products. By recognizing the 

importance of each of the three primary 

participants in a transaction, the 

Executed Share Model requires 

equitable contributions to the cost of the 

CAT by both Participants and Industry 

Members. 

a. Comparable to Existing Fee Precedent 

The Executed Share Model would 

operate in a manner similar to other 

funding models employed by the SEC 

and the Participants, including the 

SEC’s Section 31 fees, FINRA’s trading 

activity fee (‘‘FINRA TAF’’) and the 

options regulatory fee (‘‘ORF’’) utilized 

by options exchanges. The SEC 

previously has determined that the 

Participants’ sales value fees related to 

Section 31, the FINRA TAF and the ORF 

are consistent with the Exchange Act. 

i. Section 31 Fees 

Pursuant to Section 31 of the 

Exchange Act, a national securities 

exchange must pay the Commission a 

fee based on the aggregate dollar amount 

of sales of securities transacted on the 

exchange, and a national securities 

association must pay the Commission a 

fee based on the aggregate dollar amount 

of sales of securities transacted by or 

through any member of the association 

otherwise than on a national securities 

exchange (collectively, ‘‘covered sales’’). 

The SEC calculates the amount of 

Section 31 fees due from each exchange 

or FINRA by multiplying the aggregate 

dollar amount of its covered sales by the 

fee rate set by the Commission in a 

procedure set forth in Section 31(j) of 

the Exchange Act. These fees are 

designed to recover the costs related to 

the government’s supervision and 

regulation of the securities markets and 

securities professionals. Section 31 

requires the SEC to make annual and, in 

some cases, mid-year adjustments to the 

fee rate. These adjustments are 

necessary to make the SEC’s total 

collection of transaction fees in a given 

year as close as possible to the amount 

of the regular appropriation to the 

Commission by Congress for that fiscal 

year. 

To recover the costs of their Section 

31 fee obligations, each of the national 

securities exchanges and FINRA have 

adopted, and the SEC has approved, 

rules assessing a regulatory transaction 

fee on their members, the amount of 

which is set in accordance with Section 

31.25 Broker-dealers, in turn, often 

impose fees on their customers that 

provide the funds to pay the fees owed 

to the exchanges and FINRA. 

Like the well-known, longstanding 

and accepted Section 31-related fee 

model, the Executed Share Model 

would use a predetermined fee rate for 

the calculation of the fees, seek to 

recover designated regulatory costs (as 

CAT provides a solely regulatory 

function), and allow for the adjustment 

of the fee rate during the year to seek to 

match regulatory costs with fees 

collected. The Executed Share Model, 

however, would impose fees based on 

executed equivalent share volume rather 

than the sales values of certain 

transactions. Despite the different 

calculation metric, the Executed Share 

Model is similar to a model well known, 

long accepted and justified under the 

Exchange Act the purpose of which is 

also to cover costs associated with the 

regulation of securities markets and 

securities professionals. 

ii. FINRA Trading Activity Fee 

The transaction-based fees charged 

under the Executed Share Model also 

would be similar to FINRA’s 

transaction-based trading activity fee,26

which was modeled on the 

Commission’s Section 31 fee.27

Although the FINRA TAF is designed to 

cover a subset of the costs of FINRA 

services (e.g., costs to FINRA of the 

supervision and regulation of members, 

including performing examinations, 

financial monitoring, and policy, 

rulemaking, interpretive, and 

enforcement activities) rather than all of 

FINRA’s costs like the CAT, the 

transaction-based calculation of the 

FINRA TAF and the proposed CAT fees 

are similar. With the FINRA TAF, 

FINRA members on the sell-side of a 

transaction are required to pay a per 

share fee for each sale of covered 

securities, which includes exchange 

registered securities, equity securities 

traded otherwise than on an exchange, 

security futures, TRACE-Eligible 

Securities and municipal securities, 

subject to certain exceptions. In 

approving the FINRA TAF, the SEC 

stated that the implementation of the 

FINRA TAF ‘‘is consistent with section 

15A(b)(5) of the Act, in that the proposal 

is reasonably designed to recover NASD 

costs related to regulation and oversight 

of its members.’’ 28 The SEC further 

stated that ‘‘[t]he Commission 

recognizes the difficulties inherent in 

restructuring the NASD’s regulatory 

fees, and believes that the NASD has 

done so in a manner that is fair and 

reasonable.’’ 29 The CAT fees calculated 

under the Executed Share Model would 

be similar to the FINRA TAF in that 

they would be transaction-based fees 

intended to provide funding for 

regulatory costs. 

iii. Options Regulatory Fee 

The fees charged under the Executed 

Share Model also would be similar to 

the ORF charged by the options 

exchanges.30 The ORF is a per contract 

fee charged by an options exchange for 

certain options transactions to options 

members of the relevant exchange. The 

ORF is collected indirectly from 

exchange members through their 

clearing firms by the Options Clearing 

Corporation on behalf of the Exchange. 

Revenue generated from the ORF is 


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31See, e.g., Securities Exchange Act Rel. No. 

58817 (Oct. 20, 2008), 73 FR 63744, 63745 (Oct. 27, 

2008). 

32For a detailed discussion of cost drivers of the 

CAT, see CAT LLC Webinar, CAT Costs (Sept. 21, 

2021), https://www.catnmsplan.com/events/catcosts-september-21-2021. 

33The predictability of fees is discussed further 

below in Section A.3.f. 

34TAF Release at 34024. 

35See Sections 6, 15 and 15A of the Exchange 

Act. 

designed to recover a material portion of 

an options exchange’s regulatory costs 

related to the supervision and regulation 

of its members’ options business, 

including performing routine 

surveillance, investigations, 

examinations and financial monitoring 

as well as policy, rulemaking, 

interpretive, and enforcement activities. 

Exchange members generally passthrough the ORF to their customers in 

the same manner that firms passthrough to their customers the fees 

charged by self-regulatory organizations 

(‘‘SROs’’) to help the SROs meet their 

obligations under Section 31 of the 

Exchange Act.31 The CAT fees 

calculated under the Executed Share 

Model would be similar to the ORF in 

that they would be transaction-based 

fees intended to provide funding for 

regulatory costs. 

b. Fee Metric: Transaction Volume 

The Operating Committee proposes to 

use the executed equivalent share 

volume of transactions in Eligible 

Securities as the means for allocating 

CAT costs among Participants and 

Industry Members. The use of executed 

equivalent share volume would replace 

the use of message traffic for allocating 

costs among Industry Members and the 

use of market share for allocating costs 

among Participants as set forth in the 

Original Funding Model. The use of 

executed equivalent share volume is a 

reasonable and equitable method for 

allocating costs for a variety of reasons, 

and the Operating Committee believes it 

improves upon the use of message 

traffic. 

The proposed use of CAT-reported 

message traffic as set forth in the 

Original Funding Model raised a variety 

of issues for allocating CAT costs. First, 

based on a subsequent study of cost 

drivers for the CAT, it was determined 

that message traffic may be a factor in 

the CAT costs, but it is not the primary 

factor. CAT costs are dominated by 

technology costs, and the predominant 

technology costs are data processing 

(e.g., linker) and storage costs.32 The 

data processing and storage costs are 

related to the level of message traffic, 

but such costs also relate to other 

factors. The data processing and storage 

costs also are directly related to the 

complexity of the reporting 

requirements for the market activity. For 

example, in light of the complexity of 

market activity, the CAT’s order 

reporting and linkage scenarios 

document is over 600 pages in length, 

addressing more than 170 scenarios. 

The processing and storage of such a 

large number of complex reporting 

scenarios requires very complex 

algorithms, which, in turn, lead to 

significant data processing and storage 

costs. The data processing and storage 

costs also are driven by the stringent 

performance, timelines and operational 

requirements for processing CAT Data. 

For example, the CAT NMS Plan 

requires that CAT order events be 

processed within established 

timeframes to ensure data can be made 

available to Participants’ regulatory staff 

and the SEC in a timely manner. 

Accordingly, a CAT Reporter’s message 

traffic may be a factor, but not a primary 

factor, in terms of the costs of the CAT. 

Second, in general, Industry Member 

revenue, including revenue derived 

from fees Industry Members charge their 

clients, is often driven by transactions. 

Because message traffic is separate from 

whether or not a transaction occurs, fees 

based on message traffic may not 

correlate with common revenue or fee 

models. As a result, CAT fees based on 

message traffic could impose an 

outsized adverse financial impact on 

certain Industry Members. 

Third, imposing CAT fees on each 

CAT Reporter based on its message 

traffic may have an adverse effect on 

competition, liquidity or other aspects 

of market structure, and may increase 

model complexity. For example, the 

number of messages for any given order, 

whether or not ultimately executed, 

could vary depending on how a given 

order is processed, leading to a lack of 

predictability on the applicable cost to 

process any given order or executions 

for broker-dealers or non-broker-dealer 

customers.33 As one example, discussed 

in the context of the previously 

proposed funding models, market 

makers in Eligible Securities may have 

very high levels of message traffic due 

to their quoting obligations. Such high 

levels of message traffic may lead to 

outsized fees for market makers in 

comparison to their transaction activity, 

thereby placing an excessive financial 

burden on market makers. This, in turn, 

may lead to a decrease in the number of 

market makers, resulting in a decrease 

in liquidity and a reduction in market 

quality. To address this effect on market 

makers, the Operating Committee 

proposed to discount the fees that 

market makers would need to pay. 

However, such a discount adds 

complexity to the message traffic 

approach, as the model must determine 

when a discount is necessary and how 

much the discount should be. 

The use of executed equivalent share 

volume to allocate CAT costs addresses 

each of these concerns. As discussed in 

more detail below, the fees are not 

divorced from transactions, the 

traditional source of revenue for 

Industry Members; fees based on 

executed equivalent share volume 

would not adversely impact certain 

market participants to the detriment of 

the markets, and the model is simple to 

understand and implement. Moreover, 

in addition to these benefits, the 

executed equivalent share volume is 

related to, but not precisely linked to, 

the CAT Reporter’s burden on the CAT. 

In light of the many inter-related cost 

drivers of the CAT (e.g., storage, 

message traffic, processing), 

determining the precise cost burden 

imposed by each individual CAT 

Reporter on the CAT is not feasible. 

Accordingly, the Operating Committee 

has determined that trading activity 

provides a reasonable proxy for cost 

burden on the CAT, and therefore is an 

appropriate metric for allocating CAT 

costs among CAT Reporters. This 

conclusion is consistent with the SEC’s 

prior recognition of the use of 

transaction volume in setting regulatory 

fees. For example, in approving the 

FINRA TAF, the SEC recognized that 

transaction volume was closely enough 

connected to FINRA’s regulatory 

responsibilities to satisfy the statutory 

standard in the Exchange Act.34

c. One-Third/One-Third/One-Third 

Allocation Between CBS, CBB and 

Participant 

Under the Executed Share Model, the 

CBS, the CBB and the relevant 

Participant each pay one-third of the fee 

obligation for each transaction. The 

proposed allocation recognizes the three 

primary roles in each transaction: The 

buyer, the seller and the market 

regulator, and assigns an equal one-third 

share of the fee per transaction to each 

of these three roles. The Exchange Act 

itself recognizes the importance of these 

three roles in a transaction by imposing 

registration and other regulatory 

obligations on the broker-dealers and 

regulator involved in a transaction.35

This allocation is similar to the 

approach taken with the FINRA TAF, 

ORF and Section 31 fees, and recognizes 

the role of the market regulator and the 


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36See Securities Exchange Act Rel. No. 92451 

(July 20, 2021), 86 FR 40114, 40123–26 (July 26, 

2021) (‘‘Proceedings Order’’). 

37Not only does the Executed Share Model 

increase the contribution of Participants as a group 

in comparison to prior proposed models, but it also 

changes the contributions of each Participant, 

depending upon the types and amount of securities 

traded on each market or over-the-counter. For 

example, as described in Exhibit B, FINRA’s 

contribution likely would increase under the 

Executed Share Model in comparison to prior 

models given FINRA’s responsibility for securities 

traded in the over-the-counter market. 

38See Proceedings Order at 40122. 

39Potential message traffic models, including the 

2018 Fee Proposal and 2021 Fee Proposals, and the 

message traffic only model are discussed below. 40Section 11.2(d) of the CAT NMS Plan. 

buyer in the transaction as well as the 

seller. 

The proposed allocation of one-third 

of the CAT costs to the Participants also 

addresses feedback expressed by some 

commenters on prior fee filings about 

the amount allocated to Participants 

versus Industry Members.36 In the prior 

fee proposals, Execution Venues, which 

included Participants and certain ATSs, 

would have paid 25% of the CAT costs. 

As a result, Participants would have 

paid 25% or less of the CAT costs, and 

commenters questioned whether the 

Participant allocation was too small. 

Under the Executed Share Model, CBBs, 

as a group, would be responsible for 

paying for one-third of the CAT costs; 

CBSs, as a group, would be responsible 

for paying one-third of the CAT costs; 

and Participants, as a group, would be 

responsible for paying one-third of the 

CAT costs. The proposed one-third 

allocation to Participants with the 

Executed Share Model substantially 

increases the Participant allocation and 

substantially reduces the Industry 

Member allocation from prior 

proposals.37

d. Clearing Firms 

The Executed Share Model would 

impose the proposed CAT fees on the 

clearing members for transactions in 

Eligible Securities. The Operating 

Committee determined to charge 

clearing members (that is, the CBBs and 

CBSs), rather than all Industry 

Members, as it is a process that is 

currently used in other contexts. For 

example, the ORF is collected indirectly 

from exchange members through their 

clearing firms by the Options Clearing 

Corporation on behalf of the exchanges. 

Although charging clearing firms 

reduces administrative issues, the 

Operating Committee recognizes that 

imposing this obligation solely on 

clearing members may impose an 

excessive financial burden on such 

firms. Accordingly, CBBs and CBSs 

may, but are not required to, passthrough the CAT fees to their clients, 

who may, in turn, pass the fees to their 

clients until they are imposed 

ultimately on the account that executed 

the transaction. This process would 

operate in a manner similar to the 

manner in which Industry Members 

pass-through other fees imposed to 

cover regulatory costs to their 

customers, for example, the fees charged 

by SROs to help the SROs meet their 

obligation under Section 31 of the 

Exchange Act or the ORF charged by the 

options exchanges. 

e. Straightforward Approach 

Another advantage of the Executed 

Share Model is that the approach is 

simple, straightforward and easy to 

understand. Using the predetermined 

Fee Rate, Participants, CBBs and CBSs 

would calculate their fees by 

multiplying the number of executed 

equivalent shares in their transactions 

in Eligible Securities by the Fee Rate 

and one-third. Both values necessary for 

the calculation are readily available. 

The Fee Rates (including initial and 

adjusted Fee Rates) would be 

announced by the Operating Committee, 

and Participants, CBBs and CBSs have 

easy access to their transaction data. 

Moreover, the two adjustments—one for 

Listed Options and one for OTC Equity 

Securities—are similarly straightforward 

calculations. The Executed Share Model 

does not include other complexities, 

such as tiered fees, minimum or 

maximum fees, excluded types of 

Eligible Securities or excluded 

transactions in Eligible Securities. 

f. Predictable Fees 

The Executed Share Model also 

provides CAT Reporters with 

predictable CAT fees. Because the Fee 

Rate is established in advance, 

Participants, CBBs and CBSs can 

calculate the CAT fee that applies to 

each transaction when it occurs. 

Accordingly, CAT Reporters with a CAT 

fee obligation are able to easily estimate 

and validate their applicable fees based 

on their own trading data. In addition, 

to the extent any CAT fees are passed 

on to customers, such customers also 

can calculate the applicable CAT fee for 

each transaction. 

The predictability of CAT fees under 

the Executed Share Model addresses 

feedback raised by commenters 

regarding the lack of fee predictability 

present in prior fee filings.38 For 

example, with potential message traffic 

models,39 CAT Reporters would not 

know the actual per message rate until 

after the end of the relevant reporting 

period for which they were assessed the 

fee and also could not determine in 

advance the number of messages that 

may be associated with a given order or 

the total number of messages, thereby 

making it difficult for a CAT Reporter to 

predict a CAT fee related to its market 

activity. In addition, this lack of 

predictability related to message-based 

fees also could complicate efforts by 

Industry Members to estimate, explain 

and directly pass message-based fees 

back to customers, particularly if no 

trade has occurred. 

g. Administrative Ease 

The Executed Share Model also 

would allow for ease of billing and other 

administrative functions.40 As 

discussed above, the Executed Share 

Model relies upon a basic calculation 

using a predetermined Fee Rate, thereby 

making the fee determination a 

straightforward process. In addition, the 

CAT fees will be collected in a manner 

similar to the collection process that 

Industry Members are already 

accustomed, thereby further reducing 

the administrative burden on the 

industry. 

h. Equal Treatment of Trading Venues 

The Executed Share Model also has 

the benefit of treating transactions in 

Eligible Securities equally regardless of 

the trading venue. The Fee Rate would 

be the same regardless of whether a 

trade was executed on an exchange or 

in the OTC market, or how the trade 

ultimately occurred more generally (e.g., 

in a manner that generated more 

message traffic). As a result, it would 

not favor or unfairly burden any one 

type of trading venue or method. 

i. Equitable Treatment of Different 

Eligible Securities 

The Executed Share Model also 

recognizes and addresses the different 

trading characteristics of different types 

of securities. Recognizing that Listed 

Options trade in contracts rather than 

shares, the Executed Share Model 

would count executed equivalent share 

volume differently for Listed Options. 

Specifically, each executed contract for 

a transaction in Listed Options would 

be counted based on the multiplier 

applicable to the specific Listed Option 

contract in the relevant transaction (e.g., 

100 executed equivalent shares or such 

other applicable equivalency). 

Similarly, in recognition of the different 

trading characteristics of OTC Equity 

Securities as compared to NMS Stocks, 

the Executed Share Model would 

discount the share volume of OTC 

Equity Securities when calculating the 


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41Rule 613 Adopting Release at 45726. 

42 Id. at 45795. 

43See also Sections 11.1(c), 11.2(c), and 11.3(a) 

and (b) of the CAT NMS Plan. 

44CAT NMS Plan Approval Order at 84794. 

45 Id. at 84795. 

46 Id. at 84797 (emphasis added). 

47Financial Accountability Milestone Release at 

31329. 

CAT fees. Specifically, each executed 

share for a transaction in OTC Equity 

Securities would be counted as 0.01 

executed equivalent shares. As a result, 

the Executed Share Model would not 

favor or unfairly burden any one type of 

product or product type. 

j. Contributions by Both Industry 

Members and Participants 

The Executed Share Model would 

require both Participants and Industry 

Members to contribute to the funding of 

the CAT by paying a CAT fee. To date, 

the Participants have paid the full cost 

of the creation, implementation and 

maintenance of the CAT since 2012, 

pending Commission approval of a fee 

program. The continued funding of the 

CAT solely by the Participants was and 

is not contemplated by the CAT NMS 

Plan, nor is it a financially sustainable 

approach. As noted by the SEC, the CAT 

‘‘substantially enhance[s] the ability of 

the SROs and the Commission to 

oversee today’s securities markets,’’ 41

thereby benefiting all market 

participants. The Executed Share Model 

would require both Participants and 

Industry Members to contribute to the 

cost of the CAT, as contemplated by 

Rule 613 and the CAT NMS Plan. 

Rule 613(a)(1)(vii)(D) specifically 

contemplates Industry Members 

contributing to the payment of CAT 

costs. Specifically, this provision 

requires the CAT NMS Plan to address 

‘‘[h]ow the plan sponsors propose to 

fund the creation, implementation, and 

maintenance of the consolidated audit 

trail, including the proposed allocation 

of such estimated costs among the plan 

sponsors, and between the plan 

sponsors and members of the plan 

sponsors.’’ In approving Rule 613, the 

SEC noted that ‘‘although the plan 

sponsors likely would initially incur the 

costs to establish and fund the central 

repository directly, they may seek to 

recover some or all of these costs from 

their members.’’ 42

In addition, as approved by the SEC, 

the CAT NMS Plan specifically 

contemplates CAT fees to be paid by 

both Industry Members and 

Participants. Section 11.1(b) of the CAT 

NMS Plan states that ‘‘the Operating 

Committee shall have discretion to 

establish funding for the Company, 

including: (i) Establishing fees that the 

Participants shall pay; and (ii) 

establishing fees for Industry Members 

that shall be implemented by the 

Participants.’’ 43 The Commission stated 

in approving the CAT NMS Plan the 

following: 

The Commission believes that the 

proposed funding model reflects a reasonable 

exercise of the Participants’ funding 

authority to recover the Participants’ costs 

related to the CAT. The CAT is a regulatory 

facility jointly owned by the Participants 

and, as noted above, the Exchange Act 

specifically permits the Participants to charge 

members fees to fund their self-regulatory 

obligations. The Commission further believes 

that the proposed funding model is designed 

to impose fees reasonably related to the 

Participants’ self-regulatory obligations 

because the fees would be directly associated 

with the costs of establishing and 

maintaining the CAT, and not unrelated SRO 

services.44

Likewise, the Commission stated that 

‘‘the Participants are permitted to 

recoup their regulatory costs under the 

Exchange Act through the collection of 

fees from their members, as long as such 

fees are reasonable, equitably allocated 

and not unfairly discriminatory, and 

otherwise are consistent with Exchange 

Act standards,’’ 45 and noted that ‘‘Rule 

613(a)(1)(vii)(D) requires the 

Participants to discuss in the CAT NMS 

Plan how they propose to fund the 

creation, implementation and 

maintenance of the CAT, including the 

proposed allocation of estimated costs 

among the Participants, and between the 

Participants and Industry Members.’’ 46

In its amendments to the CAT NMS 

Plan regarding financial accountability, 

the SEC reaffirmed the ability for the 

Participants to charge Industry Members 

a CAT fee. Specifically, the SEC noted 

that the amendments were not intended 

to change the basic funding structure for 

the CAT, which may include fees 

established by the Operating Committee, 

and implemented by the Participants, to 

recover from Industry Members the 

costs and expenses incurred by the 

Participants in connection with the 

development and implementation of the 

CAT.47

k. Use of CAT Data 

CAT Data would be used to calculate 

the CAT fees under the Executed Share 

Model. CAT Data would be used to 

identify each transaction in Eligible 

Securities for which a CAT fee would be 

collected. Specifically, CAT fees will be 

charged with regard to trades reported 

to CAT by FINRA via the Alternative 

Trading Facility (‘‘ADF’’), Over-theCounter Reporting Facility (‘‘ORF’’) and 

the Trade Reporting Facilities (‘‘TRF’’) 

and by the exchanges. In addition, the 

same transaction data in the CAT Data 

would be used in the calculation of the 

projected total executed equivalent 

share volume for the Fee Rate. 

Furthermore, the transaction data in the 

CAT Data provides the identity of the 

relevant clearing broker for each trade. 

This data would be used to identify the 

CBB and CBS for each trade for 

purposes of the CAT fees. Using CAT 

Data for the CAT fee calculations 

provides administrative efficiency, as 

the data will be accessible via the CAT. 

In addition, the transaction data would 

be the same transaction data used by the 

Participants in calculating their fee 

obligations with regard to Section 31 of 

the Exchange Act. 

l. Six Month Look Back 

The calculation of the Fee Rate also 

requires the determination of the 

projected total executed equivalent 

share volume of transactions in Eligible 

Securities for the year. The Operating 

Committee proposes to determine this 

projection based on the total executed 

equivalent share volume of transactions 

in Eligible Securities from the prior six 

months. The Operating Committee 

determined that the use of the data from 

the prior six months provides an 

appropriate balance between using data 

from a period that is sufficiently long to 

avoid short term fluctuations while 

providing data close in time to the 

calculation of the Fee Rate. Moreover, 

given that the Executed Share Model 

contemplates setting the Fee Rate at the 

beginning of the year, and allows for an 

adjustment of the Fee Rate during the 

year, the projections may be based on 

different sets of six months, thereby 

ensuring that the projections are not 

always based on certain months of the 

year that may exhibit different trading 

patterns from other times of the year. 

m. Cost Discipline Mechanisms 

The reasonableness of the Executed 

Share Model and the fees calculated 

under the Executed Share Model are 

supported by key cost discipline 

mechanisms for the CAT—a cost-based 

funding structure, cost transparency, 

cost management efforts and oversight. 

Together, these mechanisms help ensure 

the ongoing reasonableness of the CAT’s 

costs and the level of fees assessed to 

support those costs. 

First, the CAT NMS Plan requires that 

the Company operate on a ‘‘break-even’’ 

basis, with fees imposed to cover costs 

and an appropriate reserve. Any 

surpluses would be treated as an 

operational reserve to offset future fees 

and would not be distributed to the 


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48CAT NMS Plan Approval Order at 84792. 

49 26 U.S.C. 501(c)(6). 

50CAT NMS Plan Approval Order at 84793. 

51See CAT Audited Financial Statements, https:// 

www.catnmsplan.com/audited-financialstatements. 

52See, e.g., CAT LLC Webinar CAT Costs (Sept. 

21, 2021), https://www.catnmsplan.com/events/catcosts-september-21-2021; CAT LLC Webinar, CAT 

Funding (Sept. 22, 2021), https://

www.catnmsplan.com/events/cat-fundingseptember-22-2021; and CAT LLC Webinar, CAT 

Funding (Apr. 6, 2022). 

53For a description of the 2018 Fee Proposal, see 

Securities Exchange Act Rel. No. 82451 (Jan. 5, 

2018), 83 FR 1399 (Jan. 11, 2018) (‘‘2018 Fee 

Proposal Release’’). The Participants later withdrew 

this proposed amendment. Securities Exchange Act 

Rel. No. 82892 (Mar. 16, 2018), 83 FR 12633 (Mar. 

22, 2018). 

Participants as profits.48 To ensure that 

the Participants’ operation of the CAT 

will not contribute to the funding of 

their other operations, Section 11.1(c) of 

the CAT NMS Plan specifically states 

that ‘‘[a]ny surplus of the Company’s 

revenues over its expenses shall be 

treated as an operational reserve to 

offset future fees.’’ In addition, as set 

forth in Article VIII of the CAT NMS 

Plan, the Company ‘‘intends to operate 

in a manner such that it qualifies as a 

‘business league’ within the meaning of 

Section 501(c)(6) of the [Internal 

Revenue] Code.’’ To qualify as a 

business league, an organization must 

‘‘not [be] organized for profit and no 

part of the net earnings of [the 

organization can] inure[ ] to the benefit 

of any private shareholder or 

individual.’’ 49 As the SEC stated when 

approving the CAT NMS Plan, ‘‘the 

Commission believes that the 

Company’s application for Section 

501(c)(6) business league status 

addresses issues raised by commenters 

about the Plan’s proposed allocation of 

profit and loss by mitigating concerns 

that the Company’s earnings could be 

used to benefit individual 

Participants.’’ 50 The Internal Revenue 

Service has determined that the 

Company is exempt from federal income 

tax under Section 501(c)(6) of the 

Internal Revenue Code. 

Second, the CAT’s commitment to 

reasonable funding in support of its 

regulatory obligations is further 

reinforced by the transparency it has 

committed to provide on an ongoing 

basis regarding its financial 

performance. The Company currently 

makes detailed financial information 

about the CAT publicly available. 

Section 9.2(a) of the CAT NMS Plan 

requires the Operating Committee to 

maintain a system of accounting 

established and administered in 

accordance with GAAP and requires 

‘‘all financial statements or information 

that may be supplied to the Participants 

shall be prepared in accordance with 

GAAP (except that unaudited 

statements shall be subject to year-end 

adjustments and need not include 

footnotes).’’ Section 9.2(a) of the CAT 

NMS Plan also requires the Company to 

prepare and provide to each Participant 

‘‘as soon as practicable after the end of 

each Fiscal Year, a balance sheet, 

income statement, statement of cash 

flows and statement of changes in 

equity for, or as of the end of, such year, 

audited by an independent public 

accounting firm.’’ The CAT NMS Plan 

requires that this audited balance sheet, 

income statement, statement of cash 

flows and statement of changes in 

equity be made publicly available. 

Among other things, these financial 

statements provide operating expenses, 

including technology, legal, consulting, 

insurance, professional and 

administration and public relations 

costs. The Company also maintains a 

dedicated web page on the CAT NMS 

Plan website that consolidates its 

annual financial statements in a public 

and readily accessible place.51

In addition, the Company publicly 

provides the annual operating budget 

for the Company as well as periodically 

provides updates to the budget that 

occur during the year. The Company 

includes such budget information on a 

dedicated web page on the CAT NMS 

Plan website to make it readily 

accessible, like the CAT financial 

statements. 

The Operating Committee also has 

held webinars providing additional 

detail about CAT costs and about 

potential alternative funding models for 

the CAT.52 In addition, the Operating 

Committee plans to offer additional 

webinars on cost and funding for the 

industry as appropriate going forward. 

Collectively, these reports and other 

efforts provide extensive and 

comprehensive information regarding 

the CAT’s operations with respect to its 

budgets, revenues, costs, and financial 

reserves, among other information. 

Third, the Operating Committee 

regularly engages in and oversees efforts 

to reduce CAT costs responsibly while 

appropriately funding its regulatory 

obligations. The Operating Committee’s 

efforts to manage its expenses 

responsibly include oversight of the 

CAT’s annual budget, including 

technology and other expenditures and 

initiatives. This oversight is informed by 

key CAT working groups, such as the 

Technology Working Group, Regulatory 

Working Group and Interpretive 

Working Group, each of which brings 

varied expertise to issues of responsible 

cost management. In particular, the 

Operating Committee currently utilizes 

a Cost Management Working Group to 

analyze opportunities to manage CAT 

costs responsibly. In addition, the Plan 

Processor regularly reviews options to 

lower compute and storage needs and 

works with CAT technology providers 

to provide services in a cost-effective 

manner. These collective efforts have 

led to a variety of technological changes 

to reduce costs. 

Fourth, the CAT’s funding and 

operations are subject to the oversight of 

the Commission. The CAT is 

extensively supervised by the 

Commission, including regular and 

continuous attendance at Operating 

Committee, Subcommittee and working 

group meetings. In addition, CAT fees as 

well as cost management efforts that 

require an amendment of the CAT NMS 

Plan are subject to review by the 

Commission’s Division of Trading and 

Markets, as well as public comment. 

6. Alternative Models Considered 

The Operating Committee has 

determined to propose the Executed 

Share Model to fund the CAT for the 

reasons discussed above. In reaching 

this conclusion, the Operating 

Committee considered the advantages 

and disadvantages of a variety of 

possible alternative funding and cost 

allocation models for the CAT in detail. 

After analyzing the various alternatives 

and considering comments on the 

previously proposed models, the 

Operating Committee determined that, 

although various funding models may 

be reasonable and appropriate, the 

Executed Share Model provides a 

variety of advantages in comparison to 

the alternatives, and satisfies the 

requirements of the Exchange Act, 

including providing for an equitable 

allocation of reasonable fees among CAT 

Reporters, not being designed to permit 

unfair discrimination among CAT 

Reporters and not imposing any burden 

on competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. 

a. 2018 Fee Proposal 

The Operating Committee previously 

filed a fee proposal in line with the CAT 

NMS Plan—the 2018 Fee Proposal.53

Under that model, the Operating 

Committee, among other things, 

proposed a 75%–25% allocation of CAT 

costs between Execution Venues (which 

included Participants and Execution 

Venue ATSs) and Industry Members 

(other than Execution Venue ATSs), and 

required Execution Venues to pay fees 

based on market share, and Industry 


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54 In developing the 2018 Fee Proposal, the 

Operating Committee considered many variations of 

different aspects of that model. For example, the 

Operating Committee evaluated different cost 

allocations between Industry Members (other than 

Execution Venue ATSs) and Execution Venues, 

including 80%–20%, 75%–25%, 70%–30% and 

65%–35% allocations, and different cost allocations 

between Equity and Options Execution Venues. The 

Operating Committee also considered different 

discounts for equities and options market makers, 

different numbers of tiers of Industry Members and 

Execution Venues, different fee levels for each tier, 

and other aspects of the model. 

55For a discussion of comments made regarding 

the Original Funding Model and the 2018 Fee 

Proposal, see generally 2018 Fee Proposal Release. 

56Securities Exchange Act Rel. No. 91555 (Apr. 

14, 2021), 86 FR 21050 (Apr. 21, 2021). 

57Securities Exchange Act Rel. No. 92451 (July 

20, 2021), 86 FR 40114 (July 26, 2021). See also 

Securities Exchange Act Rel. No. 93227 (Oct. 1, 

2021), 86 FR 55900 (Oct. 7, 2021). 

58Letter to Vanessa Countryman, Secretary, SEC 

from Mike Simon, Chair, CAT NMS Plan Operating 

Committee re: File Number 4–698—Withdrawal of 

Amendment to the National Market System Plan 

Governing the Consolidated Audit Trail (Dec. 8, 

2021). 

59See paragraphs (c) and (d) of Section 1 of 

Schedule A of FINRA’s By-Laws regarding FINRA’s 

annual Gross Income Assessment. 

Members (other than Execution Venue 

ATSs) to pay fees based on CAT 

message traffic.54

Each Industry Member (other than 

Execution Venue ATSs) would be 

placed into one of seven tiers of fixed 

fees, based on CAT message traffic in 

Eligible Securities. Options Market 

Maker and equity market maker quotes 

would be discounted when calculating 

message traffic. 

The Operating Committee determined 

to allocate 67% of Execution Venue 

costs recovered to Equity Execution 

Venues and 33% to Options Execution 

Venues. Each Equity Execution Venue 

would be placed in one of four tiers of 

fixed fees based on market share, and 

each Options Execution Venue would 

be placed in one of two tiers of fixed 

fees based on market share. Equity 

Execution Venue market share would be 

determined by calculating each Equity 

Execution Venue’s proportion of the 

total volume of NMS Stock and OTC 

Equity shares reported by all Equity 

Execution Venues during the relevant 

time period. For purposes of calculating 

market share, the OTC Equity Securities 

market share of Execution Venue ATSs 

trading OTC Equity Securities as well as 

the market share of the FINRA OTC 

reporting facility would be discounted. 

Similarly, market share for Options 

Execution Venues would be determined 

by calculating each Options Execution 

Venue’s proportion of the total volume 

of Listed Options contracts reported by 

all Options Execution Venues during 

the relevant time period. 

The 2018 Fee Proposal was a very 

complex model with many interrelated 

parts, including allocation percentages, 

discounts for certain market behavior, 

and multiple tiered fees, and the 

complexity raised concerns from the 

Commission regarding its use as the 

CAT funding model. In addition, in 

response to the proposal, the industry 

provided a number of other comments 

related to the proposal, including 

comments regarding the proposed 

allocation of CAT costs between 

Participants and Industry Members, and 

the ability of certain market segments to 

afford the proposed CAT fee.55

b. 2021 Fee Proposal 

In response to the comments on the 

2018 Fee Proposal, the Operating 

Committee determined to revise various 

aspects of the proposed model, thereby 

developing the 2021 Fee Proposal.56 The 

2021 Fee Proposal would have 

continued to require many of the same 

elements as the 2018 model, including 

the bifurcated funding approach, and 

the use of market share and message 

traffic for allocating costs, as required by 

the current CAT NMS Plan. The 2021 

Fee Proposal, however, proposed to 

revise the model in certain ways, 

including (1) dividing the CAT costs 

between Participants and Industry 

Members, rather than between 

Execution Venues and Industry 

Members (other than Execution Venue 

ATSs); (2) eliminating the use of tiers in 

calculating CAT fees for Participants 

and Industry Members; (3) adopting 

certain minimum and maximum CAT 

fees for Industry Members and 

Participants; (4) revising the allocation 

between Equity Execution Venues and 

Options to be 60%–40%; and (5) 

excluding, rather than discounting, 

market share in OTC Equity Shares from 

the calculation of market share for 

FINRA. 

Although the revisions of the 2021 

Fee Proposal addressed certain 

comments on the prior 2018 Fee 

Proposal, commenters continued to 

raise issues regarding the proposal. For 

example, commenters provided 

feedback regarding the 75%–25% cost 

allocation between Industry Members 

and Participants, the 60%–40% cost 

allocation between Equity Participants 

and Options Participants, the use of 

market share and message traffic for 

allocating costs among Participants and 

Industry Members, respectively, and the 

proposed minimum and maximum fees. 

Noting these and other issues, the SEC 

determined to institute proceedings to 

determine whether to disapprove the 

2021 Fee Proposal or to approve the 

proposal with any changes or subject to 

any conditions the SEC deemed 

necessary or appropriate after 

considering public comment.57

Ultimately, the Operating Committee 

determined to withdraw the 2021 Fee 

Proposal.58

c. Revenue Funding Model 

The Operating Committee also 

considered a model in which all CAT 

Reporters, including both Industry 

Members and Participants, would pay 

fees based solely on revenue. The 

concept underlying this proposal is that 

CAT costs would be borne by CAT 

Reporters based on their ability to pay. 

Under this model, Industry Member 

revenue would be calculated based on 

revenue reported in FOCUS reports, and 

Participant revenue would be calculated 

based on revenue information in Form 

1 amendments and other publicly 

reported figures. 

The Operating Committee did not 

select this model for various reasons. 

Under this approach, Participants as a 

group would only pay approximately 

4% of the total CAT costs. Given their 

role as SROs and their use of the CAT, 

the Operating Committee did not 

believe that such a small allocation of 

the CAT costs to the Participants was 

appropriate. Using revenue also raised a 

variety of practical issues. For example, 

questions were raised as to what 

revenue was appropriate to include in 

the calculation of revenue for Industry 

Members. The gross revenue set forth on 

FOCUS reports was proposed, as it was 

similar to an existing FINRA regulatory 

fee.59 However, questions were raised as 

to whether revenue unrelated to NMS 

Securities or OTC Equity Securities, or 

otherwise unrelated to the CAT, should 

be included for calculation of the CAT 

fee. Eliminating revenue unrelated to 

CAT-related activity would have been 

difficult or impossible. In addition, the 

lack of a uniform approach to 

calculating revenue for the Participants 

could raise inequities in the collection 

of a CAT fee. 

To address the issues regarding the 

96%–4% allocation and the calculation 

of the Participant revenue in the straight 

revenue model described above, the 

Operating Committee considered an 

alternative version of the revenue model 

in which the CAT costs would be 

allocated between Industry Members 

and Participants based on a set 

percentage (e.g., 75%–25%) and the 

Industry Member allocation would be 

allocated among Industry Members 


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60For a discussion of alternatives considered in 

the drafting of the CAT NMS Plan, see Appendix 

C of the CAT NMS Plan at C–88–C–89. 

based on revenue and the Participant 

allocation would be allocated among 

Participants based on market share. 

However, this alternative revenue model 

failed to address the issues regarding the 

appropriate revenue calculations for 

Industry Members. 

d. Message Traffic Only Model 

The Operating Committee considered 

a funding model in which CAT costs 

were allocated across all CAT 

Reporters—both Industry Members and 

Participants—based on message traffic 

in the CAT. Specifically, the Operating 

Committee considered eliminating the 

concepts of a Participant allocation and 

an Industry Member allocation entirely, 

and treating Participants and Industry 

Members the same under the model. 

The use of message traffic, however, 

raised issues regarding the predictability 

of fees. It also introduced complexity to 

the model, as discounts were necessary 

for certain types of activity to avoid fees 

that may adversely impact market 

making activity and other market 

activity. 

e. Alternative Allocation for Executed 

Share Model 

The Operating Committee also 

discussed an alternative funding model 

that would calculate fees in a manner 

similar to the Executed Share Model, 

but would allocate the fee to one 

Industry Member, the CBS, rather than 

allocating one-third of the fees each to 

the CBS, the CBB and the applicable 

Participant. This allocation would more 

closely parallel the existing Section 31 

fee allocation structure that is already in 

place. This alternative allocation for the 

Executed Share Model would eliminate 

complexity from the fee process, 

including the process of allocating fees 

among Industry Members and 

Participants that are likely to be passed 

through to the ultimate investors, and 

would provide for a more transparent 

funding process for investors. Instead of 

using this approach, the Operating 

Committee determined to allocate costs 

among the main participants in a 

transaction and allow those participants 

to determine whether and how to 

recover the costs. 

f. Sales Value Model 

The Operating Committee also 

considered a funding model in which 

fees would be calculated based on 

transaction sales values, similar to the 

method used in the Section 31/sales 

value fee programs. Under this model, 

the per sales value fee rate would be 

calculated by dividing the annual CAT 

budget by the projected annual total 

industry transaction sales values. The 

fee would be calculated by multiplying 

the sales value fee rate by a given trade’s 

sales value. The CBB, the CBS and the 

relevant Participant would each be 

assessed one-third of the fee, or, in the 

alternative, the CBS would be assessed 

two-thirds of the fee and the relevant 

Participants would be assessed onethird of the fee. The same rate would 

apply to all transactions equally, 

regardless of the type of product in the 

trade (i.e., NMS Stocks, Listed Options 

or OTC Equity Securities). Based on an 

analysis of 2021 data, the Operating 

Committee observed that the sales value 

model could potentially impose a 

disproportionate share of the CAT costs 

on Participants and Industry Members 

trading NMS Stocks versus Listed 

Options. In comparison, also based on 

an analysis of 2021 data, the Operating 

Committee observed that the Executed 

Share Model would impose an equitable 

allocation of fees among Participants 

and Industry Members trading NMS 

Stocks and Listed Options, as well as 

OTC Equity Securities. 

g. Other Models 

The Operating Committee also 

considered other possible funding 

models. For example, the Participants 

considered allocating the CAT costs 

equally among each of the Participants, 

and then permitting each Participant to 

charge its own members as it deems 

appropriate. The Operating Committee 

determined that such an approach 

raised a variety of issues, including the 

likely inconsistency of the ensuing 

charges, potential for lack of 

transparency, and the impracticality of 

multiple SROs submitting invoices for 

CAT charges. The Operating Committee 

also discussed the advantages and 

disadvantages of various alternative 

models during the development of the 

CAT NMS Plan, such as a cost 

allocation based on a strict pro-rata 

distribution, regardless of the type or 

size of the CAT Reporters.60 The 

Operating Committee believes that the 

Executed Share Model provides 

advantages over each of these 

previously considered models and 

provides an equitable allocation of 

reasonable fees among CAT Reporters. 

7. Proposed Amendments to CAT NMS 

Plan for the Executed Share Model 

To implement the Executed Share 

Model and to impose the associated 

CAT fees on the Participants, the 

Operating Committee proposes to the 

amend CAT NMS Plan. The following 

discusses the proposed amendments to 

the CAT NMS Plan, including the 

addition of a Participant CAT fee 

schedule, entitled ‘‘Consolidated Audit 

Trail Funding Fees,’’ to Exhibit B [sic] 

of the CAT NMS Plan. 

a. Definition of Execution Venue 

Section 1.1 of the CAT NMS Plan 

defines the term ‘‘Execution Venue’’ to 

mean ‘‘a Participant or an alternative 

trading system (‘ATS’) (as defined in 

Rule 300 of Regulation ATS) that 

operates pursuant to Rule 301 of 

Regulation ATS (excluding any such 

ATS that does not execute orders).’’ 

Currently, the term ‘‘Execution Venue’’ 

is used in Section 11.2 and 11.3 of the 

CAT NMS Plan to describe how CAT 

costs would be allocated among CAT 

Reporters under the Original Funding 

Model. The Original Funding Model 

would have imposed fees based on 

market share to CAT Reporters that are 

Execution Venues, including ATSs, and 

fees based on message traffic for 

Industry Members’ non-ATS activities. 

In contrast, the Executed Share Model 

would impose fees based on the 

executed equivalent shares of 

transactions in Eligible Securities for 

three categories of CAT Reporters: 

Participants, CBBs and CBSs. 

Accordingly, as the concept for an 

‘‘Execution Venue’’ would not be 

relevant for the Executed Share Model, 

the Operating Committee proposes to 

delete this term and its definition from 

Section 1.1 of the CAT NMS Plan. 

b. Use of Executed Equivalent Shares for 

CAT Fees 

The Original Funding Model set forth 

in the CAT NMS Plan requires 

Participants and Execution Venue ATSs 

to pay CAT fees based on market share 

and Industry Members (other than 

Execution Venue ATSs) to pay CAT fees 

based on message traffic. The CAT NMS 

Plan also describes how the market 

share based fee would be calculated for 

Participants and other Execution Venue 

ATSs and how the message traffic-based 

fee would be calculated for Industry 

Members (other than Execution Venue 

ATSs). The Operating Committee 

proposes to amend the CAT NMS Plan 

to require each of the Participants, CBBs 

and CBSs to pay a CAT fee based on the 

number of executed equivalent shares in 

a transaction in Eligible Securities, 

rather than based on market share and 

message traffic. Accordingly, the 

Operating Committee proposes to 

amend Section 11.2(b) and (c) and 

Section 11.3(a) and (b) of the CAT NMS 

Plan to reflect the proposed use of the 

number of executed equivalent shares in 


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61As discussed in the next section, the Operating 

Committee also proposes to delete the reference to 

a ‘‘tiered’’ fee structure. 

transactions in Eligible Securities in 

calculating CAT Fees. 

Section 11.2(b) of the CAT NMS Plan 

states that ‘‘In establishing the funding 

of the Company, the Operating 

Committee shall seek . . . (b) to 

establish an allocation of the Company’s 

related costs among Participants and 

Industry Members that is consistent 

with the Exchange Act, taking into 

account the timeline for implementation 

of the CAT and distinctions in the 

securities trading operations of 

Participants and Industry Members and 

their relative impact upon Company 

resources and operations.’’ The 

Operating Committee proposes to delete 

the requirement to take into account 

‘‘distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

Company resources and operations.’’ 

This requirement related to using 

message traffic and market share in the 

calculation of CAT fees, as message 

traffic and market share were metrics 

related to the impact of a CAT Reporter 

on the Company’s resources and 

operations. With the proposed move to 

the use of the executed equivalent 

shares metric instead of message traffic 

and market share, the requirement is no 

longer relevant. 

Section 11.2(c) of the CAT NMS Plan 

states that ‘‘[i]n establishing the funding 

of the Company, the Operating 

Committee shall seek . . . (c) to 

establish a tiered fee structure in which 

the fees charged to: (i) CAT Reporters 

that are Execution Venues, including 

ATSs, are based upon the level of 

market share; (ii) Industry Members’ 

non-ATS activities are based upon 

message traffic.’’ The Operating 

Committee proposes to delete 

subparagraphs (i) and (ii) and replace 

these subparagraphs with the 

requirement that the fee structure in 

which the fees charged to ‘‘Participants 

and Industry Members are based upon 

the executed equivalent share volume of 

transactions in Eligible Securities.’’ 61

Section 11.3(a) of the CAT NMS Plan 

provides additional detail regarding the 

market share based fees to be paid by 

Participants and Execution Venue ATSs 

under the Original Funding Model. 

Specifically, Section 11.3(a) of the CAT 

NMS Plan states: 

(a) The Operating Committee will 

establish fixed fees to be payable by 

Execution Venues as provided in this 

Section 11.3(a): 

(i) Each Execution Venue that: (A) 

Executes transactions; or (B) in the case 

of a national securities association, has 

trades reported by its members to its 

trade reporting facility or facilities for 

reporting transactions effected 

otherwise than on an exchange, in NMS 

Stocks or OTC Equity Securities will 

pay a fixed fee depending on the market 

share of that Execution Venue in NMS 

Stocks and OTC Equity Securities, with 

the Operating Committee establishing at 

least two and no more than five tiers of 

fixed fees, based on an Execution 

Venue’s NMS Stocks and OTC Equity 

Securities market share. For these 

purposes, market share for Execution 

Venues that execute transactions will be 

calculated by share volume, and market 

share for a national securities 

association that has trades reported by 

its members to its trade reporting 

facility or facilities for reporting 

transactions effected otherwise than on 

an exchange in NMS Stocks or OTC 

Equity Securities will be calculated 

based on share volume of trades 

reported, provided, however, that the 

share volume reported to such national 

securities association by an Execution 

Venue shall not be included in the 

calculation of such national security 

association’s market share. 

(ii) Each Execution Venue that 

executes transactions in Listed Options 

will pay a fixed fee depending on the 

Listed Options market share of that 

Execution Venue, with the Operating 

Committee establishing at least two and 

no more than five tiers of fixed fees, 

based on an Execution Venue’s Listed 

Options market share. For these 

purposes, market share will be 

calculated by contract volume. 

The Operating Committee proposes to 

delete Section 11.3(a) of the CAT NMS 

Plan and replace this paragraph with a 

description of the fees to be paid by 

each Participant under the Executed 

Share Model. Specifically, proposed 

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

would state that ‘‘[e]ach Participant that 

is a national securities exchange will be 

required to pay a fee for each 

transaction in Eligible Securities 

executed on the exchange based on CAT 

Data. Each Participant that is a national 

securities association will be required to 

pay a fee for each transaction in Eligible 

Securities executed otherwise than on 

an exchange based on CAT Data.’’ 

Proposed Section 11.3(a)(ii) of the CAT 

NMS Plan would state that ‘‘[t]he fee for 

each transaction in Eligible Securities 

will be calculated by multiplying the 

number of executed equivalent shares in 

the transaction by one-third and by the 

applicable fee rate for the relevant 

period.’’ 

The Operating Committee proposes to 

add proposed Section 11.3(a)(iii), which 

would require Participants ‘‘to pay a 

CAT fee with regard to CAT costs not 

previously paid by the Participants 

(‘‘Prospective CAT Costs’’).’’ Proposed 

Section 11.3(a)(iii) would describe how 

the Fee Rate would be calculated for 

these CAT fees. Specifically, proposed 

Section 11.3(a)(iii) would state that 

‘‘[t]he Fee Rate for the CAT fees related 

to Prospective CAT Costs will be 

calculated by dividing the budgeted 

CAT costs for the relevant period (as 

determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data.’’ 

The Operating Committee would utilize 

budgeted costs in calculating the 

proposed forward-looking fees. 

The Operating Committee also 

proposes to add Section 11.3(a)(iv) to 

describe Participants’ obligations under 

the funding model with regard to CAT 

costs previously paid by Participants. 

Specifically, proposed Section 

11.3(a)(iv) would state that 

‘‘[n]otwithstanding anything to contrary, 

Participants will not be required to a 

pay a CAT fee related to CAT costs 

previously paid by the Participants in a 

manner determined by the Operating 

Committee (‘Past CAT Costs’).’’ 

Accordingly, under those 

circumstances, Industry Members 

would be required to pay two-thirds of 

such Past CAT Costs in accordance with 

the Executed Share Model. The 

Participants would remain responsible 

for the other one-third of the Past CAT 

Costs, but such one-third of the Past 

CAT Costs has already been paid in a 

manner determined by the Operating 

Committee; that one-third of Past CAT 

Costs would not be paid pursuant to the 

Executed Share Model. The two-thirds 

of the Past CAT Costs to be collected 

from Industry Members would be 

allocated to the Participants for 

repayment of the outstanding loan notes 

of the Participants to the Company on 

a pro rata basis. 

Section 11.3(b) of the CAT NMS Plan 

provides additional detail regarding the 

message traffic-based CAT fees to be 

paid by Industry Members (other than 

Execution Venue ATSs). Specifically, 

Section 11.3(b) of the CAT NMS Plan 

states: 

The Operating Committee will 

establish fixed fees to be payable by 

Industry Members, based on the 

message traffic generated by such 

Industry Member, with the Operating 

Committee establishing at least five and 

no more than nine tiers of fixed fees, 

based on message traffic. For the 

avoidance of doubt, the fixed fees 

payable by Industry Members pursuant 


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62For a discussion of comments on prior fee 

models, see, e.g., Securities Exchange Act Rel. No. 

80167 (June 30, 2017), 82 FR 31656, 31664 (July 7, 

2017). 

to this paragraph shall, in addition to 

any other applicable message traffic, 

include message traffic generated by: (i) 

An ATS that does not execute orders 

that is sponsored by such Industry 

Member; and (ii) routing orders to and 

from any ATS sponsored by such 

Industry Member. 

The Operating Committee proposes to 

delete Section 11.3(b) of the CAT NMS 

Plan and replace this paragraph with a 

description of the fees to be paid by 

CBBs and CBSs under the Executed 

Share Model as follows: 

The Operating Committee will 

establish fees to be payable by Industry 

Members as follows: 

(i) Each Industry Member that is the 

clearing firm for the buyer in a 

transaction in Eligible Securities 

(‘‘Clearing Broker for the Buyer’’ or 

‘‘CBB’’) will be required to pay a fee for 

each such transaction in Eligible 

Securities based on CAT Data. The 

CBB’s fee for each transaction Eligible 

Securities will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the Fee Rate. 

(ii) Each Industry Member that is the 

clearing firm for the seller in a 

transaction in Eligible Securities 

(‘‘Clearing Broker for the Seller’’ or 

‘‘CBS’’) will be required to pay a fee for 

each transaction in Eligible Securities 

based on CAT Data. The CBS’s fee for 

each transaction in Eligible Securities 

will be calculated by multiplying the 

number of executed equivalent shares in 

the transaction by one-third and the Fee 

Rate. 

The Operating Committee proposes to 

add proposed Section 11.3(b)(iii) to the 

CAT NMS Plan to further describe the 

fee obligations of CBBs and CBSs with 

regard to Past CAT Costs. Specifically, 

proposed Section 11.3(b)(iii) would 

state that ‘‘CBBs and CBSs will be 

required to pay CAT fees related to Past 

CAT Costs. The Fee Rate for the CAT 

fees related to Past CAT Costs will be 

calculated by dividing the Past CAT 

Costs for the relevant period (as 

determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data.’’ As 

discussed in detail above, the Operating 

Committee would utilize actual CAT 

costs in calculating these CAT fees. 

The Operating Committee also 

proposes to add proposed Section 

11.3(b)(iv) to the CAT NMS Plan to 

further describe the fee obligations of 

CBBs and CBSs with regard to 

Prospective CAT Costs. Specifically, 

proposed Section 11.3(b)(iv) would state 

that ‘‘CBBs and CBSs will be required to 

pay CAT fees related to Prospective 

CAT Costs. The Fee Rate for the CAT 

fees related to Prospective CAT Costs 

will be the same as set forth in 

paragraph (a)(iv) above.’’ Accordingly, 

the Participants, CBBs and CBSs would 

pay the same Fee Rate for CAT fees 

related to Prospective CAT Costs. 

c. Elimination of Tiered Fees 

The Operating Committee proposes to 

eliminate the use of tiered fees for the 

Executed Share Model. Instead, under 

the Executed Share Model, each 

Participant, CBB or CBS would pay a fee 

based solely on its transactions in 

Eligible Securities. The Operating 

Committee therefore proposes to amend 

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

11.3(b) of the CAT NMS Plan to 

eliminate tiered fees and related 

concepts. 

By removing the concept of fee tiering 

for both Industry Members and 

Participants, the Executed Share Model 

addresses various comments regarding 

the use of tiering.62 Utilizing a tiered fee 

structure, by its nature, would create 

certain inequities among the CAT fees 

paid by CAT Reporters. For example, 

two CAT Reporters with comparable 

executed equivalent share volume may 

pay notably different fees if one falls in 

a higher tier and the other falls within 

a lower tier. Correspondingly, a tiered 

fee structure generally reduces fees for 

CAT Reporters with higher executed 

share volume in one tier, while 

increasing fees for Industry Members 

with lower executed share volume in 

the same tier, as compared to a nontiered fee. Furthermore, CAT Reporters 

in lower tiers potentially pay more than 

they would without the use of tiers. 

While tiering appropriately exists in 

various other self-regulatory fee 

programs, in response to feedback on 

the 2018 and 2021 Fee Proposals, the 

Operating Committee is proposing to 

eliminate the tiering concept, rendering 

past comments about a tiered model 

moot. 

By charging each Participant, CBB 

and CBS a CAT fee directly based on its 

own executed equivalent share volume, 

rather than charging a tiered fee, the 

Executed Share Model would result in 

a CAT fee being tied more directly to the 

CAT Reporter’s executed share volume. 

In contrast, with a tiered fee, CAT 

Reporters with different levels of 

executed equivalent share volume that 

are placed in the same tier would all 

pay the same CAT fee, thereby limiting 

the correlation between a CAT 

Reporter’s activity and its CAT fee. 

The proposed non-tiering approach is 

simpler and more objective to 

administer than the tiering approach. 

With a tiering approach, the number of 

tiers for Participants, CBBs and CBSs, 

the boundaries for each tier and the fees 

assigned to each tier must be 

established. In the absence of clear 

groupings of CAT Reporters, selecting 

the number of, boundaries for, and the 

fees associated with each tier would be 

subject to some level of subjectivity. 

Furthermore, the establishment of tiers 

would need to be continually reassessed 

based on changes in the executed 

equivalent share volume of transactions 

in Eligible Securities, thereby requiring 

regular subjective assessments. 

Accordingly, the removal of tiering from 

the funding model eliminates a variety 

of subjective analyses and judgments 

from the model and simplifies the 

determination of CAT fees. 

Section 11.1(d) of the CAT NMS Plan 

states that ‘‘[c]onsistent with this Article 

XI, the Operating Committee shall adopt 

policies, procedures, and practices 

regarding the budget and budgeting 

process, assignment of tiers, resolution 

of disputes, billing and collection of 

fees, and other related matters.’’ With 

the elimination of tiered fees, the 

reference to the ‘‘assignment of tiers’’ 

would no longer be relevant for the 

Executed Share Model. Therefore, the 

Operating Committee proposes to delete 

the reference to ‘‘assignment of tiers’’ 

from Section 11.1(d). 

Section 11.1(d) of the CAT NMS Plan 

also states that: 

For the avoidance of doubt, as part of 

its regular review of fees for the CAT, 

the Operating Committee shall have the 

right to change the tier assigned to any 

particular Person in accordance with fee 

schedules previously filed with the 

Commission that are reasonable, 

equitable and not unfairly 

discriminatory and subject to public 

notice and comment, pursuant to this 

Article XI. Any such changes will be 

effective upon reasonable notice to such 

Person. 

As noted above, unlike the Original 

Funding Model, the Executed Share 

Model would not utilize tiered fees. 

Accordingly, these two sentences would 

not be applicable to the Executed Share 

Model. Therefore, the Operating 

Committee proposes to delete these two 

sentences from Section 11.1(d) of the 

CAT NMS Plan. 

The Operating Committee proposes to 

delete the reference to ‘‘tiered’’ fees 

from Section 11.2(c) of the CAT NMS 

Plan. Section 11.2(c) of the CAT NMS 

Plan states that ‘‘[i]n establishing the 


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63See, e.g., Securities Exchange Act Rel. No. 

82451 (Jan. 5, 2018), 83 FR 1399, 1406–07 (Jan. 11, 

2018). 

funding of the Company, the Operating 

Committee shall seek: . . . (c) to 

establish a tiered fee structure . . .’’ The 

Participants propose to delete the word 

‘‘tiered’’ from this provision as the CAT 

fees would not be tiered under the 

Executed Share Model. 

The Operating Committee also 

proposes to delete paragraph (iii) of 

Section 11.2(c) of the CAT NMS Plan. 

Paragraph (iii) of Section 11.2(c) of the 

CAT NMS Plan states that the Operating 

Committee shall seek to establish a 

tiered fee structure in which fees 

charged to: 

The CAT Reporters with the most CATrelated activity (measured by market share 

and/or message traffic, as applicable) be 

generally comparable (where for these 

comparability purposes, the tiered fee 

structure takes into consideration affiliations 

between or among CAT Reporters, whether 

Execution Venues and/or Industry Members). 

Under the Original Funding Model, 

the comparability provision was an 

important factor in determining the tiers 

for Industry Members and Execution 

Venues. In determining the tiers, the 

Operating Committee sought to establish 

comparable fees among the CAT 

Reporters with the most Reportable 

Events.63 Under the Executed Share 

Model, however, the comparability 

provision is no longer necessary, as a 

tiered fee structure would not be used 

for Industry Members or Participants. 

As discussed above, the Operating 

Committee proposes to replace the 

language in Sections 11.3(a) and (b) of 

the CAT NMS Plan with language 

implementing the Executed Share 

Model. These proposed changes would 

remove the references to tiers in 

Sections 11.3(a)(i) and (ii) and 11.3(b) of 

the CAT NMS Plan, along with the other 

proposed changes. Specifically, Section 

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

that the Operating Committee, when 

establishing fees for Execution Venues 

for NMS Stocks and OTC Equity 

Securities, will establish ‘‘at least two 

and no more than five tiers of fixed fees, 

based on an Execution Venue’s NMS 

Stocks and OTC Equity Securities 

market share.’’ Similarly, Section 

11.3(a)(ii) of the CAT NMS Plan states 

that the Operating Committee, when 

establishing fees for Execution Venues 

that execute transactions in Listed 

Options, will establish ‘‘at least two and 

no more than five tiers of fixed fees, 

based on an Execution Venue’s Listed 

Options market share.’’ Section 11.3(b) 

of the CAT NMS Plan states that the 

Operating Committee, when 

establishing fees to be payable by 

Industry Members, will establish ‘‘at 

least five and no more than nine tiers of 

fixed fees, based on message traffic.’’ 

The Operating Committee proposes to 

delete each of these references to tiers 

from the CAT NMS Plan. 

d. No Fixed Fees 

As discussed above, the Operating 

Committee proposes to replace the 

language in Sections 11.3(a) and (b) of 

the CAT NMS Plan with language 

implementing the Executed Share 

Model. These proposed changes also 

would remove the references to ‘‘fixed 

fees’’ in Sections 11.3(a), 11.3(a)(i) and 

11.3(a)(ii) and replaced them with 

references to ‘‘fees.’’ Under the Executed 

Share Model, the CAT fees to be paid by 

Participants, CBBs and CBSs will vary 

in accordance with their executed 

equivalent share volume of transactions 

in Eligible Securities, although the Fee 

Rate will be fixed for a relevant period. 

Therefore, the concept of a fixed fee— 

that is, a fee that does not vary 

depending on circumstances—is not 

relevant under the Executed Share 

Model. 

e. Proposed CAT Fee Schedule for 

Participants 

To implement the Participant CAT 

fees, the Operating Committee proposes 

to add a fee schedule, entitled 

‘‘Consolidated Audit Trail Funding 

Fees,’’ to Exhibit B [sic] of the CAT NMS 

Plan. Proposed paragraph (a) of the fee 

schedule would describe the CAT fee to 

be paid by the Participants under the 

Executed Share Model. Specifically, 

paragraph (a)(1) of the fee schedule 

would state that ‘‘[e]ach Participant that 

is a national securities exchange shall 

pay a fee for each transaction in Eligible 

Securities executed on the exchange 

based on CAT Data, where the fee for 

each transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the Fee Rate.’’ 

Paragraph (a)(2) of the fee schedule 

would state that ‘‘[e]ach Participant that 

is a national securities association shall 

pay a fee for each transaction in Eligible 

Securities executed otherwise than on 

exchange based on CAT Data, where the 

fee for each transaction will be 

calculated by multiplying the number of 

executed equivalent shares in the 

transaction by one-third and by the Fee 

Rate.’’ 

Proposed paragraph (b) of the fee 

schedule would describe how and when 

the Operating Committee would set the 

Fee Rate. Proposed paragraph (b)(1) of 

the fee schedule would state that ‘‘[t]he 

Operating Committee will calculate the 

Fee Rate at the beginning of each year 

by dividing the budgeted CAT costs for 

the year by the projected total executed 

equivalent share volume of all 

transactions in Eligible Securities for the 

year. After setting the Fee Rate at the 

beginning of the year, the Fee Rate may 

be adjusted once during the year, if 

necessary, due to changes in the 

budgeted or actual costs or projected or 

actual total executed equivalent share 

volume during the year.’’ 

Proposed paragraph (b)(2) of the fee 

schedule would describe the method for 

counting executed equivalent shares in 

a transaction in Eligible Securities. 

Specifically, proposed paragraph 

(b)(2)(i) would state that ‘‘each executed 

share for a transaction in NMS Stocks 

will be counted as one executed 

equivalent share.’’ Proposed paragraph 

(b)(2)(ii) of the fee schedule would state 

that ‘‘each executed contract for a 

transaction in Listed Options will be 

counted based on the multiplier 

applicable to the specific Listed Option 

(i.e., 100 executed equivalent shares or 

such other applicable multiplier).’’ 

Proposed paragraph (b)(2)(iii) of the fee 

schedule would state that ‘‘each 

executed share for a transaction in OTC 

Equity Securities shall be counted as 

0.01 executed equivalent share.’’ 

Proposed paragraph (b)(3) of the fee 

schedule would describe the budgeted 

CAT costs and adjustments to the 

budgeted CAT costs to be used in 

calculating the Fee Rate. Proposed 

paragraph (b)(3) of the fee schedule 

would state that ‘‘[t]he budgeted CAT 

costs for the year shall be comprised of 

all fees, costs and expenses budgeted to 

be incurred by or for the Company in 

connection with the development, 

implementation and operation of the 

CAT as set forth in the annual operating 

budget approved by the Operating 

Committee pursuant to Section 11.1(a) 

of the CAT NMS Plan, or as adjusted 

during the year by the Operating 

Committee.’’ 

Proposed paragraph (b)(4) of the fee 

schedule would describe the projected 

total executed equivalent share volume 

of transactions in Eligible Securities to 

be used in calculating the Fee Rate as 

well as any adjustments to such 

projections. Proposed paragraph (b)(4) 

of the fee schedule would state that 

‘‘[t]he Operating Committee shall 

determine the projected total executed 

equivalent share volume of all 

transactions in Eligible Securities for 

each relevant period based on the 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

prior six months.’’ 

Proposed paragraph (c) of the fee 

schedule would describe the payment of 


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64CAT NMS Plan Approval Order at 84792. 

the CAT fees by Participants. Proposed 

paragraph (c) would state that ‘‘[e]ach 

Participant shall pay the CAT fee set 

forth in paragraph (a) to Consolidated 

Audit Trail, LLC in the manner 

prescribed by Consolidated Audit Trail, 

LLC on a monthly basis based on the 

Participant’s transactions in the prior 

month.’’ 

8. Satisfaction of Exchange Act and CAT 

NMS Plan Requirements 

The Executed Share Model offers a 

variety of benefits and satisfies the 

funding principles and other 

requirements of the CAT NMS Plan, as 

proposed to be revised herein, as well 

as the applicable requirements of the 

Exchange Act. 

a. Funding Principle: Section 11.2(a) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principles set forth in 

Section 11.2(a) of the CAT NMS Plan, as 

proposed to be modified herein. Section 

11.2(a) requires the Operating 

Committee, in establishing the funding 

of the Company, to seek ‘‘to create 

transparent, predictable revenue streams 

for the Company that are aligned with 

the anticipated costs to build, operate 

and administer the CAT and the other 

costs of the Company.’’ 

First, by adopting a CAT-specific fee 

tied directly to CAT costs, the Operating 

Committee would be fully transparent 

regarding the costs of the CAT and how 

those costs would be allocated among 

CAT Reporters. The CAT fees would be 

designed solely to cover CAT costs, and 

no other regulatory costs. In contrast, 

charging a general regulatory fee, which 

might otherwise be used to cover CAT 

costs as well as other regulatory costs, 

would be less transparent than the 

selected approach of charging a fee 

designated to cover CAT-related costs 

only. Such a general regulatory fee 

could cover a variety of regulatory costs 

without differentiating those costs 

related to the CAT. 

Second, the Executed Share Model 

would provide a predictable revenue 

stream for the Company. The Executed 

Share Model is designed to collect the 

annual CAT costs each year, thereby 

providing for a predictable revenue 

stream. In addition, to address the 

possibility of some variability in the 

collected CAT fees, an unexpected 

increase in costs or variations from the 

budgeted costs or projected executed 

equivalent share volume of transactions 

in Eligible Securities, the CAT costs 

covered by the Executed Share Model 

would include an operational reserve. 

The operational reserve could be used 

in the event that the total CAT fees 

collected differ from the actual CAT 

costs. Moreover, the Executed Share 

Model includes a method for adjusting 

the calculation of the Fee Rate during 

the year if there are changes in the 

projected total volume of transactions in 

Eligible Securities or the CAT costs. 

Third, as discussed above, the 

Executed Share Model provides for a 

revenue stream for the Company that is 

aligned with the anticipated costs to 

build, operate and administer the CAT 

and the other costs of the Company. The 

total CAT fees to be collected from CAT 

Reporters are designed to cover the CAT 

costs. Any surpluses collected would be 

treated as an operational reserve to 

offset future fees and would not be 

distributed to the Participants as 

profits.64

b. Funding Principle: Section 11.2(b) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principle set forth in 

Section 11.2(b) of the CAT NMS Plan, 

as proposed to be amended herein, 

which would require the Operating 

Committee to seek ‘‘to establish an 

allocation of the Company’s related 

costs among Participants and Industry 

Members that is consistent with the 

Exchange Act, taking into account the 

timeline for implementation of the 

CAT.’’ As described in more detail 

below, the Executed Share Model 

establishes an allocation of Company’s 

related costs among Participants and 

Industry Members that is consistent 

with the Exchange Act. In addition, as 

described in more detail below, the 

Executed Share Model provides for an 

equitable allocation of reasonable dues, 

is not unfairly discriminatory and does 

not impose a burden on competition 

that is not necessary or appropriate in 

furtherance of the Exchange Act. In 

addition, the Executed Share Model 

takes into account the timeline for 

implementation of the CAT. The CAT 

fees are designed to cover the CAT costs 

for each relevant period. 

c. Funding Principle: Section 11.2(c) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principle set forth in 

Section 11.2(c) of the CAT NMS Plan, as 

proposed to be modified herein. Section 

11.2(c), as proposed to be modified 

herein, requires the Operating 

Committee to seek ‘‘to establish a fee 

structure in which the fees charged to 

Participants and Industry Members are 

based upon the executed equivalent 

share volume of transactions in Eligible 

Securities.’’ The Executed Share Model 

requires Participants and Industry 

Members to pay a fee based upon the 

executed equivalent share volume of 

transactions in Eligible Securities. 

d. Funding Principle: Section 11.2(d) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principle set forth in 

Section 11.2(d) of the CAT NMS Plan, 

which requires the Operating 

Committee to seek ‘‘to provide for ease 

of billing and other administrative 

functions.’’ The Executed Share Model 

satisfies this principle in several ways. 

The Executed Share Model is modeled 

after the existing Section 31-related fee 

programs, with which the Participants 

and Industry Members have a 

longstanding familiarity. The Executed 

Share Model relies upon a basic 

calculation using a predetermined Fee 

Rate along with an Industry Member or 

Participant’s own information regarding 

its executed equivalent share volume, 

thereby making the fee determination a 

straightforward process. 

Furthermore, the Executed Share 

Model provides CAT Reporters with 

predictable CAT fees. Because the Fee 

Rate is established in advance for a 

relevant time period, Participants, CBBs 

and CBSs know the CAT fee that applies 

to each transaction when it occurs. 

Accordingly, Participants, CBBs and 

CBSs are able to easily estimate and 

validate their applicable fees based on 

their own trading data. In addition, to 

the extent any CAT fees are passed on 

to customers, the customers, too, can 

calculate the applicable CAT fee for 

each transaction. 

e. Funding Principle: Section 11.2(e) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principle set forth in 

Section 11.2(e) of the CAT NMS Plan, 

which requires the Operating 

Committee to seek ‘‘to avoid any 

disincentives such as placing an 

inappropriate burden on competition 

and a reduction in market quality.’’ The 

Executed Share Model would operate in 

a manner similar to the funding models 

employed by the SEC and the 

Participants related to Section 31 of the 

Exchange Act, the FINRA TAF and the 

ORF. These fees are long-standing, and 

have been approved by the Commission 

as satisfying the requirements under the 

Exchange Act, including not imposing a 

burden on the competition that is not 

necessary or appropriate under the 

Exchange Act. In addition, the Executed 

Share Model avoids potentially 

burdensome fees for market makers or 

other market participants based on 

message traffic. Furthermore, the 


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65 Id. 

66 26 U.S.C. 501(c)(6). 

67CAT NMS Plan Approval Order at 84793. 

68Sections 6(b)(4) and 15A(b)(5) of the Exchange 

Act. 

69The SEC has noted that SRO transaction fees 

account for a significant portion of SRO revenue. 

Securities Exchange Act Rel. No. 50700 (Nov. 18, 

2004); 69 FR 71256, 71271 (Dec. 8, 2004). 

70See, e.g., NYSE Price List; Nasdaq Price List. 

Executed Share Model addresses the 

specific trading characteristics of Listed 

Options and OTC Equity Securities to 

avoid adverse effects of the trading of 

those instruments. For example, the 

Executed Share Model also includes the 

discounting of transactions involving 

OTC Equity Shares which, given the 

volume of shares typically involved in 

such securities transactions, otherwise 

may result in disproportionate fees to 

market participants transaction these 

securities. 

The Executed Share Model also 

would not unfairly burden FINRA or 

any of the exchanges. The Executed 

Share Model is designed to be neutral as 

to the manner of execution and place of 

execution. The CAT fees would be the 

same regardless of whether the 

transaction is executed on an exchange 

or in the over-the-counter market. All 

Participants are SROs that have the 

same regulatory responsibilities under 

the Exchange Act. Their usage of CAT 

Data will be for the same regulatory 

purposes. By treating each Participant 

the same, the CAT fees would not 

become a competitive issue by and 

among the Participants. 

The Executed Share Model also 

would not unfairly burden CBBs and 

CBSs. The Operating Committee 

determined to charge CBBs and CBSs, 

rather than Industry Members buyers 

and sellers more generally, because such 

a fee collection model is currently used 

and well-known in the securities 

markets. For example, SRO members 

regularly rely on their clearing firms to 

assist with the payment of SRO fees. As 

a result, the CAT fees could be paid by 

Industry Members without requiring 

significant and potentially costly 

changes. In addition, this approach 

would limit the number of Industry 

Members charged a CAT fee to a few 

hundred, rather than a few thousand, 

thereby limiting the costs for collecting 

the fees. Moreover, the CBBs and CBSs 

would be permitted, but not required, to 

pass their CAT fees through to their 

customers, who, in turn, could pass 

their CAT fees to their customers, until 

the fee is imposed on the ultimate 

participant in the transaction. With such 

a pass through, the CBBs and CBSs 

would not ultimately incur the cost of 

all CAT fees related to the transactions 

that they clear. 

f. Funding Principle: Section 11.2(f) of 

the CAT NMS Plan 

The Executed Share Model satisfies 

the funding principle set forth in 

Section 11.2(f) of the CAT NMS Plan, 

which requires the Operating 

Committee to seek ‘‘to build financial 

stability to support the Company as a 

going concern.’’ The Operating 

Committee believes that the Executed 

Share Model is structured to collect 

sufficient funds to pay for the cost of the 

CAT going forward. In addition, the 

Executed Share Model would collect an 

operational reserve for the CAT. This 

operational reserve is intended to 

address potential shortfalls in collected 

CAT fees versus actual CAT costs. 

Moreover, the Executed Share Model 

includes a method for adjusting the 

calculation of the Fee Rate during the 

year if there are changes in the projected 

total volume of transactions in Eligible 

Securities or the CAT costs. 

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

The Executed Share Model would 

satisfy the requirements in Section 

11.1(c) of the CAT NMS Plan. Section 

11.1(c) of the CAT NMS Plan states that 

‘‘[t]o fund the development and 

implementation of the CAT, the 

Company shall time the imposition and 

collection of all fees on Participants and 

Industry Members in a manner 

reasonably related to the timing when 

the Company expects to incur such 

development and implementation 

costs.’’ The CAT fees are designed to 

cover the CAT costs for a relevant 

period. As such, on a going forward 

basis, they are designed to be imposed 

close in time to when costs are incurred. 

Section 11.1(c) of the CAT NMS Plan 

also requires that ‘‘[a]ny surplus of the 

Company’s resources over its expenses 

shall be treated as an operational reserve 

to offset future fees.’’ The Company 

would operate on a ‘‘break-even’’ basis, 

with fees imposed to cover costs and an 

appropriate reserve. Any surpluses 

would not be distributed to the 

Participants as profits.65 In addition, as 

set forth in Article VIII of the CAT NMS 

Plan, the Company ‘‘intends to operate 

in a manner such that it qualifies as a 

‘business league’ within the meaning of 

Section 501(c)(6) of the [Internal 

Revenue] Code.’’ To qualify as a 

business league, an organization must 

‘‘not [be] organized for profit and no 

part of the net earnings of [the 

organization can] inure[ ] to the benefit 

of any private shareholder or 

individual.’’ 66 As the SEC stated when 

approving the CAT NMS Plan, ‘‘the 

Commission believes that the 

Company’s application for Section 

501(c)(6) business league status 

addresses issues raised by commenters 

about the Plan’s proposed allocation of 

profit and loss by mitigating concerns 

that the Company’s earnings could be 

used to benefit individual 

Participants.’’ 67 The Internal Revenue 

Service has determined that the 

Company is exempt from federal income 

tax under Section 501(c)(6) of the 

Internal Revenue Code. 

h. Equitable Allocation of Reasonable 

Fees 

The proposed CAT fees provide for 

the ‘‘equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities necessary or 

appropriate in furtherance of the 

purposes of this chapter,’’ 68 as required 

by the Exchange Act. The Operating 

Committee believes that the CAT fees 

equitably allocate CAT costs between 

and among Participants and Industry 

Members, as discussed in detailed 

above. For the reasons discussed above, 

the Operating Committee believes that 

the allocation of one-third of the CAT 

costs each to Participants, CBBs and 

CBSs in the Executed Share Model as 

well as the use of the total equivalent 

share volume of transactions in Eligible 

Securities for allocating costs provide 

for an equitable allocation of CAT costs 

among CAT Reporters. 

The Operating Committee also 

believes that the Executed Share Model 

would provide for reasonable fees. The 

transaction-based fees contemplated by 

the Executed Share Model are a 

reasonable fee structure. The SROs have 

a long history of charging transactionbased fees, as transactions are the 

intended economic goal of the securities 

markets. In addition to the transactionbased regulatory fees discussed above 

(e.g., the SROs’ Section 31-related fees, 

the FINRA TAF and the ORF), the SROs 

charge a variety of other types of 

transaction fees to fund their 

operations.69 Indeed, each of the SROs 

collect transaction-based fees from their 

members.70 In each case, the 

transaction-based fees charged by SROs 

have been subject to the fee filing 

process and found to satisfy the 

requirements of the Exchange Act. Not 

only is the type of fee reasonable, but 

the level of the fee is reasonable as well. 

Although the exact Fee Rate to be paid 

for any particular period will be 

determined at a later date, the 

illustrative example provides a pertransaction Fee Rate that is not 


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71Sections 6(b)(5) and 15A(b)(6) of the Exchange 

Act. 

72Sections 6(b)(8) and 15A(b)(9) of the Exchange 

Act. 

73Although the FINRA TAF is designed to cover 

a subset of the costs of FINRA services (e.g., costs 

to FINRA of the supervision and regulation of 

members, including performing examinations, 

financial monitoring, and policy, rulemaking, 

interpretive, and enforcement activities) rather than 

all of FINRA’s costs like the CAT, the transactionbased calculation of the FINRA TAF and the 

proposed CAT fees are similar. 

74 17 CFR 242.608(b)(1). 

excessive in comparison to existing 

transaction fee rates. 

i. No Unfair Discrimination 

The Executed Share Model is ‘‘not 

designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers,’’ 71 as 

required by the Exchange Act. In 

addition, the Executed Share Model 

does not unfairly discriminate between 

Industry Members and Participants, 

among Industry Members or among 

Participants. Both Participants and 

Industry Members would contribute to 

the cost of the CAT; Participants alone 

would no longer be required to shoulder 

the burden without the contribution of 

Industry Members. In addition, both 

Participants and Industry Members 

would pay a fee based on the total 

equivalent share volume of their 

transactions in Eligible Securities; the 

type of metric would not vary based on 

whether the CAT Reporter is an 

Industry Member or Participant. 

Furthermore, the Fee Rate would be 

the same regardless of the type of venue 

a trade was executed on, or how the 

trade ultimately occurred more 

generally (e.g., in a manner that 

generated more message traffic). In 

addition, the Executed Share Model 

recognizes the different trading 

characteristics of Listed Options and 

OTC Equity Securities as compared to 

NMS Stocks. The Executed Share Model 

recognizes that Listed Option trade in 

contracts rather than shares, and, 

therefore, counts the executed 

equivalent shares for Listed Options 

accordingly. Similarly, in recognition of 

the different trading characteristics of 

OTC Equity Securities as compared to 

NMS Stocks, the Executed Share Model 

would discount the share volume of 

OTC Equity Securities when calculating 

the CAT fees. Furthermore, although the 

fee would be charged to the CBB and the 

CBS, the CBB and CBS may pass 

through the fee to their clients. 

Therefore, CBBs and CBSs would not 

need to bear all the CAT costs for 

Industry Members. As a result, the 

Executed Share Model would not favor 

or unfairly burden any one type of 

trading venue, product or product type. 

With the elimination of tiers, fees for 

Industry Members and Participants are 

directly related to their executed 

equivalent share volume of their 

transactions. With tiers, the relationship 

between a CAT Reporter’s share volume 

and the CAT fee would not have been 

as direct. 

j. No Burden on Competition 

The Executed Share Model does ‘‘not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of this chapter,’’ 72 as 

required by the Exchange Act. 

Moreover, the Operating Committee 

believes that the proposed fee schedule 

fairly and equitably allocates costs 

among CAT Reporters. The Executed 

Share Model would operate in a manner 

similar to the funding model employed 

by the SEC and the Participants related 

to Section 31 of the Exchange Act as 

well as the FINRA TAF 73 and the ORF 

rules, and these long-standing fees to 

cover regulatory costs have been 

approved by the Commission as 

satisfying the requirements under the 

Exchange Act, including not imposing a 

burden on the competition that is not 

necessary or appropriate under the 

Exchange Act. Furthermore, the 

Executed Share Model does not impose 

a burden on competition for reasons set 

forth above in Section A.8.e above. 

B. Governing or Constituent Documents 

Not applicable. 

C. Implementation of Amendment 

The Participants are filing this 

proposed amendment pursuant to Rule 

608(b)(1) of Regulation NMS under the 

Exchange Act.74

D. Development and Implementation 

Phases 

The Participants expect to implement 

the proposed Participant CAT fees upon 

approval by the SEC, provided, 

however, that the Participant CAT fees 

would not be collected unless the 

Industry Member CAT fees for the same 

time period are effective at that time. 

E. Analysis of Impact on Competition 

The Operating Committee does not 

believe that the proposed amendment 

would result in any burden on 

competition that is not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. The 

Operating Committee notes that the 

proposed amendment implements 

provisions of the CAT NMS Plan 

approved by the Commission, subject to 

proposed revisions to the CAT NMS 

Plan described above, and is designed to 

assist the Participants in meeting their 

regulatory obligations pursuant to the 

Plan. Because all Participants are 

subject to the Executed Share Model set 

forth in the proposed amendment, this 

is not a competitive filing that raises 

competition issues between and among 

the Participants. Furthermore, for the 

reasons discussed above, including in 

Sections A.8.e and A.8.j above, the 

Operating Committee does not believe 

that the Executed Share Model would 

result in any burden on competition that 

is not necessary or appropriate in 

furtherance of the purpose of the 

Exchange Act. 

F. Written Understanding or Agreements 

Relating to Interpretation of, or 

Participation in, Plan 

Not applicable. 

G. Approval by Plan Sponsors in 

Accordance With Plan 

Section 12.3 of the CAT NMS Plan 

states that, subject to certain exceptions, 

the CAT NMS Plan may be amended 

from time to time only by a written 

amendment, authorized by the 

affirmative vote of not less than twothirds of all of the Participants, that has 

been approved by the SEC pursuant to 

Rule 608 of Regulation NMS under the 

Exchange Act or has otherwise become 

effective under Rule 608 of Regulation 

NMS under the Exchange Act. In 

addition, Section 4.3(a)(vi) of the Plan 

requires the Operating Committee, by 

Majority Vote, to authorize action to 

determine the appropriate fundingrelated policies, procedures and 

practices-consistent with Article XI. The 

Operating Committee has satisfied both 

of these requirements. In addition, the 

Executed Share Model was discussed 

and voted on during a general session of 

the Operating Committee. 

H. Description of Operation of Facility 

Contemplated by the Proposed 

Amendment 

Not applicable. 

I. Terms and Conditions of Access 

Not applicable. 

J. Method of Determination and 

Imposition, and Amount of, Fees and 

Charges 

Section A of this letter describes in 

detail how the Participants developed 

the Executed Share Model for the CAT. 

K. Method and Frequency of Processor 

Evaluation 

Not applicable. 


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75See Securities Exchange Act Rel. No. 81500 

(Aug. 30, 2017), 82 FR 42143 (Sept. 6, 2017). 76 17 CFR 200.30–3(a)(85). 

L. Dispute Resolution 

Section 11.5 of the CAT NMS Plan 

addresses the resolution of disputes 

regarding CAT fees charged to 

Participants and Industry Members. 

Specifically, Section 11.5 of the CAT 

NMS Plan states that 

[d]isputes with respect to fees the Company 

charges Participants pursuant to Article XI of 

the CAT NMS Plan shall be determined by 

the Operating Committee or a Subcommittee 

designated by the Operating Committee. 

Decisions by the Operating Committee or 

such designated Subcommittee on such 

matters shall be binding on Participants, 

without prejudice to the rights of any 

Participant to seek redress from the SEC 

pursuant to Rule 608 of Regulation NMS 

under the Exchange Act or in any other 

appropriate forum. 

In addition, the Participants adopted 

rules to establish the procedures for 

resolving potential disputes related to 

CAT fees charged to Industry 

Members.75

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views and 

arguments concerning the foregoing, 

including whether the amendment is 

consistent with the Exchange 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 4– 

698 on the subject line. 

Paper Comments 

• Send paper comments to Secretary, 

Securities and Exchange Commission, 

100 F Street NE, Washington, DC 

20549–1090. 

All submissions should refer to File 

Number 4–698. This file number should 

be included on the subject line if email 

is used. To help the Commission 

process and review your comments 

more efficiently, please use only one 

method. The Commission will post all 

comments on the Commission’s internet 

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

sro.shtml). Copies of the submission, all 

subsequent amendments, all written 

statements with respect to the proposed 

plan amendment that are filed with the 

Commission, and all written 

communications relating to the 

amendment 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 such filing also will be 

available for inspection and copying at 

the Participants’ offices. All comments 

received will be posted without change. 

Persons submitting comments are 

cautioned that we do not redact or edit 

personal identifying information from 

comment submissions. You should 

submit only information that you wish 

to make available publicly. All 

submissions should refer to File 

Number 4–698 and should be submitted 

on or before June 22, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.76

J. Matthew DeLesDernier, 

Assistant Secretary. 

Exhibit A 

Additions italicized; deletions 

[bracketed] 

* * * * * 

Article I 

Definitions 

* * * * * 

[‘‘Execution Venue’’ means a 

Participant or an alternative trading 

system (‘‘ATS’’) (as defined in Rule 300 

of Regulation ATS) that operates 

pursuant to Rule 301 of Regulation ATS 

(excluding any such ATS that does not 

execute orders).] 

* * * * * 

Article XI 

Funding of the Company 

Section 11.1. Funding Authority. 

(a) On an annual basis the Operating 

Committee shall approve an operating 

budget for the Company. The budget 

shall include the projected costs of the 

Company, including the costs of 

developing and operating the CAT for 

the upcoming year, and the sources of 

all revenues to cover such costs, as well 

as the funding of any reserve that the 

Operating Committee reasonably deems 

appropriate for prudent operation of the 

Company. 

(b) Subject to Section 11.2, the 

Operating Committee shall have 

discretion to establish funding for the 

Company, including: (i) Establishing 

fees that the Participants shall pay; and 

(ii) establishing fees for Industry 

Members that shall be implemented by 

Participants. The Participants shall file 

with the SEC under Section 19(b) of the 

Exchange Act any such fees on Industry 

Members that the Operating Committee 

approves, and such fees shall be labeled 

as ‘‘Consolidated Audit Trail Funding 

Fees.’’ 

(c) To fund the development and 

implementation of the CAT, the 

Company shall time the imposition and 

collection of all fees on Participants and 

Industry Members in a manner 

reasonably related to the timing when 

the Company expects to incur such 

development and implementation costs. 

In determining fees on Participants and 

Industry Members the Operating 

Committee shall take into account fees, 

costs and expenses (including legal and 

consulting fees and expenses) incurred 

by the Participants on behalf of the 

Company prior to the Effective Date in 

connection with the creation and 

implementation of the CAT, and such 

fees, costs and expenses shall be fairly 

and reasonably shared among the 

Participants and Industry Members. Any 

surplus of the Company’s revenues over 

its expenses shall be treated as an 

operational reserve to offset future fees. 

(d) Consistent with this Article XI, the 

Operating Committee shall adopt 

policies, procedures, and practices 

regarding the budget and budgeting 

process, [assignment of tiers,] resolution 

of disputes, billing and collection of 

fees, and other related matters. [For the 

avoidance of doubt, as part of its regular 

review of fees for the CAT, the 

Operating Committee shall have the 

right to change the tier assigned to any 

particular Person in accordance with fee 

schedules previously filed with the 

Commission that are reasonable, 

equitable and not unfairly 

discriminatory and subject to public 

notice and comment, pursuant to this 

Article XI. Any such changes will be 

effective upon reasonable notice to such 

Person.] 

Section 11.2. Funding Principles. In 

establishing the funding of the 

Company, the Operating Committee 

shall seek: 

(a) To create transparent, predictable 

revenue streams for the Company that 

are aligned with the anticipated costs to 

build, operate and administer the CAT 

and the other costs of the Company; 

(b) to establish an allocation of the 

Company’s related costs among 

Participants and Industry Members that 

is consistent with the Exchange Act, 

taking into account the timeline for 

implementation of the CAT [and 

distinctions in the securities trading 

operations of Participants and Industry 

Members and their relative impact upon 

Company resources and operations]; 


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(c) to establish a [tiered] fee structure 

in which the fees charged to [: (i)] 

Participants and [CAT Reporters that 

are Execution Venues, including ATSs, 

are based upon the level of market 

share; (ii)] Industry Members[’ non-ATS 

activities] are based upon the executed 

equivalent share volume of transactions 

in Eligible Securities [message traffic; 

and (iii) the CAT Reporters with the 

most CAT-related activity (measured by 

market share and/or message traffic, as 

applicable) are generally comparable 

(where, for these comparability 

purposes, the tiered fee structure takes 

into consideration affiliations between 

or among CAT Reporters, whether 

Execution Venues and/or Industry 

Members)]. 

(d) to provide for ease of billing and 

other administrative functions; 

(e) to avoid any disincentives such as 

placing an inappropriate burden on 

competition and a reduction in market 

quality; and 

(f) to build financial stability to 

support the Company as a going 

concern. 

Section 11.3. Recovery. 

(a) The Operating Committee will 

establish [fixed] fees to be payable by 

Participants [Execution Venues] as 

follows [provided in this Section 

11.3(a)]: 

(i) Each Participant that is a national 

securities exchange will be required to 

pay a fee for each transaction in Eligible 

Securities executed on the exchange 

based on CAT Data. Each Participant 

that is a national securities association 

will be required to pay a fee for each 

transaction in Eligible Securities 

executed otherwise than on an exchange 

based on CAT Data. 

(ii) The fee for each transaction in 

Eligible Securities will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the applicable fee rate 

for the relevant period (‘‘Fee Rate’’). 

(iii) Participants will be required to 

pay a CAT fee with regard to CAT costs 

not previously paid by the Participants 

(‘‘Prospective CAT Costs’’). The Fee Rate 

for the CAT fees related to Prospective 

CAT Costs will be calculated by dividing 

the budgeted CAT costs for the relevant 

period (as determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data. 

(iv) Notwithstanding anything to 

contrary, Participants will not be 

required to a pay a CAT fee related to 

CAT costs previously paid by the 

Participants in a manner determined by 

the Operating Committee (‘‘Past CAT 

Costs’’). 

[(i) Each Execution Venue that: (A) 

Executes transactions; or (B) in the case 

of a national securities association, has 

trades reported by its members to its 

trade reporting facility or facilities for 

reporting transactions effected 

otherwise than on an exchange, in NMS 

Stocks or OTC Equity Securities will 

pay a fixed fee depending on the market 

share of that Execution Venue in NMS 

Stocks and OTC Equity Securities, with 

the Operating Committee establishing at 

least two and no more than five tiers of 

fixed fees, based on an Execution 

Venue’s NMS Stocks and OTC Equity 

Securities market share. For these 

purposes, market share for Execution 

Venues that execute transactions will be 

calculated by share volume, and market 

share for a national securities 

association that has trades reported by 

its members to its trade reporting 

facility or facilities for reporting 

transactions effected otherwise than on 

an exchange in NMS Stocks or OTC 

Equity Securities will be calculated 

based on share volume of trades 

reported, provided, however, that the 

share volume reported to such national 

securities association by an Execution 

Venue shall not be included in the 

calculation of such national security 

association’s market share.] 

[(ii) Each Execution Venue that 

executes transactions in Listed Options 

will pay a fixed fee depending on the 

Listed Options market share of that 

Execution Venue, with the Operating 

Committee establishing at least two and 

no more than five tiers of fixed fees, 

based on an Execution Venue’s Listed 

Options market share. For these 

purposes, market share will be 

calculated by contract volume.] 

(b) The Operating Committee will 

establish [fixed] fees to be payable by 

Industry Members as follows: 

(i) Each Industry Member that is the 

clearing firm for the buyer in a 

transaction in Eligible Securities 

(‘‘Clearing Broker for the Buyer’’ or 

‘‘CBB’’) will be required to pay a fee for 

each such transaction in Eligible 

Securities based on CAT Data. The 

CBB’s fee for each transaction in Eligible 

Securities will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the Fee Rate. 

(ii) Each Industry Member that is the 

clearing firm for the seller in a 

transaction in Eligible Securities 

(‘‘Clearing Broker for the Seller’’ or 

‘‘CBS’’) will be required to pay a fee for 

each transaction in Eligible Securities 

based on CAT Data. The CBS’s fee for 

each transaction in Eligible Securities 

will be calculated by multiplying the 

number of executed equivalent shares in 

the transaction by one-third and by the 

Fee Rate. [, based on the message traffic 

generated by such Industry Member, 

with the Operating Committee 

establishing at least five and no more 

than nine tiers of fixed fees, based on 

message traffic. For the avoidance of 

doubt, the fixed fees payable by 

Industry Members pursuant to this 

paragraph shall, in addition to any other 

applicable message traffic, include 

message traffic generated by: (i) an ATS 

that does not execute orders that is 

sponsored by such Industry Member; 

and (ii) routing orders to and from any 

ATS sponsored by such Industry 

Member.] 

(iii) CBBs and CBSs will be required 

to pay CAT fees related to Past CAT 

Costs. The Fee Rate for the CAT fees 

related to Past CAT Costs will be 

calculated by dividing the Past CAT 

Costs for the relevant period (as 

determined by the Operating 

Committee) by the projected total 

executed equivalent share volume of all 

transactions in Eligible Securities for the 

relevant period based on CAT Data. 

(iv) CBBs and CBSs will be required to 

pay CAT fees related to Prospective CAT 

Costs. The Fee Rate for the CAT fees 

related to Prospective CAT Costs will be 

the same as set forth in paragraph (a)(iv) 

above. 

(c) The Operating Committee may 

establish any other fees ancillary to the 

operation of the CAT that it reasonably 

determines appropriate, including fees: 

(i) for the late or inaccurate reporting of 

information to the CAT; (ii) for 

correcting submitted information; and 

(iii) based on access and use of the CAT 

for regulatory and oversight purposes 

(and not including any reporting 

obligations). 

(d) The Company shall make publicly 

available a schedule of effective fees and 

charges adopted pursuant to this 

Agreement as in effect from time to 

time. The Operating Committee shall 

review such fee schedule on at least an 

annual basis and shall make any 

changes to such fee schedule that it 

deems appropriate. The Operating 

Committee is authorized to review such 

fee schedule on a more regular basis, but 

shall not make any changes on more 

than a semiannual basis unless, 

pursuant to a Supermajority Vote, the 

Operating Committee concludes that 

such change is necessary for the 

adequate funding of the Company. 

* * * * * 


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Appendix B 

Fee Schedule 

Consolidated Audit Trail Funding Fees 

for Participants 

(a) CAT Fee 

(1) Each Participant that is a national 

securities exchange shall pay a fee for 

each transaction in Eligible Securities 

executed on the exchange based on CAT 

Data, where the fee for each transaction 

will be calculated by multiplying the 

number of executed equivalent shares in 

the transaction by one-third and by the 

Fee Rate. 

(2) Each Participant that is a national 

securities association shall pay a fee for 

each transaction in Eligible Securities 

executed otherwise than on exchange 

based on CAT Data, where the fee for 

each transaction will be calculated by 

multiplying the number of executed 

equivalent shares in the transaction by 

one-third and by the Fee Rate. 

(b) Fee Rate 

(1) The Operating Committee will 

calculate the Fee Rate at the beginning 

of each year by dividing the budgeted 

CAT costs for the year by the projected 

total executed equivalent share volume 

of all transactions in Eligible Securities 

for the year. After setting the Fee Rate 

at the beginning of each year, the Fee 

Rate may be adjusted once during the 

year, if necessary, due to changes in the 

budgeted or actual costs or projected or 

actual total executed equivalent share 

volume during the year. 

(2) For purposes of calculating the 

fees, executed equivalent shares in a 

transaction in Eligible Securities will be 

counted as follows: 

(i) each executed share for a 

transaction in NMS Stocks will be 

counted as one executed equivalent 

share; 

(ii) each executed contract for a 

transaction in Listed Options will be 

counted based on the multiplier 

applicable to the specific Listed Option 

(i.e., 100 executed equivalent shares or 

such other applicable multiplier); and 

(iii) each executed share for a 

transaction in OTC Equity Securities 

shall be counted as 0.01 executed 

equivalent share. 

(3) Budgeted CAT Costs. The 

budgeted CAT costs for the year shall be 

comprised of all fees, costs and 

expenses budgeted to be incurred by or 

for the Company in connection with the 

development, implementation and 

operation of the CAT as set forth in the 

annual operating budget approved by 

the Operating Committee pursuant to 

Section 11.1(a) of the CAT NMS Plan, or 

as adjusted during the year by the 

Operating Committee. 

(4) Projected Total Executed 

Equivalent Share Volume of 

Transactions in Eligible Securities. The 

Operating Committee shall determine 

the projected total executed equivalent 

share volume of all transactions in 

Eligible Securities for each relevant 

period based on the executed equivalent 

share volume of all transactions in 

Eligible Securities for the prior six 

months. 

(c) Fee Payments/Collection. Each 

Participant shall pay the CAT fee set 

forth in paragraph (a) to Consolidated 

Audit Trail, LLC in the manner 

prescribed by Consolidated Audit Trail, 

LLC on a monthly basis based on the 

Participant’s transactions in the prior 

month. 

* * * * * 

Exhibit B 

The following sets forth an illustrative 

example of calculated under the 

Executed Share Model based on the 

budgeted annual CAT Costs for 2022 

and the actual total executed equivalent 

share volume of transactions in Eligible 

Securities in 2021. Note Exhibit B only 

provides an illustrative example of how 

the Executed Share Model would 

operate; the calculation of actual fees 

will differ from this example in various 

ways. For example, the Participants 

have paid or will have paid some or all 

of these costs up to the time of any SEC 

approval of the Executed Share Model, 

and, as a result, Participants would not 

be obligated to pay CAT fees related to 

2022 CAT costs to the extent the 

Participants have already paid such 

costs. In addition, the illustrative 

example calculates the fee rate using the 

total executed equivalent share 

transactions in Eligible Securities for 

2021, rather than the projected volume 

for 2022 based on the previous six 

months. Furthermore, the CAT 

Reporters’ monthly CAT fee is not based 

on the CAT Reporters’ transactions from 

the prior month; instead, it is calculated 

by using each CAT Reporter’s 

transactions in 2021 and dividing the 

result by twelve. 

CAT Fee Example for Illustrative 

Purposes Only 

Budgeted CAT Costs for 2022: 

$165,841,447.00. 

Total Executed Equivalent Share 

Volume of Transactions in Eligible 

Securities for 2021: 3,963,697,612,395. 

Fee Rate: $0.0000418401 per executed 

equivalent share. 

PARTICIPANT CAT FEES

Participant 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee 77 Monthly CAT fee 

1 ................................................................................................................................. 46,400,250,500 $647,130.15 $53,927.51 

2 ................................................................................................................................. 204,330,644,337 2,849,737.21 237,478.10 

3 ................................................................................................................................. 40,241,451,971 561,235.26 46,769.61 

4 ................................................................................................................................. 37,837,901,411 527,713.68 43,976.14 

5 ................................................................................................................................. 239,781,829,838 3,344,164.09 278,680.34 

6 ................................................................................................................................. 149,570,501,700 2,086,014.19 173,834.52 

7 ................................................................................................................................. 36,318,789,800 506,527.09 42,210.59 

8 ................................................................................................................................. 1,361,484,729,008 18,988,212.50 1,582,351.04 

9 ................................................................................................................................. 64,139,149,375 894,529.16 74,544.10 

10 ............................................................................................................................... 51,910,120,400 723,974.63 60,331.22 

11 ............................................................................................................................... 55,784,034,310 778,002.92 64,833.58 

12 ............................................................................................................................... 38,683,005,800 539,500.09 44,958.34 

13 ............................................................................................................................... 531,025,057,170 7,406,044.60 617,170.38 

14 ............................................................................................................................... 30,117,744,430 420,043.00 35,003.58 

15 ............................................................................................................................... 135,340,379,281 1,887,551.01 157,295.92 

16 ............................................................................................................................... 62,342,194,800 869,467.59 72,455.63 

17 ............................................................................................................................... 39,349,215,400 548,791.51 45,732.63 

18 ............................................................................................................................... 14,998,526,300 209,179.87 17,431.66 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 33247 

77Under the Executed Share Model, Participants, 

CBBs and CBSs will pay a monthly fee based on 

actual executed equivalent share volume for the prior calendar month. The annual CAT fee is 

provided here for informational purposes only. 

PARTICIPANT CAT FEES—Continued 

Participant 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee 77 Monthly CAT fee 

19 ............................................................................................................................... 277,173,161,059 3,865,649.59 322,137.47 

20 ............................................................................................................................... 345,397,838,631 4,817,158.37 401,429.86 

21 ............................................................................................................................... 90,011,105,331 1,255,357.45 104,613.12 

22 ............................................................................................................................... 30,979,556,597 432,062.43 36,005.20 

23 ............................................................................................................................... 5,507,340,998 76,809.21 6,400.77 

24 ............................................................................................................................... 5,581,710 77.85 6.49 

25 ............................................................................................................................... 74,967,502,238 1,045,548.90 87,129.08 

INDUSTRY MEMBER CAT FEES 78

CBBs & CBSs 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee Monthly CAT fee 

1 ................................................................................................................................. 859,841,671,740 $11,991,949.69 $999,329.14 

2 ................................................................................................................................. 778,256,091,356 10,854,100.47 904,508.37 

3 ................................................................................................................................. 740,559,440,045 10,328,356.76 860,696.40 

4 ................................................................................................................................. 536,740,052,223 7,485,749.89 623,812.49 

5 ................................................................................................................................. 467,988,393,675 6,526,891.47 543,907.62 

6 ................................................................................................................................. 380,556,173,472 5,307,500.95 442,291.75 

7 ................................................................................................................................. 350,408,314,337 4,887,037.94 407,253.16 

8 ................................................................................................................................. 316,955,750,074 4,420,485.23 368,373.77 

9 ................................................................................................................................. 312,687,014,481 4,360,950.47 363,412.54 

10 ............................................................................................................................... 291,608,017,108 4,066,968.12 338,914.01 

11 ............................................................................................................................... 285,766,444,467 3,985,497.49 332,124.79 

12 ............................................................................................................................... 257,779,680,900 3,595,174.63 299,597.89 

13 ............................................................................................................................... 220,269,528,700 3,072,031.97 256,002.66 

14 ............................................................................................................................... 145,075,274,359 2,023,320.63 168,610.05 

15 ............................................................................................................................... 141,826,246,034 1,978,007.42 164,833.95 

16 ............................................................................................................................... 139,111,829,825 1,940,150.28 161,679.19 

17 ............................................................................................................................... 126,903,666,123 1,769,886.75 147,490.56 

18 ............................................................................................................................... 117,993,448,569 1,645,618.66 137,134.89 

19 ............................................................................................................................... 109,530,158,500 1,527,583.73 127,298.64 

20 ............................................................................................................................... 108,170,149,680 1,508,616.10 125,718.01 

21 ............................................................................................................................... 94,948,734,900 1,324,221.06 110,351.76 

22 ............................................................................................................................... 80,808,074,508 1,127,005.58 93,917.13 

23 ............................................................................................................................... 77,877,312,671 1,086,131.14 90,510.93 

24 ............................................................................................................................... 71,627,190,900 998,962.60 83,246.88 

25 ............................................................................................................................... 65,979,744,166 920,199.38 76,683.28 

26 ............................................................................................................................... 62,476,795,435 871,344.82 72,612.07 

27 ............................................................................................................................... 59,962,856,615 836,283.68 69,690.31 

28 ............................................................................................................................... 53,277,619,100 743,046.71 61,920.56 

29 ............................................................................................................................... 48,251,539,722 672,949.52 56,079.13 

30 ............................................................................................................................... 43,794,466,264 610,788.07 50,899.01 

31 ............................................................................................................................... 40,818,110,970 569,277.75 47,439.81 

32 ............................................................................................................................... 39,413,060,847 549,681.95 45,806.83 

33 ............................................................................................................................... 25,642,997,831 357,635.07 29,802.92 

34 ............................................................................................................................... 24,274,017,616 338,542.32 28,211.86 

35 ............................................................................................................................... 24,265,127,300 338,418.33 28,201.53 

36 ............................................................................................................................... 23,768,492,482 331,491.92 27,624.33 

37 ............................................................................................................................... 20,802,708,100 290,129.03 24,177.42 

38 ............................................................................................................................... 20,019,521,644 279,206.17 23,267.18 

39 ............................................................................................................................... 18,035,978,054 251,542.29 20,961.86 

40 ............................................................................................................................... 16,828,270,736 234,698.76 19,558.23 

41 ............................................................................................................................... 16,627,104,316 231,893.16 19,324.43 

42 ............................................................................................................................... 16,270,456,203 226,919.09 18,909.92 

43 ............................................................................................................................... 15,560,896,419 217,023.08 18,085.26 

44 ............................................................................................................................... 15,340,132,696 213,944.15 17,828.68 

45 ............................................................................................................................... 14,357,387,825 200,238.11 16,686.51 

46 ............................................................................................................................... 13,794,427,204 192,386.67 16,032.22 


jspears on DSK121TN23PROD with NOTICES1
33248 Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 

INDUSTRY MEMBER CAT FEES 78—Continued 

CBBs & CBSs 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee Monthly CAT fee 

47 ............................................................................................................................... 10,844,249,411 151,241.44 12,603.45 

48 ............................................................................................................................... 10,345,612,840 144,287.11 12,023.93 

49 ............................................................................................................................... 10,047,142,100 140,124.43 11,677.04 

50 ............................................................................................................................... 9,676,729,440 134,958.40 11,246.53 

51 ............................................................................................................................... 9,525,189,150 132,844.91 11,070.41 

52 ............................................................................................................................... 9,497,695,858 132,461.47 11,038.46 

53 ............................................................................................................................... 9,141,959,858 127,500.13 10,625.01 

54 ............................................................................................................................... 9,111,887,600 127,080.72 10,590.06 

55 ............................................................................................................................... 8,246,296,500 115,008.58 9,584.05 

56 ............................................................................................................................... 7,409,804,367 103,342.28 8,611.86 

57 ............................................................................................................................... 5,943,333,522 82,889.86 6,907.49 

58 ............................................................................................................................... 5,537,962,838 77,236.28 6,436.36 

59 ............................................................................................................................... 4,969,306,436 69,305.40 5,775.45 

60 ............................................................................................................................... 4,858,930,658 67,766.02 5,647.17 

61 ............................................................................................................................... 4,724,287,600 65,888.20 5,490.68 

62 ............................................................................................................................... 4,688,574,389 65,390.12 5,449.18 

63 ............................................................................................................................... 4,619,665,921 64,429.07 5,369.09 

64 ............................................................................................................................... 4,586,579,797 63,967.63 5,330.64 

65 ............................................................................................................................... 4,552,355,173 63,490.31 5,290.86 

66 ............................................................................................................................... 4,530,370,991 63,183.70 5,265.31 

67 ............................................................................................................................... 4,432,887,822 61,824.14 5,152.01 

68 ............................................................................................................................... 4,188,226,789 58,411.92 4,867.66 

69 ............................................................................................................................... 4,095,928,162 57,124.66 4,760.39 

70 ............................................................................................................................... 3,615,599,600 50,425.67 4,202.14 

71 ............................................................................................................................... 3,411,736,434 47,582.45 3,965.20 

72 ............................................................................................................................... 3,411,224,100 47,575.30 3,964.61 

73 ............................................................................................................................... 3,290,953,800 45,897.93 3,824.83 

74 ............................................................................................................................... 3,199,333,714 44,620.13 3,718.34 

75 ............................................................................................................................... 2,924,604,582 40,788.57 3,399.05 

76 ............................................................................................................................... 2,888,374,000 40,283.27 3,356.94 

77 ............................................................................................................................... 2,839,512,902 39,601.82 3,300.15 

78 ............................................................................................................................... 2,659,506,700 37,091.33 3,090.94 

79 ............................................................................................................................... 2,537,489,086 35,389.59 2,949.13 

80 ............................................................................................................................... 2,459,185,612 34,297.51 2,858.13 

81 ............................................................................................................................... 2,395,884,300 33,414.67 2,784.56 

82 ............................................................................................................................... 2,336,005,686 32,579.56 2,714.96 

83 ............................................................................................................................... 2,328,536,077 32,475.38 2,706.28 

84 ............................................................................................................................... 2,006,993,344 27,990.92 2,332.58 

85 ............................................................................................................................... 1,991,341,100 27,772.63 2,314.39 

86 ............................................................................................................................... 1,926,691,600 26,870.98 2,239.25 

87 ............................................................................................................................... 1,818,491,446 25,361.95 2,113.50 

88 ............................................................................................................................... 1,807,513,774 25,208.84 2,100.74 

89 ............................................................................................................................... 1,798,384,897 25,081.53 2,090.13 

90 ............................................................................................................................... 1,499,870,900 20,918.24 1,743.19 

91 ............................................................................................................................... 1,407,921,581 19,635.85 1,636.32 

92 ............................................................................................................................... 1,343,940,690 18,743.53 1,561.96 

93 ............................................................................................................................... 1,292,476,485 18,025.78 1,502.15 

94 ............................................................................................................................... 1,263,050,400 17,615.38 1,467.95 

95 ............................................................................................................................... 1,259,148,848 17,560.97 1,463.41 

96 ............................................................................................................................... 1,239,077,200 17,281.03 1,440.09 

97 ............................................................................................................................... 1,229,508,300 17,147.58 1,428.96 

98 ............................................................................................................................... 1,192,809,266 16,635.75 1,386.31 

99 ............................................................................................................................... 1,161,692,310 16,201.77 1,350.15 

100 ............................................................................................................................. 1,103,718,859 15,393.23 1,282.77 

101 ............................................................................................................................. 1,036,854,477 14,460.69 1,205.06 

102 ............................................................................................................................. 903,767,212 12,604.57 1,050.38 

103 ............................................................................................................................. 764,853,800 10,667.18 888.93 

104 ............................................................................................................................. 749,409,514 10,451.79 870.98 

105 ............................................................................................................................. 736,464,500 10,271.25 855.94 

106 ............................................................................................................................. 579,536,030 8,082.61 673.55 

107 ............................................................................................................................. 574,150,273 8,007.50 667.29 

108 ............................................................................................................................. 554,402,371 7,732.08 644.34 

109 ............................................................................................................................. 528,767,825 7,374.56 614.55 

110 ............................................................................................................................. 475,219,998 6,627.75 552.31 

111 ............................................................................................................................. 439,220,400 6,125.67 510.47 

112 ............................................................................................................................. 403,544,995 5,628.12 469.01 

113 ............................................................................................................................. 389,096,923 5,426.62 452.22 

114 ............................................................................................................................. 352,562,888 4,917.09 409.76 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 33249 

INDUSTRY MEMBER CAT FEES 78—Continued 

CBBs & CBSs 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee Monthly CAT fee 

115 ............................................................................................................................. 324,569,237 4,526.67 377.22 

116 ............................................................................................................................. 287,942,268 4,015.84 334.65 

117 ............................................................................................................................. 279,648,356 3,900.17 325.01 

118 ............................................................................................................................. 268,773,558 3,748.50 312.38 

119 ............................................................................................................................. 242,088,969 3,376.34 281.36 

120 ............................................................................................................................. 240,735,871 3,357.47 279.79 

121 ............................................................................................................................. 227,696,800 3,175.62 264.63 

122 ............................................................................................................................. 223,889,862 3,122.52 260.21 

123 ............................................................................................................................. 219,207,411 3,057.22 254.77 

124 ............................................................................................................................. 215,960,600 3,011.94 250.99 

125 ............................................................................................................................. 208,506,846 2,907.98 242.33 

126 ............................................................................................................................. 177,727,500 2,478.71 206.56 

127 ............................................................................................................................. 175,224,523 2,443.80 203.65 

128 ............................................................................................................................. 156,286,900 2,179.69 181.64 

129 ............................................................................................................................. 150,735,418 2,102.26 175.19 

130 ............................................................................................................................. 148,742,902 2,074.47 172.87 

131 ............................................................................................................................. 119,952,427 1,672.94 139.41 

132 ............................................................................................................................. 118,614,304 1,654.28 137.86 

133 ............................................................................................................................. 95,597,569 1,333.27 111.11 

134 ............................................................................................................................. 85,976,961 1,199.09 99.92 

135 ............................................................................................................................. 81,558,800 1,137.48 94.79 

136 ............................................................................................................................. 73,755,556 1,028.65 85.72 

137 ............................................................................................................................. 73,265,165 1,021.81 85.15 

138 ............................................................................................................................. 70,050,100 976.97 81.41 

139 ............................................................................................................................. 57,611,957 803.50 66.96 

140 ............................................................................................................................. 50,604,392 705.76 58.81 

141 ............................................................................................................................. 42,751,230 596.24 49.69 

142 ............................................................................................................................. 41,893,367 584.27 48.69 

143 ............................................................................................................................. 36,371,376 507.26 42.27 

144 ............................................................................................................................. 34,981,349 487.87 40.66 

145 ............................................................................................................................. 34,223,462 477.30 39.78 

146 ............................................................................................................................. 32,885,122 458.64 38.22 

147 ............................................................................................................................. 32,396,791 451.83 37.65 

148 ............................................................................................................................. 28,510,532 397.63 33.14 

149 ............................................................................................................................. 23,936,450 333.83 27.82 

150 ............................................................................................................................. 23,569,357 328.71 27.39 

151 ............................................................................................................................. 20,131,196 280.76 23.40 

152 ............................................................................................................................. 19,520,773 272.25 22.69 

153 ............................................................................................................................. 14,373,735 200.47 16.71 

154 ............................................................................................................................. 14,322,926 199.76 16.65 

155 ............................................................................................................................. 12,213,708 170.34 14.20 

156 ............................................................................................................................. 6,548,894 91.34 7.61 

157 ............................................................................................................................. 6,017,900 83.93 6.99 

158 ............................................................................................................................. 3,678,840 51.31 4.28 

159 ............................................................................................................................. 3,035,249 42.33 3.53 

160 ............................................................................................................................. 2,036,500 28.40 2.37 

161 ............................................................................................................................. 1,670,000 23.29 1.94 

162 ............................................................................................................................. 1,498,709 20.90 1.74 

163 ............................................................................................................................. 1,106,266 15.43 1.29 

164 ............................................................................................................................. 1,085,833 15.14 1.26 

165 ............................................................................................................................. 656,400 9.15 0.76 

166 ............................................................................................................................. 456,577 6.37 0.53 

167 ............................................................................................................................. 355,000 4.95 0.41 

168 ............................................................................................................................. 205,844 2.87 0.24 

169 ............................................................................................................................. 189,206 2.64 0.22 

170 ............................................................................................................................. 100,000 1.39 0.12 

171 ............................................................................................................................. 78,367 1.09 0.09 

172 ............................................................................................................................. 50,000 0.70 0.06 

173 ............................................................................................................................. 49,658 0.69 0.06 

174 ............................................................................................................................. 19,500 0.27 0.02 

175 ............................................................................................................................. 10,000 0.14 0.01 

176 ............................................................................................................................. 4,200 0.06 0.00 

177 ............................................................................................................................. 2,200 0.03 0.00 

178 ............................................................................................................................. 1,379 0.02 0.00 

179 ............................................................................................................................. 300 0.00 0.00 

180 ............................................................................................................................. 225 0.00 0.00 

181 ............................................................................................................................. 125 0.00 0.00 

182 ............................................................................................................................. 18 0.00 0.00 


jspears on DSK121TN23PROD with NOTICES1
33250 Federal Register / Vol. 87, No. 105 / Wednesday, June 1, 2022 / Notices 

78The Operating Committee recognizes that an 

Industry Member’s knowledge of its own fees in the 

illustrative example would be helpful in analyzing 

the Executed Share Model. Accordingly, if a CBB 

or CBS is interested in learning which anonymized 

CBB or CBS in the illustrative example represents 

its volume and fees, the CBB or CBS may contact 

the FINRA CAT Helpdesk by email at help@

finracat.com. Industry Members other than CBBs 

and CBSs will not be charged a fee under the 

Executed Share Model; however, CBBs and CBSs 

may choose to pass-through CAT fees to such 

Industry Members. Therefore, if an Industry 

Member other than a CBB or CBS is interested in 

learning its associated volume in the illustrative 

example and potential fee (assuming the CBB or 

CBS passes the fee through), the Industry Member 

may also contact the FINRA Helpdesk by email at 

help@finracat.com. Accordingly, subject to 

verification of the identity of the requesting party 

as an authorized representative of the relevant 

Industry Member, the Helpdesk will provide the 

authorized representative of the CBB or CBS with 

the number of the applicable anonymized CBB or 

CBS in Exhibit B. or the authorized representative 

of the Industry Member other than the CBB or CBS 

with its associated volume and potential passthrough fee from the illustrative example. 

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

2 17 CFR 240.19b–4. 

3The Trust was formed as a Delaware statutory 

trust on June 22, 2021 and is operated as a grantor 

trust for U.S. federal tax purposes. The Trust has 

no fixed termination date. 

4The Commission approved BZX Rule 14.11(e)(4) 

in Securities Exchange Act Release No. 65225 

(August 30, 2011), 76 FR 55148 (September 6, 2011) 

(SR–BATS–2011–018). 

5All statements and representations made in this 

filing regarding (a) the description of the portfolio, 

(b) limitations on portfolio holdings or reference 

assets, or (c) the applicability of Exchange rules and 

surveillance procedures shall constitute continued 

listing requirements for listing the Shares on the 

Exchange. 

6The Exchange notes that a different proposal to 

list and trade shares of the Trust was disapproved 

by the Commission on March 31, 2022. See 

Exchange Act Release No. 94571 (March 31, 2022), 

87 FR 20014 (April 6, 2022). 

7See draft Registration Statement on Form S–1, 

dated June 28, 2021 submitted to the Commission 

by the Sponsor on behalf of the Trust. The 

descriptions of the Trust, the Shares, and the Index 

(as defined below) contained herein are based, in 

part, on information in the Registration Statement. 

The Registration Statement is not yet effective and 

the Shares will not trade on the Exchange until 

such time that the Registration Statement is 

effective. 

8See Securities Exchange Act Release No. 83723 

(July 26, 2018), 83 FR 37579 (August 1, 2018). This 

proposal was subsequently disapproved by the 

Commission. See Securities Exchange Act Release 

No. 83723 (July 26, 2018), 83 FR 37579 (August 1, 

2018) (the ‘‘Winklevoss Order’’). 

9See streetTRACKS Gold Shares, Exchange Act 

Release No. 50603 (Oct. 28, 2004), 69 FR 64614, 

64618–19 (Nov. 5, 2004) (SR–NYSE–2004–22) (the 

‘‘First Gold Approval Order’’); iShares COMEX 

Gold Trust, Exchange Act Release No. 51058 (Jan. 

19, 2005), 70 FR 3749, 3751, 3754–55 (Jan. 26, 2005) 

(SR–Amex–2004–38); iShares Silver Trust, 

Exchange Act Release No. 53521 (Mar. 20, 2006), 71 

FR 14967, 14968, 14973–74 (Mar. 24, 2006) (SR– 

Amex–2005–072); ETFS Gold Trust, Exchange Act 

Release No. 59895 (May 8, 2009), 74 FR 22993, 

22994–95, 22998, 23000 (May 15, 2009) (SR– 

NYSEArca–2009–40); ETFS Silver Trust, Exchange 

Act Release No. 59781 (Apr. 17, 2009), 74 FR 18771, 

INDUSTRY MEMBER CAT FEES 78—Continued 

CBBs & CBSs 

Executed equivalent share volume 

of transactions in 

eligible securities 

for 2021 

Annual CAT fee Monthly CAT fee 

183 ............................................................................................................................. 3 0.00 0.00 

[FR Doc. 2022–11675 Filed 5–31–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94982; File No. SR– 

CboeBZX–2022–031] 

Self-Regulatory Organizations; Cboe 

BZX Exchange, Inc.; Notice of Filing of 

a Proposed Rule Change To List and 

Trade Shares of the ARK 21Shares 

Bitcoin ETF Under BZX Rule 

14.11(e)(4), Commodity-Based Trust 

Shares 

May 25, 2022. 

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

Securities Exchange Act of 1934 (the 

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

notice is hereby given that on May 13, 

2022, Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the Exchange. 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 

Cboe BZX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BZX’’) is filing with the 

Securities and Exchange Commission 

(‘‘Commission’’) a proposed rule change 

to list and trade shares of the ARK 

21Shares Bitcoin ETF (the ‘‘Trust’’),3

under BZX Rule 14.11(e)(4), 

Commodity-Based Trust Shares. 

The text of the proposed rule change 

is also available on the Exchange’s 

website (http://markets.cboe.com/us/ 

equities/regulation/rule_filings/bzx/), at 

the Exchange’s Office of the Secretary, 

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 

Exchange included statements 

concerning the purpose of and basis for 

the proposed rule change and discussed 

any comments it received on the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. The 

Exchange 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 

The Exchange proposes to list and 

trade the Shares under BZX Rule 

14.11(e)(4),4 which governs the listing 

and trading of Commodity-Based Trust 

Shares on the Exchange.5 6 21Shares US 

LLC is the sponsor of the Trust (the 

‘‘Sponsor’’). The Shares will be 

registered with the Commission by 

means of the Trust’s registration 

statement on Form S–1 (the 

‘‘Registration Statement’’).7 As further 

discussed below, the Commission has 

historically approved or disapproved 

exchange filings to list and trade series 

of Trust Issued Receipts, including spotbased Commodity-Based Trust Shares, 

on the basis of whether the listing 

exchange has in place a comprehensive 

surveillance sharing agreement with a 

regulated market of significant size 

related to the underlying commodity to 

be held.8 Prior orders from the 

Commission have pointed out that in 

every prior approval order for 

Commodity-Based Trust Shares, there 

has been a derivatives market that 

represents the regulated market of 

significant size, generally a Commodity 

Futures Trading Commission (the 

‘‘CFTC’’) regulated futures market.9


jspears on DSK121TN23PROD with NOTICES1