Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42247 

36 17 CFR 200.30–3(a)(12). 

1The Participants include BOX Exchange LLC, 

Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., 

Cboe C2 Exchange, Inc., Cboe EDGA Exchange, Inc., 

Cboe EDGX 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. 

2See Securities Exchange Act Release No. 67457 

(July 18, 2012), 77 FR 45722 (Aug. 1, 2012) (‘‘Rule 

613 Adopting Release’’). 

3Securities Exchange Act Release No. 78318 

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

(‘‘CAT NMS Plan Approval Order’’). The CAT NMS 

Plan is Exhibit A to the CAT NMS Plan Approval 

Order. See CAT NMS Plan Approval Order, at 

84943–85034. The CAT NMS Plan functions as the 

limited liability company agreement of the jointly 

owned limited liability company formed under 

Delaware state law through which the Participants 

conduct the activities of the CAT (the ‘‘Company’’). 

Each Participant is a member of the Company and 

jointly owns the Company on an equal basis. The 

Participants submitted to the Commission a 

proposed amendment to the CAT NMS Plan on 

Aug. 29, 2019, which they designated as effective 

on filing. Under the amendment, the limited 

liability company agreement of a new limited 

liability company named Consolidated Audit Trail, 

LLC serves as the CAT NMS Plan, replacing in its 

entirety the CAT NMS Plan. See Securities 

Exchange Act Release No. 87149 (Sept. 27, 2019), 

84 FR 52905 (Oct. 3, 2019). 

4See Securities Exchange Act Release No. 90689 

(Dec. 16, 2020), 85 FR 83667 (Dec. 22, 2020) (the 

‘‘First Order’’); see also Letter from Michael Simon, 

CAT NMS Plan Operating Committee Chair, to 

Vanessa Countryman, Secretary, Commission, dated 

Dec. 1, 2020, available at ≤https://catnmsplan.com/ 

sites/default/files/2020-12/12.01.20-CATExemption-Request-OTQT.pdf (‘‘Participant 

Letter’’). 

5See Securities Exchange Act Release No. 90688 

(Dec. 16, 2020), 85 FR 83634 (Dec. 22, 2020) (the 

‘‘Second Order’’). 

6 Id. at 83634. 

7See Motion for Partial Stay of Order 34–90689, 

at 2 (‘‘First Motion’’); Motion for Partial Stay of 

Order 34–90688, at 2 (‘‘Second Motion’’). Financial 

Industry Regulatory Authority, Inc. and Long-Term 

Stock Exchange, Inc. did not join these motions. 

8See Petition for Review, USCA Case No. 21– 

1065; Petition for Review, USCA Case No. 21–1066. 

Financial Industry Regulatory Authority, Inc., 

Investors Exchange LLC, Long-Term Stock 

Exchange, Inc., MEMX LLC, Miami International 

Securities Exchange LLC, MIAX Emerald, LLC, and 

MIAX PEARL, LLC did not join these petitions. 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for website viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE, 

Washington, DC 20549 on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of DTC and on DTCC’s website 

(http://dtcc.com/legal/sec-rulefilings.aspx). All comments received 

will be posted without change. Persons 

submitting comments are cautioned that 

we do not redact or edit personal 

identifying information from comment 

submissions. You should submit only 

information that you wish to make 

available publicly. All submissions 

should refer to File Number SR–DTC– 

2022–008 and should be submitted on 

or before August 4, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–15002 Filed 7–13–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–95234] 

Order Granting Temporary Conditional 

Exemptive Relief, Pursuant to Section 

36 of the Securities Exchange Act of 

1934 (‘‘Exchange Act’’) and Rule 608(e) 

of Regulation NMS Under the 

Exchange Act, From Certain 

Requirements of the National Market 

System Plan Governing the 

Consolidated Audit Trail 

July 8, 2022. 

I. Introduction 

In July 2012, the Securities and 

Exchange Commission (the 

‘‘Commission’’ or the ‘‘SEC’’) adopted 

Rule 613 of Regulation NMS, which 

required national securities exchanges 

and national securities associations (the 

‘‘Participants’’) 1 to jointly develop and 

submit to the Commission a national 

market system plan to create, 

implement, and maintain a consolidated 

audit trail (the ‘‘CAT’’).2 The goal of 

Rule 613 was to create a modernized 

audit trail system that would provide 

regulators with timely access to a 

comprehensive set of trading data, thus 

enabling regulators to more efficiently 

and effectively analyze and reconstruct 

market events, monitor market behavior, 

conduct market analysis to support 

regulatory decisions, and perform 

surveillance, investigation, and 

enforcement activities. On November 

15, 2016, the Commission approved the 

national market system plan required by 

Rule 613 (the ‘‘CAT NMS Plan’’).3

The Commission recognizes that the 

Participants have expended, and 

continue to expend, substantial 

resources and effort towards the 

development and implementation of the 

CAT. To provide the Participants with 

more time to meet certain requirements 

of the CAT NMS Plan and thereby allow 

the Participants to prioritize and focus 

resources on meeting other 

implementation goals, the Commission 

issued two exemptive orders on 

December 16, 2020 (collectively, the 

‘‘prior Orders’’). In the first order, in 

response to a request from the 

Participants, the Commission granted 

temporary conditional relief from 

certain performance requirements 

related to the online targeted query tool 

(‘‘OTQT’’).4 The second order granted 

temporary conditional relief from the 

following requirements: (1) 

requirements for lifecycle linkages 

timeframes; (2) requirements for reprocessing of corrected data received 

after T+5; (3) linkage requirements for 

Securities Information Processor data 

(‘‘SIP Data’’); (4) reporting requirements 

for port-level settings; (5) requirements 

for lifecycle linkages between customer 

orders and ‘‘representative’’ orders; and 

(6) requirements for Participant 

reporting of rejected orders.5 Although 

the Participants did not request the 

relief granted in the Second Order, the 

Commission believed that granting such 

relief was necessary in order to ‘‘provide 

Participants the time to develop the 

necessary technological, system or 

procedural changes to meet the CAT 

NMS Plan requirements’’ at stake.6

On February 14, 2021, a subset of the 

Participants filed motions requesting 

that the Commission stay the December 

2020 orders, based on their concern that 

portions of the orders ‘‘interpret and 

apply the Plan in ways that will 

produce unintended adverse 

consequences, present implementation 

challenges, or both.’’ 7 Corresponding 

petitions for judicial review were also 

filed with the D.C. Circuit by a smaller 

subset of the Participants.8 In their 

motions to stay and supporting 

materials, the Participants urged the 

Commission to consider their 

‘‘arguments and supporting evidence 

and to reevaluate whether the Order[s] 

[were] appropriate in light of that 


jspears on DSK121TN23PROD with NOTICES1
42248 Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 

9First Motion, supra note 7, at 2; Second Motion, 

supra note 7, at 2. 

10First Motion, supra note 7, at 2; Second 

Motion, supra note 7, at 2. 

11See Letter from K. King, Counsel for 

Consolidated Audit Trail, LLC, Covington & Burling 

LLP, to Vanessa Countryman, Secretary, 

Commission (Jan. 12, 2022). 

12 In May 2020, the Commission adopted 

amendments to the CAT NMS Plan that establish 

four Financial Accountability Milestones and set 

target deadlines by which these milestones must be 

achieved. These amendments also reduce the 

amount of any fees, costs, and expenses that the 

Participants may recover from Industry Members if 

the Participants fail to meet the target deadlines. 

See Securities Exchange Act Release No. 88890 

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

Commission believes it is most appropriate to 

consider whether the Participants have met the 

target deadlines established for each Financial 

Accountability Milestone in connection with 

proposals related to the imposition of CAT fees on 

broker-dealers. For that reason, in issuing this 

Order, the Commission makes no determinations 

regarding the Participants’ compliance or noncompliance with the conditions set forth in the 

prior Orders or the potential impact of such 

compliance or non-compliance on the Participants’ 

ability to meet the Financial Accountability 

Milestones set forth in Section 1.1 of the CAT NMS 

Plan or the potential application of fee reduction 

provisions set forth in Section 11.6 of the CAT NMS 

Plan. Rather, the Commission will consider the 

Participants’ compliance with the CAT NMS Plan 

requirements, and/or compliance with the 

conditions set forth in the prior Orders and the 

Third Order and the impact of that compliance, in 

the context of such fee proposals. Moreover, the 

Commission makes no determinations regarding the 

Participants’ compliance or non-compliance with 

other provisions or requirements of the CAT NMS 

Plan that are not discussed in the prior Orders or 

in this Order. 

13 15 U.S.C. 78mm(a)(1). 

14 17 CFR 242.608(e). 

15 ‘‘Plan Processor’’ is a defined term under the 

CAT NMS Plan and means ‘‘the Initial Plan 

Processor or any other Person selected by the 

Operating Committee pursuant to SEC Rule 613 and 

Sections 4.3(b)(i) and 6.1, and with regard to the 

Initial Plan Processor, the Selection Plan, to 

perform the CAT processing functions required by 

SEC Rule 613 and set forth in this Agreement.’’ See 

CAT NMS Plan, supra note 3, at Section 1.1. 

16 ‘‘CAT Data’’ is a defined term under the CAT 

NMS Plan and means ‘‘data derived from 

information.’’ 9 Alternatively, the 

Participants requested that the 

Commission stay portions of the prior 

Orders pending resolution of the 

petitions for judicial review.10 Since 

that time, the Participants and 

Commission staff have been engaged in 

ongoing discussions with the goal of 

resolving or narrowing their differences 

with respect to the issues raised in the 

Participants’ stay motions. On January 

12, 2022, the Participants requested that 

the Commission supplement the record 

to include certain additional materials 

prepared in connection with those 

discussions.11 The Commission granted 

this request. 

After careful review of the arguments 

and evidence proffered by the 

Participants, the Commission has 

decided to issue a new order granting 

temporary exemptive relief that will 

supersede the prior Orders. This order 

(the ‘‘Third Order’’ or ‘‘Order’’) revises 

the conditions with which the 

Participants must comply in order to 

qualify for the exemptive relief provided 

herein. As of the date that this Order is 

issued by the Commission, the terms of 

this Order will govern, and the terms of 

the First Order and the Second Order 

will no longer be in force.12

II. Discussion and Exemptive Relief 

Section 36 of the Exchange Act grants 

the Commission the authority to 

‘‘conditionally or unconditionally 

exempt any person, security, or 

transaction . . . from any provision or 

provisions of [the Exchange Act] or of 

any rule or regulation thereunder, to the 

extent that such exemption is necessary 

or appropriate in the public interest, 

and is consistent with the protection of 

investors.’’ 13 Rule 608(e) of Regulation 

NMS similarly grants the Commission 

the authority to ‘‘exempt from [Rule 

608], either unconditionally or on 

specified terms and conditions, any selfregulatory organization, member 

thereof, or specified security, if the 

Commission determines that such 

exemption is consistent with the public 

interest, the protection of investors, the 

maintenance of fair and orderly markets 

and the removal of impediments to, and 

perfection of the mechanisms of, a 

national market system.’’ 14

In each of the areas of CAT operation 

addressed below, the current 

functionality of the CAT does not yet 

comply with CAT NMS Plan 

requirements. As explained above, the 

Commission’s intention in issuing the 

prior Orders was to provide the 

Participants with additional time in 

which to come into compliance with the 

CAT NMS Plan, subject to certain 

conditions generally intended to allow 

the Commission (and, in some 

instances, the public) to monitor 

progress towards that goal. The 

Participants represent that, in many of 

these areas, strict compliance with the 

CAT NMS Plan requirements and/or the 

conditions set forth in the prior Orders 

would not be cost-effective; in other 

areas, the Participants disagree with or 

seek clarification of the Commission’s 

interpretation of the CAT NMS Plan’s 

requirements. Upon consideration of the 

Participants’ arguments and evidence, 

the Commission has determined that the 

revised exemptive relief discussed 

herein is appropriate in the public 

interest and consistent with the 

protection of investors under Section 36 

of the Exchange Act, as well as 

consistent with the public interest, the 

protection of investors, the maintenance 

of fair and orderly markets, and the 

perfection of the mechanisms of a 

national market system under Rule 

608(e). 

The Commission approved the CAT 

NMS Plan to help to protect investors 

and maintain fair and orderly markets 

by providing a sophisticated audit trail 

that improves regulators’ ability to 

investigate potential misconduct, to 

reconstruct and to analyze market 

events, and to support regulatory 

decisions with detailed and accurate 

data, among other benefits. To realize 

this full spectrum of regulatory benefits, 

however, the CAT must be implemented 

in a manner that achieves the regulatory 

goals of Rule 613 and the CAT NMS 

Plan. The Commission believes that 

providing the Participants with 

additional time to achieve such 

implementation will improve the 

functionality of the CAT for regulators 

and thus further the public interest, the 

protection of investors, the maintenance 

of fair and orderly markets, and the 

perfection of the mechanisms of a 

national market system. 

In evaluating the Participants’ 

implementation of the provisions of the 

CAT NMS Plan, the Commission is 

guided by the desire to realize the full 

spectrum of the CAT’s intended 

benefits, as encompassed in the terms of 

the CAT NMS Plan and the CAT NMS 

Plan Approval Order. To the extent that 

Participants seek to implement 

alternative solutions that deviate from 

the CAT NMS Plan requirements, they 

must first obtain Commission approval 

of either an amendment to the CAT 

NMS Plan or permanent exemptive 

relief. The Commission is therefore 

issuing this new Order to clarify certain 

aspects of the prior Orders, to modify 

other aspects of the prior Orders in light 

of subsequent developments and/or 

additional information provided by the 

Participants, and to provide the 

Participants with additional time either 

to come into compliance with the 

relevant provisions of the CAT NMS 

Plan or to develop alternative solutions 

that achieve the regulatory goals of Rule 

613 and the CAT NMS Plan in a more 

cost-effective manner. In doing so, the 

Commission emphasizes its willingness 

to consider such alternative solutions in 

the form of a proposed CAT NMS Plan 

amendment or a request for permanent 

exemptive relief. 

A. OTQT Performance Requirements 

Section 6.10(c)(i) of the CAT NMS 

Plan requires the Plan Processor 15 to 

provide Participants and the 

Commission with access to CAT Data 16


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42249 

Participant Data, Industry Member Data, SIP Data, 

and such other data as the Operating Committee 

may designate as ‘CAT Data’ from time to time.’’ 

See id. 

17 ‘‘Central Repository’’ is a defined term under 

the CAT NMS Plan and means ‘‘the repository 

responsible for the receipt, consolidation, and 

retention of all information reported to the CAT 

pursuant to SEC Rule 613 and this Agreement.’’ See 

id. 

18 Different timeframes are identified for searches 

that include equities and options order and 

National Best Bid and National Best Offer data in 

search criteria. Id. at Appendix D, Section 8.1.2. 

19See Participant Letter, supra note 4, at 3–6. The 

Participants also sought relief from certain 

requirements of Appendix D, Section 8.1.1 of the 

CAT NMS Plan in their Dec. 1, 2020 letter, see id. 

at 2–3, but the Participants have asserted that this 

functionality was implemented in Feb. 2021. See, 

e.g., CAT Q4 2021 Quarterly Progress Report, 

available at https://catnmsplan.com/sites/default/ 

files/2022-01/CAT-Q4-2021-QPR.pdf. 

20See Participant Letter, supra note 4, at 4; see 

also First Motion, supra note 7, at 6. 

21See Participant Letter, supra note 4, at 4–5 (‘‘It 

typically currently takes up to four minutes for 

queries for a single day involving equities trades 

and up to six minutes for options trade queries for 

a single day for the OTQT to create and return a 

data mart in response to targeted search requests 

with a required response time of one minute under 

Section 8.1.2 of Appendix D.’’); First Motion, supra 

note 7, at 6 (‘‘The OTQT query function can 

perform the latter step, but not both steps, in one 

minute.’’). 

22See CAT NMS Plan, supra note 3, at Appendix 

D, Section 8.1.2. 

23See First Order, supra note 4, at 83670. 

24See id. 

25See Participant Letter, supra note 4, at 6 

(requesting relief from the requirement that the 

OTQT achieve ‘‘parallel processing up to 300 

simultaneous query requests with no performance 

degradation’’). 

26See First Order, supra note 4, at 83669. 

27See Participant Letter, supra note 4, at 5. 

28See First Order, supra note 4, at 83670. 

29See id. at 83670–71. 

30 Id. at 83669. 

31See, e.g., First Motion, supra note 7, at 7. 

stored in the Central Repository 17

through three different methods: (1) the 

OTQT, (2) user-defined direct queries, 

and (3) bulk extracts. Section 8.1.2 of 

Appendix D of the CAT NMS Plan sets 

forth certain performance requirements 

for the OTQT, including timeframes in 

which results must be returned for 

various types of queries (‘‘Search Return 

Functionality’’). Specifically, the CAT 

NMS Plan requires the OTQT to return 

results for searches that include only 

equities and options trade data within 

the following timeframes: (1) ‘‘within 1 

minute for all trades and related 

lifecycle events for a specific Customer 

or CAT Reporter with the ability to filter 

by security and time range for a 

specified time window up to and 

including an entire day’’; (2) ‘‘within 30 

minutes for all trades and related 

lifecycle events for a specific Customer 

or CAT Reporter in a specified date 

range (maximum 1 month)’’; and (3) 

‘‘within 6 hours for all trades and 

related lifecycle events for a specific 

Customer or CAT Reporter in a specified 

date range (maximum 12-month 

duration from the most recent 24 

months).’’ 18 Section 8.1.2 of Appendix 

D also requires the OTQT to ‘‘support 

parallel processing of queries’’ and 

states that the OTQT ‘‘must be able to 

process up to 300 simultaneous query 

requests with no performance 

degradation’’ (‘‘Simultaneous Query 

Functionality’’). 

The Participants sought relief from 

these requirements in their December 1, 

2020 letter.19 The Participants 

explained that the OTQT provided by 

the Plan Processor is based on a model 

that responds to user queries by first 

collecting all relevant data into a ‘‘data 

mart’’ and then making this ‘‘data mart’’ 

available to the user for subsequent 

filtering and analysis.20 This data mart 

functionality does not consistently 

return results to users in accordance 

with the timeframes specified by the 

Search Return Functionality 

requirements of the CAT NMS Plan.21

Nor does the OTQT currently satisfy the 

Simultaneous Query Functionality 

requirements of the CAT NMS Plan, 

which require the OTQT ‘‘to process up 

to 300 simultaneous query requests with 

no performance degradation.’’ 22 As the 

Commission explained in the First 

Order, ‘‘performance degradation’’ is a 

deterioration in performance as 

measured according to a certain 

standard.23 The OTQT’s ability to 

process up to 300 simultaneous queries 

with ‘‘no performance degradation’’ 

should accordingly be based on the 

ability of the OTQT to achieve the 

timeframes set forth in Appendix D, 

Section 8.1.2 of the CAT NMS Plan.24

Because the current data mart model 

cannot consistently achieve these 

timeframes even on fewer than 300 

simultaneous queries, the OTQT does 

not currently comply with the 

performance requirements of the CAT 

NMS Plan.25 And, as discussed in the 

First Order, the OTQT does not 

currently meet the above-described 1- 

minute, 30-minute, and 6-hour 

requirements that apply to certain 

queries run on ‘‘all trades and related 

lifecycle events.’’ 26 The Participants 

argued, however, that the data mart 

model is a ‘‘more powerful, useful[,] and 

reliable regulatory surveillance tool’’ 

than ‘‘an alternative OTQT’’ that ‘‘might 

be constructed’’ that ‘‘returns results’’ 

within the required timeframes.27

In the First Order, the Commission 

granted the Participants’ request for 

temporary exemptive relief from the 

Search Return Functionality and 

Simultaneous Query Functionality 

requirements until July 31, 2023.28 The 

Commission conditioned this exemptive 

relief on: (1) the satisfaction of all other 

requirements of the Full 

Implementation of Core Equity 

Reporting Requirements milestone by 

December 31, 2020; (2) the performance 

of benchmark queries to measure, on a 

monthly basis, the timeframes in which 

the OTQT returns results for specified 

types of queries, the provision of 

monthly reports containing certain data 

on the timeframes in which the OTQT 

returns results for any actual queries 

done by regulatory users, the provision 

of such information to the Operating 

Committee, and the inclusion of such 

information as factual indicators in the 

Quarterly Progress Reports required by 

Section 6.6(c) of the CAT NMS Plan; 

and (3) the monthly testing, using 

benchmark queries, of the time it takes 

to provide results to users from OTQT 

searches that are run concurrently with 

either 50–100, 100–200, or 200–300 

queries, the provision of such 

information to the Operating 

Committee, and the inclusion of such 

information as factual indicators in the 

Quarterly Progress Reports required by 

Section 6.6(c) of the CAT NMS Plan.29

In requesting a stay of the conditions 

of the First Order, the Participants 

challenge the Commission’s conclusion 

that ‘‘[t]he timeframe for ‘returning 

results’ in Section 8.1.2 of Appendix D 

. . . begins with the submission of the 

query in the OTQT and ends with the 

return of the results of the query to user; 

it does not begin with the population of 

a data mart.’’ 30 The Participants argue 

that the CAT NMS Plan is ‘‘silent’’ as to 

‘‘whether creation of the data mart 

counts toward’’ the timeframe for 

‘‘returning results’’ and that the 

timeframe should thus be assessed after 

the system creates a data mart.31 But in 

requiring results to be returned within 

a specified timeframe, the CAT NMS 

Plan by its terms refers to the entirety 

of the time it takes to generate results in 

response to the user’s initial query. It 

thus encompasses the time it takes the 

system to process the user’s initial 

query, to generate results, and to return 

the results to the user. There is nothing 

in the natural reading of ‘‘returning 

results’’ that indicates that the 

timeframe actually begins at some point, 

undiscernible by the user, after query 

submission. Nor is there any other 

indication that the CAT NMS Plan 

contemplated such a possibility. 

Moreover, the CAT NMS Plan requires 

the OTQT to record the date and time 

the query request is submitted. It 

therefore stands to reason that the query 


jspears on DSK121TN23PROD with NOTICES1
42250 Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 

32Appendix D, Section 8.1.1 of the CAT NMS 

Plan requires that the OTQT ‘‘must provide a record 

count of the result set, the date and time the query 

request is submitted, and the date and time the 

result set is provided to the users.’’ It also requires 

that the OTQT must ‘‘log submitted queries and 

parameters used in the query, the user ID of the 

submitter, the date and time of the submission, as 

well as the delivery of results.’’ 

33For instance, under this approach, the OTQT 

could be said to satisfy the 1-minute timeframe set 

forth in Appendix D, Section 8.1.2 if it took 72 

hours to generate a data mart but only 30 seconds 

to return that data mart to the user. The 

Commission does not believe this is a sensible or 

plausible reading of the CAT NMS Plan. 

34Unlike the First Order, the exemptive relief 

provided by the Third Order is not conditioned on 

the satisfaction of ‘‘all other requirements of the 

Full Implementation of Core Equity Reporting 

Requirements milestone by December 31, 2020.’’ 

See First Order, supra note 4, at 83670. This 

milestone has passed and is therefore no longer 

relevant to the exemptive relief provided herein. 

However, the Commission will consider the 

Participants’ compliance with that condition in 

assessing whether the Participants have met the 

target deadlines established for the Full 

Implementation of Core Equity Reporting 

Requirements milestone. See note 12 supra. 

35Because these revised conditions only require 

the Participants to provide the Commission with 

the results of testing that is already performed, such 

revisions should also address the Participants’ 

objections that the testing conditions set forth in the 

First Order imposed significant and unwarranted 

new costs. See First Motion, supra note 7, at 9–10. 

36CAT NMS Plan, supra note 3, at Appendix D, 

Section 3. 

37See Second Motion, supra note 7, at 6. 

38See CAT NMS Plan, supra note 3, at Appendix 

D, Section 6.1; see also Securities Exchange Act 

Release No. 77724 (Apr. 27, 2016), 81 FR 30614, 

30691 (May 17, 2016) (‘‘CAT NMS Plan Notice’’) 

(‘‘The CAT Data would be made available to 

regulators in raw form after it is received from 

reporters and passes basic validations; the Plan 

does not specify exactly when these validations 

would be complete, but the requirement to link 

records by 12:00 p.m. (noon) Eastern Time on day 

T+1 gives a practical upper bound on this timeline 

for initial access to the data.’’). If the Participants 

were only required to validate lifecycle linkages by 

T+1 at noon Eastern Time, the CAT NMS Plan 

would state that ‘‘lifecycle validations’’—not 

‘‘lifecycle linkages’’—were due to be completed by 

that deadline. 

response times set forth in the CAT 

NMS Plan were intended to be 

measured from the time of query 

submission.32

This plain language interpretation 

also accords with the purpose of the 

performance requirements. The OTQT is 

an important regulatory tool required by 

the CAT NMS Plan; it is one of only 

three methods that regulators have to 

access and query CAT Data, and it is the 

only method that can be used by 

regulatory staff without programming 

experience to directly access and query 

the CAT with tools provided by the Plan 

Processor. And to most efficiently 

enable regulatory use, a wellfunctioning regulatory tool should 

consistently return results in a 

predictable, reliable, and timely 

manner. Measuring the OTQT’s 

performance from the time a data mart 

is generated would undermine that goal. 

Such an interpretation builds in an 

undetermined, undiscernible timeframe 

for the provisions of results to the user 

and, taken to its logical extreme, would 

essentially erase the required 

timeframes set forth in Appendix D, 

Section 8.1.2 of the CAT NMS Plan.33

Given its significance to regulators, it is 

critically important that the OTQT be 

subject to meaningful and enforceable 

performance standards. 

The Participants assert that it is 

technologically infeasible for the OTQT, 

using the data mart functionality, to 

meet the requirements of the CAT NMS 

Plan and that the data mart functionality 

is beneficial to regulatory users. But, if 

that is the case, the more appropriate 

course is for the Participants to seek 

regulatory relief in the form of a CAT 

NMS Plan amendment or permanent 

exemptive relief, rather than adhere to 

an implausible interpretation of 

straightforward CAT NMS Plan 

requirements. 

The Commission continues to believe 

that temporary conditional exemptive 

relief from the performance 

requirements set forth in Appendix D, 

Section 8.1.2 is appropriate. Such relief 

gives the Participants additional time 

either to implement the required 

functionality or to obtain the 

Commission’s approval of an alternative 

solution that would meaningfully 

advance the goals that the standards 

were intended to promote. In light of 

information that the Participants have 

provided with the First Motion, and 

further developments in the interim 

period, the Commission believes it is 

appropriate for the Third Order to 

provide this exemptive relief until July 

31, 2024 and to replace the conditions 

set forth in the First Order with the 

following conditions: 

• The Participants must maintain or 

improve the existing performance of the 

OTQT. 

• The Participants must continue to 

test the OTQT’s performance with 

benchmark queries and to evaluate the 

response times for actual queries on a 

monthly basis. Such tests and 

evaluations should contain the same 

content that is currently provided to the 

Commission and should be provided to 

the Commission within 30 days from 

the end of each month. 

• The Participants must provide the 

results of any concurrency testing 

performed on the OTQT within 30 days 

from the date of such testing.34

• To ensure that the Participants 

remain on track either to come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 

Commission’s approval of an alternative 

solution by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data. 

The Commission intends these 

conditions to preserve, as a baseline, the 

OTQT functionality that is already in 

place and expects that the Participants 

will provide the Commission with 

sufficient information to gather 

necessary insight into the performance 

of the OTQT and the impact of any 

changes or improvements made by the 

Participants.35

B. Requirements for Lifecycle Linkages 

Timeframes 

Appendix D, Section 6.1 of the CAT 

NMS Plan states that ‘‘Noon Eastern 

Time T+1 (transaction date + one day)’’ 

is the deadline for ‘‘initial data 

validation, lifecycle linkages and 

communication of errors to CAT 

Reporters.’’ The CAT NMS Plan further 

explains that the Plan Processor must 

‘‘link and create the order lifecycle’’ 

using a ‘‘daisy chain approach,’’ in 

which ‘‘a series of unique order 

identifiers, assigned to all order events 

handled by CAT Reporters[,] are linked 

together by the Central Repository and 

assigned a single CAT-generated CATOrder-ID that is associated with each 

individual order event and used to 

create the complete lifecycle of an 

order.’’ 36 This language makes clear that 

additional steps by the Plan Processor 

are required after the submission of 

certain ‘‘unique order identifiers’’ by 

CAT Reporters to ‘‘link and create the 

order lifecycle.’’ In context, the term 

‘‘lifecycle linkages’’ in Section 6.1 of 

Appendix D is thus properly understood 

as a reference to this order event 

connection process (i.e., completed 

processing and linkage of the initial 

data) and not, as the Participants 

assert,37 to the ‘‘unique order 

identifiers’’ that are used to create 

lifecycle linkages. Section 6.1 of 

Appendix D requires that the Plan 

Processor create these lifecycle linkages, 

and not just validate or verify them, by 

T+1 at noon Eastern Time. Initial data 

validation, including validation of data 

elements that can be used by the Plan 

Processor to create a lifecycle linkage, is 

a separate step that must also occur by 

T+1 at noon Eastern Time.38

The Plan Processor creates lifecycle 

linkages by assigning an interim CAT 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42251 

39See, e.g., Second Order, supra note 5, at 83634. 

40See id. at 83634–35. 

41 Id. at 83635. 

42See Second Motion, supra note 7, at 5–6. 

43See id. at 7. 

44See, e.g., CAT NMS Plan, supra note 3, at 

Appendix D, Section 6.2. 

45See id. None of the CAT NMS Plan provisions 

cited by the Participants state that the Plan 

Processor may wait until T+5 to assign CAT Order 

IDs given their role in creating lifecycle linkages. 

See Second Motion, supra note 7, at 7. 

46See Second Motion, supra note 7, at 8. 

47See CAT NMS Plan Notice, supra note 38, at 

30693. 

48See id. at 30691–93. 

49 Id. at 30691, 30693. 

50See Second Motion, supra note 7, at 6. 51See, e.g., id. at 8. 

Order ID.39 The Commission 

understands that, currently, the Plan 

Processor is generally capable of 

assigning interim CAT Order IDs by T+1 

at 9 p.m. Eastern Time, rather than by 

the T+1 at noon Eastern Time deadline 

set forth in the CAT NMS Plan. 

Accordingly, in the Second Order, the 

Commission granted the Participants 

temporary exemptive relief, until July 

31, 2023, to give the Participants time to 

achieve compliance with the CAT NMS 

Plan’s requirement that the Plan 

Processor create lifecycle linkages by 

noon Eastern Time on T+1.40 The 

Commission conditioned this exemptive 

relief on the Participants ‘‘providing an 

interim CAT Order ID and lifecycle 

linkages by 9 p.m. EST T+1’’—which it 

understood to represent current 

performance—and including in 

Quarterly Progress Reports factual 

indicators that describe ‘‘any 

improvements to the time by which the 

Plan Processor is capable of providing 

an interim CAT Order ID and lifecycle 

linkages.’’ 41

The Participants requested a stay of 

this aspect of the Second Order, arguing 

that the CAT NMS Plan is ‘‘silent 

regarding when CAT Order IDs must be 

assigned’’ and does not ‘‘expressly 

recite’’ a requirement to assign interim 

CAT Order IDs.42 But the CAT NMS 

Plan does expressly require the creation 

of lifecycle linkages by noon Eastern 

Time on T+1. And the obligation to 

assign CAT Order IDs—the mechanism 

by which the Plan Processor creates 

lifecycle linkages—by noon Eastern 

Time on T+1 necessarily follows from 

that requirement. 

Contrary to Participants’ suggestion,43

this conclusion is not at odds with the 

CAT NMS Plan’s framework for 

identifying and correcting errors. 

Although the initial data submitted by 

CAT Reporters may contain errors, the 

CAT NMS Plan specifically 

contemplates regulator access to ‘‘all 

iterations of processed data’’ during the 

period between noon Eastern Time on 

T+1 (when such errors must be 

identified) and T+5 (when corrected 

data must be made available to 

regulators).44 Consistent with this 

framework, the CAT NMS Plan requires 

that the Plan Processor first provide 

lifecycle linkages to regulators by T+1 at 

noon Eastern Time, and then, after any 

errors in linkage data have been 

identified and corrected, provide 

finalized and corrected lifecycle 

linkages by T+5 at 8:00 a.m. Eastern 

Time.45 Indeed, the error correction 

process has not prevented the Plan 

Processor from generally providing 

interim CAT Order IDs by T+1 at 9 p.m. 

Eastern Time, which are then corrected 

if necessary by T+5. 

The Participants also incorrectly 

assert that there is ‘‘no benefit’’ to 

requiring lifecycle linkages by noon 

Eastern Time on T+1.46 Timely access to 

linked data was one of the underlying 

goals of Rule 613 and the CAT NMS 

Plan. Before the implementation of 

CAT, it could take up to several days for 

regulators to gain access to uncorrected 

order event data, and regulators could 

spend additional days (or months) 

processing data to create lifecycle 

linkages.47 The CAT NMS Plan 

proposed by the Participants and 

approved by the Commission therefore 

specifically included measures like 

Appendix D, Section 3 and Section 6.1 

that require the Plan Processor to 

provide faster access to uncorrected data 

in a linked format.48 These measures 

‘‘generally represent[ed] a significant 

improvement in timeliness’’ and were 

intended to ‘‘reduce or eliminate the 

delays associated with merging and 

linking order events within the same 

lifecycle.’’ 49 The alternative approach 

suggested by the Participants in their 

Second Motion—e.g., that regulatory 

users should manually piece together 

lifecycle linkages using unique order 

identifiers submitted by CAT Reporters 

instead of the Plan Processor providing 

lifecycle linkages by T+1 at noon 

Eastern Time 50—actively undercuts 

these goals by burdening regulatory 

users with the Plan Processor’s 

obligations. The expected regulatory 

benefits provided by timely access to 

linked CAT Data would be even further 

undermined if the CAT did not provide 

lifecycle linkages to regulatory users 

until T+5. In order to study and react to 

market events and/or problematic 

trading activity in an effective and 

expeditious way, regulators need access 

to relevant data as close in time to such 

events or activity as is possible. Delays 

in access to data could delay a 

regulator’s response time. 

The Participants argue that, in 

exercising its discretionary authority to 

grant exemptive relief, the Commission 

must consider whether the regulatory 

benefits of the requirement to create 

lifecycle linkages by T+1 at noon justify 

the cost of reconfiguring the CAT 

system to enable it do so.51 But in 

granting sua sponte exemptive relief 

from this requirement, the Commission 

was relieving burdens. The Commission 

has not altered the CAT NMS Plan 

requirement to create lifecycle linkages 

by T+1 at noon Eastern Time and the 

Participants configured the CAT System 

knowing what that requirement was. To 

the extent the Participants believe that 

requirement is no longer appropriate in 

light of the way the CAT System has 

been built, the Participants may propose 

an alternative solution that advances the 

relevant regulatory objectives in a more 

cost-effective manner, either through a 

CAT NMS Plan amendment or a request 

for permanent exemptive relief. The 

Commission is open to considering and 

working with the Participants to 

identify such a solution. 

To give the Participants additional 

time either to implement the required 

functionality or to obtain the 

Commission’s approval of an alternative 

solution, the Commission continues to 

believe that temporary conditional 

exemptive relief from the requirement 

set forth in Appendix D, Section 6.1 that 

lifecycle linkages be created by T+1 at 

noon Eastern Time is appropriate. 

However, in light of the information the 

Participants have provided with their 

stay motion and further developments 

in the interim period, the Commission 

believes it is appropriate for the Third 

Order to provide this exemptive relief 

until July 31, 2024, and to replace the 

conditions set forth in the Second Order 

with the following conditions: 

• The Participants must maintain or 

improve the existing performance of 

functionality currently providing 

lifecycle linkages by T+1 at 9 p.m. 

Eastern Time. 

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe any 

improvements to the time by which the 

Plan Processor is capable of providing 

lifecycle linkages. 

• To ensure that the Participants 

remain on track either to come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 

Commission’s approval of an alternative 

solution by July 31, 2024, the 


jspears on DSK121TN23PROD with NOTICES1
42252 Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 

52See CAT NMS Plan, supra note 3, at Appendix 

D, Section 6.1. 

53See id. at Appendix D, Section 6.2. 

54See, e.g., Second Motion, supra note 7, at 11. 

For example, if a corrected record submitted after 

T+5 connects two broken order event lifecycles into 

one order event lifecycle, the Plan Processor does 

not join all relevant records into a single order 

event lifecycle as it would have if the corrected data 

had been received prior to T+5. As another 

example, in some instances the Plan Processor adds 

a corrected record to an order event lifecycle but 

also retains the original record, leaving two records 

representing the same event in the Central 

Repository—whereas the Plan Processor would 

have replaced the original record if the corrected 

data had been received prior to T+5. 

55See Second Order, supra note 5, at 83635. 

56See id. 

57See, e.g., Second Motion, supra note 7, at 10. 

58See, e.g., Rule 613 Adopting Release, supra 

note 2, at 45722. See also, e.g., CAT NMS Plan 

Notice, supra note 38, at 30615; CAT NMS Plan 

Approval Order, supra note 3, at 84698. 59Simply adding corrected data to the Central 

Repository, for example, could require regulators to 

run multiple, time-consuming searches to locate 

corrected data (or just to discover whether corrected 

data exists), to manually process data to weed out 

inaccurate event records, to manually format data 

to look the same as data that was submitted before 

T+5, and/or to manually construct lifecycles. 

Depending on the circumstances, this methodology 

may not satisfy the requirement that corrected data 

submitted after T+5 be ‘‘processed and assembled 

to create the complete lifecycle of each Reportable 

Event.’’ 

60See, e.g., CAT NMS Plan Notice, supra note 38, 

at 30693 (‘‘Currently regulators can spend days and 

up to months processing data they receive into a 

useful format. Part of this delay is due to the need 

to combine data across sources that could have nonuniform formats and to link data about the same 

event both within and across data sources. . . . 

[T]he Commission preliminarily believes that the 

Plan would reduce or eliminate the delays 

associated with merging and linking order events 

within the same lifecycle.’’). 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data. 

The Commission intends these 

conditions to preserve, as a baseline, the 

lifecycle linkage functionality that is 

already in place and expects that the 

Participants will provide the 

Commission with sufficient information 

to gather necessary insight into the Plan 

Processor’s ability to meet the T+1 at 

noon Eastern Time deadline and the 

impact of any changes or improvements 

made by the Participants. 

C. Requirements for Re-Processing of 

Corrected Data Received After T+5 

Appendix D, Section 3 of the CAT 

NMS Plan requires that ‘‘[a]ll CAT Data 

reported to the Central Repository must 

be processed and assembled to create 

the complete lifecycle of each 

Reportable Event.’’ The CAT NMS Plan 

sets a deadline of T+3 at 8:00 a.m. 

Eastern Time for the ‘‘[r]esubmission of 

corrected data’’ and a deadline of T+5 

at 8:00 a.m. Eastern Time for the Plan 

Processor to make ‘‘[c]orrected data 

available to Participant regulatory staff 

and the SEC.’’ 52 For data corrections 

received after T+5, the CAT NMS Plan 

specifies that ‘‘Participants’ regulatory 

staff and the SEC must be notified and 

informed as to how re-processing will 

be completed.’’ 53 Together, these 

sections require the Plan Processor to 

process and assemble any corrected 

CAT Data received after T+5 into 

complete order event lifecycles and to 

notify regulatory users as to how such 

re-processing will be completed. 

The Commission understands that the 

Participants do not currently process 

and assemble all corrected CAT Data 

received after T+5 into complete order 

event lifecycles; in some cases, for 

instance, the Plan Processor may simply 

add corrected CAT Data to the Central 

Repository without integrating such 

CAT Data into order event lifecycles.54

In the Second Order, the Commission 

granted the Participants temporary 

exemptive relief, until July 31, 2021, to 

provide the Participants time to come 

into compliance with the requirement in 

Section 3 and Section 6.2 of Appendix 

D of the CAT NMS Plan that the 

Participants process and assemble the 

complete lifecycle for corrected 

Reportable Events received by the Plan 

Processor after T+5.55 The Commission 

conditioned this exemptive relief on the 

Participants including in the Quarterly 

Progress Reports required by Section 

6.6(c) of the CAT NMS Plan factual 

indicators that describe ‘‘progress made 

with respect to the re-processing of all 

corrections received after T+5 prior to 

the expiration of the exemptive relief on 

July 31, 2021.’’ 56

In their Second Motion, the 

Participants object that the 

Commission’s interpretation requires 

the Plan Processor to assign a new CAT 

Order ID every time a correction is 

received after T+5.57 But the 

Commission recognizes that, in many 

such circumstances, it may not be 

necessary to assign a new CAT Order ID. 

As discussed above, the CAT NMS Plan 

gives the Participants the discretion to 

choose how—but not whether—to 

process and assemble corrected CAT 

Data submitted after T+5 into complete 

order event lifecycles. Some reprocessing is mandatory under 

Appendix D, Section 3 of the CAT NMS 

Plan to ensure that CAT Data submitted 

after T+5 is processed and assembled 

into complete order event lifecycles; if 

the Plan Processor is able to process and 

assemble CAT Data submitted after T+5 

into complete and accurate order event 

lifecycles using existing CAT Order IDs, 

it need not assign a new CAT Order ID. 

To the extent the Participants believe 

that the above-described requirements 

should be revised because of the costs 

involved in or technological obstacles 

presented by implementing such 

requirements in certain circumstances, 

the Participants may propose an 

amendment to the CAT NMS Plan or 

request permanent exemptive relief 

from the Commission. 

One of the main regulatory goals of 

Rule 613 and the CAT NMS Plan was to 

cure shortcomings in existing audit trail 

systems that made it impractical to 

follow orders through their entire 

lifecycles, as they may be routed, 

aggregated, re-routed, and 

disaggregated.58 Failure to process and 

assemble corrected data received after 

T+5 into complete order event lifecycles 

would perpetuate a similar problem 

within the CAT by making it difficult 

and/or time-consuming for regulators to 

find the relevant data and by forcing 

individual regulatory users to manually 

process data and assemble lifecycles on 

their own.59 These are burdens that the 

CAT NMS Plan was specifically 

designed to alleviate.60

To give the Participants additional 

time either to implement the required 

functionality or to obtain the 

Commission’s approval of an alternative 

solution, the Commission continues to 

believe that it is appropriate to grant 

temporary conditional exemptive relief 

from the requirements set forth in 

Appendix D, Section 3 and Appendix D, 

Section 6.2 of the CAT NMS Plan that 

the Plan Processor process and assemble 

any corrected CAT Data received after 

T+5 into complete order event lifecycles 

and notify regulatory users as to how 

such re-processing will be completed. 

However, in light of information the 

Participants have provided with their 

stay motion and further developments 

in the interim period, the Commission 

believes it is appropriate for the Third 

Order to provide this exemptive relief 

until July 31, 2024, and to replace the 

condition set forth in the Second Order 

with the following condition: 

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe any 

improvements to functionality that 

processes and assembles corrected CAT 

Data submitted after T+5 into complete 

order event lifecycles. 

• To ensure that the Participants 

remain on track either to come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42253 

61See CAT NMS Plan, supra note 3, at Section 

6.5(a)(ii)(A)–(B); 17 CFR 242.613(e)(7). 

62See CAT NMS Plan, supra note 3, at Section 

6.5(a)(ii)(A)–(B); see also 17 CFR 242.613(e)(7). 

63See CAT NMS Plan, supra note 3, at Section 

1.1 (defining ‘‘CAT Data’’ as ‘‘data derived from 

Participant Data, Industry Member Data, SIP Data, 

and such other data as the Operating Committee 

may designate as ‘CAT Data’ from time to time’’). 

64See also 17 CFR 242.613(e)(1) (‘‘The central 

repository shall store and make available to 

regulators data in a uniform electronic format, and 

in a form in which all events pertaining to the same 

originating order are linked together in a manner 

that ensures timely and accurate retrieval of the 

information required by paragraph (c)(7) of this 

section for all reportable events for that order.’’). 

65See, e.g., Second Order, supra note 5, at 83635. 

66The Commission identified several possible 

uses for SIP Data in approving the CAT NMS Plan. 

See CAT NMS Plan Approval Order, supra note 3, 

at 84914 n.3222–23. 

67See, e.g., CAT NMS Plan Approval Order, 

supra note 3, at 84814–15. 

68See notes 58, 60 and associated text supra; see 

also CAT NMS Plan Approval Order, supra note 3, 

at 84826–27. 

69See Second Order, supra note 5, at 83635. 

70 Id. 

71See, e.g., Second Motion, supra note 7, at 15. 

72See Securities Exchange Act Release No. 90610 

(Dec. 9, 2020), 86 FR 18596, at 18598 n.10 (Apr. 9, 

2021) (describing the three effective national market 

system plans that govern the collection, 

consolidation, processing, and dissemination of 

certain NMS information) (‘‘MDI Release’’). 

73See id.; see also Second Motion, supra note 7, 

at 14–15. 

Commission’s approval of an alternative 

solution by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data. 

The Commission intends these 

conditions to provide the Commission 

with sufficient information to gather 

necessary insight into the Plan 

Processor’s ability to meet the abovedescribed requirements and the impact 

of any changes or improvements made 

by the Participants. 

D. Requirements for SIP Data Linkage 

Section 6.5(a)(ii) of the CAT NMS 

Plan, which implements Rule 613(e)(7), 

requires that the Central Repository 

‘‘collect . . . and retain on a current and 

continuing basis,’’ certain SIP Data ‘‘in 

a format compatible with’’ the 

Participant Data and Industry Member 

Data that is collected pursuant to Rule 

613(c)(7).61 This SIP Data must include: 

‘‘(A) information, including the size and 

quote condition, on quotes including 

the National Best Bid and National Best 

Offer for each NMS Security; [and] (B) 

Last Sale Reports and transaction 

reports reported pursuant to an effective 

transaction reporting plan filed with the 

SEC pursuant to, and meeting the 

requirements of, SEC Rules 601 and 

608.’’ 62 Section 6.5(b)(i) of the CAT 

NMS Plan further states that SIP Data, 

‘‘when available to Participant 

regulatory staff and the SEC[,] shall be 

linked’’ to the Participant Data and 

Industry Member Data that is collected 

pursuant to Rule 613(c)(7). Moreover, 

the CAT NMS Plan explicitly includes 

the SIP Data described in Section 

6.5(a)(ii) in its definition of ‘‘CAT 

Data,’’ 63 thereby subjecting SIP Data to 

the same requirements that generally 

apply to CAT Data, including the 

requirement set forth in Appendix D, 

Section 3 that ‘‘[a]ll CAT Data reported 

to the Central Repository must be 

processed and assembled to create the 

complete lifecycle of each Reportable 

Event.’’ 64

The Commission understands that the 

CAT currently does not link SIP Data to 

the ‘‘complete lifecycle of each 

Reportable Event,’’ but instead presents 

regulatory users with a side-by-side 

view of SIP Data and other transactional 

data reported to the CAT.65 In other 

words, SIP Data is provided to 

regulatory users in a separate stream 

from order event lifecycles, such that 

regulatory users may only view SIP Data 

sequentially with other CAT Data, rather 

than as part of order event lifecycles. 

This side-by-side functionality forces 

regulatory users to perform the timeconsuming and burdensome work of 

manually matching SIP Data with order 

event lifecycles and creating their own 

combined and linked audit trail.66 In 

approving the CAT NMS Plan, the 

Commission explained that ‘‘regulators 

analyzing an event or running a 

surveillance pattern often need to link 

data,’’ but that ‘‘linking many different 

data sources’’ was ‘‘cumbersome and 

time-consuming’’ and that ‘‘the inability 

to link all records affects the accuracy 

of the resulting data and can force an 

inefficient manual linkage process that 

would delay the completion of the data 

collection and analysis portion of an 

examination, investigation, or 

reconstruction.’’ 67 Linkage of all CAT 

Data—which includes SIP Data by 

definition—was intended to address 

these issues by improving the accuracy 

of the data provided to regulators and 

the timeliness of regulatory review.68

SIP Data is a core component of market 

structure and established market control 

mechanisms; SIP Data linkage would 

better enable regulators to clearly and 

accurately identify the market 

participants involved in the order event 

lifecycles that cause SIP messages, 

which is critical in recreating market 

events and looking for problematic 

trading behaviors. 

In the Second Order, the Commission 

granted the Participants temporary 

exemptive relief, until July 31, 2023, to 

give them more time to develop the 

changes necessary to meet the SIP data 

linkage requirements described above.69

The Commission conditioned this 

exemptive relief on the Participants 

including in Quarterly Progress Reports 

factual indicators that describe ‘‘the 

release of updated specifications and/or 

scenarios documents relating to the 

linkage of Participant Data and Industry 

Member Data with SIP Data, such that 

SIP Data is incorporated in the lifecycle 

of an order.’’ 70

In their Second Motion, the 

Participants argue that the Commission 

was obligated to consider various 

practical and technological obstacles 

before requiring them to link SIP data to 

the complete order lifecycle.71 But as 

discussed above, that requirement was 

imposed by the CAT NMS Plan itself, 

not by the Commission’s exemptive 

order, which merely granted the 

Participants more time to meet the 

requirement. To the extent the 

Participants now believe this CAT NMS 

Plan requirement is inappropriate or 

unjustified in light of its costs, the 

Participants are free to propose an 

alternative solution that advances the 

relevant regulatory objectives in a more 

cost-effective manner, either through a 

CAT NMS Plan amendment or a request 

for permanent exemptive relief. The 

Commission is open to considering and 

working with the Participants to 

identify such a solution. 

The Participants contend that linking 

SIP Data to complete order lifecycles is 

impractical, in part because it would 

require changes to the existing national 

market system plans that govern the 

collection, consolidation, processing, 

and dissemination of SIP Data (the 

‘‘existing SIP Plans’’),72 and because of 

the new approach to SIP Data provided 

for under the Commission’s Market Data 

Infrastructure Rule (‘‘MDI Rules’’).73

The Commission does not believe that 

amending the existing SIP Plans is 

impractical. The Commission also 

believes that there may be alternatives 

that would allow the Participants to 

achieve SIP Data linkage without 

changing the existing SIP Plans or the 

MDI Rules. Under the existing SIP 

Plans, which remain in effect despite 

the promulgation of the MDI Rules, the 

Participants provide data to the SIPs; 

under the MDI Rules, the Participants 

would provide data to competing 

consolidators. The Participants are also 

the parties that currently provide this 

data to the CAT and that would provide 


jspears on DSK121TN23PROD with NOTICES1
42254 Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 

74The MDI Rules, pursuant to which the SIPs will 

eventually be replaced by ‘‘competing 

consolidators,’’ are in the process of being 

implemented. The Commission has stated that as a 

result of the MDI Rules, ‘‘the Central Repository 

may have to collect the data from a different 

source,’’ which may be one or multiple competing 

consolidators. See MDI Release, supra note 72, at 

18697. Therefore, the Participants can meet the 

requirements of Section 6.5(b)(i) and Appendix D, 

Section 3 of the CAT NMS Plan by July 31, 2024, 

by using the current SIPs or one or more competing 

consolidators that the Operating Committee may 

determine to use once they are operational. 

75See also 17 CFR 242.613(c)(7). 

76See CAT NMS Plan, supra note 3, at Section 

1.1; 17 CFR 242.613(j)(7). 

77Material Terms of the Order can also be 

communicated verbally. In response to the 

Participants’ request for exemptive relief, the 

Commission granted temporary exemptive relief 

from certain reporting requirements contained in 

the CAT NMS Plan that relate to such verbal 

communications. See Securities Exchange Act 

Release No. 90405 (Nov. 12, 2020), 85 FR 73544 

(Nov. 18, 2020). 

78The terms of Rule 613 and the CAT NMS Plan 

require that any special handling instructions be 

reported by senders (for ‘‘origination of an order’’ 

and ‘‘for the routing of an order’’) and receivers 

(‘‘for original receipt’’ of an order and ‘‘for the 

receipt of an order that has been routed’’), as well 

as by both Participants and Industry Members. Each 

party—sender and receiver, Participant and 

Industry Member—is therefore required to report 

any special handling instructions that it 

communicated through a port-level setting. 

Requiring both the sender and the receiver to report 

in this manner is not necessarily duplicative. 

Rather, this kind of differential reporting is of value 

to regulators; comparing the special handling 

instructions reported by senders and receivers can 

be used by regulators to identify inconsistencies in 

reporting. Moreover, even where two-sided 

reporting would be duplicative, it still provides 

value to regulators. Because of the differences 

between the technical specifications utilized by 

Industry Members and Participants, and the varied 

approach to applying and reporting port-level 

settings among the Participants, it is far more 

efficient for regulators evaluating the trading 

activity of one firm to analyze that firm’s (e.g., the 

sender’s) data directly. If only receivers are required 

to report, the regulatory user would be required to 

expend significant additional effort to run unique 

queries to find each receiver’s data and process 

such data into a consistent and usable format. 

79See Second Order, supra note 5, at 83636. 

80 Id. 

81See, e.g., Second Motion, supra note 7, at 16. 

this data to the CAT in the future. To 

achieve compliance with the CAT NMS 

Plan, the Participants may therefore be 

able to include in their data the 

information necessary for the Plan 

Processor to facilitate SIP Data linkage 

in a manner that would not require an 

amendment to the existing SIP Plans or 

the MDI Rules. In any event, if the 

Participants disagree, the appropriate 

course is for the Participants to seek 

regulatory relief in the form of a CAT 

NMS Plan amendment or permanent 

exemptive relief. 

The Commission continues to believe 

that temporary conditional exemptive 

relief from the requirements set forth in 

Section 6.5(b)(i) and Appendix D, 

Section 3 of the CAT NMS Plan that SIP 

Data ‘‘shall be linked,’’ processed, and 

assembled to create complete order 

event lifecycles is appropriate to give 

the Participants time either to 

implement the required functionality or 

to obtain the Commission’s approval of 

an alternative solution. However, in 

light of information the Participants 

have provided with their stay motion, 

further developments in the interim 

period, and the current status of 

implementation of the MDI Rules, the 

Commission believes it is appropriate 

for the Third Order to provide this 

exemptive relief until July 31, 2024.74

The Commission further believes it is 

appropriate to replace the condition set 

forth in the Second Order with the 

following conditions: 

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe any 

improvements to functionality that links 

Participant Data and Industry Member 

Data with SIP Data, such that SIP Data 

is incorporated into complete order 

event lifecycles. 

• To ensure that the Participants 

remain on track to either come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 

Commission’s approval of an alternative 

solution by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data. 

The Commission intends these 

conditions to provide the Commission 

with sufficient information to gather 

necessary insight into the Participants’ 

efforts to meet the requirements of the 

CAT NMS Plan and the impact of any 

changes or improvements made by the 

Participants. 

E. Reporting Requirements for Port-Level 

Settings 

Rule 613 and Sections 6.3(d)(i)(F), 

6.3(d)(ii)(G), 6.3(d)(iii)(F), 6.3(d)(iv)(E), 

and 6.4(d)(i) of the CAT NMS Plan 

require the Participants to report, and to 

amend their Compliance Rules to 

require Industry Members to report, the 

‘‘Material Terms of the Order’’ for 

certain events in an order’s lifecycle, 

including ‘‘for original receipt or 

origination of an order,’’ ‘‘for the routing 

of an order,’’ ‘‘for the receipt of an order 

that has been routed,’’ and for orders 

that are ‘‘modified or cancelled.’’ 75 Rule 

613 and the CAT NMS Plan further 

define the ‘‘Material Terms of the 

Order’’ to include ‘‘any special handling 

instructions.’’ 76 Port-level settings are 

used by Industry Members and 

Participants as one method of 

communicating various Material Terms 

of the Order, including, in some cases, 

special handling instructions.77 When 

port-level settings are used to 

communicate Material Terms of the 

Order, Rule 613 and the CAT NMS Plan 

thus require these port-level settings to 

be reported for that order by both 

senders and receivers.78

The Commission understands, 

however, that Participants and/or 

Industry Members would have to make 

technological changes to ensure the 

accurate and reliable reporting of portlevel settings by both the sender and 

receiver of the order. In the Second 

Order, the Commission therefore 

granted the Participants temporary 

exemptive relief, until July 31, 2023, 

from the requirement that both the CAT 

Reporter sending an order and the CAT 

Reporter receiving an order report portlevel settings as part of the Material 

Terms of an Order.79 The Commission 

conditioned this relief on the 

Participants (1) including in the 

Quarterly Progress Reports required by 

Section 6.6(c) factual indicators that 

describe ‘‘the release of updated 

specifications and/or scenarios 

documents relating to the reporting of 

port-level settings by both the sender 

and receiver of an Order as a special 

handling instruction’’ and (2) engaging 

both the Commission and Industry 

Members on a plan to address the 

reporting of port-level settings on an 

exchange-by-exchange basis.80

The Participants correctly assert in 

the Second Motion that the CAT NMS 

Plan does not require all port-level 

settings to be reported to the CAT.81

Rule 613 and the CAT NMS Plan only 

require Participants and Industry 

Members to report port-level settings 

that are used by a sender or a receiver 

of an order to communicate the Material 

Terms of the Order, including ‘‘any 

special handling instructions.’’ 

Furthermore, Rule 613 and the CAT 

NMS Plan only obligate the sender of an 

order to report the Material Terms of the 

Order that it communicated to and/or 

agreed upon with the receiver of the 

order, including default or implicit 

special handling instructions 

communicated through a port-level 

setting. If the receiver of an order 

subsequently attaches ‘‘any special 

handling instructions’’ to an order 

without informing the sender, including 

special handling instructions 

communicated through a port-level 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42255 

82See, e.g., Second Motion, supra note 7, at 16; 

see also FAQ D34, available at https://

catnmsplan.com/faq. 

83See Second Order, supra note 5, at 83635–36. 

84See, e.g., Second Motion, supra note 7, at 16. 

85The Commission believes the Participants will 

need to engage and meet regularly with Industry 

Members in order to satisfy this condition. 

86See CAT NMS Plan, supra note 3, at Appendix 

D, Section 3. A representative order is an order 

originated in a firm-owned or -controlled account, 

including principal, agency average price and 

omnibus accounts, by an Industry Member for the 

purpose of working one or more customer or client 

orders. See, e.g., Second Order, supra note 5, at 

83636 n.14. 

87See, e.g., note 58 and associated text supra. 

88See, e.g., note 60 and associated text supra; see 

also, e.g., CAT NMS Plan Notice, supra note 38, at 

30665–66 (describing difficulties involved in 

manual linkage of customer data across multiple 

parts of an order lifecycle). 

setting, only the receiver would be 

obligated to report those Material Terms 

of the Order. 

However, the Participants go further, 

suggesting that the reporting obligation 

is only implicated when instructions 

communicated through such port-level 

settings are ‘‘applied’’ or ‘‘triggered,’’ 

but that fact is irrelevant to this 

inquiry.82 A special handling 

instruction that a sender or receiver 

communicates through a port-level 

setting must be reported as Material 

Terms of the Order regardless of 

whether it is subsequently ‘‘applied’’ or 

‘‘triggered.’’ Neither Rule 613 nor the 

CAT NMS Plan state, for instance, ‘‘any 

special handling instructions applied to 

the order’’ or ‘‘Material Terms Applied 

to the Order.’’ Rather, as one example, 

an instruction that prevents an order 

from trading with another order from 

the same broker-dealer (self-trade match 

prevention) is reportable as a special 

handling instruction even if the 

exchange does not need to apply the 

instruction because there is not another 

order from the same broker-dealer that 

would trade with the incoming order.83

Such information is valuable to 

regulators, regardless of whether it is 

applied, because it could potentially 

help regulators to identify and 

investigate trading behaviors like 

layering or wash sales and establish the 

intent of broker-dealers sending such 

orders. 

The Participants also argue that, in 

exercising its discretion to grant a 

temporary exemption from the portlevel settings reporting requirements, 

the Commission was obligated to 

consider certain costs and practical 

obstacles.84 But in granting sua sponte 

exemptive relief from this requirement, 

the Commission was relieving burdens 

and did not alter the CAT NMS Plan 

requirement. To the extent the 

Participants now believe this CAT NMS 

Plan requirement is inappropriate or 

unjustified in light of its costs, the 

Participants are free to propose an 

alternative solution that advances the 

relevant regulatory objectives in a more 

cost-effective manner, either through a 

CAT NMS Plan amendment or a request 

for permanent exemptive relief. The 

Commission is open to considering and 

working with the Participants to 

identify such a solution. 

To give the Participants and Industry 

Members additional time either to 

implement the required functionality or 

to obtain the Commission’s approval of 

an alternative solution, the Commission 

continues to believe that it is 

appropriate to grant temporary 

conditional exemptive relief from the 

requirement set forth in Rule 613(c)(7) 

and Sections 6.3(d)(i)(F), 6.3(d)(ii)(G), 

6.3(d)(iii)(F), 6.3(d)(iv)(E), and 6.4(d)(i) 

of the CAT NMS Plan that the 

Participants report, and amend their 

Compliance Rules to require Industry 

Members to report, the Material Terms 

of the Order for certain events in an 

order’s lifecycle that are communicated 

through a port-level setting. However, in 

light of information the Participants 

have provided with their stay motion 

and further developments in the interim 

period, the Commission believes it is 

appropriate for the Third Order to 

provide this exemptive relief until July 

31, 2024, and to replace the conditions 

set forth in the Second Order with the 

following conditions: 

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe any 

improvements to the Participants’ 

current efforts to report, and to require 

Industry Members to report, port-level 

settings that communicate ‘‘Material 

Terms of the Order,’’ including efforts to 

implement two-sided reporting (when 

required) and efforts to require that portlevel settings that communicate ‘‘any 

special handling instructions’’ be 

reported regardless of whether such 

instructions are ‘‘applied.’’ 

• To ensure that the Participants 

remain on track to either come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 

Commission’s approval of an alternative 

solution by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data.85

The Commission intends these 

conditions to provide the Commission 

with sufficient information to gather 

necessary insight into the Participants’ 

efforts to meet the requirements of the 

CAT NMS Plan and the impact of any 

changes or improvements made by the 

Participants. 

F. Requirements for Lifecycle Linkages 

Between Customer Orders and 

‘‘Representative’’ Orders 

Appendix D, Section 3 of the CAT 

NMS Plan requires the Plan Processor to 

‘‘link all related order events from all 

CAT Reporters involved in the lifecycle 

of an order. At a minimum,’’ the CAT 

NMS Plan specifies that the ‘‘Central 

Repository must be able to create the 

lifecycle between . . . [c]ustomer orders 

to ‘representative’ orders created in firm 

accounts for the purpose of facilitating 

a customer order (e.g., linking a 

customer order handled on a riskless 

principal basis to the street-side 

proprietary order).’’ 86 As discussed 

above, one of the main regulatory goals 

of Rule 613 and the CAT NMS Plan was 

to cure shortcomings in existing audit 

trail systems that made it impractical to 

follow orders through their entire 

lifecycles, as they may be routed, 

aggregated, re-routed, and 

disaggregated.87 Lifecycle linkage for all 

order events—including linkage of 

‘‘representative orders’’ to customer 

orders and linkage of customer data 

across an order event lifecycle—was 

intended to alleviate the burdens 

associated with manual processing and 

linkage of data and to provide regulators 

with information that is not otherwise 

available.88 It is therefore critical that 

the Participants fully implement 

functionality to create complete order 

event lifecycle linkages, including 

linkage of ‘‘representative’’ orders to 

customer orders. 

The Commission understands that the 

Participants do not currently have the 

ability to create lifecycles in certain 

representative order scenarios where 

Industry Members do not have a 

systematic or direct link between their 

order management systems and 

execution management systems. This is 

a critical loss of data that breaks order 

event lifecycles, because regulatory 

users would not be able to recreate these 

parts of the order event lifecycles on 

their own. In the Second Order, the 

Commission granted the Participants 

temporary exemptive relief, until July 

31, 2023, to allow time for Participants 

and Industry Members to develop the 


jspears on DSK121TN23PROD with NOTICES1
42256 Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 

89See Second Order, supra note 5, at 83636. 

90 Id. 

91See, e.g., FAQ F5–F7, available at https://

catnmsplan.com/faq. 

92See, e.g., Securities Exchange Act Release No. 

88702 (Apr. 20, 2020), 85 FR 23075 (Apr. 24, 2020). 

93The Commission believes the Participants will 

need to engage and meet regularly with Industry 

Members in order to satisfy this condition. 

94 17 CFR 242.613(c)(7); CAT NMS Plan, supra 

note 3, at Section 6.3(d)(i). 

95See CAT NMS Plan, supra note 3, at Section 

1.1. 

96 17 CFR 242.613(j)(8). 

97Sometimes a rejected order may represent the 

final action in a complete order event lifecycle; 

other times, the sender may submit a second order 

as a ‘‘follow-up’’ to the rejected order. In both cases, 

data reflecting orders that were received and 

rejected provides useful and necessary context to 

regulatory users evaluating trading activity. 

98See, e.g., note 58, note 60 and associated text 

supra. 

99See, e.g., Rule 613 Adopting Release, supra 

note 2, at 45723 (‘‘In performing their oversight 

responsibilities, regulators today must attempt to 

cobble together disparate data from a variety of 

existing information systems lacking in 

completeness, accuracy, accessibility, and/or 

timeliness—a model that neither supports the 

efficient aggregation of data from multiple trading 

venues nor yields the type of complete and accurate 

market activity data needed for robust market 

oversight.’’); see also, e.g., CAT NMS Plan Notice, 

supra note 38, at 30652 (stating that the CAT NMS 

Plan would benefit regulators by improving the 

completeness of data by requiring the reporting of 

additional data fields, events, and products in 

Section 6.3 of the CAT NMS Plan). 

100See CAT NMS Plan Notice, supra note 38, at 

30662. 

101See Second Order, supra note 5, at 83636. 

capability of meeting this CAT NMS 

Plan requirement.89 The Commission 

conditioned this relief on the 

Participants (1) continuing to require 

Industry Member reporting of 

representative orders as described in 

another exemptive relief order related to 

the timing and phasing of Industry 

Member reporting and (2) including in 

the Quarterly Progress Reports required 

by Section 6.6(c) factual indicators that 

describe ‘‘progress made regarding the 

release of updated specifications and/or 

scenarios documents relating to the 

reporting of all representative orders.’’ 90

After challenging this part of the 

Second Order in the Second Motion, the 

Participants issued guidance indicating 

that Industry Members will be required 

to provide the data necessary for the 

Central Repository to create the required 

lifecycle linkages starting on July 31, 

2023.91 To give Industry Members 

additional time to implement the 

necessary reporting, the Commission 

believes that it is appropriate to grant 

temporary conditional exemptive relief 

from the requirement set forth in 

Appendix D, Section 3 of the CAT NMS 

Plan that the ‘‘Central Repository must 

be able to create the lifecycle between 

. . . [c]ustomer orders to 

‘representative’ orders created in firm 

accounts for the purpose of facilitating 

a customer order (e.g., linking a 

customer order handled on a riskless 

principal basis to the street-side 

proprietary order)’’ for representative 

order scenarios in which Industry 

Members do not have a systematic or 

direct link between their order 

management systems and execution 

management systems until July 31, 

2024. The Commission also believes 

that it is appropriate to impose 

conditions on this relief similar to those 

set forth in the Second Order: 

• The Participants must require 

Industry Members to report 

‘‘representative’’ orders as currently 

described in FAQs F5–F7 and as 

described in other exemptive relief 

issued by the Commission by July 31, 

2024.92

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe the progress 

made towards the release of updated 

specifications and/or scenarios 

documents relating to the reporting and 

linkage of all ‘‘representative’’ orders. 

• To ensure that the Participants 

remain on track to come into 

compliance with the requirements of the 

CAT NMS Plan by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data.93

The Commission intends these 

conditions to preserve, as a baseline, the 

reporting and linkage functionality that 

is already in place for ‘‘representative’’ 

orders and expects the Participants and 

Industry Members to provide the 

Commission with sufficient information 

to gather necessary insight into the 

efforts made by both Participants and 

Industry Members to fully meet the 

requirements of the CAT NMS Plan. 

G. Requirements for Participant 

Reporting of Rejected Orders 

Rule 613(c)(7) and Section 6.3(d)(i) of 

the CAT NMS Plan require Participants 

to ‘‘record and electronically report to 

the Central Repository’’ certain 

information for ‘‘each order and each 

Reportable Event,’’ including ‘‘for 

original receipt or origination of an 

order.’’ 94 The CAT NMS Plan specifies 

that ‘‘order’’ has ‘‘the meaning set forth 

in Rule 613(j)(8),’’ 95 which further 

defines ‘‘order’’ to include: ‘‘(i) [a]ny 

order received by a member of a 

national securities exchange or national 

securities association from any person; 

(ii) [a]ny order originated by a member 

of a national securities exchange or 

national securities association; or (iii) 

[a]ny bid or offer.’’ 96 These provisions 

require the Participants to report all 

orders that are ‘‘received,’’ not just those 

orders that are ‘‘received and 

successfully processed by the matching 

engine,’’ those orders that are ‘‘received 

and accepted,’’ and/or those orders that 

are ‘‘received and assigned an order ID’’; 

the reporting requirement is not 

conditioned on how a Participant acts 

on an order that is received. For 

example, if a Participant receives a 

message that contains all of the terms 

necessary for an order to be executed, 

that message still constitutes a 

‘‘received’’ order that must be reported 

pursuant to the provisions of Section 

6.3(d) of the CAT NMS Plan regardless 

of whether it is subsequently rejected. 

Moreover, as ‘‘CAT Data,’’ rejected 

orders must also be ‘‘processed and 

assembled to create the complete 

lifecycle of each Reportable Event’’ 

under Appendix D, Section 3 of the 

CAT NMS Plan. 

Orders that are received and rejected 

are part of a complete order event 

lifecycle, in the same way that cancelled 

orders are part of a complete order event 

lifecycle. Without information about 

these events, regulatory users reviewing 

trading activity could struggle to 

determine how orders that are received 

but rejected were resolved.97 As 

discussed above, one of the main 

regulatory goals of Rule 613 and the 

CAT NMS Plan was to cure 

shortcomings in existing audit trail 

systems that made it impractical to 

follow orders through their entire 

lifecycles.98 Providing regulatory users 

with a more complete and 

comprehensive set of audit trail data 

was another of the main regulatory goals 

of Rule 613 and the CAT NMS Plan.99

Failure to report orders that are received 

and rejected and to create complete 

order lifecycles for such orders would 

subvert these two goals, because 

regulators would not have access to ‘‘all 

of the market activity of interest in 

sufficient detail in one consolidated 

audit trail.’’ 100

In the Second Order, the Commission 

granted the Participants temporary 

exemptive relief, until December 13, 

2021, from the requirement in Section 

6.3(d) of the CAT NMS Plan that the 

Participants report rejected orders.101

The Commission conditioned this relief 

on the Participants including in 

Quarterly Progress Reports factual 

indicators that describe ‘‘any updates to 

specifications and/or scenarios 


jspears on DSK121TN23PROD with NOTICES1
Federal Register / Vol. 87, No. 134 / Thursday, July 14, 2022 / Notices 42257 

102 Id. at 83636–37. 

103See Second Motion, supra note 7, at 3 n.8. 

104 15 U.S.C. 78mm(a)(1). 

105 17 CFR 242.608(e). 

documents relating to the capture and 

reporting of rejected orders.’’ 102 The 

Participants represent in the Second 

Motion that they are reporting to the 

CAT ‘‘all messages rejected after receipt 

by an exchange.’’ 103 However, the 

Commission understands that the 

Participants are currently only reporting 

a subset of the rejected orders that are 

required to be reported by Section 6.3(d) 

and are working on implementing 

functionality that will permit the 

Participants to report additional rejected 

orders. 

To give the Participants and Industry 

Members sufficient time either to 

implement the required functionality or 

to obtain the Commission’s approval of 

an alternative solution, the Commission 

continues to believe that it is 

appropriate to grant temporary 

conditional exemptive relief from the 

requirement set forth in Rule 613(c)(7) 

and Section 6.3(d)(i) of the CAT NMS 

Plan that Participants ‘‘record and 

electronically report to the Central 

Repository’’ certain information for 

orders that are received and 

subsequently rejected, and from the 

requirement set forth in Appendix D, 

Section 3 of the CAT NMS Plan that 

‘‘[a]ll CAT Data’’ related to such orders 

be ‘‘processed and assembled to create 

the complete lifecycle of each 

Reportable Event.’’ However, in light of 

further developments in the interim 

period, the Commission believes it is 

appropriate for the Third Order to 

provide this exemptive relief until July 

31, 2024, and to replace the condition 

set forth in the Second Order with the 

following conditions: 

• The Participants must maintain or 

improve their existing reporting of 

orders that are received and 

subsequently rejected, including 

existing efforts towards implementing 

functionality that would permit the 

Participants to report additional rejected 

orders. 

• The Participants must provide, in 

Quarterly Progress Reports submitted 

pursuant to Section 6.6(c), factual 

indicators that describe any 

improvements to the Participants’ 

reporting of orders that are received and 

subsequently rejected, as well as 

improvements to the functionality that 

creates linkages for such orders. 

• To ensure that the Participants 

remain on track to either come into 

compliance with the requirements of the 

CAT NMS Plan or obtain the 

Commission’s approval of an alternative 

solution by July 31, 2024, the 

Participants and the Plan Processor 

must meet with Commission staff on at 

least a monthly basis to provide a 

detailed status update regarding their 

current efforts towards this goal and 

promptly respond to related requests for 

additional information or data. 

The Commission intends these 

conditions to preserve, as a baseline, the 

reporting functionality that is already in 

place and expects the Participants to 

provide the Commission with sufficient 

information to gather necessary insight 

into the Participants’ efforts to meet the 

requirements of the CAT NMS Plan. 

III. Conclusion 

Accordingly, it is hereby ordered, 

pursuant to Section 36(a)(1) of the 

Exchange Act 104 and Rule 608(e) under 

the Exchange Act,105 that the abovedescribed temporary conditional 

exemptive relief be granted. 

By the Commission. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–14982 Filed 7–13–22; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

Temporary 504 Express Loan Authority 

for Certified Development Companies 

Participating in the Accredited Lenders 

Program—Industries With a High Rate 

of Default 

The Economic Aid to Hard-Hit Small 

Businesses, Nonprofits, and Venues Act 

(Pub. L. 116–260) (‘‘Economic Aid Act’’) 

temporarily provides increased 

authority to Certified Development 

Companies (CDCs) participating in the 

Small Business Administration’s (SBA) 

Accredited Lenders Program (ALP) with 

respect to 504 loans that are not more 

than $500,000 and that are not made to 

a borrower in an industry with a high 

rate of default. The authority for ALP 

CDCs to make ALP Express Loans was 

implemented through an interim final 

rule published in the Federal Register 

on June 27, 2022 Vol. 97, No. 122 RIN 

3245–AH74. 

Section 328(b) of the Economic Aid 

Act further requires that SBA annually 

identify the industries with a high rate 

of default. Accordingly, on an annual 

basis, SBA will list the industries that 

it has determined have a high rate of 

default in a notice published in the 

Federal Register, with the first list 

published after the publication of the 

interim final rule, and annually 

thereafter. 

To comply with this requirement, 

SBA defines ‘‘industries with a high rate 

of default’’ as an industry that for the 

past 5 fiscal years has 50 or more 

approvals/year and an annualized 

default rate of 5% or above. Using SBA’s 

ALP Express risk identification 

methodology, SBA has determined there 

are no industries with a high rate of 

default in the 504 program based on 

prior SBA 504 portfolio performance. 

SBA will review and update its analysis 

and publish an updated list annually 

through September 20, 2023. 

For SBA’s analysis, the industries are 

analyzed by North American Industry 

Classification System (NAICS) 

Subsector Title and three-digit subsector 

code. 

Isabella Casillas Guzman, 

Administrator. 

[FR Doc. 2022–15015 Filed 7–13–22; 8:45 am] 

BILLING CODE 8026–09–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #17505 and #17506; 

INDIANA Disaster Number IN–00077] 

Administrative Declaration of a 

Disaster for the State of Indiana 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of Indiana dated 07/08/ 

2022. 

Incident: Derecho Windstorm. 

Incident Period: 06/13/2022 through 

06/14/2022. 

DATES: Issued on 07/08/2022. 

Physical Loan Application Deadline 

Date: 09/06/2022. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 04/10/2023. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street SW, Suite 6050, 

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

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

filed at the address listed above or other 

locally announced locations. 

The following areas have been 

determined to be adversely affected by 

the disaster: 


jspears on DSK121TN23PROD with NOTICES1