42168 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 

1See Securities Exchange Act Release No. 80283 

(March 21, 2017), 82 FR 15244 (March 27, 2017) 

(SR–NYSEMKT–2017–14). The name change was 

not yet effective when NYSE MKT filed SR– 

NYSEMKT–2017–29 and SR–NYSEMKT–2017–30. 

2 15 U.S.C. 78s(b)(1). 

3 17 CFR 240.19b–4. 

4 17 CFR 242.613. 

5Effective August 17, 2017, NYSE Arca amended, 

among other things, certain rules of the Exchange 

to create a single rulebook. See Securities Exchange 

Act Release No. 81419 (August 17, 2017) (SR– 

NYSEArca–2017–40) (the ‘‘Arca Merger Filing’’). 

NYSE Arca rule text references in this notice and 

order reflect rule numbering changes as a result of 

the Arca Merger Filing. 

6Nasdaq and Phlx initially filed proposed rule 

changes on May 15, 2017 (SR–NASDAQ–2017–050 

and SR–PHLX–2017–38). On May 26, 2017, Nasdaq 

and Phlx withdrew these filings and submitted new 

proposed rule changes (SR–NASDAQ–2017–055 

and SR–PHLX–2017–43). 

7BX initially filed a proposed rule change on May 

15, 2017 (SR–BX–2017–025). On May 30, 2017, BX 

withdrew that initial filing and submitted a new 

proposed rule change (SR–BX–2017–027). 

8See Securities Exchange Act Release No. 80796 

(May 26, 2017), 82 FR 25374 (SR–BatsBZX–2017– 

37) (‘‘Bats BZX Notice’’); Securities Exchange Act 

Release No. 80795 (May 26, 2017), 82 FR 25358 

(SR–BatsEDGX–2017–23) (‘‘Bats EDGX Notice’’); 

Securities Exchange Act Release No. 80789 (May 

26, 2017), 82 FR 25492 (SR–BOX–2017–17) (‘‘BOX 

Notice’’); Securities Exchange Act Release No. 

80798 (May 26, 2017), 82 FR 25385 (SR–C2–2017– 

018) (‘‘C2 Notice’’); Securities Exchange Act Release 

No. 80797 (May 26, 2017), 82 FR 25429 (SR–CBOE– 

2017–041) (‘‘CBOE Notice’’); Securities Exchange 

Act Release No. 80783 (May 26, 2017), 82 FR 25423 

(SR–FINRA–2017–013) (‘‘FINRA Notice’’); 

Securities Exchange Act Release No. 80788 (May 

26, 2017), 82 FR 25400 (SR–IEX–2017–18) (‘‘IEX 

Notice’’); Securities Exchange Act Release No. 

80787 (May 26, 2017), 82 FR 25469 (SR–ISE–2017– 

46) (‘‘ISE Notice’’); Securities Exchange Act Release 

No. 80790 (May 26, 2017), 82 FR 25366 (SR–MIAX– 

2017–20) (‘‘MIAX Notice’’); Securities Exchange Act 

Release No. 80792 (May 26, 2017), 82 FR 25436 

(SR–PEARL–2017–23) (‘‘PEARL Notice’’); Securities 

Exchange Act Release No. 80791 (May 26, 2017), 82 

FR 25362 (SR–NYSEArca–2017–59) (‘‘NYSE Arca 

Notice 1’’); Securities Exchange Act Release No. 

80793 (May 26, 2017), 82 FR 25443 (SR– 

NYSEMKT–2017–29) (‘‘NYSE MKT Notice 1’’); 

Securities Exchange Act Release No. 80794 (May 

26, 2017), 82 FR 25439 (SR–NYSEMKT–2017–30) 

(‘‘NYSE MKT Notice 2’’). 

9See Securities Exchange Act Release No. 80799 

(May 26, 2017), 82 FR 25635 (SR–NYSE–2017–23) 

(‘‘NYSE Notice’’); Securities Exchange Act Release 

No. 80800 (May 26, 2017), 82 FR 25639 (SR– 

NYSEArca–2017–57) (‘‘NYSE Arca Notice 2’’). 

10See Securities Exchange Act Release No. 80813 

(May 30, 2017), 82 FR 25820 (SR–NASDAQ–2017– 

055) (‘‘NASDAQ Notice’’); Securities Exchange Act 

Release No. 80814 (May 30, 2017), 82 FR 25872 

(SR–BX–2017–027) (‘‘BX Notice’’); Securities 

Exchange Act Release No. 80811 (May 30, 2017), 82 

FR 25863 (SR–Phlx–2017–43) (‘‘Phlx Notice’’). 

11See letters from William H. Herbert, Managing 

Director, Financial Information Forum, dated June 

22, 2017 (‘‘FIF Letter’’); Manisha Kimmel, Chief 

Regulatory Officer, Wealth Management, Thomson 

Reuters, dated June 22, 2017 (‘‘Thomson Reuters 

Letter’’); Marc R. Bryant, Senior Vice President, 

Deputy General Counsel, Fidelity Investments, 

dated June 22, 2017 (‘‘Fidelity Letter’’); and Ellen 

Greene, Managing Director and Theodore R. Lazo, 

Managing Director and Associate General Counsel, 

SIFMA, dated June 23, 2017 (‘‘SIFMA Letter’’). 

Dated: August 31, 2017. 

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18858 Filed 9–5–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81499; File Nos. SR– 

BatsBZX–2017–37; SR–BatsEDGX–2017–23; 

SR–BOX–2017–17; SR–C2–2017–018; SR– 

CBOE–2017–041; SR–FINRA–2017–013; 

SR–ISE–2017–46; SR–IEX–2017–18; SR– 

MIAX–2017–20; SR–PEARL–2017–23; SR– 

NASDAQ–2017–055; SR–BX–2017–027; SR– 

Phlx–2017–43; SR–NYSE–2017–23; SR– 

NYSEArca–2017–57; SR–NYSEArca–2017– 

59; SR–NYSEMKT–2017–29; SR–NYSEMKT– 

2017–30] 

Self-Regulatory Organizations; Bats 

BZX Exchange, Inc.; Bats EDGX 

Exchange, Inc.; BOX Options 

Exchange LLC; C2 Options Exchange, 

Incorporated; Chicago Board Options 

Exchange, Incorporated; Financial 

Industry Regulatory Authority, Inc.; 

International Securities Exchange, 

LLC; Investors Exchange LLC; Miami 

International Securities Exchange LLC; 

MIAX PEARL, LLC; The NASDAQ Stock 

Market LLC; NASDAQ BX, Inc.; 

NASDAQ PHLX LLC; New York Stock 

Exchange LLC; NYSE Arca, Inc.; NYSE 

MKT LLC; Notice of Filing of 

Amendment No. 1 by Bats BZX 

Exchange, Inc.; Bats EDGX Exchange, 

Inc.; BOX Options Exchange LLC; C2 

Options Exchange, Incorporated; 

Chicago Board Options Exchange, 

Incorporated; Financial Industry 

Regulatory Authority, Inc.; Investors 

Exchange LLC; New York Stock 

Exchange LLC; NYSE Arca, Inc.; NYSE 

MKT LLC, of Amendment Nos. 1 and 2 

by International Securities Exchange, 

LLC; The NASDAQ Stock Market LLC; 

NASDAQ BX, Inc.; and NASDAQ PHLX 

LLC, of Amendment No. 2 by MIAX 

PEARL, LLC, and of Amendment No. 3 

by Miami International Securities 

Exchange LLC; Order Instituting 

Proceedings To Determine Whether To 

Approve or Disapprove the Proposed 

Rule Changes, as Modified by 

Amendments Thereto, To Eliminate 

Requirements That Will Be Duplicative 

of CAT 

August 30, 2017. 

I. Introduction 

On May 15, 2017, Bats BZX Exchange, 

Inc. (‘‘Bats BZX’’); Bats EDGX Exchange, 

Inc. (‘‘Bats EDGX’’); BOX Options 

Exchange LLC (‘‘BOX’’); C2 Options 

Exchange, Incorporated (‘‘C2’’); Chicago 

Board Options Exchange, Incorporated 

(‘‘CBOE’’); Financial Industry 

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

International Securities Exchange, LLC 

(‘‘ISE’’); Investors Exchange LLC 

(‘‘IEX’’); Miami International Securities 

Exchange LLC (‘‘MIAX’’); MIAX PEARL, 

LLC (‘‘PEARL’’); NYSE Arca, Inc. 

(‘‘NYSE Arca’’); and NYSE MKT LLC 

(‘‘NYSE MKT’’) (n/k/a NYSE American 

LLC) 1 filed with the Securities and 

Exchange Commission (‘‘Commission’’), 

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

Securities Exchange Act of 1934 

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

proposed rule changes to eliminate or 

modify certain rules that require the 

collection or reporting of information 

that is duplicative of the information 

that will be collected by the 

Consolidated Audit Trail (‘‘CAT’’) 

established pursuant to the National 

Market System Plan contemplated by 

Rule 613 of Regulation NMS.4 On May 

22, 2017, the New York Stock Exchange 

LLC (‘‘NYSE’’) filed with the 

Commission a proposed rule change for 

the same purpose, and each of NYSE 

Arca 5 and NYSE MKT filed an 

additional proposed rule change for the 

same purpose. On May 26, 2017, the 

NASDAQ Stock Market LLC 

(‘‘NASDAQ’’) and NASDAQ PHLX LLC 

(‘‘Phlx’’) filed with the Commission 

proposed rule changes for the same 

purpose.6 On May 30, 2017, NASDAQ 

BX, Inc. (‘‘BX’’) filed with the 

Commission a proposed rule change for 

the same purpose.7 In this notice and 

order, all of these proposed rule changes 

are referred to collectively as the 

‘‘Systems Retirement Proposals.’’ Bats 

BZX, Bats EDGX, BOX, BX, C2, CBOE, 

ISE, IEX, MIAX, PEARL, NASDAQ, 

NYSE, NYSE Arca, NYSE MKT, and 

Phlx are collectively referred to as the 

‘‘Exchanges,’’ and, together with FINRA, 

are referred to as the ‘‘SROs.’’ 

On June 1, 2017, the proposed rule 

changes submitted by Bats BZX, Bats 

EDGX, BOX, C2, CBOE, FINRA, IEX, 

ISE, MIAX, and PEARL; both proposed 

rule changes submitted by NYSE MKT; 

and one of the proposed rule changes 

submitted by NYSE Arca were 

published for comment in the Federal 

Register.8 On June 2, 2017, the proposed 

rule change submitted by NYSE and the 

other proposed rule change submitted 

by NYSE Arca were published for 

comment in the Federal Register.9 On 

June 5, 2017, the proposed rule changes 

submitted by NASDAQ, BX, and Phlx 

were published for comment in the 

Federal Register.10

Four comments were submitted to 

File Number SR–FINRA–2017–013.11

On June 22, 2017, each of NASDAQ, 

BX, ISE, and Phlx filed an amendment 


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12These amendments modified Section 2 of the 

Form 19b–4 submitted by each of NASDAQ, BX, 

ISE, and Phlx to state that on June 1, 2017, the 

exchange obtained the necessary approval from its 

Board of Directors for the proposed rule change. 

When NASDAQ, BX, ISE, and Phlx each filed 

Amendment No. 1 to their respective proposals 

with the Commission, they also submitted the 

Amendment No. 1 to the public comment file for 

each of their respective proposals. 

13See Securities Exchange Act Release No. 81145, 

82 FR 33533 (July 20, 2017). 

14This amendment: (1) Added introductory 

language to BOX’s COATS-related rules to clarify 

that the rules will be amended upon announcement 

by BOX that the CAT has achieved a sufficient level 

of accuracy and reliability; (2) modified rule text 

language for BOX’s EBS rule and the rule regarding 

securities accounts and orders of market makers to 

clarify that BOX will not request trade data or 

information, and members will not be required to 

provide trade data or information, pursuant to the 

rule for trades reported to the CAT after BOX 

announces that it has determined that the accuracy 

and reliability of the CAT are sufficient to replace 

requests pursuant to these rules; and (3) clarified 

that the accuracy and reliability standards 

discussed in its Systems Retirement Proposal apply 

to all of the rules discussed therein. When BOX 

filed Amendment No. 1 to its proposal with the 

Commission, it also submitted Amendment No. 1 to 

the public comment file for its proposal. 

15This amendment: (1) Added introductory 

language to IEX’s OATS rule series to clarify that 

the rules will be deleted upon announcement by 

IEX that the CAT has achieved a level of accuracy 

and reliability sufficient to replace OATS; (2) 

modified IEX’s EBS rule text language to clarify that 

IEX (or FINRA on behalf of IEX) will not request 

trade data or information, and members will not be 

required to provide trade data or information, 

pursuant to the EBS rule for trades reported to the 

CAT after IEX announces that it has determined 

that the accuracy and reliability of the CAT are 

sufficient to replace requests pursuant to the EBS 

rule; and (3) made two clarifying revisions to the 

Purpose section of its proposal. When IEX filed 

Amendment No. 1 to its proposal with the 

Commission, it also submitted Amendment No. 1 to 

the public comment file for its proposal. 

16PEARL filed Amendment No. 1 to its proposed 

rule change on August 22, 2017. On August 24, 

2017, PEARL withdrew Amendment No. 1 and 

replaced it with Amendment No. 2. Amendment 

No. 2 modified the rule text for PEARL’s EBS rule 

(which is incorporated by reference from the MIAX 

rulebook) and its rule regarding market maker order 

and account information to clarify that PEARL will 

not request trade data or information, and members 

will not be required to provide trade data or 

information, pursuant to such rule for trades 

reported to the CAT after PEARL announces that it 

has determined that the accuracy and reliability of 

the CAT are sufficient to replace requests pursuant 

to these rules. When PEARL filed Amendment No. 

2 to its proposal with the Commission, it also 

submitted Amendment No. 2 to the public comment 

file for its proposal. 

17MIAX filed Amendment No. 1 to its proposed 

rule change on August 22, 2017 and withdrew and 

replaced it with Amendment No. 2 on the same day. 

On August 24, 2017, MIAX withdrew Amendment 

No. 2 and replaced it with Amendment No. 3. 

Amendment No. 3 modified the rule text for 

MIAX’s EBS rule and its rule regarding market 

maker order and account information to clarify that 

MIAX will not request trade data or information, 

and members will not be required to provide trade 

data or information, pursuant to such rule for trades 

reported to the CAT after MIAX announces that it 

has determined that the accuracy and reliability of 

the CAT are sufficient to replace requests pursuant 

to these rules. When MIAX filed Amendment No. 

3 to its proposal with the Commission, it also 

submitted Amendment No. 3 to the public comment 

file for its proposal. 

18This amendment: (1) Added introductory 

language to BZX’s rule regarding securities accounts 

and orders of market makers to clarify that the rules 

will be amended upon announcement by BZX that 

the CAT has achieved a sufficient level of accuracy 

and reliability; and (2) modified rule text language 

for BZX’s EBS rule and the rule regarding 

furnishing of records to clarify that BZX will not 

request trade data or information, and members will 

not be required to provide trade data or 

information, pursuant to the rule for trades reported 

to the CAT after BZX announces that it has 

determined that the accuracy and reliability of the 

CAT are sufficient to replace requests pursuant to 

these rules. When BZX filed Amendment No. 1 to 

its proposal with the Commission, it also submitted 

Amendment No. 1 to the public comment file for 

its proposal. 

19This amendment: (1) Added introductory 

language to Bats EDGX’s rule regarding securities 

accounts and orders of market makers to clarify that 

the rule will be amended upon announcement by 

Bats EDGX that the CAT has achieved a sufficient 

level of accuracy and reliability; and (2) modified 

rule text language for Bats EDGX’s EBS rule and the 

rule regarding furnishing of records to clarify that 

Bats EDGX will not request trade data or 

information, and members will not be required to 

provide trade data or information, pursuant to the 

rule for trades reported to the CAT after Bats EDGX 

announces that it has determined that the accuracy 

and reliability of the CAT are sufficient to replace 

requests pursuant to these rules. When Bats EDGX 

filed Amendment No. 1 to its proposal with the 

Commission, it also submitted Amendment No. 1 to 

the public comment file for its proposal. 

20This amendment: (1) Added introductory 

language to BX’s OATS rule series to clarify that the 

rules will be deleted upon announcement by BX 

that the CAT has achieved a level of accuracy and 

reliability sufficient to replace OATS; (2) added 

introductory language to BX’s COATS-related rules 

to clarify that the rules will be amended upon 

announcement by BX that the CAT has achieved a 

level of accuracy and reliability sufficient to replace 

COATS; and (3) modified BX’s EBS rule text and 

the language of Chapter VII, Section 7, to clarify 

that BX will not request trade data or information, 

and members will not be required to provide trade 

data or information, pursuant to EBS Rules or 

Chapter VII, Section 7, for trades reported to the 

CAT after BX announces that it has determined that 

the accuracy and reliability of the CAT are 

sufficient to replace requests pursuant to these 

rules. When BX filed Amendment No. 2 to its 

proposal with the Commission, it also submitted 

Amendment No. 2 to the public comment file for 

its proposal. 

21This amendment added introductory language 

to C2’s rule regarding securities accounts and orders 

of market makers to clarify that the rule will be 

amended upon announcement by C2 that the CAT 

has achieved a sufficient level of accuracy and 

reliability. When C2 filed Amendment No. 1 to its 

proposal with the Commission, it also submitted 

Amendment No. 1 to the public comment file for 

its proposal. 

22This amendment: (1) Added introductory 

language to CBOE’s COATS-related rules and rule 

regarding securities accounts and orders of market 

makers to clarify that the rules will be amended 

upon announcement by CBOE that the CAT has 

achieved a sufficient level of accuracy and 

reliability; and (2) modified rule text language for 

CBOE’s EBS rule and the rule regarding complaints 

and investigations to clarify that CBOE will not 

request trade data or information, and members will 

not be required to provide trade data or 

information, pursuant to the rule for trades reported 

to the CAT after CBOE announces that it has 

determined that the accuracy and reliability of the 

CAT are sufficient to replace requests pursuant to 

these rules. When CBOE filed Amendment No. 1 to 

its proposal with the Commission, it also submitted 

Amendment No. 1 to the public comment file for 

its proposal. 

23This amendment: (1) Added introductory 

language to FINRA’s OATS rule series to clarify that 

the rules will be deleted upon announcement by 

FINRA that the CAT has achieved a level of 

accuracy and reliability sufficient to replace OATS; 

and (2) modified FINRA’s EBS rule text to clarify 

that FINRA will not request trade data or 

information, and members will not be required to 

provide trade data or information, pursuant to its 

EBS rules for trades reported to the CAT after 

FINRA announces that it has determined that the 

accuracy and reliability of the CAT are sufficient to 

replace requests pursuant to these rules. When 

FINRA filed Amendment No. 1 to its proposal with 

the Commission, it also submitted Amendment No. 

1 to the public comment file for its proposal. 

24This amendment modified ISE’s EBS rule text 

language to clarify that ISE will not request trade 

data or information, and members will not be 

required to provide trade data or information, 

pursuant to ISE’s Rule 1404 for trades reported to 

the CAT after ISE announces that it has determined 

that the accuracy and reliability of the CAT are 

sufficient to replace requests pursuant to the rule. 

When ISE filed Amendment No. 2 to its proposal 

with the Commission, it also submitted 

Amendment No. 2 to the public comment file for 

its proposal. 

25This amendment: (1) Added introductory 

language to NASDAQ’s OATS rule series to clarify 

that the rules will be deleted upon announcement 

by NASDAQ that the CAT has achieved a level of 

accuracy and reliability sufficient to replace OATS; 

(2) added introductory language to NASDAQ’s 

COATS-related rules to clarify that these rules will 

be amended upon announcement by NASDAQ that 

the CAT has achieved a level of accuracy and 

reliability sufficient to replace COATS; and (3) 

modified NASDAQ’s EBS rule text and the language 

of Chapter VII, Section 7, to clarify that NASDAQ 

will not request trade data or information, and 

members will not be required to provide trade data 

or information, pursuant to the EBS Rules or 

Chapter VII, Section 7, for trades reported to the 

CAT after NASDAQ announces that it has 

Continued 

to its proposed rule change.12 On July 

14, 2017, the Commission extended the 

time period for Commission action on 

all of the Systems Retirement Proposals 

to August 30, 2017.13

On August 24, 2017, BOX submitted 

Amendment No. 1 to its proposed rule 

filing,14 IEX submitted Amendment No. 

1 to its proposed rule filing,15 PEARL 

submitted Amendment No. 2 to its 

proposed rule filing,16 and MIAX 

submitted Amendment No. 3 to its 

proposed rule filing.17 On August 25, 

2017, Bats BZX submitted Amendment 

No. 1 to its proposed rule filing,18 Bats 

EDGX submitted Amendment No. 1 to 

its proposed rule filing,19 BX submitted 

Amendment No. 1 to its proposed rule 

filing,20 C2 submitted Amendment No. 

1 to its proposed rule filing,21 CBOE 

submitted Amendment No. 1 to its 

proposed rule filing,22 FINRA submitted 

Amendment No. 1 to its proposed rule 

filing,23 ISE submitted Amendment No. 

2 to its proposed rule filing,24 NASDAQ 

submitted Amendment No. 2 to its 

proposed rule filing,25 NYSE submitted 


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determined that the accuracy and reliability of the 

CAT are sufficient to replace requests pursuant to 

these rules. When NASDAQ filed Amendment No. 

2 to its proposal with the Commission, it also 

submitted Amendment No. 2 to the public comment 

file for its proposal. 

26This amendment: (1) Added introductory 

language to NYSE’s OATS rules to clarify that they 

will be deleted upon announcement by FINRA that 

the CAT has achieved a level of accuracy and 

reliability sufficient to replace OATS; and (2) 

modified NYSE’s EBS rule text to clarify that NYSE 

will not request trade data or information, and 

member organizations will not be required to 

provide trade data or information, pursuant to the 

rule for trades reported to the CAT after FINRA 

announces that it has determined that the accuracy 

and reliability of the CAT are sufficient to replace 

requests pursuant to FINRA’s EBS rules. When 

NYSE filed Amendment No. 1 to its proposal with 

the Commission, it also submitted Amendment No. 

1 to the public comment file for its proposal. 

27Amendment No. 1 to SR–NYSEArca–2017–59: 

(1) Added introductory language to NYSE Arca’s 

OATS rules to clarify that the OATS rules will be 

deleted upon announcement by FINRA that the 

CAT has achieved a level of accuracy and reliability 

sufficient to replace OATS; and (2) modified NYSE 

Arca’s EBS rule text to clarify that NYSE Arca will 

not request trade data or information, and ETP 

Holders, OTP Holders, OTP Firms, and associated 

persons of ETP Holders and OTP Firms (as defined 

in NYSE Arca’s rulebook) will not be required to 

provide trade data or information, pursuant to the 

rule for trades reported to the CAT after FINRA 

announces that it has determined that the accuracy 

and reliability of the CAT are sufficient to replace 

requests pursuant to FINRA’s EBS rules. 

Amendment No. 1 to SR–NYSEArca–2017–57 

added introductory language to NYSE Arca’s 

COATS-related rules to clarify that these rules will 

be amended upon announcement by NYSE Arca, in 

conjunction with the other options exchanges, that 

CAT has achieved a level of accuracy and reliability 

sufficient to replace COATS. When NYSE Arca filed 

Amendment No. 1 to each of its proposed rule 

changes with the Commission, it also submitted 

Amendment No. 1 to the public comment file for 

each respective proposed rule change. 

28Amendment No. 1 to SR–NYSEMKT–2017–30: 

(1) Added introductory language to NYSE MKT’s 

OATS rules to clarify that they will be deleted upon 

announcement by FINRA that the CAT has 

achieved a level of accuracy and reliability 

sufficient to replace OATS; and (2) modified NYSE 

MKT’s EBS rule text to clarify that NYSE MKT will 

not request trade data or information, and member 

organizations and ATP Holders (as defined in NYSE 

MKT’s rulebook) will not be required to provide 

trade data or information, pursuant to the rule for 

trades reported to the CAT after FINRA announces 

that it has determined that the accuracy and 

reliability of the CAT are sufficient to replace 

requests pursuant to FINRA’s EBS rules. 

Amendment No. 1 to SR–NYSEMKT–2017–29 

added introductory language to NYSE MKT’s 

COATS-related rules to clarify that the COATSrelated rules will be amended upon announcement 

by NYSE MKT, in conjunction with the other 

options exchanges, that CAT has achieved a level 

of accuracy and reliability sufficient to replace 

COATS. When NYSE MKT filed Amendment No. 1 

to each of its proposed rule changes with the 

Commission, it also submitted Amendment No. 1 to 

the public comment file for each respective 

proposed rule change. 

29This amendment: (1) Added introductory 

language to Phlx OATS rule series to clarify that the 

rules will be deleted upon announcement by Phlx 

that the CAT has achieved a level of accuracy and 

reliability sufficient to replace OATS; (2) added 

introductory language to Phlx’s COATS-related 

rules to clarify that the rules will be amended upon 

announcement by Phlx that the CAT has achieved 

a level of accuracy and reliability sufficient to 

replace COATS; (3) modified Phlx’s EBS rule text 

and language in Phlx Rule 1022 to clarify that Phlx 

will not request trade data or information, and 

members will not be required to provide trade data 

or information, pursuant to the EBS Rule or Rule 

1022 for trades reported to the CAT after Phlx 

announces that is has determined that the accuracy 

and reliability of the CAT are sufficient to replace 

requests pursuant to these rules; and (4) made a 

conforming change to Phlx Option Floor Procedure 

Advices and Order and Decorum Regulations C–2 

to delete rule text that corresponds to rule text that 

Phlx previously proposed to delete in Rule 1063. 

When Phlx filed Amendment No. 2 to its proposal 

with the Commission, it also submitted 

Amendment No. 2 to the public comment file for 

its proposal. 

30 15 U.S.C. 78s(b)(2)(B). 

31For purposes of this notice and order, 

capitalized terms are defined as set forth in the 

Notices or in the CAT NMS Plan unless otherwise 

specified. 

32See FINRA Rule 7400. 

33See BX Rule 6950, IEX Rule 11.420, NASDAQ 

Rule 7000A Series, NYSE Rule 7400 Series, NYSE 

Arca Rule 6–E, and NYSE MKT Rule 7400— 

Equities Series, Phlx Rule 3400 series. 

34See FINRA Notice, 82 FR at 25424. 

35See CAT NMS Plan, Appendix B, Section 

A.3(b). 

36CAT NMS Plan, Appendix C, Section A.3(b), at 

n. 102. 

37CAT NMS Plan, Appendix C, Section A.3(b). 

38 Id. See also FINRA Notice, 82 FR at 25424. 

Amendment No. 1 to its proposed rule 

filing,26 NYSE Arca submitted 

Amendment No. 1 to each of its 

proposed rule filings,27 NYSE MKT 

submitted Amendment No. 1 to each of 

its proposed rule filings,28 and Phlx 

submitted Amendment No. 2 to its 

proposed rule filing.29

The Commission is publishing this 

notice and order to solicit comments on 

the proposed rule changes, as modified 

by the respective amendments thereto, 

from interested persons and to institute 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 30 to determine 

whether to approve or disapprove the 

proposed rule changes, as modified by 

the respective amendments thereto.31

II. Description of the Proposals, as 

Modified by Amendments Thereto 

As required by the CAT NMS Plan, 

the Systems Retirement Proposals 

discuss: (1) The specific standards that 

will govern when SRO rules and related 

systems that are duplicative of CAT— 

including the Order Audit Trail System 

(‘‘OATS’’), the Consolidated Options 

Audit Trail System (‘‘COATS’’), and the 

Electronic Blue Sheets system 

(‘‘EBS’’)—will be modified or 

eliminated; (2) whether the availability 

of data from Small Industry Members in 

November of 2018 would facilitate 

duplicative systems retirement; and (3) 

the feasibility of granting exemptions 

from reporting to duplicative systems to 

individual Industry Members whose 

CAT reporting meets certain accuracy 

and reliability thresholds. 

A. Specific Accuracy and Reliability 

Standards 

1. OATS 

FINRA’s OATS rules require certain 

FINRA members to report a variety of 

data regarding transactions in OTC 

equity securities and NMS stocks to the 

system on a daily basis.32 Several other 

SROs have their own OATS rules that 

mirror FINRA’s rule or incorporate it by 

reference.33 FINRA and the other SROs 

with OATS rules (the ‘‘OATS SROs’’) 

have proposed to delete their OATS 

rules from their respective rulebooks. As 

described in more detail below, these 

deletions will be implemented once 

CAT Data achieves certain pre- and 

post-correction error rates and certain 

qualitative criteria have been met. 

In its Systems Retirement Proposal, 

FINRA stated that it believes that 

relevant error rates are the primary, but 

not the sole, metric by which to 

determine the CAT’s accuracy and 

reliability and will serve as the baseline 

requirement needed before OATS can be 

retired to account for information being 

available in the CAT.34

FINRA noted that the Participants 

established an initial Error Rate, as 

defined in the Plan, of 5% on initially 

submitted data (i.e., data as submitted 

by a CAT Reporter before any required 

corrections are performed).35 The 

Participants noted in the Plan their 

expectation that ‘‘error rates after 

reprocessing of error corrections will be 

de minimis.’’ 36 The Participants based 

this Error Rate on their consideration of 

‘‘current and historical OATS Error 

Rates, the magnitude of new reporting 

requirements on the CAT Reporters and 

the fact that many CAT Reporters may 

have never been obligated to report data 

to an audit trail.’’ 37

In its Systems Retirement Proposal, 

FINRA expressed agreement with the 

Participants’ conclusion that a 5% precorrection threshold ‘‘strikes the balance 

of adapting to a new reporting regime, 

while ensuring that the data provided to 

regulators will be capable of being used 

to conduct surveillance and market 

reconstruction, as well as having a 

sufficient level of accuracy to facilitate 

the retirement of existing regulatory 

reports and systems where possible.’’ 38

However, FINRA believed that, when 

assessing the accuracy and reliability of 

the data for the purposes of retiring 

OATS, the error thresholds should be 

measured in more granular ways and 

should also include minimum error 

rates of post-correction data, which 


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39See FINRA Notice, 82 FR at 25424. 40See CAT NMS Plan, Appendix D, Section 7.2. 

The Plan requires the Plan Processor to confirm that 

file transmission and receipt are in the correct 

formats, including validation of header and trailers 

on the submitted report, confirmation of a valid 

SRO-Assigned Market Participant Identifier, and 

verification of the number of records in the file. See 

id. 41See id. The Plan notes that syntax and context 

checks would include format checks (i.e., that data 

is entered in the specified format); data type checks 

(i.e., that the data type of each attribute conforms 

to the specifications); consistency checks (i.e., that 

all attributes for a record of a specified type are 

consistent); range/logic checks (i.e., that each 

attribute for every record has a value within 

specified limits and the values provided are 

associated with the event type they represent); data 

validity checks (i.e., that each attribute for every 

record has an acceptable value); completeness 

checks (i.e., that each mandatory attribute for every 

record is not null); and timeliness checks (i.e., that 

the records were submitted within the submission 

timelines). See id. 

42See id. 

43See id. 

44CAT NMS Plan, Appendix D, Section 3. 

45 Id. 

46See id. 

47See id. 

48See id. 

49 Id. 

50The Plan requires the Plan Processor to ensure 

that regulators have access to corrected and linked 

order and Customer data by 8:00 a.m. Eastern Time 

on T+5. See CAT NMS Plan, Appendix C, Section 

A.2(a). 

51See FINRA Notice, 82 FR at 25426. 

52BX, IEX, NASDAQ, and Phlx. 

represents the data most likely to be 

used by FINRA to conduct surveillance. 

Although FINRA is proposing to 

measure the appropriate error rates in 

the aggregate rather than firm-by-firm, 

FINRA expressed the belief that the 

error rates for equity securities should 

be measured separately from options 

since options orders are not currently 

reported regularly or included in 

OATS.39

FINRA has proposed that, before 

OATS could be retired, the CAT would 

generally need to achieve a sustained 

error rate for Industry Member reporting 

in each of the categories below: 

• Rejection Rates and Data 

Validations. Data validations for the 

CAT, while not expected to be designed 

the same as OATS, must be functionally 

equivalent to OATS in accordance with 

the CAT NMS Plan (i.e., the same types 

of basic data validations must be 

performed by the Plan Processor to 

comply with the CAT NMS Plan 

requirements). Appendix D of the Plan, 

for example, requires that certain file 

validations40 and syntax and context 

checks be performed on all submitted 

records.41 If a record does not pass these 

basic data validations, it must be 

rejected and returned to the CAT 

Reporter to be corrected and 

resubmitted.42 The specific validations 

can be determined only after the Plan 

Processor has finalized the Industry 

Member Technical Specifications; 

however, the Plan also requires the Plan 

Processor to provide daily statistics on 

rejection rates after the data has been 

processed, including the number of files 

rejected and accepted, the number of 

order events accepted and rejected, and 

the number of each type of report 

rejected.43 FINRA is proposing that, 

over the 180-day period, aggregate 

rejection rates (measured separately for 

equities and options) must be no more 

than 5% pre-correction or 2% postcorrection across all CAT Reporters. 

• Intra-Firm Linkages. The Plan 

requires that ‘‘the Plan Processor must 

be able to link all related order events 

from all CAT Reporters involved in the 

lifecycle of an order.’’ 44 At a minimum, 

this requirement includes the creation 

of an order lifecycle between ‘‘[a]ll order 

events handled within an individual 

CAT Reporter, including orders routed 

to internal desks or departments with 

different functions (e.g., an internal 

ATS).’’ 45 FINRA is proposing that 

aggregate intra-firm linkage rates across 

all Industry Member Reporters must be 

at least 95% pre-correction and 98% 

post-correction. 

• Inter-Firm Linkages. The order 

linkage requirements in the Plan also 

require that the Plan Processor be able 

to create the lifecycle between orders 

routed between broker-dealers.46 FINRA 

is proposing that at least a 95% precorrection and 98% post-correction 

aggregate match rate be achieved for 

orders routed between two Industry 

Member Reporters. 

• Order Linkage Rates. In addition to 

creating linkages within and between 

broker-dealers, the Plan also includes 

requirements that the Plan Processor be 

able to create lifecycles to link various 

pieces of related orders.47 For example, 

the Plan requires linkages between 

customer orders and ‘‘representative’’ 

orders created in firm accounts for the 

purpose of facilitating a customer order, 

various legs of option/equity complex 

orders, riskless principal orders, and 

orders worked through average price 

accounts.48 FINRA is proposing that 

there be at least a 95% pre-correction 

and 98% post-correction linkage rate for 

multi-legged orders (e.g., related equity/ 

options orders, VWAP orders, riskless 

principal transactions). 

• Exchange and TRF/ORF Match 

Rates. The Plan requires that an order 

lifecycle be created to link ‘‘[o]rders 

routed from broker-dealers to 

exchanges’’ and ‘‘[e]xecuted orders and 

trade reports.’’ 49 FINRA is proposing at 

least a 95% pre-correction and 98% 

post-correction aggregate match rate to 

each equity exchange for orders routed 

from Industry Members to an exchange 

and, for over-the-counter executions, the 

same match rate for orders linked to 

trade reports. 

FINRA believes that an error rate of 

5% or lower, measured on a precorrection or as-submitted basis, and 

2% or lower on a post-correction basis 

(measured at T+5),50 should be attained 

across a 180-day period before retiring 

OATS. FINRA believes that this time 

period is necessary to reveal any errors 

that could manifest themselves only 

after surveillance patterns and other 

queries have been run and to confirm 

that the Plan Processor is meeting its 

obligations and performing its functions 

adequately. FINRA would not require a 

maximum 5% pre-correction error rate 

and 2% post-correction error rate each 

day for 180 consecutive days. FINRA’s 

Systems Retirement Proposal also 

provides that, during the 180-day period 

over which the thresholds are 

calculated, FINRA’s use of the data in 

the CAT must confirm that (i) usage 

over that time period has not revealed 

material issues that have not been 

corrected, (ii) the CAT includes all data 

necessary to allow FINRA to continue to 

meet its surveillance obligations, and 

(iii) the Plan Processor is sufficiently 

meeting all of its obligations under the 

Plan. 

Finally, FINRA notes that it will 

implement the deletion of its OATS 

rules on a date to be announced in a 

Regulatory Notice once FINRA 

concludes the thresholds for accuracy 

and reliability described above have 

been met.51 In addition, FINRA added 

proposed introductory language to its 

OATS rules in its Amendment No. 1 

that clarified that, if approved, the 

OATS rules will be deleted from its 

rulebook upon announcement by FINRA 

that the CAT has achieved a level of 

accuracy and reliability sufficient to 

replace OATS. 

In their Systems Retirement 

Proposals, some of the OATS SROs 52

proposed to assess when to eliminate 

their respective OATS rules based on 

the same accuracy and reliability 

standards as proposed by FINRA, and to 

announce the implementation date of 

the elimination of their OATS rules via 

regulatory notice once each has 

concluded that these standards have 


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53See BX Notice, 82 FR at 25873–74; IEX Notice, 

82 FR at 25401–02; NASDAQ Notice, 82 FR at 

25821–22; Phlx Notice, 82 FR at 25864. Similar to 

FINRA, each of these Exchanges also added 

proposed introductory language to its OATS rules 

to clarify that, if approved, the OATS rules will be 

deleted from its rulebook upon announcement by 

the Exchange that CAT has achieved a level of 

accuracy and reliability sufficient to replace OATS. 

See Amendment No. 1 to IEX Notice and 

Amendment No. 2 to BX Notice, NASDAQ Notice, 

and Phlx Notice. 

54NYSE, NYSE Arca, and NYSE MKT. 

55See NYSE Notice, 82 FR at 25636–37; NYSE 

Arca Notice 1, 82 FR at 25363–64; NYSE MKT 

Notice 2, 82 FR at 25440. Similar to FINRA, each 

of NYSE, NYSE Arca, and NYSE MKT also added 

proposed introductory language to its OATS rules 

to clarify that, if approved, the OATS rules will be 

deleted from its rulebook upon announcement by 

FINRA that the CAT has achieved a level of 

accuracy and reliability sufficient to replace OATS. 

See Amendment No. 1 to NYSE Notice, NYSE Arca 

Notice 1, and NYSE MKT Notice 2. 

56COATS was developed to comply with an order 

of the Commission requiring CBOE, in coordination 

with other exchanges, to design and implement a 

consolidated audit trail to ‘‘enable the options 

exchanges to reconstruct markets promptly, 

effectively surveil them and enforce order handling, 

firm quote, trade reporting and other rules.’’ 

Securities Exchange Act Release No. 43268, Section 

IV.B.e.(v) (September 11, 2000) (Administrative 

Proceeding File No. 3–10282) (Order Instituting 

Public Administrative Proceedings Pursuant to 

Sections 19(h)(1) of the Act, Making Findings and 

Imposing Remedial Sanctions). 

57See Bats BZX Notice, 82 FR at 25375; Bats 

EDGX Notice, 82 FR at 25359; BOX Notice, 82 FR 

at 25492; BX Notice, 82 FR at 25876; C2 Notice, 82 

FR at 25386; CBOE Notice, 82 FR at 25430; NYSE 

Arca Notice 2, 82 FR at 25640; NYSE MKT Notice 

1, 82 FR at 25444; NASDAQ Notice, 82 FR at 25824; 

Phlx Notice, 82 FR at 25868. 

58See CBOE Notice, 82 FR at 25430 (proposing 

to eliminate, from CBOE Rule 6.24, references to 

and background on COATS as well as COATS 

requirements regarding the reporting of the time of 

receipt of an execution report); NYSE Arca Notice 

2, 82 FR at 25640 (proposing to eliminate the 

COATS-related clock synchronization requirements 

of NYSE Arca Rule 6.20–O). 

59See BX Notice, 82 FR at 25876 (proposing to 

eliminate the COATS-based information reporting 

requirements of BX Chapter V, Section 7, and to 

replace them with a requirement that BX members 

maintain order records consisting of the elements 

required by BX’s CAT Compliance Rule); 

Amendment No. 1 to BOX Notice (proposing to 

eliminate the COATS-based data requirements of 

BOX Rule 7120(b) and to replace them with a 

requirement that order tickets consist of the 

elements required by BOX’s CAT Compliance Rule); 

CBOE Notice, 82 FR at 25430 (proposing to amend 

various interpretations and policies of CBOE Rule 

6.24 to require that certain systems and data reports 

comply with the functionality and format 

requirements of CAT rather than COATS); Nasdaq 

Notice, 82 FR at 25824 (proposing to eliminate the 

COATS-based information reporting requirements 

of Nasdaq Chapter V, Section 7, and to replace them 

with a requirement that Nasdaq members maintain 

order records consisting of the elements required by 

Nasdaq’s CAT Compliance Rule); NYSE Arca Notice 

2, 82 FR at 25640 (proposing to amend NYSE Arca 

Rule 6.68–O to require order records to include the 

elements required by NYSE Arca’s CAT Compliance 

Rule rather than the elements required under 

COATS); NYSE MKT Notice 1, 82 FR at 25444 

(proposing to amend NYSE MKT Rule 956NY to 

require order records to include the elements 

required by NYSE MKT’s CAT Compliance Rule 

rather than the elements required under COATS); 

Phlx Notice, 82 FR at 25868 and Amendment No. 

2 to Phlx Notice (proposing to amend Phlx Rule 

1063, which implements certain reporting 

requirements related to COATS, and Option Floor 

Procedure Advices and Order and Decorum 

Regulation C–2, which repeats these requirements 

and imposes a schedule of fines for violating them, 

by replacing the COATS requirements with 

provisions stating that order records must include 

the elements enumerated in Phlx’s CAT 

Compliance Rule). See also Bats EDGX Notice, 82 

FR at 25359; BZX Notice, 82 FR at 25375; C2 

Notice, 82 FR at 25386 (noting that BZX, EDGX, and 

C2 do not have any specific rules or requirements 

related to COATS but refer to the retirement of 

COATS in their filings to be consistent with the 

other options exchanges). 

60See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360–61; BOX Notice, 82 

FR at 25493–94; BX Notice, 82 FR at 25877; C2 

Notice, 82 FR at 25387–88; CBOE Notice, 82 FR at 

25432; NYSE Arca Notice 2, 82 FR at 25641; NYSE 

MKT Notice 1, 82 FR at 25445; NASDAQ Notice, 

82 FR at 25825; Phlx Notice, 82 FR at 25869. 61See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 at FR 25361; CBOE Notice, 82 FR 

at 25432; C2 Notice, 82 FR at 25388 (all stating that 

the proposed modifications will be implemented 

‘‘once the Exchange (and other options exchanges 

with respect to COATS and EBS) determines that 

the thresholds for accuracy and reliability described 

above have been met and that the Plan Processor 

is sufficiently meeting all of its obligations under 

the CAT NMS Plan’’); BX Notice, 82 FR at 25877, 

NASDAQ Notice, 82 FR at 25826, and Phlx Notice, 

82 FR at 25869 (all stating that the proposed 

modifications will be implemented ‘‘once [the 

Exchange] concludes the thresholds for accuracy 

and reliability described above have been met and 

that the Plan Processor is sufficiently meeting all of 

its obligations under the CAT NMS Plan’’); BOX 

Notice, 82 FR at 25494, NYSE Arca Notice 2, 82 FR 

at 25640, and NYSE MKT Notice 1, 82 FR at 25444 

(all stating that the proposed modifications will be 

implemented ‘‘once the options exchanges 

determine that the thresholds for accuracy and 

reliability described . . . have been met and that 

the Plan Processor is sufficiently meeting all of its 

obligations under the CAT NMS Plan’’). 

62See Amendment No. 1 to Bats BZX Notice, Bats 

EDGX Notice, BOX Notice, C2 Notice, CBOE Notice, 

been met.53 Other OATS SROs 54

proposed to implement the elimination 

of their OATS rules via regulatory 

notice once FINRA has determined that 

the accuracy and reliability standards 

proposed by FINRA had been met, and 

FINRA publishes a notice announcing 

the date it will retire its OATS rules.55

2. COATS 

Bats BZX, Bats EDGX, BX, BOX, 

CBOE, C2, NASDAQ, NYSE Arca, NYSE 

MKT, and Phlx (collectively, the 

‘‘COATS SROs’’) utilize COATS to 

collect and review data regarding 

orders, quotes, and transactions in listed 

options.56 In their Systems Retirement 

Proposals, the COATS SROs noted that 

the Participants have provided COATS 

technical specifications to the CAT Plan 

Processor for use in developing the 

Technical Specifications for the CAT, 

and that the Participants are working 

with the Plan Processor to include the 

necessary COATS data elements in the 

CAT Technical Specifications.57

Accordingly, the COATS SROs have 

proposed to eliminate COATS once CAT 

is operational and CAT Data is 

sufficiently accurate and reliable for the 

COATS SROs to perform the regulatory 

functions that they now perform via 

COATS. The COATS SROs also have 

proposed to eliminate certain provisions 

of their rules that reference COATS or 

implement COATS requirements 58 and/ 

or to replace certain provisions that 

implement COATS requirements with 

others that provide for compliance with 

CAT requirements.59

Similar to the standards described in 

the Systems Retirement Proposals that 

discuss eliminating OATS-related rules, 

the COATS SROs believe that, before 

COATS can be retired and the proposed 

modifications to COATS-related rules 

can be implemented, the CAT would 

need to achieve an aggregate average 

error rate of 5% or lower measured on 

a pre-correction or as-submitted basis, 

and 2% or lower on a post-correction 

basis (measured at T+5).60 The 5% and 

2% error rates would be measured 

across a 180-day period. For purposes of 

COATS retirement, the COATS SROs 

have proposed to measure the error rates 

for CAT records relating only to listed 

options and not to equities, as only 

options orders and transactions are 

currently subject to COATS reporting. 

As with the proposals to retire OATS, 

the COATS SROs believe that, during 

the minimum 180-day period during 

which the error thresholds are 

calculated, their use of CAT Data must 

confirm that (1) there are no material 

issues that have not been corrected, (2) 

the CAT includes all data necessary to 

allow the COATS SROs to continue to 

meet their surveillance obligations, and 

(3) the Plan Processor is sufficiently 

meeting all of its obligations under the 

CAT NMS Plan. Each COATS SRO also 

noted that, if the Commission approves 

its proposed rule change, it would 

announce the date for modification or 

elimination, as applicable, of reporting 

requirements and the implementation 

date of the proposed rule changes via 

regulatory notices or circulars that 

would be published once the thresholds 

for accuracy and reliability described 

above have been met and the Plan 

Processor is sufficiently meeting all of 

its obligations under the Plan.61 In 

amendments to their respective filings, 

each COATS SRO also added 

introductory language to each of the 

rules that it has proposed to modify in 

connection with the retirement of 

COATS specifying that the rule will be 

amended upon announcement by the 

SRO that the CAT has achieved a 

sufficient level of accuracy and 

reliability.62


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NYSE Arca Notice 2, NYSE MKT Notice 1; and 

Amendment No. 2 to BX Notice, NASDAQ Notice, 

and Phlx Notice. 

63See Bats BZX Rule 24.4; Bats EDGX Rule 24.4; 

BOX Rule 10040; BX Equity Rule 8211; BX Options 

Rule Chapter IX, Section 4; C2 Chapter 15 

(incorporating CBOE Rule 15.7 by reference); CBOE 

Rule 15.7; IEX Rule 8.220; ISE Rule 1404; FINRA 

Rules 8211 and 8213; MIAX Rule 804; Nasdaq 

Equity Rule 8211; Nasdaq Options Rule Chapter IX, 

Section 4; NYSE Rule 8211; NYSE Arca Rule 

10.2(e); NYSE MKT Rule 8211; Phlx Rule 785; 

PEARL Rule 804. PEARL notes that PEARL Rule 

804 is incorporated by reference from the rules in 

MIAX rulebook Chapter VIII. See PEARL Notice, 82 

FR at 25437, n. 14. 

64See Bats BZX Notice, 82 FR at 25375; Bats 

EDGX Notice, 82 FR at 25359; BOX Notice, 82 FR 

at 25493; BX Notice, 82 FR at 25875; C2 Notice, 82 

FR at 25386; CBOE Notice, 82 FR at 25431; FINRA 

Notice, 82 FR at 25426; IEX Notice, 82 FR at 25403; 

ISE Notice, 82 FR at 25470; MIAX Notice, 82 FR at 

25367; NYSE Notice, 82 FR at 25637; NYSE Arca 

Notice 1, 82 FR at 25364; NYSE MKT Notice 2, 82 

FR at 25442; NASDAQ Notice, 82 FR at 25823; 

PEARL Notice, 82 FR at 25437; Phlx Notice, 82 FR 

at 25866. 

65See Bats BZX Notice, 82 FR at 25375; Bats 

EDGX Notice, 82 FR at 25359–60; BX Notice, 82 FR 

at 25875; CBOE Notice, 82 FR at 25431; C2 Notice, 

82 FR at 25386–87; FINRA Notice, 82 FR at 25426; 

Phlx Notice, 82 FR at 25867 ; NASDAQ Notice, 82 

FR at 25823; NYSE Notice, 82 FR at 25637; NYSE 

Arca Notice 1, 82 FR at 25365; and NYSE MKT 

Notice 2, 82 FR at 25442. 

66See Amendment No. 1 to Bats BZX Notice, Bats 

EDGX Notice, BOX Notice; C2 Notice, CBOE Notice, 

FINRA Notice, IEX Notice, NYSE Notice, NYSE 

Arca Notice 1, and NYSE MKT Notice 2; 

Amendment No. 2 to BX Notice, ISE Notice, 

NASDAQ Notice, PEARL Notice, and Phlx Notice; 

and Amendment No. 3 to MIAX Notice. 67See proposed revisions to Bats BZX Rule 24.4, 

as modified by Amendment No. 1; proposed 

revisions to Bats EDGX Rule 24.4, as modified by 

Amendment No. 1; proposed Supplementary 

Material to BX Equity Rule 8211, as modified by 

Amendment No. 2; proposed Supplementary 

Material to BX Options Rule Chapter IX, Section 4, 

as modified by Amendment No. 2; proposed 

Interpretive Material to BOX Rule 10040, as 

modified by Amendment No. 1; C2 Chapter 15 

(incorporating by reference the proposed revisions 

to CBOE Rule 15.7); proposed revisions to CBOE 

Rule 15.7, as modified by Amendment No. 1; 

proposed Supplementary Material to FINRA Rules 

8211 and 8213, as modified by Amendment No. 1; 

proposed Supplementary Material .01 to IEX Rule 

8.220, as modified by Amendment No. 1; proposed 

Supplementary Material to ISE Rule 1404, as 

modified by Amendment No. 2; proposed 

Interpretation and Policy .01 to MIAX Rule 804, as 

modified by Amendment No. 3; proposed 

Supplementary Material to Phlx Rule 785, as 

modified by Amendment No. 2; proposed 

Supplementary Material to Nasdaq Equity Rule 

8211, as modified by Amendment No. 2; proposed 

Supplementary Material to Nasdaq Options Rule 

Chapter IX Section 4, as modified by Amendment 

No. 2; proposed Supplementary Material .01 to 

NYSE Rule 8211, as modified by Amendment No. 

1; proposed Commentary .01(E) to NYSE Arca Rule 

10.2, as modified by Amendment No. 1; proposed 

Supplementary Material .01 to NYSE MKT Rule 

8211, as modified by Amendment No. 1; proposed 

Interpretation and Policy .01 to PEARL Rule 804, 

as modified by Amendment No. 2. 

68See BX Notice, 82 FR at 25876; Bats BZX 

Notice, 82 FR at 25375; Bats EDGX Notice, 82 FR 

at 25359; BOX Notice, 82 FR at 25493; C2 Notice, 

82 FR at 25386; CBOE Notice, 82 FR at 25431; IEX 

Notice, 82 FR at 25403; ISE Notice, 82 FR at 25470– 

71; MIAX Notice, 82 FR at 25367–68; NASDAQ 

Notice, 82 FR at 25823–24; PEARL Notice, 82 FR 

at 25437–38; and Phlx Notice, 82 FR at 25866–68, 

respectively (stating that each SRO will assess 

whether ‘‘an acceptable accuracy rate for customer 

and account information’’ has been reached); 

FINRA Notice, 82 FR at 25426; NYSE Notice, 82 FR 

at 25638; NYSE Arca Notice 1, 82 FR at 25365; and 

NYSE MKT Notice 2, 82 FR at 25442, respectively 

(stating that FINRA will assess whether ‘‘an 

accuracy rate for customer and account information 

of 95% for pre-corrected data and 98% for postcorrection data’’ has been reached). 

69See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360–61; BOX Notice, 82 

FR at 25494; BX Notice, 82 FR at 25876; C2 Notice, 

82 FR at 25387; CBOE Notice, 82 FR at 25432; 

FINRA Notice, 82 FR at 25426; IEX Notice, 82 FR 

at 25403; ISE Notice, 82 FR at 25471; MIAX Notice, 

82 FR at 25368; NYSE Notice, 82 FR at 25636; 

NYSE Arca Notice 1, 82 FR at 25365; NYSE MKT 

Notice 2, 82 FR at 25442; NASDAQ Notice, 82 FR 

at 25824; PEARL Notice, 82 FR at 25438; Phlx 

Notice, 82 FR at 25868. NYSE, NYSE Arca, and 

NYSE MKT will implement this change by 

regulatory notice once FINRA publishes a notice 

announcing a date that it will retire its EBS Rules 

and thus will rely on FINRA’s conclusion that the 

described accuracy and reliability thresholds have 

been met and the CAT Plan Processor is sufficiently 

meeting all of its obligations under the CAT NMS 

Plan. See NYSE Notice, 82 FR at 25636; NYSE Arca 

Notice 1, 82 FR at 25365; NYSE MKT Notice 2, 82 

FR at 25442. 

70See Bats BZX Rule 22.7 and Interpretation and 

Policy .01 to Bats BZX Rule 22.7 (requiring market 

makers to identify accounts and report orders, and 

specifying requirements for joint accounts); Bats 

EDGX Rule 22.7 and Interpretation and Policy .01 

to Bats EDGX Rule 22.7 (requiring market makers 

to identify accounts and report orders, and 

specifying requirements for joint accounts); BOX 

Rule 8060 (requiring market makers to identify 

accounts and report orders, and specifying 

requirements for joint accounts); BX Options Rule 

Continued 

3. EBS 

Each of Bats BZX, Bats EDGX, BX, 

BOX, CBOE, C2, FINRA, IEX, ISE, 

MIAX, PEARL, Phlx, NASDAQ, NYSE, 

NYSE Arca, and NYSE MKT (each an 

‘‘EBS SRO’’) has a rule requiring a 

member, upon request by the SRO, to 

provide trading information using the 

electronic blue sheets (‘‘EBS’’) system in 

such format as may be prescribed by the 

SRO.63

According to the EBS SROs, after 

broker-dealer reporting to the CAT 

begins, CAT will contain much of the 

data with respect to transactions in 

CAT-Eligible Securities that an SRO 

could otherwise have requested via the 

EBS system.64 Consequently, the EBS 

SROs would no longer need to request 

information pursuant to the EBS Rules 

for transactions in CAT-Eligible 

Securities after such time as appropriate 

thresholds for accuracy and reliability, 

including for customer and account 

information, are achieved. However, the 

EBS SROs do not believe that the EBS 

rules can be completely removed from 

their rulebooks and the EBS system 

completely retired, because EBS 

requests might have to be made to 

obtain information about transactions 

occurring before CAT has attained an 

appropriate threshold for accuracy and 

reliability. Some of the EBS SROs 65 also 

noted that their EBS rules apply to 

transactions in non-CAT-Eligible 

Securities, such as fixed-income 

securities. Thus, the rules would have to 

remain in effect with respect to those 

transactions. 

Each of the EBS SROs proposed to 

add new language to its EBS rule to 

clarify how it will request data under 

these rules after members are reporting 

to the CAT.66 Specifically, the proposed 

new language notes that the SRO will 

not request trade data or information 

under the rule, and members will not be 

required to provide trade data or 

information under the rule, for trades 

reported to the CAT after the SRO (or, 

in some cases, FINRA) announces that 

it has determined that the accuracy and 

reliability of the CAT are sufficient to 

replace requests pursuant to the EBS 

rule.67

As noted above, the EBS SROs believe 

(or reiterate FINRA’s belief) that the 

CAT must meet certain minimum 

accuracy and reliability standards before 

it, or FINRA, could rely on the CAT 

Data to replace existing regulatory tools, 

including EBS. Therefore, the EBS SROs 

propose to implement the new rule text 

related to their EBS rules only after CAT 

achieves certain accuracy thresholds. 

The EBS SROs proposed similar 

standards to those for eliminating 

OATS-related rules set forth above, as 

well as specific accuracy standards for 

customer and account information.68 In 

addition, each of the EBS SROs states 

that it (or, in some cases, FINRA) can 

rely on CAT Data to replace EBS 

requests only after it has determined 

that its usage of the CAT Data over a 

180-day period has not revealed 

material issues that have not been 

corrected, confirmed that the CAT 

includes all data necessary to allow it or 

FINRA to continue to meet its 

surveillance obligations, and confirmed 

that the Plan Processor is fulfilling its 

obligations under the Plan.69

4. Other Rules 

Certain Exchanges proposed to amend 

other reporting rules that they have 

determined are duplicative of CAT 

requirements. BatsBZX, BatsEDGX, 

BOX, BX, C2, CBOE, MIAX, PEARL, 

Phlx, and NASDAQ currently have rules 

requiring certain market participants 

(e.g., specialists and market makers) to 

report certain account or order 

information for accounts over which the 

market participant engages in trading 

activities or exercises investment 

discretion.70 These Exchanges stated 


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Chapter VII, Section 7 and Commentary .01 to BX 

Options Rule Chapter VII, Section 7 (requiring 

market makers to identify accounts and report 

orders, and specifying requirements for joint 

accounts); C2 Rule 8.7 (requiring market makers to 

identify accounts and report orders, and specifying 

requirements for joint accounts); CBOE Rule 8.9 and 

Interpretation and Policy .07 to CBOE Rule 8.9 

(requiring market makers to identify accounts and 

report orders, and specifying requirements for joint 

accounts); MIAX Rule 607 (requiring market makers 

to identify accounts and report orders, and 

specifying requirements for joint accounts); Nasdaq 

Options Rule Chapter VII, Section 7 and 

Commentary .01 to Nasdaq Options Rule Chapter 

VII, Section 7 (requiring market makers to identify 

accounts and report orders, and specifying 

requirements for joint accounts); PEARL Rule 606 

and Interpretation and Policy .01 to PEARL Rule 

606 (requiring market makers to identify accounts 

and report orders, and specifying requirements for 

joint accounts); Phlx Options Rule 1022 and 

Commentary .01 and .02 to Phlx Options Rule 1022 

(requiring specialists and market makers to identify 

accounts and, with respect to options in a foreign 

currency, make available books and records 

concerning transactions). 

71See Bats BZX Notice, 82 FR at 25375; Bats 

EDGX Notice, 82 FR at 25359; BOX Notice, 82 FR 

at 25492; BX Notice at 25875; C2 Notice, 82 FR at 

25386; CBOE Notice, 82 FR at 25431; MIAX Notice, 

82 FR at 25367; NASDAQ Notice, 82 FR at 25823; 

PEARL Notice, 82 FR at 25437; Phlx Notice, 82 FR 

at 25866. 

72See proposed Interpretive Material 8060–1 to 

BOX Rule 8060, as modified by Amendment No. 1; 

proposed Commentary .02 to BX Options Rule 

Chapter VII, Section 7, as modified by Amendment 

No. 2; proposed Interpretation and Policy .01 to 

MIAX Rule 607, as modified by Amendment No. 3; 

proposed Commentary .02 to Nasdaq Options Rule 

Chapter VII, Section 7, as modified by Amendment 

No. 2; proposed Interpretation and Policy .02 to 

PEARL Rule 606, as modified by Amendment No. 

2; proposed Commentary .03 to Phlx Options Rule 

1022, as modified by Amendment No. 2. In 

addition, BZX, CBOE, and EDGX proposed language 

for other rules that require the furnishing of data 

similar to the proposed revisions to the EBS rules— 

that is, that they will not request information for 

trades reported to the CAT after each has 

announced that it has determined that CAT is 

sufficiently accurate and reliable. See Amendment 

No. 1 to BZX Notice (proposing to add such 

language to Interpretation and Policy .02 to BZX 

Rule 4.2); Amendment No. 1 to EDGX Notice 

(proposing to add such language to Interpretation 

and Policy .02 to EDGX Rule 4.2); Amendment No. 

1 to CBOE Notice (proposing to add such language 

to Interpretation and Policy .04 to CBOE Rule 17.2). 

73See proposed revisions to Bats BZX Rule 

22.7(b) and Interpretation and Policy .01 to Bats 

BZX Rule 22.7 (proposing to replace requirement 

that market makers report orders with requirement 

that market makers report positions and eliminate 

required elements of report pertaining to orders); 

proposed revisions to Bats EDGX Rule 22.7(b) and 

Interpretation and Policy .01 to Bats EDGX Rule 

22.7 (proposing to replace requirement that market 

makers report orders with requirement that market 

makers report positions and eliminate required 

elements of report pertaining to orders); proposed 

revisions to C2 Rule 8.7(b) (proposing to replace 

requirement that market makers report orders with 

requirement that market makers report positions 

and eliminate required elements of report 

pertaining to orders); proposed revisions to CBOE 

Rule 8.9(b) and Interpretation and Policy .07 to 

CBOE Rule 8.9 (proposing to replace requirement 

that market makers report orders with requirement 

that market makers report positions and eliminate 

required elements of report pertaining to orders). 

74See Amendment No. 1 to each of Bats BZX 

Notice, Bats EDGX Notice, C2 Notice, and CBOE 

Notice. 

75See CBOE Notice, 82 FR at 25431; EDGX 

Notice, 82 FR at 25360. 

76The Plan requires the Plan Processor to ensure 

that regulators have access to corrected and linked 

order and Customer data by 8:00 a.m. Eastern Time 

on T+5. See CAT NMS Plan, at C–15. 

77See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360–61; BX Notice, 82 FR 

at 25876; BOX Notice, 82 FR at 25494; C2 Notice, 

82 FR at 25387; CBOE Notice, 82 FR at 25432; 

MIAX Notice, 82 FR at 25368; NASDAQ Notice, 82 

FR at 25824; PEARL Notice, 82 FR at 25438; Phlx 

Notice, 82 FR at 25867–68. 

78CAT NMS Plan, Appendix C, Section C.9. 

79FINRA Notice, 82 FR at 25425. 

80FINRA notes that the 180-day timeframes 

discussed above with respect to usage of the data 

and calculation of error rates would apply to data 

reported to the CAT by Small Industry Members 

that are reporting to OATS. If an amendment to the 

Plan to accelerate the reporting requirement for 

those firms is not approved, the retirement of OATS 

could not be accomplished until at least 180 days 

after Small Industry Members begin reporting, 

which is currently scheduled to begin in November 

2019. See FINRA Notice, 82 FR at 25425. 

81See FINRA Notice, 82 FR at 25425 (noting that 

in one recent month eight of the ten firms submitted 

that, once broker-dealers are reporting to 

CAT, CAT will contain some of the data 

the Exchanges would otherwise have 

requested under these rules.71 Similar to 

the proposed revisions to the EBS rules, 

some of the Exchanges have proposed to 

add new text to these order and account 

identification rules stating that the 

Exchange will not request information 

under the rule, and members will not be 

required to provide information under 

the rule, for trades reported to CAT after 

the Exchange announces that it has 

determined that the accuracy and 

reliability of the CAT are sufficient to 

replace requests pursuant to the rule.72

Other Exchanges have proposed to 

revise these rules by deleting specific 

reporting requirements that are 

duplicative of CAT while retaining their 

position reporting requirements, which 

are not duplicative of CAT.73 In their 

respective amendments, these 

Exchanges proposed to add introductory 

language to these rules to clarify that the 

rules will be amended upon 

announcement by the Exchange that the 

CAT has achieved a sufficient level of 

accuracy and reliability.74

In addition, CBOE and EDGX 

currently require members to submit to 

the Exchange stock transaction 

information for each Qualified 

Contingent Cross order executed at the 

Exchange.75 CAT will require exchange 

members to report stock transaction 

information. Therefore, CBOE and 

EDGX intend to eliminate this reporting 

requirement in accordance with the 

proposed timeline and standards below. 

These Exchanges proposed standards 

for when the proposed modifications to 

these reporting rules will be 

implemented that are similar to those 

for eliminating OATS-related rules set 

forth above. Accordingly, these 

Exchanges proposed that CAT would 

need to achieve a sustained error rate for 

a period of at least 180 days of 5% or 

lower measured on a pre-correction or 

as-submitted basis, and 2% or lower on 

a post-correction basis (measured at 

T+5).76 These Exchanges have proposed 

to measure the 5% pre-correction and 

2% post-correction thresholds by 

averaging the error rate across the 

period, not requiring a 5% precorrection and 2% post-correction 

maximum each day for 180 consecutive 

days. In addition, each of these 

Exchanges stated that it can rely on CAT 

Data to replace information required to 

be reported under duplicative rules only 

after it has determined that its usage of 

the CAT Data over a 180-day period has 

not revealed material issues that have 

not been corrected, confirmed that the 

CAT includes all data necessary to 

allow it to continue to meet its 

surveillance obligations, and confirmed 

that the CAT Plan Processor is fulfilling 

its obligations under the CAT NMS 

Plan.77

B. Small Industry Member Data 

Availability 

As noted above, the CAT NMS Plan 

requires the SROs, in their Systems 

Retirement Proposals, to address 

‘‘whether the availability of certain data 

from Small Industry Members two years 

after the Effective Date would facilitate 

a more expeditious retirement of 

duplicative systems.’’ 78

In its Systems Retirement Proposal, 

FINRA stated its view that there is no 

effective way to retire OATS until all 

current OATS reporters are reporting to 

the CAT and that having data from 

Small Industry Members currently 

reporting to OATS available two years 

after the Effective Date rather than three 

would ‘‘substantially facilitate a more 

expeditious retirement of OATS.’’ 79

Therefore, FINRA supports an 

amendment to the Plan that would 

require current OATS reporters that are 

Small Industry Members to report to 

CAT two years after the Effective Date 

(instead of three) and stated that it 

intends to work with the other SROs to 

propose such an amendment to the 

Plan.80

FINRA has identified approximately 

300 member firms that currently report 

to OATS and meet the definition of 

‘‘Small Industry Member.’’ According to 

FINRA, only ten of these firms submit 

information to OATS on their own 

behalf, and eight of those ten firms 

report very few records to OATS.81 The 


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fewer than 100 reports during the month, with four 

firms submitting fewer than 50). 

82See id. 

83See BX Notice, 82 FR at 25874–75; IEX Notice, 

82 FR at 25402; NYSE Notice, 82 FR at 25636; 

NYSE Arca Notice 1, 82 FR at 25364; NYSE MKT 

Notice 2, 82 FR at 25441; NASDAQ Notice, 82 FR 

at 25822–23; Phlx Notice, 82 FR at 25866. See also 

FINRA Notice, 82 FR at 25427–28. 

84See Bats BZX Notice, 82 FR at 25375–76; Bats 

EDGX Notice, 82 FR at 25360; BOX Notice, 82 FR 

at 25493; BX Notice, 82 FR at 25877; C2 Notice at, 

82 FR at 25387; CBOE Notice, 82 FR at 25431; 

NYSE Arca Notice 2, 82 FR at 25640; NYSE MKT 

Notice 1, 82 FR at 25444; NASDAQ Notice, 82 FR 

at 25825; Phlx Notice, 82 FR at 25868. 

85See MIAX Notice, 82 FR at 25368; PEARL 

Notice at 25437–38. MIAX and PEARL also make 

similar statements with respect to whether earlier 

availability of data from Small Industry Members 

would facilitate the retirement of MIAX Rule 607 

and PEARL Rule 606, which require certain account 

and order information to be reported. See MIAX 

Notice, 82 FR at 25368; PEARL Notice at 25437–38. 

86See BX Notice, 82 FR at 25876; ISE Notice, 82 

FR at 25470; NASDAQ Notice, 82 FR at 25824; Phlx 

Notice, 82 FR at 25867. 

87CAT NMS Plan, Appendix C, Section C.9. 

88See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360; BOX Notice, 82 FR 

at 25493; BX Notice, 82 FR at 25875–77; C2 Notice, 

82 FR at 25387; CBOE Notice, 82 FR at 25431–32; 

FINRA Notice, 82 FR at 25425; IEX Notice, 82 FR 

at 25402; ISE Notice, 82 FR at 25470; MIAX Notice, 

82 FR at 25368; NYSE Notice, 82 FR at 25637; 

NYSE Arca Notice 1, 82 FR at 25364; NYSE Arca 

Notice 2, 82 FR at 25640; NYSE MKT Notice 1, 82 

FR at 25445; NYSE MKT Notice 2, 82 FR at 25441; 

NASDAQ Notice, 82 FR at 25823–25; PEARL 

Notice, 82 FR at 25438; Phlx Notice, 82 FR at 

25866–68. 

89See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360; BOX Notice, 82 FR 

at 25493; BX Notice, 82 FR at 25876–77; C2 Notice, 

82 FR at 25387; CBOE Notice, 82 FR at 25431–32; 

ISE Notice, 82 FR at 25470; MIAX Notice, 82 FR at 

25368; NYSE Arca Notice 2, 82 FR at 25640; NYSE 

MKT Notice 1, 82 FR at 25445; NASDAQ Notice, 

82 FR at 25824–25; PEARL Notice, 82 FR at 25438; 

Phlx Notice, 82 FR at 25867–68. 

90See BX Notice, 82 FR at 25875; FINRA Notice, 

82 FR at 25426; NYSE Notice, 82 FR at 25637; 

NYSE Arca Notice 1, 82 FR at 25364; NYSE MKT 

Notice 2, 82 FR at 25441; NASDAQ Notice, 82 FR 

at 25823; Phlx Notice, 82 FR at 25866. 

91See FINRA Notice, 82 FR at 25427. 

92 Id. 

93 Id. 

94See id. 

95See id. 

96See supra note 11. 

vast majority of these 300 firms use 

third parties to fulfill their reporting 

obligations, and many of these third 

parties will begin reporting to CAT in 

November 2018. Consequently, FINRA 

believes that the burden on current 

OATS reporters that are Small Industry 

Members would not be significant if 

those firms are required to report to 

CAT beginning in November 2018 rather 

than November 2019. FINRA does not 

believe that it is necessary or 

appropriate to accelerate CAT reporting 

for Small Industry Members that are not 

currently reporting to OATS.82

The Systems Retirement Proposals of 

BX, IEX, NYSE, NYSE Arca, NYSE 

MKT, NASDAQ, and Phlx contain the 

same analysis as FINRA (or summarize 

FINRA’s analysis) in connection with 

whether the earlier availability of data 

from Small Industry Members would 

facilitate the retirement of their own 

respective OATS rules, and these 

Exchanges expressed support for the 

Plan amendment described by FINRA.83

Some of the Systems Retirement 

Filings also discussed how earlier 

availability of data from Small Industry 

Members might affect the retirement of 

systems other than OATS. The COATS 

SROs expressed the view that COATS 

should not be retired until all 

Participants and Industry Members that 

report data to COATS are reporting 

comparable data to the CAT.84 They 

noted that, while the early submission 

of options data to the CAT by Small 

Industry Members could expedite the 

retirement of COATS, they believe it 

premature to consider such a change, 

and that additional analysis would be 

necessary to determine whether such 

early reporting by Small Industry 

Members would be feasible. Some of the 

EBS SROs made statements similar to 

the COATS SROs with respect to 

whether earlier availability of data from 

Small Industry Members would 

facilitate EBS retirement,85 while other 

EBS SROs stated that the submission of 

data to the CAT by Small Industry 

Members a year earlier than is required 

in the CAT NMS Plan, at the same time 

as the other Industry Members, would 

expedite the replacement of EBS data 

with CAT Data because CAT would then 

have all necessary data from Industry 

Members to enable these SROs to 

perform the regulatory surveillance that 

currently is performed via EBS.86

C. Individual Industry Member 

Exemptions 

As noted above, the CAT NMS Plan 

also requires the SROs, in their Systems 

Retirement Proposals, to address 

‘‘whether individual Industry Members 

can be exempted from reporting to 

duplicative systems once their CAT 

reporting meets specified accuracy and 

reliability standards, including, but not 

limited to, ways in which establishing 

cross-system regulatory functionality or 

integrating data from existing systems 

and the CAT would facilitate such 

Individual Industry Member 

exemptions.’’ 87

All of the SROs stated (or reiterated 

FINRA’s statement) that a single ‘‘cutover’’ from existing systems to CAT is 

preferable to elimination of OATS 

reporting requirements on a firm-byfirm basis.88 Some of the SROs stated 

that providing individual exemptions to 

Industry Members would be inefficient, 

more costly, and less reliable than the 

single cut-over.89 These SROs further 

stated that providing individual 

exemptions would require the 

temporary creation of a cross-system 

regulatory function and the integration 

of data from existing systems and the 

CAT to avoid creating any regulatory 

gaps as a result of such exemptions. 

These SROs believed that such a 

function would be costly to create and 

would give rise to a greater likelihood 

of data errors or other issues. These 

SROs stated that, given the limited time 

in which such exemptions would be 

necessary, they did not believe that such 

exemptions would be an appropriate 

use of limited resources. Some of the 

SROs also noted that, if an amendment 

to require Small Industry Members who 

currently report to OATS to begin 

reporting to CAT in November of 2018 

were approved by the Commission, 

there would be no need to exempt 

members from OATS requirements on a 

firm-by-firm basis.90

FINRA argued that the primary 

beneficiary of its proposed approach 

would be the investing public.91 FINRA 

noted that firm-by-firm retirement of 

OATS would require merging OATS 

and CAT data, and that such an 

approach would be ‘‘technologically 

costly and difficult and could introduce 

errors into the data being surveilled that 

did not exist prior to integration.’’ 92

FINRA further stated that conducting its 

surveillance using a single source 

‘‘increases the efficiency and 

effectiveness of the process and 

improves the integrity of the 

markets.’’ 93 FINRA noted that the 

potential costs of this approach would 

be borne by those firms that would have 

met an individual threshold sooner and 

that the approach could disincentivize 

individual firms from meeting the 

minimum error rate thresholds, which 

could, at the margin, extend the period 

of duplicative reporting for all firms.94

However, FINRA noted this disincentive 

would be small for firms with 

significant reporting burdens, as they 

would want to end duplicative reporting 

quickly, and that firms that otherwise 

delay in meeting their error rates could 

incur higher costs through enforcement 

actions.95

III. Summary of Comments 

The Commission received four 

comments that were submitted to File 

Number SR–FINRA–2017–13.96 Two of 

the commenters noted that their 

comments applied to the similar 


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97See FIF Letter at 1; Thomson Reuters Letter at 

1. 

98See FIF Letter at 3; SIFMA Letter at 3–4 (noting 

that the inaccurate reporting of the ‘‘slowest’’ 

broker-dealers, in the absence of individual firm 

exemptions, could force the whole industry to 

engage in duplicative reporting for an extended 

period). 

99See Fidelity Letter at 4. This commenter also 

suggested that FINRA could ‘‘consider migrating 

firms in tranches, or phases, based on priority of 

those firms that first met the proposed error rates’’ 

if FINRA does not agree that a firm-by-firm 

transition is appropriate. Id. 

100See FIF Letter at 3; Thomson Reuters Letter at 

3. 

101See FIF Letter at 3. 

102See id. 

103SIFMA Letter at 3–4. 

104See FIF Letter at 3. 

105 Id. (also stating that the Plan Processor could, 

for example, route all CAT reports and errors 

corrections from exempted firms to FINRA for 

conversion and input into OATS, and that more 

sophisticated data merge solutions are possible with 

a reasonable investment by FINRA and the Plan 

Processor). 

106See id. at 4. 

107See SIFMA Letter at 3–4 (‘‘once a brokerdealer meets accuracy thresholds in CAT, and the 

surveillance logic is recreated with the Central 

Repository, FINRA should utilize a subset of data 

from the CAT, and format it so that it effectively 

mimics what it would have received from OATS’’). 

108See Thomson Reuters Letter at 3. 

109 Id. 

110See FIF Letter at 4; SIFMA Letter at 2; 

Thomson Reuters Letter at 2–3; Fidelity Letter at 3. 

111See SIFMA Letter at 2. See also Fidelity Letter 

at 3. 

112See FIF Letter at 4–5. 

113See id. Similarly, the commenter 

recommended that ‘‘the average post-correction 

error rate across the five categories must achieve 

2% but no single category could exceed a 3% postcorrection error rate.’’ Id. at 5. 

114See id. 

proposals made by the other SROs.97

While the commenters supported 

certain aspects of the Systems 

Retirement Proposals, there were 

others—noted below—where the 

commenters did not agree and believed 

that the SROs had not provided 

adequate justification. 

A. Possibility of Firm-by-Firm 

Retirement 

All four of the commenters disagreed 

with the SROs’ proposed approach of 

applying a single cut-over from existing 

systems to CAT. Two of the commenters 

argued that individual firms that 

achieve the quality criteria—even if the 

industry as a whole has not—should be 

granted exemptions from reporting to 

existing systems until those systems can 

be retired. In the commenters’ view, the 

SROs’ proposed approach would 

penalize firms that quickly and 

consistently meet or exceed quality 

standards for CAT reporting.98 A third 

commenter argued that the single cutover approach provides little incentive 

for an individual firm to reduce its error 

rate, because the retirement of OATS 

will be based on an industry-wide error 

rate that is beyond its control.99

Two commenters took the view that 

FINRA had not provided sufficient cost/ 

benefit analysis to justify its position 

and emphasized the significant costs of 

duplicative reporting to brokerdealers.100 One of these commenters 

noted that broker-dealers who do not 

outsource their regulatory reporting 

(approximately 126 firms) spend on 

average $725,615 per month on their 

regulatory reporting obligations (which 

include OATS, EBS, large trader 

reporting, and other reporting).101 This 

commenter estimated that duplicative 

OATS and EBS reporting for these 126 

broker-dealer firms would cost more 

than $20 million per month and stated 

that this approach would severely 

penalize broker-dealer firms that rapidly 

and consistently met reporting 

standards.102 Another commenter cited 

the same average monthly cost of 

$725,615 and argued that the benefits of 

individual Industry Member exemptions 

outweigh the ‘‘generalized and 

unsubstantiated justifications against 

such an approach’’ outlined by the 

SROs.103

One commenter stated that FINRA has 

not provided sufficient technological 

rationale to explain its opposition to 

individual firm exemptions, and 

disagreed with FINRA’s conclusion that 

the technology to merge OATS and CAT 

would be costly and could introduce 

errors.104 The commenter argued that 

there are ‘‘multiple possible approaches 

that could be used to integrate CAT and 

OATS data allowing FINRA to 

effectively surveil the market, especially 

if FINRA and the Plan Processor work 

jointly on a cooperative solution.’’ 105 In 

addition, the commenter noted that, 

because the EBS retirement plan 

proposes to extract any data available in 

CAT before requesting historical data or 

data for asset classes not covered by 

CAT, the SROs can effectively merge 

CAT data and existing EBS data to meet 

their surveillance obligations.106

Similarly, another commenter noted 

that the Participants have committed to 

include the relevant fields required for 

the decommissioning of OATS in the 

initial phase of CAT and recommended 

that FINRA utilize data from CAT to 

obtain what it would otherwise receive 

from OATS.107

Another commenter recommended 

that the SROs include a cost-benefit 

analysis of a ‘‘CAT-to-OATS converter’’ 

that would allow firms that meet the 

error rates to cease sending data to 

OATS directly.108 Instead, the Plan 

Processor would convert the CAT 

reports of the firm into an OATS-eligible 

format and report that firm’s audit trail 

information to OATS. The commenter 

believed that this approach is 

technically possible based on comments 

made by the Plan Processor, and ‘‘that 

CAT Industry Member Specifications 

could incorporate this concept.’’ 109

B. Assessment Criteria 

All four of the commenters generally 

maintained that only data required by 

OATS or EBS rules today should be 

included in the accuracy and reliability 

metrics for system retirement, and that 

CAT data elements or other aspects of 

CAT that are not required by existing 

systems should be outside the scope for 

assessment.110 One commenter argued, 

for example, that CAT error rates related 

to customer information and options 

activity should not have any bearing on 

the retirement of OATS, as FINRA does 

not rely on OATS for that 

information.111 Another commenter 

posed a number of clarifying questions 

regarding the standards, including 

whether the proposed accuracy and 

reliability metrics apply to Participants 

as well as Industry Members, whether 

the proposed accuracy and reliability 

metrics for the OATS retirement plan 

apply only to equities data, whether 

customer and account information 

accuracy standards are excluded from 

the OATS retirement plan, whether the 

inter-firm linkage quality metric is 

calculated as an aggregate measurement 

across all Industry Members, and 

whether the 2% post-correction error 

rate is an average error rate over the 

period calculated as the number of 

erroneous records, as measured on T+5 

divided by the total number of records 

received.112 This commenter also 

recommended that FINRA consider that 

the average pre-correction error rate 

across the five categories (i.e., rejection 

rates, intra-firm linkages, inter-firm 

linkages, order linkage rates, exchange 

and TRF/ORF match rates) must achieve 

5%, but no single category could exceed 

7% for the pre-correction error rate.113

This commenter further recommended 

that corrections should be calculated 

under CAT in the same timeframes as 

under existing audit trail systems (i.e., 

T+6 for OATS and T+10 for EBS rather 

than T+5, as proposed).114

Three commenters raised concerns 

about the broader, qualitative factors 

proposed by the SROs—that during the 

180-day evaluation period material 

issues are not revealed, that the CAT 

includes all data necessary to allow 

FINRA to continue to meet its 

surveillance obligations, and that the 


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115See Fidelity Letter at 2–3; FIF Letter at 5; 

Thomson Reuters Letter at 4–5. 

116See FIF Letter at 5; Thomson Reuters Letter at 

4–5. 

117See Fidelity Letter at 2–3. 

118See FIF Letter at 2. 

119See id. 

120 Id. at 2. See also Thomson Reuters Letter at 

2 (noting that these daily metrics should be issued 

during the planned testing phase that begins no 

later than three months before CAT reporting and 

that the actual date of OATS and EBS retirement 

will remain uncertain without access to these 

metrics). 

121See FIF Letter at 2; Thomson Reuters at 2. 

122Thomson Reuters Letter at 2–3. 

123SIFMA Letter at 2. 

124See FIF Letter at 2; Thomson Reuters Letter at 

2 (commending the SROs for ‘‘their willingness to 

move all OATS reporters to the same timeline’’). 

One of these commenters noted that accelerating 

the compliance date might ‘‘place additional 

burden on the Small Industry Members who are 

OATS reporters, even for those members that will 

likely use third party providers for their CAT 

reporting obligations, because these reporters 

ultimately bear supervisory responsibility for the 

OATS and CAT regulatory reporting.’’ FIF Letter at 

2. The commenter concluded, however, that ‘‘the 

economic trade-off of a significantly earlier date for 

OATS retirement for the entire industry’’ justifies 

the proposal. Id. 

125See SIFMA Letter at 2–3; Fidelity Letter at 3. 

126SIFMA Letter at 2. See also Fidelity Letter at 

3 (arguing that phasing in CAT reporting based on 

current OATS-reporting status would give nonOATS reporting firms additional time to comply 

with CAT requirements). 

127See SIFMA Letter at 2–3. 

128See Fidelity Letter at 3. 

129See FIF Letter at 5; SIFMA Letter at 4; 

Thomson Reuters Letter at 4. 130FIF Letter at 5. 

131SIFMA Letter at 4. 

132 15 U.S.C. 78s(b)(2). 

133 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of 

the Act also provides that proceedings to determine 

whether to disapprove a proposed rule change must 

be concluded within 180 days of the date of 

publication of notice of the filing of the proposed 

rule change. See id. The time for conclusion of the 

proceedings may be extended for up to 60 days if 

the Commission finds good cause for such 

extension and publishes its reasons for so finding, 

or if the exchange consents to the longer period. See 

id. 

134 15 U.S.C. 78f(b)(5). 

135 15 U.S.C. 78o–3(b)(6). 

Plan Processor is sufficiently meeting all 

of its obligations under the Plan.115 Two 

commenters suggested that the Systems 

Retirement Proposals should require 

these conditions to be met before CAT 

goes live and acknowledge that 

evaluation of all of these issues will 

begin with CAT Participant reporting.116

Another commenter opined that these 

additional standards do not provide 

enough clarity regarding when FINRA 

will retire OATS and provide too much 

discretion to FINRA.117

C. Assessment Length and Other 

Considerations Relating to the 

Assessment Period 

One commenter recommended that 

the SROs should consider shortening 

the trial period if all criteria have been 

met before the 180th day.118 This 

commenter also recommended that the 

180-day trial period be a ‘‘rolling 

metric’’—i.e., if the industry does not 

meet the quality criteria by the end of 

the first 180 days, the most recent 180 

days should be recalculated each day 

thereafter.119 The same commenter 

urged FINRA to ‘‘take a daily accounting 

of the measurements’’ and to 

‘‘communicate both the aggregate 

measurements and the individual 

Industry Member measurements so that 

all parties are regularly updated’’ 

regarding the status of the various error 

rates and can make necessary 

corrections.120

Two commenters argued that the early 

phases of CAT compliance should be 

viewed as a ‘‘trial period’’ and that there 

should be no CAT penalties or 

regulatory inquiries associated with 

CAT reporting before the end of the trial 

period.121 One of these commenters 

suggested ‘‘that CAT not go-live until 

the 95% uncorrected and 98% postcorrection thresholds have been met for 

two weeks during the testing 

period.’’ 122 Similarly, another 

commenter stated that the SROs 

‘‘should establish a test period to gather 

information prior to production 

reporting’’ to ‘‘enable CAT to go into 

production at a confidence level that 

allows its reporting systems to serve as 

many existing regulatory requirements 

and accompanying surveillance 

programs as possible.’’ 123

D. Additional Plan Amendments 

All of the commenters supported 

requiring reporting for current OATS 

reporters 24 months after the CAT 

effective date. Of those, two commenters 

supported the proposal to amend the 

CAT NMS Plan to accelerate CAT 

reporting for Small Industry Members 

who currently report to OATS from 36 

to 24 months after the CAT Effective 

Date.124 Two other commenters instead 

recommended that all current OATS 

reporters—regardless of size—should 

begin reporting to CAT in November of 

2018 and all non-OATS reporters 

should be allowed to begin reporting to 

CAT in November of 2019.125 One of 

these commenters noted that many large 

broker-dealers do not report to OATS 

and argued that ‘‘requiring such firms to 

implement the systems and reporting 

mechanisms for the CAT on a shortened 

timeframe simply due to their 

designation as a ‘Large Industry 

Member’ may result in significant 

technological and operational 

challenges.’’ 126 Accordingly, the 

commenter urged some mechanism to 

allow such Large Industry Members to 

begin reporting 36 rather than 24 

months after the CAT Effective Date.127

The other commenter noted that, if the 

first phase of Industry Member reporting 

were limited to current OATS reporting 

firms, FINRA would still have all of the 

data that it currently has from OATS 

today.128

E. Other Comments 

Three commenters requested that the 

CAT NMS Plan be clarified to specify 

that prime broker transactions are 

included in the CAT reporting 

requirements.129 One commenter stated 

that ‘‘this will enable a more complete 

set of transactions in the CAT audit trail 

and allow CAT to replace EBS as a more 

complete reporting source for this 

data.’’ 130 Similarly, another commenter 

noted that prime broker transactions are 

missing from the CAT NMS Plan, which 

‘‘may prevent the regulators from 

utilizing CAT data as envisioned.’’ 131

IV. Proceedings To Determine Whether 

To Approve or Disapprove the Systems 

Retirement Proposals, as Modified by 

Amendments Thereto 

The Commission hereby institutes 

proceedings pursuant to Section 19(b)(2) 

of the Act 132 to determine whether the 

Systems Retirement Proposals of Bats 

BZX, Bats EDGX, BOX, BX, C2, CBOE, 

FINRA, IEX, ISE, MIAX, NASDAQ, 

PEARL, NYSE, NYSE Arca, NYSE MKT, 

and Phlx, as modified by their 

respective amendments, should be 

approved or disapproved. Further, 

pursuant to Section 19(b)(2)(B) of the 

Act,133 the Commission is hereby 

providing notice of the grounds for 

disapproval under consideration. The 

Commission believes that it is 

appropriate to institute proceedings at 

this time in view of the legal and policy 

issues raised by the proposals. 

Institution of proceedings does not 

indicate, however, that the Commission 

has reached any conclusions with 

respect to any of the issues involved. 

In particular, the Commission is 

instituting proceedings to allow for 

additional analysis for consistency with: 

(1) Section 6(b)(5) of the Act,134 with 

respect to the Exchanges’ Systems 

Retirement Proposals, and Section 

15A(b)(6) of the Act,135 with respect to 

FINRA’s Systems Retirement Proposal, 

both of which sections require, among 

other things, that the rules of a national 

securities exchange or registered 

securities association be designed ‘‘to 

prevent fraudulent and manipulative 

acts and practices, to promote just and 

equitable principles of trade, . . . to 

remove impediments to and perfect the 


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42178 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 

136 15 U.S.C. 78f(b)(8). 

137 15 U.S.C. 78o–3(b)(9). 

138 15 U.S.C. 78k–1. 

139 17 CFR 242.608(c) and 242.613. 

140 17 CFR 242.613(a)(9). 

141See CAT NMS Plan, Appendix C, Section C.9. 

142 Id. 

143See id. 

144See CAT NMS Plan, Appendix C, Section C.9. 

145CAT Approval Order, 81 FR at 84771. 

146 Id. 

147See Bats BZX Notice, 82 FR at 25376; Bats 

EDGX Notice, 82 FR at 25360; BOX Notice, 82 FR 

at 25493; BX Notice, 82 FR at 25876–77; C2 Notice, 

82 FR at 25387; CBOE Notice, 82 FR at 25431–32; 

ISE Notice, 82 FR at 25470; MIAX Notice, 82 FR at 

25368; NYSE Arca Notice 2, 82 FR at 25640; NYSE 

MKT Notice 1, 82 FR at 25445; NASDAQ Notice, 

82 FR at 25824–25; PEARL Notice, 82 FR at 25438; 

Phlx Notice, 82 FR at 25867–68. 

mechanism of a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest;’’ and (2) Section 6(b)(8) 

of the Act,136 with respect to the 

Exchanges’ Systems Retirement 

Proposals, and Section 15A(b)(9) of the 

Act,137 with respect to FINRA’s Systems 

Retirement Proposal, both of which 

sections require that the rules of a 

national securities exchange or 

registered securities association ‘‘not 

impose any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of [the Act].’’ 

In addition, the Commission is 

instituting proceedings to allow for 

additional analysis of whether the 

Systems Retirement Proposals are 

consistent with Section 11A of the 

Act 138 and Rules 608(c) and 613 of 

Regulation NMS thereunder.139 Section 

11A of the Act directs the Commission, 

with due regard for the public interest, 

the protection of investors, and the 

maintenance of fair and orderly markets, 

to use its authority to facilitate the 

establishment of a national market 

system for securities, including by 

authorizing or requiring SROs to act 

jointly to plan, develop, operate, or 

regulate a national market system. Rule 

608(c) requires each SRO to comply 

with the terms of any effective NMS 

plan of which it is a sponsor or 

participant. Rule 613 requires the CAT 

NMS Plan to include a ‘‘plan to 

eliminate existing rules and systems 

. . . that will be rendered duplicative 

by the consolidated audit trail.’’ 140 The 

Plan, in turn, required the SROs to file 

proposed rule changes, within six 

months of the Commission’s approval of 

the Plan, to eliminate or modify their 

duplicative rules.141 The Plan further 

stated that the rule change proposals to 

eliminate or modify duplicative rules 

and systems should be ‘‘effective at such 

time as CAT Data meets minimum 

standards of accuracy and 

reliability.’’ 142 As discussed above, the 

Plan also requires these proposals to 

discuss the specific accuracy and 

reliability standards that would 

determine when duplicative systems 

would be retired, whether the 

availability of certain data from Small 

Industry Members in November 2018 

would facilitate a more expeditious 

retirement of duplicative systems, and 

whether individual Industry Members 

could be exempted from reporting to 

duplicative systems once their CAT 

reporting meets specified accuracy and 

reliability standards.143 Accordingly, 

the SROs filed the Systems Retirement 

Proposals to indicate which duplicative 

rules and systems would be eliminated 

once CAT is sufficiently accurate and 

reliable and to explain how they intend 

to assess CAT’s accuracy and reliability. 

The Commission is therefore 

considering whether the Systems 

Retirement Proposals are consistent 

with the SROs’ regulatory obligations 

under Rule 608(c), Rule 613, and the 

Plan, and are otherwise consistent 

Section 11A of the Act and the rules and 

regulations thereunder. 

As noted above, the CAT NMS Plan 

required the SROs’ proposals to retire 

duplicative audit trail systems to 

consider whether ‘‘individual Industry 

Members can be exempted from 

reporting to duplicative systems once 

their CAT reporting meets specified 

accuracy and reliability standards, 

including, but not limited to, ways in 

which establishing cross-system 

regulatory functionality or integrating 

data from existing systems and the CAT 

would facilitate such Individual 

Industry Member exemptions.’’ 144 In 

addition, in the CAT Approval Order, 

the Commission noted ‘‘that FINRA is 

considering whether it can integrate 

CAT Data with OATS data in such a 

way that ‘ensures no interruption in 

FINRA’s surveillance capabilities,’ and 

that FINRA will consider ‘exempting 

firms from the OATS Rules provided 

they report data to the Central 

Repository pursuant to the CAT NMS 

Plan and any implementing rules.’ ’’ 145

The Commission also ‘‘encourage[d] the 

other Participants to consider similar 

measures to exempt firms from 

reporting to existing systems once they 

are accurately reporting comparable 

data to the CAT and to enable the usage 

of CAT Data to conduct their regulatory 

activities.’’ 146 As described above, the 

SROs considered individual firm 

exemptions but believe that a single cutover from existing systems to CAT is 

preferable to a firm-by-firm approach. 

Several of the SROs assert that 

providing firm-by-firm exemptions 

would be inefficient, more costly, and 

less reliable than the single cut-over.147

However, commenters disagreed with 

this aspect of the SROs’ proposals, and 

questioned whether FINRA had 

adequately analyzed the costs and 

benefits of allowing firms to discontinue 

OATS reporting on an individual basis. 

Commenters also noted the high costs of 

duplicative reporting. Accordingly, the 

Commission is considering whether the 

Systems Retirement Proposals impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act, including the 

potential competitive burdens that may 

be created by an extended period of 

duplicative reporting for certain firms. 

As discussed in more detail above, the 

SROs also proposed certain accuracy 

and reliability standards that CAT Data 

must meet before existing systems can 

be retired. These standards include both 

quantitative and qualitative metrics. 

Commenters raised questions about the 

scope of these metrics, in particular data 

elements and functionalities that were 

not included in current audit trail 

systems, and asked for clarification 

regarding a number of metrics. In 

addition, several commenters raised 

concerns about the broader, qualitative 

factors proposed by the SROs. 

Accordingly, the Commission is 

considering the accuracy and reliability 

standards set forth in the Systems 

Retirement Proposals. 

In addition, the Commission is 

considering whether the Systems 

Retirement Proposals are designed to 

prevent fraudulent and manipulative 

acts and practices and, in particular, 

whether the Systems Retirement 

Proposals would help to ensure that the 

SROs can effectively conduct their 

surveillance and oversight functions. 

The Commission is also considering 

whether the Systems Retirement 

Proposals remove impediments to and 

perfect the mechanism of a free and 

open market and a national market 

system and whether they adequately 

balance the duplicative reporting costs 

incurred by broker-dealers and the risks 

to effective surveillance and oversight, 

which may impact investor protection. 

V. Commission’s Solicitation of 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns that they may have with any 

of the Systems Retirement Proposals. In 

particular, the Commission invites the 


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Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 42179 

148Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Pub. L. 94–29 

(June 4, 1975), grants the Commission flexibility to 

determine what type of proceeding—either oral or 

notice and opportunity for written comments—is 

appropriate for consideration of a particular 

proposal by a self-regulatory organization. See 

Securities Act Amendments of 1975, Senate Comm. 

on Banking, Housing & Urban Affairs, S. Rep. No. 

75, 94th Cong., 1st Sess. 30 (1975). 

149See supra notes 101–103 and accompanying 

text. 

written views of interested persons 

concerning whether the Systems 

Retirement Proposals, as modified by 

the amendments thereto, are consistent 

with Sections 6(b)(5), 6(b)(8), 15A(b)(6), 

15A(b)(9), or any other provision of the 

Act, and the rules and regulations 

thereunder. Although there do not 

appear to be any issues relevant to 

approval or disapproval that would be 

facilitated by an oral presentation of 

views, data, and arguments, the 

Commission will consider, pursuant to 

Rule 19b–4, any request for an 

opportunity to make an oral 

presentation.148

Such comments should be submitted 

by September 27, 2017. Rebuttal 

comments should be submitted by 

October 11, 2017. The Commission asks 

that commenters address the sufficiency 

and merit of the SROs’ statements in 

support of their respective Systems 

Retirement Proposals, in addition to any 

other comments that commenters may 

wish to submit about any of the 

proposed rule changes. The Commission 

also asks the SROs to respond to the 

issues raised in the four comment letters 

received to date, including the 

commenters’ cost estimates. In addition, 

the Commission seeks comment, 

including, where relevant, any specific 

data, statistics, or studies, on the 

following: 

1. What would be the monetary costs 

of constructing a CAT-to-OATS 

‘‘converter’’ or developing an alternative 

mechanism for linking CAT Data to 

OATS that would provide continuity of 

the OATS SROs’ surveillance 

capabilities? To the extent possible, 

please provide specific data, analyses, 

or studies for support for your answer. 

2. What technological challenges 

would have to be addressed to make a 

converter or other mechanism feasible? 

When could work begin on a converter 

or alternative mechanism? For example, 

could work begin before technical 

specifications for Industry Member 

reporting to CAT have been finalized? 

Could work begin before the Plan 

Processor had begun accepting CAT 

reports from Industry Members and 

making those reports available to 

regulators? How long would it take to 

construct a converter or other 

mechanism? To the extent possible, 

please provide specific data, analyses, 

or studies for support for your answer. 

3. Are there any entities that would be 

capable of constructing a converter? 

Please explain who they are and why 

you believe they have the ability to 

construct a converter. To the extent 

possible, please provide specific data, 

analyses, or studies for support for your 

answer. 

4. If the costs of the converter would 

be passed on to Industry Members, 

would the benefits of a converter be 

undermined? To the extent possible 

please provide specific data, analyses, 

or studies for support for your answer. 

5. Please estimate, to the extent 

possible, the percentage of Industry 

Members’ CAT reports that would 

qualify for an individual exemption 

from OATS reporting for each month 

after Industry Members begin reporting 

in November 2018. Do you believe that 

the costs and/or benefits of a converter 

would be affected by the number of 

Industry Members that can be expected 

to meet the threshold error rates for CAT 

reporting (weighted by their percentage 

of total CAT reports submitted by 

OATS-reporting Industry Members) 

before full OATS retirement, thus 

qualifying for an individual exemption 

from OATS and to have their CAT 

reports converted to OATS? To the 

extent possible, please provide specific 

data, analyses, or studies for support for 

your answer. 

6. Do you believe that the Systems 

Retirement Proposals would result in 

any burden on competition and, if so, 

please analyze whether any such burden 

would be necessary or appropriate in 

furtherance of the purposes of the Act. 

If there are burdens, how would they 

compare to the burdens that would be 

imposed by the converter approach? To 

the extent possible, please provide 

specific data, analyses, or studies for 

support of your answer. 

7. What impact would a converter 

have on the SROs’ ability to conduct 

their surveillance and oversight? 

Specifically, do you believe that there 

are risks that a converter might not be 

able to successfully integrate CAT 

reports into OATS? If so, what is the 

likelihood of failures and what would 

be the magnitude of the costs resulting 

from any such failures? What costs 

might be incurred by SROs to detect and 

address any regulatory gaps created by 

a converter? For example, would an 

OATS SRO have to design additional 

surveillances to address that possibility? 

If so, what sort of additional 

surveillances might be necessary and 

how would you estimate the cost for an 

SRO to develop them? To the extent 

possible, please provide specific data, 

analyses, or studies for support. 

8. How long do you believe it will 

take before CAT reaches the accuracy 

and reliability thresholds proposed by 

the SROs before retiring OATS and 

other systems for all firms? Also, how 

long do you think it would take to make 

an effective converter available and how 

long would the converter be used for 

those firms who individually have met 

the thresholds while CAT overall has 

not? Does the length of this period affect 

your cost/benefit analysis for the 

converter approach? If so, how? 

9. Regarding the converter approach 

and firm-by-firm exemptions from 

OATS reporting, what criteria should 

the OATS SROs consider for releasing a 

firm from its OATS requirements? To 

the extent possible please provide 

specific data, analyses, or studies for 

support. Would you still support a firmby-firm approach if it also incorporated 

an assessment of whether the Plan 

Processor is sufficiently meeting all of 

its obligations under the Plan? 

10. Please describe any opportunity 

costs associated with the converter 

approach. For example, would the 

development of the converter and any 

new processes and procedures at the 

SRO level to accommodate the converter 

divert resources that otherwise would 

be devoted to CAT implementation? If 

so, please describe the nature and extent 

of such effects. 

11. Do you agree with the estimated 

costs of duplicative reporting described 

by two of the commenters? 149 Are there 

any additional opportunity costs faced 

by Industry Members that would result 

from duplicative reporting? How would 

the length of the duplicative reporting 

period affect the opportunity costs? To 

the extent possible, please provide 

specific data, analyses, or studies for 

support. 

12. Do you agree with the proposed 

quantitative metrics for the pre- and 

post-correction error rates that would 

have to be attained by CAT before the 

SROs would retire duplicative systems? 

Do you agree with the proposed 

categories for the assessment? Why or 

why not? Are these categories 

sufficiently clear? If you believe that 

different thresholds or alternative areas 

for consideration would be more 

appropriate, please describe. What are 

the costs and benefits of the proposed 

approach versus any alternative 

approach that you would recommend? 

13. Do you agree with the SROs’ 

proposed qualitative standards for 

retirement of duplicative systems, i.e., 


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42180 Federal Register / Vol. 82, No. 171 / Wednesday, September 6, 2017 / Notices 

150 17 CFR 200.30–3(a)(12); 17 CFR 200.30– 

3(a)(57). 

1 15 U.S.C. 80a–53(a). 

2 15 U.S.C. 80a–53(c). 

that retirement could not be permitted 

to occur until it is confirmed that (1) 

there are no material issues in CAT that 

have not been corrected, (2) the CAT 

includes all data necessary to allow the 

SROs to continue to meet their 

surveillance obligations, and (3) the 

Plan Processor is sufficiently meeting all 

of its obligations under the CAT NMS 

Plan? Why or why not? What are the 

costs and benefits of the proposed 

approach versus an alternative 

approach, which may include not 

having any additional qualitative 

considerations? 

14. To what extent should the SROs 

consider CAT performance regarding 

functions and data elements not present 

within existing audit trail systems when 

determining when to allow retirement of 

those existing systems? What are the 

costs and benefits of the proposed 

approach versus any alternative 

approach that you would recommend? 

Do you believe that the Systems 

Retirement Proposals will promote 

efficiency, competition, and capital 

formation? Please submit any data or 

information that would assist the 

Commission in considering these issues. 

15. Do you agree with the length of 

the assessment period proposed by the 

SROs? Why or why not? If not, what 

alternative do you believe would be 

more appropriate and why? What are 

the costs and benefits of the proposed 

approach versus any alternative 

approach that you would recommend? 

To the extent possible, please provide 

specific data, analyses, or studies for 

support. 

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 any of File 

Numbers SR–BatsBZX–2017–37, SR– 

BatsEDGX–2017–23, SR–BOX–2017–17, 

SR–BX–2017–027, SR–C2–2017–018, 

SR–CBOE–2017–041, SR–FINRA–2017– 

013, SR–IEX–2017–18, SR–ISE–2017– 

46, SR–MIAX–2017–20, SR–NASDAQ– 

2017–055, SR–PEARL–2017–23, SR– 

NYSE–2017–23, SR–NYSEArca–2017– 

57, SR–NYSEArca–2017–59, SR– 

NYSEMKT–2017–29, SR–NYSEMKT– 

2017–30, or SR–Phlx–2017–43, as 

appropriate, on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street NE., 

Washington, DC 20549–1090. 

All submissions should refer to any 

of: File Numbers SR–BatsBZX–2017–37, 

SR–BatsEDGX–2017–23, SR–BOX– 

2017–17, SR–BX–2017–027, SR–C2– 

2017–018, SR–CBOE–2017–041, SR– 

FINRA–2017–013, SR–IEX–2017–18, 

SR–ISE–2017–46, SR–MIAX–2017–20, 

SR–NASDAQ–2017–055, SR–PEARL– 

2017–23, SR–NYSE–2017–23, SR– 

NYSEArca–2017–57, SR–NYSEArca– 

2017–59, SR–NYSEMKT–2017–29, SR– 

NYSEMKT–2017–30, or SR–Phlx–2017– 

43, as appropriate. The 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 Web site (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 Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

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

filing also will be available for 

inspection and copying at the principal 

office of the SRO. All comments 

received will be posted without change; 

the Commission does not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

All submissions should refer to any of 

File Numbers SR–BatsBZX–2017–37, 

SR–BatsEDGX–2017–23, SR–BOX– 

2017–17, SR–BX–2017–027, SR–C2– 

2017–018, SR–CBOE–2017–041, SR– 

FINRA–2017–013, SR–IEX–2017–18, 

SR–ISE–2017–46, SR–MIAX–2017–20, 

SR–NASDAQ–2017–055, SR–PEARL– 

2017–23, SR–NYSE–2017–23, SR– 

NYSEArca–2017–57, SR–NYSEArca– 

2017–59, SR–NYSEMKT–2017–29, SR– 

NYSEMKT–2017–30, or SR–Phlx–2017– 

43, as appropriate, and should be 

submitted by September 27, 2017. 

Rebuttal comments should be submitted 

by October 11, 2017. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.150

Eduardo A. Aleman, 

Assistant Secretary. 

[FR Doc. 2017–18793 Filed 9–5–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Proposed Collection; Comment 

Request 

Upon Written Request, Copies Available 

From: Securities and Exchange 

Commission, Office of FOIA Services, 

100 F Street NE., Washington, DC 

20549–2736. 

Extension: 

Form N–54C, SEC File No. 270–184, OMB 

Control No. 3235–0236. 

Notice is hereby given that, pursuant 

to the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.), the Securities 

and Exchange Commission (the 

‘‘Commission’’) is soliciting comments 

on the collection of information 

summarized below. The Commission 

plans to submit this existing collection 

of information to the Office of 

Management and Budget for extension 

and approval. 

Certain investment companies can 

elect to be regulated as business 

development companies, as defined in 

section 2(a)(48) of the Investment 

Company Act of 1940 (‘‘Investment 

Company Act’’), under sections 55 

through 65 of the Investment Company 

Act. Under section 54(a) of the 

Investment Company Act,1 any 

company defined in section 2(a)(48)(A) 

and (B) of the Investment Company Act 

may, if it meets certain enumerated 

eligibility requirements, elect to be 

subject to the provisions of Sections 55 

through 65 of the Investment Company 

Act by filing with the Commission a 

notification of election. Under section 

54(c) of the Investment Company Act,2

any business development company 

may voluntarily withdraw its election 

under section 54(a) of the Investment 

Company Act by filing a notice of 

withdrawal of election with the 

Commission. The Commission has 

adopted Form N–54C as the form for the 

notification of withdrawal of election to 

be subject to Sections 55 through 65 of 

the Investment Company Act. The 

purpose of Form N–54C is to notify the 

Commission that the business 

development company withdraws its 

election to be subject to Sections 55 


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