Document ID: SEC-2020-1637-0001
Agency: sec
Document Type: Rule
Title: Rescission of Effective-Upon-Filing Procedure for National Market System Plan Fee Amendments and Modified Procedures for Proposed National Market System Plans and Plan Amendments
Posted Date: 2020-10-15T04:00Z

[Federal Register Volume 85, Number 200 (Thursday, October 15, 2020)]
[Rules and Regulations]
[Pages 65470-65498]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-18572]

[[Page 65469]]

Vol. 85

Thursday,

No. 200

October 15, 2020

Part II

Securities and Exchange Commission

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17 CFR Parts 200, 201, 240, et al.

Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee 
Amendments and Modified Procedures for Proposed NMS Plans and Plan 
Amendments; Final Rule

  Federal Register / Vol. 85 , No. 200 / Thursday, October 15, 2020 / 
Rules and Regulations  

[[Page 65470]]

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 201, 240, and 242

[Release No. 34-89618; File No. S7-15-19]
RIN 3235-AM56

Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee 
Amendments and Modified Procedures for Proposed NMS Plans and Plan 
Amendments

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'' or 
``SEC'') is amending Regulation NMS under the Securities Exchange Act 
of 1934 (``Exchange Act'') to rescind a provision that allows a 
proposed amendment to a national market system plan (``NMS plan'') to 
become effective upon filing if the proposed amendment establishes or 
changes a fee or other charge. As a result of rescinding the provision, 
such a proposed amendment instead will be subject to the procedures 
under which there must be an opportunity for public comment and 
Commission approval by order prior to effectiveness. The Commission 
also is amending its regulations to require that proposed NMS plans and 
proposed amendments to existing NMS plans be filed with the Commission 
by email, and is amending its regulations to modify the procedures 
applicable to the Commission's handling of proposed NMS plans and plan 
amendments, including fee amendments. Finally, the Commission is 
adopting amendments to its rules of practice regarding disapproval 
proceedings and its delegations of authority to the Director of the 
Division of Trading and Markets (``Division'').

DATES: Effective November 16, 2020.

FOR FURTHER INFORMATION CONTACT: Michael Bradley, Special Counsel, at 
(202) 551-5594, Andrew Sherman, Special Counsel, at (202) 551-7255, 
Liliana Burnett, Special Counsel, at (202) 551-2552, Division, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549.

SUPPLEMENTARY INFORMATION: The Commission is: (1) Rescinding and 
reserving paragraph (b)(3)(i) of 17 CFR 242.608 (Rule 608 of Regulation 
NMS) under the Exchange Act, and thereby eliminating the effective-
upon-filing exception for proposed NMS plan amendments to establish or 
change a fee or other charge collected on behalf of all the plan 
participants in connection with access to, or use of, any facility 
contemplated by the plan or amendment (including changes in any 
provision with respect to distribution of any net proceeds from such 
fees or other charges to the participants) (``NMS plan fee 
amendment''); (2) adopting amendments to 17 CFR 242.608(a)(1) (Rule 
608(a)(1)) to require that proposed NMS plans and plan amendments be 
filed with the Commission by email; (3) adopting amendments to 17 CFR 
242.608(b)(1) and (2) (Rule 608(b)(1) and (2)) to modify the procedure 
applicable to Commission action on a proposed NMS plan or plan 
amendment; (4) adopting modifications in 17 CFR 201.700 and 701 
(Commission Rules of Practice 700 and 701); (5) adopting an updated 
cross-reference in 17 CFR 240.19b-4(g) (Rule 19b-4(g)); (6) amending 17 
CFR 200.30-3 (Rule 30-3) to delegate authority to the Division Director 
to publish notice of the filing of a proposed NMS plan amendment, to 
notify plan participants that a proposed NMS plan or plan amendment 
does not comply with 17 CFR 242.608(a) (Rule 608(a)) or plan filing 
requirements in other sections of Regulation NMS and 17 CFR 240, 
subpart A, to determine that a proposed NMS plan or plan amendment is 
unusually lengthy and complex or raises novel regulatory issues and 
inform the NMS plan participants of such determination, to institute 
proceedings to determine whether a proposed NMS plan or plan amendment 
should be disapproved, to provide the NMS plan participants notice of 
the grounds for disapproval under consideration, to extend for a period 
not exceeding 240 days from the date of publication of notice of the 
filing of a proposed NMS plan or plan amendment the period during which 
the Commission must issue an order approving or disapproving the 
proposed NMS plan or plan amendment and determine whether such longer 
period is appropriate and publish the reasons for such determination; 
(7) amending Rule 30-3 to remove delegated authority from the Division 
Director to approve a proposed NMS plan amendment and to extend a time 
period that will no longer exist under Rule 608(b) as amended; and (8) 
amending Rule 30-3 to relocate within the rule existing delegations of 
authority to the Division Director to summarily abrogate a proposed NMS 
plan amendment put into effect upon filing with the Commission and 
require that such amendment be refiled in accordance with paragraph 
(a)(1) of Rule 608 and reviewed in accordance with paragraph (b)(2) of 
Rule 608, and to put a proposed plan amendment into effect summarily 
upon publication of notice and on a temporary basis not to exceed 120 
days.

Table of Contents

I. Introduction
II. Rule Amendments
    A. Rescission of the Fee Exception
    B. Modified Procedure for Proposed NMS Plans and Plan Amendments
    1. Amendments to Rule 608
    a. Procedure for Notice Publication Under Rule 608(b)(1) As 
Amended
    b. Procedure for Commission Action Subsequent to Notice 
Publication Under Rule 608(b)(2) As Amended
    c. Filing of NMS Plans and Amendments Thereto Under Rule 
608(a)(1) as Amended
    d. Additional Aspects of Amended Rule 608
    2. Amendments to Rules of Practice 700 and 701
    3. Amendments to Delegations of Authority in Rule 30-3
    4. Administrative Matters Common to Amendments to Rules of 
Practice and Delegations of Authority
III. Paperwork Reduction Act
IV. Economic Analysis
    A. Introduction
    B. Baseline
    1. NMS Plan Fee Amendments
    2. Procedures and Timeframes for NMS Plans and NMS Plan 
Amendments Filed Under Rule 608(b)(1) and (2)
    3. Procedures and Timeframes for SRO Rule Changes Filed Under 
Section 19(b)(2)
    4. Market for Core and Aggregated Market Data Products
    5. Current Structure of the Market for Trading Services in NMS 
Securities
    C. Economic Effects
    1. Benefits
    a. Rescission of the Fee Exception
    b. Modified Procedures for Proposed New NMS Plans and Plan 
Amendments
    2. Costs
    a. Rescission of the Fee Exception
    b. Modified Procedures for Proposed New NMS Plans and Plan 
Amendments
    3. Impact on Efficiency, Competition, and Capital Formation
    a. Efficiency
    b. Competition
    c. Capital Formation
    D. Reasonable Alternative
V. Regulatory Flexibility Certification
VI. Other Matters
VII. Statutory Authority

I. Introduction

    On October 1, 2019, the Commission proposed to amend Rule 608 under 
Regulation NMS to rescind paragraph (b)(3)(i) and thereby eliminate the 
effective-upon-filing exception for NMS plan fee amendments.\1\ Rule 
608 under Regulation NMS sets forth requirements for the filing and 
amendment of NMS plans. Rule 608(a) provides that any two

[[Page 65471]]

or more self-regulatory organizations (``SROs''), acting jointly, may 
file a new proposed NMS plan or a proposed amendment to an existing NMS 
plan by submitting to the Secretary of the Commission the text of the 
plan or amendment along with extensive supporting information.\2\ Rule 
608(b) addresses the effectiveness of proposed NMS plans and plan 
amendments, and sets forth a procedure for Commission action in 
paragraphs (b)(1) and (b)(2). Among other things, this procedure 
precludes a proposed NMS plan amendment from becoming effective until 
after an opportunity for public comment and Commission approval by 
order.
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    \1\ Securities Exchange Act Release No. 87193, 84 FR 54794 (Oct. 
11, 2019) (``Proposing Release'' or ``Proposal'').
    \2\ As discussed in the Proposal, Section 11A of the Exchange 
Act directs the Commission to facilitate the creation of a national 
market system for qualified securities. 15 U.S.C. 78k-1(a). 
Proposing Release, supra note 1, at 54794.
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    Paragraph (b)(3)(i) of Rule 608, however, has provided for NMS plan 
fee amendments an exception to the standard procedure since Rule 608 
was adopted in 1981 (the ``Fee Exception'').\3\ Under the Fee 
Exception, a NMS plan fee amendment could be put into effect upon 
filing with the Commission, before comments could be submitted and 
without Commission approval.\4\ Consequently, the Fee Exception allowed 
the SROs, as NMS plan participants that constitute the NMS plan 
operating committees and vote to approve plan amendments, to begin 
charging new or altered NMS plan fees to a wide range of market 
participants prior to an opportunity for public comment and without 
Commission action.\5\
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    \3\ Proposing Release, supra note 1, at 54796-97. Paragraph 
(b)(3)(iii) of Rule 608 provides that the Commission may summarily 
abrogate an immediately effective amendment within 60 days after 
filing and require it to be refiled as not immediately effective if 
it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, 
or the maintenance of fair and orderly markets, to remove 
impediments to, and perfect the mechanisms of, a national market 
system, or otherwise in furtherance of the purposes of the Exchange 
Act.
    \4\ While a NMS plan fee amendment was deemed effective upon 
filing, the required substance of the fee amendment is the same as 
what is required for a proposed NMS plan amendment that is not 
immediately effective. See Rule 608(a).
    \5\ The Fee Exception has been available for NMS plans that 
charge or intend to charge fees. Currently, these are: (i) The NMS 
plans that govern the facilities through which registered securities 
information processors (``SIPs'') collect, consolidate, and 
distribute real-time market information (also known as ``core 
data''); and (ii) the plan that governs the consolidated audit trail 
(``CAT''). The participants in these plans are all SROs. The 
Proposing Release sets forth additional background concerning the 
core data plans and the CAT plan, those plans' fee-setting process, 
Rule 608 of Regulation NMS and the Fee Exception, and pre-Proposal 
comments and petitions regarding the Fee Exception. See Proposing 
Release, supra note 1, at 54795-99.
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    After considering the comments received on the Proposal to rescind 
the Fee Exception,\6\ the Commission has determined that the Fee 
Exception is no longer appropriate for today's national market system 
and should be rescinded. As a result, NMS plan fee amendments will be 
subject to the procedure set forth in Rule 608(b)(1) and (2), and there 
must be an opportunity for public comment and Commission approval by 
order before the fees can become effective. The Commission also has 
decided to amend Rule 608(a)(1) to require that proposed new NMS plans 
and plan amendments be filed with the Commission by email, and to 
modify the procedure set forth in Rule 608(b)(1) and (2) for the 
Commission's handling of proposed new NMS plans and proposed amendments 
to existing NMS plans, including NMS plan fee amendments. As discussed 
below, the modified procedure sets forth a new process and timeframes 
for Commission publication of notice and for subsequent Commission 
action. In addition, the Commission is adopting amendments to 
Commission rules of practice and delegations of authority.
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    \6\ Comments received on the Proposal are available on the 
Commission's website, available at https://www.sec.gov/comments/s7-15-19/s71519.htm.
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II. Rule Amendments

A. Rescission of the Fee Exception

    The Commission proposed to rescind the Fee Exception based on 
several factors, many of which were echoed by commenters. As discussed 
in the Proposal and by commenters, NMS plan fees have a broad effect on 
a wide range of market participants, and the total revenues derived 
from NMS plans' fees are substantial.\7\ In addition, non-SRO market 
participants, including investors, broker-dealers, data vendors and 
others, are required to pay the fees charged by NMS plans to obtain 
core data, as well as critical market information that is not available 
from sources other than the core data NMS plans, such as regulatory 
data required by the National Market System Plan to Address 
Extraordinary Market Volatility (``LULD'' plan) and administrative 
messages.\8\ Further, the exchange SROs have demutualized in the time 
since Rule 608 (and the Fee Exception) was adopted in 1981, resulting 
in less opportunity for SRO members to influence a NMS plan fee 
amendment before it is filed with the Commission.\9\ There also are 
potential conflicts of interest for exchange SROs in setting NMS plan 
fees for core data,\10\ and for SRO participants in the CAT plan in 
setting fees that industry members must pay for the costs of the CAT 
system.\11\ Moreover, even if the

[[Page 65472]]

Commission ultimately abrogates a NMS plan fee amendment, the Fee 
Exception allows the new or altered fee to be effective during the time 
between its filing and abrogation.\12\
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    \7\ Proposing Release, supra note 1, at 54798; Letter from 
Dennis M. Kelleher, President and CEO, and Lev Bagramian, Senior 
Securities Policy Advisor, Better Markets Inc., to Vanessa 
Countryman, Secretary, Commission, dated December 10, 2019 (``Better 
Markets Letter''), at 3; Letter from Greg Babyak, Global Head of 
Regulatory Affairs, Bloomberg L.P., to Vanessa Countryman, 
Secretary, Commission, dated December 10, 2019 (``Bloomberg 
Letter''), at 2; Letter from Jeffrey P. Mahoney, General Counsel, 
Council of Institutional Investors, to Vanessa Countryman, 
Secretary, Commission, dated December 5, 2019 (``CII Letter''), at 
2-3; Letter from Dorothy M. Donohue, Deputy General Counsel, 
Securities Regulation, Investment Company Institute, to Vanessa 
Countryman, Secretary, Commission, dated December 10, 2019 (``ICI 
Letter''), at 1-2; Letter from Rich Steiner, Head of Client Advocacy 
and Market Innovation, RBC Capital Markets, to Vanessa Countryman, 
Secretary, Commission, dated December 10, 2019 (``RBC Capital 
Markets Letter''), at 3. As noted in the Proposal, the total 
revenues generated by fees charged by the core data plans totaled 
more than $500 million in 2017. Proposing Release, supra note 1, at 
54798. The total revenues generated by fees charged by the core data 
plans totaled more than $500 million in 2018 as well. Both the 2017 
and 2018 amounts are derived from audited financial statements for 
the CTA/CQ and Nasdaq/UTP plans, and from summary financial 
information for the OPRA plan.
    \8\ Proposing Release, supra note 1, at 54798-99; Better Markets 
Letter at 2-3; Bloomberg Letter at 2-3, 5; Letter from Ray Ross, 
Chief Technology Officer, Clearpool Group, to Vanessa Countryman, 
Secretary, Commission, dated December 10, 2019 (``Clearpool 
Letter''), at 3; Letter from Joanna Mallers, Secretary, FIA 
Principal Trading Group, to Vanessa Countryman, Secretary, 
Commission, dated December 10, 2019 (``FIA Principal Traders 
Letter''), at 1; Letter from Derrick Chan, Head of Equities Trading 
and Sales, Fidelity Capital Markets, to Vanessa Countryman, 
Secretary, Commission, dated December 10, 2019 (``Fidelity 
Letter''), at 2 and n. 3; ICI Letter at 1; Letter from Theodore D. 
Lazo, Managing Director, Associate General Counsel, SIFMA, to 
Vanessa Countryman, Secretary, Commission, dated December 6, 2019 
(``SIFMA Letter''), at 1-2. Commenters also stated that the core 
data plans are monopolistic providers of market-wide services and 
there is no market competition that can be relied upon to set 
competitive prices. Better Markets Letter at 3; Bloomberg Letter at 
2, 5; CII Letter at 2, 3; Clearpool Letter at 3; Fidelity Letter at 
3; Letter from Mark D. Epley, Executive Vice President and Managing 
Director, General Counsel, and Jennifer W. Han, Associate General 
Counsel, Managed Funds Association, to Vanessa Countryman, 
Secretary, Commission, dated December 6, 2019 (``MFA Letter''), at 
3; RBC Capital Markets Letter at 2.
    \9\ Proposing Release, supra note 1, at 54799; Letter from Tyler 
Gellasch, Executive Director, Healthy Markets Association, to 
Vanessa Countryman, Secretary, Commission, dated December 12, 2019 
(``Healthy Markets Letter''), at 10.
    \10\ Proposing Release, supra note 1, at 54799-802; Better 
Markets Letter at 3-4; Bloomberg Letter at 5; CII Letter at 3-4; 
Clearpool Letter at 3; Fidelity Letter at 3; Healthy Markets Letter 
at 1, 4-5; RBC Capital Markets Letter at 2.
    \11\ Proposing Release, supra note 1, at 54798; FIA Principal 
Traders Letter at 1-2; Fidelity Letter at 3. On August 29, 2019, the 
operating committee for CAT NMS, LLC filed an immediately effective 
NMS plan amendment that created a new Delaware limited liability 
company, named Consolidated Audit Trail, LLC, for the purposes of 
conducting activities related to the CAT plan. See Securities 
Exchange Act Release No. 87149 (Sept. 27, 2019), 84 FR 52905 (Oct. 
3, 2019). The CAT plan currently allows the operating committee of 
Consolidated Audit Trail, LLC to establish funding for Consolidated 
Audit Trail, LLC, including establishing an allocation of its 
related costs among SRO participants and SRO members that is 
consistent with the Exchange Act. See Proposing Release, supra note 
1, at 54796 and n. 17, 54798.
    \12\ Proposing Release, supra note 1, at 54799; Bloomberg Letter 
at 3; Fidelity Letter at 4; RBC Capital Markets Letter at 4. One 
commenter stated that this can cause disruption and attendant costs. 
RBC Capital Markets Letter at 4.
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    Commenters that supported the Proposal also criticized the Fee 
Exception, stating that it does not facilitate informed and meaningful 
public comment,\13\ discourages market participants from submitting 
comments on NMS plan fee amendments,\14\ provides too much autonomy to 
SIP operators,\15\ and provides an inadequate opportunity for investors 
and market participants to prepare for a new or altered NMS plan fee 
before it is charged.\16\ Commenters stated that, instead, NMS plan fee 
amendments should become effective only after public notice, an 
opportunity for comment, and Commission approval.\17\ They stated that 
this procedure will: (i) Create a more meaningful comment process; \18\ 
(ii) impose the financial and operational costs of fee changes only 
after notice, comment, and an affirmative Commission disposition, which 
will help mitigate the risk of unwarranted fee changes, avoid 
complications with refunds should an application be withdrawn or 
subsequently denied, and more appropriately place the cost of delay in 
imposing a new fee on the filer; \19\ (iii) more properly allocate 
administrative burdens such that agency action is necessary to approve, 
rather than abrogate, a NMS plan fee amendment; \20\ (iv) provide 
greater assurance that NMS plan fees are fair and reasonable before 
they go into effect; \21\ and (v) provide advanced notice and time to 
plan for a fee change,\22\ which should help facilitate more fair, 
orderly and efficient markets.\23\
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    \13\ Better Markets Letter at 1-3; Bloomberg Letter at 4, 7; 
Clearpool Letter at 2; Healthy Markets Letter at 8. Two commenters 
stated that the effective-upon-filing process has made it difficult 
for the Commission to evaluate if proposed NMS plan fee amendments 
comply with the Exchange Act and Commission rules. Better Markets 
Letter at 2-3; Healthy Markets Letter at 7.
    \14\ Better Markets Letter at 3; MFA Letter at 2-3; RBC Capital 
Markets Letter at 3. One commenter stated that market participants 
are discouraged from commenting on NMS plan fee amendments because, 
given the Commission's history of abrogating less than one out of 
ten fee amendments, they have little confidence that their after-
the-fact feedback will persuade the Commission to abrogate the fee 
amendment and assess whether the fees are necessary or appropriate 
in the public interest. Better Markets Letter at 3. Another 
commenter stated that market participants are likely to perceive NMS 
plan fee amendments that are subject to an effective-upon-filing 
procedure as a fait accompli, and be less willing to spend time to 
submit comments or raise concerns. MFA Letter at 2-3.
    \15\ Bloomberg Letter at 4; ICI Letter at 2.
    \16\ Bloomberg Letter at 3; Clearpool Letter at 2; Fidelity 
Letter at 3-4; Healthy Markets Letter at 10; RBC Capital Markets 
Letter at 4.
    \17\ Better Markets Letter at 3; Bloomberg Letter at 1-3, 6; CII 
Letter at 2-3; Clearpool Letter at 1-2; FIA Principal Traders Letter 
at 1; Fidelity Letter at 2; Healthy Markets Letter at 7-9; ICI 
Letter at 2; MFA Letter at 2; RBC Capital Markets Letter at 2-4; 
SIFMA Letter at 1.
    \18\ Better Markets Letter at 3; Bloomberg Letter at 2, 5; 
Clearpool Letter at 2; FIA Principal Traders Letter at 1; Fidelity 
Letter at 3; Healthy Markets Letter at 8; MFA Letter at 2-3; RBC 
Capital Markets Letter at 3-4; SIFMA Letter at 1.
    \19\ RBC Capital Markets Letter at 3-4.
    \20\ Bloomberg Letter at 3-6.
    \21\ Bloomberg Letter at 5; CII Letter at 2; ICI Letter at 2; 
MFA Letter at 1-3; RBC Capital Markets Letter at 3.
    \22\ Bloomberg Letter at 3; ICI Letter at 2; RBC Capital Markets 
Letter at 3-4.
    \23\ RBC Capital Markets Letter at 4. Some commenters made 
suggestions regarding NMS plan governance and transparency that are 
outside the scope of this rulemaking. See Better Markets Letter at 
5-6; Bloomberg Letter at 7-8; Clearpool Letter at 3 n. 6; Fidelity 
Letter at 4; Healthy Markets Letter at 5-6; ICI Letter at 2-3. In 
addition, some commenters made suggestions regarding what 
substantive information should be set forth in NMS plan fee 
amendments, and guidance that the Commission should provide in that 
regard. See MFA Letter at 3-4; Healthy Markets Letter at 11. The 
Commission is not adopting amendments to the required substance of 
proposed NMS plan amendments. As discussed in the Proposal, the 
rescission of the Fee Exception does not change any requirements 
regarding the substantive information that must be set forth in NMS 
plan fee amendments pursuant to paragraph (a) of Rule 608 and the 
relevant provisions of the Exchange Act. Proposing Release, supra 
note 1, at 54798.
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    The Commission continues to believe that a NMS plan fee amendment 
should not become effective--and SRO plan participants should not be 
able to charge new or altered fees to investors, broker-dealers, and 
others--until after the public has had an opportunity to comment on the 
NMS plan fee amendment. By changing the timing of effectiveness, 
commenters will have an opportunity to provide their views about a NMS 
plan fee amendment prior to the time they are charged a new or altered 
NMS plan fee, and the Commission will have an opportunity to consider 
commenters' views before a NMS plan fee amendment becomes effective. 
The Commission believes that this is an appropriate adjustment to the 
comment process for NMS plan fee amendments in light of how broadly NMS 
plan fees affect market participants.
    In response to a request for comment in the Proposal, commenters 
addressed a potential alternative approach where the Commission could 
modify Rule 608(b)(3) such that a NMS plan fee amendment is not 
effective immediately upon filing, but becomes effective automatically 
some time period (e.g., 60 or 90 days) after filing if the Commission 
does not abrogate the filing.\24\ Several commenters criticized this 
alternative approach as suffering from the same defects as the 
effective-upon-filing procedure.\25\ Another commenter believed the 
alternative would be inappropriate because Commission review and 
approval by order should be required before a NMS plan fee is 
effective, given the lack of competition for NMS plan fees.\26\ One 
commenter stated that the alternative would be acceptable and would 
achieve substantially the same goals as the Proposal.\27\
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    \24\ See Proposing Release, supra note 1, at 54799, 54804-05; 
see also Bloomberg Letter at 4 n. 8; Clearpool Letter at 2-3 n. 5; 
Healthy Markets Letter at 8-9; MFA Letter at 3; RBC Capital Markets 
Letter at 4-5; Fidelity Letter at 4; Letter from Joan C. Conley, 
Senior Vice President and Corporate Secretary, The Nasdaq Stock 
Market LLC, to Vanessa Countryman, Secretary, Commission, dated 
December 10, 2019 (``Nasdaq Letter''), at 2, 4-5.
    \25\ Bloomberg Letter at 4 n. 8; Clearpool Letter at 2-3 n. 5; 
Healthy Markets Letter at 8-9; MFA Letter at 3; RBC Capital Markets 
Letter at 4-5.
    \26\ Fidelity Letter at 4.
    \27\ Nasdaq Letter at 2, 4-5.
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    The Commission is not adopting this alternative approach. While the 
alternative approach included a comment period and Commission 
abrogation, if necessary, prior to the effectiveness of a NMS plan fee 
amendment, the Commission has decided to rescind the Fee Exception and 
to adopt the requirement of Commission approval by order before a NMS 
plan fee amendment can become effective. The Commission does not 
believe that any proposed NMS plan fee should be imposed on the public 
without an affirmative Commission determination that the fee meets the 
relevant requirements of the Exchange Act and rules thereunder. This is 
what will occur under the procedure set forth in Rule 608(b)(1) and 
(2), as amended, which is being modified from the Proposal as discussed 
below.

B. Modified Procedure for Proposed NMS Plans and Plan Amendments

1. Amendments to Rule 608
    In the Proposing Release, the Commission requested comment on 
whether the existing procedure for notice, comment and Commission

[[Page 65473]]

action in Rule 608(b)(1) and (2) would be appropriate for NMS plan fee 
amendments if the Fee Exception were rescinded.\28\ The Commission also 
asked whether the time periods in Rule 608 for Commission action should 
be longer or shorter for NMS plan fee amendments, whether any other 
aspects of the Rule 608 procedure should be modified for NMS plan fee 
amendments, and what issues or improvements relating to Rule 608 
procedures commenters would recommend that the Commission address or 
undertake to ensure that NMS plan fee amendments are not unduly 
delayed.\29\
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    \28\ Proposing Release, supra note 1, at 54799.
    \29\ Id. at 54799-800.
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    Two commenters recommended that the Commission incorporate into 
Rule 608 procedures for Commission action on proposed NMS plan 
amendments that mirror the procedures for individual SRO rule filings 
under Section 19(b) of the Exchange Act.\30\ They stated that, under 
these Section 19(b) procedures, a SRO rule filing is ``deemed 
approved'' if the Commission does not act within the specified 
timeframe for final action.\31\ These commenters also stated that it is 
particularly important to add a deadline for the Commission to publish 
notice of a proposed NMS plan amendment, and provided examples of 
proposed NMS plan amendments that were not published until several 
months after their submission to the Commission or had not yet been 
published several months after submission.\32\ They also criticized the 
Commission's estimate that the median time for processing a proposed 
NMS plan amendment is 70.5 days, stating that median times are less 
affected than mean times by outlier cases when the Commission's 
processing of amendments has been significantly delayed.\33\ These 
commenters believed that explicit deadlines for Commission action on 
proposed NMS plan amendments would result in a more transparent and 
expeditious process.\34\
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    \30\ Letter from Howard Kramer and James Dombach, Murphy & 
McGonigle, Robert B. Wilcox, Jr. and Chris L. Bollinger, Schiff 
Hardin LLP, on behalf of the Operating Committees of the CTA Plan, 
CQ Plan, UTP Plan, and OPRA Plan, and the Plans' Participants and 
Members, to Vanessa Countryman, Secretary, Commission, dated 
December 9, 2019 (``Operating Committees Letter''); Nasdaq Letter. 
The Nasdaq Letter stated that it did not object to the Proposal 
provided that its recommended modifications are implemented. Nasdaq 
Letter at 2-4.
    \31\ Operating Committees Letter at 1, 7; Nasdaq Letter at 1-3 
(concurring with the Operating Committees Letter).
    \32\ Operating Committees Letter at 3-4; Nasdaq Letter at 2-3. 
The Operating Committees also suggested that the Division be granted 
delegated authority to publish notice of proposed NMS plan 
amendments, stating that the Division already has delegated 
authority to approve or extend the time to approve proposed NMS plan 
amendments, but not to publish notice when proposed NMS plan 
amendments are filed. Operating Committees Letter at 4-5.
    \33\ Operating Committees Letter at 3-4; Nasdaq Letter at 3. See 
Proposing Release, supra note 1, at 54799-801. As discussed infra, 
the Commission agrees with these commenters and, for completeness, 
the Commission is revising its analysis to present estimates of both 
the average and median times related to NMS plan fee amendments. See 
infra note 117.
    \34\ Operating Committees Letter at 2-5; Nasdaq Letter at 3.
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    One commenter opposed incorporating a deemed approved provision 
into Rule 608.\35\ This commenter believed that Commission inaction 
resulting in a proposed NMS plan amendment being deemed approved would 
be inconsistent with judicial precedent and public policy, and stated 
that Section 11A of the Exchange Act does not explicitly authorize the 
deemed approved provision found in Section 19(b).\36\ Similarly, 
another commenter stated that it would not be appropriate for NMS plan 
fee amendments to become automatically effective if the Commission does 
not take specific action, and that Commission approval by order should 
be required before a NMS plan fee amendment can become effective.\37\
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    \35\ Healthy Markets Letter at 9.
    \36\ Id.
    \37\ Fidelity Letter at 4 and n. 6.
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    The Commission has decided to adopt a modified procedure for 
Commission action on all proposed new NMS plans and plan amendments, 
including NMS plan fee amendments.\38\ This procedure is largely 
patterned on the current statutory requirements in Section 19(b) for 
Commission review of SRO proposed rule changes, but with modifications 
that reflect the particular nature of proposed new NMS plans and plan 
amendments. As discussed in the Proposal, Section 11A(a)(3)(B) of the 
Exchange Act, which governs Rule 608 and NMS plans, does not mandate 
any specific procedures for Commission action.\39\ It instead broadly 
authorizes the Commission to require SROs to act jointly with respect 
to matters relating to the national market system.\40\ Pursuant to that 
authority, the Commission may adopt (and has adopted in the past) 
procedures in Rule 608 that are appropriate for handling proposed NMS 
plans and plan amendments,\41\ and the Commission may determine what, 
if any, elements of the Section 19(b) process for SRO rule filings are 
appropriate to incorporate into the Rule 608 procedures for proposed 
NMS plans and plan amendments.\42\
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    \38\ As discussed infra, proposed plan amendments that are 
solely administrative, technical or ministerial remain effective-
upon-filing pursuant to Rule 608(b)(3)(ii) and (iii), but they are 
subject to the modified notice publication process.
    \39\ See Proposing Release, supra note 1, at 54796-97. 
Commenters agreed with the Commission's analysis that Congress did 
not intend Section 19(b) to cover NMS plan fees or to treat NMS 
plans as analogous to individual SRO rules. Better Markets Letter at 
4-5; Bloomberg Letter at 6-7 n. 14.
    \40\ See 15 U.S.C. 78k-1(a)(3)(B).
    \41\ See Proposing Release, supra note 1, at 54796; see also 
Securities Exchange Act Release No. 17580 (Feb. 26, 1981), 46 FR 
15866 (Mar. 10, 1981) (adopting Rule 11Aa3-2, the predecessor to 
Rule 608) (``Rule 11Aa3-2 Adopting Release'').
    \42\ As discussed in the Proposing Release, when the Commission 
adopted Rule 11Aa3-2 (the predecessor to Rule 608) in 1981, it 
rejected the argument of some commenters that the procedures for NMS 
plan amendments under Section 11A should incorporate the same 
procedures specified in Section 19 for rule changes by individual 
SROs. See Proposing Release, supra note 1, at 54797; Rule 11Aa3-2 
Adopting Release, supra note 41, at 15868 (noting that the 
legislative history ``indicates that Congress viewed the 
Commission's authority in Section 11A(a)(3)(B) as distinct from its 
authority contained in Section 19 or any other provision of the 
Act.''). Although Congress did not mandate procedures for NMS plan 
amendments, Rule 11Aa3-2, as adopted in 1981, included all three of 
the effective-upon-filing exceptions that currently are in Rule 608 
and that were similar to the effective-upon-filing exceptions in 
Section 19 in effect at that time. See Proposing Release, supra note 
1, at 54797; Rule 11Aa3-2 Adopting Release, supra note 41.
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    The current timeframes in Rule 608(b) for Commission action begin 
to run on the date of publication of notice of the filing of a national 
market system plan or an amendment to an effective national market 
system plan. In other words, after plan participants file a proposed 
NMS plan or plan amendment with the Commission, the Commission must 
thereafter publish notice of the filing in the Federal Register in 
order for the current time periods in Rule 608(b) to begin.\43\ But, as 
commenters pointed out, Rule 608(b) currently does not set forth a 
timeframe for the Commission to publish notice after it has received a 
filing, and therefore there is no specified date when the time periods 
that are included in current Rule 608(b) are to begin. In addition, 
Rule 608(b) currently does not include a requirement for the Commission 
to issue an order disapproving a proposed NMS plan or plan amendment 
for which the Commission does not make the finding necessary for 
approval.
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    \43\ This effectively means that ``starting the clock'' on the 
Commission's time to act on a proposed NMS plan or plan amendment 
does not occur until the Commission publishes notice of the filed 
plan or amendment.
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    In Section 19(b) of the Exchange Act, Congress enacted a procedure 
for Commission publication of notice of and action on individual SRO 
rule

[[Page 65474]]

filings that has proved workable in that context. In the past ten 
years, the Commission has received and processed thousands of SRO rule 
filings that were subject to the notice publication (and rejection) 
procedure in Section 19(b).\44\ In addition, Section 19(b) sets forth 
certain requirements for SRO rule filings that, if applied to proposed 
NMS plans and plan amendments, would modify the above-noted aspects of 
the Rule 608(b) procedure. Importantly, and as pointed out by 
commenters, the Section 19(b) process ensures that the ``clock'' will 
begin to run on the Commission's time to act on a SRO rule filing and 
provides for certainty of approval or disapproval of a SRO rule filing 
within a specified timeframe that is lacking in Rule 608(b). This is 
because Section 19(b) of the Exchange Act sets forth a deadline for the 
Commission to publish notice of a SRO rule filing, with a default 
notice publication date if the Commission fails to meet that 
deadline,\45\ and requires that the Commission issue a disapproval 
order if it does not make the finding necessary to approve a SRO rule 
filing.\46\ Section 19(b) also authorizes the Commission to institute 
proceedings on a SRO rule filing, which is a useful intermediate 
procedural step by which the Commission can highlight issues and seek 
additional public comment that focuses on those issues. Neither Section 
11A of the Exchange Act nor current Rule 608(b) sets out a process to 
institute proceedings or procedural detail like that set forth in 
Section 19(b) of the Exchange Act.
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    \44\ See 15 U.S.C. 78s(b)(2)(E) and 78s(b)(10)(B). SRO rule 
filings become subject to the notice publication procedure in 
Section 19(b) upon filing with the Commission, but the Commission 
does not publish notice of filings that are rejected under Section 
19(b)(10)(B) or withdrawn by the SRO prior to the noticing deadline 
in Section 19(b)(2)(E).
    \45\ See 15 U.S.C. 78s(b)(2)(E).
    \46\ See 15 U.S.C. 78s(b)(2)(A)(i), (b)(2)(B)(ii), and 
(b)(2)(C)(ii).
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    The Commission believes that a modified procedure for proposed new 
NMS plans and plan amendments that incorporates these aspects of 
Section 19(b) would be workable and beneficial. On average, roughly one 
proposed new NMS plan is filed with the Commission every five years, 
and roughly 13 proposed plan amendments are filed with the Commission 
per year \47\--a small fraction of the number of SRO rule filings that 
are filed with the Commission. Thus, the Commission expects the volume 
of proposed NMS plans and plan amendments under Rule 608(b) as amended 
to be manageable. In addition, ensuring that the ``clock'' begins on 
the Commission's time to act and requiring that the Commission 
disapprove, by order, a proposed NMS plan or plan amendment that it 
cannot approve will result in a more transparent and efficient process 
for handling proposed NMS plans and plan amendments. It will enable 
plan participants to more accurately project, at the time of filing, 
the maximum time by which they will receive affirmative Commission 
approval or disapproval of a proposed NMS plan or plan amendment. It 
will also help assure all market participants that the Commission will 
act within a specified timeframe. As a result, plan participants and 
other market participants should be better able to prepare for 
potential new NMS plans or changes in existing plan requirements.
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    \47\ These proposed plan amendments include amendments that are 
solely administrative, technical or ministerial, which remain 
effective-upon-filing under Rule 608(b)(3)(ii) and (iii). See supra 
note 38 and infra Section II.B.1.a and note 63. The Commission 
estimates that, on average, roughly eight to nine proposed plan 
amendments that are not effective-upon-filing, including fee 
amendments, will be filed each year.
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    Moreover, adopting a process for instituting proceedings, which 
could include seeking additional public comment, would facilitate 
Commission review of a complex proposed NMS plan or plan amendment and 
consideration of particular issues relevant to the Commission's 
determination whether to approve to disapprove such proposed plan or 
amendment. Further, as a result of the Commission's rescission of the 
Fee Exception,\48\ proposed fee amendments will be subject to the 
procedural modifications that the Commission is incorporating into Rule 
608(b)(1) and (2). These modifications are based on Section 19(b).
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    \48\ See supra Section II.A.
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    While commenters suggested applying the Section 19(b) procedures 
only to proposed plan amendments,\49\ the Commission believes that it 
is appropriate to incorporate into amended Rule 608(b) similar 
requirements for both proposed new NMS plans and plan amendments. The 
Commission believes improved transparency and efficiency are important 
for both proposed new NMS plans and proposed plan amendments. 
Paragraphs (1) and (2) of current Rule 608(b) set forth the same 
procedural requirements for proposed NMS plans and plan amendments that 
are not effective upon filing, and the Commission believes it is also 
important to enhance the Commission's procedure for handling proposed 
new NMS plans.
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    \49\ Operating Committees Letter; Nasdaq Letter.
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    Accordingly, as described in more detail below, the Commission is 
adopting amendments to Rule 608(b) to incorporate elements of the 
Section 19(b) process that will enhance the Commission's procedure for 
handling both proposed NMS plans and plan amendments. In light of 
differences between SRO rule filings and proposed NMS plans and plan 
amendments, the Commission is not incorporating every aspect of the 
Section 19(b) procedure into amended Rule 608(b), and the Commission is 
adopting certain timeframes for Commission action under amended Rule 
608(b) that differ from what is required by Section 19(b).
a. Procedure for Notice Publication Under Rule 608(b)(1) as Amended
    A new procedure for Commission publication of notice of the filing 
of proposed NMS plans and plan amendments is set forth in amendments to 
paragraph (b)(1) of Rule 608. New paragraphs (b)(1)(i) and (ii) of Rule 
608 provide the time periods for the Commission to send notice of the 
filing of a proposed new NMS plan and a proposed plan amendment, 
respectively, to the Federal Register.
    Specifically, under Rule 608(b)(1)(i), the Commission must send the 
notice of the filing of a proposed NMS plan to the Federal Register 
within 90 days of the business day on which such plan was filed with 
the Commission pursuant to paragraph (a) of Rule 608. If the Commission 
fails to send the notice to the Federal Register within such 90-day 
period, then the date of publication shall be deemed to be the last day 
of such 90-day period. Rule 608(b)(1)(i) therefore specifies a 
timeframe for the publication of notice of a new NMS plan and a default 
notice publication date if the Commission fails to act by the deadline. 
In so doing, Rule 608(b)(1)(i), unlike current Rule 608(b)(1), ensures 
for all NMS plans filed with the Commission that notice will be 
published in a specified timeframe.
    The timeframe and default publication date differ, however, from 
what is set forth in Section 19(b) for SRO proposed rule changes. Under 
Section 19(b), if, after filing a proposed rule change with the 
Commission, the SRO publishes notice of the proposed rule change, 
together with the substantive terms of such proposed rule change, on a 
publicly accessible website, the Commission is required to send the 
notice to the Federal Register within 15 days of the date on which such 
website publication was made. If the Commission fails to send the 
notice for publication within such 15-day period, then the date of 
publication is

[[Page 65475]]

deemed to be the date on which such website publication was made.\50\
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    \50\ See 15 U.S.C. 78s(b)(2)(E).
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    In the context of a proposed new NMS plan, while the Commission 
believes that the concept of a notice publication deadline and default 
publication date in the event of Commission failure to meet the 
deadline are beneficial, the Commission does not believe that a 15-day 
deadline, or the default to a website publication date if that deadline 
is missed, are workable. In order to send notice of a SRO rule filing 
to the Federal Register within the 15-day deadline mandated by Section 
19(b), the Commission generally reproduces the proposed rule change 
filed by the SRO in a Federal Register-compliant format without 
including observations, questions, and requests for comment, in 
addition to what the SRO has filed. The publication of notice of a new 
NMS plan, in contrast, may require more time because new plans present 
more substance for review and typically raise a greater number of 
issues than would be the case for a SRO rule filing or a proposed 
amendment to an existing plan. As a result, the Commission may want to 
add material to the notice of a proposed new plan that is designed to 
facilitate informed public comment on the proposal, which is an 
integral aspect of the Commission's review of a new NMS plan. For 
example, the Commission added detailed requests for comment to the 
notice of the proposed NMS plan to implement a tick size pilot 
program.\51\ The Commission anticipates it would need more than 15 days 
to prepare such additional material before sending notice of a proposed 
new NMS plan to the Federal Register. The Commission believes that 90 
days both gives a sufficient amount of time for the Commission to 
complete such efforts and improves the current Rule 608(b) process for 
proposed new NMS plans by providing certainty and transparency 
regarding timeframes for Commission action. In addition, the 90-day 
timeframe for the Commission to send notice of a new NMS plan to the 
Federal Register will result in faster publication of the notice in the 
Federal Register than the average publication time under the current 
rule.\52\
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    \51\ See Securities Exchange Act Release No. 73511 (Nov. 3, 
2014), 79 FR 66423 (Nov. 7, 2014).
    \52\ See infra Section IV.B.2, where the Commission estimates 
that the average and median time it currently takes to publish 
notice of proposed new NMS plans in the Federal Register are 163.8 
days and 76.5 days, respectively.
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    A default notice publication date based on the date of plan 
participants' website posting, as in Section 19(b), would not be 
appropriate for proposed new NMS plans. Rule 608(a)(8) currently does 
not require website posting of a new NMS plan until after the plan has 
been approved and becomes effective. The Commission does not believe it 
would be appropriate to require website posting of a proposed new NMS 
plan prior to that time, as it could require the creation of a website 
for a proposed plan that is not yet and may never become effective, 
which could confuse market participants as to which NMS plans actually 
are effective at any given time.\53\ The Commission believes, however, 
that it is important to provide certainty and transparency regarding 
the date on which the time periods for Commission action subsequent to 
notice publication will begin to run. Therefore, the Commission has 
adopted the default notice publication provision in paragraph (b)(1)(i) 
of amended Rule 608(b), pursuant to which the publication of notice of 
a new NMS plan is deemed to have occurred on the last day of the 90-day 
notice period if the Commission fails to send the notice to the Federal 
Register by the end of that period.
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    \53\ While an existing SRO's proposed rule changes are required 
to be posted on the SRO's website within two business days of filing 
and are typically website posted on the same day as filing (see Rule 
19b-4(l)), there is no such requirement for applications to become a 
new SRO, such as a Form 1 application to become a registered 
national securities exchange.
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    Similar to what will occur under Rule 608(b)(1)(i) for proposed new 
NMS plans, Rule 608(b)(1)(ii) will ensure for all proposed plan 
amendments filed with the Commission that notice will be published in a 
specified timeframe and that the time periods for Commission action 
subsequent to notice publication will be triggered. However, the 
noticing deadline and default notice publication date in paragraph 
(b)(1)(ii) differ from paragraph (b)(1)(i) by more closely following 
the requirements set forth in Section 19(b) for SRO rule filings. 
Specifically, under Rule 608(b)(1)(ii), the Commission must send the 
notice of the filing of a proposed NMS plan amendment to the Federal 
Register within 15 days of the business day on which such proposed 
amendment was posted on a plan website or a website designated by plan 
participants after being filed with the Commission. If the Commission 
fails to send the notice to the Federal Register within such 15-day 
period, then the date of publication shall be deemed to be the business 
day on which the plan participants posted notice of the proposed plan 
amendment on a plan website or a website designated by plan 
participants. These notice publication procedures in Rule 608(b)(1)(ii) 
apply to all proposed plan amendments, including solely administrative, 
technical, or ministerial plan amendments that remain effective-upon-
filing under Rule 608(b)(3)(ii) and (iii).
    Unlike for proposed new NMS plans, the noticing deadline for 
proposed NMS plan amendments in paragraph (b)(1)(ii) is measured from 
the date of website posting. Paragraph (b)(1)(ii) also defaults the 
notice publication date to the business day of such website posting if 
the Commission does not send the notice of the filing of the proposed 
plan amendment to the Federal Register within the deadline in paragraph 
(b)(1)(ii). Since website posting of proposed plan amendments within 
two business days of their filing is an existing requirement under Rule 
608(a)(ii), these provisions impose no new burdens on plan participants 
and are not likely to confuse other market participants already 
familiar with the fact that plan participants post proposed plan 
amendments on their websites prior to the amendments becoming 
effective. Moreover, a similar framework exists, and has been workable, 
in the SRO rule filing context: SROs are required to post rule filings 
on their websites within two business days after their filing,\54\ such 
website posting is a condition to triggering the 15-day noticing 
deadline for SRO rule filings,\55\ and the notice publication date 
defaults to the business day of website posting if the Commission does 
not send notice of the SRO rule filing to the Federal Register within 
the 15-day deadline.\56\ This framework was requested by 
commenters,\57\ and would be workable and familiar to plan participants 
and market participants in the context of proposed plan amendments; the 
Commission believes that it is appropriate to adopt it in this context.
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    \54\ See Rule 19b-4(l). Such website posting typically occurs on 
the same day as filing and SROs must inform the Commission if that 
does not occur. Id. As discussed infra in Section II.B.1.d, the 
Commission is amending Rule 608(a)(8)(ii) to add a similar 
requirement that plan participants inform the Commission if website 
posting of a proposed plan amendment does not occur on the same 
business day as filing.
    \55\ See Section 19(b)(2)(E).
    \56\ Id.
    \57\ Operating Committees Letter at 6; Nasdaq Letter.
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    In addition, unlike in the context of proposed new NMS plans, the 
Commission believes that a 15-day notice deadline is workable in the 
context of proposed plan amendments because the process of publishing 
notice of proposed plan amendments generally need not go beyond 
reproducing materials provided by the plan

[[Page 65476]]

participants, similar to publishing notice of SRO rule filings. As 
discussed above, the Commission believes that proposed amendments to 
existing plans typically are more limited in substance than proposed 
new plans and therefore typically do not require the Commission to add 
statements to facilitate public comment.\58\ A 15-day noticing time 
period would be substantially shorter than the current average and 
median timeframes in which the Commission publishes notice of proposed 
plan amendments.\59\ Commenters requested a 15-day time period, and the 
Commission believes that it will be able to publish notice of proposed 
plan amendments within the requested 15-day time period. The 15-day 
noticing time period will provide market participants faster notice, 
via the Federal Register, of a proposed plan amendment that has been 
filed with the Commission, and will cause the ``clock'' to start on the 
Commission's time to act more promptly after such filing.
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    \58\ The Commission could issue a supplemental request for 
comment after publishing notice of the proposed plan amendment. In 
addition, the Commission will have the ability to institute 
proceedings on a proposed plan amendment under Rule 608(b) as 
modified, which provides an opportunity for the Commission to seek 
additional comment. See Rule 608(b)(2)(i).
    \59\ See infra Section IV.B.2, where the Commission estimates 
that the average and median time it takes to publish notice in the 
Federal Register of non-immediately effective proposed NMS plan 
amendments are 65.5 days and 38 days, respectively.
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    The Commission also is adopting new paragraphs (b)(1)(iii) and 
(b)(1)(iv) under Rule 608. Paragraph (b)(1)(iii) is generally based on 
Section 19(b)(10) for Commission review of SRO rule filings, and 
provides that a proposed NMS plan or plan amendment that does not 
comply with relevant filing requirements has not been filed with the 
Commission for purposes of Rule 608(b)(1).\60\ Specifically, if the 
Commission informs the plan participants within seven business days of 
the business day of receipt by the Commission of a proposed NMS plan or 
plan amendment that the plan or amendment does not comply with 
paragraph (a) of Rule 608 or plan filing requirements in other sections 
of Regulation NMS and 17 CFR 240, subpart A, the plan or amendment is 
deemed not filed with the Commission.\61\ The seven-business-day 
rejection period is extended to 21 days if the Commission informs the 
plan participants that the proposed NMS plan or plan amendment is 
unusually lengthy and is complex or raises novel regulatory issues. If 
the filing is deemed not made due to such rejection, the time period 
for the Commission to publish notice does not begin again until a new 
proposed NMS plan or plan amendment is filed pursuant to paragraph (a) 
and is not rejected.\62\ New paragraph (b)(1)(iv) under Rule 608 
mirrors relevant portions of Rule 19b-4(b)(2) and (k), and defines 
``business day'' and when a filing has been received by the Commission 
or website posting has occurred on a given business day for purposes of 
Rule 608.
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    \60\ See also 17 CFR 240.0-3(a) (``[t]he date on which papers 
are actually received by the Commission shall be the date of filing 
thereof if all of the requirements with respect to the filing have 
been complied with . . . .'').
    \61\ Paragraph (a) of Rule 608 sets forth the information that 
must accompany and be described in all proposed NMS plans or plan 
amendments filed with the Commission. Paragraph (a)(7) of Rule 608 
requires compliance with plan filing requirements contained in any 
other section of Regulation NMS and 17 CFR 240, subpart A. For 
example, proposed amendments to transaction reporting plans must 
comply with Rule 601 of Regulation NMS, in addition to Rule 608(a).
    \62\ As discussed supra, the noticing time period for a proposed 
NMS plan amendment that is filed with the Commission is measured 
from the business day of website posting by the plan participants.
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b. Procedure for Commission Action Subsequent to Notice Publication 
Under Rule 608(b)(2) as Amended
    A modified procedure for Commission action following publication of 
notice of the filing of proposed NMS plans and plan amendments that are 
not immediately effective is set forth in amendments to paragraph 
(b)(2) of Rule 608.\63\ Under new paragraph (b)(2)(i) of Rule 608, 
within 90 days of the date of notice publication, or within such longer 
period as to which the plan participants consent, the Commission shall, 
by order, approve or disapprove the proposed NMS plan or plan 
amendment, or institute proceedings to determine whether the proposed 
NMS plan or plan amendment should be disapproved. Such proceedings will 
be conducted pursuant to 17 CFR 201.700 and 701,\64\ and shall include 
notice of the grounds for disapproval under consideration and 
opportunity for hearing and shall be concluded within 180 days of 
notice publication. At the conclusion of such proceedings the 
Commission shall, by order, approve or disapprove the proposed NMS plan 
or plan amendment.\65\ The time for conclusion of such proceedings may 
be extended for up to 60 days (thus allowing proceedings to conclude up 
to 240 days from the date of notice publication) if the Commission 
determines that a longer period is appropriate and publishes the 
reasons for such determination or the plan participants consent to the 
longer period. In addition, under new paragraph (b)(2)(ii) of Rule 608, 
the time for conclusion of proceedings may be extended for an 
additional period of up to 60 days beyond the 240-day period set forth 
in paragraph (b)(2)(i) (thus allowing proceedings to conclude up to 300 
days total from the date of notice publication) if the Commission 
determines that a longer period is appropriate and publishes the 
reasons for such determination or the plan participants consent to the 
longer period.\66\
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    \63\ Solely administrative, technical, or ministerial plan 
amendments remain effective-upon-filing under Rule 608(b)(ii) and 
(iii) and are not subject to Rule 608(b)(2), as amended, unless they 
are abrogated.
    \64\ As discussed infra in Section II.B.2, the Commission is 
modifying Rules 700 and 701 to incorporate proposed NMS plans and 
plan amendments into those rules.
    \65\ Though in a proceeding to determine whether to disapprove a 
proposed NMS plan or plan amendment the Commission is required to 
publish notice of its grounds for disapproval under consideration, 
the Commission can ultimately either disapprove or approve the 
proposed NMS plan or plan amendment following conclusion of the 
proceedings. See Securities Exchange Act Release No. 63723 (Jan. 14, 
2011), 76 FR 4066, 4067 n. 17 (Jan. 24, 2011).
    \66\ As discussed infra in Section II.B.3, the Division Director 
will have delegated authority to extend the time for conclusion of 
such proceedings from 180 days to a period not exceeding 240 days 
from the date of publication of notice of the filing of a proposed 
NMS plan or plan amendment, as set forth in paragraph (b)(2)(i) of 
Rule 608. The Division Director will not have delegated authority to 
further extend the time for conclusion of such proceedings for an 
additional 60 days to a period not exceeding 300 days from the date 
of publication of notice of the filing of a proposed NMS plan or 
plan amendment, as set forth in paragraph (b)(2)(ii) of Rule 608.
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    Paragraph (b)(2)(i) adopts certain elements from Section 19(b), 
namely, requiring that the Commission approve or disapprove a proposed 
new NMS plan or plan amendment, by order, within a specified timeframe, 
and enabling the Commission to institute proceedings and to extend the 
time for the conclusion of those proceedings. These are modifications 
to the existing Rule 608(b) procedure. By requiring disapproval by 
order if the Commission cannot make the finding necessary to approve, 
which is currently not required by Rule 608(b), the amended rule will 
provide more certainty regarding when final Commission action--whether 
approval or disapproval--must occur. And by authorizing the institution 
of proceedings, which currently is not provided for under Rule 608(b), 
the amended rule gives the Commission a way to seek additional public 
input that could help the Commission determine whether proposed NMS 
plans and plan amendments should be approved or disapproved. In 
addition, the 180-day

[[Page 65477]]

period from the date of notice publication for such proceedings, and 
the availability of an extension of that period up to 240 days from the 
date of notice publication, as requested by commenters, are the same as 
what is set forth in Section 19(b) for SRO rule filings. The Commission 
believes these time periods would be appropriate for proposed NMS plans 
and plan amendments based on the Commission's experience with SRO rule 
filings, where 180 days has generally provided a sufficient amount of 
time to conclude proceedings and 240 days has been appropriate in more 
complex cases.
    The 90-day time period for initial Commission action, and the 
availability of the additional extension of the time to conclude 
proceedings up to 300 days from the date of notice publication, are 
different from what is set forth in Section 19(b). Commenters suggested 
that, consistent with the Section 19(b) process for SRO rule filings, 
initial Commission action with regard to NMS plan amendments occur 
within 45 days of notice publication with the availability of a 45-day 
extension (for a total of 90 days).\67\ In addition, under Section 
19(b), the Commission cannot take longer than 240 days from the date of 
notice publication to approve or disapprove a SRO rule filing.\68\ The 
Commission, however, anticipates needing more than 45 days following 
notice publication to act initially, and potentially needing more than 
240 days following notice publication to act finally, on proposed new 
NMS plans and plan amendments because they can be complex and have far-
reaching effects on a wide range of market participants, many of which 
are not SRO members. Whereas a SRO rule filing applies to a single 
SRO's rules, a proposed new NMS plan or plan amendment involves all 
SROs that are plan participants and implicates the manner in which they 
collectively act with regard to the national market system, in which 
many non-SRO members, such as retail investors, participate.
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    \67\ Operating Committees Letter; Nasdaq Letter.
    \68\ See 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    The Commission believes that providing 90 days after notice 
publication for initial Commission action (i.e., approval, disapproval, 
or institution of proceedings) is more appropriate than the Section 
19(b) approach as well as other potential timeframes for initial 
Commission action, such as the pre-existing 120-day timeframe in Rule 
608(b). The 90-day timeframe is the same timeframe that applies when 
the initial 45-day deadline is extended by 45 days under the Section 
19(b) approach requested by commenters, and it provides enhanced 
efficiency and conservation of Commission resources by eliminating the 
discretionary procedural step of extending a 45-day period to 90 days. 
The Commission believes that, if it instead were to adopt timeframes 
identical to those in Section 19(b), it would need to take such a 
procedural step routinely for proposed NMS plans and plan amendments. 
Nevertheless, the Commission believes that it typically would be 
possible to take initial action on proposed NMS plans and plan 
amendments following notice publication sooner than the 120-day 
deadline currently set forth in Rule 608(b), and the Commission expects 
that 90 days from notice publication typically will be an appropriate 
amount of time for such action. By requiring initial Commission action 
within 90 days instead of 120 days, the Commission believes that Rule 
608(b)(2), as amended, will more effectively balance the Commission's 
need to allocate sufficient time for it to consider and initially act 
upon a proposed NMS plan or plan amendment with commenters' request for 
a backstop for such action of 90 days from notice publication.
    The Commission likewise believes that allowing an additional 
extension to the Commission's final deadline to approve or disapprove, 
of up to 60 days, for a total of up to 300 days from the date of notice 
publication, is an appropriate way to balance the Commission's 
expectation that it will potentially need more time for its final 
disposition of a proposed NMS plan or plan amendment than the 
corresponding 240-day timeframe for SRO rule filings in Section 19(b) 
with commenters' request that Section 19(b)'s 240-day timeframe be 
incorporated into Rule 608(b). The Commission believes that up to 60 
days is a reasonable amount for a potential extension for final 
Commission action because it will provide the Commission with 
flexibility when it needs more time to fully consider complex and 
significant proposed NMS plans and plan amendments. In addition, while 
the Commission's estimates are lower than 300 days for the average 
length of time that currently passes from the date of notice 
publication to Commission approval of a proposed plan or plan 
amendment,\69\ the lack of a specified time period in current Rule 
608(b) for publishing notice provided an opportunity for plan 
participants to address issues in a proposed plan or plan amendment 
before notice publication and thereby reduced the amount of time 
subsequent to notice publication that the Commission needed to 
determine whether to approve a proposed plan or amendment. The new 
noticing deadlines under amended Rule 608(b)(1) may largely prevent 
such an opportunity.
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    \69\ See infra Section IV.B.2, where the Commission estimates 
that the average and median time it currently takes to approve 
proposed NMS plan amendments that are not immediately effective are 
62.0 days and 44.5 days, respectively, from the date of their 
publication in the Federal Register, and the average and median time 
it currently takes to approve proposed new NMS plans are 204.8 days 
and 181 days, respectively, from the date of their publication in 
the Federal Register. Notably, these figures are average and median 
times that encompass all proposed new NMS plans and plan amendments 
within a particular period. In determining the Rule 608 timeframes 
by which Commission action is required, however, the Commission must 
consider the time it will need to appropriately review the most 
complex proposals that are likely to generate significant public 
comment.
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    Moreover, while 300 days is a longer period from notice publication 
than the 180-day period currently set forth in Rule 608(b), this 
difference will be mitigated by the fact that, under the current rules, 
there is no requirement that notice publication, and hence the start of 
the 180-day ``clock,'' occur within a specified amount of time after a 
proposed NMS plan or plan amendment is filed with the Commission, as 
commenters pointed out.\70\ As a result, the time from filing (as 
distinguished from notice publication) to final Commission action may 
be unpredictable under the current rule, and might be significantly 
longer than 180 days, depending on the date on which the Commission 
publishes notice.\71\ This can occur because, in addition to not 
specifying timeframes for the Commission to publish notice, Rule 608(b) 
currently does not deem notice to be published in the absence of 
Commission publication within a specified timeframe. This will change, 
however, under Rule 608(b) as amended. In conjunction with the new 
notice publication deadlines and default notice publication provisions 
in amended Rule 608(b)(1), the outside deadline of up to 300 days from 
notice publication for Commission approval or

[[Page 65478]]

disapproval may result in faster final Commission action as measured 
from the time of filing than the current process in some cases,\72\ and 
in all cases will provide a more transparent and definite timeframe for 
final Commission action.
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    \70\ See Operating Committees Letter at 3-4; Nasdaq Letter at 1-
2.
    \71\ See infra Section IV.B.2, where the Commission estimates 
that the average and median total time it currently takes to approve 
proposed new NMS plans are 368.5 days and 338 days, respectively, 
from the date they are filed with the Commission, and the average 
and median total time it currently takes to approve proposed NMS 
plan amendments that are not immediately effective are 127.6 days 
and 86 days, respectively, from the date they are filed with the 
Commission.
    \72\ Id.
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    The Commission does not believe that it would be appropriate to add 
a provision to Rule 608 that would result in a proposed NMS plan or 
plan amendment being deemed approved in the absence of affirmative 
Commission action, particularly given that, contrary to SRO proposed 
rule filings, Congress has not mandated such treatment of proposed NMS 
plans or plan amendments. The Commission expects to approve or 
disapprove, by order, all proposed NMS plans and plan amendments within 
the new timeframes specified in amended Rule 608(b). As discussed 
above, NMS plans and plan amendments are different from an individual 
SRO rule filing because they implicate the manner in which SRO plan 
participants collectively act with regard to matters concerning the 
entire national market system whereas a SRO rule filing applies to a 
single SRO's rules. Accordingly, the Commission is not adopting a 
``deemed approved'' provision similar to that in Section 19(b).\73\
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    \73\ See Section 19(b)(2)(D).
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c. Filing of NMS Plans and Amendments Thereto Under Rule 608(a)(1) as 
Amended
    Rule 608(a)(1) currently states that any two or more self-
regulatory organizations, acting jointly, may file a national market 
system plan or may propose an amendment to an effective national market 
system plan by submitting the text of the plan or amendment to the 
Secretary of the Commission, together with a statement of the purpose 
of such plan or amendment and, to the extent applicable, the documents 
and information required by paragraphs (a)(4) and (5) of Rule 608. NMS 
plan participants typically satisfied the Rule 608(a)(1) filing 
requirement through paper submission to the Secretary of the 
Commission.
    The Commission is amending Rule 608(a)(1) to replace the current 
requirement that proposed NMS plans and plan amendments be filed with 
the Secretary of the Commission with a new requirement that they be 
filed with the Commission by email. Specifically, the amended rule 
requires plan participants to file by email the text of the proposed 
NMS plan or plan amendment and the other information required by Rule 
608(a) directly to an email address used solely for the purpose of 
filing plans and plan amendments that is monitored by Division staff 
responsible for handling NMS plan filings. Only filings made by email 
will satisfy the amended Rule 608(a) filing requirement; paper filings 
will no longer be permitted. For purposes of satisfying the filing 
requirement, all filings must be emailed to the Commission in a format 
compatible with a commonly used word processing program. The required 
email address will be provided on the Commission's website at 
www.sec.gov. Requiring filing with the Commission by email will modify 
the current filing process to promote more efficient filing by plan 
participants, as well as the receipt and handling of filed materials by 
Division staff. Email filing particularly will facilitate Division 
staff's timely preparation of the notice of proposed plan amendments in 
order to meet the 15-day noticing deadline.
d. Additional Aspects of Amended Rule 608
    The Commission is not modifying the finding set forth in Rule 
608(b)(2) that the Commission must make to approve a new proposed NMS 
plan or any proposed NMS plan amendment, including any NMS plan fee 
amendment. To account for potential Commission disapproval of proposed 
NMS plans or plan amendments, however, the Commission is modifying Rule 
608(b)(2) to provide that the Commission shall disapprove a proposed 
NMS plan or plan amendment if the Commission does not make the finding 
that is required for approval, and that such disapproval shall be by 
Commission order. This language is based on Exchange Act Section 
19(b)(2)(C). The Commission also is modifying Rule 608(a)(8)(ii), which 
addresses website posting of proposed NMS plan amendments, to account 
for potential Commission rejection or disapproval of such amendments. 
This modification to Rule 608(a)(8)(ii), along with the previously 
existing provision relating to the withdrawal of a proposed NMS plan 
amendment, means that a proposed plan amendment that is withdrawn, 
rejected or disapproved must be removed from the plan website or 
designated website.
    In addition, the Commission is amending Rule 608(a)(8)(ii) to 
mirror Rule 19b-4(l) for SRO rule filings in requiring that plan 
participants inform the Commission of the business day on which they 
posted to the appropriate website a proposed plan amendment if such 
website posting does not occur on the same business day as filing.\74\ 
Put another way, unless the Commission is informed otherwise by the 
plan participants, the website posting is calculated as having occurred 
on the same business day as filing for purposes of determining when the 
15-day noticing time period expires.\75\
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    \74\ As noted supra in Section II.B.1.a, Rule 608(a)(8)(ii) 
already requires that plan participants ensure that any proposed 
plan amendments are posted on a plan website or a designated website 
no later than two business days after their filing with the 
Commission. Rule 19b-4(l) contains an identical requirement for SRO 
rule filings.
    \75\ The Commission also is amending Rule 608(a)(8)(i) and 
(a)(8)(ii) to replace the term ``website'' with ``website.''
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    Further, the Commission is not removing from Rule 608(b)(2) 
language that states that the Commission may approve a NMS plan or 
proposed NMS plan amendment ``with such changes or subject to such 
conditions as the Commission may deem necessary or appropriate.'' 
According to one commenter, this language should be removed because it 
would contravene the Administrative Procedure Act (``APA'') \76\ for 
the Commission to act consistent with this language without first 
undertaking notice and comment rulemaking.\77\ The Commission does not, 
however, believe that such Commission action pursuant to Rule 608(b)(2) 
is inconsistent with the APA. First, this provision has been part of 
Rule 608 since Rule 608 was first proposed in 1979 and adopted in 1981, 
and was itself adopted pursuant to notice-and-comment rulemaking.\78\ 
Moreover, any amendments initiated by the Commission to an effective 
NMS plan pursuant to Rule 608 are made through notice and comment 
rulemaking.\79\ And the Commission's approval of a NMS plan amendment 
initiated by plan participants with changes or conditions as specified 
in Rule 608(b)(2) is subject to the procedural protections governing 
the approval process. Among other things, the proposed NMS plan 
amendment itself--along with any questions or issues that the 
Commission may choose to raise in the notice of the proposal--is 
subject to notice and comment.
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    \76\ 5 U.S.C. 551 et seq.
    \77\ Nasdaq Letter at 2-4.
    \78\ See Securities Exchange Act Release No. 16410 (Dec. 7, 
1979), 44 FR 72606 (Dec. 14, 1979) (proposing Rule 11Aa3-2, the 
predecessor to Rule 608); Rule 11Aa3-2 Adopting Release, supra note 
41.
    \79\ Rule 608(a)(2) continues to provide that the Commission may 
propose an amendment to any effective NMS plan, and Rule 608(b)(2) 
continues to provide that promulgation of an amendment to a NMS plan 
initiated by the Commission shall be by rule.

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[[Page 65479]]

2. Amendments to Rules of Practice 700 and 701
    Commission Rule of Practice 700 currently sets forth procedures for 
conducting proceedings that are instituted for individual SRO proposed 
rule changes pursuant to Section 19(b) and Rule 19b-4, and Rule of 
Practice 701 addresses the issuance of a Commission order after 
proceedings for individual SRO proposed rule changes have been 
initiated.\80\ The Commission is adopting amendments to these rules to 
set forth the procedures for conducting proceedings that have been 
initiated for proposed NMS plans or plan amendments under new paragraph 
(b)(2)(i) of Rule 608. The procedures that apply to proceedings for 
individual SRO proposed rule changes under Rules 700 and 701 are not 
being changed, although the organization of the Rules is changing.\81\
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    \80\ 17 CFR 201.700 and 701.
    \81\ Because existing Rule 701 explicitly references individual 
SRO proposed rule changes, the Commission has amended Rule 701 to 
add a new paragraph that replicates the language of the existing 
rule except that the new paragraph applies to proposed NMS plans and 
plan amendments.
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    Where Rule 700 explicitly references individual SRO proposed rule 
changes, the Commission has added references to proposed NMS plans or 
plan amendments in those paragraphs or added new paragraphs that 
replicate the existing substantive language to make them applicable to 
proposed NMS plans or plan amendments. Specifically, the Commission has 
amended Rule 700(b)(1) to state that, if the Commission initiates 
proceedings to determine whether a proposed NMS plan or plan amendment 
(which are collectively defined as a ``NMS plan filing'' for purpose of 
Rule 700) should be disapproved, it shall provide notice to the NMS 
plan participants, as well as other interested parties, by publication 
in the Federal Register of the grounds for disapproval under 
consideration. Similarly, the Commission has amended Rule 
700(b)(1)(iii) to state that the Commission shall serve a copy of the 
grounds for disapproval under consideration to the NMS plan 
participants by serving notice to the contact person for the NMS plan.
    Likewise, the Commission has amended Rule 700(b)(2) to state that 
the grounds for disapproval under consideration shall include a brief 
statement of the matters of fact and law on which the Commission has 
instituted proceedings, including areas in which the Commission may 
have questions or may need to solicit additional information on the NMS 
plan filing. The Commission also has amended Rule 700(b)(3) to add a 
new paragraph (ii) stating that the burden to demonstrate that a NMS 
plan filing is consistent with the Exchange Act and rules and 
regulations thereunder is on the plan participants that filed the NMS 
plan filing. This language does not create any new burden for NMS plan 
participants, but rather sets forth the existing burden that applies to 
NMS plan participants under Rule 608(a), which provides that two or 
more SRO plan participants, acting jointly, may file a NMS plan or 
propose an amendment to an effective NMS plan. The burden also is 
substantively the same as that currently set forth in Rule 700(b)(3) 
for a SRO in the context of a SRO's proposed rule change, which is 
being relocated without substantive modifications to new paragraph (i) 
of Rule 700(b)(3) as a result of the amendment to the rule to 
incorporate NMS plan filings.
    The Commission also has amended the following provisions in Rule 
700 in order to replicate for NMS plan filing proceedings the 
procedures applicable to SRO proposed rule change proceedings: (i) Rule 
700(c)(1), by referencing NMS plan filings in paragraph (c)(1) and 
adding new paragraph (ii) regarding the conduct of hearings and 
opportunity to submit written statements; (ii) Rule 700(c)(3), by 
adding new paragraph (ii) regarding rebutting any comments received 
during proceedings; (iii) Rule 700(c)(4), by adding new paragraph (ii) 
regarding a failure to respond to any comment received; and (iv) Rule 
700(d), by referencing NMS plan filings in paragraph (d)(1) regarding 
the filing of papers with the Commission and paragraph (d)(2) regarding 
the public availability of materials received, and by adding new 
paragraph (d)(3)(ii) regarding the record before the Commission.\82\
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    \82\ In connection with these amendments, where the Commission 
added new paragraphs (ii) to incorporate NMS plan filings, the 
Commission relocated without changes existing text regarding SRO 
proposed rule changes to new paragraphs (i).
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    Where paragraphs of Rule 700 do not explicitly reference individual 
SRO proposed rule changes (such as paragraph (b)(2), among others), as 
a result of other amendments being made to Rule 608(b)(2)(i),\83\ the 
language in those paragraphs of Rule 700 applies to NMS plan filings as 
well as individual SRO proposed rule changes without the need to add 
explicit references to each type of proposal.\84\
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    \83\ Rule 608(b)(2)(i) states, among other things, that 
proceedings to determine whether a NMS plan fee amendment should be 
disapproved will be conducted pursuant to Rules 700 and 701.
    \84\ The Commission also is amending the title of Rule 700, 
which currently references the initiation of proceedings for SRO 
proposed rule changes, so that it also references proposed NMS plans 
and plan amendments. Relatedly, the Commission is making a 
conforming amendment to Rule 19b-4(g), which cross-references the 
current title of Rule 700 in a parenthetical, to add proposed NMS 
plans and plan amendments to the cross reference.
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3. Amendments to Delegations of Authority in Rule 30-3
    The Commission is revising the delegations of authority to the 
Division Director in conjunction with the modifications that the 
Commission is adopting to Rule 608.\85\ These revisions are intended to 
conserve Commission resources and increase the effectiveness and 
efficiency of the Commission's process for handling proposed NMS plans 
and plan amendments. Congress has authorized such delegation by Public 
Law 87-592, 76 Stat. 394, 15 U.S.C. 78d-1(a), which provides that the 
Commission ``shall have the authority to delegate, by published order 
or rule, any of its functions to . . . an employee or employee board, 
including functions with respect to hearing, determining, ordering, 
certifying, reporting, or otherwise acting as to any work, business or 
matter.''
---------------------------------------------------------------------------

    \85\ 17 CFR 200.30-3.
---------------------------------------------------------------------------

    Accordingly, the Commission is amending its rules, by adding new 
paragraph (a)(85) to Rule 30-3, to delegate authority to the Division 
Director to perform certain procedural steps up to but not including 
approval or disapproval. Under this delegation, the Division Director 
(or, under his or her direction, such persons as might be designated 
from time to time by the Chairman of the Commission) is authorized to 
perform the following actions: (1) To publish notice of the filing of a 
proposed amendment to an effective NMS plan; (2) to notify NMS plan 
participants that a proposed NMS plan or plan amendment does not comply 
with paragraph (a) of Rule 608 or plan filing requirements in other 
sections of Regulation NMS and 17 CFR 240, subpart A, and to determine 
that a proposed NMS plan or plan amendment is unusually lengthy and 
complex or raises novel regulatory issues and to inform the NMS plan 
participants of such determination; (3) to institute proceedings to 
determine whether a proposed NMS plan or plan amendment should be 
disapproved; (4) to provide the NMS plan participants notice of the 
grounds for disapproval under consideration; and (5) to extend for a 
period not exceeding 240 days from the date of publication of notice of 
the filing

[[Page 65480]]

of a proposed NMS plan or plan amendment the period during which the 
Commission must issue an order approving or disapproving the proposed 
NMS plan or plan amendment and determine whether such longer period is 
appropriate and publish the reasons for such determination.\86\ In 
addition, new paragraph (a)(85) retains the delegations of authority to 
the Division Director: (i) To summarily abrogate, pursuant to Rule 
608(b)(3)(iii), a proposed NMS plan amendment put into effect upon 
filing with the Commission (i.e., a solely administrative, technical or 
ministerial plan amendment that remains effective-upon-filing under 
Rule 608(b)(3)) and require that such amendment be refiled in 
accordance with Rule 608(a)(1) and reviewed in accordance with Rule 
608(b)(2); and (ii) pursuant to Rule 608(b)(4), to put a proposed plan 
amendment into effect summarily upon publication of notice and on a 
temporary basis not to exceed 120 days.\87\ Notwithstanding these 
delegations, the Division Director may submit any matter he or she 
believes appropriate to the Commission. Furthermore, any action taken 
by the Division Director pursuant to delegated authority would be 
subject to Commission review as provided by Rules 430 and 431 of the 
Commission's Rules of Practice, 17 CFR 201.430-201.431 and 15 U.S.C. 
78d-1(b).
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    \86\ These delegations of authority to the Division Director do 
not include the authority to publish notice of filing of a proposed 
new NMS plan pursuant to paragraph (b)(1)(i) of Rule 608 or to 
further extend the time for the conclusion of proceedings up to an 
additional 60 days--for a period not exceeding 300 days from the 
date of publication of notice of filing of a proposed NMS plan or 
plan amendment--as set forth in paragraph (b)(2)(ii) of Rule 608. 
Any publication of notice of a proposed new NMS plan pursuant to 
paragraph (b)(1)(i) of Rule 608 and any extension of the time for 
the conclusion of proceedings pursuant to paragraph (b)(2)(ii) of 
Rule 608 must be done by the Commission itself and not by staff via 
delegated authority.
    \87\ These are not new delegations of authority--they are 
currently encompassed by paragraph (a)(29) of Rule 30-3. The 
Commission is retaining these delegations of authority, and in light 
of the deletion of paragraph (a)(29) as discussed infra, the 
Commission has relocated them to and made them explicit in new 
paragraph (a)(85).
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    In addition, the Commission is rescinding the existing delegations 
of authority to the Division Director to approve proposed NMS plan 
amendments set forth in paragraphs (a)(27) and (29) of Rule 30-3 by 
deleting and reserving those paragraphs.\88\ Further, the Commission is 
deleting language from paragraph (a)(42) of Rule 30-3 that currently 
provides delegated authority to the Division Director to extend to 180 
days from the date of notice publication the Commission's time to 
consider a proposed NMS plan or plan amendment, as this 180-day 
extension has been replaced by the modified timeframes and extensions 
set forth in Rule 608(b) as amended.\89\
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    \88\ Paragraph (a)(27) of Rule 30-3 also currently contains a 
delegation of authority to grant exemptions pursuant to Rule 601 
that is now obsolete and being deleted.
    \89\ Paragraph (a)(42) of Rule 30-3 also currently delegates 
authority to the Division Director to grant or deny exemptions from 
Rule 608, and that delegation is being retained.
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4. Administrative Matters Common to Amendments to Rules of Practice and 
Delegations of Authority
    The Commission finds, in accordance with the APA,\90\ that the 
amendments to Rules of Practice 700 and 701 and to the Commission's 
delegations of authority in Rule 30-3 relate solely to agency 
organization, procedures or practices. Accordingly, these rule 
amendments are not subject to the provisions of the APA requiring 
notice, opportunity for public comment, and publication. The Regulatory 
Flexibility Act,\91\ therefore, does not apply. Similarly, because 
these rules relate to ``agency organization, procedure or practice that 
does not substantially affect the rights or obligations of non-agency 
parties,'' analysis of major status under the Small Business Regulatory 
Enforcement Fairness Act is not required.\92\ The rule amendments also 
do not contain any new collection of information requirements as 
defined by the Paperwork Reduction Act of 1995, as amended 
(``PRA'').\93\ Rather, the amendments to Rules 700 and 701 govern 
procedures for conducting proceedings that are instituted for a 
proposed NMS plan or plan amendment, and the amendments to Rule 30-3 
govern internal Commission procedures regarding whether Commission 
staff has the authority to act on behalf of the Commission with respect 
to proposed NMS plans and plan amendments. The required scope of 
information that NMS plan participants must file is established in Rule 
608(a), other sections of Regulation NMS, and 17 CFR 240, subpart A, 
and it is not being amended. The rule amendments do not contain any 
additional collection of information requirements beyond what is 
already required.
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    \90\ 5 U.S.C. 553(b)(3)(A).
    \91\ 5 U.S.C. 601 et seq.
    \92\ 5 U.S.C. 804(3)(C).
    \93\ 44 U.S.C. 3501 et seq.
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III. Paperwork Reduction Act

    The Commission continues to believe that the rescission of the Fee 
Exception would not impose any new, or revise any existing, collection 
of information requirement as defined by the PRA.\94\ No commenter 
addressed whether or not the rescission of the Fee Exception would 
impose any new, or revise any existing, collection of information 
requirement as defined by the PRA. Further, the Commission believes 
that the amendments to Rule 608(a)(1) to require email filing for the 
estimated 13 annual filings is a non-material change to the current PRA 
estimate for Rule 608. Any future change in the estimated PRA burden 
will be reflected in the next three-year update. Further, the modified 
procedures for Commission action on proposed NMS plans and plan 
amendments under Rule 608(b)(1) and (2) also do not impose any new, or 
revise any existing, collection of information requirement as defined 
by the PRA.\95\ Accordingly, the Commission is not submitting this 
amendment to the Office of Management and Budget for review under the 
PRA.\96\
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    \94\ 44 U.S.C. 3501 et seq. See also Proposing Release, supra 
note 1, at 54800.
    \95\ As stated supra in Section II.B.4, the required scope of 
information that NMS plan participants must file is established in 
Rule 608(a), other sections of Regulation NMS, and 17 CFR 240, 
subpart A, and it is not being amended. The amendments to Rule 
608(b) do not contain any additional collection of information 
requirements beyond what is already required.
    \96\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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IV. Economic Analysis

A. Introduction

    Section 3(f) of the Exchange Act requires the Commission, whenever 
it engages in rulemaking and is required to consider or determine 
whether an action is necessary or appropriate in the public interest, 
to consider, in addition to the protection of investors, whether the 
action would promote efficiency, competition, and capital 
formation.\97\ In addition, Section 23(a)(2) of the Exchange Act 
requires the Commission, when making rules under the Exchange Act, to 
consider the impact such rules would have on competition.\98\ Exchange 
Act Section 23(a)(2) prohibits the Commission from adopting any rule 
that would impose a burden on competition not necessary or appropriate 
in furtherance of the purposes of the Exchange Act. The discussion 
below addresses the likely economic effects of the rule, including the 
likely effects of the rule on efficiency, competition, and capital 
formation.
---------------------------------------------------------------------------

    \97\ 15 U.S.C. 78c(f).
    \98\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    As discussed above, the Commission is adopting amendments that 
rescind the Fee Exception and subjects NMS

[[Page 65481]]

plan fee amendments to the standard procedure of Rule 608(b)(1) and 
(2), which requires public notice, an opportunity for public comment, 
and Commission action by order before a NMS plan fee amendment can 
become effective.\99\ The Commission is also amending Rule 608(a)(1) to 
require that proposed new NMS plans and plan amendments be filed with 
the Commission by email, instead of with the Office of the Secretary, 
typically using a paper-based filing process.\100\ Additionally, the 
amendments modify the procedures and timeframes set forth in Rule 
608(b)(1) and (2) for Commission publication of notice and subsequent 
Commission actions for proposed new NMS plans and proposed amendments 
to existing NMS plans.
---------------------------------------------------------------------------

    \99\ See supra Section II.A and Section II.B.1.
    \100\ See supra Section II.B.1.c.
---------------------------------------------------------------------------

    As discussed below, the Commission believes rescinding the Fee 
Exception will benefit market participants by eliminating a potential 
disincentive for persons to provide comments on NMS plan fee 
amendments, which could make additional information available that 
could help the Commission evaluate whether a NMS plan fee amendment 
complies with the Exchange Act. Even if rescinding the Fee Exception 
does not improve the robustness of the comment process, the Commission 
believes it will help protect market participants from having to pay 
fees that the Commission may later determine do not comply with the 
Exchange Act, since fees will not become effective unless approved by 
the Commission. Additionally, the Commission believes rescinding the 
Fee Exception will benefit SRO members and subscribers of SIP data by 
providing them with earlier notice and more time to plan and prepare 
before they are subject to a new or altered NMS plan fee. However, the 
Commission also believes that rescinding the Fee Exception will impose 
costs on SROs if the process delays the implementation of a NMS plan 
fee increase because SROs will no longer receive the incremental 
revenue they would have earned if NMS plan fee amendments were 
immediately effective. Similarly, there may be costs on SRO members and 
subscribers of SIP data if the process delays the implementation of a 
NMS plan fee decrease because they would no longer benefit from the 
incremental cost savings.
    Furthermore, the Commission believes that the modifications to the 
procedures and timeframes for Commission publication of notice and 
subsequent Commission actions for proposed new NMS plans and plan 
amendments will increase the transparency and improve the efficiency of 
the process for handling proposed new NMS plans and proposed amendments 
to existing NMS plans by decreasing the time it takes for them to be 
published in the Federal Register, as well as the average total time it 
takes for the Commission to act on them relative to the date they are 
initially filed.\101\ The Commission acknowledges that increasing the 
maximum timeframe for the Commission to act after publication in the 
Federal Register might have a negative impact on efficiency for some 
proposed new NMS plans or plan amendments, but does not believe that 
this effect will be significant.
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    \101\ The Commission estimates that the average total amount of 
time it takes the Commission to act on a proposed new NMS plan or 
plan amendment, relative to the time it is initially filed, may 
decrease. See infra note 203 and accompanying text. However, the 
Commission acknowledges that the total time it takes for the 
Commission to act on some individual proposed new NMS plans or plan 
amendments may increase.
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    The Commission is making changes to the economic analysis it made 
in the Proposing Release.\102\ These changes address the Commission's 
modifications to the procedures and timeframes for Commission 
publication and action for proposed new NMS plans and proposed 
amendments to existing NMS plans as well as comments related to the 
Commission's economic analysis in the Proposing Release.\103\
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    \102\ See Proposing Release, supra note 1, at 54800.
    \103\ See supra Section II.B.
---------------------------------------------------------------------------

    Wherever possible, the Commission has quantified the likely 
economic effects of the amendments. However, most of the costs, 
benefits, and other economic effects discussed are inherently difficult 
to quantify. Therefore, much of our discussion is qualitative in 
nature. Our inability to quantify certain costs, benefits, and effects 
does not imply that such costs, benefits, or effects are less 
significant.

B. Baseline

    The Commission has assessed the likely economic effects of the 
amendments, including benefits, costs, and effects on efficiency, 
competition, and capital formation, against a baseline that consists of 
the existing regulatory process for NMS plan fee amendments in 
practice, the existing procedure and timeframes for proposed new NMS 
plans and plan amendments that are filed under Rule 608(b)(1) and (2) 
and are not immediately effective upon filing, the regulatory 
procedures and timeframes for SRO rule filings that are not immediately 
effective under Section 19(b)(2) of the Exchange Act, the structure of 
the market for core data and aggregated market data products, and the 
structure of the market for trading services in NMS securities.
1. NMS Plan Fee Amendments
    There are currently a total of five NMS plans that either charge 
fees or could charge fees and have filed NMS plan fee amendments under 
the Fee Exception. These consist of the CAT Plan along with four NMS 
plans that govern the collection and dissemination of core data: The 
CTA Plan, the CQ Plan, the Nasdaq/UTP Plan, and the OPRA Plan.\104\
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    \104\ See Proposing Release, supra note 1, at 54795-96. On May 
6, 2020, the Commission issued an order directing the SROs to file a 
new, single NMS plan with a new governance structure that would 
govern the collection and dissemination of core data for NMS stocks 
(``New Consolidated Data Plan''). See Securities Exchange Act 
Release No. 88827 (May 6, 2020), 85 FR 28702 (May 13, 2020) 
(``Governance Order''). This would replace the three existing NMS 
plans that currently govern the collection and dissemination of core 
data for NMS stocks: The CTA Plan, the CQ Plan, and the NASDAQ/UTP 
Plan. The Governance Order states that the CTA Plan, the CQ Plan, 
and the Nasdaq/UTP Plan will continue to be responsible for the 
consolidation and dissemination of core data for NMS stocks and that 
the fees for core data will continue to be governed by the 
provisions of these plans, until the New Consolidated Data Plan is 
ready to assume responsibility for the dissemination of core data 
for NMS stocks and fees of the New Consolidated Data Plan have 
become effective.

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[[Page 65482]]

    The SROs approve all NMS plan fee amendments.\105\ This can create 
potential conflicts of interest for the SROs, because their duties 
administering NMS plans that either charge or could charge fees could 
potentially come into conflict with other products the SROs sell or 
costs they incur as part of their businesses.\106\ The exchange SROs 
have a potential conflict of interest with respect to the 
administration of the four NMS plans that set fees for core data 
because they vote to set SIPs' fees and also own and control the 
dissemination of all equity and option market data and also 
individually set the prices of some of the proprietary data products 
certain market participants may in some circumstances use as 
substitutes for SIP data.\107\ Additionally, the SROs have potential 
conflicts of interest with respect to allocating costs related to the 
CAT Plan because both SRO participants and Industry Members are 
responsible for paying fees related to the CAT Plan; however, the CAT 
Operating Committee, whose voting participants are all SROs, decides 
how these fees should be split.\108\
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    \105\ See Proposing Release, supra note 1, at 54796.
    \106\ See Proposing Release, supra note 1, at 54798-99 and infra 
Section IV.B.4. Some commenters agreed with this assessment. See 
Better Markets Letter at 1, 3-4; Bloomberg Letter at 2; CII Letter 
at 4; Clearpool Letter at 1; FIA Letter at 1-2; Fidelity Letter at 
2, 3; Healthy Markets Letter at 1, 5; ICI Letter at 3; RBC Capital 
Markets Letter at 2.
    \107\ See infra Section IV.B.4. Some commenters agreed that the 
exchange SROs have a potential conflict of interest with respect to 
the administration of the four NMS plans that set fees for core 
data. See Better Markets Letter at 1, 3-4; Bloomberg Letter at 2; 
Clearpool Letter at 1; Fidelity Letter at 3; Healthy Markets Letter 
at 1.
    \108\ See Proposing Release, supra note 1, at 54796. Two 
commenters agreed that the SROs have potential conflicts of interest 
with respect to allocating costs related to the CAT Plan. See FIA 
Letter at 1-2; Fidelity Letter at 3. One commenter stated that 
Industry Members under the CAT Plan have no alternative but to pay 
the required fees. See MFA Letter at 4.
---------------------------------------------------------------------------

    The Commission's notice and comment process is one of the only ways 
market participants have to express their views on NMS plan fee 
amendments.\109\ However, under the current process, market 
participants do not have the opportunity to comment before NMS plan fee 
amendments become effective.\110\
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    \109\ Industry members and other market participants also sit on 
the Advisory Committees to NMS plans and can express their views 
during Operating Committee meetings. However, they cannot vote on 
NMS plan fee amendments. See Proposing Release, supra note 1, at 
54796. Non-SRO members would serve as voting members on the 
Operating Committee of the New Consolidated Data Plan. See supra 
note 104. One commenter agreed that the comment process is one of 
the only ways market participants have to express their views on NMS 
plan fee amendments. See Clearpool Letter at 2.
    \110\ See Proposing Release, supra note 1, at 54798-99.
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    Because NMS plan fee amendments are effective upon filing, fees in 
connection with a NMS plan can be charged immediately upon filing with 
the Commission.\111\ In some cases, SRO members or subscribers to core 
data plans may not be given adequate time to plan for a new or altered 
fee before it is implemented.\112\ Some commenters agreed that market 
participants may not receive adequate notice about NMS plan fee 
increases before they are charged.\113\ Additionally, one commenter 
argued that NMS plan fee amendments being effective upon filing can 
lead to unclear rules that need clarification after the fact.\114\
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    \111\ SRO participants must post a proposed amendment to a NMS 
plan on their website no later than two business days after the 
filing of the proposed amendment with the Commission. See Rule 
608(a)(8)(ii).
    \112\ The Commission estimates the average and median time it 
takes NMS plans to begin charging new fees pursuant to NMS plan fee 
amendments are 66.3 days and 62.5 days, respectively, after filing 
with the Commission. See infra note 120 and accompanying text. 
However, a few NMS plan fee amendments give significantly less 
notice before beginning to charge new fees. See, e.g., Securities 
Exchange Act Release Nos. 69157 (Mar. 18, 2013), 78 FR 17946 (Mar. 
25, 2013) and 69361 (Apr. 10, 2013), 78 FR 22588 (Apr. 16, 2013). 
Comments submitted in response to NMS plan fee amendments and in 
connection with the Roundtable on Market Data and Market Access 
(``Roundtable'') that was hosted by SEC staff in October 2018 stated 
that in some instances market participants did not receive enough 
notice regarding NMS plan fee changes. See, e.g., Letter from Peter 
Moss, Managing Director, Trading, Financial and Risk, Thomson 
Reuters (May 7, 2013) at 1-2, available at https://www.sec.gov/comments/s7-24-89/s72489-34.pdf (``Moss Letter'') (commenting on the 
need to ``make necessary changes to billing systems and to notify 
clients of the changes''); Letter from Kimberly Unger, Esq., CEO and 
Executive Director, The Security Traders Association of New York, 
Inc., New York, New York (Apr. 10, 2013) at 2, available at https://www.sec.gov/comments/sr-ctacq-2013-01/ctacq201301-2.pdf (``Unger 
Letter''); Letter from Ira D. Hammerman, Senior Managing Director & 
General Counsel, SIFMA (Mar. 28, 2013) at 6-7, available at https://www.sec.gov/comments/s7-24-89/s72489-31.pdf (``Hammerman Letter'') 
(commenting on the need of ``professionals and their firms, as well 
as market data vendors, to alter their systems and business 
plans''); Letter from Marcy Pike, SVP, Enterprise Infrastructure, 
Krista Ryan, VP, Associate General Counsel, Fidelity Investments 
(Oct. 26, 2018) at 6, available at https://www.sec.gov/comments/4-729/4729-4566044-176136.pdf (``Fidelity Letter II'').
    \113\ See Bloomberg Letter at 3; Clearpool Letter at 2; Fidelity 
Letter at 4; Healthy Markets Letter at 10; RBC Capital Markets 
Letter at 4.
    \114\ See Bloomberg Letter at 7.
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    At any time within 60 days of the filing of a NMS plan fee 
amendment, the Commission may summarily abrogate the amendment and 
require that the amendment be re-filed pursuant to the standard 
procedure of Rule 608(b)(1) and (2).\115\ However, because NMS plan fee 
amendments are immediately effective-upon-filing, market participants 
can be charged a new or altered fee before comments can be submitted 
and before the Commission can evaluate whether to abrogate a NMS plan 
fee amendment.\116\
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    \115\ See Proposing Release, supra note 1, at 54796.
    \116\ The input of commenters is an important part of the 
Commission's review of NMS plan fee amendments, and the Commission 
generally does not abrogate a NMS plan fee amendment prior to 
reviewing the comments. See Proposing Release, supra note 1, at 
54798.
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    Table 1 shows information on the number of NMS plan fee amendments 
filed under Rule 608(b)(3)(i) since 2010 for each of the NMS plans that 
either charge fees or could charge fees.\117\ Since 2010, the 
Commission estimates an average of 3.8 NMS plan fee amendments have 
been filed each year. The Commission estimates the average and median 
time it takes the Commission to notice a NMS plan fee amendment on its 
website are 57.0 days and 25.5 days, respectively, from the time it is 
filed.\118\ The Commission estimates that the average and median time 
it takes to publish notice of a NMS plan fee amendment in the Federal 
Register are 62.9 days and 31.5 days, respectively.\119\ The Commission 
estimates the average and median time it takes a NMS plan to begin 
charging new fees pursuant to NMS plan fee

[[Page 65483]]

amendments are 66.3 days and 62.5 days, respectively, after filing with 
the Commission.\120\ Table 1 also contains information on how many of 
the NMS plan fee amendments were abrogated by the Commission or 
withdrawn by the NMS plan after receiving comments from market 
participants. For cases in which the Commission abrogates a NMS plan 
fee amendment, the Commission estimates the average and median time the 
NMS plan fee amendment is effective before the Commission abrogates the 
NMS plan fee amendment are 57.7 days and 57 days, respectively.\121\ No 
NMS plan fee amendments that have been abrogated by the Commission have 
been refiled under the standard procedure.\122\ For cases in which a 
NMS plan withdraws a NMS plan fee amendment, the Commission estimates 
the average and median time that the NMS plan fee amendment is 
effective before the NMS plan withdraws the filing are 47.3 days and 
46.5 days, respectively.\123\ The Commission estimates the average and 
median time it takes the Commission to notice the withdrawal of a NMS 
plan fee amendment are 40.0 days and 34 days, respectively.\124\ When a 
NMS plan refiles a withdrawn NMS plan fee amendment, it is refiled on 
an immediately effective basis. The Commission estimates the average 
and median time it takes a NMS plan to refile a withdrawn NMS plan fee 
amendment are 143.3 days and 175 days, respectively, from the time the 
initial NMS plan fee amendment was withdrawn.\125\
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    \117\ In the Proposing Release, the Commission stated that it 
preliminarily believes that the median value was the most 
appropriate measure to estimate times related to NMS plan fee 
amendments because the average was not an informative estimate for 
these measures since the sample size was small and contained extreme 
outliers. See Proposing Release, supra note 1, at 54801, n. 71. Two 
commenters stated that estimates based on median values may not be 
fully reflective of the anticipated times to process a NMS plan 
amendment under the Proposal because the estimate does not account 
for the cases where the Commission's processing of certain 
amendments had been significantly delayed. See Operating Committees 
Letter at 4; Nasdaq Letter at 3. The Commission agrees that the 
median value does not provide information on the times where the 
Commission's processing of certain NMS plan fee amendments have been 
significantly delayed. For completeness, the Commission is revising 
its analysis to present estimates of both the average and median 
times related to NMS plan fee amendments.
    \118\ Statistics on the number of days it takes the Commission 
to notice a NMS plan fee amendment and the number of days it takes 
the Commission to notice a withdrawn NMS plan fee amendment were 
determined from NMS plan fee filing amendments to the CAT Plan, the 
CTA Plan, the CQ Plan, the Nasdaq/UTP Plan, and the OPRA Plan filed 
under Rule 608(b)(3)(i) between 2014 and 2019. The Commission chose 
this five-year lookback time-period to calculate these measures 
because it reflects a current snapshot of the timeframes under which 
the Commission provides notices of NMS plan fee amendments and 
withdrawn NMS plan fee amendments. NMS plan amendments are available 
at https://www.sec.gov/rules/sro/nms.htm.
    \119\ See supra note 118.
    \120\ Statistics on the number of days it takes a NMS plan to 
begin charging a new fee are based on dates determined from NMS plan 
fee filing amendments to the CTA Plan, the CQ Plan, the Nasdaq/UTP 
Plan, and the OPRA Plan filed under Rule 608(b)(3)(i) between 2010 
and 2019. NMS plan fee amendments that contained policy changes and 
did not alter or impose a fee or fee cap were not included in this 
calculation. These statistics do not include NMS plan fee amendments 
to the CAT Plan. NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \121\ Statistics on the number of days it takes the Commission 
to abrogate a NMS plan fee filing were determined from NMS plan fee 
filing amendments to the CAT Plan, the CTA Plan, the CQ Plan, the 
Nasdaq/UTP Plan, and the OPRA Plan filed under Rule 608(b)(3)(i) 
between 2010 and 2019. NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \122\ See Proposing Release, supra note 1, at 54796.
    \123\ Statistics on the number of days it takes a NMS plan to 
withdraw a NMS plan fee amendment were determined from NMS plan fee 
filing amendments to the CAT Plan, the CTA Plan, the CQ Plan, the 
Nasdaq/UTP Plan, and the OPRA Plan filed under Rule 608(b)(3)(i) 
between 2010 and 2019. Note these statistics do not include the 
Twenty-fourth amendment to the CTA Plan and the Fifteenth amendment 
to the CQ Plan. See Securities Exchange Act Release No. 84194 (Sept. 
18, 2018), 83 FR 48356 (Sept. 24, 2018). These amendments withdraw 
fee changes from the Twenty-second amendment to the CTA Plan and the 
Thirteenth amendment to the CQ Plan, which was challenged by 
Bloomberg and stayed by the Commission on July 31, 2018. See In the 
Matter of the Application of Bloomberg L.P., Securities Exchange Act 
Release No. 83755 at 3 (July 31, 2018), available at https://www.sec.gov/litigation/opinions/2018/34-83755.pdf (``Bloomberg 
Order''). NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \124\ See supra note 118.
    \125\ Some refiled NMS plan fee amendments were modified but 
remained substantially similar to the withdrawn fee changes. See, 
e.g., Securities Exchange Act Release No. 82071 (Nov. 14, 2017), 82 
FR 55130 (Nov. 20, 2017). Other refiled NMS plan fee amendments were 
modified in response to comments. See, e.g., Securities Exchange Act 
Release No. 70953 (Nov. 27, 2013), 78 FR 72932 (Dec. 4, 2013).

                                                             Table 1--Information on NMS Plan Fee Amendments Under Rule 608(b)(3)(i)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number filed                              Number abrogated                            Number withdrawn
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                            Year                                          NASDAQ/                                     NASDAQ/                                     NASDAQ/
                                                                CTA/CQ      UTP        OPRA       CAT       CTA/CQ      UTP        OPRA       CAT       CTA/CQ      UTP        OPRA       CAT
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................          2          0          1  .........          0          0          0  .........          0          0          0  .........
2011........................................................          0          2          4  .........          0          0          0  .........          0          0          0  .........
2012........................................................          0          0          2  .........          0          0          0  .........          0          0          0  .........
2013........................................................          3          3          1  .........          0          0          0  .........          2          2          0  .........
2014........................................................          2          1          2  .........          0          0          0  .........          0          0          0  .........
2015........................................................          0          0          0  .........          0          0          0  .........          0          0          0  .........
2016........................................................          0          0          5          0          0          0          0          0          0          0          0          0
2017........................................................          2          1          2          1          0          0          0          1          2          0          0          0
2018........................................................          1          2          0          1          1          1          0          0          0          0          0          1
2019........................................................          0          0          0          0          0          0          0          0          0          0          0          0
                                                             -----------------------------------------------------------------------------------------------------------------------------------
    Total...................................................         10          9         17          2          1          1          0          1          4          2          0          1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
This table shows the number of NMS plan fee amendments filed under Rule 608(b)(3)(i) of Regulation NMS, the number of NMS plan fee amendments that were abrogated by the Commission, and the
  number of NMS plan fee amendments that were withdrawn by the NMS plan each year from 2010-2019 for the following NMS plans: The CTA and CQ Plans, the NASDAQ/UTP Plan, the OPRA Plan, and the
  CAT Plan. NMS plan fee amendments to the CTA and CQ Plans are included in one category because fee changes to both NMS plans are included in the same filing. Source: This table was compiled
  from NMS plan rule filings available at https://www.sec.gov/rules/sro/nms.htm.

    Since 2010, the four NMS plans that govern core data have filed a 
total of 36 NMS plan fee amendments under Rule 608(b)(3)(i). Two of 
these filings were abrogated by the Commission and six were withdrawn 
by the SRO participants.
    Since 2017, the CAT Plan has filed two NMS plan fee amendments 
under Rule 608(b)(3)(i) to establish the allocation of funding for the 
CAT. One of these fee filings was abrogated by the Commission and one 
was withdrawn by the SRO participants.
2. Procedures and Timeframes for NMS Plans and NMS Plan Amendments 
Filed Under Rule 608(b)(1) and (2)
    As discussed in detail above, the Commission has modified the 
procedures and timeframes under Rule 608(b)(1) and (2) for Commission 
actions on proposed new NMS plans and proposed amendments to existing 
NMS plans.\126\ As a result of this change, the Commission has updated 
its economic baseline to discuss and provide statistics on the 
timeframes for Commission actions for proposed new NMS plans and plan 
amendments that are not immediately effective upon filing and filed 
under the existing procedures of Rule 608(b)(1) and (2).
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    \126\ See supra Section II.B.1.
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    SROs, as plan participants, file proposed new NMS plans and 
proposed amendments to NMS plans, including NMS plan fee amendments, 
with the Secretary of the Commission, typically using a paper-based 
filing process.\127\ As discussed in detail in the Electronic 19b-4 
Adopting Release, the Commission believes that paper-based filing 
process can be less efficient and more costly than electronic 
filing.\128\ For example, a paper-based filing requires

[[Page 65484]]

filers to devote time and incur costs related to printing, copying, and 
mailing filed materials.
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    \127\ See supra Section II.B.1.c.
    \128\ See Securities Exchange Act Release No. 50486 (Oct. 4, 
2004), 69 FR 60287, 60297 (Oct. 8, 2004) (File No. S7-18-04) 
(``Electronic 19b-4 Adopting Release'').
---------------------------------------------------------------------------

    Rule 608(b)(1) requires the Commission to publish notice of the 
filing of any NMS plan, or any proposed amendment to any effective NMS 
plan, and provide interested persons an opportunity to submit written 
comments.\129\ However, it does not specify a timeframe in which the 
Commission is required to publish notice of the filing.\130\ The 
Commission estimates that the average and median time it takes to 
publish notice of proposed NMS plan amendments in the Federal Register 
that are filed under Rule 608(b)(1) and are not immediately effective 
are 65.5 days and 38 days, respectively.\131\ The Commission estimates 
that the average and median time it takes to publish notice of proposed 
new NMS plans in the Federal Register are 163.8 days and 76.5 days, 
respectively. However, the Commission acknowledges that it can take 
significantly longer to publish notice of some proposed new NMS plans 
and plan amendments.\132\
---------------------------------------------------------------------------

    \129\ Rule 608(b)(1) also states that no NMS plan, or NMS plan 
amendment, shall become effective unless approved by the Commission. 
See Rule 608(b)(1). An exception currently exists under Rule 
608(b)(3) for NMS plan fee amendments and other types of NMS plan 
amendments that are immediately effective upon filing with the 
Commission. See Proposing Release, supra note 1, at 54796.
    \130\ See supra Section II.B.1.
    \131\ Statistics on the number of days it takes to publish 
notice of proposed new NMS plans and plan amendments in the Federal 
Register that are not immediately effective and filed under Rule 
608(b)(1) are based on proposed new NMS plans and proposed 
amendments to effective NMS plans filed between 2010 and 2020. NMS 
plans and NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \132\ See, e.g., Securities Exchange Act Release Nos. 72820 
(Aug. 12, 2014), 79 FR 48779 (Aug. 18, 2014) and 77123 (Feb. 11, 
2016), 81 FR 8264 (Feb. 18, 2016), which took 301 days and 178, 
respectively, to be published in the Federal Register.
---------------------------------------------------------------------------

    Rule 608(b)(2) specifies a 120 day timeframe from the date of 
publication of notice in the Federal Register for the Commission to 
approve a proposed new NMS plan or plan amendment.\133\ The Commission 
may extend this timeframe an additional 60 days, up to 180 days from 
the date of publication, if it finds such a longer review period to be 
appropriate and publishes its reasons for so finding, or if the 
sponsors of the proposal consent to a longer review period. The 
Commission estimates that the average and median time it takes to 
approve proposed NMS plan amendments that are not immediately effective 
are 62.0 days and 44.5 days, respectively, from the date of their 
publication in the Federal Register.\134\ The average and median time 
it takes to approve proposed new NMS plans are 204.8 days and 181 days, 
respectively, from the date of their publication in the Federal 
Register.\135\ The Commission estimates that 95 percent of proposed NMS 
plan amendments and 25 percent of proposed new NMS plans were approved 
within 120 days of being published in the Federal Register. The 
Commission estimates that the average and median total time it takes to 
approve proposed NMS plan amendments that are not immediately effective 
are 127.6 days and 86 days, respectively, from the date they are filed 
with the Commission. The average and median total time it takes to 
approve proposed new NMS plans are 368.5 days and 338 days, 
respectively, from the date they are filed with the Commission.
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    \133\ See Rule 608(b)(2).
    \134\ Statistics on the number of days it takes the Commission 
to approve proposed new NMS plans and plan amendments that are not 
immediately effective under Rule 608(b)(2) are based on proposed new 
NMS plans and proposed amendments to effective NMS plans filed 
between 2010 and 2020. NMS plans and NMS plan amendments are 
available at https://www.sec.gov/rules/sro/nms.htm.
    \135\ Extensions of time agreed to by plan participants caused 
average and median times for Commission approval of proposed new NMS 
plans to be greater than 180 days. See, e.g., Securities Exchange 
Act Release No. 67091 (May 31, 2012), 77 FR 33498 (June 6, 2012).
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3. Procedures and Timeframes for SRO Rule Changes Filed Under Section 
19(b)(2)
    As discussed in detail above, the Commission has modified Rule 
608(b) to include procedures for all Commission actions on proposed new 
NMS plans and proposed amendments to existing NMS plans that are 
patterned on Section 19(b), with some modifications of the Section 
19(b) timeframes that the Commission believes are appropriate in light 
of differences between SRO rule filings and proposed NMS plans and plan 
amendments.\136\ As a result of this change, the Commission has updated 
its economic baseline to discuss the procedures and provide statistics 
on the timeframes for Commission actions for SRO rule changes that are 
not immediately effective upon filing and are filed under Section 
19(b)(2) of the Exchange Act.\137\
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    \136\ See supra Section II.B.1.
    \137\ Section 19(b)(2) sets forth the procedures and timeframes 
for Commission action for most SRO rule changes, unless they: (i) 
Constitute a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule 
of the SRO; (ii) establish or changing a due, fee, or other charge 
imposed by the SRO; or (iii) are concerned solely with the 
administration of the SRO. Under Section 19(b)(3), these changes are 
immediately effective upon filing. However, the Commission may 
suspend one of these SRO rule changes within 60 days of the date the 
SRO rule change is filed with the Commission, if it appears to the 
Commission that such action is necessary or appropriate in the 
public interest, for the protection of investors, or the maintenance 
of fair and orderly markets, to remove impediments to, and perfect 
the mechanisms of, a national market system, or otherwise in 
furtherance of the purposes of the Exchange Act. If the Commission 
does suspend a SRO rule change, then it shall institute proceedings 
under Section 19(b)(2)(B) to determine whether the proposed SRO rule 
change should be approved or disapproved. See 15 U.S.C. 78s(b)(2) 
and 15 U.S.C. 78s(b)(3).
---------------------------------------------------------------------------

    Rule 19b-4(b)(1) mandates that SROs electronically file proposed 
changes to SRO rules with the Commission on Form 19b-4.\138\ The 
Commission believes that electronically filing SRO rule changes is more 
efficient and less costly than a paper-based filing process.\139\
---------------------------------------------------------------------------

    \138\ See 17 CFR 240.19b-4.
    \139\ See supra note 128.
---------------------------------------------------------------------------

    Section 19(b)(2) mandates specific timeframes for the Commission to 
notice and approve or disapprove SRO proposed rule changes that are not 
immediately effective upon filing.\140\ If a SRO files a proposed rule 
change with the Commission and publishes a notice of the filing of the 
proposed rule change, together with the substantive terms of the 
proposed rule change, on a publicly accessible website, then Section 
19(b)(2) requires the Commission to send notice of the SRO proposed 
rule change to the Federal Register for publication within 15 days of 
the notice being published on the website.\141\ The Commission is 
required to approve, disapprove, or institute proceeding to determine 
if the SRO proposed rule change should be disapproved within 45 days of 
the date of publication in the Federal Register.\142\ If the Commission 
institutes proceedings, then it must provide the SRO that filed the 
proposed rule change notice of the grounds for disapproval under 
consideration and an opportunity for hearing, which must be concluded 
not later than 180 days after the date of publication. If the 
Commission institutes proceedings, then it must issue an order 
approving or disapproving the proposed rule change no later than 180 
days after the date of

[[Page 65485]]

publication in the Federal Register.\143\ If the Commission fails to 
institute or conclude proceedings within the specified time period, 
then the SRO proposed rule change shall be deemed to have been approved 
by the Commission.
---------------------------------------------------------------------------

    \140\ The timeframes discussed in Section 19(b)(2) do not apply 
to SRO fee changes, which are immediately effective upon filing. See 
supra note 137.
    \141\ If the Commission fails to send notice of the SRO proposed 
rule change to the Federal Register within 15 days, then the date of 
publication is deemed to be the date on which the website 
publication was made.
    \142\ The Commission may extend its review period another 45 
days if it determines that a longer period is appropriate and 
publishes the reasons for such determination; or if the SRO that 
filed the proposed rule change consents to the longer period.
    \143\ The Commission may extend the proceedings another 60 days 
if it determines that a longer period is appropriate and publishes 
the reasons for such determination; or if the SRO that filed the 
proposed rule change consents to the longer period.
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(10)(B), a SRO proposed rule change has 
not been received by the Commission if the Commission notifies the SRO 
within seven business days after the date of receipt that such proposed 
rule change does not comply with the Commission's rules relating to the 
required form of a proposed rule change.\144\
---------------------------------------------------------------------------

    \144\ The Commission can extend the deadline for the time period 
it can reject the filing of a SRO proposed rule change to 21 days 
after the date of receipt if the Commission determines that the 
proposed rule change is unusually lengthy and is complex or raises 
novel regulatory issues and the Commission informs the SRO that 
filed the proposed rule change of such determination not later than 
seven business days after the date of receipt. See 15 U.S.C. 
78s(b)(10)(B).
---------------------------------------------------------------------------

    The Commission estimated average and median timeframes for 
Commission actions for SRO proposed rule changes that were not 
immediately effective upon filing and filed under Section 
19(b)(2).\145\ The average and median time it takes the Commission to 
send notice of a SRO proposed rule change to the Federal Register are 
10.6 days and 12 days, respectively.\146\ The average and median time 
it takes the Commission to publish a SRO proposed rule change in the 
Federal Register are 16.5 days and 17 days, respectively. The average 
and median time it takes the Commission to approve or disapprove a SRO 
proposed rule change after it was published in the Federal Register are 
69.7 days and 44 days, respectively.\147\ The Commission estimates that 
60.8 percent of SRO proposed rule changes were either approved or 
disapproved by the Commission within a 45 day time period of being 
published in the Federal Register, 27.7 percent were either approved or 
disapproved within a 45 to 90 day time period, 3.1 percent within a 90 
to 180 day time period, and 8.5 percent within a 180 to 240 day time 
period.\148\ If the Commission extends its review for a SRO proposed 
rule change beyond the initial 45 day period,\149\ the average and 
median time it takes the Commission to approve or disapprove the SRO 
proposed rule change are 119.5 days and 89 days, respectively, from the 
time it was published in the Federal Register.
---------------------------------------------------------------------------

    \145\ The sample the Commission examined consisted of 1,016 SRO 
proposed rule changes filed under Section 19(b)(2) of the Exchange 
Act in which the Commission issued an order either approving or 
disapproving the proposed rule change between 2015 and 2019. The 
sample does not include SRO fee changes, which are immediately 
effective upon filing under Section 19(b)(3). See supra note 137.
    \146\ See supra note 141 and accompanying text.
    \147\ The Commission estimates that 98.2 percent of SRO proposed 
rule changes were approved by the Commission and 1.8 percent were 
disapproved. The average and median time it took the Commission to 
complete its review of a SRO proposed rule change that was approved 
were 66.8 days and 44 days, respectively, after it was published in 
the Federal Register. The average and median time it took the 
Commission to complete its review of a SRO proposed rule change that 
was disapproved were 232.8 days and 239 days, respectively, after it 
was published in the Federal Register.
    \148\ See supra notes 142 and 143 and accompanying text.
    \149\ See supra note 142.
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4. Market for Core and Aggregated Market Data Products
    Under the CTA Plan, the CQ Plan, the Nasdaq/UTP Plan, and the OPRA 
Plan, core data is collected, consolidated, processed, and disseminated 
by the SIPs.\150\ NMS plan operating committees, which are composed of 
the SROs, set the fees the SIPs charge for core data.\151\ Any revenue 
earned by the SIPs, after deducting costs, is split among the 
SROs.\152\ The total revenues generated by fees charged by the core 
data plans totaled more than $500 million in 2018.\153\ Fees for core 
data are paid by a wide range of market participants, including 
investors, broker-dealers, data vendors, and others.\154\ One 
Roundtable commenter submitted an analysis that showed SIP data fees 
went up by five percent between 2010 and 2018.\155\
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    \150\ See Proposing Release, supra note 1, at 54795.
    \151\ See Proposing Release, supra note 1, at 54796.
    \152\ FINRA rebates a portion of the SIP revenue it receives 
back to its members. See FINRA Rule 7610B, available at https://www.finra.org/rules-guidance/rulebooks/finra-rules/7610b.
    One Roundtable commenter estimated that from 2013 to 2017, 
through the Nasdaq/UTP plan, the FINRA/Nasdaq TRF gave 83 percent of 
SIP revenue it received to broker-dealers. See Letter from Thomas 
Wittman, Executive Vice President, Head of Global Trading and Market 
Services and CEO, Nasdaq Stock Exchange (Oct. 25, 2018) at 19, 
available at https://www.sec.gov/comments/4-729/4729-4562784-176135.pdf.
    \153\ See supra note 7. A number of commenters agreed that 
revenues generated from core data fees are substantial. See, e.g., 
Better Markets Letter at 1, 3; Clearpool Letter at 1; Fidelity 
Letter at 2; MFA Letter at 2; RBC Capital Markets Letter at 3; SIFMA 
Letter at 1.
    \154\ A number of commenters agreed that fees for core data are 
paid by a wide range of market participants. See, e.g., CII Letter 
at 2; ICI Letter at 1; Bloomberg Letter at 2. Three commenters also 
stated that broker-dealers and funds ultimately pass these fees on 
to investors. See Better Markets Letter at 3; Bloomberg Letter at 2; 
CII Letter at 2.
    \155\ The commenter's analysis examined changes in the fees that 
some broker-dealers paid for CTA data between 2010 and 2018. The 
analysis also found that the change in the total amount each broker-
dealer spent on CTA data varied based on the type of broker-dealer. 
They found that the average amount of money spent on CTA data by 
retail broker-dealers declined by four percent between 2010 and 
2017, but the average amount spent by institutional broker-dealers 
increased by seven percent. See Letter from Melissa MacGregor, 
Managing Director and Associate General Counsel and Theodore R. 
Lazo, Managing Director and Associate General Counsel, SIFMA (Oct. 
24, 2018) at 21-28, available at https://www.sec.gov/comments/4-729/4729-4559181-176197.pdf.
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    The Commission believes that the SIPs have significant market power 
in the market for core and aggregated market data products and are 
monopolistic providers of certain information,\156\ which means that 
for all such products they would have the market power to charge 
supracompetitive prices.\157\ One reason the SIPs have significant 
market power is that, although some market data products are comparable 
to SIP data and could be used by some core data subscribers as 
substitutes for SIP data in certain situations, these products are not 
perfect substitutes and are not viable substitutes across all use 
cases.\158\ For example, in the equity markets, some market data 
aggregators buy direct depth of book feeds from the exchanges and 
aggregate them to produce products similar to the equity market 
SIPs.\159\ However, these products do not provide market information 
that is critical to some subscribers and only available through the 
SIPs, such as LULD plan price bands and administrative messages.\160\ 
Additionally, some SROs

[[Page 65486]]

offer top of book data feeds, which may be considered by some to be 
viable substitutes for SIP data for certain applications.\161\ However, 
in the equity markets, broker-dealers typically rely on the SIP data to 
fulfill their obligations under Rule 603 of Regulation NMS, i.e., the 
``Vendor Display Rule,'' which requires a broker-dealer to show a 
consolidated display of market data in a context in which a trading or 
order routing decision can be implemented.\162\
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    \156\ See Proposing Release, supra note 1, at 54799. See also 
infra note 160.
    \157\ Some commenters agreed that the core data plans are 
monopolistic providers of market-wide services and market 
competition cannot be relied upon to set competitive prices. See 
Better Markets Letter at 3; Bloomberg Letter at 2, 5; CII Letter at 
2-3, 4-5; Clearpool Letter at 3; Fidelity Letter at 3, 4; MFA Letter 
at 3; RBC Capital Markets Letter at 2. One of these commenters 
stated that ``exchanges generate revenue from the SIP plans, plus 
additional (unshared) revenue from their proprietary data fees, they 
have no incentive whatsoever to cannibalize their own revenue 
streams by positioning them as more competitively priced 
alternatives to core data.'' See Bloomberg Letter at 2 and n. 4.
    \158\ Some commenters stated that proprietary data products sold 
by some SROs do not represent viable, competitively priced 
alternatives to the core data distributed by the NMS plan 
processors. See Bloomberg Letter at 2, n. 4; Clearpool Letter at 3; 
CII Letter at 4-5; Healthy Markets Letter at 11.
    \159\ The feeds produced by market data aggregators offer 
additional features, such as lower latency, but usually cost more 
than SIP data. See Equity Market Structure Roundtables: Roundtable 
on Market Data and Market Access October 25, 2018 Transcript, 
available at https://www.sec.gov/spotlight/equity-market-structure-roundtables/roundtable-market-data-market-access-102518-transcript.pdf (``Oct. 25 Tr.''), at 126:20-129:8 (statement of Mr. 
Skalabrin).
    \160\ See Proposing Release, supra note 1, at 54799. Three 
commenters agreed that certain regulatory information, such as LULD 
price bands, is only available through the SIPs. See Better Markets 
Letter at 3; Bloomberg Letter at 5; ICI Letter at 1. One commenter 
stated that broker-dealers need access to core data to meet their 
regulatory obligations including but not limited to receipt of LULD 
plan price bands and information relating to regulatory halts and 
market-wide circuit breakers. See Fidelity Letter at 2 and n. 3.
    \161\ See Proposing Release, supra note 1, at 54802.
    \162\ See Proposing Release, supra note 1, at 54799. Two 
commenters agreed that broker-dealers typically use core data to 
meet their regulatory obligations under the Vendor Display Rule. See 
Bloomberg Letter at 3; Fidelity Letter at 2. Some commenters stated 
that broker-dealers need access to core data to meet their 
regulatory obligations. See Better Markets Letter at 2-3; Bloomberg 
Letter at 2-3, 5; Clearpool Letter at 1, 3; FIA Principal Traders 
Letter at 1; Fidelity Letter at 2 and n. 3; ICI Letter at 1, 2; 
SIFMA Letter at 1-2.
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    The purchase of SIP data or proprietary market data from all 
exchanges, either directly or indirectly, is necessary for all market 
participants executing orders in NMS securities.\163\ SROs have 
significant influence over the prices of most market data 
products.\164\ For example, the exchanges individually set the pricing 
of the depth of book data that they sell to market data aggregators and 
broker-dealers that self-aggregate who in turn generate consolidated 
data. At the same time, SROs collectively, as participants in the 
national market system plans, decide what fees to set for SIP 
data.\165\ Although market data aggregators might compete with the SIPs 
by offering products that provide core data for the equity markets, 
they ultimately derive their data from the exchanges' direct 
proprietary data feeds, whose prices are set by the exchanges, a subset 
of SROs.\166\
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    \163\ For example, Rule 611(a) of Regulation NMS requires 
trading centers to establish policies and procedures to prevent 
trade-throughs. In order to prevent trade-throughs, executing 
broker-dealers need to be able to view the protected quotes on all 
exchanges. They can fulfill this requirement by using SIP data, 
proprietary data feeds offered by the SROs, or a combination of 
both.
    \164\ Two commenters agreed that SROs have significant influence 
over the prices of market data. See CII Letter at 2, 3, 4-5; 
Clearpool Letter at 3.
    \165\ Currently, the Commission can abrogate NMS plan fee 
amendments for core data. See Rule 608(b)(3)(iii); see also 
Proposing Release, supra note 1, at 54796. The Commission can also 
suspend SRO fee changes filed under Section 19(b)(3). See 15 U.S.C. 
78s(b)(3); see also supra note 137.
    \166\ Pursuant to Section 19(b) of the Exchange Act and Rule 
19b-4 thereunder, SROs must file with the Commission proposed rules, 
in which they set prices for their direct feed data. Those prices 
can vary depending on the type of end user.
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5. Current Structure of the Market for Trading Services in NMS 
Securities
    The Commission described the structure of the market for trading in 
NMS securities, as of that time, in the Notice and the CAT Plan 
Approval Order.\167\ While the Commission's analysis of the state of 
competition in the Notice is fundamentally unchanged, the market for 
trading services in options and equities currently consists of 24 
national securities exchanges, all of which are participants to NMS 
plans, as well as off-exchange trading venues including broker-dealer 
internalizers and 34 NMS Stock ATSs,\168\ which are not participants in 
NMS plans.\169\ The 24 exchanges are currently controlled by eight 
separate entities; four of which each operate a single exchange.\170\
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    \167\ See Securities Exchange Act Release No. 77724 (Apr. 27, 
2016), 81 FR 30614 (May 17, 2016) (File No. 4-698) (``Notice''), 
Section IV.G.1.a; and Securities Act Release No. 79318 (Nov. 15, 
2016), 81 FR 84696 (Nov. 23, 2016) (``CAT Plan Approval Order''), 
Section V.G.1.
    \168\ As of July 13, 2020, 34 NMS Stock ATSs are operating 
pursuant to an initial Form ATS-N. A list of NMS Stock ATSs, 
including access to initial Form ATS-N filings that are effective, 
can be found at https://www.sec.gov/divisions/marketreg/form-ats-n-filings.htm.
    \169\ Members from some ATSs or broker-dealer internalizers may 
serve on the Advisory Committees of some NMS plans, but they would 
not be able to vote on NMS plan amendments. See supra note 109. Non-
SRO members would serve as voting members on the Operating Committee 
of the New Consolidated Data Plan. See supra note 104.
    \170\ Cboe Global Markets, Inc., controls Cboe Exchange, Inc., 
Cboe C2 Exchange, Inc., Cboe BZX Exchange, Inc., Cboe BYX Exchange, 
Inc., Cboe EDGA Exchange, Inc., and Cboe EDGA Exchange, Inc.; Miami 
International Holdings, Inc. controls Miami International Securities 
Exchange LLC, MIAX Emerald, LLC, and MIAX PEARL, LLC; Nasdaq, Inc. 
controls Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq 
MRX, LLC, Nasdaq PHLX, LLC, and The Nasdaq Stock Market LLC; 
Intercontinental Exchange, Inc. controls New York Stock Exchange, 
LLC, NYSE Arca, Inc., NYSE American LLC, NYSE Chicago, Inc., and 
NYSE National, Inc. The three entities that control a single-
exchange are IEX Group, Inc., which controls Investors' Exchange 
LLC; BOX Holdings Group LLC, which controls BOX Exchange LLC; LTSE 
Group, Inc., which controls Long-Term Stock Exchange, Inc.; and MEMX 
Holdings LLC, which controls MEMX, LLC.
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    Broker-dealer internalizers and ATSs subscribe to SIP data as well 
as other proprietary data products offered by the exchanges, but also 
compete with them for order flow in NMS securities.\171\ Additionally, 
FINRA rebates a portion of the SIP revenue it receives back to broker-
dealer internalizers and ATSs based on the trade volume they 
report.\172\ The CAT NMS Plan Approval Order discusses how the CAT 
funding model and the allocation of fees between SRO participants and 
Industry Members could affect competition in the market for trading 
services in options and equities.\173\
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    \171\ See supra Section IV.B.4. One commenter agreed that for-
profit SROs set the price for core data that broker-dealers have a 
regulatory obligation to purchase and SROs also compete directly 
with their broker-dealer customers for order flow. See Fidelity 
Letter at 3.
    \172\ See supra note 152.
    \173\ See CAT Plan Approval Order, supra note 167, at 84882-84. 
One commenter agreed that SROs compete with broker-dealers and are 
also charged with allocating costs between SROs and Industry Members 
for the CAT, in which broker-dealers are required to participate by 
regulation. See Fidelity Letter at 3.
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C. Economic Effects

    In the Proposing Release the Commission stated that, overall, it 
believed the rescission of the Fee Exception would not have significant 
economic effects for the following reasons: (1) On average, there are 
very few proposed NMS plan fee changes each year, which the Commission 
expects to continue to be the case; (2) the existing filing procedure 
already allows for Commission abrogation of NMS plan fee amendments 
that do not comply with the Exchange Act, therefore the impact of the 
proposed amendments on the fees paid by market participants would have 
largely been restricted to the two to six month Commission review 
period, because a fee change that is effective under the current 
procedure would not be effective under the proposed amendments unless 
it was approved by the Commission; (3) the SIPs have significant market 
power in the market for core and aggregated market data products and 
are monopolistic providers of certain information, so the proposed 
amendments would have had a minimal effect on the SIPs' pricing models; 
and (4) the proposed amendments were a procedural change and would not 
have affected the contents of the SIP data or comparable products.\174\
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    \174\ See Proposing Release, supra note 1, at 54803.
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    Several commenters suggested the proposed amendments could have 
additional economic effects beyond the ones the Commission discussed in 
the Proposing Release.\175\ The Commission has modified its analysis of 
the economic effects of the adopted amendments to address these 
comments as well as to address Commission modifications to the 
procedures and timeframes for Commission publication of notice and 
subsequent Commission actions for proposed new NMS plans and plan 
amendments that are not immediately effective upon filing.\176\
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    \175\ See, e.g., Better Markets Letter at 3; Bloomberg Letter at 
2, 6; CII Letter at 2-3.
    \176\ See supra Section II.B.

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[[Page 65487]]

    While the Commission continues to believe the proposed amendments 
would not have significant economic effects for the reasons discussed 
above, the Commission believes that the economic benefits from the 
adopted amendments will be more significant than those discussed in the 
Proposing Release.\177\ After considering input from commenters,\178\ 
the Commission now believes that the benefits of rescinding the Fee 
Exception will no longer be restricted to the Commission review period, 
during which a fee change is effective under the current procedure, but 
will not be effective under the adopted amendments. Instead, the 
Commission believes that the benefits will be greater because the 
Commission believes that rescinding the Fee Exception will eliminate a 
potential disincentive for persons to provide comments on NMS plan fee 
amendments, which could make additional information available that 
could help the Commission evaluate if NMS plan fee amendments comply 
with the Exchange Act. Additionally, the Commission believes that the 
modifications to Rule 608(b) will increase the transparency and improve 
the efficiency of the process for handling new NMS plans and proposed 
amendments to existing NMS plans (including fee amendments).
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    \177\ See Proposing Release, supra note 1, at 54803.
    \178\ See infra note 183.
---------------------------------------------------------------------------

    Below, the Commission analyzes the economic effects of the 
amendments, including the benefits, costs, and effects on efficiency, 
competition, and capital formation in more detail.
1. Benefits
    The Commission believes that rescinding the Fee Exception will 
provide a number of benefits, including, among other things: 
Eliminating a potential disincentive for persons to provide comments on 
NMS plan fee amendments, which could make additional information 
available that could help the Commission evaluate whether a NMS plan 
fee amendment complies with the Exchange Act; helping protect market 
participants from having to pay fees that the Commission may later 
determine do not comply with the Exchange Act; and providing SRO 
members and subscribers of SIP data with earlier notice and more time 
to plan and prepare before they are subject to a new or altered NMS 
plan fee. Additionally, the Commission believes the modifications to 
Rule 608(b) will increase the transparency and improve the efficiency 
of the process for handling proposed new NMS plans and plan amendments.
a. Rescission of the Fee Exception
    In response to commenters, the Commission has updated its analysis 
and now believes that rescinding the Fee Exception will benefit market 
participants by eliminating a potential disincentive for persons to 
provide comments on NMS plan fee amendments. To the extent there is 
additional public comment, this could, in turn, enhance regulatory 
efficiency if it provides additional information that assists the 
Commission in evaluating whether some NMS plan fee amendments comply 
with the Exchange Act.
    As discussed above, some commenters stated that the Fee Exception 
discourages market participants from commenting on NMS plan fee 
amendments.\179\ Some commenters stated this lack of public comment has 
made it difficult for the Commission to evaluate if NMS plan fee 
amendments comply with the Exchange Act and Commission Rules.\180\ The 
Commission acknowledges it is possible that the Fee Exception may 
discourage market participants from commenting on NMS plan fee 
amendments.
---------------------------------------------------------------------------

    \179\ See supra note 14.
    \180\ See supra note 13.
---------------------------------------------------------------------------

    Two commenters stated that allowing an opportunity, before NMS plan 
fee amendments could become effective, for public comment and 
Commission approval by order would encourage market participants to 
comment on NMS plan fee amendments.\181\ One commenter stated that this 
would provide the Commission with more information at an earlier point 
in the agency decision-making process.\182\ Several commenters stated 
that the amendments would assist in the Commission's assessment of 
whether a NMS plan fee amendment meets the requirements of the Exchange 
Act before they go into effect.\183\ The Commission believes, to the 
extent that rescinding the Fee Exception encourages more market 
participants to comment, it may provide the Commission with more 
information at an earlier stage in its decision-making process about 
the impact of a NMS plan fee amendment on market participants before 
the fee goes into effect. This additional information could help the 
Commission evaluate if a NMS plan fee amendment complies with the 
Exchange Act, which could enhance regulatory efficiency.
---------------------------------------------------------------------------

    \181\ See Better Markets Letter at 3; MFA Letter at 3.
    \182\ See Bloomberg Letter at 5.
    \183\ See Better Markets Letter at 3; Bloomberg Letter at 2, 6; 
CII Letter at 2-3; Clearpool Letter at 3; Fidelity Letter at 3; ICI 
Letter at 2; MFA Letter at 1, 3; RBC Capital Markets Letter at 2-3, 
4; SIFMA Letter at 1.
---------------------------------------------------------------------------

    If rescinding the Fee Exception helps the Commission evaluate 
whether NMS plan fee amendments comply with the Exchange Act, then it 
might affect the fees charged by NMS plans. One commenter stated that 
the Proposal is unlikely to have a significant immediate effect on the 
cost of core data, since the Proposal does not decrease, or otherwise 
amend, any particular fee currently in existence.\184\ This commenter 
also stated that over time the Proposal should result in simpler, 
clearer, and more reasonably priced fees.\185\ The Commission agrees 
with this commenter and believes that rescinding the Fee Exception may 
not have a significant immediate impact on the price of core data or 
other fees charged by NMS plans, but over a longer time period 
rescinding the Fee Exception could have a limited effect on the fees 
charged by NMS plans if it helps the Commission evaluate whether NMS 
plan fee amendments comply with the Exchange Act. However, the 
Commission is unable to estimate the long-term effects rescinding the 
Fee Exception will have on fees charged by NMS plans, because it would 
depend on the nature of future NMS plan fee amendments.
---------------------------------------------------------------------------

    \184\ See Bloomberg Letter at 8.
    \185\ See Bloomberg Letter at 5.
---------------------------------------------------------------------------

    Even if rescinding the Fee Exception does not encourage more market 
participants to comment on NMS plan fee amendments, the Commission 
believes it will still help protect market participants from having to 
pay fees that the Commission may later determine do not comply with the 
Exchange Act.\186\ Currently, NMS Plans could begin charging market 
participants fees immediately upon filing that the Commission may later 
determine do not comply with the Exchange Act and decide to 
abrogate.\187\ The new process is designed to help ensure that changes 
to NMS plan fees and charges could not be immediately imposed and 
market participants would not have to pay fees (even temporarily) that 
the Commission may later determine do not comply with the Exchange Act.
---------------------------------------------------------------------------

    \186\ Several commenters agreed that rescinding the Fee 
Exception will help protect market participants from NMS plan fee 
amendments that are ultimately found to not meet the requirements of 
the Exchange Act. See Bloomberg Letter at 3; CII Letter at 2, 3; FIA 
Letter at 2; MFA Letter at 1, 2; RBC Capital Markets Letter at 1; 
SIFMA Letter at 1-2.
    \187\ See supra Section IV.B.1.
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    To the extent NMS plans currently refund fees that are subsequently

[[Page 65488]]

abrogated or withdrawn,\188\ the benefit of the additional protection 
rescinding the Fee Exception offers to market participants from having 
to pay fees that the Commission may later determine do not comply with 
the Exchange Act may be limited, because market participants would 
already receive refunds. One commenter stated that, under the current 
process, there could be complications associated with refunding NMS 
plan fees that are abrogated.\189\ This commenter also pointed out that 
rescinding the Fee Exception will help market participants avoid 
complications with refunds should a NMS plan fee amendment be withdrawn 
or subsequently be denied, because NMS plan fee amendments will only be 
imposed on market participants after notice, comment, and an 
affirmative determination by the Commission that the fee change 
conforms to the requirements of the Exchange Act.\190\ To the extent 
NMS plans currently refund fees that are subsequently abrogated or 
withdrawn, rescinding the Fee Exception may provide a benefit to market 
participants by helping them avoid complications associated with 
refunds for NMS plan fee amendments that would have been abrogated.
---------------------------------------------------------------------------

    \188\ The Commission is not aware of the occurrence of any 
refunds.
    \189\ See RBC Capital Markets Letter at 3-4.
    \190\ See RBC Capital Markets Letter at 3.
---------------------------------------------------------------------------

    Additionally, the Commission believes that rescinding the Fee 
Exception will benefit market participants because they will no longer 
incur costs from having to challenge NMS plan fee changes that the 
Commission would later abrogate. Two commenters stated the immediate 
effectiveness of NMS plan fee amendments can create significant costs 
for market participants to challenge fee changes, even if the changes 
are later suspended or abrogated.\191\ One of these commenters stated 
that it invested significant resources challenging a NMS plan fee 
amendment in order to prepare and lodge a stay application with the 
Commission, and prepare its business and customers in the event the 
Commission decided not to take immediate action before the new fees 
took effect.\192\ The Commission acknowledges that NMS plan fee 
amendments being immediately effective upon filing can create costs for 
market participants to challenge fee changes. Under the new process, 
NMS plan fee amendments would not become effective unless they are 
approved by the Commission. Therefore, market participants will not 
need to incur the costs of challenging NMS plan fee amendments that the 
Commission may later determine do not comply with the Exchange Act.
---------------------------------------------------------------------------

    \191\ See Bloomberg Letter at 6-7; RBC Capital Markets Letter at 
4.
    \192\ See Bloomberg Letter at 6.
---------------------------------------------------------------------------

    The Commission believes that rescinding the Fee Exception will 
provide SRO members and subscribers of SIP data with earlier notice and 
more time to plan and prepare before they are subject to a new or 
altered NMS plan fee.\193\ Because NMS plan fee amendments will not 
become effective until after they are subject to public comment and 
approved by the Commission, SRO members and subscribers to SIP data 
will receive earlier notice regarding NMS plan fee amendments before 
they go into effect. In cases where SRO members and subscribers to SIP 
data may not previously have received adequate notice, they will now 
have more time to plan and prepare before they are subject to a new or 
altered NMS plan fee. For example, under the amendments, third party 
vendors of SIP data will learn about potential fee changes to a type of 
SIP fee (e.g., non-displayed fees) earlier, which might give them more 
time to make adjustments (e.g., changes to fee schedules, billing 
systems, categorization of customers) and notify their clients before 
they are subject to the fee changes. Additionally, the Commission 
believes the notice and comment period for NMS plan fee filings before 
they become effective will benefit market participants by providing 
them an opportunity to comment and seek clarifications on NMS plan fee 
amendments before they become effective, which will help them to plan 
and prepare before they are subject to a new or altered NMS plan 
fee.\194\
---------------------------------------------------------------------------

    \193\ See supra Section IV.B.1. Several commenters agreed that 
rescinding the Fee Exception would provide market participants with 
advance notice and more time to plan for a fee change. See Bloomberg 
Letter at 3, 5; ICI Letter at 2; RBC Capital Markets Letter at 4.
    \194\ Several commenters agreed that commenting on NMS plan fee 
amendments before they become effective would bring greater 
transparency to the fee proposal process and help market 
participants seek clarification with respect to NMS plan fee 
amendments before they become effective. See CII Letter at 2; MFA 
Letter at 2. One way NMS plans could issue clarification on NMS plan 
fee amendments is by responding to comments on the proposed fee 
amendment, which would be included in the comment file. 
Additionally, rescinding the Fee Exception provides NMS plans the 
opportunity to amend their NMS plan fee amendments in response to 
issues raised by commenters before they become effective.
---------------------------------------------------------------------------

    The Commission believes that SRO members and subscribers of SIP 
data might benefit from the delay caused by the notice and comment 
process pursuant to Rule 608 if a NMS plan fee amendment increased a 
NMS plan fee, because they would not have to pay the increased fee 
until the Commission approved the fee change and it became 
effective.\195\ Similarly, SROs might benefit by earning incremental 
revenue if the process delays a NMS plan fee decrease.
---------------------------------------------------------------------------

    \195\ A delay in a NMS plan fee increase would also impose a 
corresponding cost on SROs, while a delay in a NMS plan fee decrease 
would impose a cost on SRO members and subscribers of SIP data. See 
infra Section IV.C.2.a (discussing incremental revenue and costs of 
delayed NMS plan fees).
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b. Modified Procedures for Proposed New NMS Plans and Plan Amendments
    Two commenters stated that applying the timeframes and procedures 
of Section 19(b)(2) to NMS plan amendments would increase transparency 
and provide for more efficient review of NMS plan amendments.\196\ As 
discussed above,\197\ the Commission is adopting amendments to the Rule 
608(b) procedure for handling proposed NMS plans and plan amendments 
that are patterned on Section 19(b), but with some modifications of the 
Section 19(b) timeframes that the Commission believes are appropriate 
in light of differences between SRO rule filings and proposed NMS plans 
and plan amendments.\198\ Additionally, the Commission is requiring 
that proposed new NMS plans and plan amendments be filed with the 
Commission by email, instead of with the Office of the Secretary, 
typically using a paper-based filing process.\199\
---------------------------------------------------------------------------

    \196\ See Operating Committees Letter at 3-5; Nasdaq Letter at 
1, 3. As discussed in detail above, these two commenters stated that 
the standard filing procedure for NMS plan amendments can delay 
transparency and public input into proposed NMS plan amendments 
because it does not mandate a timeframe in which the Commission must 
notice a proposed NMS plan amendment. See supra note 32 and 
accompanying text and infra note 200 and accompanying text.
    \197\ See supra Section II.B.1.
    \198\ As described in detail above, commenters advocated for the 
application of the Section 19(b) process to proposed plan fee 
amendments. However, the Commission is extending the modified 
procedures to all proposed plan amendments and proposed new NMS 
plans. See id.
    \199\ See supra Section II.B.1.c.
---------------------------------------------------------------------------

    The Commission believes that the modifications to the procedures 
and timeframes for Commission actions to the notice and consideration 
process for proposed new NMS plans and plan amendments under Rule 
608(b), along with the requirement that they be filed with the 
Commission by email, will increase the transparency and improve the 
efficiency of the notice and consideration process for proposed new NMS 
plans and plan amendments. Two commenters believe that the current

[[Page 65489]]

lack of specified timeframes for noticing proposed new NMS plans and 
plan amendments have delayed the consideration of some proposed new NMS 
plans and plan amendments.\200\ The Commission believes that the new 
timeframes for the Commission to send notice to the Federal Register, 
along with the requirement that they be filed with the Commission by 
email, will alleviate these commenters' concerns and improve the 
efficiency of the process for handling proposed new NMS plans and plan 
amendments by increasing the speed with which they are sent to and 
published in the Federal Register.\201\ This will also provide more 
certainty to NMS plan participants and market participants regarding 
the timeframes for noticing proposed new NMS plans and plan amendments.
---------------------------------------------------------------------------

    \200\ Two commenters stated that the current lack of specified 
timeframe in which the Commission is required to publish notice of 
the filing of proposed amendments to NMS plans can result in what 
one commenter called ``unwarranted delays'' and delay transparency 
and public input into proposed NMS plan amendments. See Nasdaq 
Letter at 1; Operating Committees Letter at 2-3. These commenters 
also gave examples of proposed NMS plan amendments in which there 
was a significant delay in publishing notice of the proposed 
amendments in the Federal Register. See supra note 32 and 
accompanying text. One of these commenters also stated that this has 
led to uncertainty and inefficiency in NMS plan operations, and 
hampered the ability of the SROs to manage the plans. See Nasdaq 
Letter at 2.
    \201\ The Commission estimates that, under modified Rule 608(b), 
the average time it will take the Commission to send notice of a NMS 
plan amendment to the Federal Register will be 10.6 days, which is 
less than the 15 day requirement under modified Rule 608(b)(1). The 
Commission based this estimate on the average time it historically 
takes the Commission to send notice of SRO proposed rule changes 
filed under Section 19(b)(2) to the Federal Register, because the 
required timeframes are the same, 15 days. See supra note 146 and 
accompanying text. The Commission estimates that, under modified 
Rule 608(b), the average time it will take to publish notice of a 
NMS plan amendment in the Federal Register will be 16.5 days. The 
Commission reached this estimate by adding the expected average time 
(10.6 days) required to send notice of a NMS plan amendment to the 
Federal Register under modified Rule 608(b) and the average time 
(5.9 days) required for the Federal Register to publish the notice 
(10.6 days + 5.9 days = 16. 5 days). This estimate is shorter than 
both the Commission's estimate of the average time of 62.9 days 
required under the current procedures to publish notice of NMS plan 
fee amendments in the Federal Register, and the average time of 65.5 
days required to publish notice of proposed NMS plan amendments that 
are not immediately effective upon filing in the Federal Register. 
See supra notes 119 and 131 and accompanying text.
    The Commission estimates that, under modified Rule 608(b), the 
average time it will take the Commission to send notice of a 
proposed new NMS plan to the Federal Register will be 90 days, the 
maximum timeframe the Commission has under modified Rule 608(b) to 
send notice of a proposed new NMS plan to the Federal Register. The 
Commission chose the maximum time allowed because it believes the 
publication of notice of a new NMS plan may involve significant 
input from the Commission and it was a conservative approach that 
represents the upper bound of the amount of time this would take. 
See supra Section II.B.1.a. The Commission estimates that, under 
modified Rule 608(b), the average time it will take to publish a 
proposed new NMS plan in the Federal Register will be 95.9 days. The 
Commission reached this estimate by adding the expected average time 
(90 days) required to send notice of a proposed new NMS plan to the 
Federal Register under modified Rule 608(b) and the average time 
(5.9 days) required for the Federal Register to publish the notice, 
(90 days + 5.9 days = 95.9 days). This estimate is shorter than the 
Commission's estimate of the average time of 163.8 days required 
under the current procedures to publish notice of proposed new NMS 
plans. See supra note 131 and accompanying text.
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    The Commission also believes that faster publication in the Federal 
Register will improve efficiency by decreasing, on average, the total 
time it takes for the Commission to act on a proposed new NMS plan or 
plan amendment from the time it is initially filed.\202\ The Commission 
estimates, under the amended rule, the average total time it will take 
to act on proposed NMS plan amendments and proposed new NMS plans will 
be 78.5 days and 343.9 days, respectively, from the date they are filed 
with the Commission.\203\ This is shorter than the Commission's 
estimate of the average total time it takes under the current 
procedures to act on proposed NMS plan amendments and proposed new NMS 
plans, which are 127.6 days and 368.5 days, respectively.\204\
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    \202\ The Commission acknowledges that the increasing the 
maximum timeframe for the Commission to act on a proposed new NMS 
plan or plan amendment from the date of publication in the Federal 
Register could increase the total time it takes for the Commission 
to act on some individual proposed new NMS plan or plan amendment 
from the time it is initially filed. This is discussed infra, in 
Section IV.C.2.b.
    \203\ The Commission estimates that, under modified Rule 608(b), 
the average total time it will take the Commission to act on a 
proposed NMS plan amendment from the date it is filed with the 
Commission will be 78.5 days. The Commission reached this estimate 
by adding the expected average time (16.5 days) required to publish 
notice of a proposed NMS plan amendment in the Federal Register and 
the expected average time (62.0 days) it will take the Commission, 
under modified Rule 608(b), to act on a proposed NMS plan amendment 
from the time it is published in the Federal Register, (16.5 days + 
62.0 days = 78.5 days). See supra note 201 for a discussion of the 
Commission's estimate of the average time it will take to publish 
notice of a proposed NMS plan amendment. The Commission estimates 
that, under the modified Rule 608(b), the average time it will take 
to act on a proposed NMS plan amendment from the time it is 
published in the Federal Register will be 62.0 days, which is equal 
to the average time it has historically taken under the current 
procedures. See supra note 134 and accompanying text.
    The Commission estimates that, under modified Rule 608(b), the 
average total time it will take the Commission to act on a proposed 
new NMS plan from the date it is filed with the Commission will be 
343.9 days. The Commission reached this estimate by adding the 
expected average time (95.9 days) required to publish notice of a 
proposed new NMS plan in the Federal Register and the expected 
average time (248 days) it will take the Commission, under modified 
Rule 608(b), to act on a proposed new NMS plan from the time it is 
published in the Federal Register, (95.9 days + 248 days = 343.9 
days). See supra note 201 for a discussion of the Commission's 
estimate of the average time it will take to publish notice of a 
proposed new NMS plan.
    The Commission determined its estimate of the average time it 
will take, under modified Rule 608(b), for the Commission to act on 
a proposed new NMS plans from the time it is published in the 
Federal Register by using historical data on the time it took the 
Commission to approve proposed new NMS plans filed between 2010 and 
2020 from the time they were published in the Federal Register. For 
the historical NMS plan approvals, the original approval time was 
kept if a NMS plan took less than 180 days to approve, which is the 
maximum timeframe the Commission currently has to approve a NMS plan 
or plan amendment after it is published in the Federal Register. See 
supra Section IV.B.2. If a NMS plan took 180 days or longer to 
approve, the Commission assumed that it would have a value of 300 
days, which is the maximum timeframe the Commission has under the 
adopted amendments to act on a NMS plan or plan amendment from the 
time it is published in the Federal Register. See supra Section 
II.B.1.b. The average of these modified values is the Commission's 
estimate of the average time it will take the Commission, under 
modified Rule 608(b), to act on a proposed new NMS plan from the 
time it is published in the Federal Register, 248 days. The 
Commission chose this estimation method because it believes it is a 
conservative approach that represents an upper bound on the average 
time and accounts for the longer Commission timeframe to approve 
proposed new NMS plans under the modified procedures and timeframes 
for Rule 608(b).
    \204\ See supra Section IV.B.2 (for details on these estimates).
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    The Commission believes that adopted Rule 608(b)(1)(ii), requiring 
the Commission to provide notice of any non-compliant filing of a 
proposed new NMS plan or plan amendment to plan participants within 
seven business days of receiving the filing, will also improve the 
efficiency of the process by reducing the time it takes for NMS plan 
participants to identify and correct any deficiencies and refile the 
proposed new NMS plan or plan amendment.
    The Commission believes that increasing the maximum timeframe the 
Commission has to act on a proposed new NMS plan or plan amendment from 
180 to 300 days from the date of publication in the Federal Register 
may improve the Commission's evaluation of certain proposed new NMS 
plans or plan amendments that are particularly complex.\205\ This 
longer timeframe may improve the Commission's evaluation of such 
proposed new NMS plans or plan amendments by giving the Commission the 
option to take more time, if it is

[[Page 65490]]

needed, to review comments and better determine if a proposed new NMS 
plan or plan amendment is consistent with the Exchange Act.
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    \205\ Under the current process, the Commission has 120 days to 
approve a proposed new NMS plan or plan amendment from the date of 
publication in the Federal Register. However, the Commission has the 
option to extend its timeframe an additional 60 days, which gives 
the Commission a maximum timeframe of 180 days to approve a proposed 
new NMS plan or plan amendment from the date of publication in the 
Federal Register. See supra Section II.B.1 and IV.B.2.
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    The Commission believes that the new process for the Commission to 
institute proceedings, if needed, for proposed new NMS plans and plan 
amendments under adopted Rule 608(b)(2)(i) will improve the 
transparency and efficiency of the consideration process by enabling 
the Commission to inform the NMS plan and market participants about 
issues that provide potential grounds for disapproval of a proposed new 
NMS plan or plan amendment.\206\ Publication of this information will 
improve transparency and efficiency by allowing the public a chance to 
address identified issues and provide the Commission with additional 
information.
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    \206\ See supra Section II.B.1.
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    The Commission believes that the requirement that proposed new NMS 
plans and plan amendments be filed with the Commission by email will 
benefit SROs by improving the efficiency of the filing process and 
reducing the costs they incur in connection with such filings. 
Currently, proposed new NMS plans and proposed amendments to NMS plans 
are filed with the Secretary of the Commission, typically using a 
paper-based filing process.\207\ The new filing requirement should 
eliminate many of the costs associated with paper filing, including 
printing, copying, mailing, and delivery costs. It should also conserve 
Commission resources, as Commission staff will no longer manually 
process the receipt and distribution of proposed new NMS plans and plan 
amendments.
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    \207\ See supra Section II.B.1.c and Section IV.B.2.
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2. Costs
    The Commission believes that rescinding the Fee Exception will 
impose costs on SROs if the process delays the implementation of a NMS 
plan fee increase, and will impose costs on SRO members and subscribers 
of SIP data if the process delays the implementation of a NMS plan fee 
decrease, because these parties would no longer receive the incremental 
revenue or costs savings they would have earned if NMS plan fee 
amendments were immediately effective. The Commission acknowledges that 
increasing the maximum timeframe for the Commission to act after 
publication in the Federal Register might have a negative impact on 
efficiency in some cases, but does not believe that this effect will be 
significant.\208\ The Commission does not believe the amendments will 
impose implementation costs on SROs or other market participants.
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    \208\ See infra Section IV.C.2.b (for a detailed discussion).
---------------------------------------------------------------------------

a. Rescission of the Fee Exception
    The Commission believes that rescinding the Fee Exception might 
impose costs on SROs because the new rule may delay implementation of 
NMS plan fee amendments.\209\ For example, a delay in the approval of a 
NMS plan amendment increasing SIP fees may delay its implementation, 
which would eliminate incremental revenue that, under the baseline, 
would have been able to be generated earlier because fees were 
immediately effective upon the filing of the amendment. The loss of 
this incremental revenue, in turn, could reduce the revenues the SROs 
are able to collect from the SIP, as well as the SIP revenue that FINRA 
rebates back to its members.\210\ However, the Commission believes the 
costs of rescinding the Fee Exception should not be significant 
because, on average, there are only 3.8 NMS plan fee changes in a 
year,\211\ and because the Commission estimates that the average delay 
caused by the amendments to the implementation of NMS plan fee 
amendments will only be 127.1 days.\212\ In addition, any lost revenue 
or delay in recovering costs by the SROs should represent a 
corresponding benefit to SRO members and subscribers of SIP data.\213\ 
On the other hand, a delay in the effectiveness of a NMS plan fee 
amendment decreasing a NMS plan fee would reverse these costs and 
benefits.
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    \209\ Rescinding the Fee Exception will delay the implementation 
of NMS plan fee amendments that currently would have been 
implemented without a phase-in period. It might also delay the 
implementation of NMS plan fee amendments that currently would have 
been implemented with a phase-in period that is shorter than the 
amendment's specified time-frames for the review of NMS plan 
amendments. It would not delay the implementation of NMS plan fee 
amendments that currently would have been implemented with a phase-
in period that is longer than the amendment's specified time-frames 
for the review of NMS plan amendments.
    \210\ See supra note 152; see also supra Section IV.B.4. In the 
case of the CAT plan, rescinding the Fee Exception could also delay 
the SROs from recovering money for costs they might have already 
incurred. See supra note 108 and accompanying text.
    \211\ See supra Section IV.B.1 (for details on the average 
number of NMS plan fee amendments).
    \212\ The Commission reached this estimate by adding the 
expected average time (16.5 days), under modified Rule 608(b), 
required to publish a NMS plan fee amendment in the Federal Register 
and the Commission's estimate of the average time (110.6 days) it 
will take the Commission, under modified Rule 608(b), to approve or 
disapprove a NMS plan fee amendment from the time it is published in 
the Federal Register, (16.5 days + 110.6 days = 127.1 days). See 
supra note 201 for a discussion of the Commission's estimate of the 
average time it will take to publish notice of a proposed NMS plan 
amendment in the Federal Register.
    Because NMS plan fee amendments are immediately effective upon 
filing, there is no historical data on the time it takes the 
Commission to approve a NMS plan fee amendment. Given that the 
modified Rule 608(b) procedures for all Commission actions on 
proposed new NMS plans and plan amendments are largely patterned on 
Section 19(b), the Commission based its estimate of the average time 
it will take the Commission to approve or disapprove a NMS plan fee 
amendment on historical data on Commission actions during the 
Section 19(b) process for SRO proposed rule changes filed under 
Section 19(b)(2), modified to account for the modified timeframes 
under Rule 608(b) for proposed new NMS plans and plan amendments. 
The Commission estimated the percentage of time SRO proposed rule 
changes filed under Section 19(b)(2) were approved or disapproved: 
(1) Without instituting proceedings (88.4 percent), (2) when 
proceedings were instituted but not extended (3.1 percent), and (3) 
when proceedings were instituted and extended (8.5 percent). See 
supra note 148 and accompanying text. These percentages were 
multiplied, respectively, by the maximum amount of time the 
Commission could take to approve NMS plan amendments under the 
modified 608(b) procedures when it: (1) Does not institute 
proceedings (90 days), (2) institutes but does not extend 
proceedings (180 days), and (3) institutes and extends proceedings 
to the maximum allowable time (300 days). See supra Section 
II.B.1.b. The Commission chose these time estimates because they are 
a conservative estimate of how long it would take the Commission to 
approve a NMS plan fee amendment under each of these scenarios. The 
Commission's estimate for the average time it will take the 
Commission to approve or disapprove a NMS plan fee amendment is 
110.6 days = 88.4 percent * 90 days + 3.1 percent * 180 days + 8.5 
percent * 300 days. If the Commission instituted proceedings and 
extended the review period to the 300 day time limit, the Commission 
estimates it would take an average of 316.5 days for the Commission 
to act upon a NMS plan fee amendment from the time it is initially 
filed with the Commission, which is 16.5 days to publish notice of 
the filing in the Federal Register plus the 300 days it would take 
the Commission to act on the NMS plan fee amendment from the date it 
is published in the Federal Register. See supra Section II.B.1.
    These estimated time periods do not include the time period 
between when the Commission takes action and the NMS plan begins 
charging the fee. It is possible that the average time period 
between Commission approval and when the NMS plan begins charging 
fees (which time period may be specified by the NMS plan) could be 
similar to the Commission's estimate of the current average time 
period it takes a NMS plan to begin charging fees, i.e., 66.3 days. 
The time period specified by the NMS plan could also be shorter, 
since market participants will have received earlier notice and more 
time to prepare for the potential fee change due to the Rule 608 
process. See supra note 112.
    \213\ See supra note 195 and accompanying text.
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b. Modified Procedures for Proposed New NMS Plans and Plan Amendments
    As noted above, the Commission believes that the adopted amendments 
will, on average, decrease the total time it takes for the Commission 
to act on a proposed new NMS plan or plan amendment from the time it is 
filed.\214\

[[Page 65491]]

The Commission acknowledges, however, that for some proposed new NMS 
plans and plan amendments, the increase in the maximum timeframe for 
the Commission to act from the date of publication in the Federal 
Register from 180 days to 300 days could cause delays compared to the 
baseline for this part of the process, thereby decreasing 
efficiency.\215\ To the extent that, as a result, there is an increase 
in the total time it takes to approve a proposed new NMS plan or plan 
amendment from the time it is initially filed, this may impose indirect 
costs on market participants.\216\ The Commission, however, does not 
believe any such increase in total time will be significant. 
Specifically, with regard to proposed new NMS plans, the Commission 
believes the increase in total time will not be significant because, 
under the current process, the average total time it has taken the 
Commission to act on proposed new NMS plans from the time they are 
filed is close to the maximum total time the Commission can take to act 
under the modified procedures of Rule 608(b).\217\ With regard to 
proposed new NMS plan amendments, the Commission believes any increase 
in the total time for the Commission to act from the time of filing 
will not be significant because the time it takes to publish notice of 
the proposed amendment in the Federal Register is expected to decrease 
and because currently 95 percent of proposed NMS plan amendments are 
approved within 120 days of publication of in the Federal 
Register.\218\ To the extent that any indirect costs do occur as a 
result of an overall increase in time, the Commission is unable to 
estimate their effects because they would depend on the nature of 
future proposed new NMS plans and plan amendments.
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    \214\ See supra Section IV.C.1.b.
    \215\ See supra Sections II.B.1 (for details on the modified 
timeframes) and Section IV.B.2 (for details on the current 
timeframes). The Commission estimates that the average time it takes 
for the Commission to act on proposed new NMS plans from the date of 
their publication in the Federal Register will increase from an 
average of 204.8 days under the current process to an average of 248 
days under the modified procedures. See supra note 203 (for details 
on the Commission's estimate for proposed new NMS plans under the 
modified procedures) and supra note 135 and accompanying text (for 
the average time for proposed new NMS plans under the current 
procedures).
    The Commission estimates that average time it takes for the 
Commission to act on proposed NMS plan amendments from the date of 
their publication in the Federal Register will remain the same, 62 
days. See supra note 203 (for details on the Commission's estimate 
for proposed NMS plan amendments under the modified procedures) and 
supra note 134 and accompanying (for the average time for proposed 
NMS plan amendments under the current procedures).
    \216\ For example, if the amendments delayed the approval of a 
NMS plan that would improve liquidity, market participants may 
experience indirect costs in the form of higher transaction costs 
until the amendments are approved.
    \217\ The modified procedures of Rule 608(b) place limits on 
both the time the Commission can take to notice the filing and the 
time it can take to act on a proposed new NMS plan or plan 
amendment. Previously there was no limit on the total time for 
Commission consideration because there was no limit on the time for 
the Commission to notice a proposed new NMS plan or plan amendment.
    The Commission estimates that under the current procedures it 
has taken an average total time of 368.5 days for the Commission to 
approve a proposed new NMS plan from the time it is initially filed. 
See supra Section IV.B.2 (for a discussion of this estimate). Under 
the modified procedures, the limit on the total time for the 
Commission to act from the time of filing will be 390 days (90 days 
to notice the proposed new NMS plan to the Federal Register + 300 
for the Commission to act after it is published in the Federal 
Register) plus the time it takes the Federal Register to publish the 
notice, which the Commission estimates will take an average of 5.9 
days. See supra Section II.B.1 (discussing the new time limits for 
Rule 608(b)) and supra note 201 (discussing the estimate of the time 
for the Federal Register to publish notice).
    \218\ See supra Section IV.B.2 (for a discussion of current 
proposed NMS plan amendment approval times). The Commission 
estimates that the time it will take to publish notice of a proposed 
NMS plan amendment in the Federal Register will decrease from an 
average of 65.5 days under the current process to an average of 16.5 
days under the modified procedures. See supra note 201 (for details 
on the Commission's estimate for proposed NMS plan amendments under 
the modified procedures) and supra note 131 and accompanying text 
(for the average time for proposed NMS plan amendments under the 
current procedures).
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    The Commission acknowledges that the new timeframes for the 
Commission to send notice of proposed new NMS plans and plan amendments 
to the Federal Register may increase the time that it takes for the 
Commission to approve or disapprove certain proposed new NMS plans or 
plan amendments after they are published in the Federal Register. The 
new noticing deadlines under amended Rule 608(b)(1) may not allow 
sufficient time for the Commission and plan participants to resolve 
issues before notice publication.\219\ Instead, the Commission and plan 
participants will need to resolve such issues during the Commission 
consideration process, which may increase the time it takes the 
Commission to approve or disapprove certain proposed new NMS plans or 
plan amendments from the time they are published in the Federal 
Register. However, because the new noticing deadlines would also result 
in proposed new NMS plans or plan amendments being published in the 
Federal Register more quickly, the Commission does not believe the 
total amount of time it takes the Commission to act on these proposed 
new NMS plans or plan amendments is likely to increase and impose 
indirect costs on market participants.\220\
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    \219\ See supra note 69 and accompanying text (discussing plan 
participants addressing issues in a proposed plan or plan amendment 
before notice publication reducing Commission approval time 
subsequent to notice publication).
    \220\ The Commission estimates that the average total amount of 
time it takes the Commission to act on a proposed new NMS plan or 
plan amendment may decrease. See supra note 203 and accompanying 
text. See also supra note 216 and accompanying text (discussing 
these potential indirect costs).
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    The rescission of the Fee Exception is a procedural amendment and 
impacts the timing of effectiveness of NMS plan fee amendments; it does 
not affect substance of the supporting information that is required to 
be included in all proposed NMS plan fee amendments.\221\ Additionally, 
the new procedures for Commission action on proposed NMS plans and plan 
amendments under Rule 608(b)(1) and (2) do not change the substance of 
the information that must be included in all proposed new NMS plans and 
plan amendments. Therefore, the Commission believes that the amendments 
will not impose additional implementation costs on the administration 
of NMS plans or on market participants.\222\
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    \221\ See Proposing Release, supra note 1, at 54796.
    \222\ One commenter agreed that rescinding the Fee Exception 
would not materially add to the administrative burden of filers. See 
RBC Capital Markets Letter at 4.
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3. Impact on Efficiency, Competition, and Capital Formation
a. Efficiency
    The Commission believes that rescinding the Fee Exception will 
result in a number of improvements in efficiency, including, among 
other things: Regulatory efficiency and the efficiency with which SRO 
members and subscribers to SIP data adjust to fee changes to NMS plans. 
However, the Commission also believes that rescinding the Fee Exception 
will decrease the efficiency of the implementation of NMS plan fee 
changes. Additionally, the Commission believes the modifications to the 
procedures and timeframes for notice and Commission actions for 
proposed new NMS plans and plan amendments, along with the requirement 
that they be filed with the Commission by email, will improve the 
efficiency of the notice and consideration process for proposed new NMS 
plans and plan amendments.
    The Commission believes that rescinding the Fee Exception will 
enhance regulatory efficiency. The Commission believes that rescinding 
the Fee Exception will eliminate a potential disincentive for persons 
to provide comments on NMS plan fee

[[Page 65492]]

amendments.\223\ This may enhance regulatory efficiency if it provides 
the Commission with more information at an earlier stage in its 
decision making process.
---------------------------------------------------------------------------

    \223\ See supra Section IV.C.1.a (discussing removal of a 
disincentive to comment).
---------------------------------------------------------------------------

    The Commission believes that rescinding the Fee Exception will 
improve the efficiency of handling NMS plan fee amendments that would 
otherwise have been abrogated.\224\ Under the amendments, the 
Commission will not need to abrogate NMS plan fee amendments because, 
absent approval by the Commission, such fee changes will never take 
effect. Additionally, to the extent NMS plans currently issue refunds 
for NMS plan fee amendments that are abrogated by the Commission,\225\ 
rescinding the Fee Exception may also improve efficiency if it helps 
market participants avoid complications associated with refunding NMS 
plan fees that are abrogated.\226\
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    \224\ The amendments might also improve the efficiency of 
implementing some NMS plan fee amendments that would otherwise have 
been withdrawn and later refiled. Currently, these fee changes are 
refiled on an immediately effective basis. The Commission estimates 
that the average and median time it takes a NMS plan to refile these 
fee changes are 143.3 days and 175 days, respectively. See supra 
note 125 and accompanying text. If these fee changes are ultimately 
approved more quickly under the amendments, it might increase the 
efficiency of their implementation. See supra Section IV.B.1.
    \225\ The Commission is not aware of the occurrence of any 
refunds.
    \226\ See supra note 190 and accompanying text (discussing 
complications with refunds).
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    The Commission believes that rescinding the Fee Exception might 
improve the efficiency with which SRO members and subscribers to SIP 
data adjust to fee changes to NMS plans. The notice of NMS plan fee 
amendments before they are approved by the Commission and become 
effective might give market participants more time to plan and prepare 
before they are subject to a new or altered NMS plan fee.\227\
---------------------------------------------------------------------------

    \227\ See supra note 193 and accompanying text (discussing 
additional time to prepare).
---------------------------------------------------------------------------

    On the other hand, the Commission believes the amendments might 
have a negative impact on the efficiency of the implementation of NMS 
plan fee changes, because they will delay when NMS plans could begin 
charging new fees. If plan participants seek to change existing NMS 
plan fees, possibly due to changes in technology or market conditions 
or other demonstrable increases in NMS plan costs, then the amendments 
might reduce efficiency because any NMS plan fee amendments will take 
longer to become effective under the amendments than when they were 
immediately effective-upon-filing.\228\
---------------------------------------------------------------------------

    \228\ See supra Section IV.C.2.a (discussing costs of delaying 
NMS plan fee changes).
---------------------------------------------------------------------------

    The Commission believes that the modified timeframes and procedures 
for the Commission to send notice of proposed new NMS plans and plan 
amendments to the Federal Register will, overall, improve the 
efficiency of the process for handling such plans and amendments by 
decreasing the time it takes for them to be published in the Federal 
Register,\229\ as well as the average total time it takes for the 
Commission to act on them relative to the date they are initially 
filed.\230\ The Commission further believes that the requirement that 
proposed new NMS plans and plan amendments be filed with the Commission 
by email will improve the efficiency of the filing process for both 
plan participants and the Commission.\231\
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    \229\ See supra Section IV.C.1.b (for a detailed explanation of 
this improvement) and note 201 and accompanying text (for an 
estimate of time to publish in the Federal Register).
    \230\ See supra note 203 and accompanying text (for an estimate 
of total time for Commission action). As noted above, the Commission 
acknowledges that increasing the maximum timeframe for the 
Commission to act after publication in the Federal Register might 
have a negative impact on efficiency for some proposed new NMS plans 
or plan amendments, but does not believe that this effect will be 
significant. See supra Section IV.C.2.b (for a detailed 
explanation).
    \231\ See supra Section IV.C.1.b (discussing benefits of email 
filing).
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b. Competition
    In the Proposing Release, the Commission stated that it believed 
the rescission of the Fee Exception would not have a significant impact 
on competition in either the market for core and aggregated market data 
products or in the market for trading services in NMS securities 
because the Commission believed the rescission of the Fee Exception 
would not have a significant effect on the fees charged for core 
data.\232\ However, in response to commenters, the Commission has 
revised its analysis of the effect of rescinding the Fee Exception on 
the fees charged for core data.\233\ As a result of the revisions, the 
Commission has also made revisions in its analysis on the effects 
rescinding the Fee Exception will have on competition in the market for 
core and aggregated market data products and the market for trading 
services in NMS securities. Overall, the Commission continues to 
believe the rescission of the Fee Exception will not have a significant 
impact on competition in either the market for core and aggregated 
market data products or in the market for trading services in NMS 
securities.
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    \232\ See Proposing Release, supra note 1, at 54804.
    \233\ See supra Section IV.C.1.a.
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    As discussed above,\234\ the Commission believes that rescinding 
the Fee Exception will not have a significant immediate impact on the 
price of core data. However, the Commission acknowledges that over a 
longer time period it could have a limited effect on the fees charged 
for core data if it leads to a more robust comment process for NMS plan 
fee amendments that provides additional information that helps the 
Commission evaluate whether NMS plan fee amendments comply with the 
Exchange Act. Any effect of this change on the fees charged for core 
data could affect competition in the market for core and aggregated 
market data products over the longer term. Similarly, any effect over 
the longer term on the fees charged for core data (and thus on SRO 
revenues or core data costs) could affect competition in the market for 
trading services in NMS securities. However, the Commission is unable 
to estimate these longer-term effects, because they would depend on the 
nature of future NMS plan fee amendments. In addition, because the SIPs 
have significant market power and are monopolistic providers of certain 
information, the Commission believes that any such effects on 
competition in the market for core and aggregated market data products 
would be limited.
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    \234\ See id.
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    The Commission believes that the rescinding the Fee Exception will 
not have a significant impact on competition in the market for core and 
aggregated market data products for the following reasons: (1) The 
Commission believes that the SIPs have significant market power in the 
market for core and aggregated market data products and are 
monopolistic providers of certain information; \235\ (2) rescinding the 
Fee Exception will not affect the contents of SIP data or comparable 
products; (3) on average, there are very few (only 3.8) proposed NMS 
plan fee amendments in a year; and (4) the Commission currently has the 
ability to abrogate NMS plan fee amendments.\236\ Although the 
Commission believes rescinding the Fee Exception will not have a 
significant effect on the market power of the SIPs, the Commission 
believes it might have minor effects on the SIPs'

[[Page 65493]]

ability to compete. On the margin, the SIPs' competitive positions 
might be negatively affected by rescinding the Fee Exception because it 
will allow the SIPs' competitors, such as market data aggregators and 
SRO top of book feeds, to be able to adjust their fees and prices more 
quickly than the SIPs.\237\ For example, vendors and SROs would be able 
to adjust the prices for their data products more quickly than the SIPs 
in response to any cost shock. However, because the SIPs have 
significant market power in the market for core and aggregated market 
data products and are monopolistic providers of certain 
information,\238\ the Commission believes that these competitive 
effects will not be significant.
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    \235\ See supra Section IV.B.3.
    \236\ The Commission's ability to abrogate NMS plan fee 
amendments within 60 days of their filing means that the SIPs are 
already limited in their ability to potentially charge fees that do 
not comply with the Exchange Act. See supra Section IV.B.1 and 
IV.C.1.a.
    \237\ See Proposing Release, supra note 1, at 54804 (for a 
details on why market data aggregators and SRO top of book feeds 
could adjust their prices quicker).
    \238\ See supra Section IV.B.3.
---------------------------------------------------------------------------

    The Commission believes that, in the short-term, rescinding the Fee 
Exception will not have a significant impact on competition in the 
market for trading services in NMS securities for two reasons.\239\ 
First, the Commission believes that it will not have a significant 
impact on the future fees the CAT plan will collect from Industry 
Members or the allocation of costs among Participants and Industry 
Members because the Commission already has the ability to abrogate NMS 
plan fee amendments.\240\ Second, as discussed above, the Commission 
believes that, over the short-term, rescinding the Fee Exception will 
not have a significant impact on the cost of core data.\241\ Therefore, 
the Commission believes that, in the short-term, rescinding the Fee 
Exception will not have a significant impact on revenues SROs receive 
or the costs broker-dealer internalizers and ATSs pay for core data.
---------------------------------------------------------------------------

    \239\ See supra Section IV.B.4.
    \240\ See supra Section IV.B.1.
    \241\ See supra Section IV.C.1.a.
---------------------------------------------------------------------------

    The Commission does not believe the modifications to the timeframes 
and procedures for the Commission to notice and act on proposed new NMS 
plans and plan amendments that currently are not immediately effective 
upon filing will have a significant effect on competition.\242\ The 
Commission acknowledges that these modifications may have limited 
effects on competition if they significantly reduce or extend the time 
it takes to act on certain proposed new NMS plans and plan amendments. 
However, the Commission is unable to estimate these effects because 
they would depend on the nature of future proposed new NMS plans and 
plan amendments. Additionally, the Commission believes that, even if 
the modifications to the timeframes and procedures for the Commission 
to notice and act on proposed new NMS plans and plan amendments does 
produce effects on competition, the effects would be limited because 
the Commission estimates that the average reduction in the total time 
it will take to act on proposed new NMS plans and plan amendments, 
relative to the time they are filed, will be less than 50 days.\243\
---------------------------------------------------------------------------

    \242\ See supra Section II.B.1.
    \243\ See supra note 203 and accompanying text. See also supra 
Section II.B.1.
---------------------------------------------------------------------------

c. Capital Formation
    The Commission believes that rescinding the Fee Exception will not 
have a significant impact on capital formation. The Commission believes 
that, in the short-term, rescinding the Fee Exception will not have a 
significant impact on capital formation because, for the reasons 
discussed above, any effect in the short term on NMS plan fees or on 
the average SIP costs are likely to be insignificant.\244\ Moreover, 
any longer-term effects would also likely not be significant as the 
Commission does not expect these changes to have a significant effect 
on the overall costs that investors pay or investor participation in 
the market. Additionally, the Commission believes that the changes to 
the timeframes and procedures for the Commission to notice and act on 
proposed new NMS plans and plan amendments that are not immediately 
effective upon filing will not have a significant effect on capital 
formation because the Commission estimates that the average reduction 
in the total time it will take to act on proposed new NMS plans and 
plan amendments, relative to the time they are filed, will be less than 
50 days.\245\
---------------------------------------------------------------------------

    \244\ See supra Section IV.C.1.a and Section IV.C.3.b.
    \245\ See supra note 203 and accompanying text. See also supra 
Section II.B.1.
---------------------------------------------------------------------------

D. Reasonable Alternative

    The Commission considered a reasonable alternative where the 
Commission would amend Rule 608(b)(3)(i) of Regulation NMS to provide 
that NMS plan fee amendments would not become effective immediately 
upon filing, but would instead become effective automatically without 
the Commission having to approve the NMS plan fee amendment at the end 
of the 60 day period, during which the Commission could potentially 
abrogate the NMS plan fee amendment. If the Commission did abrogate the 
NMS plan fee amendment, then the NMS plan fee amendment would still 
need to be re-filed pursuant to the standard procedure of paragraphs 
(b)(1) and (2).
    This alternative would provide a comment period for NMS plan fee 
amendments before they go into effect. Therefore, similar to the 
adopted amendments, market participants would benefit from being able 
to comment on NMS plan fee amendments before they could become 
effective. However, because this alternative does not require 
Commission approval before a NMS plan fee amendment could become 
effective, one commenter stated that, compared to the Proposal, this 
alternative would discourage market participants from submitting 
comments because the fee change would be viewed as a fait 
accompli.\246\ The Commission acknowledges that market participants may 
be less likely to comment on NMS plan fee amendments under this 
alternative compared to the adopted amendments.\247\ To the extent this 
occurs, the comment process for NMS plan fee amendments would not be as 
robust under this alternative compared to the adopted amendments and 
the Commission would be less likely to receive additional information 
from the comment process that would help it evaluate whether a NMS plan 
fee amendment complies with the Exchange Act compared to the adopted 
amendments.
---------------------------------------------------------------------------

    \246\ See MFA Letter at 3.
    \247\ See supra Section IV.B.1 and Section IV.C.1.a.
---------------------------------------------------------------------------

    Compared to the adopted amendments, the time until a NMS plan fee 
amendment becomes effective could be slightly shorter.\248\ Therefore, 
NMS plans could implement fee changes more efficiently and the costs to 
the SROs from the delay in implementing NMS plan fee increases could be 
lower than under the adopted amendments.\249\ However, SRO members and 
subscribers to SIP data would have less time to plan and prepare before 
they are subject to a new or altered NMS plan fee than under the 
adopted amendments.\250\
---------------------------------------------------------------------------

    \248\ Under this alternative, NMS plan fee amendments would 
become effective 60 days after filing unless the Commission decided 
to abrogate the fee filing. Under the amendments, the Commission 
estimates that the average time it would take for NMS plan fee 
amendments to be approved by the Commission and become effective 
will be 127.1 days from the time of filing. See supra note 212 and 
accompanying text.
    \249\ Similarly, the costs to SRO members and subscribers from 
the delay in implementing NMS plan fee decreases could be lower 
under this alternative than under the adopted amendments. See supra 
Section IV.C.2.a and Section IV.C.3.a.
    \250\ See supra Section IV.C.1.a.
---------------------------------------------------------------------------

    Under this alternative, the Commission could not extend the 60-

[[Page 65494]]

day abrogation period.\251\ Without extensions, this alternative would 
provide market participants with more certainty about when the NMS plan 
fee amendments would become effective. If a NMS plan fee amendment is 
complicated, the Commission may be unable to complete its review during 
the 60-day abrogation period.\252\ If the Commission is unable to 
determine if a NMS plan fee amendment is fair, reasonable, and complies 
with the Exchange Act by the end of the 60-day abrogation period, then 
the Commission may have to abrogate the NMS plan fee amendment, which 
would then require the NMS plan fee amendment to be refiled under the 
standard procedure. This could cause these fee filings to take longer 
to be approved from the date of initial filing than under the adopted 
amendments.\253\
---------------------------------------------------------------------------

    \251\ The Commission could also consider an alternative where it 
had the option to extend the 60-day abrogation period to allow the 
Commission more time to consider the filing and comments. The filing 
would not become effective automatically until the expiration of 
this longer time period. However, this alternative would still not 
require the Commission to approve NMS plan fee amendments before 
they became effective, which could still discourage market 
participants from submitting comments. This means the comment 
process would still not be as robust compared to the adopted 
amendments and the improvements to the Commission's evaluation of 
NMS plan fee amendments would not be as great compared to the 
adopted amendments. See supra Section IV.C.1.a.
    \252\ Two commenters agreed that this alternative may not 
provide sufficient time for the Commission to ensure a NMS plan fee 
amendment is consistent with the Exchange Act before it is 
automatically approved. They stated that there could be situations 
where a NMS plan fee amendment is complicated and the Commission may 
be unable to complete its review during the 60-day abrogation 
period. See Clearpool Letter at 3; Healthy Markets Letter at 9.
    \253\ See Proposing Release, supra note 1, at 54796.
---------------------------------------------------------------------------

    Under this alternative, the timeframes and procedures for proposed 
new NMS plans and plan amendments that are not immediately effective 
upon filing would not change.\254\ Therefore, the process for handling 
proposed new NMS plans and plan amendments would not experience the 
gains in efficiency and transparency under this alternative that it 
would when compared to the adopting amendments.\255\
---------------------------------------------------------------------------

    \254\ See supra Section II.B.1.
    \255\ See supra Section IV.C.1.b and IV.C.3.a.
---------------------------------------------------------------------------

V. Regulatory Flexibility Certification

    The Regulatory Flexibility Act (``RFA'') \256\ requires Federal 
agencies, in promulgating rules, to consider the impact of those rules 
on small entities. Section 603(a) \257\ of the Administrative Procedure 
Act,\258\ as amended by the RFA, generally requires the Commission to 
undertake a regulatory flexibility analysis of all proposed rules, or 
proposed rule amendments, to determine the impact of such rulemaking on 
``small entities.'' \259\ Section 605(b) of the RFA states that this 
requirement shall not apply to any proposed rule or proposed rule 
amendment which, if adopted, would not have a significant economic 
impact on a substantial number of small entities.\260\
---------------------------------------------------------------------------

    \256\ 5 U.S.C. 601 et seq.
    \257\ 5 U.S.C. 603(a).
    \258\ 5 U.S.C. 551 et seq.
    \259\ Although Section 601(b) of the RFA defines the term 
``small entity,'' the statute permits agencies to formulate their 
own definitions. The Commission has adopted definitions for the term 
``small entity'' for purposes of Commission rulemaking in accordance 
with the RFA. Those definitions, as relevant to this rulemaking, are 
set forth in Rule 0-10, 17 CFR 240.0-10.
    \260\ See 5 U.S.C. 605(b).
---------------------------------------------------------------------------

    The adopted amendments to Rule 608 would apply to national 
securities exchanges registered with the Commission under Section 6 of 
the Exchange Act and national securities associations registered with 
the Commission under Section 15A of the Exchange Act.\261\ None of the 
exchanges registered under Section 6 that would be subject to the 
amendments are ``small entities'' for purposes of the Regulatory 
Flexibility Act.\262\ There is only one national securities 
association, and the Commission has previously stated that it is not a 
small entity as defined by 13 CFR 121.201.\263\
---------------------------------------------------------------------------

    \261\ See supra note 5 (stating that the participants in the NMS 
plans are all SROs).
    \262\ See 17 CFR 240.0-10(e). Paragraph (e) of Rule 0-10 states 
that the term ``small business,'' when referring to an exchange, 
means any exchange that has been exempted from the reporting 
requirements of Rule 601 of Regulation NMS, 17 CFR 242.601, and is 
not affiliated with any person (other than a natural person) that is 
not a small business or small organization as defined in Rule 0-10. 
Under this standard, none of the exchanges subject to the amendments 
to Rule 608 is a ``small entity'' for the purposes of the RFA. See 
also Securities Exchange Act Release Nos. 82873 (Mar. 14, 2018), 83 
FR 13008, 13074 (Mar. 26, 2018) (File No. S7-05-18) (Transaction Fee 
Pilot for NMS Stocks); 55341 (May 8, 2001), 72 FR 9412, 9419 (May 
16, 2007) (File No. S7-06-07) (Proposed Rule Changes of Self-
Regulatory Organizations Proposing Release).
    \263\ See, e.g., Securities Exchange Act Release No. 62174 (May 
26, 2010), 75 FR 32556, 32605 n. 416 (June 8, 2010) (``FINRA is not 
a small entity as defined by 13 CFR 121.201.'').
---------------------------------------------------------------------------

    The Commission received no comments regarding its initial 
Regulatory Flexibility Analysis.\264\ For the foregoing reasons, the 
Commission certifies that the adopted amendments to Rule 608 would not 
have a significant economic impact on a substantial number of small 
entities for purposes of the Regulatory Flexibility Act.
---------------------------------------------------------------------------

    \264\ See Proposing Release, supra note 1, at 54805-06.
---------------------------------------------------------------------------

VI. Other Matters

    If any of the provisions of these rules, or the application thereof 
to any person or circumstance, is held to be invalid, such invalidity 
shall not affect other provisions or application of such provisions to 
other persons or circumstances that can be given effect without the 
invalid provision or application.
    Pursuant to the Congressional Review Act, the Office of Information 
and Regulatory Affairs has designated these rules as not a major rule, 
as defined by 5 U.S.C. 804(2).

VII. Statutory Authority

    Pursuant to the Exchange Act, and particularly Section 2, 3, 6, 9, 
10, 11A, 15, 15A, 17 and 23(a) thereof, 15 U.S.C. 78b, 78c, 78f, 78l, 
78j, 78k-1, 78o, 78o-3 and 78w(a), the Commission is amending Sections 
200.30-3, 201.700, 201.701, 240.19b-4 and 242.608 of chapter II of 
title 17 of the Code of Federal Regulations in the manner set forth 
below.

List of Subjects

17 CFR Part 200

    Organization, Conduct and ethics, Information and requests.

17 CFR Part 201

    Rules of practice.

17 CFR Part 240

    Brokers, Confidential business information, Fraud, Reporting and 
recordkeeping requirements, Securities.

17 CFR Part 242

    Brokers, Reporting and recordkeeping requirements, Securities.

Text of the Amendments

    For the reasons stated in the preamble, the Commission is amending 
Title 17, Chapter II of the Code of Federal Regulations as follows:

PART 200--ORGANIZATION; CONDUCT AND ETHICS; AND INFORMATION AND 
REQUESTS

0
1. The authority citation for part 200, subpart A continues to read, in 
part, as follows:

    Authority:  15 U.S.C. 77c, 77o, 77s, 77z-3, 77sss, 78d, 78d-1, 
78d-2, 78o-4, 78w, 78ll(d), 78mm, 80a-37, 80b-11, 7202, and 7211 et 
seq., unless otherwise noted.
* * * * *
    Section 200.30-3 is also issued under 15 U.S.C. 78b, 78d, 78f, 
78k-1, 78q, 78s, and 78eee.
* * * * *

0
2. Amend Sec.  200.30-3 by:

[[Page 65495]]

0
a. Removing and reserving paragraphs (a)(27) and (29);
0
b. Revising paragraph (a)(42); and
0
c. Adding paragraph (a)(85).
    The revision and addition read as follows:

Sec.  200.30-3  Delegation of authority to Director of Division of 
Trading and Markets.

* * * * *
    (a) * * *
    (42) Under 17 CFR 242.608(e), to grant or deny exemptions from 17 
CFR 242.608.
* * * * *
    (85) Pursuant to Rule 608(b)(1)(ii) (17 CFR 242.608(b)(1)(ii)), to 
publish notice of the filing of a proposed amendment to an effective 
national market system plan; pursuant to Rule 608(b)(1)(iii) (17 CFR 
242.608(b)(1)(iii)), to notify plan participants that the filing of a 
national market system plan or a proposed amendment to an effective 
national market system plan does not comply with paragraph (a) of Rule 
608 (17 CFR 242.608) or plan filing requirements in other sections of 
Regulation NMS and 17 CFR 240, subpart A, and to determine that such 
plan or amendment is unusually lengthy and complex or raises novel 
regulatory issues and to inform the plan participants of such 
determination; pursuant to Rule 608(b)(2)(i) (17 CFR 242.608(b)(2)(i)), 
to institute proceedings to determine whether such plan or amendment 
should be disapproved, to provide the plan participants notice of the 
grounds for disapproval under consideration, and to extend for a period 
not exceeding 240 days from the date of publication of notice of the 
filing of such plan or amendment the period during which the Commission 
must issue an order approving or disapproving such plan or amendment 
and to determine whether such longer period is appropriate and publish 
the reasons for such determination; pursuant to Rule 608(b)(3)(iii) (17 
CFR 242.608(b)(3)(iii)), to summarily abrogate a proposed amendment put 
into effect upon filing with the Commission and require that such 
amendment be refiled in accordance with paragraph (a)(1) of Rule 608 
and reviewed in accordance with paragraph (b)(2) of Rule 608; and 
pursuant to Rule 608(b)(4) (17 CFR 242.608(b)(4), to put a proposed 
amendment into effect summarily upon publication of notice and on a 
temporary basis not to exceed 120 days.
* * * * *

PART 201--RULES OF PRACTICE

0
3. The authority citation for part 201, subpart D, continues to read as 
follows:

    Authority:  15 U.S.C. 77f, 77g, 77h, 77h-1, 77j, 77s, 77u, 
77sss, 77ttt, 78(c)(b), 78d-1, 78d-2, 78l, 78m, 78n, 78o(d), 78o-3, 
78o-10(b)(6), 78s, 78u-2, 78u-3, 78v, 78w, 80a-8, 80a-9, 80a-37, 
80a-38, 80a-39, 80a-40, 80a-41, 80a-44, 80b-3, 80b-9, 80b-11, 80b-
12, 7202, 7215, and 7217.

0
4. Amend Sec.  201.700 by revising the section heading and paragraphs 
(b), (c)(1), (3), and (4), and (d) to read as follows:

Sec.  201.700  Initiation of proceedings for SRO proposed rule changes 
and for proposed NMS plans and plan amendments.

* * * * *
    (b) Institution of proceedings; notice and opportunity to submit 
written views--(1) Generally. If the Commission determines to initiate 
proceedings to determine whether a self-regulatory organization's 
proposed rule change or whether a proposed national market system 
(``NMS'') plan or a proposed amendment to an effective NMS plan 
(proposed NMS plan or NMS plan amendment hereinafter collectively 
referred to as ``NMS plan filing'') should be disapproved, it shall 
provide notice thereof to the self-regulatory organization that filed 
the proposed rule change or to the NMS plan participants, as well as 
all interested parties and the public, by publication in the Federal 
Register of the grounds for disapproval under consideration.
    (i) Prior to notice. If the Commission determines to institute 
proceedings prior to initial publication by the Commission of the 
notice of the self-regulatory organization's proposed rule change or 
the notice of the NMS plan filing in the Federal Register, then the 
Commission shall publish notice of the proposed rule change or the NMS 
plan filing simultaneously with a brief summary of the grounds for 
disapproval under consideration.
    (ii) Subsequent to notice. If the Commission determines to 
institute proceedings subsequent to initial publication by the 
Commission of the notice of the self-regulatory organization's proposed 
rule change or the notice of the NMS plan filing in the Federal 
Register, then the Commission shall publish separately in the Federal 
Register a brief summary of the grounds for disapproval under 
consideration.
    (iii) Service of an order instituting proceedings. In addition to 
publication in the Federal Register of the grounds for disapproval 
under consideration, the Secretary, or another duly authorized officer 
of the Commission, shall serve a copy of the grounds for disapproval 
under consideration to the self-regulatory organization that filed the 
proposed rule change by serving notice to the person listed as the 
contact person on the cover page of the Form 19b-4 filing and shall 
serve a copy of the grounds for disapproval under consideration to the 
NMS plan participants by serving notice to the contact person for the 
NMS plan. Notice shall be made by delivering a copy of the order to 
such contact person either by any method specified in Sec.  201.141(a) 
or by electronic means including email.
    (2) Notice of the grounds for disapproval under consideration. The 
grounds for disapproval under consideration shall include a brief 
statement of the matters of fact and law on which the Commission 
instituted the proceedings, including the areas in which the Commission 
may have questions or may need to solicit additional information on the 
proposed rule change or NMS plan filing. The Commission may consider 
during the course of the proceedings additional matters of fact and law 
beyond what was set forth in its notice of the grounds for disapproval 
under consideration.
    (3) Demonstration of consistency with the Exchange Act. (i) The 
burden to demonstrate that a proposed rule change is consistent with 
the Exchange Act and the rules and regulations issued thereunder that 
are applicable to the self-regulatory organization is on the self-
regulatory organization that proposed the rule change. As reflected in 
the General Instructions to Form 19b-4, the Form is designed to elicit 
information necessary for the public to provide meaningful comment on 
the proposed rule change and for the Commission to determine whether 
the proposed rule change is consistent with the requirements of the 
Exchange Act and the rules and regulations thereunder applicable to the 
self-regulatory organization. The self-regulatory organization must 
provide all information elicited by the Form, including the exhibits, 
and must present the information in a clear and comprehensible manner. 
In particular, the self-regulatory organization must explain why the 
proposed rule change is consistent with the requirements of the 
Exchange Act and the rules and regulations thereunder applicable to the 
self-regulatory organization. A mere assertion that the proposed rule 
change is consistent with those requirements, or that another self-
regulatory organization has a similar rule in place, is not sufficient. 
Instead, the description of the proposed rule change, its purpose and 
operation, its effect, and a legal analysis of its consistency with 
applicable requirements must all be sufficiently detailed and specific 
to support an affirmative Commission finding. Any

[[Page 65496]]

failure of the self-regulatory organization to provide the information 
elicited by Form 19b-4 may result in the Commission not having a 
sufficient basis to make an affirmative finding that a proposed rule 
change is consistent with the Exchange Act and the rules and 
regulations issued thereunder that are applicable to the self-
regulatory organization.
    (ii) The burden to demonstrate that a NMS plan filing is consistent 
with the Exchange Act and the rules and regulations issued thereunder 
that are applicable to NMS plans is on the plan participants that filed 
the NMS plan filing. In particular, these plan participants must 
explain why the NMS plan filing is consistent with the requirements of 
the Exchange Act and the rules and regulations thereunder applicable to 
NMS plans. A mere assertion that the NMS plan filing is consistent with 
those requirements is not sufficient. Instead, the description of the 
NMS plan filing, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an affirmative Commission 
finding. Any failure of the plan participants that filed the NMS plan 
filing to provide such detail and specificity may result in the 
Commission not having a sufficient basis to make an affirmative finding 
that a NMS plan filing is consistent with the Exchange Act and the 
rules and regulations issued thereunder that are applicable to NMS 
plans.
    (c) Conduct of hearings--(1) Initial comment period in writing. 
Unless otherwise specified by the Commission in its notice of grounds 
for disapproval under consideration, all interested persons will be 
given an opportunity to submit written data, views, and arguments 
concerning the proposed rule change or NMS plan filing under 
consideration and whether the Commission should approve or disapprove 
the proposed rule change or NMS plan filing.
    (i) The self-regulatory organization that submitted the proposed 
rule change may file a written statement in support of its proposed 
rule change demonstrating, in specific detail, how such proposed rule 
change is consistent with the requirements of the Exchange Act and the 
rules and regulations thereunder applicable to the self-regulatory 
organization, including a response to each of the grounds for 
disapproval under consideration. Such statement may include specific 
representations or undertakings by the self-regulatory organization. 
The Commission will specify in the summary of the grounds for 
disapproval under consideration the length of the initial comment 
period.
    (ii) The NMS plan participants may file a written statement in 
support of a NMS plan filing demonstrating, in specific detail, how 
such NMS plan filing is consistent with the requirements of the 
Exchange Act and the rules and regulations thereunder applicable to NMS 
plans, including a response to each of the grounds for disapproval 
under consideration. Such statement may include specific 
representations or undertakings by the plan participants. The 
Commission will specify in the summary of the grounds for disapproval 
under consideration the length of the initial comment period.
* * * * *
    (3) Rebuttal. (i) At the end of the initial comment period, the 
self-regulatory organization that filed the proposed rule change will 
be given an opportunity to respond to any comments received. The self-
regulatory organization may voluntarily file, or the Commission may 
request a self-regulatory organization to file, a response to a comment 
received regarding any aspect of the proposed rule change under 
consideration to assist the Commission in determining whether the 
proposed rule change should be disapproved. The Commission will specify 
in the summary of the grounds for disapproval under consideration the 
length of the rebuttal period.
    (ii) At the end of the initial comment period, the NMS plan 
participants will be given an opportunity to respond to any comments 
received. The plan participants may voluntarily file, or the Commission 
may request the plan participants to file, a response to a comment 
received regarding any aspect of such NMS plan filing under 
consideration to assist the Commission in determining whether such NMS 
plan filing should be disapproved. The Commission will specify in the 
summary of the grounds for disapproval under consideration the length 
of the rebuttal period.
    (4) Non-response. (i) Any failure by the self-regulatory 
organization to provide a complete response, within the applicable time 
period specified, to a comment letter received or to the Commission's 
grounds for disapproval under consideration may result in the 
Commission not having a sufficient basis to make an affirmative finding 
that a proposed rule change is consistent with the Exchange Act and the 
rules and regulations issued thereunder that are applicable to the 
self-regulatory organization.
    (ii) Any failure by the NMS plan participants to provide a complete 
response, within the applicable time period specified, to a comment 
letter received or to the Commission's grounds for disapproval under 
consideration may result in the Commission not having a sufficient 
basis to make an affirmative finding that a NMS plan filing is 
consistent with the Exchange Act and the rules and regulations issued 
thereunder that are applicable to NMS plans.
    (d) Record before the Commission--(1) Filing of papers with the 
Commission. Filing of papers with the Commission shall be made by 
filing them with the Secretary, including through electronic means. In 
its notice setting forth the grounds for disapproval under 
consideration for a proposed rule change or a NMS plan filing, the 
Commission shall inform interested parties of the methods by which they 
may submit written comments and arguments for or against Commission 
approval.
    (2) Public availability of materials received. During the conduct 
of the proceedings, the Commission generally will make available 
publicly all written comments it receives without change. In its notice 
setting forth the grounds for disapproval under consideration for a 
proposed rule change or a NMS plan filing, the Commission shall inform 
interested parties of the methods by which they may view all written 
communications relating to the proposed rule change or a NMS plan 
filing 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.
    (3) Record before the Commission. The Commission shall determine 
each matter on the basis of the record.
    (i) The record shall consist of the proposed rule change filed on 
Form 19b-4 by the self-regulatory organization, including all 
attachments and exhibits thereto, and all written materials received 
from any interested parties on the proposed rule change, including the 
self-regulatory organization that filed the proposed rule change, 
through the means identified by the Commission as provided in paragraph 
(d)(1) of this section, as well as any written materials that reflect 
communications between the Commission and any interested parties.
    (ii) The record shall consist of the NMS plan filing filed by the 
plan participants, including all attachments and exhibits thereto, and 
all written materials received from any interested

[[Page 65497]]

parties on such NMS plan filing, including the plan participants, 
through the means identified by the Commission as provided in paragraph 
(d)(1) of this section, as well as any written materials that reflect 
communications between the Commission and any interested parties.
* * * * *

0
5. Section 201.701 is revised to read as follows:

Sec.  201.701  Issuance of order.

    (a) At any time following conclusion of the rebuttal period 
specified in 17 CFR 201.700(c)(3)(i), the Commission may issue an order 
approving or disapproving the self-regulatory organization's proposed 
rule change together with a written statement of the reasons therefor.
    (b) At any time following conclusion of the rebuttal period 
specified in 17 CFR 201.700(c)(3)(ii), the Commission may issue an 
order approving or disapproving the proposed national market system 
plan or proposed amendment to an effective national market system plan 
together with a written statement of the reasons therefor.

PART 240--GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 
1934

0
6. The authority citation for part 240 continues to read as follows:

    Authority: 15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 
77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 
78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 
78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 
80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, and 7201 et seq.; and 
8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and 
Pub. L. 111-203, 939A, 124 Stat. 1376 (2010); and Pub. L. 112-106, 
sec. 503 and 602, 126 Stat. 326 (2012), unless otherwise noted.
* * * * *
    Section 240.19b-4 is also issued under 12 U.S.C. 5465(e).
* * * * *

0
7. Amend Sec.  240.19b-4 by revising paragraph (g) to read as follows:

Sec.  240.19b-4  Filings with respect to proposed rule changes by self-
regulatory organizations.

* * * * *
    (g) Proceedings to determine whether a proposed rule change should 
be disapproved will be conducted pursuant to 17 CFR 201.700 and 201.701 
(Initiation of Proceedings for SRO Proposed Rule Changes and for 
Proposed NMS Plans and Plan Amendments).
* * * * *

PART 242--REGULATIONS M, SHO, ATS, AC, NMS AND SBSR AND CUSTOMER 
MARGIN REQUIREMENTS FOR SECURITY FUTURES

0
8. The authority citation for part 242 continues to read as follows:

    Authority:  15 U.S.C. 77g, 77q(a), 77s(a), 78b, 78c, 78g(c)(2), 
78i(a), 78j, 78k-1(c), 78l, 78m, 78n, 78o(b), 78o(c), 78o(g), 
78q(a), 78q(b), 78q(h), 78w(a), 78dd-1, 78mm, 80a-23, 80a-29, and 
80a-37.

0
5. Amend Sec.  242.608 by:
0
a. Revising paragraphs (a)(1) and (8);
0
b. Adding paragraphs (b)(1)(i) through (iv);
0
c. Revising paragraph (b)(2); and
0
d. Removing and reserving paragraph (b)(3)(i).
    The revisions and additions read as follows:

Sec.  242.608  Filing and amendment of national market system plans.

    (a) * * *
    (1) Any two or more self-regulatory organizations, acting jointly, 
may file a national market system plan or may propose an amendment to 
an effective national market system plan (``proposed amendment'') by 
submitting the text of the plan or amendment to the Commission by 
email, together with a statement of the purpose of such plan or 
amendment and, to the extent applicable, the documents and information 
required by paragraphs (a)(4) and (5) of this section.
* * * * *
    (8)(i) A participant in an effective national market system plan 
shall ensure that a current and complete version of the plan is posted 
on a plan website or on a website designated by plan participants 
within two business days after notification by the Commission of 
effectiveness of the plan. Each participant in an effective national 
market system plan shall ensure that such website is updated to reflect 
amendments to such plan within two business days after the plan 
participants have been notified by the Commission of its approval of a 
proposed amendment pursuant to paragraph (b) of this section. If the 
amendment is not effective for a certain period, the plan participants 
shall clearly indicate the effective date in the relevant text of the 
plan. Each plan participant also shall provide a link on its own 
website to the website with the current version of the plan.
    (ii) The plan participants shall ensure that any proposed 
amendments filed pursuant to paragraph (a) of this section are posted 
on a plan website or a designated website no later than two business 
days after the filing of the proposed amendments with the Commission. 
If the plan participants do not post a proposed amendment on a plan 
website or a designated website on the same business day that they file 
such proposed amendment with the Commission, then the plan participants 
shall inform the Commission of the business day on which they posted 
such proposed amendment on a plan website or a designated website. The 
plan participants shall maintain any proposed amendment to the plan on 
a plan website or a designated website until the Commission approves 
the plan amendment and the plan participants update the website to 
reflect such amendment or the plan participants withdraw the proposed 
amendment or the plan participants are notified pursuant to paragraph 
(b)(1)(iii) of this section that the proposed amendment is not filed in 
compliance with requirements or the Commission disapproves the proposed 
amendment. If the plan participants withdraw a proposed amendment or 
are notified pursuant to paragraph (b)(1)(iii) of this section that a 
proposed amendment is not filed in compliance with requirements or the 
Commission disapproves a proposed amendment, the plan participants 
shall remove such amendment from the plan website or designated website 
within two business days of withdrawal, notification of non-compliant 
filing or disapproval. Each plan participant shall provide a link to 
the website with the current version of the plan.
* * * * *
    (b) * * *
    (1) * * *
    (i) Publication of national market system plans. The Commission 
shall send the notice of the filing of a national market system plan to 
the Federal Register for publication thereof under this paragraph 
(b)(1) within 90 days of the business day on which such plan was filed 
with the Commission pursuant to paragraph (a) of this section. If the 
Commission fails to send the notice to the Federal Register for 
publication thereof within such 90-day period, then the date of 
publication shall be deemed to be the last day of such 90-day period.
    (ii) Publication of proposed amendments. The Commission shall send 
the notice of the filing of a proposed amendment to the Federal 
Register for publication thereof under this paragraph (b)(1) within 15 
days of the business day on which such

[[Page 65498]]

proposed amendment was posted on a plan website or a website designated 
by plan participants pursuant to paragraph (a) of this section after 
being filed with the Commission pursuant to paragraph (a) of this 
section. If the Commission fails to send the notice to the Federal 
Register for publication thereof within such 15-day period, then the 
date of publication shall be deemed to be the business day on which 
such website posting was made.
    (iii) A national market system plan or proposed amendment has not 
been filed with the Commission for purposes of this paragraph (b)(1) 
if, not later than 7 business days after the business day of receipt by 
the Commission, the Commission notifies the plan participants that the 
filing of the national market system plan or proposed amendment does 
not comply with paragraph (a) of this section or plan filing 
requirements in other sections of Regulation NMS and part 240, subpart 
A of this chapter, except that if the Commission determines that the 
plan or amendment is unusually lengthy and is complex or raises novel 
regulatory issues, the Commission shall inform the plan participants of 
such determination not later than 7 business days after the business 
day of receipt by the Commission and, for purposes of this paragraph 
(b)(1), the filing of such plan or amendment has not been made with the 
Commission if, not later than 21 days after the business day of receipt 
by the Commission, the Commission notifies the plan participants that 
the filing of such plan or amendment does not comply with paragraph (a) 
of this section or plan filing requirements in other sections of 
Regulation NMS and part 240, subpart A of this chapter.
    (iv) For purposes of this section, a ``business day'' is any day 
other than a Saturday, Sunday, Federal holiday, a day that the Office 
of Personnel Management has announced that Federal agencies in the 
Washington, DC area are closed to the public, a day on which the 
Commission is subject to a Federal government shutdown or a day on 
which the Commission's Washington, DC office is otherwise not open for 
regular business; provided further, a filing received by the Commission 
or a website posting made at or before 5:30 p.m. Eastern Standard Time 
or Eastern Daylight Saving Time, whichever is currently in effect, on a 
business day, shall be deemed received or made on that business day, 
and a filing received by the Commission or a website posting made after 
5:30 p.m. Eastern Standard Time or Eastern Daylight Saving Time, 
whichever is currently in effect, shall be deemed received or made on 
the next business day.
    (2) The Commission shall approve a national market system plan or 
proposed amendment to an effective national market system plan, with 
such changes or subject to such conditions as the Commission may deem 
necessary or appropriate, if it finds that such plan or amendment is 
necessary or appropriate in the public interest, for the protection of 
investors and the maintenance of fair and orderly markets, to remove 
impediments to, and perfect the mechanisms of, a national market 
system, or otherwise in furtherance of the purposes of the Act. The 
Commission shall disapprove a national market system plan or proposed 
amendment if it does not make such a finding. Approval or disapproval 
of a national market system plan, or an amendment to an effective 
national market system plan (other than an amendment initiated by the 
Commission), shall be by order. Promulgation of an amendment to an 
effective national market system plan initiated by the Commission shall 
be by rule.
    (i) Within 90 days of the date of publication of notice of the 
filing of a national market system plan or proposed amendment, or 
within such longer period as to which the plan participants consent, 
the Commission shall, by order, approve or disapprove the plan or 
amendment, or institute proceedings to determine whether the plan or 
amendment should be disapproved. Proceedings to determine whether the 
plan or amendment should be disapproved will be conducted pursuant to 
17 CFR 201.700 and 201.701. Such proceedings shall include notice of 
the grounds for disapproval under consideration and opportunity for 
hearing and shall be concluded within 180 days of the date of 
publication of notice of the plan or amendment. At the conclusion of 
such proceedings the Commission shall, by order, approve or disapprove 
the plan or amendment. The time for conclusion of such proceedings may 
be extended for up to 60 days (up to 240 days from the date of notice 
publication) if the Commission determines that a longer period is 
appropriate and publishes the reasons for such determination or the 
plan participants consent to the longer period.
    (ii) The time for conclusion of proceedings to determine whether a 
national market system plan or proposed amendment should be disapproved 
may be extended for an additional period up to 60 days beyond the 
period set forth in paragraph (b)(2)(i) of this section (up to 300 days 
from the date of notice publication) if the Commission determines that 
a longer period is appropriate and publishes the reasons for such 
determination or the plan participants consent to the longer period.
* * * * *

    By the Commission.

    Dated: August 19, 2020.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-18572 Filed 10-14-20; 8:45 am]
BILLING CODE 8011-01-P