Document ID: SEC-2021-0556-0001
Agency: sec
Document Type: Notice
Title: Joint Industry Plan: National Market System Plan Governing the Consolidated Audit Trail
Posted Date: 2021-04-21T04:00Z

[Federal Register Volume 86, Number 75 (Wednesday, April 21, 2021)]
[Notices]
[Pages 21050-21080]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-08049]

[[Page 21049]]

Vol. 86

Wednesday,

No. 75

April 21, 2021

Part IV

Securities and Exchange Commission

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Joint Industry Plan; Notice of Filing of Amendment to the National 
Market System Plan Governing the Consolidated Audit Trail by BOX 
Exchange LLC; Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe 
EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc. 
and Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc., 
Investors Exchange LLC, Long-Term Stock Exchange, Inc., Miami 
International Securities Exchange LLC, MEMX, LLC, MIAX Emerald, LLC, 
MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, 
Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market LLC; and New 
York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE 
Chicago, Inc., and NYSE National, Inc.; Notice

  Federal Register / Vol. 86, No. 75 / Wednesday, April 21, 2021 / 
Notices  

[[Page 21050]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91555; File No. 4-698]

Joint Industry Plan; Notice of Filing of Amendment to the 
National Market System Plan Governing the Consolidated Audit Trail by 
BOX Exchange LLC; Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., 
Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, 
Inc. and Cboe Exchange, Inc., Financial Industry Regulatory Authority, 
Inc., Investors Exchange LLC, Long-Term Stock Exchange, Inc., Miami 
International Securities Exchange LLC, MEMX, LLC, MIAX Emerald, LLC, 
MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, 
Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market LLC; and New 
York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE 
Chicago, Inc., and NYSE National, Inc.

April 14, 2021.

I. Introduction

    On March 31, 2021, the Operating Committee for Consolidated Audit 
Trail, LLC (``CAT LLC''), on behalf of the following parties to the 
National Market System Plan Governing the Consolidated Audit Trail (the 
``CAT NMS Plan'' or ``Plan''): \1\ BOX Exchange LLC; Cboe BYX Exchange, 
Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX 
Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Financial 
Industry Regulatory Authority, Inc., Investors Exchange LLC, Long-Term 
Stock Exchange, Inc., MEMX, LLC, Miami International Securities 
Exchange LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., 
Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, 
The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE American 
LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc. 
(collectively, the ``Participants,'' ``self-regulatory organizations,'' 
or ``SROs'') filed with the Securities and Exchange Commission (``SEC'' 
or ``Commission'') pursuant to Section 11A(a)(3) of the Securities 
Exchange Act of 1934 (``Exchange Act''),\2\ and Rule 608 thereunder,\3\ 
a proposed amendment to the CAT NMS Plan to implement a revised funding 
model (``Proposed Funding Model'') for the consolidated audit trail 
(``CAT'') and to establish a fee schedule for Participant CAT fees in 
accordance with the Proposed Funding Model.\4\ Exhibit A, attached 
hereto, contains proposed revisions to Articles I and XI of the CAT NMS 
Plan as well as proposed Appendix B to the Plan containing the fee 
schedule setting forth the CAT fees to be paid by the Participants. In 
addition, the Operating Committee provided an example of how the 
Proposed Funding Model would operate for illustrative purposes only, as 
attached hereto as Exhibit B. The example is provided in three charts 
setting forth illustrative CAT fees for each Participant and Industry 
Member CAT Reporter. The Commission is publishing this notice to 
solicit comments from interested persons on the amendment.\5\
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    \1\ The CAT NMS Plan is a national market system plan approved 
by the Commission pursuant to Section 11A of the Exchange Act and 
the rules and regulations thereunder. See Securities Exchange Act 
Release No. 79318 (November 15, 2016), 81 FR 84696 (November 23, 
2016).
    \2\ 15 U.S.C 78k-1(a)(3).
    \3\ 17 CFR 242.608.
    \4\ See Letter from Michael Simon, CAT NMS Plan Operating 
Committee Chair, to Vanessa Countryman, Secretary, Commission, dated 
March 31, 2021 (``Transmittal Letter'').
    \5\ 17 CFR 242.608.
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II. Description of the Plan

    Set forth in this Section II is the statement of the purpose and 
summary of the amendment, along with information required by Rule 
608(a) under the Exchange Act,\6\ substantially as prepared and 
submitted by the Participants to the Commission.\7\
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    \6\ See 17 CFR 242.608(a).
    \7\ See Transmittal Letter, supra note 4. Unless otherwise 
defined herein, capitalized terms used herein are defined as set 
forth in the CAT NMS Plan.
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A. Description of the Amendments to the CAT NMS Plan

    The Operating Committee proposes to revise certain aspects of the 
funding model set forth in Article XI of the CAT NMS Plan (the 
``Original Funding Model''). The Original Funding Model requires a 
bifurcated funding model, where costs associated with building and 
operating the CAT would be borne by (1) Industry Members (other than 
alternative trading systems (``ATSs'') that execute transactions in 
Eligible Securities (``Execution Venue ATSs'')) through fixed tiered 
fees based on message traffic for Eligible Securities, and (2) 
Participants and Industry Members that are Execution Venue ATSs for 
Eligible Securities through fixed tiered fees based on market share. 
The Operating Committee proposes to amend the CAT NMS Plan to adopt the 
Proposed Funding Model. The Proposed Funding Model would continue to 
require many of the same elements as the Original Funding Model, 
including the bifurcated funding approach, and the use of market share 
and message traffic for allocating costs. The Proposed Funding Model, 
however, would revise the Original Funding Model in certain ways, 
including (1) dividing the CAT costs between Participants and Industry 
Members, rather than between Execution Venues and Industry Members 
(other than Execution Venue ATSs); (2) eliminating the use of tiers in 
calculating CAT fees for Participants and Industry Members; (3) 
adopting certain minimum and maximum CAT fees for Industry Members and 
Participants; and (4) imposing certain discounts for market making 
activity when calculating Industry Member CAT fees. The Operating 
Committee also proposes to adopt a fee schedule to establish the CAT 
fees applicable to Participants based on the Proposed Funding Model. 
The fee schedule would establish the allocation percentages and other 
variables for calculating the CAT fees under the Proposed Funding 
Model.
1. Executive Summary of the Proposed Funding Model
    Under the Proposed Funding Model, the CAT fees for the relevant 
period would be designed to cover the total CAT costs associated with 
developing, implementing and operating the CAT for the relevant period 
(``Total CAT Costs'').\8\ The Proposed Funding Model would implement a 
bifurcated funding model, where these costs would be borne by both 
Participants and Industry Members. Industry Members as a group would 
pay 75% of the Total CAT Costs (the ``Industry Member Allocation''), 
and Participants as a group would pay 25% of the Total CAT Costs (the 
``Participant Allocation'').\9\
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    \8\ Note that certain costs would be excluded from the 
Historical CAT Assessment Costs, as discussed in more detail below.
    \9\ Each Industry Member and Participant CAT Reporter would be 
required to pay CAT fees as established via the Proposed Funding 
Model. CAT Reporting Agents acting in their role as such would not 
have an obligation to pay CAT fees.
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    The Industry Member Allocation would be allocated to each Industry 
Member based on message traffic. This is similar to the Original 
Funding Model, which allocated the Industry Member Allocation among 
Industry Members (other than Execution Venue ATSs) based on message 
traffic. The Proposed Funding Model would differ from the Original 
Funding Model because it would eliminate tiering, and it would include 
certain market maker discounts and a minimum and

[[Page 21051]]

maximum CAT fee for Industry Members. Under the Proposed Funding Model, 
each Industry Member would pay a CAT fee that is calculated by 
multiplying each Industry Member's percentage of the total message 
traffic of all Industry Members each quarter by the Industry Member 
Allocation, subject to certain market making discounts, a minimum fee 
and a maximum fee. Each Industry Member that is an Options Market Maker 
\10\ would have a discount based on the options trade-to-quote ratio 
applied to its options market making message traffic when calculating 
that Industry Member's message traffic to prevent a potentially 
disproportionate effect on options market making due to such message 
traffic. Similarly, to prevent a potentially disproportionate effect on 
market making in NMS Stocks, each Industry Member that is an equity 
market maker in NMS Stocks (``Equity Market Maker'') would have a 
discount based on the NMS Stock trade-to-quote ratio applied to its 
market making message traffic in NMS Stocks when calculating that 
Industry Member's message traffic.\11\ In addition, each Industry 
Member CAT Reporter would pay a minimum CAT fee (``Minimum Industry 
Member CAT Fee'') of $125 per quarter if its CAT fee would be less than 
$125 per quarter when calculated based on message traffic. Furthermore, 
an Industry Member's CAT fee would be subject to a maximum fee 
(``Maximum Industry Member CAT Fee''). The Maximum Industry Member CAT 
Fee would be the fee calculated based on 8% of the total message 
traffic for all Industry Members. If an Industry Member's fee is 
limited to the Maximum Industry Member CAT Fee, any excess amount which 
the Industry Member would have paid as a fee above such Maximum 
Industry Member CAT Fee will be re-allocated among all Industry Members 
(including any Industry Members subject to the Maximum Industry Member 
CAT Fee and any Industry Members subject to the Minimum Industry Member 
CAT Fee) in accordance with each Industry Member's percentage of total 
message traffic.
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    \10\ Section 1.1 of the CAT NMS Plan defines an ``Options Market 
Maker'' as ``a broker-dealer registered with an exchange for the 
purpose of making markets in options contracts traded on the 
exchange.''
    \11\ The proposed market making discounts are consistent with a 
prior CAT fee proposal filed with the SEC (``Prior Fee Proposal''). 
For a description of the Prior Fee Proposal, see Securities Exchange 
Act Rel. No. 82451 (Jan. 5, 2018), 83 FR 1399 (Jan. 11, 2018) 
(``Prior Fee Proposal Release''). The Participants later withdrew 
this proposed amendment. Securities Exchange Act Rel. No. 82892 
(Mar. 16, 2018), 83 FR 12633 (Mar. 22, 2018) (``Withdrawal 
Release'').
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    As for the Participant Allocation, each Participant would pay a 
minimum CAT fee of 0.75% of the Participant Allocation (the ``Minimum 
Participant Fee''). The Participant Allocation minus the total Minimum 
Participant Fees required to be paid by all Participants (the 
``Adjusted Participant Allocation'') would be divided between 
Participants that execute transactions in, or in the case of a national 
securities association, has trades reported by its members to its trade 
reporting facility or facilities for reporting transactions effected 
otherwise than on an exchange, in Eligible Securities that are NMS 
Stocks (``Equities Participants'') and Participants that execute 
transactions in Listed Options (``Options Participants''). Equities 
Participants as a group would pay 60% of the Adjusted Participant 
Allocation (``Equities Participant Allocation'') and Options 
Participants as a group would pay 40% of the Adjusted Participant 
Allocation (``Options Participant Allocation'').\12\
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    \12\ For the avoidance of doubt, the Equities Participant 
Allocation would be divided among Equities Participants based only 
on each Participant's market share in NMS Stocks. Unlike the 
Original Funding Model, the allocation of the Equities Participant 
Allocation among Equities Participants under the Proposed Funding 
Model will not take into consideration market share associated with 
OTC Equity Securities for which FINRA facilitates trade reporting.
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    The Equities Participant Allocation would be divided among Equities 
Participants based on each Equities Participant's market share in NMS 
Stocks. Each Equities Participant would pay a CAT fee that is 
calculated by multiplying its percentage of the total market share of 
NMS Stock for all Equities Participants during the relevant time period 
by the Equities Participant Allocation, subject to a maximum Equities 
Participant fee. Total market share in NMS Stocks would be determined 
by calculating the total volume in NMS Stocks reported by all Equities 
Participants during the relevant time period. A national securities 
association (currently, only FINRA) would pay its respective share of 
the Equities Participant Allocation calculated based on market share, 
provided that the national securities association would not pay more 
than a maximum Equities Participant fee, which would be the greater of 
(x) 20% of the Equities Participant Allocation or (y) the highest CAT 
fee required to be paid by any other Equities Participant plus 5% of 
such highest CAT fee (``Maximum Equities Participant Fee''), plus any 
additional fee required by the re-allocation of any excess amount which 
such Participant otherwise would have paid if not subject to the 
Maximum Equities Participant Fee. Specifically, if any Participant's 
fee is limited to the Maximum Equities Participant Fee, any excess 
amount which such Participant otherwise would have paid as a fee above 
such Maximum Equities Participant Fee will be re-allocated among all 
Equities Participants (including any Equities Participant subject to 
the Maximum Equities Participant Fee) in accordance with their market 
share.
    The Options Participant Allocation would be divided among Options 
Participants based on each Options Participant's market share in Listed 
Options. Each Options Participant would pay a CAT fee that is 
calculated by multiplying its percentage of the total market share in 
Listed Options during the relevant time period by the Options 
Participant Allocation. Total market share in Listed Options would be 
determined by calculating the total volume of Listed Options contracts 
reported by all Options Participants during the relevant time period.
    The following chart summarizes certain similarities and differences 
between the Original Funding Model \13\ (as well as certain aspects 
that were proposed in the Prior Fee Proposal \14\) and the Proposed 
Funding Model:
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    \13\ The Original Funding Model is set forth in the CAT NMS 
Plan, which was approved in 2016. See CAT NMS Plan Approval Order at 
84793-84798.
    \14\ See generally Prior Fee Proposal Release.

------------------------------------------------------------------------
 Original funding model (as proposed in
          prior fee proposal)                 Proposed funding model
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Bifurcated Cost Allocation:
    75% Industry Member Allocation.....  75% Industry Member Allocation.
    25% Execution Venue Allocation.....  25% Participant Allocation.
    Execution Venues include             All ATSs would be included as
     Participants and Execution Venue     Industry Members.
     ATSs.

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    Note that the bifurcated model to
     allocate costs among Industry
     Members (other than Execution
     Venue ATSs) and Execution Venues
     is part of the Original Funding
     Model; the 75%-25% allocation had
     been proposed in the Prior Fee
     Proposal.
75% Industry Member Allocation:
    Message Traffic Approach with        Message Traffic Approach:
     Tiering:
    Count each Industry Member's         Count each Industry Member's
     messages so the Industry Member      messages so the Industry
     can be assigned to a tier and        Member can be allocated a
     allocated a proportionate share of   proportionate share of cost
     cost for that tier.                  compared to total Industry
    Note that the discounts for market    Member messages, subject to
     making had been proposed in the      certain discounts for market
     Prior Fee Proposal..                 making, a minimum fee, and a
                                          maximum fee.
25% Participant Allocation:
    Market Share Approach with Tiering:  Market Share Approach:
        No Minimum Participant Fee.      Minimum Participant Fee: 0.75%
                                          of the Participant Allocation
                                          allocated to each Participant.
        Market Group Split:              Market Group Split:
             67% of costs              60% of costs
             allocated to NMS Stock and        allocated to NMS Stock
             OTC Equities Execution            Participants.
             Venues.
             33% of costs            40% of costs
             allocated to Listed             allocated Listed Options
             Options Execution Venues.       Participants.
    Note that the split between NMS      Note OTC Equity Security market
     Stock and OTC Equities Execution     share would not be considered.
     Venues and Listed Options
     Execution Venues is part of the
     Original Funding Model; the 67%-
     33% allocation had been proposed
     in the Prior Fee Proposal.
    Market Share-Based Tier Allocation:  Market Share-Based Allocation:
         Within NMS Stock and        Within NMS Stock
         OTC Equities market group,          market group, determine
         determine each Execution            each Participant's market
         Venue's market share so the         share, subject to a FINRA-
         Execution Venue can be              related cap allocation/
         assigned to a tier and              reallocation, so the
         allocated a proportionate           Participant can be
         share of cost for that tier.        allocated a proportionate
                                             share of cost.
         Within Listed Options       Within Listed
         market group, determine each        Options market group,
         Execution Venue's market share      determine each
         so the Execution Venue can be       Participant's market share
         assigned to a tier and              so it can be allocated a
         allocated a proportionate           proportionate share of
         share of cost for that tier.        cost.
------------------------------------------------------------------------

    As discussed in detail below, the Operating Committee believes that 
the Proposed Funding Model satisfies the applicable requirements of the 
Exchange Act as well as the funding principles and other requirements 
of the CAT NMS Plan, as proposed to be revised herein. For example, the 
Operating Committee believes that the Proposed Funding Model provides 
for the ``equitable allocation of reasonable dues, fees, and other 
charges among its members and issuers and other persons using its 
facilities necessary or appropriate in furtherance of the purposes of 
this chapter.'' \15\ The Operating Committee also believes that the 
Proposed Funding Model is ``not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers.'' \16\ 
Furthermore, the Operating Committee believes that the Proposed Funding 
Model does ``not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of this chapter.'' \17\ 
Accordingly, the Operating Committee believes that the Proposed Funding 
Model satisfies the requirements of the Exchange Act. The Participants 
also believe that the Proposed Funding Model satisfies the funding 
principles set forth in Section 11.2 of the CAT NMS Plan, as proposed 
to be modified herein, as well as the requirements in Section 11.1(c) 
of the CAT NMS Plan. The Operating Committee therefore believes that 
the Commission should approve the Proposed Funding Model as it ``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.'' \18\
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    \15\ Sections 6(b)(4) and 15A(b)(5) of the Exchange Act.
    \16\ Sections 6(b)(5) and 15A(b)(6) of the Exchange Act.
    \17\ Sections 6(b)(8) and 15A(b)(9) of the Exchange Act.
    \18\ Rule 608(b)(2) of Regulation NMS under the Exchange Act.
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2. Allocation of CAT Costs Between Industry Members and Participants
a. CAT Fees for Both Industry Members and Participants
    Under the Proposed Funding Model, both Participants and Industry 
Members would contribute to the funding of the CAT by paying a CAT fee. 
As permitted by Rule 613, the CAT NMS Plan requires Industry Members to 
pay a CAT fee. Nevertheless, the Participants have paid the full cost 
of the creation, implementation and maintenance of the CAT since 2012, 
pending Commission approval of a fee program. The continued funding of 
the CAT solely by the Participants was and is not contemplated by the 
CAT NMS Plan, nor is it a financially sustainable approach.
    Rule 613(a)(1)(vii)(D) contemplates Industry Members contributing 
to the payment of CAT costs. Specifically, this provision requires the 
CAT NMS Plan to address ``[h]ow the plan sponsors propose to fund the 
creation, implementation, and maintenance of the consolidated audit 
trail, including the proposed allocation of such estimated costs among 
the plan sponsors, and between the plan sponsors and members of the 
plan sponsors.''
    In addition, as approved by the SEC, the CAT NMS Plan specifically 
contemplates CAT fees to be paid by both Industry Members and 
Participants. Section 11.1(b) states that ``the Operating Committee 
shall have discretion to establish funding for the Company,\19\ 
including: (i) Establishing

[[Page 21053]]

fees that the Participants shall pay; and (ii) establishing fees for 
Industry Members that shall be implemented by the Participants.'' \20\ 
The Commission stated in approving the CAT NMS Plan the following:
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    \19\ As defined in the CAT NMS Plan, the Company is the 
Consolidated Audit Trail, LLC.
    \20\ See also Sections 11.1(c), 11.2(c), and 11.3(a) and (b) of 
the CAT NMS Plan.
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    The Commission believes that the proposed funding model reflects a 
reasonable exercise of the Participants' funding authority to recover 
the Participants' costs related to the CAT. The CAT is a regulatory 
facility jointly owned by the Participants and, as noted above, the 
Exchange Act specifically permits the Participants to charge members 
fees to fund their self-regulatory obligations. The Commission further 
believes that the proposed funding model is designed to impose fees 
reasonably related to the Participants' self-regulatory obligations 
because the fees would be directly associated with the costs of 
establishing and maintaining the CAT, and not unrelated SRO 
services.\21\
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    \21\ CAT NMS Plan Approval Order at 84794.
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    In its recent amendments to the CAT NMS Plan, the SEC reaffirmed 
the ability for the Participants to charge Industry Members a CAT fee. 
Specifically, the SEC noted that the amendments were not intended to 
change the basic funding structure for the CAT, which may include fees 
established by the Operating Committee, and implemented by the 
Participants, to recover from Industry Members the costs and expenses 
incurred by the Participants in connection with the development and 
implementation of the CAT.\22\
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    \22\ Securities Exchange Act Rel. No. 88890 (May 15, 2020), 85 
FR 31322, 31329 (May 22, 2020) (``Financial Accountability Milestone 
Release'').
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    Finally, as noted by the SEC, the CAT ``substantially enhance[s] 
the ability of the SROs and the Commission to oversee today's 
securities markets,'' \23\ thereby benefitting all market participants. 
As such, both Participants and Industry Members should contribute to 
covering the cost of the CAT.
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    \23\ Securities Exchange Act Rel. No. 67457 (Jul. 18, 2012), 77 
FR 45722, 45726 (Aug. 1, 2012) (``Rule 613 Adopting Release'').
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b. Categorization of Alternative Trading Systems
    The Original Funding Model employs a bifurcated approach in which 
costs associated with building and operating the CAT would be borne by 
(1) Participants and Industry Members that are Execution Venue ATSs for 
Eligible Securities, and (2) Industry Members (other than Execution 
Venue ATSs). Under the Proposed Funding Model, the concept of an 
Execution Venue would be eliminated, and CAT costs would be divided 
between Participants as a group and Industry Members as a group; 
Execution Venue ATSs would be treated like other Industry Members, not 
Participants. Accordingly, the Operating Committee proposes to delete 
the definition of the term ``Execution Venue'' and related provisions 
from the CAT NMS Plan.
    The Operating Committee believes that this change would address 
prior comments regarding the inclusion of ATSs in the Execution Venue 
category with Participants. First, this proposed change would simplify 
the model by requiring all Industry Members to pay a fee based on 
message traffic, rather than treating certain Industry Members--
Execution Venue ATSs--in the same manner as Participants, which would 
pay a fee based on market share. Second, this proposed change would 
address comments that treating Execution Venue ATSs like Participants 
would act as a barrier to entry for smaller ATSs.\24\ Whether or not 
such a potential would exist, under the Proposed Funding Model, smaller 
ATSs would be treated like any other smaller Industry Member when 
calculating their CAT fee, thereby rendering comments regarding 
potential barriers to entry for smaller ATSs moot.
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    \24\ See, e.g., Securities Exchange Act Rel. No. 81067 (June 30, 
2017), 82 FR 31656, 31664 (July 7, 2017) (``Suspension Order'').
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    Section 1.1 of the CAT NMS Plan defines the term ``Execution 
Venue'' to mean ``a Participant or an alternative trading system 
(`ATS') (as defined in Rule 300 of Regulation ATS) that operates 
pursuant to Rule 301 of Regulation ATS (excluding any such ATS that 
does not execute orders).'' The Operating Committee proposes to delete 
this term and its definition from Section 1.1 of the CAT NMS Plan as 
the concept will no longer be necessary for the Proposed Funding Model.
    The Operating Committee also proposes to amend Section 11.2(c)(i) 
and (ii) of the CAT NMS Plan to reflect the new approach of the 
Proposed Funding Model. Section 11.2(c)(i) of the CAT NMS Plan states 
that the fees charged to ``CAT Reporters that are Execution Venues, 
including ATSs, are based upon the level of market share.'' Under the 
Proposed Funding Model, fees charged to Participants only would be 
based on market share; fees charged to all Industry Members, including 
ATSs, will be based on message traffic. Accordingly, the Operating 
Committee proposes to replace the phrase ``CAT Reporters that are 
Execution Venues, including ATSs'' with the term ``Participants.''
    Section 11.2(c)(ii) of the CAT NMS Plan states that the fees 
charged to ``Industry Members' non-ATS activities are based upon 
message traffic.'' Under the Proposed Funding Model, both the ATS and 
non-ATS activity of Industry Members will be used as the basis for the 
fees charged to Industry Members. Accordingly, the Operating Committee 
proposes to delete the phrase ``non-ATS activities'' from Section 
11.2(c)(ii) of the CAT NMS Plan.
    Section 11.3(a) describes the CAT fees to be paid by Execution 
Venues. Because these fees would be limited to Participants, not to 
Execution Venues more broadly, the Operating Committee proposes to 
replace the references to ``Execution Venues'' with ``Participants'' in 
Section 11.3(a) of the CAT NMS Plan. The Operating Committee proposes 
to replace the reference to ``Execution Venues'' with ``Participants'' 
in Section 11.3(a) of the CAT NMS Plan, which currently states that 
``[t]he Operating Committee will establish fixed fees to be payable by 
Execution Venues as provided in this Section 11.3(a).''
    The Operating Committee also proposes to replace the references to 
``Execution Venue'' with ``Participants'' in Section 11.3(a)(i) of the 
CAT NMS Plan,\25\ which currently states:
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    \25\ Note that, as discussed below, references to tiers and OTC 
Equity Securities in this provision will be deleted as well.
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    (i) Each Execution Venue that: (A) Executes transactions; or (B) in 
the case of a national securities association, has trades reported by 
its members to its trade reporting facility or facilities for reporting 
transactions effected otherwise than on an exchange, in NMS Stocks or 
OTC Equity Securities will pay a fixed fee depending on the market 
share of that Execution Venue in NMS Stocks and OTC Equity Securities, 
with the Operating Committee establishing at least two and no more than 
five tiers of fixed fees, based on an Execution Venue's NMS Stocks and 
OTC Equity Securities market share. For these purposes, market share 
for Execution Venues that execute transactions will be calculated by 
share volume, and market share for a national securities association 
that has trades reported by its members to its trade reporting facility 
or facilities for reporting transactions effected otherwise than on an 
exchange in NMS Stocks or OTC Equity Securities will be calculated 
based on share volume of trades reported, provided, however, that the 
share volume reported to such national

[[Page 21054]]

securities association by an Execution Venue shall not be included in 
the calculation of such national security association's market share.
    In addition, the Operating Committee proposes to delete the final 
clause in Section 11.3(a)(i), which states ``provided, however, that 
the share volume reported to such national securities association by an 
Execution Venue shall not be included in the calculation of the such 
national security association's market share.'' This proviso was 
included to clarify how the share volume of an Execution Venue ATS was 
treated in the context of calculating a national security association's 
market share when Execution Venue ATSs and Participants were in the 
same fee category. As Execution Venue ATSs would be treated as Industry 
Members under the Proposed Funding Model, the Operating Committee 
proposes to delete this proviso from Section 11.3(a)(i) of the CAT NMS 
Plan.
    Similarly, Section 11.3(a)(ii) of the CAT NMS Plan states that 
``[e]ach Execution Venue that executes transactions in Listed Options 
will pay a fixed fee depending on the Listed Options market share of 
that Execution Venue.'' The Operating Committee proposes to replace 
both references to ``Execution Venue'' with ``Participant.''
    Section 11.3(b) of the CAT NMS Plan provides guidance as to how the 
message traffic for certain ATS activity would be included in the 
Industry Member message traffic calculations. Specifically, Section 
11.3(b) of the CAT NMS Plan, in part, states, the following:
    For the avoidance of doubt, the fixed fees payable by Industry 
Members pursuant to this paragraph shall, in addition to any other 
applicable message traffic, include message traffic generated by: (i) 
An ATS that does not execute orders that is sponsored by such Industry 
Member; and (ii) routing orders to and from any ATS sponsored by such 
Industry Member.
    Under the Original Funding Model, Execution Venue ATSs were treated 
as Execution Venues, but other ATSs were treated as Industry Members. 
Accordingly, this statement clarified how message traffic would be 
counted for ATSs that were not Execution Venue ATSs and for routing to 
and from ATSs. Under the Proposed Funding Model, however, all ATS 
activity would be treated as Industry Member activity for purposes of 
calculating the Industry Member CAT fees. Therefore, because this 
clarifying statement is unnecessary under the Proposed Funding Model, 
the Operating Committee proposes to delete this sentence from Section 
11.3(b) of the CAT NMS Plan.
c. 75%-25% Allocation Between Industry Members and Participants
    As discussed above, the CAT NMS Plan as approved by the Commission 
provides the Operating Committee with discretion to establish CAT fees 
to be paid by Participants and Industry Members. The Proposed Funding 
Model contemplates allocating CAT costs between Participants and 
Industry Members to permit the calculation of CAT fees based on market 
share for Participants and based on message traffic for Industry 
Members.\26\ The Operating Committee proposes to implement this 
allocation through a 75%-25% allocation between Industry Members and 
Participants. Specifically, in calculating CAT fees for the relevant 
period under the Proposed Funding Model, Industry Members as a group 
would pay 75% of the Total CAT Costs for the relevant period 
(``Industry Member Allocation''), and Participants as a group would pay 
25% of the Total CAT Costs for the relevant period (``Participant 
Allocation'').
---------------------------------------------------------------------------

    \26\ See, e.g., Sections 11.2(b)-(c) and 11.3(a)-(b) of the CAT 
NMS Plan. In the Original Funding Model, costs were allocated 
between Execution Venues and certain Industry Members, whereas the 
Proposed Funding Model proposes to allocate costs between 
Participants and Industry Members.
---------------------------------------------------------------------------

    In proposing a 75%-25% allocation between Industry Members and 
Participants, Participants considered a variety of different potential 
allocations between Industry Members and Participants. After analyzing 
the various alternatives, the Participants determined that the 75%-25% 
allocation continues to be an equitable allocation of reasonable CAT 
fees between Industry Members and Participants that balances the costs 
paid by each CAT Reporter and the regulatory benefits each receives.
    The Operating Committee notes that the 75%-25% allocation would 
have the effect of increasing the cost allocation to Participants by 
approximately 8% of the total CAT costs in comparison to the Prior Fee 
Proposal.\27\ The Prior Fee Proposal also relied upon a 75%-25% 
allocation between CAT Reporters, but the allocation was structured 
differently than in the Proposed Funding Model. In the Prior Fee 
Proposal, Industry Members (other than Execution Venue ATSs) would have 
paid 75% of the total CAT costs, and Participants and Execution Venue 
ATSs would have paid 25% of the total CAT costs.\28\ Most ATSs were 
included in the 25% allocation for Execution Venues. ATSs accounted for 
approximately 8% of the total CAT costs in the Prior Fee Proposal, and 
approximately 32% of the Execution Venue allocation. By moving ATSs to 
the Industry Member Allocation, Participants would pay the full 25% of 
the total CAT costs allocated to Participants rather than approximately 
68% of the 25% of Total CAT costs allocated to Execution Venues under 
the Prior Fee Proposal. Using total CAT cost data for 2020, 8% of total 
CAT costs would be approximately $6.8 million for 2020. The Operating 
Committee believes that this substantial increase in the Participant 
share of the total CAT costs addresses comments suggesting that 
Execution Venue ATSs should be treated like other Industry Members 
(rather than as Execution Venues) and indicating that the size of the 
percentage of total CAT costs to be paid by Industry Members as a group 
was too large.\29\ Correspondingly, the 75% Industry Member Allocation 
would be shared among more Industry Members under the Proposed Funding 
Model as all ATSs will be Industry Members for purposes of CAT fees, 
not just ATSs other than Execution Venue ATSs.
---------------------------------------------------------------------------

    \27\ For a description of the Prior Fee Proposal, see generally 
Prior Fee Proposal Release. The Participants later withdrew this 
amendment. See Withdrawal Release.
    \28\ Prior Fee Proposal Release at 1408.
    \29\ See Suspension Order at 31662-3.
---------------------------------------------------------------------------

    The Operating Committee also considered alternatives to the 
Participant contribution besides the proposed 25% in which Participants 
paid larger contributions than 25% of the total CAT costs (e.g., a 50%-
50% allocation between Industry Members and Participants) and 
Participants paid smaller contributions than 25% of the total CAT 
costs.\30\ In considering these alternative allocations with 
percentages greater than 25% of total CAT costs allocated to 
Participants, the Participants noted that there are far more Industry 
Members than Participants. There are only 25 Participants and 
approximately 1237 Industry Members, as of December 2020. Moreover, 
based upon an analysis of available CAT Reporter revenue, Participants 
only represented

[[Page 21055]]

approximately 4% of the total CAT Reporter revenue; Industry Members 
represented 96% of the total CAT Reporter revenue.\31\ In addition, 
various Industry Members have revenue in excess of some or all of the 
Participants. Accordingly, the Operating Committee determined that 
allocating more than 25% of the total CAT costs to the Participants was 
not a fair and equitable approach. Furthermore, with this allocation, 
the Industry Members with the most message traffic and the Participant 
complexes with the most market share would pay comparable CAT fees. For 
example, based on the data from the fourth quarter of 2020, the three 
Industry Members with the most message traffic would be subject to an 
annual CAT fee in the range of $5 to $6 million, and the Participant 
complexes with the highest CAT fees would pay an annual CAT fee in a 
similar range.
---------------------------------------------------------------------------

    \30\ In the development of the Prior Fee Proposal and the 
Proposed Funding Model, the Participants explored a variety of other 
possible allocations. For example, in determining the cost 
allocation between Industry Members (other than Execution Venue 
ATSs) and Execution Venues for the Prior Fee Proposal, the 
Participants analyzed a range of possible splits for revenue 
recovery from such Industry Members and Execution Venues, including 
80%-20%, 75%-25%, 70%-30% and 65%-35% allocations between Industry 
Members and Execution Venues. See, e.g., Prior Fee Proposal Release 
at 1408.
    \31\ Industry Member revenue was calculated based on the total 
revenue reported in the Industry Member's FOCUS reports. Participant 
revenue was calculated based on revenue information provided in Form 
1 amendments and/or publicly reported figures. Participants are not 
required to file uniform FOCUS-type reports regarding revenue like 
Industry Members. Accordingly, the revenue calculation for 
Participants is not as straightforward as for Industry Members.
---------------------------------------------------------------------------

    The Operating Committee also analyzed the possibility of allocating 
CAT costs among CAT Reporters--both Participants and Industry Members--
based on revenue. Such a revenue-based allocation would impose a more 
significant portion of the CAT costs on Industry Members. Industry 
Members would pay approximately 96% of the CAT costs and Participants 
would pay approximately 4% of the CAT costs. Because the revenue-based 
allocation would impose such a significant percentage of CAT costs on 
Industry Members, the Operating Committee determined not to pursue that 
approach. The Operating Committee also recognized the practical 
difficulties with determining the appropriate revenue figures for all 
CAT Reporters.
    The Industry Member Allocation of 75% of Total CAT Costs and the 
Participant Allocation of 25% of Total CAT Costs would be included in 
the fee schedule for the Consolidated Audit Trail Funding Fees in the 
CAT NMS Plan. Because the Participant CAT fees would be charged on a 
quarterly basis, this provision would indicate that the Industry Member 
Allocation and the Participant Allocation would be calculated based on 
1/4th of the Total CAT Costs for the relevant year. Specifically, 
proposed paragraph (b)(1) of Appendix B of the CAT NMS Plan would state 
that ``The Industry Member Allocation for each quarter shall be 75% of 
1/4th of the Total CAT Costs for the relevant year. The Participant 
Allocation for each quarter shall be 25% of 1/4th of the Total CAT 
Costs for the relevant year.''
3. Industry Member CAT Fee
    Under the Proposed Funding Model, each Industry Member will pay a 
CAT fee that is calculated by multiplying each Industry Member's 
message traffic percentage of the total message traffic of all Industry 
Members during the relevant time period by the Industry Member 
Allocation, subject to certain market maker message traffic discounts, 
a Minimum Industry Member CAT Fee and a Maximum Industry Member CAT 
Fee. Each Industry Member that is an Options Market Maker will have a 
discount based on the options trade-to-quote ratio applied to its 
Options Market Maker message traffic when calculating that Industry 
Member's message traffic, and each Industry Member that is an Equity 
Market Maker will have a discount based on the NMS Stock trade-to-quote 
ratio applied to its Equity Market Maker message traffic when 
calculating that Industry Member's message traffic. In addition, each 
Industry Member CAT Reporter will pay a Minimum Industry Member CAT Fee 
of $125 per quarter if its CAT fee would be less than $125 per quarter 
when calculated based on message traffic. Furthermore, an Industry 
Member's CAT fee would be subject to the Maximum Industry Member CAT 
Fee. The Maximum Industry Member CAT Fee would be the fee calculated 
based on 8% of the total message traffic for all Industry Members. If 
an Industry Member's CAT fee is limited to the Maximum Industry Member 
CAT Fee, any excess amount which the Industry Member would have paid as 
a fee above such Maximum Industry Member CAT Fee will be re-allocated 
among all Industry Members (including any Industry Members subject to 
the Maximum Industry Member CAT Fee and any Industry Members subject to 
the Minimum Industry Member CAT Fee) in accordance with each Industry 
Member's percentage of total message traffic. Each of these aspects of 
the Industry Member CAT fee are discussed in more detail below.
a. Use of Message Traffic
    Consistent with the Original Funding Model, the Industry Member 
Allocation would be allocated among Industry Members based on message 
traffic. The CAT NMS Plan, as approved by the SEC, contemplates the use 
of message traffic to apportion the Industry Member Allocation among 
Industry Members.\32\ Although the Operating Committee analyzed various 
alternative methods for allocating costs among Industry Members, the 
Operating Committee continued to conclude that using message traffic 
would equitably allocate CAT fees among Industry Members. This approach 
is consistent with the approach set forth in Section 11.3(b) of the CAT 
NMS Plan, which states that ``[t]he Operating Committee will establish 
fixed fees to be payable by Industry Members, based on the message 
traffic generated by such Industry Member.'' \33\ Accordingly, the use 
of message traffic for allocating CAT costs among Industry Members is 
consistent with the CAT NMS Plan as approved by the Commission.
---------------------------------------------------------------------------

    \32\ See, e.g., Sections 11.2(c) and 11.3(b) of the CAT NMS 
Plan.
    \33\ See also Section 11.2(c) of the CAT NMS Plan.
---------------------------------------------------------------------------

    The Operating Committee also analyzed the possibility of allocating 
the Industry Member Allocation among Industry Members based on revenue 
related to activities in Eligible Securities, which would have been 
derived from Industry Member revenue reported on FOCUS reports.\34\ The 
Operating Committee concluded that it may be difficult to determine 
which types of Industry Member revenue should be included in the 
calculation for a CAT fee under such an approach.
---------------------------------------------------------------------------

    \34\ This approach would have been similar to FINRA's imposition 
of the Gross Income Assessment, which is based on FOCUS report 
revenue. See Section 1(c) and (d) of Schedule A of FINRA By-Laws.
---------------------------------------------------------------------------

b. Calculating Industry Member CAT Fees
i. No Tiered Fees for Industry Members
    While continuing to utilize a message traffic-based model for 
Industry Members, the Operating Committee proposes to eliminate the use 
of tiered fees for Industry Members in the Proposed Funding Model. 
Instead, under the Proposed Funding Model, each Industry Member would 
pay a fee based solely on its percentage of total Industry Member 
message traffic (subject to the market maker message traffic discounts, 
the Minimum Industry Member CAT Fee and the Maximum Industry Member CAT 
Fee).\35\ The Operating Committee therefore proposes to amend Sections 
11.1(d), 11.2(c), 11.3(a) and 11.3(b) to eliminate the

[[Page 21056]]

concept of tiered fees from the CAT NMS Plan.
---------------------------------------------------------------------------

    \35\ Similarly, as discussed further below, the Operating 
Committee proposes to allocate the Participant Allocation among 
Participants based on the Participant's market share, consistent 
with the Original Funding Model, except it too would be calculated 
without relying on tiered fees.
---------------------------------------------------------------------------

(a) Advantages of No Tiered Fees
    By removing the concept of fee tiering for both Industry Members 
and Participant Allocations, the Proposed Funding Model addresses 
various comments regarding the use of tiering.\36\ Utilizing a tiered 
fee structure, by its nature, would create certain inequities among the 
CAT fees paid by Industry Members. For example, two Industry Members 
with similar levels of message traffic may pay notably different fees 
if one falls in a higher tier and the other falls within a lower tier. 
Correspondingly, a tiered fee structure generally reduces fees for 
Industry Members with higher message traffic in one tier, while 
increasing fees for Industry Members with lower levels of message 
traffic in the same tier, as compared to a non-tiered fee. Furthermore, 
Industry Members in lower tiers potentially pay more than they would 
without the use of tiers. While tiering exists in various other fee 
programs and generally itself may not be an unfairly discriminatory 
practice, in response to feedback on the Prior Fee Proposal, the 
Participants are proposing to eliminate the tiering concept, rendering 
past comments about potential inequities that may exist using a tiering 
model moot.
---------------------------------------------------------------------------

    \36\ See, e.g., Suspension Order at 31667.
---------------------------------------------------------------------------

    By charging each Industry Member a CAT fee directly based on its 
own message traffic, rather than charging a tiered fee, the Proposed 
Funding Model will result in an Industry Member's CAT fee being tied 
more directly to the Industry Member's message traffic in the CAT. In 
contrast, with a tiered fee, Industry Members with different levels of 
message traffic that are placed in the same tier would all pay the same 
CAT fee, thereby limiting the correlation between an Industry Member's 
message traffic in the CAT and its CAT fee.
    The proposed non-tiering approach is, arguably, more simplistic and 
objective to administer than the tiering approach. With a tiering 
approach, the number of tiers for Industry Members, the boundaries for 
each tier and the fees assigned to each tier must be established. In 
the absence of clear groupings of Industry Members by message traffic, 
selecting the number of, boundaries, and the fees associated with each 
tier would be subject to some level of subjectivity. Furthermore, the 
establishment of tiers would need to be continually reassessed based on 
changes in message traffic, thereby requiring regular subjective 
assessments. Accordingly, the removal of tiering from the funding model 
eliminates a variety of subjective analyses and judgments from the 
model, and simplifies the determination of Industry Member CAT fees.
(2) Proposed Amendments to the CAT NMS Plan
    The Operating Committee proposes to amend Sections 11.1(d), 
11.2(c), 11.3(a) and 11.3(b) of the CAT NMS Plan to eliminate 
references to the use of tiered fees and related concepts.
    Section 11.1(d) of the CAT NMS Plan states that ``[c]onsistent with 
this Article XI, the Operating Committee shall adopt policies, 
procedures, and practices regarding the budget and budgeting process, 
assignment of tiers, resolution of disputes, billing and collection of 
fees, and other related matters.'' With the elimination of tiered fees, 
the reference to the ``assignment of tiers'' would no longer be 
applicable for the Proposed Funding Model. Therefore, the Operating 
Committee proposes to delete the reference to ``assignment of tiers'' 
from Section 11.1(d).
    Section 11.1(d) of the CAT NMS Plan also states that:

    For the avoidance of doubt, as part of its regular review of 
fees for the CAT, the Operating Committee shall have the right to 
change the tier assigned to any particular Person in accordance with 
fee schedules previously filed with the Commission that are 
reasonable, equitable and not unfairly discriminatory and subject to 
public notice and comment, pursuant to this Article XI. Any such 
changes will be effective upon reasonable notice to such Person.

    As noted above, unlike the Original Funding Model, the Proposed 
Funding Model would not utilize tiered fees. Accordingly, these two 
sentences would no longer be applicable to the Proposed Funding Model. 
Therefore, the Operating Committee proposes to delete these two 
sentences from Section 11.1(d) of the CAT NMS Plan.
    The Operating Committee proposes to delete the reference to 
``tiered'' fees from Section 11.2(c) of the CAT NMS Plan. Section 
11.2(c) of the CAT NMS Plan states that ``[i]n establishing the funding 
of the Company, the Operating Committee shall seek: . . . (c) to 
establish a tiered fee structure . . .'' The Participants propose to 
delete the word ``tiered'' from this provision as the CAT fees would 
not be tiered under the Proposed Funding Model.
    The Operating Committee also proposes to delete paragraph (iii) of 
Section 11.2(c) of the CAT NMS Plan. Paragraph (iii) of Section 11.2(c) 
of the CAT NMS Plan states that the Operating Committee shall seek to 
establish a tiered fee structure in which fees charged to:

the CAT Reporters with the most CAT-related activity (measured by 
market share and/or message traffic, as applicable) be generally 
comparable (where for these comparability purposes, the tiered fee 
structures takes into consideration affiliations between or among 
CAT Reporters, whether Execution Venues and/or Industry Members).

    Under the Original Funding Model, the comparability provision was 
an important factor in determining the tiers for Industry Members and 
Execution Venues. Under the Proposed Funding Model, however, the 
comparability provision is no longer relevant, as a tiered fee 
structure would not be used for Industry Members or Participants.\37\
---------------------------------------------------------------------------

    \37\ This change also would address the comments regarding the 
use of comparability in the Original Funding Model. See Suspension 
Order at 31662-3.
---------------------------------------------------------------------------

    The Operating Committee further proposes to delete the references 
to tiers in Sections 11.3(a)(i) and (ii) and 11.3(b) of the CAT NMS 
Plan. Specifically, Section 11.3(a)(i) of the CAT NMS Plan states that 
the Operating Committee, when establishing fees for Execution Venues 
for NMS Stocks and OTC Equity Securities, will establish ``at least two 
and no more than five tiers of fixed fees, based on an Execution 
Venue's NMS Stocks and OTC Equity Securities market share.'' \38\ 
Similarly, Section 11.3(a)(ii) of the CAT NMS Plan states that the 
Operating Committee, when establishing fees for Execution Venues that 
execute transactions in Listed Options, will establish ``at least two 
and no more than five tiers of fixed fees, based on an Execution 
Venue's Listed Options market share.'' Section 11.3(b) of the CAT NMS 
Plan states that the Operating Committee, when establishing fees to be 
payable by Industry Members, will establish ``at least five and no more 
than nine tiers of fixed fees, based on message traffic.'' The 
Operating Committee proposes to delete each of these references to 
tiers from the CAT NMS Plan.
---------------------------------------------------------------------------

    \38\ Note that, as discussed below, the Operating Committee also 
proposes to delete the reference to OTC Equity Securities.
---------------------------------------------------------------------------

ii Definition of Message Traffic
    Message traffic will be calculated based on Industry Members' 
Reportable Events reported to the CAT as defined in the CAT Reporting 
Technical Specifications for Industry Members (``IM Reporting Tech 
Specs'') as amended from time to time.\39\ The Reportable Events may 
vary over time if the IM Reporting Tech Specs are

[[Page 21057]]

amended.\40\ However, Reportable Events in the current IM Reporting 
Tech Specs that will be counted as message traffic include, but are not 
limited to, such events as the New Order Event, the Order Route Event 
and Trade Event. In addition, under the Proposed Funding Model, message 
traffic will not include reporting activity related to Customer 
information as set forth in the CAT Reporting Customer and Account 
Technical Specifications for Industry Members.\41\
---------------------------------------------------------------------------

    \39\ The CAT Reporting Technical Specifications for Industry 
Members are available at www.catnmsplan.com.
    \40\ The Operating Committee recognizes that, due to the Phased 
Reporting approach, all Reportable Events will not be reported until 
all Industry Members are reporting all Reportable Events to the CAT. 
For example, Phase 2d CAT reporting is scheduled for December 2021, 
and Small Industry Non-OATS Reporters are not required to report 
until December 2021. In addition, certain Reportable Events, such as 
simple options manual orders and OTC link messages, are not required 
to be reported until later in the Phased Reporting. For a detailed 
description of such Reportable Events, see CAT Reporting Technical 
Specifications for Industry Members (available at 
www.catnmsplan.com). For the Industry Member CAT reporting timeline, 
see, e.g., FINRA Rule 6895(c). The Operating Committee proposes to 
allocate costs based on the Reportable Events reported to the CAT in 
any relevant quarter, regardless of whether all Industry Members are 
reporting to the CAT or all Reportable Events are required to be 
reported to the CAT for the relevant quarter.
    \41\ The CAT Reporting Customer and Account Technical 
Specifications for Industry Members are available at 
www.catnmsplan.com.
---------------------------------------------------------------------------

iii. Market Maker Discounts
    In the Original Funding Model, Options Market Maker message traffic 
and Equity Market Maker message traffic would have been treated the 
same as other message traffic for purposes of calculating Industry 
Member CAT fees.\42\ The Commission and commenters raised questions as 
to whether this treatment of market maker quotes may result in an undue 
or inappropriate burden on competition or may lead to a reduction in 
market quality.\43\ For example, commenters noted that charging 
Industry Members on the basis of message traffic would impact market 
makers disproportionately because of their continuous quoting 
obligations. Moreover, in the context of Options Market Makers, message 
traffic would include bids and offers for every Listed Options strikes 
and series.\44\ To address these issues, the Operating Committee 
proposes to discount Options Market Maker message traffic by the trade-
to-quote ratio for Listed Options when calculating message traffic for 
Options Market Makers, and to discount Equity Market Maker message 
traffic by the trade-to-quote ratio for NMS Stocks when calculating 
message traffic for Equity Market Makers. The message traffic of 
Options Market Makers and Equity Market Makers, as discounted, would be 
counted as part of the total message traffic for all Industry Members. 
The practical effect of applying such discounts for market making 
activity would be to lower the CAT fees for Options Market Makers and 
Equity Market Makers.
---------------------------------------------------------------------------

    \42\ Note, however, that market maker discounts were included in 
the Prior Fee Proposal. See Prior Fee Proposal Release at 1418-9.
    \43\ See Suspension Order at 31663-4.
    \44\ Id. at 31664.
---------------------------------------------------------------------------

    By imposing a discount on Options Market Makers and Equity Market 
Makers' message traffic for the calculation of message traffic, the 
Operating Committee believes that the proposed CAT fees for market 
makers would satisfy the requirements of the funding principles set 
forth in Section 11.2 of the CAT NMS Plan as well as the requirements 
of the Exchange Act. First, the proposed market maker discounts are 
designed to address comments that the Original Funding Model could 
disproportionately affect market makers, thereby leading to a reduction 
in liquidity and market quality. Commenters noted that charging 
Industry Members on the basis of message traffic will impact market 
makers disproportionately because of their continuous quoting 
obligations. With their continuous quoting obligations, market makers 
would have higher levels of message traffic, and the type of message 
traffic (bids and offers rather than transactions) are not necessarily 
related to higher revenue. The SEC repeatedly has recognized the value 
of protecting the provision of market liquidity, and afforded market 
makers favorable regulatory treatment by virtue of their role as 
liquidity providers. For example, market makers receive favorable 
treatment under short sale rules,\45\ margin rules,\46\ pursuant to 
exchange fee schedules,\47\ and under the Volcker Rule.\48\ The 
proposed discounts are designed to put market makers and other market 
participants on a level playing field in the Proposed Funding Model, 
thereby preserving and incentivizing the ability of market makers to 
provide liquidity to the market, which liquidity ultimately benefits 
all market participants. Market makers' primary role is to provide the 
markets with competitive prices and quotes against which others may 
execute their orders. Market makers update their quotes continuously 
throughout each trading day to reflect changes in the market, and each 
update is additional message traffic that will be reported to CAT. If 
CAT fees made it unduly costly for market makers to provide this 
competitive liquidity, it could reduce the available liquidity against 
which customers could execute orders and create worse pricing for 
customers that do receive executions.
---------------------------------------------------------------------------

    \45\ See, e.g., Rule 203(b)(2)(iii) of Regulation SHO under the 
Exchange Act (market maker exception for short sale locate 
requirement).
    \46\ See, e.g., Section 7(c)(3) of the Exchange Act (market 
maker exception regarding margin requirements).
    \47\ See, e.g., NYSE Arca Rule 8.800-E and Market Maker Fees and 
Credits, NYSE Arca Fees and Charges (incentive programs for market 
makers).
    \48\ See Section __.4(b) (market making exemption from the 
proprietary trading prohibition).
---------------------------------------------------------------------------

    Second, although the proposed discounts would provide market makers 
with a benefit not provided to other market participants, such 
discounts would not amount to unfair discrimination or an unnecessary 
or inappropriate burden on competition. As discussed above, the SEC has 
recognized repeatedly that such favorable treatment for market makers 
in other contexts was not unfairly discriminatory or a burden on 
competition in light of its positive effects on market quality, nor was 
it considered to involve an inequitable allocation of fees among 
members.
    Third, the Operating Committee believes that the proposed fees 
appropriately take into account the distinctions in the securities 
trading operations of different Industry Members, and avoid 
disincentives, such as a reduction in market quality, as required under 
the funding principles of the CAT NMS Plan.\49\ The proposed discounts 
recognize the different types of trading operations presented by 
Options Market Makers and Equity Market Makers, as well as the value of 
the market makers' quoting activity to the markets as a whole. 
Accordingly, the Operating Committee believes that the proposed 
discounts will not impact the ability of Options Market Makers or 
Equity Market Makers to provide liquidity.
---------------------------------------------------------------------------

    \49\ Section 11.2(b) of the CAT NMS Plan.
---------------------------------------------------------------------------

    Finally, the Operating Committee believes that the trade-to-quote 
ratio is an appropriate method for discounting market maker message 
traffic, including because of the relatively few quotes that ultimately 
execute. As discussed above, the vast majority of quotes market makers 
submit are intended to price the market and provide liquidity against 
which orders may execute. The Operating Committee proposes to use the 
trade-to-quote ratio for calculating the discount because it directly 
relates to the issue regarding the quoting requirement (i.e., fewer 
trades per quote

[[Page 21058]]

for market makers due to their quoting activity) and it is an objective 
discounting method.
(a) Options Market Maker Discount
    To address issues regarding the potential burdens on competition 
and market quality of including Options Market Maker message traffic in 
the calculation of message traffic, the Operating Committee proposes to 
discount Options Market Maker message traffic based on the trade-to-
quote ratio for options when calculating the message traffic for 
Options Market Makers.\50\ Specifically, for each Options Market Maker, 
a discount would be applied to (1) all message traffic reported to the 
CAT by the Options Market Maker related to an order originated by a 
market maker in its market making account for a security in which it is 
registered, regardless of where the order is ultimately routed or 
executed; \51\ and (2) all message traffic for which a ``quote sent 
time'' is reported by an Options Exchange on behalf of the given 
Options Market Maker.
---------------------------------------------------------------------------

    \50\ The SEC approved exemptive relief permitting Options Market 
Maker quotes to be reported to the Central Repository by the 
relevant Options Exchange in lieu of requiring that such reporting 
be done by both the Options Exchange and the Options Market Maker, 
as required by Rule 613 of Regulation NMS. See Securities Exchange 
Act Rel. No. 77265 (Mar. 1, 2016), 81 FR 11856 (Mar. 7, 2016). This 
exemption applies to Options Market Maker quotes for CAT reporting 
purposes only. Therefore, notwithstanding the reporting exemption 
provided for Options Market Maker quotes, Options Market Maker quote 
messages that are reported to the CAT by Options Exchanges will be 
included in the calculation of total message traffic and for the 
calculation of individual Options Market Makers message traffic, 
subject to the proposed discounts.
    \51\ Under the current version of the IM Reporting Tech Specs, 
the discount would apply to new order messages and all related 
messages reported to the CAT by an Options Market Maker with an 
accountHolderType = O. See CAT FAQ C5 (available at 
www.catnmsplan.com). The discount would not apply to messages by an 
Industry Member that are associated with any other 
accountHolderType. The IM Reporting Tech Specs may be amended from 
time to time and this designation could be changed.
---------------------------------------------------------------------------

    The relevant trade-to-quote ratio for the Options Market Maker 
discount would be calculated each quarter based on the prior quarter's 
CAT data. The discount is calculated by dividing the adjusted trade 
count (that is, the total number of trades for the quarter minus the 
total number of trade busts) by the total number of quotes received by 
the securities information processors (``SIP'') from an exchange. As an 
example, the trade-to-quote ratio for Listed Options for the fourth 
quarter of 2020 was 0.01%.
    Accordingly, each Options Market Maker's discounted message traffic 
count would be calculated by multiplying its message traffic by the 
options trade-to-quote ratio. The Options Market Maker's CAT fee then 
would be calculated by multiplying its discounted percentage of the 
total message traffic of all Industry Members during the relevant time 
\52\ period by the Industry Member Allocation, subject to the Minimum 
Industry Member CAT Fee and the Maximum Industry Member CAT Fee.
---------------------------------------------------------------------------

    \52\ Note that the total message traffic of all Industry Members 
during the relevant time period will be calculated using the 
discounted total for all Options Market Makers.
---------------------------------------------------------------------------

(b) Equity Market Maker Discount
    Similar to the treatment of Options Market Maker message traffic, 
the Operating Committee proposes to discount Equity Market Maker 
message traffic based on the trade-to-quote ratio for NMS Stocks when 
calculating the message traffic for Equity Market Makers. Specifically, 
for each Equities Market Maker, a discount would be applied to all 
message traffic reported to the CAT by the Equities Market Maker 
related to an order originated by a market maker in its market making 
account for a security in which it is registered,\53\ regardless of 
where the order is ultimately routed or executed.\54\
---------------------------------------------------------------------------

    \53\ Note that Equity Market Makers do not have a quote sent 
time exemption comparable to the Options Market Maker quote sent 
time exemption, as discussed above.
    \54\ Under the current version of the IM Reporting Tech Specs, 
the discount would apply to new order messages and all related 
messages reported to the CAT by an Equities Market Maker with an 
accountHolderType = O. See CAT FAQ C5 (available at 
www.catnmsplan.com). The discount would not apply to messages by the 
Industry Member that are associated with any other 
accountHolderType. The IM Reporting Tech Specs may be amended from 
time to time and this designation could be changed.
---------------------------------------------------------------------------

    The relevant trade-to-quote ratio for the Equity Market Maker 
discount would be calculated each quarter based on the prior quarter's 
CAT data. The discount is calculated by dividing the adjusted trade 
count (that is, the total number of trades for the quarter minus the 
total number of trade busts) by the total number of quotes received by 
the SIP from an exchange. As an example, the trade-to-quote ratio for 
NMS Stocks for the fourth quarter of 2020 was 4.77%.
    The Equity Market Maker CAT fee would be calculated in the same 
manner as the Options Market Maker CAT fee. Each Equity Market Maker's 
discounted message traffic count would be calculated by multiplying its 
message traffic by the NMS Stock trade-to-quote ratio. The Equity 
Market Maker CAT fee then would be calculated by multiplying its 
discounted percentage of the total message traffic of all Industry 
Members during the relevant time period \55\ by the Industry Member 
Allocation, subject to the Minimum Industry Member CAT Fee and the 
Maximum Industry Member CAT Fee.
---------------------------------------------------------------------------

    \55\ Note that the total message traffic of all Industry Members 
during the relevant time period will be calculated using the 
discounted total for all Equity Market Makers.
---------------------------------------------------------------------------

(c) Proposed Amendments
    To implement the proposed market maker discounts, the Operating 
Committee proposes to revise Section 11.3(b) of the CAT NMS Plan to 
reflect the application of such discounts. Specifically, the Operating 
Committee proposes to amend the statement in Section 11.3(b) that 
``[t]he Operating Committee will establish fixed fees to be payable by 
Industry Members, based on the message traffic generated by such 
Industry Members'' to add the concept of the market maker discounts. 
Specifically, the Operating Committee proposes to qualify this 
statement by the phrase ``subject to . . . discounts for market maker 
message traffic.''
iv. Minimum Industry Member CAT Fee
    The Operating Committee proposes to require all Industry Members to 
pay at least a minimum fee for each relevant period. Specifically, the 
Operating Committee proposes to impose a Minimum Industry Member CAT 
Fee of $125 per quarter on an Industry Member if its CAT fee would be 
less than $125 per quarter when calculated based on message traffic. 
All Industry Members required to report to the CAT, including those 
that have not yet begun to report to the CAT due to the phased 
implementation schedule for the CAT, would be subject to the Minimum 
Industry Member CAT Fee. If any Industry Member is required to pay the 
Minimum Industry Member CAT Fee, the total additional amount paid by 
all such Industry Members over the amount they otherwise would have 
paid as a result of their message traffic calculation would be 
discounted from all Industry Members other than those that were subject 
to a Minimum Industry Member CAT Fee in accordance with their message 
traffic percentage.\56\ Such a minimum fee satisfies the purposes of 
the CAT as well as the funding principles of the CAT NMS Plan.
---------------------------------------------------------------------------

    \56\ Options Market Makers and Equity Market Makers will be 
required to pay the Minimum Industry CAT Member Fee if their 
quarterly CAT fee calculated with the market maker discounts is less 
than $125 per quarter.
---------------------------------------------------------------------------

    A minimum fee of $125 per quarter ensures that all Industry Members

[[Page 21059]]

provide a meaningful contribution to the funding of the CAT, as the CAT 
is intended to assist all market participants by creating enhanced 
oversight of the markets, and thus benefits all Industry Members, 
including those with small levels of message traffic.\57\ Because some 
Industry Members may have very small levels of message traffic, their 
proposed CAT fee may be commensurately very small (e.g., they could pay 
a CAT fee of pennies). However, the size of the $125 minimum quarterly 
fee is not so large as to be overly burdensome to Industry Members with 
small levels of message traffic. Accordingly, the minimum fee would be 
in keeping with the funding principle requiring the funding model to 
``avoid disincentives such as placing an inappropriate burden on 
competition and a reduction in market quality.'' \58\
---------------------------------------------------------------------------

    \57\ See, e.g., CAT NMS Plan Approval Order at 84698.
    \58\ Section 11.2(e) of the CAT NMS Plan.
---------------------------------------------------------------------------

    Such a minimum fee also would contribute to the ease of billing and 
other administrative functions, in accordance with the funding 
principle set forth in Section 11.2(d) of the CAT NMS Plan.\59\ Without 
such a minimum fee, the Participants would be required to oversee the 
payment of fees as little as pennies for certain Industry Members given 
their limited message traffic.
---------------------------------------------------------------------------

    \59\ Section 11.2(d) of the CAT NMS Plan.
---------------------------------------------------------------------------

    To implement the Minimum Industry Member CAT Fee, the Operating 
Committee proposes to revise Section 11.3(b) of the CAT NMS Plan to 
reflect the imposition of a minimum fee. Specifically, the Operating 
Committee proposes to amend the statement in Section 11.3(b) that 
``[t]he Operating Committee will establish fixed fees \60\ to be 
payable by Industry Members, based on the message traffic generated by 
such Industry Members'' to add the concept of the minimum fee. 
Specifically, the Operating Committee proposes to qualify this 
statement with the phrase ``subject to a base minimum fee.''
---------------------------------------------------------------------------

    \60\ As noted below, the Operating Committee also proposes to 
delete the term ``fixed'' from this provision.
---------------------------------------------------------------------------

v. Maximum Industry Member CAT Fee
    The Operating Committee proposes to establish a maximum fee to be 
paid by Industry Members. Under the Proposed Funding Model, Industry 
Members would pay a CAT fee based on their proportionate message 
traffic in NMS Stocks, subject to a maximum fee. The maximum fee for 
Industry Members would be the fee calculated based on 8% of the total 
message traffic for Industry Members. If an Industry Member's fee is 
limited to the Maximum Industry Member CAT Fee, any excess amount which 
the Industry Member otherwise would have paid as a fee above such 
Maximum Industry Member CAT Fee would be re-allocated among all 
Industry Members including any Industry Members subject to the Maximum 
Industry Member CAT Fee and any Industry Members subject to the Minimum 
Industry Member CAT Fee in accordance with its message traffic.
    The imposition of the Maximum Industry Member CAT Fee serves as a 
method to institute a cap on fees in order to fairly allocate costs to 
Industry Members as using message traffic alone potentially may result 
in certain Industry Members paying a significant allocation of Total 
CAT Costs. In this way, the proposed Maximum Industry Member CAT Fee 
would address the potential for outsized fees that were previously 
addressed via the tiering and comparability provisions set forth in the 
Original Funding Model and the Prior Fee Proposal. These provisions 
sought to impose similar levels of fees on comparable CAT 
Reporters.\61\ Specifically, the Operating Committee proposes to limit 
the Industry Member CAT fee to 8% of the total message traffic as 8% 
would limit Industry Members to paying a fee comparable to the highest 
fee for Participant complexes. For example, using the CAT Data from the 
fourth quarter of 2020, the top three Industry Members would be subject 
to the Maximum Industry Member CAT Fee, as their message traffic 
exceeds 8% of the total Industry Member message traffic. These three 
Industry Members would be subject to annual CAT fees in the range of $5 
to 6 million. Similarly, the Participant complexes with the highest CAT 
fees would pay an annual CAT fee in a similar range. Without the 
imposition of the Maximum Industry Member CAT Fee, the Industry Member 
with the highest CAT fee would pay almost $10 million for its annual 
CAT fee.
---------------------------------------------------------------------------

    \61\ The proposed deletion of the tiering and comparability 
provisions are discussed above.
---------------------------------------------------------------------------

    The Operating Committee proposes to revise Section 11.3(b) of the 
CAT NMS Plan to implement the proposed Maximum Industry Member CAT Fee. 
Specifically, the Operating Committee proposes to amend Section 11.3(b) 
of the CAT NMS Plan to state that

any Industry Member shall pay a maximum fee established by the 
Operating Committee instead of the higher fee calculated based on 
such Industry Member's message traffic. If an Industry Member's fee 
is limited to such maximum fee, any excess amount which the Industry 
Member otherwise would have paid as a fee above such maximum fee 
will be re-allocated among all Industry Members, including any 
Industry Member that is subject to the maximum fee or subject to the 
base minimum fee, in accordance with their message traffic.
vi. No Fixed Fees
    The Operating Committee proposes to eliminate references in the CAT 
NMS Plan to ``fixed fees'' used with regard to the CAT fees to be paid 
by Industry Members. The CAT fees to be paid by Industry Members may 
vary from time to time in accordance with their message traffic. 
Accordingly, the Operating Committee proposes to replace the reference 
to ``fixed fees'' for Industry Members in Section 11.3(b) with 
references to ``fees.''
4. Participant CAT Fee
    Like Industry Members, Participants would also be required to pay a 
CAT fee. The total CAT fees to be paid by Participants as a group would 
be designed to cover the Participant Allocation. Each Participant would 
pay a minimum CAT fee of 0.75% of the Participant Allocation, referred 
to as the ``Minimum Participant Fee.'' The Participant Allocation minus 
the total Minimum Participant Fees required to be paid by each 
Participant (the ``Adjusted Participant Allocation'') would be divided 
between Equities Participants and Options Participants. Equities 
Participants as a group would pay 60% of the Adjusted Participant 
Allocation (``Equities Participant Allocation'') and Options 
Participants as a group would pay 40% of the Adjusted Participant 
Allocation (the ``Options Participant Allocation''). The Equities 
Participant Allocation would be divided among Equities Participants 
based on market share of NMS Stocks, although FINRA would not pay more 
than the Maximum Equities Participant Fee (plus any additional re-
allocation of costs above the fee cap). The Options Participant 
Allocation would be divided among Options Participants based on market 
share in Listed Options.
    The Operating Committee notes that allocating the Participant 
Allocation among the Participants is different from allocating the 
Industry Member Allocation among Industry Members. Unlike Industry 
Members, the Participants are each parties to the CAT NMS Plan and, 
therefore, have been engaged in negotiations among themselves regarding 
the allocation of CAT costs among Participants and the amendment of the 
CAT NMS Plan to address the CAT funding model. Accordingly, the 
Participants believe that the proposed method for allocating

[[Page 21060]]

the costs among Participants should be afforded some deference, 
provided the proposed fees satisfy the requirements of the Exchange Act 
and the CAT NMS Plan, which are discussed in detail in Section A.8 
below.
a. Minimum Participant Fee
    The Operating Committee proposes to require each Participant to pay 
at least a minimum CAT fee, regardless of its market share. 
Specifically, the Operating Committee proposes to require each 
Participant to pay a minimum CAT fee of 0.75% of the Participant 
Allocation, referred to as the Minimum Participant Fee. The Minimum 
Participant Fee will be paid by each registered national securities 
exchange that is a Participant and each registered national securities 
association that is a Participant, not by each market operated by the 
Participants. This Minimum Participant Fee is intended to ensure that 
all Participants provide a meaningful contribution to the funding of 
the CAT, as the CAT is intended to assist all market participants by 
creating enhanced oversight of the markets.\62\ All Participants, 
regardless of their market share, are required to regulate their 
markets and members, and they may do so using the CAT. Therefore, all 
Participants receive benefits from the CAT and should pay a meaningful 
portion of the CAT costs. However, the size of the minimum fee is not 
so large as to be overly burdensome to Participants with a smaller 
market share.
---------------------------------------------------------------------------

    \62\ CAT NMS Plan Approval Order at 84698.
---------------------------------------------------------------------------

    The Operating Committee proposes to revise Section 11.3(a) of the 
CAT NMS Plan to reflect the imposition of the Minimum Participant Fee. 
Specifically, the Operating Committee proposes to amend Section 11.3(a) 
of the CAT NMS Plan to state that ``[t]he Operating Committee will 
establish a minimum fee to be payable by each Participant'' in addition 
to fees based on market share.
    In addition, as discussed below, the Minimum Participant Fee would 
be included in the fee schedule for the Consolidated Audit Trail 
Funding Fees set forth in Appendix B of the CAT NMS Plan. Proposed 
paragraph (a)(1)(A) of Appendix B of the CAT NMS Plan would state that 
each Participant would pay a CAT fee that includes the Minimum 
Participant Fee. Paragraph (b)(2) of Appendix B would state that 
``[t]he Minimum Participant Fee is 0.75% of the Participant 
Allocation.'' Paragraph (b)(2) of Appendix B would further clarify how 
the Minimum Participant Fee would be imposed by stating that ``[f]or 
avoidance of doubt, the Minimum Participant Fee will be paid by each 
registered national securities exchange that is a Participant and each 
registered national securities association that is a Participant.''
b. Allocation of Adjusted Participant Allocation Among Participants
    The Participant Allocation minus the total Minimum Participant Fees 
required to be paid by each Participant, referred to as the ``Adjusted 
Participant Allocation,'' will be divided among the Participants as 
described below. The Operating Committee proposes to include this 
definition of ``Adjusted Participant Allocation'' in proposed paragraph 
(b)(3) of the Appendix B. Specifically, proposed paragraph (b)(3) of 
Appendix B would state that ``[t]he Adjusted Participant Allocation is 
the Participant Allocation minus the sum of all Minimum Participant 
Fees required to be paid by each Participant.''
i. Use of Market Share
    Under the Proposed Funding Model, the Adjusted Participant 
Allocation would be allocated among Participants based on market share. 
The use of market share for this purpose is in accordance with the CAT 
NMS Plan as adopted by the SEC. Specifically, the CAT NMS Plan 
contemplates Participants paying a CAT fee based upon market share.\63\ 
The Operating Committee analyzed various alternative methods for 
allocating costs among Participants other than market share and 
continued to determine that using market share would equitably allocate 
CAT fees among Participants. In contrast to Industry Members, which 
determine the degree to which they produce message traffic that 
constitutes Reportable Events, the Reportable Events of Participants 
are largely derivative of quotations and orders received from Industry 
Members that they are required to display. The business models for 
Participants, however, generally are focused on executions and/or trade 
reporting in their marketplaces. As a result, the Operating Committee 
believes that it is more equitable to charge Participants based on 
their market share rather than their message traffic. Moreover, relying 
on market share would provide the Participants with a straightforward 
calculation using readily available market data. Such a basic 
calculation would be consistent with the CAT funding principle, which 
requires the model to ``provide for ease of billing and other 
administrative functions.'' \64\ Finally, the Participants have been 
voluntarily allocating CAT costs based on market share for the past 
eight years and are comfortable that allocating CAT cost based on 
market share is an appropriate way to allocate CAT costs, as it is 
consistent with the CAT NMS Plan.
---------------------------------------------------------------------------

    \63\ See Sections 11.2(c), 11.3(a)(i) and 11.3(a)(ii) of the CAT 
NMS Plan.
    \64\ Section 11.2(d) of the CAT NMS Plan.
---------------------------------------------------------------------------

    The Operating Committee proposes to amend Section 11.3(a) of the 
CAT NMS Plan to clarify that the Participants will pay a fee based on 
market share. Specifically, the Operating Committee proposes to add the 
phrase ``based on market share'' to Section 11.3(a) of the CAT NMS 
Plan. With this change and the changes discussed above, Section 11.3(a) 
of the CAT NMS Plan would state that ``[t]he Operating Committee will 
establish a minimum fee to be payable by each Participant in addition 
to fees based on market share to be payable by Participants as provided 
in this Section 11.3(a).''
ii. No Tiered Fees for Participants
    The Operating Committee proposes to eliminate the use of tiered 
fees for Participants in the Proposed Funding Model. The Operating 
Committee proposes to allocate the Adjusted Participant Allocation 
among Participants based on the Participant's market share without 
relying on tiered fees for the reasons discussed above with regard to 
Industry Members. As discussed above, the Operating Committee proposes 
to amend Sections 11.1(d), 11.2(c), 11.3(a) and 11.3(b) to eliminate 
the concept of tiered fees from the CAT NMS Plan.
iii. 60%-40% Allocation Between Equities Participants and Options 
Participants
    The Operating Committee proposes to divide the Adjusted Participant 
Allocation between Equities Participants and Options Participants 
because it is difficult to compare market share between asset classes 
(i.e., equity shares versus options contracts). This bifurcated 
approach to allocating costs among Equities Participants and Options 
Participants is consistent with the CAT NMS Plan, which specifically 
contemplates allocating Participant CAT fees based on options and 
equity activity.\65\ Note that, unlike the Original Funding Model, the 
Operating Committee has determined not to allocate any portion of the 
Adjusted Participant Allocation based on OTC Equity Securities market 
share.
---------------------------------------------------------------------------

    \65\ See Section 11.3(a) of the CAT NMS Plan.

---------------------------------------------------------------------------

[[Page 21061]]

    Under the Proposed Funding Model, the Equities Participant 
Allocation would be 60% of the Adjusted Participant Allocation and, 
correspondingly, the Options Participants Allocation would be 40% of 
the Adjusted Participant Allocation. If a Participant has both options 
and equities market share, then such Participant will be treated as 
both an Equities Participant and an Options Participant.\66\
---------------------------------------------------------------------------

    \66\ The Operating Committee proposes to clarify this point in 
the CAT NMS Plan by including the following statement in proposed 
paragraph (a)(1) of Appendix B of the CAT NMS Plan: ``For the 
avoidance of doubt, Participants with both options and equities 
market share shall be considered both Equities Participants and 
Options Participants.''
---------------------------------------------------------------------------

    The Operating Committee believes that the proposed 60%-40% 
allocation between Equities Participants and Options Participants is an 
appropriate allocation among Participants. The allocation among the 
Equities and Options Participants has been the subject of negotiations 
among the Participants. In addition, in the Prior Fee Proposal, the 
Operating Committee proposed a 67%/33% allocation between Equity 
Execution Venues and Options Execution Venues based on the 
comparability concept.\67\
---------------------------------------------------------------------------

    \67\ See Prior Fee Proposal at 1408.
---------------------------------------------------------------------------

    As discussed below, the 60%-40% allocation of the Adjusted 
Participant Allocation between Equities Participants and Options 
Participants would be included in the fee schedule for the Consolidated 
Audit Trail Funding Fees in the CAT NMS Plan. Proposed paragraph (b)(4) 
of Appendix B of the CAT NMS Plan would state that ``[t]he Equities 
Participant Allocation is 60% of the Adjusted Participant Allocation,'' 
and proposed paragraph (b)(5) of Appendix B of the CAT NMS Plan would 
state that ``[t]he Options Participant Allocation is 40% of the 
Adjusted Participant Allocation.''
iv. Equities Participant Allocation
    The Equities Participant Allocation would be divided among Equities 
Participants based on market share of NMS Stocks in accordance with 
Section 11.3(a)(i) of the CAT NMS Plan. An Equities Participant's 
market share in NMS Stocks would be determined by calculating each 
Equities Participant's proportion of the total volume of NMS Stock 
shares reported by all Equities Participants during the relevant time 
period. Accordingly, in addition to the Minimum Participant Fee, each 
Equities Participant will pay a CAT fee that is calculated by 
multiplying (x) each Equities Participant's percentage of the total 
volume of NMS Stock shares during the relevant time period by (y) the 
Equities Participant Allocation, subject to the Maximum Equities 
Participant Fee.
    As discussed below, the Operating Committee proposes to include the 
allocation of the Equities Participant Allocation in the fee schedule 
for the Consolidated Audit Trail Funding Fees in the CAT NMS Plan. 
Proposed paragraph (a)(1)(B) of Appendix B of the CAT NMS Plan would 
state that Equities Participants would pay a CAT fee calculated by 
adding the sum of the Minimum Participant Fee and the lesser of ``the 
product of multiplying the Equities Participant's percentage of total 
market share of NMS Stocks for all Equities Participants against the 
Equities Participant Allocation; or (ii) the Maximum Equities 
Participant Fee, if applicable.''
(a) Treatment of OTC Equity Securities
    Under the Original Funding Model, market share for a national 
securities association was calculated based on the share volume of 
trades reported by its members to its trade reporting facility or 
facilities for reporting transactions effected otherwise than on an 
exchange in NMS Stocks or OTC Equity Securities. Under the Proposed 
Funding Model, the Operating Committee proposes to calculate market 
share for national securities associations solely based on share volume 
of trades reported in NMS Stocks. Correspondingly. [sic] the 
calculation of total market share and market share for each Equities 
Participant would not include reported share volume in OTC Equity 
Securities.
    The Operating Committee proposes to calculate market share for 
national securities associations without reference to trades reported 
in OTC Equity Securities. Many OTC Equity Securities are priced at less 
than one dollar--and a significant number at less than one penny--per 
share and low-priced shares tend to trade in larger quantities. 
Accordingly, a large number of shares are involved in transactions 
involving OTC Equity Securities versus NMS Stocks. Because the proposed 
CAT fees for Equities Participants are based on market share calculated 
by share volume, FINRA would likely be subject to higher fees if OTC 
Equity Securities were included in the calculation of market share.
    The Operating Committee proposes to exclude OTC Equity Securities 
share volume in the calculation of market share, rather than to use a 
discounting approach proposed in the Prior Fee Proposal. In the Prior 
Fee Proposal, the Operating Committee proposed to discount the share 
volume of trades reported in OTC Equity Securities when calculating the 
market share for national securities associations and Execution Venue 
ATSs.\68\ At this time, the Operating Committee has determined that 
excluding OTC Equity Share volume entirely would be a more simple and 
straightforward approach from an administrative perspective. The 
Operating Committee believes that this approach to OTC Equity Share 
volume addresses comments about prior fee proposals regarding the 
different trading characteristics of NMS Stocks and OTC Equity 
Securities.\69\
---------------------------------------------------------------------------

    \68\ Prior Fee Proposal at 1406.
    \69\ Suspension Order at 31664-5.
---------------------------------------------------------------------------

    To implement this proposed change, the Operating Committee proposes 
to delete the references to OTC Equity Securities from Section 
11.3(a)(i) of the CAT NMS Plan. Specifically, the Operating Committee 
proposes to delete the phrase ``or OTC Equity Securities'' from Section 
11.3(a)(i)(B) of the CAT NMS Plan, which states in relevant part ``in 
the case of a national securities association, has trades reported by 
its members to its trade reporting facility or facilities for reporting 
transactions effected otherwise than on an exchange, in NMS Stocks or 
OTC Equity Securities.'' Similarly, the Operating Committee proposes to 
delete the phrase to ``or OTC Equity Securities'' in the statement in 
Section 11.3(a)(i) of the CAT NMS Plan that ``market share for a 
national securities association that has trades reported by its members 
to its trade reporting facility or facilities for reporting 
transactions effected otherwise than on an exchange in NMS Stocks or 
OTC Equity Securities will be calculated based on share volume of 
trades reported.''
(b) Maximum Equities Participant Fee
    The Operating Committee proposes to establish a maximum fee to be 
paid by a national securities association that is a Participant. 
Currently, FINRA is the only national securities association that is a 
Participant in the CAT NMS Plan. Under the Proposed Funding Model, 
FINRA would pay a CAT fee based on its proportionate market share in 
NMS Stocks, subject to a maximum fee. The maximum fee allocated to 
FINRA would be the greater of (x) 20% of the Equities Participant 
Allocation or (y) the highest CAT fee required to be paid by any other 
Equities Participant plus 5% of such highest CAT fee (the ``Maximum 
Equities Participant Fee''). If FINRA's fee is limited to the Maximum 
Equities Participant Fee, any excess amount which FINRA otherwise would 
have

[[Page 21062]]

paid as a fee above such Maximum Equities Participant Fee would be re-
allocated among all Equities Participants including FINRA in accordance 
with their market share.
    The imposition of the Maximum Equities Participant Fee serves as a 
method to institute a cap on fees in order to fairly allocate costs to 
FINRA given that a market share approach potentially may result in 
FINRA having a significant allocation given the large volume of NMS 
Stock activity that is subject to trading reporting on FINRA 
facilities, and potentially may not accurately reflect a fair 
allocation of costs to FINRA. In this way, the proposed Maximum 
Equities Participant Fee would address the potential for outsized fees 
that were previously addressed via the tiering and comparability 
provisions set forth in the Original Funding Model and the Prior Fee 
Proposal. These provisions sought to impose similar levels of fees on 
comparable CAT Reporters.\70\ Finally, along with the other components 
of the calculation of the Participant CAT fee, the Operating Committee 
believes the use of market share is a fair and reasonable basis for 
assessing regulatory usage, expense and burden among the Participants. 
FINRA is expected to be one of the largest regulatory users of the CAT 
and it would be fair and reasonable for the FINRA to pay a 
proportionate percentage of the CAT fees commensurate with FINRA's 
comparable market share, which is subject to the Maximum Equities 
Participant Fee and also not subject to any fee for OTC Equity Security 
market share.
---------------------------------------------------------------------------

    \70\ The proposed deletion of the tiering and comparability 
provisions are discussed above.
---------------------------------------------------------------------------

    The Operating Committee proposes to revise Section 11.3(a)(i) of 
the CAT NMS Plan to implement the proposed Maximum Equities Participant 
Fee. Specifically, the Operating Committee proposes to amend Section 
11.3(a)(i) of the CAT NMS Plan to state that

any Participant that is a national securities association shall pay 
a maximum fee established by the Operating Committee instead of the 
higher fee calculated based on such Participant's market share. If a 
Participant's fee is limited to such maximum fee, any excess amount 
which the Participant otherwise would have paid as a fee above such 
maximum fee will be re-allocated among all Equities Participants 
(including any Equities Participant subject to the maximum fee) in 
accordance with their market share.

    In addition, as discussed below, the Operating Committee proposes 
to include the Maximum Equities Participant Fee in the fee schedule for 
the Consolidated Audit Trail Funding Fees in the CAT NMS Plan. Proposed 
paragraph (a)(1)(B)(ii) of Appendix B of the CAT NMS Plan would 
describe the application of the Maximum Equities Participant Fee. 
Specifically, proposed paragraph (a)(1)(B) would state that Equities 
Participants would pay a CAT fee calculated by adding the sum of the 
Minimum Participant Fee and the following:

    (B) For Equities Participants, the lesser of:
    (i) the product of multiplying the Equities Participant's 
percentage of total market share of NMS Stocks for all Equities 
Participants against the Equities Participant Allocation; or
    (ii) the Maximum Equities Participant Fee, if applicable; and
    If any Participant's fee is limited to the Maximum Equities 
Participant Fee, any excess amount which such Participant otherwise 
would have paid as a fee above such Maximum Equities Participant Fee 
will be re-allocated among all Equities Participants (including any 
Equities Participant subject to the Maximum Equities Participant 
Fee) in accordance with their market share.

    Furthermore, proposed paragraph (b)(6) of Appendix B of the CAT NMS 
Plan would state:

    The Maximum Equities Participant Fee is the greater of (x) 20% 
of the Equities Participant Allocation or (y) the highest CAT fee 
required to be paid by any other Equities Participant plus 5% of 
such highest CAT fee. The Maximum Equities Participant Fee only 
applies to a Participant that is a national securities association.
v. Options Participant Allocation
    The Options Participant Allocation would be divided among Options 
Participants based on market share in Listed Options in accordance with 
Section 11.3(a)(ii) of the CAT NMS Plan. An Options Participant's 
market share in Listed Options would be determined by calculating the 
total volume of Listed Options contracts reported by all Options 
Participants during the relevant time period. Accordingly, each Options 
Participant would pay a CAT fee that is calculated by multiplying (x) 
each Options Participant's percentage of the total market share in 
Listed Options during the relevant time period by (y) the Options 
Participant Allocation.
    As discussed below, the Operating Committee proposes to include the 
allocation of the Options Participant Allocation in the fee schedule 
for the Consolidated Audit Trail Funding Fees in the CAT NMS Plan. 
Proposed paragraph (a)(1)(C) of Appendix B of the CAT NMS Plan would 
state that Options Participants would pay a CAT fee calculated by 
adding the sum of the Minimum Participant Fee and ``the product of 
multiplying the Participant's percentage of total market share of 
Listed Options contracts for all Options Participants against the 
Options Participant Allocation.''
vi. No Fixed Fees
    The Operating Committee proposes to eliminate references to ``fixed 
fees'' used with regard to the CAT fees to be paid by Participants. As 
discussed above with regard to Industry Member CAT fees, the CAT fees 
to be paid by Participants may vary from time to time in accordance 
with their market share. Accordingly, the Operating Committee proposes 
to replace the references to ``fixed fees'' for Participants in 
Sections 11.3(a), 11.3(a)(i) and 11.3(a)(ii) with references to 
``fees.''
5. Proposed CAT Fees
a. Participant CAT Fee
    To recover the costs of the CAT going forward, the Operating 
Committee proposes to charge Participants a quarterly CAT fee 
calculated based on the allocation of Total CAT Costs pursuant to the 
Proposed Funding Model. The Operating Committee will use the costs set 
forth in the annual operating budget as the Total CAT Costs in the 
calculation of the Participant CAT Fee.\71\ Specifically, the Total CAT 
Costs budgeted for the upcoming year will be the costs set forth in the 
annual operating budget for the Company required pursuant to Section 
11.1(a) of the CAT NMS Plan. Section 11.1(a) states that ``[o]n an 
annual basis the Operating Committee shall approve an operating budget 
for the Company. The budget shall include the projected costs of the 
Company, including the costs of developing and operating the CAT for 
the upcoming year, and the sources of all revenue to cover such costs, 
as well as the funding of any reserve that the Operating Committee 
reasonably deems appropriate for prudent operation of the Company.'' In 
addition, to address potential changes in the budget during the year, 
the total budgeted costs for the CAT for the relevant year may be 
adjusted on a quarterly basis as the Operating Committee reasonably 
deems appropriate for the prudent operation of the Company. To the 
extent that the Operating Committee adjusts the total

[[Page 21063]]

budgeted costs for the CAT for the relevant year during its quarterly 
budget review, the adjusted total budgeted costs for the CAT will be 
used in calculating the remaining quarterly CAT fees for that year. 
Using budgeted CAT costs, rather than CAT costs already incurred, 
allows the Consolidated Audit Trail, LLC to collect fees prior to when 
bills become payable.
---------------------------------------------------------------------------

    \71\ Note that all Participant CAT fees would be paid 
prospectively based on budgeted Total CAT Costs. This contrasts with 
the Historical CAT Assessment, the Period 3 CAT Fee and the Period 4 
CAT Fee for the Industry Members which would be paid based on actual 
past costs incurred due to the application of the Financial 
Accountability Milestones. The Quarterly CAT Fee for Industry 
Members also would be paid prospectively based on budgeted Total CAT 
Costs.
---------------------------------------------------------------------------

    The Total CAT Costs budgeted for the year would be comprised of all 
fees, costs and expenses estimated to be incurred by or for the Company 
in connection with the development, implementation and operation of the 
CAT during this period. These CAT costs would include, but not be 
limited to, Plan Processor costs, insurance costs, third-party support 
costs and an operational reserve. The Plan Processor costs would 
consist of the Plan Processor's ongoing costs, including development 
costs. This amount would be based upon the fees due to the Plan 
Processor pursuant to the Company's agreement with the Plan Processor. 
Insurance costs would include cyber insurance and director liability 
insurance. The third-party support costs would include legal fees, 
consulting fees, vendor fees and audit fees. In addition, the Operating 
Committee aims to accumulate the necessary funds to establish an 
operating reserve for the Company through the CAT fees charged to CAT 
Reporters. As set forth in Section 11.1(a) of the CAT NMS Plan, the 
Operating Committee may include in the budget ``funding of any reserve 
that the Operating Committee reasonably deems appropriate for prudent 
operation of the Company.'' \72\ As required by Section 11.1(c) of the 
CAT NMS Plan, any surpluses collected will be treated as an operational 
reserve to offset future fees and will not be distributed to the 
Participants as profits.\73\ Using these budgeted Total CAT Costs, the 
Operating Committee will calculate the quarterly CAT fee owed by each 
Participant in accordance with the Proposed Funding Model.
---------------------------------------------------------------------------

    \72\ Although the Operating Committee may determine at its 
discretion that a different level of reserves is appropriate in the 
future, the Operating Committee proposes to include in the budget an 
operational reserve comprised of three months of ongoing CAT costs, 
such as Plan Processor costs, third party support costs and 
insurance costs.
    \73\ CAT NMS Plan Approval Order at 84792.
---------------------------------------------------------------------------

    To implement the Participant CAT fees, the Exchange proposes to add 
a fee schedule, entitled ``Consolidated Audit Trail Funding Fees,'' to 
Exhibit [sic] B of the CAT NMS Plan. As discussed above, proposed 
paragraph (a) states the following:

    Each Participant shall pay to Consolidated Audit Trail, LLC in 
the manner prescribed by the Consolidated Audit Trail, LLC a CAT fee 
calculated as follows:
    (1) Commencing upon SEC approval of the CAT fee, each 
Participant shall pay a quarterly CAT fee based on market share from 
the prior quarter calculated by adding the sum of the following:
    (A) For all Participants, the Minimum Participant Fee;
    (B) For Equities Participants, the lesser of:
    (i) the product of multiplying the Equities Participant's 
percentage of total market share of NMS Stocks for all Equities 
Participants against the Equities Participant Allocation; or
    (ii) the Maximum Equities Participant Fee, if applicable; and
    If any Participant's fee is limited to the Maximum Equities 
Participant Fee, any excess amount which such Participant otherwise 
would have paid as a fee above such Maximum Equities Participant Fee 
will be re-allocated among all Equities Participants (including any 
Equities Participant that is subject to the Maximum Equities 
Participant Fee) in accordance with their market share.
    (C) For Options Participants, the product of multiplying the 
Participant's percentage of total market share of Listed Options 
contracts for all Options Participants against the Options 
Participant Allocation;
    For the avoidance of doubt, Participants with both options and 
equities market share shall be considered both Equities Participants 
and Options Participants.

    As described above, proposed paragraph (b) of Appendix B of the CAT 
NMS Plan would provide the variables necessary to calculate Participant 
CAT fees in accordance with paragraph (a). Specifically, paragraph (b) 
would state that ``[t]he CAT fees set forth in paragraph (a) will be 
calculated based on the following.'' Proposed paragraph (b)(1) of the 
fee schedule would state that ``[t]he Industry Member Allocation for 
each quarter shall be 75% of 1/4th of the Total CAT Costs for the 
relevant year. The Participant Allocation for each quarter shall be 25% 
of 1/4th of the Total CAT Costs for the relevant year.'' Proposed 
paragraph (b)(2) of the fee schedule would state that ``[t]he Minimum 
Participant Fee is 0.75% of the Participant Allocation. For avoidance 
of doubt, the Minimum Participant Fee will be paid by each registered 
national securities exchange that is a Participant and each registered 
national securities association that is a Participant.'' Proposed 
paragraph (b)(3) of the fee schedule would state that ``[t]he Adjusted 
Participant Allocation is the Participant Allocation minus the sum of 
all Minimum Participant Fees required to be paid by each Participant.'' 
Proposed paragraph (b)(4) of the fee schedule would state that ``[t]he 
Equities Participant Allocation is 60% of the Adjusted Participant 
Allocation.'' Proposed paragraph (b)(5) of the fee schedule would state 
that ``[t]he Options Participant Allocation is 40% of the Adjusted 
Participant Allocation.'' Proposed paragraph (b)(6) of the fee schedule 
would state that the ``[t]he Maximum Equities Participant Fee is the 
greater of (x) 20% of the Equities Participant Allocation or (y) the 
highest CAT fee required to be paid by any other Equities Participant 
plus 5% of such second highest CAT fee. The Maximum Equities 
Participant Fee only applies to a Participant that is a national 
securities association.''
    Finally, proposed paragraph (b)(7) of the fee schedule would state 
that ``[t]he Total CAT Costs shall be the total annual budgeted costs 
for the CAT for the relevant year.'' Proposed paragraph (b)(7) of the 
fee schedule would further state that ``[t]he total budgeted costs for 
the CAT for the relevant year may be adjusted on a quarterly basis as 
the Operating Committee reasonably deems appropriate for the prudent 
operation of the Company. To the extent that the Operating Committee 
adjusts the total budgeted costs for the CAT for the relevant year 
during its quarterly budget review, the adjusted total budgeted costs 
for the CAT will be used in calculating the remaining quarterly CAT 
fees for that year.''
    The following chart summarizes the imposition of the Quarterly CAT 
Fee for Participants each year commencing upon approval by the SEC and 
continuing each year thereafter.

----------------------------------------------------------------------------------------------------------------
                                                                     CAT data used for
            Quarterly CAT fee              Quarterly participant       market share             Payment due
                                                allocation              calculation
----------------------------------------------------------------------------------------------------------------
Quarterly CAT Fee #1....................  1/4th of 25% of the     CAT Data from first     2nd quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.
Quarterly CAT Fee #2....................  1/4th of 25% of the     CAT Data from second    3rd quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.
Quarterly CAT Fee #3....................  1/4th of 25% of the     CAT Data from third     4th quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.

[[Page 21064]]

 
Quarterly CAT Fee #4....................  1/4th of 25% of the     CAT Data from fourth    1st quarter of year
                                           budgeted annual CAT     quarter of the          following the
                                           costs for the           relevant year.          relevant year.
                                           relevant year.
----------------------------------------------------------------------------------------------------------------

    Note that, if the SEC approves the proposed CAT fees mid-year, the 
Operating Committee proposes to require Participants to commence 
payment of the Participant CAT Fee in the first quarter after the 
quarter in which the SEC approves the fee. Participants will be 
required to pay a quarterly fee for the remaining quarter(s) of the 
year based on CAT Data from the prior quarter, using the portion of the 
annual budget for those remaining quarter(s) of the year. For example, 
if the SEC approves the CAT fees in the third quarter of 2021, then the 
Participants would be required to pay their first quarterly CAT fee 
during the fourth quarter of 2021 based on the market share calculation 
using CAT Data from the third quarter of 2021 and one quarter of the 
budgeted annual CAT costs for 2021.
b. Industry Member CAT Fees
    The Operating Committee has determined to charge Industry Members 
fees related to CAT costs in accordance with the Proposed Funding 
Model. To implement these CAT fees, each Participant would submit a fee 
filing pursuant to Section 19(b) of the Exchange Act to propose to add 
a section entitled ``Consolidated Audit Trail Funding Fees'' to its fee 
schedule, and to describe the following CAT fees in that section. 
Because the Participants have funded the CAT to date and CAT fees 
imposed on Industry Members are guided by the Financial Accountability 
Milestones, the Operating Committee proposes four categories of CAT 
fees: the Historical CAT Assessment (for pre-Period 1, Period 1 and 
Period 2), Period 3 CAT Fee, Period 4 CAT Fee, and the Quarterly CAT 
Fee.
i. Historical CAT Assessment (for Pre-Period 1, Period 1 and Period 2)
    The Operating Committee determined to charge Industry Members a 
historical assessment (``Historical CAT Assessment'') to recover 
certain CAT costs incurred prior to January 1, 2021 (``Historical CAT 
Assessment Costs''). Specifically, the Historical CAT Assessment is 
intended to collect from Industry Members 75% of certain costs incurred 
through June 22, 2020, the effective date for the Financial 
Accountability Milestones,\74\ certain costs from Period 1 of the 
Financial Accountability Milestones (which covered the period from June 
22, 2020-July 31, 2020) and certain costs from Period 2 of the 
Financial Accountability Milestones (which covered the period from 
August 1, 2020-December 31, 2020). The Total CAT Costs for these 
periods, excluding Excluded Costs (as defined below) and certain costs 
related to the conclusion of the relationship with Thesys CAT, LLC is 
$193,273,342. The Historical CAT Assessment is designed to recover 75% 
of these CAT costs. Accordingly, the Historical CAT Assessment Costs 
would be $144,955,006.
---------------------------------------------------------------------------

    \74\ See generally Financial Accountability Milestone Release.
---------------------------------------------------------------------------

    The Participants have already funded all CAT costs incurred prior 
to January 1, 2021. Accordingly, only Industry Members would be 
required to pay the Historical CAT Assessment. To implement the 
Historical CAT Assessment, each Participant would submit a fee filing 
pursuant to Section 19(b) of the Exchange Act describing the Historical 
CAT Assessment.
    The following describes the Historical CAT Assessment Costs for the 
period prior to June 22, 2020 and the period from June 22, 2020 through 
December 31, 2020 in more detail. The Total CAT Costs incurred prior to 
June 22, 2020 (other than Excluded Costs and certain costs related to 
the conclusion of the relationship with Thesys CAT, LLC) is 
$153,268,597. The Historical CAT Assessment to be paid by Industry 
Members would be designed to recover 75% of these total costs, which is 
$114,951,448. These cost figures are further described below.
     In accordance with Section 11.1(c) of the CAT NMS Plan, 
the Historical CAT Assessment Costs would include ``fees, costs and 
expenses (including legal and consulting fees and expenses) incurred by 
the Participants on behalf of the Company prior to the Effective Date 
in connection with the creation and implementation of the CAT.'' 
Specifically, the Historical CAT Assessment Costs include costs 
incurred from 2012 through November 20, 2016 related to the development 
of the National Market System Plan Governing the Process of Selecting a 
Plan Processor and Developing a Plan for the Consolidated Audit Trail 
\75\ (``Selection Plan'') and the CAT NMS Plan as well as the Plan 
Processor selection process pursuant to the Selection Plan. The Total 
CAT Costs incurred during this period are $13,842,881. The Historical 
CAT Assessment would be designed to recover 75% of these total costs, 
which is $10,382,161.
---------------------------------------------------------------------------

    \75\ See, e.g., Securities Exchange Act Rel. No. 71596, 79 FR 
11152 (Feb. 27, 2014).
---------------------------------------------------------------------------

     The Historical CAT Assessment Costs would include costs 
incurred after the formation of the CAT NMS Plan and prior to the 
selection of Thesys CAT, LLC as the Plan Processor for the CAT, which 
covers the period from November 21, 2016 through April 5, 2017. The 
total cost for this period is $2,933,869. The Historical CAT Assessment 
would be designed to recover 75% of these total costs, which is 
$2,200,402.
     The Historical CAT Assessment Costs would include costs 
incurred during the period in which Thesys CAT, LLC was the Plan 
Processor for the CAT, which was April 6, 2017 through March 28, 2019. 
The total costs for this period are $106,256,258. The Participants, 
however, have determined to exclude from the Historical CAT Assessment 
Costs all costs incurred from November 15, 2017 through November 15, 
2018 (``Excluded Costs'') due to the delay in the reporting to the CAT. 
The Excluded Costs are $48,874,937. Accordingly, the total costs for 
this period are $57,381,321. The Historical CAT Assessment would be 
designed to recover 75% of these total costs, which is $43,035,991.
     The Historical CAT Assessment Costs would include the 
Total CAT Costs from the date of FINRA CAT's selection as the Plan 
Processor on March 29, 2019 through June 21, 2020. The total costs for 
this period are $79,110,525.\76\ The Historical CAT Assessment would be 
designed to recover 75% of these total costs, which is $59,332,894.
---------------------------------------------------------------------------

    \76\ These costs do not include costs incurred in relation to 
the conclusion of the relationship with Thesys CAT, LLC.
---------------------------------------------------------------------------

    The Historical CAT Assessment Costs also would include the certain 
CAT costs incurred from June 22, 2020 through July 31, 2020, which is 
Period 1 of the Financial Accountability Milestones, as well as the 
Total CAT Costs incurred from August 1, 2020 through December 31, 2020, 
which is Period 2 of the Financial Accountability Milestones, subject 
to certain

[[Page 21065]]

exceptions.\77\ The total costs incurred from June 22, 2020 through 
December 31, 2020 are $40,004,745. The Historical CAT Assessment to be 
paid by the Industry Members would be designed to recover 75% of these 
total costs, which is $30,003,559.
---------------------------------------------------------------------------

    \77\ These costs do not include costs incurred in relation to 
the conclusion of the relationship with Thesys CAT, LLC.
---------------------------------------------------------------------------

    Using the Historical CAT Assessment Costs, the Operating Committee 
would calculate the Historical CAT Assessment owed by each Industry 
Member in accordance with the Proposed Funding Model. The Operating 
Committee proposes to seek to recover the Historical CAT Assessment 
Costs over a period of four calendar quarters, commencing upon the 
SEC's approval of the Historical CAT Assessment. Each quarter, each 
Industry Member would pay the greater of the minimum fee of $125 or the 
Industry Member's fee calculated based on message traffic (subject to 
the market making discounts and the maximum fee). The message traffic 
fee would be calculated by multiplying the percentage of the Industry 
Member's message traffic of the total Industry Member message traffic 
(subject to applicable discounts for Options and Equity Market Maker 
message traffic and the Maximum Industry Member CAT Fee) by 
$36,238,752, which is 1/4th of the Historical CAT Assessment Costs. 
Each Industry Member's message traffic would be calculated using CAT 
Data from the prior quarter. The Operating Committee proposes to 
commence charging the Historical CAT Assessment in the first quarter 
after SEC approval of the Historical CAT Assessment, based on CAT Data 
from the quarter in which the SEC approved the CAT fees. The following 
chart summarizes the imposition of the Historical CAT Assessment:

----------------------------------------------------------------------------------------------------------------
                                                Quarterly         CAT data used for
             Quarterly CAT fee               industry member       message traffic             Payment due
                                               allocation            calculation
----------------------------------------------------------------------------------------------------------------
Quarterly CAT Fee #1......................       $36,238,752  Quarter of SEC approval   1st quarter after SEC
                                                               of Historical CAT         approval of Industry
                                                               Assessment.               Member CAT Fees set
                                                                                         forth in this Proposed
                                                                                         Plan Amendment.
Quarterly CAT Fee #2......................        36,238,752  1st quarter after SEC     2nd quarter after SEC
                                                               approval of Historical    approval of Industry
                                                               CAT Assessment.           Member CAT Fees set
                                                                                         forth in this Proposed
                                                                                         Plan Amendment.
Quarterly CAT Fee #3......................        36,238,752  2nd quarter after SEC     3rd quarter after SEC
                                                               approval of Historical    approval of Industry
                                                               CAT Assessment.           Member CAT Fees set
                                                                                         forth in this Proposed
                                                                                         Plan Amendment.
Quarterly CAT Fee #4......................        36,238,752  3rd quarter after SEC     4th quarter after SEC
                                                               approval of Historical    approval of Industry
                                                               CAT Assessment.           Member CAT Fees set
                                                                                         forth in this Proposed
                                                                                         Plan Amendment.
----------------------------------------------------------------------------------------------------------------

    In accordance with Section 11.6(b) of the CAT NMS Plan, the 
Operating Committee indicates that the proposed Historical CAT 
Assessment seeks to recover costs that are related to Post-Amendment 
Expenses incurred during Period 1. Period 1 began on June 22, 2020, the 
effective date of Section 11.6 of the CAT NMS Plan, and concluded on 
July 31, 2020, the date of Initial Industry Member Core Equity and 
Options Reporting. As indicated by the Participants' Quarterly Progress 
Report,\78\ Initial Industry Member Core Equity and Option Reporting 
was completed on schedule by July 31, 2020. As discussed above, the 
Historical CAT Assessment Costs to be recovered via the Historical CAT 
Assessment would include fees, costs and expenses incurred by or for 
the Company in connection with the development, implementation and 
operation of the CAT during the period from June 22, 2020 through July 
31, 2020.
---------------------------------------------------------------------------

    \78\ Q3 2020 Quarterly Progress Report (Oct. 30, 2020) 
(available at www.catnmsplan.com).
---------------------------------------------------------------------------

    The Operating Committee also indicates that the proposed Historical 
CAT Assessment seeks to recover costs that are related to Post-
Amendment Expenses incurred during Period 2. Period 2 began on August 
1, 2020, and concluded on December 31, 2020, the date of the Full 
Implementation of Core Equity Reporting. As indicated by the 
Participants' Quarterly Progress Report,\79\ Full Implementation of 
Core Equity Reporting was completed on schedule by December 31, 2020. 
As discussed above, the Historical CAT Assessment Costs to be recovered 
via the Historical CAT Assessment would include fees, costs and 
expenses incurred by or for the Company in connection with the 
development, implementation and operation of the CAT during the period 
from August 1, 2020 through December 31, 2020.
---------------------------------------------------------------------------

    \79\ Q4 2020 Quarterly Progress Report (Jan. 29, 2021) 
(available at www.catnmsplan.com).
---------------------------------------------------------------------------

ii. Period 3 CAT Fee
    The Operating Committee also determined to charge Industry Members 
a quarterly fee to recover the Total CAT Costs incurred from January 1, 
2021 through December 31, 2021, referred to as the Period 3 CAT Fee. 
The Total CAT Costs incurred from January 1, 2021 through December 31, 
2021 (``Period 3 CAT Costs'') will be calculated at the completion of 
2021. Specifically, the Period 3 CAT Costs will be the total actual 
costs incurred for the CAT for 2021 as set forth in the 2021 financial 
statements for the Company. Using the Period 3 CAT Costs, the Operating 
Committee will calculate the Period 3 CAT Fee owed by each Industry 
Member in accordance with the Proposed Funding Model. The Operating 
Committee proposes to seek to recover Period 3 CAT Costs over a period 
of four calendar quarters, commencing in 2022.\80\ Each quarter, each 
Industry Member will pay the greater of the minimum fee of $125 or the 
Industry Member's fee calculated based on message traffic. The message 
traffic fee would be calculated by multiplying the percentage of the 
Industry Member's message traffic of the total Industry Member message 
traffic (subject to applicable discounts for Options Market Maker 
message traffic and Equity Market Maker message traffic, and the 
Maximum Industry Member CAT Fee) by 1/4th of 75% of the Period 3 CAT 
Costs. Each Industry Member's message traffic would be calculated using 
CAT Data from the prior quarter. The Operating Committee proposes to 
commence charging the Period 3 CAT Fee in the second quarter of 2022, 
based on CAT Data from the first quarter of 2022. The following chart 
summarizes the imposition of the Period 3 CAT Fee:
---------------------------------------------------------------------------

    \80\ Because the Period 3 CAT Fee is subject to the requirements 
of the Financial Accountability Milestones, the Period 3 CAT Fee 
will be imposed at the end of this time period. In contrast, because 
the Participant CAT fee for this time period is not subject to the 
requirements of the Financial Accountability Milestones, the 
Participant CAT fee for this period will be imposed prospectively.

[[Page 21066]]

----------------------------------------------------------------------------------------------------------------
                                                                     CAT data used for
            Quarterly CAT fee               Quarterly industry        message traffic           Payment due
                                             member allocation          calculation
----------------------------------------------------------------------------------------------------------------
Quarterly CAT Fee #1....................  1/4th of 75% of the     CAT Data from first     2nd quarter of 2022.
                                           Period 3 CAT Costs      quarter of 2022.
                                           \81\.
Quarterly CAT Fee #2....................  1/4th of 75% of the     CAT Data from second    3rd quarter of 2022.
                                           Period 3 CAT Costs.     quarter of 2022.
Quarterly CAT Fee #3....................  1/4th of 75% of the     CAT Data from third     4th quarter of 2022.
                                           Period 3 CAT Costs.     quarter of 2022.
Quarterly CAT Fee #4....................  1/4th of 75% of the     CAT Data from fourth    1st quarter of 2023.
                                           Period 3 CAT Costs.     quarter of 2022.
----------------------------------------------------------------------------------------------------------------

    To implement the Period 3 CAT Fee, each Participant would submit a 
fee filing pursuant to Section 19(b) of the Exchange Act describing the 
Period 3 CAT Fee. The Operating Committee will announce via a CAT alert 
after the end of 2021 the Total CAT Costs for 2021 to be used in 
calculating the quarterly Period 3 CAT Fees.\82\ Such Total CAT Costs 
will be set forth in the year-end financial statements of the 
Consolidated Audit Trail, LLC. Such financial statements are required 
to be prepared in accordance Section 9.2 of the CAT NMS Plan, including 
requirements related to compliance with GAAP, auditing by an 
independent public accounting firm and making the statements publicly 
available.
---------------------------------------------------------------------------

    \81\ The Period 3 CAT Costs will be the total actual costs 
incurred for the CAT for 2021 as set forth in the 2021 financial 
statements for the Company.
    \82\ The Participants intend to file a fee filing under Section 
19(b) of the Exchange Act describing the calculation method for the 
Period 3 CAT Fee, and then announce via CAT alert the Total CAT 
Costs to be used in calculating the CAT fees via the method 
described in the fee filing. The Participants do not intend to file 
a separate fee filing setting forth the Total CAT Costs relevant for 
the Period 3 CAT Fee.
---------------------------------------------------------------------------

    The Operating Committee indicates that the proposed Period 3 CAT 
Fee seeks to recover costs that will be related to Post-Amendment 
Expenses incurred during Period 3. Period 3 began on January 1, 2021 
and is expected to conclude on December 31, 2021, the date of Full 
Availability and Regulatory Utilization of Transactional Database 
Functionality. As discussed above, the Period 3 CAT Costs to be 
recovered via the Period 3 CAT Fee would include fees, costs and 
expenses incurred by or for the Company in connection with the 
development, implementation and operation of the CAT during the period 
from January 1, 2020 through December 31, 2021. The Participants' 
collection of the full amount of the Period 3 CAT Fee will depend upon 
the achievement of Full Availability and Regulatory Utilization of 
Transaction Database Functionality by December 31, 2021; if not, the 
amount of the Period 3 CAT Fee that may be collected from the Industry 
Members will depend upon the fee limitations set forth in Section 11.6 
of the CAT NMS Plan.
iii. Period 4 CAT Fee
    The Operating Committee also determined to charge Industry Members 
a quarterly fee to recover the Total CAT Costs incurred from January 1, 
2022 through December 31, 2022, referred to as the Period 4 CAT Fee. 
The Total CAT Costs incurred from January 1, 2022 through December 31, 
2022 (``Period 4 CAT Costs'') will be calculated at the completion of 
2022. Specifically, the Period 4 CAT Costs will be the total actual 
costs incurred for the CAT for 2022 as set forth in the 2022 financial 
statements for the Company. Using the Period 4 CAT Costs, the Operating 
Committee will calculate the Period 4 CAT Fee owed by each Industry 
Member in accordance with the Proposed Funding Model. The Operating 
Committee proposes to seek to recover Period 4 CAT Costs over a period 
of four calendar quarters, commencing in 2023.\83\ Each quarter, each 
Industry Member will pay the greater of the minimum fee of $125 or the 
Industry Member's fee calculated based on message traffic. The message 
traffic fee would be calculated by multiplying the percentage of the 
Industry Member's message traffic of the total Industry Member message 
traffic (subject to applicable discounts for Options Market Maker 
message traffic and Equity Market Maker message traffic, and the 
Maximum Industry Member CAT Fee) by 1/4th of 75% of the Period 4 CAT 
Costs. Each Industry Member's message traffic would be calculated using 
CAT Data from the prior quarter. The Operating Committee proposes to 
commence charging the Period 4 CAT fee in the second quarter of 2023, 
based on data from the first quarter of 2023. The following chart 
summarizes the imposition of the Period 4 CAT Fee:
---------------------------------------------------------------------------

    \83\ Because the Period 4 CAT Fee is subject to the requirements 
of the Financial Accountability Milestones, the Period 4 CAT Fee 
will be imposed at the end of this time period. In contrast, because 
the Participant CAT Fee for this time period is not subject to the 
requirements of the Financial Accountability Milestones, the 
Participant CAT Fee for this period will be imposed prospectively.

----------------------------------------------------------------------------------------------------------------
                                                                     CAT data used for
            Quarterly CAT fee               Quarterly industry        message traffic           Payment due
                                             member allocation          calculation
----------------------------------------------------------------------------------------------------------------
Quarterly CAT Fee #1....................  1/4th of 75% of the     CAT Data from first     2nd quarter of 2023.
                                           Period 4 CAT Costs      quarter of 2023.
                                           \84\.
Quarterly CAT Fee #2....................  1/4th of 75% of the     CAT Data from second    3rd quarter of 2023.
                                           Period 4 CAT Costs.     quarter of 2023.
Quarterly CAT Fee #3....................  1/4th of 75% of the     CAT Data from third     4th quarter of 2023.
                                           Period 4 CAT Costs.     quarter of 2023.
Quarterly CAT Fee #4....................  1/4th of 75% of the     CAT Data from fourth    1st quarter of 2024.
                                           Period 4 CAT Costs.     quarter of 2023.
----------------------------------------------------------------------------------------------------------------

    To implement the Period 4 CAT Fee, each Participant would submit a 
fee filing pursuant to Section 19(b) of the Exchange Act describing the 
method for calculating the Period 4 CAT Fee. The Operating Committee 
will announce via a CAT alert after the end of 2022 the Total CAT Costs 
for 2022 to be used in calculating the quarterly Period 4 CAT Fees.\85\ 
Such Total CAT Costs will be set forth in the year-end financial 
statements of the Consolidated Audit Trail, LLC. As noted above, such 
financial statements are required to be prepared in accordance with the 
requirements set forth in Section 9.2 of the CAT NMS Plan.
---------------------------------------------------------------------------

    \84\ The Period 4 CAT Costs will be the total actual costs 
incurred for the CAT for 2022 as set forth in the 2022 financial 
statements for the Company.
    \85\ The Participants intend to file one fee filing under 
Section 19(b) of the Exchange describing the calculation method for 
the Period 4 CAT Fee, and announce via CAT alert the Total CAT Costs 
to be used in calculating the CAT fees via the method described in 
the fee filing. The Participants do not intend to file a separate 
fee filing setting forth the Total CAT Costs relevant for the Period 
4 CAT Fee.
---------------------------------------------------------------------------

    The Operating Committee indicates that the proposed Period 4 CAT 
Fee seeks to recover costs that will be related to Post-Amendment 
Expenses incurred during Period 4. Period 4 is expected to begin on 
January 1, 2022

[[Page 21067]]

and conclude on December 31, 2022, the date of Full Implementation of 
CAT NMS Plan Requirements. As discussed above, the Period 4 CAT Costs 
to be recovered via the Period 4 CAT Fee would include fees, costs and 
expenses incurred by or for the Company in connection with the 
development, implementation and operation of the CAT during the period 
from January 1, 2022 through December 31, 2022. The Participants' 
collection of the full amount of the Period 4 CAT Fee will depend upon 
the achievement of Full Implementation of CAT NMS Plan Requirements by 
December 31, 2022; if not, the amount of the Period 4 CAT Fee that may 
be collected from the Industry Members will depend upon the fee 
limitations set forth in Section 11.6 of the CAT NMS Plan.
iv. Quarterly CAT Fee--Beginning 2023
    To recover the costs of the CAT going forward beginning in 2023, 
the Operating Committee determined to charge Industry Members an 
ongoing quarterly CAT fee calculated based on the allocation of Total 
CAT Costs pursuant to the Proposed Funding Model (``Quarterly CAT 
Fee''). The Operating Committee will use the costs set forth in the 
annual operating budget as the Total CAT Costs in the calculation of 
the Quarterly CAT Fee. Specifically, the Total CAT Costs budgeted for 
the upcoming year will be the costs set forth in the annual operating 
budget for the Company required pursuant to Section 11.1(a) of the CAT 
NMS Plan. As discussed above with regard to the Participant CAT fee, 
CAT costs would include, but not be limited to, Plan Processor costs, 
insurance costs, third-party support costs and an operational 
reserve.\86\ As required by Section 11.1(c) of the CAT NMS Plan, any 
surpluses collected will be treated as an operational reserve to offset 
future fees and will not be distributed to the Participants as 
profits.\87\ In addition, to address potential changes in the budget 
during the year, the total budgeted costs for the CAT for the relevant 
year may be adjusted on a quarterly basis as the Operating Committee 
reasonably deems appropriate for the prudent operation of the Company. 
To the extent that the Operating Committee adjusts the total budgeted 
costs for the CAT for the relevant year during its quarterly budget 
review, the adjusted total budgeted costs for the CAT will be used in 
calculating the remaining quarterly CAT fees for that year. Using these 
budgeted Total CAT Costs, the Operating Committee will calculate the 
Quarterly CAT Fee owed by each Industry Member in accordance with the 
Proposed Funding Model.
---------------------------------------------------------------------------

    \86\ As set forth in Section 11.1(a) of the CAT NMS Plan, the 
Operating Committee may include in the budget ``the funding of any 
reserve that the Operating Committee reasonably deems appropriate 
for prudent operation of the Company.'' Although the Operating 
Committee may determine at its discretion that a different level of 
reserves is appropriate in the future, the Operating Committee 
proposes to include in the budget an operational reserve comprised 
of three months of ongoing CAT costs, such as Plan Processor costs, 
third party support costs and insurance costs.
    \87\ CAT NMS Plan Approval Order at 84792.
---------------------------------------------------------------------------

    The Operating Committee proposes to seek to recover the budgeted 
Total CAT Costs over the course of the year. Each quarter, each 
Industry Member will pay the greater of the minimum fee of $125 or the 
Industry Member's fee calculated based on message traffic.\88\ The 
message traffic fee would be calculated by multiplying the percentage 
of the Industry Member's message traffic of the total Industry Member 
message traffic (subject to applicable discounts for Options Market 
Maker message traffic and Equity Market Maker message traffic, and the 
Maximum Industry Member CAT Fee) by 1/4th of 75% of the budgeted Total 
CAT Costs for the year. Each Industry Member's message traffic would be 
calculated using data from the prior calendar quarter. The Operating 
Committee proposes to commence charging this CAT fee in the second 
quarter of 2023, based on CAT Data from the first quarter of 2023. The 
following chart summarizes the imposition of the Quarterly CAT Fee for 
Industry Members each year commencing in 2023 and continuing each year 
thereafter:
---------------------------------------------------------------------------

    \88\ To the extent that any two or more of the four categories 
of Industry Member CAT fees (i.e., the Historical CAT Assessment, 
Period 3 CAT Fee, Period 4 CAT Fee and the Quarterly CAT Fee) are 
due during the same quarter, any Industry Member obligated to pay 
one or more categories of fees is required to pay each category of 
fee for that quarter. For example, if an Industry Member would be 
subject to the Minimum Industry Member CAT Fee for the Period 4 CAT 
Fee and the Minimum Industry Member CAT Fee for Quarterly CAT Fee 
during the same quarter, the Industry Member would be required to 
pay two minimum $125 fee that quarter for a total of $250. As 
another example, suppose that an Industry Member owed a CAT fee 
(other than the minimum fee of $125) for both the Historical CAT 
Assessment and the Period 3 CAT Fee, the Industry Member would be 
required to pay both fees that quarter.

----------------------------------------------------------------------------------------------------------------
                                                                     CAT data used for
            Quarterly CAT fee               Quarterly industry        message traffic           Payment due
                                             member allocation          calculation
----------------------------------------------------------------------------------------------------------------
Quarterly CAT Fee #1....................  1/4th of 75% of the     CAT Data from first     2nd quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.
Quarterly CAT Fee #2....................  1/4th of 75% of the     CAT Data from second    3rd quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.
Quarterly CAT Fee #3....................  1/4th of 75% of the     CAT Data from third     4th quarter of the
                                           budgeted annual CAT     quarter of the          relevant year.
                                           costs for the           relevant year.
                                           relevant year.
Quarterly CAT Fee #4....................  1/4th of 75% of the     CAT Data from fourth    1st quarter of year
                                           budgeted annual CAT     quarter of the          following the
                                           costs for the           relevant year.          relevant year.
                                           relevant year.
----------------------------------------------------------------------------------------------------------------

    To implement the Quarterly CAT Fee, each Participant would submit a 
fee filing pursuant to Section 19(b) of the Exchange Act describing the 
method for calculating the Quarterly CAT Fee. The Operating Committee 
will announce at the beginning of the relevant year via a CAT alert the 
budgeted Total CAT Costs to be used in calculating the Quarterly CAT 
Fees for that year.\89\ The budgeted Total CAT Costs will be the costs 
set forth in the annual operating budget for the Company required 
pursuant to Section 11.1(a) of the CAT NMS Plan. Section 11.1(a) states 
that ``[o]n an annual basis the Operating Committee shall approve an 
operating budget for the Company. The budget shall include the 
projected costs of the Company, including the costs of developing and 
operating the CAT for the upcoming year, and the sources of all 
revenues to cover such costs, as well as the funding of any reserve 
that the Operating Committee reasonably deems appropriate for prudent 
operation of the Company.'' To the extent that the Operating Committee 
adjusts the budgeted Total CAT Costs for the year during its quarterly 
budget review, the

[[Page 21068]]

Operating Committee will announce any such quarterly budget adjustments 
to be used in calculating the remaining Quarterly CAT Fees for that 
year via a CAT alert.
---------------------------------------------------------------------------

    \89\ The Participants intend to file one fee filing under 
Section 19(b) of the Exchange Act describing the calculation method 
for the Quarterly CAT Fee, and then announce via CAT alert the 
budgeted Total CAT Costs to be used in calculating the CAT fees each 
year via the method described in the fee filing. The Participants do 
not intend to file a separate fee filing each year setting forth the 
budgeted Total CAT Costs relevant for the Quarterly CAT Fee.
---------------------------------------------------------------------------

6. Collection of Fees
    Pursuant to Section 11.4 of the CAT NMS Plan, the Operating 
Committee proposes to establish a system for the collection of CAT 
fees. The Consolidated Audit Trail, LLC will provide each Participant 
with an invoice setting forth the Participants' quarterly CAT fee for 
each payment period. Each Participant will pay its CAT fees to the 
Consolidated Audit Trail, LLC via the centralized system for the 
collection of CAT fees established by the Consolidated Audit Trail, LLC 
in the manner prescribed by the Consolidated Audit Trail, LLC. As set 
forth in Section 11.4 of the CAT NMS Plan, each Participant shall pay 
all its CAT fees authorized under the CAT NMS Plan as required by 
Section 3.7(b) of the CAT NMS Plan.
    The Operating Committee also determined the time and manner in 
which Industry Member CAT fees will be paid. The Operating Committee 
determined that the Consolidated Audit Trail, LLC will provide each 
Industry Member with an invoice setting forth the Industry Member's 
Historical CAT Assessment, Period 3 CAT Fee, Period 4 CAT Fee and/or 
Quarterly CAT Fee (as applicable) for each payment period. Consolidated 
Audit Trail, LLC will provide each Industry Member with one invoice 
each payment period for its CAT fees, regardless of whether the 
Industry Member is a member of multiple self-regulatory organizations. 
Each Industry Member will pay its CAT fees to the Consolidated Audit 
Trail, LLC via the centralized system for the collection of CAT fees 
established by the Consolidated Audit Trail, LLC in the manner 
prescribed by the Consolidated Audit Trail, LLC. Finally, as set forth 
in Section 11.4 of the CAT NMS Plan, Industry Members would be required 
to pay their CAT fees within thirty days after receipt of an invoice or 
other notice indicating payment is due (unless a longer payment period 
is otherwise indicated). If an Industry Member fails to pay any such 
fee when due, such Industry Member shall pay interest on the 
outstanding balance from such due date until such fee is paid at a per 
annum rate equal to the lesser of (i) the Prime Rate plus 300 basis 
points, or (ii) the maximum rate permitted by applicable law.\90\ To 
implement the requirements related to the timing and manner of payment 
of the CAT fees for Industry Members, each Participant would submit a 
fee filing pursuant to Section 19(b) of the Exchange Act describing 
such requirements as discussed above.
---------------------------------------------------------------------------

    \90\ CAT Reporters will be responsible for each quarterly fee in 
which they are a CAT Reporter. If a CAT Reporter ceases to the meet 
the definition of a CAT Reporter during a quarter, the CAT Reporter 
will still be responsible for CAT fees attributable to its message 
traffic (or, the minimum fee in the alternative) during that 
quarter.
---------------------------------------------------------------------------

7. Example of Application of Proposed Funding Model
    The Operating Committee has prepared an example of how the Proposed 
Funding Model would operate for illustrative purposes only. 
Specifically, the Operating Committee has prepared an example of CAT 
fees calculated under the Proposed Funding Model based on budgeted 
Total CAT Costs for 2021 as well as message traffic and market share 
data for the fourth quarter of 2020. Set forth in Exhibit B to this 
letter are three charts setting forth illustrative CAT fees for each 
Equities Participant, Options Participant and Industry Member CAT 
Reporter. Note Exhibit B only provides an illustrative example of how 
the Proposed Funding Model would operate; the calculation of actual 
fees will differ from this example in various ways. For example, the 
Participants have paid or will have paid 100% of these costs up to the 
time of the SEC approval of the Proposed Funding Model, and, as a 
result, Participants would not be obligated to pay CAT fees related to 
2021 CAT costs to the extent the Participants have already paid such 
costs. Furthermore, Period 3 CAT Fees for Industry Members will be 
calculated based on actual Total CAT Costs for 2021, not budgeted CAT 
Costs for 2021, and based on CAT Data from 2022, not from 2020.
8. Satisfaction of Exchange Act and CAT NMS Plan Requirements
    The Operating Committee believes that the Proposed Funding Model 
offers a variety of benefits and satisfies the funding principles and 
other requirements of the CAT NMS Plan, as proposed to be revised 
herein, as well as the applicable requirements of the Exchange Act.
a. Funding Principle: Section 11.2(a) of the CAT NMS Plan
    The Participants believe that the Proposed Funding Model satisfies 
the funding principles set forth in Section 11.2(a) of the CAT NMS 
Plan, as proposed to be modified herein. Section 11.2(a) requires the 
Operating Committee, in establishing the funding of the Company, to 
seek ``to create transparent, predictable revenue streams for the 
Company that are aligned with the anticipated costs to build, operate 
and administer the CAT and the other costs of the Company.''
    First, by adopting a CAT-specific fee tied to Total CAT Costs, the 
Operating Committee will be fully transparent regarding the costs of 
the CAT and how those costs will be allocated among CAT Reporters. In 
contrast, charging a general regulatory fee, which might otherwise be 
used to cover CAT costs as well as other regulatory costs, would be 
less transparent than the selected approach of charging a fee 
designated to cover CAT-related costs only.
    Second, the Proposed Funding Model would provide a predictable 
revenue stream for the Company. The Proposed Funding Model provides for 
a predictable revenue stream as the Proposed Funding Model is designed 
to divide the Total CAT Costs among the CAT Reporters. In addition, to 
address the possibility of some variability in the collected CAT fees 
or an unexpected increase in costs, the Total CAT Costs covered by the 
Proposed Funding Model include an operational reserve. The operational 
reserve could be used in the event that the total fees are not 
collected from the CAT Reporters, or costs increase due to outside 
events.
    Third, the Proposed Funding Model provides for a revenue stream for 
the Company that is aligned with the anticipated costs to build, 
operate and administer the CAT and the other costs of the Company. The 
total fees to be collected from Participants and Industry Members are 
designed to cover the Total CAT Costs. Any surpluses collected will be 
treated as an operational reserve to offset future fees and will not be 
distributed to the Participants as profits.\91\
---------------------------------------------------------------------------

    \91\ CAT NMS Plan Approval Order at 84792.
---------------------------------------------------------------------------

b. Funding Principle: Section 11.2(b) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model satisfies the funding principle set forth in Section 11.2(b) of 
the CAT NMS Plan, which requires the Operating Committee to seek ``to 
establish an allocation of the Company's related costs among 
Participants and Industry Members that is consistent with the Exchange 
Act, taking into account the timeline for implementation of the CAT and 
distinctions in the securities trading operations of Participants and 
Industry Members and their relative impact upon Company resources and 
operations.'' As

[[Page 21069]]

discussed above, the Proposed Funding Model allocation between 
Participants and Industry Members takes into account the timeline for 
implementation, as the Company has been incurring CAT costs with the 
development and implementation of the CAT, and Participants and certain 
Industry Members have been reporting to the CAT.
    The Proposed Funding Model also recognizes the ``distinctions in 
the securities trading operations of Participants and Industry 
Members'' in various ways. In light of their different roles, 
Participants will pay a fee based on market share and Industry Members 
will pay a fee based on message traffic, as approved by the Commission 
in the CAT NMS Plan. The Proposed Funding Model also recognizes the 
different trading characteristics of the equities and options markets 
by allocating the Adjusted Participant Allocation to Equities 
Participants and Options Participants separately. Furthermore, the 
Operating Committee proposes to discount Options Market Maker message 
traffic and Equity Market Maker message traffic in recognition of their 
distinct roles as liquidity providers in the securities markets and to 
avoid potentially and inadvertently affecting market quality. The 
Proposed Funding Model also recognizes the different trading 
characteristics of OTC Equity Securities by not including them in the 
market share calculation for Participants. The Proposed Funding Model 
also is designed to take into account Participants and Industry 
Members' relative impact upon Company resources and operations through 
the use of message traffic and market share in calculating CAT fees.
c. Funding Principle: Section 11.2(c) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model satisfies the funding principle set forth in Section 11.2(c) of 
the CAT NMS Plan, as proposed to be modified herein. Section 11.2(c), 
as proposed to be modified herein, requires the Operating Committee to 
seek ``to establish a fee structure in which the fees charged to: (i) 
Participants are based upon the level of market share; and (ii) 
Industry Members are based upon message traffic.'' The Proposed Funding 
Model requires Participants to pay a fee based on market share, and 
Industry Members to pay a fee based on message traffic.
d. Funding Principle: Section 11.2(d) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model satisfies the funding principle set forth in Section 11.2(d) of 
the CAT NMS Plan, which requires the Operating Committee to seek ``to 
provide for ease of billing and other administrative functions.'' The 
Operating Committee believes that calculating CAT fees under the 
Proposed Funding Model will be manageable as the message traffic and 
market share data will be readily available. In addition, the 
elimination of tiers simplifies the billing process as it removes the 
subjective determination of the tier levels. In addition, the Operating 
Committee proposes a Minimum Industry Member CAT Fee to ease the 
administrative burden associated with very small payments.
e. Funding Principle: Section 11.2(e) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model satisfies the funding principle set forth in Section 11.2(e) of 
the CAT NMS Plan, which requires the Operating Committee to seek ``to 
avoid any disincentives such as placing an inappropriate burden on 
competition and a reduction in market quality.'' As discussed above, 
the Operating Committee has proposed various measures to address 
potential disincentives, including the market maker message traffic 
discounts, the Maximum Industry Member CAT Fee, the Maximum Equities 
Participant Fee and the treatment of OTC Equity Securities for the 
market share calculation for Participants. The Proposed Funding Model 
also is structured to avoid a reduction in market quality because it 
discounts Options Market Maker message traffic and Equity Market Maker 
message traffic when calculating message traffic for Options Market 
Makers and Equity Market Makers, respectively. The proposed discounts 
recognize the value of the market making activity to the market as a 
whole.
f. Funding Principle: Section 11.2(f) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model satisfies the funding principle set forth in Section 11.2(f) of 
the CAT NMS Plan, which requires the Operating Committee to seek ``to 
build financial stability to support the Company as a going concern.'' 
The Operating Committee believes that the Proposed Funding Model is 
structured to collect sufficient funds to pay the Total CAT Costs. In 
addition, the Proposed Funding Model would collect an operational 
reserve for the CAT. This operational reserve is intended to address 
potential shortfalls in collected CAT fees versus actual CAT costs.
g. Section 11.1(c) of the CAT NMS Plan
    The Operating Committee also believes that the Proposed Funding 
Model would satisfy the requirements in Section 11.1(c) of the CAT NMS 
Plan. Section 11.1(c) of the CAT NMS Plan states that ``[t]o fund the 
development and implementation of the CAT, the Company shall time the 
imposition and collection of all fees on Participants and Industry 
Members in a manner reasonably related to the timing when the Company 
expects to incur such development and implementation costs.'' The 
Company has been and continues to incur development and implementation 
costs for the CAT, and the Operating Committee intends for the fees to 
help cover these costs. In addition, the CAT fees going forward are 
proposed to be imposed close in time to when costs are incurred.
    Section 11.1(c) of the CAT NMS Plan also requires that ``[a]ny 
surplus of the Company's resources over its expenses shall be treated 
as an operational reserve to offset future fees.'' The Company will 
operate on a ``break-even'' basis, with fees imposed to cover costs and 
an appropriate reserve. Any surpluses will be treated as an operational 
reserve to offset future fees and will not be distributed to the 
Participants as profits.\92\ To ensure that the Participants' operation 
of the CAT will not contribute to the funding of their other 
operations, Section 11.1(c) of the CAT NMS Plan specifically states 
that ``[a]ny surplus of the Company's revenues over its expenses shall 
be treated as an operational reserve to offset future fees.'' In 
addition, as set forth in Article VIII of the CAT NMS Plan, the Company 
``intends to operate in a manner such that it qualifies as a `business 
league' within the meaning of Section 501(c)(6) of the [Internal 
Revenue] Code.'' To qualify as a business league, an organization must 
``not [be] organized for profit and no part of the net earnings of [the 
organization can] inure[ ] to the benefit of any private shareholder or 
individual.'' \93\ As the SEC stated when approving the CAT NMS Plan, 
``the Commission believes that the Company's application for Section 
501(c)(6) business league status addresses issues raised by commenters 
about the Plan's proposed allocation of profit and loss by mitigating 
concerns that the Company's earnings could be used to benefit 
individual

[[Page 21070]]

Participants.'' \94\ The Internal Revenue Service has determined that 
the Company is exempt from federal income tax under Section 501(c)(6) 
of the Internal Revenue Code.
---------------------------------------------------------------------------

    \92\ CAT NMS Plan Approval Order at 84792.
    \93\ 26 U.S.C. 501(c)(6).
    \94\ CAT NMS Plan Approval Order at 84793.
---------------------------------------------------------------------------

h. Equitable Allocation of Reasonable Fees
    The Operating Committee believes that the proposed CAT fees provide 
for the ``equitable allocation of reasonable dues, fees, and other 
charges among its members and issuers and other persons using its 
facilities necessary or appropriate in furtherance of the purposes of 
this chapter,'' \95\ as required by the Exchange Act. The Operating 
Committee believes that the CAT fees equitably allocate CAT costs 
between and among Participants and Industry Members, as discussed in 
detailed above. For the reasons discussed above, the Operating 
Committee believes that the allocation percentages in the Proposed 
Funding Model as well as the use of message traffic for allocating 
costs among Industry Members and the use of market share for allocating 
costs among Participants provide for an equitable allocation of CAT 
costs among CAT Reporters. In addition, as discussed above, the 
Operating Committee believes that the imposition of minimum and maximum 
fees and market maker discounts as well as the treatment of OTC Equity 
Securities for the market share calculation for Participants would 
operate to provide for an equitable allocation of CAT costs among CAT 
Reporters.
---------------------------------------------------------------------------

    \95\ Sections 6(b)(4) and 15A(b)(5) of the Exchange Act.
---------------------------------------------------------------------------

i. No Unfair Discrimination
    The Operating Committee believes that the Proposed Funding Model is 
``not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers,'' \96\ as required by the Exchange Act. 
In addition, the Proposed Funding Model does not unfairly discriminate 
between Industry Members and Participants, among Industry Members or 
among Participants. All Industry Members are grouped together for the 
purpose of determining CAT fees, and all Participants are grouped 
together for the purpose of determining CAT fees. CAT Reporters with 
similar levels of activity will pay similar fees. For example, Industry 
Members with higher levels of message traffic will pay higher fees, and 
those with lower levels of message traffic will pay lower fees. 
Similarly, Participants with larger market share will pay higher fees, 
and those with lower levels of market share will pay lower fees. With 
the elimination of tiers, fees for Industry Members and Participants 
are directly related to their message traffic and market share, 
respectively. With tiers, the relationship between message traffic or 
market share and the CAT fee would not have been as direct.
---------------------------------------------------------------------------

    \96\ Sections 6(b)(5) and 15A(b)(6) of the Exchange Act.
---------------------------------------------------------------------------

    In addition, where the method of fee calculation may potentially 
affect certain groups of CAT Reporters adversely, the Operating 
Committee has sought to limit such adverse effects. For example, the 
Operating Committee has proposed market maker discounts to address the 
high levels of message traffic generally exhibited by market makers. As 
discussed above, the SEC has recognized repeatedly that such favorable 
treatment for market makers in other contexts was not unfairly 
discriminatory or a burden on competition in light of its positive 
effects on market quality, nor was it considered to involve an 
inequitable allocation of fees among members.
    The Operating Committee also has proposed the Maximum Equities 
Participant Fee to address the potential for higher market share for 
FINRA due to the trade reporting to FINRA. The Maximum Equities 
Participant Fee serves as a method to institute a cap on fees to fairly 
allocate costs to FINRA given that a market share approach may result 
in FINRA having a significant allocation given the large volume of NMS 
Stock activity that is subject to trade reporting to FINRA.
    Similarly, the Operating Committee also has proposed the Maximum 
Industry Member CAT Fee to address the potential for significant fees 
based on outsized message traffic for certain Industry Members. The 
Maximum Industry Member CAT Fee serves as a method to institute a cap 
on fees to fairly allocate costs to Industry Members. Such a fee would 
prevent Industry Members from paying significantly larger CAT fees than 
Participant complexes.
    The Operating Committee also proposes to calculate market share for 
national securities associations without reference to trades reported 
in OTC Equity Securities in light of the differences in the markets for 
NMS Stocks and OTC Equity Securities. Because the proposed CAT fees for 
Equities Participants are based on market share calculated by share 
volume, FINRA would likely be subject to higher fees if OTC Equity 
Securities were included in the calculation of market share.
j. No Burden on Competition
    The Operating Committee believes that the Proposed Funding Model 
does ``not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of this chapter,'' \97\ as 
required by the Exchange Act. Moreover, the Operating Committee 
believes that the proposed fee schedule fairly and equitably allocates 
costs among CAT Reporters. In particular, as described above, the cost 
allocation between Participants and Industry Members recognizes the 
greater number of Industry Members as compared to the Participants and 
the greater collective revenue of Industry Members as compared to 
Participants. In addition, cost allocations among Industry Members 
based on message traffic and cost allocations among Participants based 
on market share fairly and equitably distributes CAT costs. 
Furthermore, the market maker discounts, Maximum Industry Member CAT 
Fee and Maximum Equities Participant Fee address the potential for 
burdens on market makers, Industry Members with outsized message 
traffic and FINRA potentially resulting from the proposed fee 
calculations. Moreover, the Operating Committee does not believe that 
the Minimum Industry Member CAT Fee or the Minimum Participant Fee 
would act as barriers to entry for smaller CAT Reporters.
---------------------------------------------------------------------------

    \97\ Sections 6(b)(8) and 15A(b)(9) of the Exchange Act.
---------------------------------------------------------------------------

9. Alternative Models Considered
    The Operating Committee has determined to propose the Proposed 
Funding Model to fund the CAT for the reasons discussed above. In 
reaching this conclusion, the Operating Committee considered the 
advantages and disadvantages of a variety of possible alternative 
funding and cost allocations models for the CAT in detail. After 
analyzing the various alternatives, the Operating Committee determined 
that the Proposed Funding Model provides a variety of advantages in 
comparison to the alternatives. In addition, although various funding 
models may be appropriate, the Proposed Funding Model provides for an 
equitable allocation of reasonable fees among CAT Reporters.
    The Operating Committee previously filed a fee proposal in line 
with the CAT NMS Plan--the Prior Fee Proposal. Under that model, the 
Operating Committee, among other things, proposed a 75%-25% allocation 
between Execution Venues (which included Participants and Execution 
Venue ATSs) and Industry Members

[[Page 21071]]

(other than Execution Venue ATSs), and required Execution Venues to pay 
fees based on market share, and Industry Members (other than Execution 
Venue ATSs) to pay fees based on message traffic. This Prior Fee 
Proposal was a very complex model with many interrelated parts, 
including allocation percentages, discounts for certain market 
behavior, and multiple tiered fees, and the complexity raised concerns 
from the Commission regarding its use as the CAT funding model. In 
addition, in response to the proposal, the industry raised a number of 
other issues related to the proposal, including issues regarding the 
proposed allocation of CAT costs between Participants and Industry 
Members, and the ability of certain market segments to afford the 
proposed CAT fee.\98\ Accordingly, the Operating Committee determined 
to revise various aspects of the Prior Fee Proposal, thereby developing 
the Proposed Funding Model.
---------------------------------------------------------------------------

    \98\ For a discussion of comments made regarding the Original 
Funding Model and the Prior Fee Proposal, see generally Prior Fee 
Proposal Release.
---------------------------------------------------------------------------

    In developing the Prior Fee Proposal, the Operating Committee 
considered many variations of different aspects of that model. For 
example, the Operating Committee evaluated different cost allocations 
between Industry Members (other than Execution Venue ATSs) and 
Execution Venues, including 80%-20%, 75%-25%, 70%-30% and 65%-35% 
allocations, and different cost allocations between Equity and Options 
Execution Venues.\99\ The Operating Committee also considered different 
discounts for equities and options market makers, different numbers of 
tiers of Industry Members and Execution Venues, different fee levels 
for each tier, and other aspects of the model.
---------------------------------------------------------------------------

    \99\ See Prior Fee Proposal Release at 1408.
---------------------------------------------------------------------------

    Furthermore, the Operating Committee considered a model in which 
all CAT Reporters, including both Industry Members and Participants, 
would pay based solely on revenue. The concept underlying this proposal 
is that CAT costs would be borne by CAT Reporters based on the ability 
to pay. Industry Member revenue would be calculated based on revenue 
reported in FOCUS reports, and Participant revenue would have been 
calculated based on revenue information in Form 1 amendments and other 
publicly reported figures. The Operating Committee did not select this 
model for various reasons. As discussed above, under this approach, 
Participants as a group would only pay approximately 4% of the total 
CAT costs. Given their role as self-regulatory organizations and their 
use of the CAT, the Operating Committee did not believe that such a 
small allocation of the CAT costs to the Participants was appropriate. 
Using revenue also raised a variety of practical issues. For example, 
questions were raised as to what revenue was appropriate to include in 
the calculation of revenue for Industry Members. The gross revenue set 
forth on FOCUS reports was proposed, as it was similar to an existing 
FINRA regulatory fee.\100\ However, questions were raised as to whether 
revenue unrelated to NMS Securities or OTC Equity Securities, or 
otherwise unrelated to the CAT, should be included for calculation of 
the CAT fee. Eliminating revenue unrelated to CAT-related activity 
would have been difficult or impossible. In addition, the lack of a 
uniform approach to calculating revenue for the Participants could 
raise inequities in the imposition of a CAT fee.
---------------------------------------------------------------------------

    \100\ See paragraph (c) and (d) of Section 1 of Schedule A of 
FINRA's Bylaws regarding FINRA's annual Gross Income Assessment.
---------------------------------------------------------------------------

    To address the issues regarding the 96%-4% allocation and the 
calculation of the Participant revenue in the straight revenue model 
described above, the Operating Committee considered an alternative 
version of the revenue model in which the CAT costs would be allocated 
between Industry Members and Participants based on a set percentage 
(e.g., 75%-25%) and the Industry Member allocation would be allocated 
among Industry Members based on revenue and the Participant allocation 
would be allocated among Participants based on market share. However, 
this alternative revenue model failed to address the issues regarding 
the appropriate revenue calculations for Industry Members.
    The Operating Committee considered a funding model in which CAT 
costs were allocated across all CAT Reporters--both Industry Members 
and Participants--based on message traffic. Specifically, the Operating 
Committee considered eliminating the concepts of the Participant 
Allocation and the Industry Member Allocation entirely, and treating 
Participants and Industry Members the same under the model. The 
Operating Committee, however, determined that the bifurcated approach 
set forth in the CAT NMS Plan continued to be a fair and reasonable 
approach.
    The Operating Committee also considered other possible funding 
models. For example, the Participants considered allocating the CAT 
costs equally among each of the Participants, and then permitting each 
Participant to charge its own members as it deems appropriate. The 
Operating Committee determined that such an approach raised a variety 
of issues, including the likely inconsistency of the ensuing charges, 
potential for lack of transparency, and the impracticality of multiple 
SROs submitting invoices for CAT charges. The Operating Committee also 
discussed the advantages and disadvantages of various alternative 
models during development of the CAT NMS Plan, such as a cost 
allocation based on a strict pro-rata distribution, regardless of the 
type or size of the CAT Reporters, or a cost allocation based on 
trades.\101\ The Operating Committee believes that the Proposed Funding 
Model provides advantages over each of these previously considered 
models and provides an equitable allocation of reasonable fees among 
CAT Reporters.
---------------------------------------------------------------------------

    \101\ For a discussion of alternatives considered in the 
drafting of the CAT NMS Plan, see Appendix C of the CAT NMS Plan at 
C-88--C-89.
---------------------------------------------------------------------------

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of Amendment

    The Participants are filing this proposed amendment pursuant to 
Rule 608(b)(1) of Regulation NMS under the Exchange Act.\102\
---------------------------------------------------------------------------

    \102\ 17 CFR 242.608(b)(1).
---------------------------------------------------------------------------

D. Development and Implementation Phases

    The Participants expect to implement the proposed Participant CAT 
fees upon approval by the SEC.

E. Analysis of Impact on Competition

    The Operating Committee does not believe that the proposed 
amendment will result in any burden on competition that is not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act. The Operating Committee notes that the proposed amendment 
implements provisions of the CAT NMS Plan approved by the Commission, 
subject to proposed revisions to the CAT NMS Plan described above, and 
is designed to assist the Participants in meeting their regulatory 
obligations pursuant to the Plan. Because all Participants are subject 
to the Proposed Funding Model set forth in the proposed amendment, this 
is not a competitive filing that raises competition issues between and 
among the Participants. Furthermore, for the reasons discussed above, 
including in Section A.8 above, the Operating Committee does not 
believe that the Proposed Funding Model will result in any burden on 
competition that

[[Page 21072]]

is not necessary or appropriate in furtherance of the purpose of the 
Exchange Act.

F. Written Understanding or Agreements Relating to Interpretation of, 
or Participation in, Plan

    Not applicable.

G. Approval by Plan Sponsors in Accordance With Plan

    Section 12.3 of the CAT NMS Plan states that, subject to certain 
exceptions, the CAT NMS Plan may be amended from time to time only by a 
written amendment, authorized by the affirmative vote of not less than 
two-thirds of all of the Participants, that has been approved by the 
SEC pursuant to Rule 608 of Regulation NMS under the Exchange Act or 
has otherwise become effective under Rule 608 of Regulation NMS under 
the Exchange Act. In addition, Section 4.3(a)(vi) of the Plan requires 
the Operating Committee, by Majority Vote, to authorize action to 
determine the appropriate funding-related policies, procedures and 
practices-consistent with Article XI. The Operating Committee has 
satisfied both of these requirements. In addition, the Proposed Funding 
Model was discussed and voted on during a general session of the 
Operating Committee.

H. Description of Operation of Facility Contemplated by the Proposed 
Amendment

    Not applicable.

I. Terms and Conditions of Access

    Not applicable.

I. Method of Determination and Imposition, and Amount of, Fees and 
Charges

    Section A of this letter describes in detail how the Participants 
developed the Proposed Funding Model for the CAT.

J. Method and Frequency of Processor Evaluation

    Not applicable.

K. Dispute Resolution

    Section 11.5 of the CAT NMS Plan addresses the resolution of 
disputes regarding CAT fees charged to Participants and Industry 
Members. Specifically, Section 11.5 of the CAT NMS Plan states that 
disputes with respect to fees the Company charges Participants pursuant 
to Article XI of the CAT NMS Plan shall be determined by the Operating 
Committee or a Subcommittee designated by the Operating Committee. 
Decisions by the Operating Committee or such designated Subcommittee on 
such matters shall be binding on Participants, without prejudice to the 
rights of any Participant to seek redress from the SEC pursuant to Rule 
608 of Regulation NMS under the Exchange Act or in any other 
appropriate forum. In addition, the Participants adopted rules to 
establish the procedures for resolving potential disputes related to 
CAT fees charged to Industry Members.\103\
---------------------------------------------------------------------------

    \103\ See Securities Exchange Act Rel. No. 81500 (Aug. 30, 
2017), 82 FR 42143 (Sept. 6, 2017).
---------------------------------------------------------------------------

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the amendment is 
consistent with the Exchange Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number 4-698 on the subject line.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange 
Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number 4-698. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed plan amendment that are filed 
with the Commission, and all written communications relating to the 
amendment between the Commission and any person, other than those that 
may be withheld from the public in accordance with the provisions of 5 
U.S.C. 552, will be available for website viewing and printing in the 
Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the Participants' offices. All comments received will be 
posted without change. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number 4-698 
and should be submitted on or before May 12, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\104\
---------------------------------------------------------------------------

    \104\ 17 CFR 200.30-3(a)(85).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Assistant Secretary.

Exhibit A

    Additions italicized; deletions [bracketed]
* * * * *

Article I

Definitions

* * * * *
    [``Execution Venue'' means a Participant or an alternative trading 
system (``ATS'') (as defined in Rule 300 of Regulation ATS) that 
operates pursuant to Rule 301 of Regulation ATS (excluding any such ATS 
that does not execute orders).]
* * * * *

Article XI

Funding of the Company

    Section 11.1. Funding Authority.
    (a) On an annual basis the Operating Committee shall approve an 
operating budget for the Company. The budget shall include the 
projected costs of the Company, including the costs of developing and 
operating the CAT for the upcoming year, and the sources of all 
revenues to cover such costs, as well as the funding of any reserve 
that the Operating Committee reasonably deems appropriate for prudent 
operation of the Company.
    (b) Subject to Section 11.2, the Operating Committee shall have 
discretion to establish funding for the Company, including: (i) 
Establishing fees that the Participants shall pay; and (ii) 
establishing fees for Industry Members that shall be implemented by 
Participants. The Participants shall file with the SEC under Section 
19(b) of the Exchange Act any such fees on Industry Members that the 
Operating Committee approves, and such fees shall be labeled as 
``Consolidated Audit Trail Funding Fees.''
    (c) To fund the development and implementation of the CAT, the 
Company shall time the imposition and collection of all fees on 
Participants and Industry Members in a manner reasonably related to the 
timing when the Company expects to incur such development and 
implementation costs.

[[Page 21073]]

In determining fees on Participants and Industry Members the Operating 
Committee shall take into account fees, costs and expenses (including 
legal and consulting fees and expenses) incurred by the Participants on 
behalf of the Company prior to the Effective Date in connection with 
the creation and implementation of the CAT, and such fees, costs and 
expenses shall be fairly and reasonably shared among the Participants 
and Industry Members. Any surplus of the Company's revenues over its 
expenses shall be treated as an operational reserve to offset future 
fees.
    (d) Consistent with this Article XI, the Operating Committee shall 
adopt policies, procedures, and practices regarding the budget and 
budgeting process, [assignment of tiers,] resolution of disputes, 
billing and collection of fees, and other related matters. [For the 
avoidance of doubt, as part of its regular review of fees for the CAT, 
the Operating Committee shall have the right to change the tier 
assigned to any particular Person in accordance with fee schedules 
previously filed with the Commission that are reasonable, equitable and 
not unfairly discriminatory and subject to public notice and comment, 
pursuant to this Article XI. Any such changes will be effective upon 
reasonable notice to such Person.]
    Section 11.2. Funding Principles. In establishing the funding of 
the Company, the Operating Committee shall seek:
    (a) To create transparent, predictable revenue streams for the 
Company that are aligned with the anticipated costs to build, operate 
and administer the CAT and the other costs of the Company;
    (b) to establish an allocation of the Company's related costs among 
Participants and Industry Members that is consistent with the Exchange 
Act, taking into account the timeline for implementation of the CAT and 
distinctions in the securities trading operations of Participants and 
Industry Members and their relative impact upon Company resources and 
operations;
    (c) to establish a [tiered] fee structure in which the fees charged 
to: (i) Participants [CAT Reporters that are Execution Venues, 
including ATSs,] are based upon the level of market share; and (ii) 
Industry Members[' non-ATS activities] are based upon message traffic[; 
and (iii) the CAT Reporters with the most CAT-related activity 
(measured by market share and/or message traffic, as applicable) are 
generally comparable (where, for these comparability purposes, the 
tiered fee structure takes into consideration affiliations between or 
among CAT Reporters, whether Execution Venues and/or Industry 
Members)].
    (d) to provide for ease of billing and other administrative 
functions;
    (e) to avoid any disincentives such as placing an inappropriate 
burden on competition and a reduction in market quality; and
    (f) to build financial stability to support the Company as a going 
concern.
    Section 11.3. Recovery.
    (a) The Operating Committee will establish a minimum fee to be 
payable by each Participant in addition to [fixed] fees based on market 
share to be payable by Participants [Execution Venues] as provided in 
this Section 11.3(a):
    (i) Each Participant [Execution Venue] that: (A) Executes 
transactions; or (B) in the case of a national securities association, 
has trades reported by its members to its trade reporting facility or 
facilities for reporting transactions effected otherwise than on an 
exchange, in NMS Stocks [or OTC Equity Securities] will pay a [fixed] 
fee depending on the market share of that Participant [Execution Venue] 
in NMS Stocks (``Equities Participant'') [and OTC Equity Securities, 
with the Operating Committee establishing at least two and no more than 
five tiers of fixed fees, based on an Execution Venue's NMS Stocks and 
OTC Equity Securities market share]. For these purposes, market share 
for Participants [Execution Venues] that execute transactions will be 
calculated by share volume, and market share for a national securities 
association that has trades reported by its members to its trade 
reporting facility or facilities for reporting transactions effected 
otherwise than on an exchange in NMS Stocks [or OTC Equity Securities] 
will be calculated based on share volume of trades reported, provided, 
however, that any Participant that is a national securities association 
shall pay a maximum fee established by the Operating Committee instead 
of the higher fee calculated based on such Participant's market share. 
If a Participant's fee is limited to such maximum fee, any excess 
amount which the Participant otherwise would have paid as a fee above 
such maximum fee will be re4allocated among all Equities Participants, 
including any Equities Participant that is subject to the maximum fee, 
in accordance with their market share [the share volume reported to 
such national securities association by an Execution Venue shall not be 
included in the calculation of such national security association's 
market share].
    (ii) Each Participant [Execution Venue] that executes transactions 
in Listed Options (``Options Participant'') will pay a [fixed] fee 
depending on the Listed Options market share of that Participant[, 
Execution Venue, with the Operating Committee establishing at least two 
and no more than five tiers of fixed fees, based on an Execution 
Venue's Listed Options market share]. For these purposes, market share 
will be calculated by contract volume.
    (b) The Operating Committee will establish [fixed] fees to be 
payable by Industry Members, based on the message traffic generated by 
such Industry Member subject to a base minimum fee and discounts for 
market maker message traffic [, with the Operating Committee 
establishing at least five and no more than nine tiers of fixed fees, 
based on message traffic. For the avoidance of doubt, the fixed fees 
payable by Industry Members pursuant to this paragraph shall, in 
addition to any other applicable message traffic, include message 
traffic generated by: (i) An ATS that does not execute orders that is 
sponsored by such Industry Member; and (ii) routing orders to and from 
any ATS sponsored by such Industry Member.], provided, however, that 
any Industry Member shall pay a maximum fee established by the 
Operating Committee instead of the higher fee calculated based on such 
Industry Member's message traffic. If an Industry Member's fee is 
limited to such maximum fee, any excess amount which the Industry 
Member otherwise would have paid as a fee above such maximum fee will 
be re-allocated among all Industry Members, including any Industry 
Member that is subject to the maximum fee or subject to the base 
minimum fee, in accordance with their message traffic.
    (c) The Operating Committee may establish any other fees ancillary 
to the operation of the CAT that it reasonably determines appropriate, 
including fees: (i) For the late or inaccurate reporting of information 
to the CAT; (ii) for correcting submitted information; and (iii) based 
on access and use of the CAT for regulatory and oversight purposes (and 
not including any reporting obligations).
    (d) The Company shall make publicly available a schedule of 
effective fees and charges adopted pursuant to this Agreement as in 
effect from time to time. The Operating Committee shall review such fee 
schedule on at least an annual basis and shall make any changes to such 
fee schedule that it deems appropriate. The Operating Committee is 
authorized to review such fee schedule on a more regular basis, but

[[Page 21074]]

shall not make any changes on more than a semiannual basis unless, 
pursuant to a Supermajority Vote, the Operating Committee concludes 
that such change is necessary for the adequate funding of the Company.
* * * * *

Appendix B

Fee Schedule

Consolidated Audit Trail Funding Fees

    (a) Each Participant shall pay to Consolidated Audit Trail, LLC in 
the manner prescribed by the Consolidated Audit Trail, LLC a CAT fee 
calculated as follows:
    (1) Commencing upon SEC approval of the CAT fee, each Participant 
shall pay a quarterly CAT fee calculated based on market share from the 
prior quarter by adding the sum of the following:
    (A) For all Participants, the Minimum Participant Fee;
    (B) For Equities Participants, the lesser of:
    (i) The product of multiplying the Equities Participant's 
percentage of total market share of NMS Stocks for all Equities 
Participants against the Equities Participant Allocation; or
    (ii) the Maximum Equities Participant Fee, if applicable; and
    If any Participant's fee is limited to the Maximum Equities 
Participant Fee, any excess amount which such Participant otherwise 
would have paid as a fee above such Maximum Equities Participant Fee 
will be re-allocated among all Equities Participants (including any 
Equities Participant subject to the Maximum Equities Participant Fee) 
in accordance with their market share.
    (C) For Options Participants, the product of multiplying the 
Participant's percentage of total market share of Listed Options 
contracts for all Options Participants against the Options Participant 
Allocation;
    For the avoidance of doubt, Participants with both options and 
equities market share shall be considered both Equities Participants 
and Options Participants.
    (b) The CAT fees set forth in paragraph (a) will be calculated 
based on the following:
    (1) Industry Member/Participant Allocation. The Industry Member 
Allocation for each quarter shall be 75% of 1/4th of the Total CAT 
Costs for the relevant year. The Participant Allocation for each 
quarter shall be 25% of 1/4th of the Total CAT Costs for the relevant 
year.
    (2) Minimum Participant Fee. The Minimum Participant Fee is 0.75% 
of the Participant Allocation. For avoidance of doubt, the Minimum 
Participant Fee will be paid by each registered national securities 
exchange that is a Participant and each registered national securities 
association that is a Participant.
    (3) Adjusted Participant Allocation. The Adjusted Participant 
Allocation is the Participant Allocation minus the sum of all Minimum 
Participant Fees required to be paid by each Participant.
    (4) Equities Participant Allocation. The Equities Participant 
Allocation is 60% of the Adjusted Participant Allocation.
    (5) Options Participant Allocations. The Options Participant 
Allocation is 40% of the Adjusted Participant Allocation.
    (6) Maximum Equities Participant Fee. The Maximum Equities 
Participant Fee is the greater of (x) 20% of the Equities Participant 
Allocation or (y) the highest CAT fee required to be paid by any other 
Equities Participant plus 5% of such highest CAT fee. The Maximum 
Equities Participant Fee only applies to a Participant that is a 
national securities association.
    (7) Total CAT Costs. The Total CAT Costs shall be the total 
budgeted costs for the CAT for the relevant year. The total budgeted 
costs for the CAT for the relevant year shall be the total CAT costs 
set forth in the annual operating budget approved by the Operating 
Committee pursuant to Section 11.1(a) of the CAT NMS Plan. The total 
budgeted costs for the CAT for the relevant year may be adjusted on a 
quarterly basis as the Operating Committee reasonably deems appropriate 
for the prudent operation of the Company. To the extent that the 
Operating Committee adjusts the total budgeted costs for the CAT for 
the relevant year during its quarterly budget review, the adjusted 
budgeted costs for the CAT will be used in calculating the remaining 
CAT fees for that year.
* * * * *

Exhibit B

    The following sets forth an illustrative example of CAT fees 
calculated under the Proposed Funding Model based on budgeted Total CAT 
Costs for 2021 and message traffic and market share data for the fourth 
quarter of 2020. Note Exhibit B only provides an illustrative example 
of how the Proposed Funding Model would operate; the calculation of 
actual fees will differ from this example in various ways. For example, 
the Participants have paid or will have paid 100% of these costs up to 
the time of the SEC approval of the Proposed Funding Model, and, as a 
result, Participants would not be obligated to pay CAT fees related to 
2021 CAT costs to the extent the Participants have already paid such 
costs. Furthermore, Period 3 CAT Fees for Industry Members will be 
calculated based on actual Total CAT Costs for 2021, not budgeted CAT 
Costs for 2021, and based on CAT Data from 2022, not from 2020.

CAT Fee Example for Illustrative Purposes Only

Budgeted Total CAT Costs for 2021: $132,522,082
Budgeted Quarterly Total CAT Costs: $33,130,502.50

Quarterly Participant CAT Fees

Participant Allocation (25% of Total CAT Costs): $8,282,625.62
Minimum Participant Fee (0.75% of Participant Allocation): $62,119.73
Equities Participant Allocation (60% of Adjusted Participant Allocation 
with Minimum Participant Fee): $4,845,413.60
Options Participant Allocation (40% of Adjusted Participant Allocation 
with Minimum Participant Fee): $3,437,291.50
Maximum Equities Participant Fee (with Minimum Participant Fee): 
$904,261.77
---------------------------------------------------------------------------

    \105\ These fees reflect the Minimum Participant Fee, the 
Maximum Equities Participant Fee and the re-allocation related to 
the Maximum Equities Participant Fee.

                          Equities Participants
------------------------------------------------------------------------
                                              % of total
            Equities participant                market    Quarterly  CAT
                                                share        fee \105\
------------------------------------------------------------------------
1..........................................       44.036   $1,316,397.13
2..........................................       15.857      819,716.78
3..........................................       10.311      574,962.49
4..........................................        8.465      452,089.70
5..........................................        7.276      392,929.38
6..........................................        4.823      270,943.47
7..........................................        2.404      181,695.58
8..........................................        1.572      140,305.36
9..........................................        1.439      133,707.03
10.........................................        1.105      117,096.53
11.........................................        0.732       67,479.86
12.........................................        0.658       63,773.04
13.........................................        0.562       90,079.89
14.........................................        0.464       54,132.27
15.........................................        0.244       74,252.16
16.........................................        0.052       33,652.74
17.........................................        0.000       62,125.23
------------------------------------------------------------------------

                          Options Participants
------------------------------------------------------------------------
                                              % of total
            Options participant                 market    Quarterly  CAT
                                                share        fee \106\
------------------------------------------------------------------------
1..........................................       15.832     $488,295.85
2..........................................       12.919      378,833.92
3..........................................        9.424      284,742.41
4..........................................        8.742      266,385.07
5..........................................        8.640      263,642.40
6..........................................        8.586      262,187.01
7..........................................        7.327      259,360.77

[[Page 21075]]

 
8..........................................        6.048      224,933.08
9..........................................        3.147      115,761.83
10.........................................        4.246      176,402.53
11.........................................        3.873      135,311.97
12.........................................        3.267      150,063.18
13.........................................        3.304      151,047.18
14.........................................        3.404      153,759.91
15.........................................        1.020       89,566.40
16.........................................        0.221       36,997.99
------------------------------------------------------------------------

Quarterly Industry Member CAT Fees
---------------------------------------------------------------------------

    \106\ These fees reflect the Minimum Participant Fee.
---------------------------------------------------------------------------

Industry Member Allocation (75% of Total CAT Costs): $24,847,876.90
Minimum Industry Member CAT Fee: $125 per quarter
Maximum Industry Member CAT Fee: 8% of message traffic

------------------------------------------------------------------------
                                              % of total
                                               message    Quarterly  CAT
              Industry member                  traffic       fee \108\
                                                \107\
------------------------------------------------------------------------
1..........................................    15.942715   $2,508,235.23
2..........................................      12.3469    2,390,859.99
3..........................................    8.5412389    2,266,635.37
4..........................................    8.4307566    2,263,028.99
5..........................................    8.1484697    2,253,814.54
6..........................................     6.881969    1,925,916.13
7..........................................         3.33      931,352.41
8..........................................         3.07      859,935.74
9..........................................         2.87      803,898.93
10.........................................       2.7555      771,124.66
11.........................................      2.66620      746,134.09
12.........................................     2.635884      737,650.94
13.........................................    2.4252220      678,697.33
14.........................................     2.131963      596,628.96
15.........................................       1.4843      415,367.88
16.........................................    1.3483314      377,329.97
17.........................................     1.335250      373,669.04
18.........................................         1.18      329,495.95
19.........................................    1.1051530      309,276.58
20.........................................   1.05683181      295,753.93
21.........................................    1.0187078      285,084.95
22.........................................    0.8705377      243,619.61
23.........................................   0.65176922      182,397.33
24.........................................     0.603158      168,793.42
25.........................................     0.596133      166,827.49
26.........................................     0.487318      136,375.85
27.........................................         0.44      123,953.82
28.........................................     0.308189       86,246.66
29.........................................    0.2935546       82,151.14
30.........................................    0.2874546       80,444.05
31.........................................     0.284763       79,690.93
32.........................................       0.2556       71,535.07
33.........................................     0.253008       70,804.09
34.........................................   0.24849056       69,539.98
35.........................................    0.1988107       55,637.08
36.........................................    0.1869246       52,310.76
37.........................................     0.163770       45,831.09
38.........................................    0.1572621       44,009.72
39.........................................       0.1417       39,645.51
40.........................................    0.1408842       39,426.37
41.........................................    0.1297568       36,312.38
42.........................................       0.1270       35,540.69
43.........................................     0.121951       34,127.81
44.........................................   0.11747991       32,876.70
45.........................................    0.1144613       32,031.93
46.........................................    0.1057779       29,601.89
47.........................................        0.105       29,271.83
48.........................................    0.1021931       28,598.71
49.........................................    0.0978121       27,372.66
50.........................................     0.096430       26,985.90
51.........................................    0.0928221       25,976.22
52.........................................    0.0859471       24,052.25
53.........................................     0.084735       23,713.00
54.........................................        0.081       22,774.83
55.........................................    0.0759906       21,265.93
56.........................................    0.0738346       20,662.59
57.........................................     0.066684       18,661.49
58.........................................     0.065941       18,453.43
59.........................................     0.063723       17,832.74
60.........................................      0.05392       15,090.39
61.........................................    0.0483078       13,518.91
62.........................................     0.043817       12,262.25
63.........................................    0.0384240       10,752.94
64.........................................       0.0370       10,361.23
65.........................................     0.031046        8,688.22
66.........................................     0.029490        8,252.77
67.........................................         0.03        8,112.33
68.........................................       0.0269        7,514.14
69.........................................      0.02450        6,855.05
70.........................................   0.02444676        6,841.42
71.........................................   0.02095646        5,864.66
72.........................................    0.0191560        5,360.79
73.........................................    0.0175190        4,902.68
74.........................................    0.0164131        4,593.20
75.........................................     0.015561        4,354.73
76.........................................       0.0148        4,140.50
77.........................................        0.014        3,978.17
78.........................................      0.01402        3,924.60
79.........................................    0.0136249        3,812.92
80.........................................   0.01284773        3,595.43
81.........................................       0.0127        3,544.27
82.........................................     0.011465        3,208.47
83.........................................    0.0112806        3,156.88
84.........................................    0.0108896        3,047.45
85.........................................     0.010741        3,005.74
86.........................................      0.01029        2,879.17
87.........................................     0.010275        2,875.50
88.........................................    0.0092574        2,590.67
89.........................................     0.008569        2,398.10
90.........................................    0.0085212        2,384.65
91.........................................         0.01        2,347.27
92.........................................         0.01        2,178.96
93.........................................      0.00758        2,120.87
94.........................................     0.007202        2,015.48
95.........................................     0.007065        1,977.19
96.........................................    0.0068586        1,919.37
97.........................................   0.00651944        1,824.46
98.........................................    0.0064808        1,813.64
99.........................................     0.006361        1,780.09
100........................................     0.005749        1,608.74
101........................................     0.005305        1,484.62
102........................................    0.0048870        1,367.64
103........................................         0.00        1,332.74
104........................................    0.0047449        1,327.84
105........................................      0.00469        1,311.81
106........................................     0.004674        1,308.08
107........................................    0.0046547        1,302.63
108........................................    0.0045685        1,278.49
109........................................    0.0044112        1,234.47
110........................................         0.00        1,194.19
111........................................     0.004164        1,165.41
112........................................        0.004        1,156.57
113........................................       0.0041        1,154.93
114........................................         0.00        1,150.64
115........................................     0.004090        1,144.70
116........................................    0.0040070        1,121.35
117........................................    0.0039591        1,107.96
118........................................     0.003438          962.16
119........................................    0.0033477          936.85
120........................................     0.003321          929.46
121........................................    0.0031118          870.83
122........................................      0.00310          867.51
123........................................     0.003082          862.46
124........................................      0.00302          845.50
125........................................    0.0029780          833.40
126........................................    0.0027976          782.91
127........................................     0.002709          758.12
128........................................      0.00269          752.67
129........................................    0.0025567          715.50
130........................................    0.0024297          679.96
131........................................       0.0024          671.83
132........................................      0.00210          586.75
133........................................     0.002030          568.06
134........................................     0.001970          551.19
135........................................    0.0018979          531.14
136........................................     0.001826          510.99
137........................................    0.0018040          504.85
138........................................    0.0017908          501.14
139........................................     0.001777          497.38
140........................................    0.0017672          494.54
141........................................    0.0015795          442.02
142........................................    0.0014790          413.90
143........................................         0.00          411.74
144........................................    0.0014253          398.86
145........................................    0.0014101          394.62
146........................................     0.001353          378.77
147........................................    0.0013274          371.48
148........................................    0.0013061          365.52
149........................................       0.0013          359.89
150........................................    0.0012558          351.44
151........................................    0.0012482          349.31
152........................................     0.001206          337.46
153........................................    0.0011434          319.97
154........................................    0.0011142          311.81
155........................................    0.0011093          310.45
156........................................     0.001090          305.14
157........................................      0.00108          301.72
158........................................        0.001          299.87
159........................................        0.001          294.94
160........................................        0.001          292.03
161........................................    0.0010354          289.75
162........................................    0.0010202          285.52
163........................................     0.000943          263.95
164........................................        0.001          257.53
165........................................     0.000860          240.72
166........................................    0.0008519          238.39
167........................................    0.0008308          232.51
168........................................    0.0008213          229.84
169........................................    0.0006737          188.53
170........................................      0.00067          187.07
171........................................    0.0006423          179.74
172........................................         0.00          178.92
173........................................      0.00063          176.72
174........................................    0.0006153          172.18
175........................................    0.0006146          171.99
176........................................     0.000544          152.35
177........................................    0.0005437          152.15
178........................................     0.000540          151.07
179........................................   0.00053041          148.44
180........................................    0.0005058          141.55
181........................................     0.000505          141.40
182........................................         0.00          140.96
183........................................         0.00          140.81
184........................................         0.00          139.48
185........................................        0.000          139.15
186........................................     0.000414          138.52
187........................................    0.0003662          136.95
188........................................      0.00036          136.85
189........................................    0.0003474          136.34
190........................................      0.00034          136.20
191........................................         0.00          135.29
192........................................     0.000312          135.19
193........................................         0.00          134.40
194........................................     0.000285          134.32
195........................................         0.00          134.11
196........................................    0.0002626          133.57
197........................................    0.0002624          133.56
198........................................    0.0002623          133.56
199........................................         0.00          133.51
200........................................    0.0002550          133.33
201........................................      0.00025          133.12
202........................................     0.000244          132.98
203........................................    0.0002442          132.97
204........................................        0.000          132.78
205........................................    0.0002311          132.54
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[[Page 21076]]

 
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[[Page 21077]]

 
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[[Page 21078]]

 
709........................................     0.000001          125.03
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953........................................     0.000000          125.01
954........................................       0.0000          125.01

[[Page 21079]]

 
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1199.......................................        0.000          125.00
1200.......................................     0.000000          125.00

[[Page 21080]]

 
1201.......................................        0.000          125.00
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1234.......................................     0.000000          125.00
1235.......................................     0.000000          125.00
1236.......................................    0.0000000          125.00
1237.......................................    0.0000000          125.00
------------------------------------------------------------------------

     
---------------------------------------------------------------------------

    \107\ These percentages reflect the market maker discounts.
    \108\ These fees reflect the Maximum Industry Member CAT Fee, 
the Minimum Industry CAT Fee, and re-allocations related to the 
applications of the Minimum Industry Member CAT Fee and the Maximum 
Industry Member CAT Fee.
---------------------------------------------------------------------------

[FR Doc. 2021-08049 Filed 4-20-21; 8:45 am]
BILLING CODE 8011-01-P