82 FR 23416 - Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Amending the NYSE MKT Equities Price List and the NYSE Amex Options Fee Schedule
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 97 (May 22, 2017)
Federal Register Volume 82, Issue 97 (May 22, 2017)
| Page Range | 23416-23435 | |
| FR Document | 2017-10298 |
[Federal Register Volume 82, Number 97 (Monday, May 22, 2017)] [Notices] [Pages 23416-23435] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-10298] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80694; File No. SR-NYSEMKT-2017-26] Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and Immediate Effectiveness of Proposed Change Amending the NYSE MKT Equities Price List and the NYSE Amex Options Fee Schedule May 16, 2017. Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ [[Page 23417]] notice is hereby given that, on May 10, 2017, NYSE MKT LLC (the ``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (the ``Commission'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the self-regulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE MKT Equities Price List (``Price List'') and the NYSE Amex Options Fee Schedule (``Fee Schedule'') to adopt the fees for Industry Members related to the National Market System Plan Governing the Consolidated Audit Trail (the ``CAT NMS Plan'' or ``Plan''). The proposed change is available on the Exchange's Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission's Public Reference Room. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of those statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant parts of such statements. A. Self-Regulatory Organization's Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., Financial Industry Regulatory Authority, Inc. (``FINRA''), Investors' Exchange LLC, Miami International Securities Exchange, LLC, MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC,\4\ NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE MKT LLC, NYSE Arca, Inc. and NYSE National, Inc.\5\ (collectively, the ``Participants'') filed with the Commission, pursuant to Section 11A of the Exchange Act \6\ and Rule 608 of Regulation NMS thereunder,\7\ the CAT NMS Plan.\8\ The Participants filed the Plan to comply with Rule 613 of Regulation NMS under the Exchange Act. The Plan was published for comment in the Federal Register on May 17, 2016,\9\ and approved by the Commission, as modified, on November 15, 2016.\10\ The Plan is designed to create, implement and maintain a consolidated audit trail (``CAT'') that would capture customer and order event information for orders in NMS Securities and OTC Equity Securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution in a single consolidated data source. The Plan accomplishes this by creating CAT NMS, LLC (the ``Company''), of which each Participant is a member, to operate the CAT.\11\ Under the CAT NMS Plan, the Operating Committee of the Company (``Operating Committee'') has discretion to establish funding for the Company to operate the CAT, including establishing fees that the Participants will pay, and establishing fees for Industry Members that will be implemented by the Participants (``CAT Fees'').\12\ The Participants are required to file with the SEC under Section 19(b) of the Exchange Act any such CAT Fees applicable to Industry Members that the Operating Committee approves.\13\ Accordingly, the Exchange submits this fee filing to amend the Price List and the Fee Schedule which will require Industry Members that are NYSE MKT members to pay the CAT Fees determined by the Operating Committee. --------------------------------------------------------------------------- \4\ ISE Gemini, LLC, ISE Mercury, LLC and International Securities Exchange, LLC have been renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, and Nasdaq ISE, LLC, respectively. See Securities Exchange Act Release Nos. 80248 (March 15, 2017), 82 FR 14547 (March 21, 2017); 80326 (March 29, 2017), 82 FR 16460 (April 4, 2017); and 80325 (March 29, 2017), 82 FR 16445 (April 4, 2017). \5\ National Stock Exchange, Inc. has been renamed NYSE National, Inc. See Securities Exchange Act Release No. 79902 (January 30, 2017), 82 FR 9258 (February 3, 2017). \6\ 15 U.S.C. 78k-1. \7\ 17 CFR 242.608. \8\ See Letter from the Participants to Brent J. Fields, Secretary, Commission, dated September 30, 2014; and Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015. On December 24, 2015, the Participants submitted an amendment to the CAT NMS Plan. See Letter from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015. \9\ See Securities Exchange Act Release No. 77724 (April 27, 2016), 81 FR 30614 (May 17, 2016). \10\ See Securities Exchange Act Release No. 79318 (November 15, 2016), 81 FR 84696 (November 23, 2016) (``Approval Order''). \11\ The Plan also serves as the limited liability company agreement for the Company. \12\ Section 11.1(b) of the CAT NMS Plan. \13\ Section 12.1(b) [sic] of the CAT NMS Plan. --------------------------------------------------------------------------- (1) Executive Summary The following provides an executive summary of the CAT funding model approved by the Operating Committee, as well as Industry Members' rights and obligations related to the payment of CAT Fees calculated pursuant to the CAT funding model. A detailed description of the CAT funding model and the CAT Fees follows this executive summary. (A) CAT Funding ModelCAT Costs. The CAT funding model is designed to establish CAT-specific fees to collectively recover the costs of building and operating the CAT from all CAT Reporters, including Industry Members and Participants. The overall CAT costs for the calculation of the CAT Fees in this fee filing are comprised of Plan Processor CAT costs and non-Plan Processor CAT costs incurred, and estimated to be incurred, from November 21, 2016 through November 21, 2017. (See Section 3(a)(2)(E) [sic] below) \14\ --------------------------------------------------------------------------- \14\ The Commission notes that references to Sections 3(a)(2) and 3(a)(3) in this Executive Summary should be instead to Sections II.A.1.(2) and II.A.1.(3), respectively. --------------------------------------------------------------------------- Bifurcated Funding Model. The CAT NMS Plan requires a bifurcated funding model, where costs associated with building and operating the CAT would be borne by (1) Participants and Industry Members that are Execution Venues for Eligible Securities through fixed tier fees based on market share, and (2) Industry Members (other than alternative trading systems (``ATSs'') that execute transactions in Eligible Securities (``Execution Venue ATSs'')) through fixed tier fees based on message traffic for Eligible Securities. (See Section 3(a)(2) [sic] below) Industry Member Fees. Each Industry Member (other than Execution Venue ATSs) will be placed into one of nine tiers of fixed fees, based on ``message traffic'' in Eligible Securities for a defined period (as discussed below). Prior to the start of CAT reporting, ``message traffic'' will be comprised of historical equity and equity options orders, cancels and quotes provided by each exchange and FINRA over the previous three months. After an Industry Member begins reporting to the CAT, ``message traffic'' will be calculated based on the Industry Member's Reportable Events reported to the CAT. Industry Members with lower [[Page 23418]] levels of message traffic will pay a lower fee and Industry Members with higher levels of message traffic will pay a higher fee. (See Section 3(a)(2)(B) [sic] below) Execution Venue Fees. Each Equity Execution Venue will be placed in one of two tiers of fixed fees based on market share, and each Options Execution Venue will be placed in one of two tiers of fixed fees based on market share. Equity Execution Venue market share will be determined by calculating each Equity Execution Venue's proportion of the total volume of NMS Stock and OTC Equity shares reported by all Equity Execution Venues during the relevant time period. Similarly, market share for Options Execution Venues will be determined by calculating each Options Execution Venue's proportion of the total volume of Listed Options contracts reported by all Options Execution Venues during the relevant time period. Equity Execution Venues with a larger market share will pay a larger CAT Fee than Equity Execution Venues with a smaller market share. Similarly, Options Execution Venues with a larger market share will pay a larger CAT Fee than Options Execution Venues with a smaller market share. (See Section 3(a)(2)(C) [sic] below) Cost Allocation. For the reasons discussed below, in designing the model, the Operating Committee determined that 75 percent of total costs recovered would be allocated to Industry Members (other than Execution Venue ATSs) and 25 percent would be allocated to Execution Venues. In addition, the Operating Committee determined to allocate 75 percent of Execution Venue costs recovered to Equity Execution Venues and 25 percent to Options Execution Venues. (See Section 3(a)(2)(D) [sic] below) Comparability of Fees. The CAT funding model requires that the CAT Fees charged to 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). (See Section 3(a)(2)(F) [sic] below) (B) CAT Fees for Industry Members Fee Schedule. The quarterly CAT Fees for each tier for Industry Members are set forth in the two fee schedules in the Consolidated Audit Trail Funding Fees, one for Equity ATSs and one for Industry Members other than Equity ATSs. (See Section 3(a)(3)(B) [sic] below) Quarterly Invoices. Industry Members will be billed quarterly for CAT Fees, with the invoices payable within 30 days. The quarterly invoices will identify within which tier the Industry Member falls. (See Section 3(a)(3)(C) [sic] below) Centralized Payment. Each Industry Member will receive from the Company one invoice for its applicable CAT Fees, not separate invoices from each Participant of which it is a member. The Industry Members will pay its CAT Fees to the Company via the centralized system for the collection of CAT Fees established by the Operating Committee. (See Section 3(a)(3)(C) [sic] below) Billing Commencement. Industry Members will begin to receive invoices for CAT Fees as promptly as possible following the establishment of a billing mechanism. The Exchange will issue a Trader Update to its members when the billing mechanism is established, specifying the date when such invoicing of Industry Members will commence. (See Section 3(a)(2)(G) [sic] below) (2) Description of the CAT Funding Model Article XI of the CAT NMS Plan requires the Operating Committee to approve the operating budget, including projected costs of developing and operating the CAT for the upcoming year. As set forth in Article XI of the CAT NMS Plan, the CAT NMS Plan requires a bifurcated funding model, where costs associated with building and operating the Central Repository would be borne by (1) Participants and Industry Members that are Execution Venues through fixed tier fees based on market share, and (2) Industry Members (other than Execution Venue ATSs) through fixed tier fees based on message traffic. In its order approving the CAT NMS Plan, the Commission determined that the proposed funding model was ``reasonable'' \15\ and ``reflects a reasonable exercise of the Participants' funding authority to recover the Participants' costs related to the CAT.'' \16\ --------------------------------------------------------------------------- \15\ Approval Order at 84796. \16\ Id. at 84794. --------------------------------------------------------------------------- More specifically, the Commission stated in approving the CAT NMS Plan that ``[t]he Commission believes that the proposed funding model is reasonably designed to allocate the costs of the CAT between the Participants and Industry Members.'' \17\ The Commission further noted the following: --------------------------------------------------------------------------- \17\ Id. at 84795. 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 . . . the Exchange Act specifically permits the Participants to charge their 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.\18\ --------------------------------------------------------------------------- \18\ Id. at 84794. Accordingly, the funding model imposes fees on both Participants and Industry Members. In addition, as discussed in Appendix C of the CAT NMS Plan, the Operating Committee considered the advantages and disadvantages of a variety of alternative funding and cost allocation models before selecting the proposed model.\19\ After analyzing the various alternatives, the Operating Committee determined that the proposed tiered, fixed fee funding model provides a variety of advantages in comparison to the alternatives. First, the fixed fee model, as opposed to a variable fee model, provides transparency, ease of calculation, ease of billing and other administrative functions, and predictability of a fixed fee. Such factors are crucial to estimating a reliable revenue stream for the Company and for permitting CAT Reporters to reasonably predict their payment obligations for budgeting purposes.\20\ --------------------------------------------------------------------------- \19\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85006. \20\ In choosing a tiered fee structure, the SROs concluded that the variety of benefits offered by a tiered fee structure, discussed above, outweighed the fact that Industry Members in any particular tier would pay different rates per message traffic order event (e.g., an Industry Member with the largest amount of message traffic in one tier would pay a smaller amount per order event than an Industry Member in the same tier with the least amount of message traffic). Such variation is the natural result of a tiered fee structure. --------------------------------------------------------------------------- Additionally, a strictly variable or metered funding model based on message volume would be far more likely to affect market behavior and place an inappropriate burden on competition. Moreover, as the SEC noted in approving the CAT NMS Plan, ``[t]he Participants also have offered a reasonable basis for establishing a funding model based on broad tiers, in that it be may be easier to implement.'' \21\ --------------------------------------------------------------------------- \21\ Approval Order at 84796. --------------------------------------------------------------------------- In addition, multiple reviews of current broker-dealer order and trading data submitted under existing reporting [[Page 23419]] requirements showed a wide range in activity among broker-dealers, with a number of broker-dealers submitting fewer than 1,000 orders per month and other broker-dealers submitting millions and even billions of orders in the same period. Accordingly, the CAT NMS Plan includes a tiered approach to fees. The tiered approach helps ensure that fees are equitably allocated among similarly situated CAT Reporters and furthers the goal of lessening the impact on smaller firms.\22\ The self- regulatory organizations considered several approaches to developing a tiered model, including defining fee tiers based on such factors as size of firm, message traffic or trading dollar volume. After analyzing the alternatives, it was concluded that the tiering should be based on the relative impact of CAT Reporters on the CAT System. --------------------------------------------------------------------------- \22\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85006. --------------------------------------------------------------------------- Accordingly, the CAT NMS Plan contemplates that costs will be allocated across the CAT Reporters on a tiered basis to allocate costs to those CAT Reporters that contribute more to the costs of creating, implementing and maintaining the CAT.\23\ The fees to be assessed at each tier are calculated so as to recoup a proportion of costs appropriate to the message traffic or market share (as applicable) from CAT Reporters in each tier. Therefore, Industry Members generating the most message traffic will be in the higher tiers, and therefore be charged a higher fee. Industry Members with lower levels of message traffic will be in lower tiers and will be assessed a smaller fee for the CAT.\24\ Correspondingly, Execution Venues with the highest market share will be in the top tier, and therefore will be charged a higher fee. Execution Venues with a lower market share will be in the lower tier and will be assessed a smaller fee for the CAT.\25\ --------------------------------------------------------------------------- \23\ Approval Order at 85005. \24\ Id. \25\ Id. --------------------------------------------------------------------------- The Commission also noted in approving the CAT NMS Plan that ``[t]he Participants have offered a credible justification for using different criteria to charge Execution Venues (market share) and Industry Members (message traffic)'' \26\ in the CAT funding model. While there are multiple factors that contribute to the cost of building, maintaining and using the CAT, processing and storage of incoming message traffic is one of the most significant cost drivers for the CAT.\27\ Thus, the CAT NMS Plan provides that the fees payable by Industry Members (other than Execution Venue ATSs) will be based on the message traffic generated by such Industry Member.\28\ --------------------------------------------------------------------------- \26\ Id. at 84796. \27\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85005. \28\ Section 11.3(b) of the CAT NMS Plan. --------------------------------------------------------------------------- The CAT NMS Plan provides that the Operating Committee will use different criteria to establish fees for Execution Venues and non- Execution Venues due to the fundamental differences between the two types of entities. In particular, the CAT NMS Plan provides that fees charged to CAT Reporters that are Execution Venues will be based on the level of market share and that costs charged to Industry Members (other than Execution Venue ATSs) will be based upon message traffic.\29\ Because most Participant message traffic consists of quotations, and Participants usually disseminate quotations in all instruments they trade, regardless of execution volume, Execution Venues that are Participants generally disseminate similar amounts of message traffic. Accordingly, basing fees for Execution Venues on message traffic would not provide the same degree of differentiation among Execution Venues that it does among Industry Members (other than Execution Venue ATSs). In contrast, execution volume more accurately delineates the different levels of trading activity of Execution Venues.\30\ --------------------------------------------------------------------------- \29\ Section 11.2(c) of the CAT NMS Plan. \30\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85005. --------------------------------------------------------------------------- The CAT NMS Plan's funding model also is structured to avoid a ``reduction in market quality.'' \31\ The tiered, fixed fee funding model is designed to limit the disincentives to providing liquidity to the market. For example, the Participants expect that a firm that had a large volume of quotes would likely be categorized in one of the upper tiers, and would not be assessed a fee for this traffic directly as they would under a more directly metered model. In contrast, strictly variable or metered funding models based on message volume were far more likely to affect market behavior. In approving the CAT NMS Plan, the SEC stated that ``[t]he Participants also offered a reasonable basis for establishing a funding model based on broad tiers, in that it may be . . . less likely to have an incremental deterrent effect on liquidity provision.'' \32\ --------------------------------------------------------------------------- \31\ Section 11.2(e) of the CAT NMS Plan. \32\ Approval Order at 84796. --------------------------------------------------------------------------- The CAT NMS Plan is structured to avoid potential conflicts raised by the Operating Committee determining fees applicable to its own members--the Participants. First, the Company will be operated 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.\33\ 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.'' \34\ As the SEC stated when approving the CAT NMS Plan, ``the Commission believes that the Company's application for Section 501(c)(6) business league status addresses issues raised by commenters about the Plan's proposed allocation of profit and loss by mitigating concerns that the Company's earnings could be used to benefit individual Participants.'' \35\ --------------------------------------------------------------------------- \33\ Id. at 84792. \34\ 26 U.S.C. 501(c)(6). \35\ Approval Order at 84793. --------------------------------------------------------------------------- Finally, by adopting a CAT-specific fee, the Participants will be fully transparent regarding the costs of the CAT. Charging a general regulatory fee, which would 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 costs only. A full description of the funding model is set forth below. This description includes the framework for the funding model as set forth in the CAT NMS Plan, as well as the details as to how the funding model will be applied in practice, including the number of fee tiers and the applicable fees for each tier. The Exchange notes that the complete funding model is described below, including those fees that are to be paid by the Participants. The proposed Consolidated Audit Trail Funding Fees, however, do not apply to the Participants; the proposed Consolidated Audit Trail Funding Fees only apply to Industry Members. The CAT fees for Participants will be imposed separately by the Operating [[Page 23420]] Committee pursuant to the CAT NMS Plan. (A) Funding Principles Section 11.2 of the CAT NMS Plan sets forth the principles that the Operating Committee applied in establishing the funding for the Company. The Operating Committee has considered these funding principles as well as the other funding requirements set forth in the CAT NMS Plan and in Rule 613 in developing the proposed funding model. The following are the funding principles in Section 11.2 of the CAT NMS Plan: To create transparent, predictable revenue streams for the Company that are aligned with the anticipated costs to build, operate and administer the CAT and other costs of the Company; 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 the Company's resources and operations; To establish a tiered fee structure in which the fees charged to: (i) CAT Reporters that are Execution Venues, including ATSs, are based upon the level of market share; (ii) Industry Members' non-ATS activities are based upon message traffic; (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 Venue and/or Industry Members); To provide for ease of billing and other administrative functions; To avoid any disincentives such as placing an inappropriate burden on competition and a reduction in market quality; and To build financial stability to support the Company as a going concern. (B) Industry Member Tiering Under Section 11.3(b) of the CAT NMS Plan, the Operating Committee is required to establish fixed fees to be payable by Industry Members, based on message traffic generated by such Industry Member, with the Operating Committee establishing at least five and no more than nine tiers. The CAT NMS Plan clarifies that the fixed fees payable by Industry Members pursuant to Section 11.3(b) 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. In addition, the Industry Member fees will apply to Industry Members that act as routing broker-dealers for exchanges. The Industry Member fees will not be applicable, however, to an ATS that qualifies as an Execution Venue, as discussed in more detail in the section on Execution Venue tiering. In accordance with Section 11.3(b), the Operating Committee approved a tiered fee structure for Industry Members (other than Execution Venue ATSs) as described in this section. In determining the tiers, the Operating Committee considered the funding principles set forth in Section 11.2 of the CAT NMS Plan, seeking to create funding tiers that take into account the relative impact on CAT System resources of different Industry Members, and that establish comparable fees among the CAT Reporters with the most Reportable Events. The Operating Committee has determined that establishing nine tiers results in the fairest allocation of fees, best distinguishing between Industry Members with differing levels of message traffic. Thus, each such Industry Member will be placed into one of nine tiers of fixed fees, based on ``message traffic'' for a defined period (as discussed below). A nine tier structure was selected to provide the widest range of levels for tiering Industry Members such that Industry Members submitting significantly less message traffic to the CAT would be adequately differentiated from Industry Members submitting substantially more message traffic. The Operating Committee considered historical message traffic generated by Industry Members across all exchanges and as submitted to FINRA's Order Audit Trail System (``OATS''), and considered the distribution of firms with similar levels of message traffic, grouping together firms with similar levels of message traffic. Based on this, the Operating Committee determined that nine tiers would best group firms with similar levels of message traffic, charging those firms with higher impact on the CAT more, while lowering the burden of Industry Members that have less CAT-related activity. Each Industry Member (other than Execution Venue ATSs) will be ranked by message traffic and tiered by predefined Industry Member percentages (the ``Industry Member Percentages''). The Operating Committee determined to use predefined percentages rather than fixed volume thresholds to allow the funding model to ensure that the total CAT fees collected recover the intended CAT costs regardless of changes in the total level of message traffic. To determine the fixed percentage of Industry Members in each tier, the Operating Committee analyzed historical message traffic generated by Industry Members across all exchanges and as submitted to OATS, and considered the distribution of firms with similar levels of message traffic, grouping together firms with similar levels of message traffic. Based on this, the Operating Committee identified tiers that would group firms with similar levels of message traffic, charging those firms with higher impact on the CAT more, while lowering the burden on Industry Members that have less CAT-related activity. The percentage of costs recovered by each Industry Member tier will be determined by predefined percentage allocations (the ``Industry Member Recovery Allocation''). In determining the fixed percentage allocation of costs recovered for each tier, the Operating Committee considered the impact of CAT Reporter message traffic on the CAT System as well as the distribution of total message volume across Industry Members while seeking to maintain comparable fees among the largest CAT Reporters. Accordingly, following the determination of the percentage of Industry Members in each tier, the Operating Committee identified the percentage of total market volume for each tier based on the historical message traffic upon which Industry Members had been initially ranked. Taking this into account along with the resulting percentage of total recovery, the percentage allocation of costs recovered for each tier were assigned, allocating higher percentages of recovery to tiers with higher levels of message traffic while avoiding any inappropriate burden on competition. Furthermore, by using percentages of Industry Members and costs recovered per tier, the Operating Committee sought to include stability and elasticity within the funding model, allowing the funding model to respond to changes in either the total number of Industry Members or the total level of message traffic. The following chart illustrates the breakdown of nine Industry Member tiers across the monthly average of total equity and equity options orders, cancels and quotes in Q1 2016 and identifies relative gaps across varying levels of Industry Member message [[Page 23421]] traffic as well as message traffic thresholds between the largest of Industry Member message traffic gaps. The Operating Committee referenced similar distribution illustrations to determine the appropriate division of Industry Member percentages in each tier by considering the grouping of firms with similar levels of message traffic and seeking to identify relative breakpoints in the message traffic between such groupings. In reviewing the chart and its corresponding table, note that while these distribution illustrations were referenced to help differentiate between Industry Member tiers, the proposed funding model is directly driven, not by fixed message traffic thresholds, but rather by fixed percentages of Industry Members across tiers to account for fluctuating levels of message traffic across time and to provide for the financial stability of the CAT by ensuring that the funding model will recover the required amounts regardless of changes in the number of Industry Members or the amount of message traffic. Actual messages in any tier will vary based on the actual traffic in a given measurement period, as well as the number of firms included in the measurement period. The Industry Member Percentages and Industry Member Recovery Allocation for each tier will remain fixed with each Industry Member's tier to be reassigned periodically, as described below in Section 3(a)(1)(H) [sic]. [GRAPHIC] [TIFF OMITTED] TN22MY17.026 ------------------------------------------------------------------------ Monthly average message traffic per industry Industry member tier member (orders, quotes and cancels) ------------------------------------------------------------------------ Tier 1............................................... >10,000,000,000 Tier 2............................................... >1,000,000,000 Tier 3............................................... >100,000,000 Tier 4............................................... >2,500,000 Tier 5............................................... >200,000 Tier 6............................................... >50,000 Tier 7............................................... >5,000 Tier 8............................................... >1,000 Tier 9............................................... <=1,000 ------------------------------------------------------------------------ Based on the above analysis, the Operating Committee approved the following Industry Member Percentages and Recovery Allocations: ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of industry Percentage of Industry member tier industry member total members recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 0.500 8.50 6.38 Tier 2.......................................................... 2.500 35.00 26.25 Tier 3.......................................................... 2.125 21.25 15.94 Tier 4.......................................................... 4.625 15.75 11.81 [[Page 23422]] Tier 5.......................................................... 3.625 7.75 5.81 Tier 6.......................................................... 4.000 5.25 3.94 Tier 7.......................................................... 17.500 4.50 3.38 Tier 8.......................................................... 20.125 1.50 1.13 Tier 9.......................................................... 45.000 0.50 0.38 ----------------------------------------------- Total....................................................... 100 100 75 ---------------------------------------------------------------------------------------------------------------- For the purposes of creating these tiers based on message traffic, the Operating Committee determined to define the term ``message traffic'' separately for the period before the commencement of CAT reporting and for the period after the start of CAT reporting. The different definition for message traffic is necessary as there will be no Reportable Events as defined in the Plan, prior to the commencement of CAT reporting. Accordingly, prior to the start of CAT reporting, ``message traffic'' will be comprised of historical equity and equity options orders, cancels and quotes provided by each exchange and FINRA over the previous three months.\36\ Prior to the start of CAT reporting, orders would be comprised of the total number of equity and equity options orders received and originated by a member of an exchange or FINRA over the previous three-month period, including principal orders, cancel/replace orders, market maker orders originated by a member of an exchange, and reserve (iceberg) orders as well as order routes and executions originated by a member of FINRA, and excluding order rejects and implied orders.\37\ In addition, prior to the start of CAT reporting, cancels would be comprised of the total number of equity and equity option cancels received and originated by a member of an exchange or FINRA over a three-month period, excluding order modifications (e.g., order updates, order splits, partial cancels). Furthermore, prior to the start of CAT reporting, quotes would be comprised of information readily available to the exchanges and FINRA, such as the total number of historical equity and equity options quotes received and originated by a member of an exchange or FINRA over the prior three-month period. --------------------------------------------------------------------------- \36\ 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 Release No. 77265 (Mar. 1, 2017 [sic], 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 quotes will be included in the calculation of total message traffic for Options Market Makers for purposes of tiering under the CAT funding model both prior to CAT reporting and once CAT reporting commences. \37\ Consequently, firms that do not have ``message traffic'' reported to an exchange or OATS before they are reporting to the CAT would not be subject to a fee until they begin to report information to CAT. --------------------------------------------------------------------------- After an Industry Member begins reporting to the CAT, ``message traffic'' will be calculated based on the Industry Member's Reportable Events reported to the CAT as will be defined in the Technical Specifications.\38\ --------------------------------------------------------------------------- \38\ If an Industry Member (other than an Execution Venue ATS) has no orders, cancels or quotes prior to the commencement of CAT Reporting, or no Reportable Events after CAT reporting commences, then the Industry Member would not have a CAT fee obligation. --------------------------------------------------------------------------- The Operating Committee has determined to calculate fee tiers every three months, on a calendar quarter basis, based on message traffic from the prior three months. Based on its analysis of historical data, the Operating Committee believes that calculating tiers based on three months of data will provide the best balance between reflecting changes in activity by Industry Members while still providing predictability in the tiering for Industry Members. Because fee tiers will be calculated based on message traffic from the prior three months, the Operating Committee will begin calculating message traffic based on an Industry Member's Reportable Events reported to the CAT once the Industry Member has been reporting to the CAT for three months. Prior to that, fee tiers will be calculated as discussed above with regard to the period prior to CAT reporting. (C) Execution Venue Tiering Under Section 11.3(a) of the CAT NMS Plan, the Operating Committee is required to establish fixed fees payable by Execution Venues. Section 1.1 of the CAT NMS Plan defines an Execution Venue as ``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).'' \39\ --------------------------------------------------------------------------- \39\ Although FINRA does not operate an execution venue, because it is a Participant, it is considered an ``Execution Venue'' under the Plan for purposes of determining fees. --------------------------------------------------------------------------- The Participants determined that ATSs should be included within the definition of Execution Venue. Given the similarity between the activity of exchanges and ATSs, both of which meet the definition of an ``exchange'' as set forth in the Exchange Act and the fact that the similar trading models would have similar anticipated burdens on the CAT, the Participants determined that ATSs should be treated in the same manner as the exchanges for the purposes of determining the level of fees associated with the CAT.\40\ --------------------------------------------------------------------------- \40\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85005. --------------------------------------------------------------------------- Given the differences between Execution Venues that trade NMS Stocks and/or OTC Equity Securities and Execution Venues that trade Listed Options, Section 11.3(a) addresses Execution Venues that trade NMS Stocks and/or OTC Equity Securities separately from Execution Venues that trade Listed Options. Equity and Options Execution Venues are treated separately for two reasons. First, the differing quoting behavior of Equity and Options Execution Venues makes comparison of activity between Execution Venues difficult. Second, Execution Venue tiers are calculated based on market share of share volume, and it is therefore difficult to compare market share between asset classes (i.e., equity shares versus options contracts). Discussed below is how the funding model treats the two types of Execution Venues. (I) NMS Stocks and OTC Equity Securities Section 11.3(a)(i) of the CAT NMS Plan states that each Execution Venue that (i) executes transactions or, (ii) 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, [[Page 23423]] 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 not more than five tiers of fixed fees, based on an Execution Venue's NMS Stocks and OTC Equity Securities market share. For these purposes, market share for Execution Venues that execute transactions will be calculated by share volume, and market share for a national securities association that has trades reported by its members to its trade reporting facility or facilities for reporting transactions effected otherwise than on an exchange in NMS Stocks or OTC Equity Securities will be calculated based on share volume of trades reported, provided, however, that the share volume reported to such national securities association by an Execution Venue shall not be included in the calculation of such national security association's market share. In accordance with Section 11.3(a)(i) of the CAT NMS Plan, the Operating Committee approved a tiered fee structure for Equity Execution Venues and Option Execution Venues. In determining the Equity Execution Venue Tiers, the Operating Committee considered the funding principles set forth in Section 11.2 of the CAT NMS Plan, seeking to create funding tiers that take into account the relative impact on system resources of different Equity Execution Venues, and that establish comparable fees among the CAT Reporters with the most Reportable Events. Each Equity Execution Venue will be placed into one of two tiers of fixed fees, based on the Execution Venue's NMS Stocks and OTC Equity Securities market share. In choosing two tiers, the Operating Committee performed an analysis similar to that discussed above with regard to the non-Execution Venue Industry Members to determine the number of tiers for Equity Execution Venues. The Operating Committee determined to establish two tiers for Equity Execution Venues, rather than a larger number of tiers as established for non-Execution Venue Industry Members, because the two tiers were sufficient to distinguish between the smaller number of Equity Execution Venues based on market share. Furthermore, the incorporation of additional Equity Execution Venue tiers would result in significantly higher fees for Tier 1 Equity Execution Venues and diminish comparability between Execution Venues and Industry Members. Each Equity Execution Venue will be ranked by market share and tiered by predefined Execution Venue percentages, (the ``Equity Execution Venue Percentages''). In determining the fixed percentage of Equity Execution Venues in each tier, the Operating Committee looked at historical market share of share volume for execution venues. Equities Execution Venue market share of share volume were sourced from market statistics made publicly-available by Bats Global Markets, Inc. (``Bats''). ATS market share of share volume was sourced from market statistics made publicly-available by FINRA. FINRA trading [sic] reporting facility (``TRF'') market share of share volume was sourced from market statistics made publicly available by Bats. As indicated by FINRA, ATSs accounted for 37.80% of the share volume across the TRFs during the recent tiering period. A 37.80/62.20 split was applied to the ATS and non-ATS breakdown of FINRA market share, with FINRA tiered based only on the non-ATS portion of its TRF market share of share volume. Based on this, the Operating Committee considered the distribution of Execution Venues, and grouped together Execution Venues with similar levels of market share of share volume. In doing so, the Participants considered that, as previously noted, Execution Venues in many cases have similar levels of message traffic due to quoting activity, and determined that it was simpler and more appropriate to have fewer, rather than more, Execution Venue tiers to distinguish between Execution Venues. The percentage of costs recovered by each Equity Execution Venue tier will be determined by predefined percentage allocations (the ``Equity Execution Venue Recovery Allocation''). In determining the fixed percentage allocation of costs recovered for each tier, the Operating Committee considered the impact of CAT Reporter market share activity on the CAT System as well as the distribution of total market volume across Equity Execution Venues while seeking to maintain comparable fees among the largest CAT Reporters. Accordingly, following the determination of the percentage of Execution Venues in each tier, the Operating Committee identified the percentage of total market volume for each tier based on the historical market share upon which Execution Venues had been initially ranked. Taking this into account along with the resulting percentage of total recovery, the percentage allocation of costs recovered for each tier were assigned, allocating higher percentages of recovery to the tier with a higher level of market share while avoiding any inappropriate burden on competition. Furthermore, due to the similar levels of impact on the CAT System across Execution Venues, there is less variation in CAT Fees between the highest and lowest of tiers for Execution Venues. Furthermore, by using percentages of Equity Execution Venues and costs recovered per tier, the Operating Committee sought to include stability and elasticity within the funding model, allowing the funding model to respond to changes in either the total number of Equity Execution Venues or changes in market share. Based on this analysis, the Operating Committee approved the following Equity Execution Venue Percentages and Recovery Allocations: ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of equity execution Percentage of Equity execution venue tier execution venue total venues recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 25.00 26.00 6.50 Tier 2.......................................................... 75.00 49.00 12.25 ----------------------------------------------- Total....................................................... 100 75 18.75 ---------------------------------------------------------------------------------------------------------------- The following table exhibits the relative separation of market share of share volume between Tier 1 and Tier 2 Equity Execution Venues. In reviewing the table, note that while this division was referenced as a data point to help differentiate between Equity Execution Venue tiers, the proposed funding model is directly driven not by market share thresholds, but rather by fixed percentages of Equity Execution Venues across tiers to account for [[Page 23424]] fluctuating levels of market share across time. Actual market share in any tier will vary based on the actual market activity in a given measurement period, as well as the number of Equity Execution Venues included in the measurement period. The Equity Execution Venue Percentages and Equity Execution Venue Recovery Allocation for each tier will remain fixed with each Equity Execution Venue tier to be reassigned periodically, as described below in Section 3(a)(1)(I) [sic]. ------------------------------------------------------------------------ Equity market Equity execution venue tier share of share volume (%) ------------------------------------------------------------------------ Tier 1.................................................. >=1 Tier 2.................................................. <1 ------------------------------------------------------------------------ (II) Listed Options Section 11.3(a)(ii) of the CAT NMS Plan states that each Execution Venue that executes transactions in Listed Options will pay a fixed fee depending on the Listed Options market share of that Execution Venue, with the Operating Committee establishing at least two and no more than five tiers of fixed fees, based on an Execution Venue's Listed Options market share. For these purposes, market share will be calculated by contract volume. In accordance with Section 11.3(a)(ii) of the CAT NMS Plan, the Operating Committee approved a tiered fee structure for Options Execution Venues. In determining the tiers, the Operating Committee considered the funding principles set forth in Section 11.2 of the CAT NMS Plan, seeking to create funding tiers that take into account the relative impact on system resources of different Options Execution Venues, and that establish comparable fees among the CAT Reporters with the most Reportable Events. Each Options Execution Venue will be placed into one of two tiers of fixed fees, based on the Execution Venue's Listed Options market share. In choosing two tiers, the Operating Committee performed an analysis similar to that discussed above with regard to Industry Members (other than Execution Venue ATSs) to determine the number of tiers for Options Execution Venues. The Operating Committee determined to establish two tiers for Options Execution Venues, rather than a larger number of tiers as established for Industry Members (other than Execution Venue ATSs), because the two tiers were sufficient to distinguish between the smaller number of Options Execution Venues based on market share. Furthermore, due to the smaller number of Options Execution Venues, the incorporation of additional Options Execution Venue tiers would result in significantly higher fees for Tier 1 Options Execution Venues and reduce comparability between Execution Venues and Industry Members. Each Options Execution Venue will be ranked by market share and tiered by predefined Execution Venue percentages, (the ``Options Execution Venue Percentages''). To determine the fixed percentage of Options Execution Venues in each tier, the Operating Committee analyzed the historical and publicly available market share of Options Execution Venues to group Options Execution Venues with similar market shares across the tiers. Options Execution Venue market share of share volume were sourced from market statistics made publicly-available by Bats. The process for developing the Options Execution Venue Percentages was the same as discussed above with regard to Equity Execution Venues. The percentage of costs recovered by each Options Execution Venue tier will be determined by predefined percentage allocations (the ``Options Execution Venue Recovery Allocation''). In determining the fixed percentage allocation of costs recovered for each tier, the Operating Committee considered the impact of CAT Reporter market share activity on the CAT System as well as the distribution of total market volume across Options Execution Venues while seeking to maintain comparable fees among the largest CAT Reporters. Furthermore, by using percentages of Options Execution Venues and costs recovered per tier, the Operating Committee sought to include stability and elasticity within the funding model, allowing the funding model to respond to changes in either the total number of Options Execution Venues or changes in market share. The process for developing the Options Execution Venue Recovery Allocation was the same as discussed above with regard to Equity Execution Venues. Based on this analysis, the Operating Committee approved the following Options Execution Venue Percentages and Recovery Allocations: ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of options execution Percentage of Options execution venue tier execution venue total venues recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 75.00 20.00 5.00 Tier 2.......................................................... 25.00 5.00 1.25 ----------------------------------------------- Total....................................................... 100 25 6.25 ---------------------------------------------------------------------------------------------------------------- The following table exhibits the relative separation of market share of share volume between Tier 1 and Tier 2 Options Execution Venues. In reviewing the table, note that while this division was referenced as a data point to help differentiate between Options Execution Venue tiers, the proposed funding model is directly driven, not by market share thresholds, but rather by fixed percentages of Options Execution Venues across tiers to account for fluctuating levels of market share across time. Actual market share in any tier will vary based on the actual market activity in a given measurement period, as well as the number of Options Execution Venues included in the measurement period. The Options Execution Venue Percentages and Equity Execution Venue Recovery Allocation for each tier will remain fixed with each Options Execution Venue tier to be reassigned periodically, as described below in Section 3(a)(1)(I) [sic]. ------------------------------------------------------------------------ Options market Options execution venue tier share of share volume (%) ------------------------------------------------------------------------ Tier 1.................................................. >=1 Tier 2.................................................. <1 ------------------------------------------------------------------------ (III) Market Share/Tier Assignments The Operating Committee determined that, prior to the start of CAT reporting, market share for Execution Venues would be sourced from publicly-available market data. Options and [[Page 23425]] equity volumes for Participants will be sourced from market data made publicly available by Bats while Execution Venue ATS volumes will be sourced from market data made publicly available by FINRA. Set forth in the Appendix are two charts, one listing the current Equity Execution Venues, each with its rank and tier, and one listing the current Options Execution Venues, each with its rank and tier. After the commencement of CAT reporting, market share for Execution Venues will be sourced from data reported to the CAT. Equity Execution Venue market share will be determined by calculating each Equity Execution Venue's proportion of the total volume of NMS Stock and OTC Equity shares reported by all Equity Execution Venues during the relevant time period. Similarly, market share for Options Execution Venues will be determined by calculating each Options Execution Venue's proportion of the total volume of Listed Options contracts reported by all Options Execution Venues during the relevant time period. The Operating Committee has determined to calculate fee tiers for Execution Venues every three months based on market share from the prior three months. Based on its analysis of historical data, the Operating Committee believes calculating tiers based on three months of data will provide the best balance between reflecting changes in activity by Execution Venues while still providing predictability in the tiering for Execution Venues. (D) Allocation of Costs In addition to the funding principles discussed above, including comparability of fees, Section 11.1(c) of the CAT NMS Plan also requires expenses to be fairly and reasonably shared among the Participants and Industry Members. Accordingly, in developing the proposed fee schedules pursuant to the funding model, the Operating Committee calculated how the CAT costs would be allocated between Industry Members and Execution Venues, and how the portion of CAT costs allocated to Execution Venues would be allocated between Equity Execution Venues and Options Execution Venues. These determinations are described below. (I) Allocation Between Industry Members and Execution Venues In determining the cost allocation between Industry Members (other than Execution Venue ATSs) and Execution Venues, the Operating Committee analyzed a range of possible splits for revenue recovered from such Industry Members and Execution Venues. Based on this analysis, the Operating Committee determined that 75 percent of total costs recovered would be allocated to Industry Members (other than Execution Venue ATSs) and 25 percent would be allocated to Execution Venues. The Operating Committee determined that this 75/25 division maintained the greatest level of comparability across the funding model, keeping in view that comparability should consider affiliations among or between CAT Reporters (e.g., firms with multiple Industry Members and/or exchange licenses). For example, the cost allocation establishes fees for the largest Industry Members (i.e., those Industry Members in Tiers 1, 2 and 3) that are comparable to the largest Equity Execution Venues and Options Execution Venues (i.e., those Execution Venues in Tier 1). In addition, the cost allocation establishes fees for Execution Venue complexes that are comparable to those of Industry Member complexes. For example, when analyzing alternative allocations, other possible allocations led to much higher fees for larger Industry Members than for larger Execution Venues or vice versa, and/or led to much higher fees for Industry Member complexes than Execution Venue complexes or vice versa. Furthermore, the allocation of total CAT costs recovered recognizes the difference in the number of CAT Reporters that are Industry Members versus CAT Reporters that are Execution Venues. Specifically, the cost allocation takes into consideration that there are approximately 25 times more Industry Members expected to report to the CAT than Execution Venues (e.g., an estimated 1,630 Industry Members versus 70 Execution Venues as of January 2017). (II) Allocation Between Equity Execution Venues and Options Execution Venues The Operating Committee also analyzed how the portion of CAT costs allocated to Execution Venues would be allocated between Equity Execution Venues and Options Execution Venues. In considering this allocation of costs, the Operating Committee analyzed a range of alternative splits for revenue recovered between Equity and Options Execution Venues, including a 70/30, 67/33, 65/35, 50/50 and 25/75 split. Based on this analysis, the Operating Committee determined to allocate 75 percent of Execution Venue costs recovered to Equity Execution Venues and 25 percent to Options Execution Venues. The Operating Committee determined that a 75/25 division between Equity and Options Execution Venues maintained elasticity across the funding model as well the greatest level of fee equitability and comparability based on the current number of Equity and Options Execution Venues. For example, the allocation establishes fees for the larger Equity Execution Venues that are comparable to the larger Options Execution Venues, and fees for the smaller Equity Execution Venues that are comparable to the smaller Options Execution Venues. In addition to fee comparability between Equity Execution Venues and Options Execution Venues, the allocation also establishes equitability between larger (Tier 1) and smaller (Tier 2) Execution Venues based upon the level of market share. Furthermore, the allocation is intended to reflect the relative levels of current equity and options order events. (E) Fee Levels The Operating Committee determined to establish a CAT-specific fee to collectively recover the costs of building and operating the CAT. Accordingly, under the funding model, the sum of the CAT Fees is designed to recover the total cost of the CAT. The Operating Committee has determined overall CAT costs to be comprised of Plan Processor costs and non-Plan Processor costs, which are estimated to be $50,700,000 in total for the year beginning November 21, 2016.\41\ --------------------------------------------------------------------------- \41\ It is anticipated that CAT-related costs incurred prior to November 21, 2016 will be addressed via a separate fee filing. --------------------------------------------------------------------------- The Plan Processor costs relate to costs incurred by the Plan Processor and consist of the Plan Processor's current estimates of average yearly ongoing costs, including development cost, which total $37,500,000. This amount is based upon the fees due to the Plan Processor pursuant to the agreement with the Plan Processor. The non-Plan Processor estimated costs incurred and to be incurred by the Company through November 21, 2017 consists of three categories of costs. The first category of such costs are third party support costs, which include historic legal fees, consulting fees and audit fees from November 21, 2016 until the date of filing as well as estimated third party support costs for the rest of the year. These amount to an estimated $5,200,000. The second category of non-Plan Processor costs are estimated insurance costs for the year. Based on discussions with potential insurance providers, assuming $2-5 million insurance premium on $100 million in coverage, the Company has received an estimate of $3,000,000 for the annual [[Page 23426]] cost. The final cost figures will be determined following receipt of final underwriter quotes. The third category of non-Plan Processor costs is the operational reserve, which is comprised of three months of ongoing Plan Processor costs ($9,375,000), third party support costs ($1,300,000) and insurance costs ($750,000). The Operating Committee aims to accumulate the necessary funds for the establishment of the three-month operating reserve for the Company through the CAT Fees charged to CAT Reporters for the year. On an ongoing basis, the Operating Committee will account for any potential need for the replenishment of the operating reserve or other changes to total cost during its annual budgeting process. The following table summarizes the Plan Processor and non-Plan Processor cost components which comprise the total CAT costs of $50,700,000. ------------------------------------------------------------------------ Cost category Cost component Amount ------------------------------------------------------------------------ Plan Processor.................... Operational Costs... $37,500,000 Non-Plan Processor................ Third Party Support 5,200,000 Costs. Operational Reserve. \42\ 5,000,000 Insurance Costs..... 3,000,000 --------------- Estimated Total............... .................... 50,700,000 ------------------------------------------------------------------------ Based on the estimated costs and the calculations for the funding model described above, the Operating Committee determined to impose the following fees: \43\ --------------------------------------------------------------------------- \42\ This $5,000,000 represents the gradual accumulation of the funds for a target operating reserve of $11,425,000. \43\ Note that all monthly, quarterly and annual CAT Fees have been rounded to the nearest dollar. --------------------------------------------------------------------------- For Industry Members (other than Execution Venue ATSs): ---------------------------------------------------------------------------------------------------------------- Monthly CAT Quarterly CAT CAT fees paid Tier fee fee annually \44\ ---------------------------------------------------------------------------------------------------------------- 1............................................................... $33,668 $101,004 $404,016 2............................................................... 27,051 81,153 324,612 3............................................................... 19,239 57,717 230,868 4............................................................... 6,655 19,965 79,860 5............................................................... 4,163 12,489 49,956 6............................................................... 2,560 7,680 30,720 7............................................................... 501 1,503 6,012 8............................................................... 145 435 1,740 9............................................................... 22 66 264 ---------------------------------------------------------------------------------------------------------------- For Execution Venues for NMS Stocks and OTC Equity Securities: --------------------------------------------------------------------------- \44\ This column represents the approximate total CAT Fees paid each year by each Industry Member (other than Execution Venue ATSs) (i.e., ``CAT Fees Paid Annually'' = ``Monthly CAT Fee'' x 12 months). ---------------------------------------------------------------------------------------------------------------- Monthly CAT Quarterly CAT CAT fees paid Tier fee fee annually \45\ ---------------------------------------------------------------------------------------------------------------- 1............................................................... $21,125 $63,375 $253,500 2............................................................... 12,940 38,820 155,280 ---------------------------------------------------------------------------------------------------------------- For Execution Venues for Listed Options: --------------------------------------------------------------------------- \45\ This column represents the approximate total CAT Fees paid each year by each Execution Venue for NMS Stocks and OTC Equity Securities (i.e., ``CAT Fees Paid Annually'' = ``Monthly CAT Fee'' x 12 months). ---------------------------------------------------------------------------------------------------------------- Monthly CAT Quarterly CAT CAT fees paid Tier fee fee annually \46\ ---------------------------------------------------------------------------------------------------------------- 1............................................................... $19,205 $57,615 $230,460 2............................................................... 13,204 39,612 158,448 ---------------------------------------------------------------------------------------------------------------- As noted above, the fees set forth in the tables reflect the Operating Committee's decision to ensure comparable fees between Execution Venues and Industry Members. The fees of the top tiers for Industry Members (other than Execution Venue ATSs) are not identical to the top tier for Execution Venues, however, because the Operating Committee also determined that the fees for Execution Venue complexes should be comparable to those of Industry Member complexes. The difference in the fees reflects this decision to recognize affiliations. --------------------------------------------------------------------------- \46\ This column represents the approximate total CAT Fees paid each year by each Execution Venue for Listed Options (i.e., ``CAT Fees Paid Annually'' = ``Monthly CAT Fee'' x 12 months). --------------------------------------------------------------------------- [[Page 23427]] The Operating Committee has calculated the schedule of effective fees for Industry Members (other than Execution Venue ATSs) and Execution Venues in the following manner. Note that the calculation of CAT Reporter fees assumes 53 Equity Execution Venues, 15 Options Execution Venues and 1,631 Industry Members (other than Execution Venue ATSs) as of January 2017. Calculation of Annual Tier Fees for Industry Members (``IM'') ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of industry Percentage of Industry member tier industry member total members recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 0.500 8.50 6.38 Tier 2.......................................................... 2.500 35.00 26.25 Tier 3.......................................................... 2.125 21.25 15.94 Tier 4.......................................................... 4.625 15.75 11.81 Tier 5.......................................................... 3.625 7.75 5.81 Tier 6.......................................................... 4.000 5.25 3.94 Tier 7.......................................................... 17.500 4.50 3.38 Tier 8.......................................................... 20.125 1.50 1.13 Tier 9.......................................................... 45.000 0.50 0.38 ----------------------------------------------- Total....................................................... 100 100 75 ---------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ Estimated number Industry member tier of industry members ------------------------------------------------------------------------ Tier 1............................................... 8 Tier 2............................................... 41 Tier 3............................................... 35 Tier 4............................................... 75 Tier 5............................................... 59 Tier 6............................................... 65 Tier 7............................................... 285 Tier 8............................................... 328 Tier 9............................................... 735 ------------------ Total............................................ 1,631 ------------------------------------------------------------------------ [[Page 23428]] [GRAPHIC] [TIFF OMITTED] TN22MY17.027 Calculation of Annual Tier Fees for Equity Execution Venues (``EV'') ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of equity execution Percentage of Equity execution venue tier execution venue total venues recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 25.00 26.00 6.50 Tier 2.......................................................... 75.00 49.00 12.25 ----------------------------------------------- Total....................................................... 100 75 18.75 ---------------------------------------------------------------------------------------------------------------- [[Page 23429]] ------------------------------------------------------------------------ Estimated number Equity execution venue tier of equity execution venues ------------------------------------------------------------------------ Tier 1............................................... 13 Tier 2............................................... 40 ------------------ Total............................................ 53 ------------------------------------------------------------------------ [GRAPHIC] [TIFF OMITTED] TN22MY17.028 Calculation of Annual Tier Fees for Options Execution Venues (``EV'') ---------------------------------------------------------------------------------------------------------------- Percentage of Percentage of options execution Percentage of Options execution venue tier execution venue total venues recovery recovery ---------------------------------------------------------------------------------------------------------------- Tier 1.......................................................... 75.00 20.00 5.00 Tier 2.......................................................... 25.00 5.00 1.25 ----------------------------------------------- Total....................................................... 100 25 6.25 ---------------------------------------------------------------------------------------------------------------- ------------------------------------------------------------------------ Estimated number Options execution venue tier of options execution venues ------------------------------------------------------------------------ Tier 1............................................... 11 Tier 2............................................... 4 ------------------ Total............................................ 15 ------------------------------------------------------------------------ [GRAPHIC] [TIFF OMITTED] TN22MY17.029 Traceability of Total CAT Fees ---------------------------------------------------------------------------------------------------------------- Estimated Type Industry member tier number of CAT fees paid Total recovery members annually ---------------------------------------------------------------------------------------------------------------- Industry Members.................... Tier 1.................... 8 $404,016 $3,232,128 Tier 2.................... 41 324,612 13,309,092 Tier 3.................... 35 230,868 8,080,380 Tier 4.................... 75 79,860 5,989,500 Tier 5.................... 59 49,956 2,947,404 Tier 6.................... 65 30,720 1,996,800 Tier 7.................... 285 6,012 1,713,420 [[Page 23430]] Tier 8.................... 328 1,740 570,720 Tier 9.................... 735 264 194,040 ----------------------------------------------- Total........................... .......................... 1,631 .............. 38,033,484 ---------------------------------------------------------------------------------------------------------------- Equity Execution Venues............. Tier 1.................... 13 253,500 3,295,500 Tier 2.................... 40 155,280 6,211,200 ----------------------------------------------- Total........................... .......................... 53 .............. 9,506,700 ---------------------------------------------------------------------------------------------------------------- Options Execution Venues............ Tier 1.................... 11 230,460 2,535,060 Tier 2.................... 4 158,448 633,792 ----------------------------------------------- Total........................... .......................... 15 .............. 3,168,852 ----------------------------------------------- Total....................... .......................... .............. .............. 50,709,036 ----------------------------------------------- Excess \47\............. .......................... .............. .............. 9,036 ---------------------------------------------------------------------------------------------------------------- (F) Comparability of Fees --------------------------------------------------------------------------- \47\ The amount in excess of the total CAT costs will contribute to the gradual accumulation of the target operating reserve of $11.425 million. --------------------------------------------------------------------------- The funding principles require a funding model in which the fees charged to 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 Venue and/or Industry Members). Accordingly, in creating the model, the Operating Committee sought to take account of the affiliations between or among CAT Reporters--that is, where affiliated entities may have multiple Industry Member and/or Execution Venue licenses, by maintaining relative comparability of fees among such affiliations with the most expected CAT-related activity. To do this, the Participants identified representative affiliations in the largest tier of both Execution Venues and Industry Members and compared the aggregate fees that would be paid by such firms. While the proposed fees for Tier 1 and Tier 2 Industry Members are relatively higher than those of Tier 1 and Tier 2 Execution Venues, Execution Venue complex fees are relatively higher than those of Industry Member complexes largely due to affiliations between Execution Venues. The tables set forth below describe the largest Execution Venue and Industry Member complexes and their associated fees:\48\ --------------------------------------------------------------------------- \48\ Note that the analysis of the complexes was performed on a best efforts basis, as all affiliations between the 1631 Industry Members may not be included. Execution Venue Complexes ---------------------------------------------------------------------------------------------------------------- Listing of equity Listing of options Total fees by Execution venue complex execution venue tiers execution venue tier EV complex ---------------------------------------------------------------------------------------------------------------- Execution Venue Complex 1............... Tier 1 (x2)...... Tier 1 (x4)...... $1,900,962 Tier 2 (x1)...... Tier 2 (x2)...... Execution Venue Complex 2............... Tier 1 (x2)...... Tier 1 (x2)...... 1,863,801 Tier 2 (x1)...... Execution Venue Complex 3............... Tier 1 (x2)...... Tier 1 (x2)...... 1,278,447 Tier 2 (x2)...... ---------------------------------------------------------------------------------------------------------------- Industry Member Complexes ---------------------------------------------------------------------------------------------------------------- Listing of industry Total fees by Industry member complex member tiers Listing of ATS tiers IM complex ---------------------------------------------------------------------------------------------------------------- Industry Member Complex 1............... Tier 1 (x2)...... Tier 2 (x1)...... $963,300 Industry Member Complex 2............... Tier 1 (x1)...... Tier 2 (x3)...... 949,674 Tier 4 (x1)...... Industry Member Complex 3............... Tier 1 (x1)...... Tier 2 (x1)...... 883,888 Tier 2 (x1)...... Industry Member Complex 4............... Tier 1 (x1)...... N/A....................... 808,472 Tier 2 (x1)...... Tier 4 (x1)...... [[Page 23431]] Industry Member Complex 5............... Tier 2 (x1)...... Tier 2 (x1)...... 796,595 Tier 3 (x1)...... Tier 4 (x1)...... Tier 7 (x1)...... ---------------------------------------------------------------------------------------------------------------- (G) Billing Onset Under Section 11.1(c) of the CAT NMS Plan, 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. The Company is currently incurring such development and implementation costs and will continue to do so prior to the commencement of CAT reporting and thereafter. For example, the Plan Processor has required up-front payments to begin building the CAT. In addition, the Company continues to incur consultant and legal expenses on an on-going basis to implement the CAT. Accordingly, the Operating Committee determined that all CAT Reporters, including both Industry Members and Execution Venues (including Participants), would begin to be invoiced as promptly as possible following the establishment of a billing mechanism. The Exchange will issue a Trader Update to its members when the billing mechanism is established, specifying the date when such invoicing of Industry Members will commence. (H) Changes to Fee Levels and Tiers Section 11.3(d) of the CAT NMS Plan states that ``[t]he Operating Committee shall review such fee schedule on at least an annual basis and shall make any changes to such fee schedule that it deems appropriate. The Operating Committee is authorized to review such fee schedule on a more regular basis, but shall not make any changes on more than a semi-annual basis unless, pursuant to a Supermajority Vote, the Operating Committee concludes that such change is necessary for the adequate funding of the Company.'' With such reviews, the Operating Committee will review the distribution of Industry Members and Execution Venues across tiers, and make any updates to the percentage of CAT Reporters allocated to each tier as may be necessary. In addition, the reviews will evaluate the estimated ongoing CAT costs and the level of the operating reserve. To the extent that the total CAT costs decrease, the fees would be adjusted downward, and, to the extent that the total CAT costs increase, the fees would be adjusted upward.\49\ Furthermore, any surplus of the Company's revenues over its expenses is to be included within the operational reserve to offset future fees. The limitations on more frequent changes to the fee, however, are intended to provide budgeting certainty for the CAT Reporters and the Company.\50\ To the extent that the Operating Committee approves changes to the number of tiers in the funding model or the fees assigned to each tier, then the Exchange will file such changes with the SEC pursuant to Section 19(b) of the Exchange Act, and any such changes will become effective in accordance with the requirements of Section 19(b). --------------------------------------------------------------------------- \49\ The CAT Fees are designed to recover the costs associated with the CAT. Accordingly, CAT Fees would not be affected by increases or decreases in other non-CAT expenses incurred by the SROs, such as any changes in costs related to the retirement of existing regulatory systems, such as OATS. \50\ Section B.7, Appendix C of the CAT NMS Plan, Approval Order at 85006. --------------------------------------------------------------------------- (I) Initial and Periodic Tier Reassignments The Operating Committee has determined to calculate fee tiers every three months based on market share or message traffic, as applicable, from the prior three months. For the initial tier assignments, the Company will calculate the relevant tier for each CAT Reporter using the three months of data prior to the commencement date. As with the initial tier assignment, for the tri-monthly reassignments, the Company will calculate the relevant tier using the three months of data prior to the relevant tri-monthly date. The Exchange notes that any movement of CAT Reporters between tiers will not change the criteria for each tier or the fee amount corresponding to each tier. In performing the tri-monthly reassignments, the Exchange notes that the percentage of CAT Reporters in each assigned tier is relative. Therefore, a CAT Reporter's assigned tier will depend, not only on its own message traffic or market share, but it also will depend on the message traffic/market share across all CAT Reporters. For example, the percentage of Industry Members (other than Execution Venue ATSs) in each tier is relative such that such Industry Member's assigned tier will depend on message traffic generated across all CAT Reporters as well as the total number of CAT Reporters. The Operating Committee will inform CAT Reporters of their assigned tier every three months following the periodic tiering process, as the funding model will compare an individual CAT Reporter's activity to that of other CAT Reporters in the marketplace. The following demonstrates a tier reassignment. In accordance with the funding model, the top 75% of Options Execution Venues in market share are categorized as Tier 1 while the bottom 25% of Options Execution Venues in market share are categorized as Tier 2. In the sample scenario below, Options Execution Venue L is initially categorized as a Tier 2 Options Execution Venue in Period A due to its market share. When market share is recalculated for Period B, the market share of Execution Venue L increases, and it is therefore subsequently reranked and reassigned to Tier 1 in Period B. Correspondingly, Options Execution Venue K, initially a Tier 1 Options Execution Venue in Period A, is reassigned to Tier 2 in Period B due to decreases in its market share of share volume. [[Page 23432]] ---------------------------------------------------------------------------------------------------------------- Period A Period B ---------------------------------------------------------------------------------------------------------------- Market share Options Market share Options execution venue rank Tier execution venue rank Tier ---------------------------------------------------------------------------------------------------------------- Options Execution Venue A.... 1 1 Options 1 1 Execution Venue A. Options Execution Venue B.... 2 1 Options 2 1 Execution Venue B. Options Execution Venue C.... 3 1 Options 3 1 Execution Venue C. Options Execution Venue D.... 4 1 Options 4 1 Execution Venue D. Options Execution Venue E.... 5 1 Options 5 1 Execution Venue E. Options Execution Venue F.... 6 1 Options 6 1 Execution Venue F. Options Execution Venue G.... 7 1 Options 7 1 Execution Venue I. Options Execution Venue H.... 8 1 Options 8 1 Execution Venue H. Options Execution Venue I.... 9 1 Options 9 1 Execution Venue G. Options Execution Venue J.... 10 1 Options 10 1 Execution Venue J. Options Execution Venue K.... 11 1 Options 11 1 Execution Venue L. Options Execution Venue L.... 12 2 Options 12 2 Execution Venue K. Options Execution Venue M.... 13 2 Options 13 2 Execution Venue N. Options Execution Venue N.... 14 2 Options 14 2 Execution Venue M. Options Execution Venue O.... 15 2 Options 15 2 Execution Venue O. ---------------------------------------------------------------------------------------------------------------- (3) Proposed CAT Fees The Exchange proposes the Consolidated Audit Trail Funding Fees to implement the CAT Fees determined by the Operating Committee on the Exchange's Industry Members. The proposed fee change has three sections, covering definitions, the fee schedule for CAT Fees, and the timing and manner of payments. Each of these sections is discussed in detail below. (A) Definitions Paragraph (a) sets forth the definitions applicable to the proposed Consolidated Audit Trail Funding Fees. Proposed paragraph (a)(1) states that, the terms ``CAT NMS Plan,'' ``Industry Member,'' ``NMS Stock,'' ``OTC Equity Security,'' and ``Participant'' are defined as set forth in Rule 6810 (Consolidated Audit Trail--Definitions) of the CAT Compliance Rule, as adopted by the Exchange for its equities and options trading platforms.\51\ --------------------------------------------------------------------------- \51\ See Securities Exchange Act Release No. 80256 (March 15, 2017), 82 FR 14526 (March 21, 2017) (SR-NYSEMKT-2017-02). --------------------------------------------------------------------------- The Exchange proposes to impose different fees on Equity ATSs and Industry Members that are not Equity ATSs. Accordingly, the Exchange proposes to define the term ``Equity ATS.'' First, paragraph (a)(2) defines an ``ATS'' to mean an alternative trading system as defined in Rule 300(a) of Regulation ATS under the Exchange Act that operates pursuant to Rule 301 of Regulation ATS. This is the same definition of an ATS as set forth in Section 1.1 of the CAT NMS Plan in the definition of an ``Execution Venue.'' Then, paragraph (a)(4) defines an ``Equity ATS'' as an ATS that executes transactions in NMS Stocks and/ or OTC Equity Securities. Paragraph (a)(3) defines the term ``CAT Fee'' to mean the Consolidated Audit Trail Funding Fee(s) to be paid by Industry Members pursuant to this proposed rule change. Finally, Paragraph (a)(6) defines an ``Execution Venue'' as a Participant or an ATS (excluding any such ATS that does not execute orders). This definition is the same substantive definition as set forth in Section 1.1 of the CAT NMS Plan. Paragraph (a)(5) defines an ``Equity Execution Venue'' as an Execution Venue that trades NMS Stocks and/or OTC Equity Securities. (B) Fee Schedule The Exchange proposes to impose the CAT Fees applicable to its Industry Members through paragraph (b) of the proposed rule change. Paragraph (b)(1) of the proposed rule change sets forth the CAT Fees applicable to Industry Members other than Equity ATSs. Specifically, paragraph (b)(1) states that the Company will assign each Industry Member (other than an Equity ATS) to a fee tier once every quarter, where such tier assignment is calculated by ranking each Industry Member based on its total message traffic for the three months prior to the quarterly tier calculation day and assigning each Industry Member to a tier based on that ranking and predefined Industry Member percentages. The Industry Members with the highest total quarterly message traffic will be ranked in Tier 1, and the Industry Members with lowest quarterly message traffic will be ranked in Tier 9. Each quarter, each Industry Member (other than an Equity ATS) shall pay the following CAT Fee corresponding to the tier assigned by the Company for such Industry Member for that quarter: ------------------------------------------------------------------------ Percentage of Tier industry Quarterly CAT members fee ------------------------------------------------------------------------ 1....................................... 0.500 $101,004 2....................................... 2.500 81,153 3....................................... 2.125 57,717 4....................................... 4.625 19,965 5....................................... 3.625 12,489 6....................................... 4.000 7,680 7....................................... 17.500 1,503 8....................................... 20.125 435 [[Page 23433]] 9....................................... 45.000 66 ------------------------------------------------------------------------ Paragraph (b)(2) of the proposed fee schedule sets forth the CAT Fees applicable to Equity ATSs.\52\ These are the same fees that Participants that trade NMS Stocks and/or OTC Equity Securities will pay. Specifically, paragraph (b)(2) states that the Company will assign each Equity ATS to a fee tier once every quarter, where such tier assignment is calculated by ranking each Equity Execution Venue based on its total market share of NMS Stocks and OTC Equity Securities for the three months prior to the quarterly tier calculation day and assigning each Equity Execution Venue to a tier based on that ranking and predefined Equity Execution Venue percentages. The Equity Execution Venues with the higher total quarterly market share will be ranked in Tier 1, and the Equity Execution Venues with the lower quarterly market share will be ranked in Tier 2. Specifically, paragraph (b)(2) states that, each quarter, each Equity ATS shall pay the following CAT Fee corresponding to the tier assigned by the Company for such Equity ATS for that quarter: --------------------------------------------------------------------------- \52\ Note that no fee schedule is provided for Execution Venue ATSs that execute transactions in Listed Options, as no such Execution Venue ATSs currently exist due trading restrictions related to Listed Options. ------------------------------------------------------------------------ Percentage of equity Quarterly CAT Tier execution fee venues ------------------------------------------------------------------------ 1....................................... 25.00 $63,375 2....................................... 75.00 38,820 ------------------------------------------------------------------------ (C) Timing and Manner of Payment Section 11.4 of the CAT NMS Plan states that the Operating Committee shall establish a system for the collection of fees authorized under the CAT NMS Plan. The Operating Committee may include such collection responsibility as a function of the Plan Processor or another administrator. To implement the payment process to be adopted by the Operating Committee, paragraph (c)(1) of the proposed rule change states that the Company will provide each Industry Member with one invoice each quarter for its CAT Fees as determined pursuant to paragraph (b) of the proposed fee change, regardless of whether the Industry Member is a member of multiple self-regulatory organizations. Paragraph (c)(1) further states that each Industry Member will pay its CAT Fees to the Company via the centralized system for the collection of CAT Fees established by the Company in the manner prescribed by the Company. The Exchange will provide Industry Members with details regarding the manner of payment of CAT Fees by Trader Update. Although the exact fee collection system and processes for CAT fees has not yet been established, all CAT fees will be billed and collected centrally through the Company, via the Plan Processor or otherwise. Although each Participant will adopt its own fee schedule regarding CAT Fees, no CAT Fees or portion thereof will be collected by the individual Participants. Each Industry Member will receive from the Company one invoice for its applicable CAT fees, not separate invoices from each Participant of which it is a member. The Industry Members will pay the CAT Fees to the Company via the centralized system for the collection of CAT fees established by the Company.\53\ --------------------------------------------------------------------------- \53\ Section 11.4 of the CAT NMS Plan. --------------------------------------------------------------------------- Section 11.4 of the CAT NMS Plan also states that Participants shall require each Industry Member to pay all applicable authorized 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). Section 11.4 further states that, 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. Therefore, in accordance with Section 11.4 of the CAT NMS Plan, proposed paragraph (c)(2) states that each Industry Member shall pay 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. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the provisions of Section 6(b)(4) of the Act,\54\ because it provides for the equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using its facilities. The Exchange believes the proposed rule change is also consistent with Section 6(b)(5) of the Act,\55\ which requires, among other things, that the Exchange's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest, and not designed to permit unfair discrimination between customers, issuers, brokers and dealers. As discussed above, the SEC approved the bifurcated, tiered, fixed fee funding model in the CAT NMS Plan, finding it was reasonable and that it equitably allocated fees among Participants and Industry Members. The Exchange believes that the proposed tiered fees adopted pursuant to the funding model approved by the SEC in the CAT NMS Plan are reasonable, equitably allocated and not unfairly discriminatory. --------------------------------------------------------------------------- \54\ 15 U.S.C. 78f(b)(4). \55\ 15 U.S.C. 78f(b)(6) [sic]. --------------------------------------------------------------------------- The Exchange believes that this proposal is consistent with the Act because it implements, interprets or [[Page 23434]] clarifies the provisions of the Plan, and is designed to assist the Exchange and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan ``is necessary and 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 mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.'' \56\ To the extent that this proposal implements, interprets or clarifies the Plan and applies specific requirements to Industry Members, the Exchange believes that this proposal furthers the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Act. --------------------------------------------------------------------------- \56\ Approval Order at 84697. --------------------------------------------------------------------------- The Exchange believes that the proposed tiered fees are reasonable. First, the total CAT Fees to be collected would be directly associated with the costs of establishing and maintaining the CAT, where such costs include Plan Processor costs and costs related to insurance, third party services and the operational reserve. The CAT Fees would not cover Participant services unrelated to the CAT. In addition, any surplus CAT Fees cannot be distributed to the individual Participants; such surpluses must be used as a reserve to offset future fees. Given the direct relationship between the fees and the CAT costs, the Exchange believes that the total level of the CAT Fees is reasonable. In addition, the Exchange believes that the proposed CAT Fees are reasonably designed to allocate the total costs of the CAT equitably between and among the Participants and Industry Members, and are therefore not unfairly discriminatory. As discussed in detail above, the proposed tiered fees impose comparable fees on similarly situated CAT Reporters. For example, those with a larger impact on the CAT (measured via message traffic or market share) pay higher fees, whereas CAT Reporters with a smaller impact pay lower fees. Correspondingly, the tiered structure lessens the impact on smaller CAT Reporters by imposing smaller fees on those CAT Reporters with less market share or message traffic. In addition, the funding model takes into consideration affiliations between CAT Reporters, imposing comparable fees on such affiliated entities. Moreover, the Exchange believes that the division of the total CAT costs between Industry Members and Execution Venues, and the division of the Execution Venue portion of total costs between Equity and Options Execution Venues, is reasonably designed to allocate CAT costs among CAT Reporters. The 75/25 division between Industry Members and Execution Venues maintains the greatest level of comparability across the funding model, keeping in view that comparability should consider affiliations among or between CAT Reporters (e.g., firms with multiple Industry Members or exchange licenses). Similarly, the 75/25 division between Equity and Options Execution Venues maintains elasticity across the funding model as well as the greatest level of fee equitability and comparability based on the current number of Equity and Options Execution Venues. Finally, the Exchange believes that the proposed fees are reasonable because they would provide ease of calculation, ease of billing and other administrative functions, and predictability of a fixed fee. Such factors are crucial to estimating a reliable revenue stream for the Company and for permitting CAT Reporters to reasonably predict their payment obligations for budgeting purposes. For the foregoing reasons, the Exchange believes that the proposal is consistent with the Act. B. Self-Regulatory Organization's Statement on Burden on Competition Section 6(b)(8) of the Act \57\ require [sic] that the Exchange's rules not impose any burden on competition that is not necessary or appropriate. The Exchange does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. The Exchange notes that the proposed rule change implements provisions of the CAT NMS Plan approved by the Commission, and is designed to assist the Exchange in meeting its regulatory obligations pursuant to the Plan. Similarly, all national securities exchanges and FINRA are proposing a similar proposed fee change to implement the requirements of the CAT NMS Plan. Therefore, this is not a competitive fee filing and, therefore, it does not raise competition issues between and among the exchanges and FINRA. --------------------------------------------------------------------------- \57\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- Moreover, as previously described, the Exchange believes that the proposed rule change fairly and equitably allocates costs among CAT Reporters. In particular, the proposed fee schedule is structured to impose comparable fees on similarly situated CAT Reporters, and lessen the impact on smaller CAT Reporters. CAT Reporters with similar levels of CAT activity will pay similar fees. For example, Industry Members (other than Execution Venue ATSs) with higher levels of message traffic will pay higher fees, and those with lower levels of message traffic will pay lower fees. Similarly, Execution Venue ATSs and other Execution Venues with larger market share will pay higher fees, and those with lower levels of market share will pay lower fees. Therefore, given that there is generally a relationship between message traffic and market share to the CAT Reporter's size, smaller CAT Reporters generally pay less than larger CAT Reporters. Accordingly, the Exchange does not believe that the CAT Fees would have a disproportionate effect on smaller or larger CAT Reporters. In addition, ATSs and exchanges will pay the same fees based on market share. Therefore, the Exchange does not believe that the fees will impose any burden on the competition between ATSs and exchanges. Accordingly, the Exchange believes that the proposed fees will minimize the potential for adverse effects on competition between CAT Reporters in the market. Furthermore, the tiered, fixed fee funding model limits the disincentives to providing liquidity to the market. Therefore, the proposed fees are structured to limit burdens on competitive quoting and other liquidity provision in the market. C. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change is effective upon filing pursuant to Section 19(b)(3)(A) \58\ of the Act and subparagraph (f)(2) of Rule 19b-4 \59\ thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. --------------------------------------------------------------------------- \58\ 15 U.S.C. 78s(b)(3)(A). \59\ 17 CFR 240.19b-4(f)(2). --------------------------------------------------------------------------- At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the [[Page 23435]] public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) \60\ of the Act to determine whether the proposed rule change should be approved or disapproved. --------------------------------------------------------------------------- \60\ 15 U.S.C. 78s(b)(2)(B). --------------------------------------------------------------------------- IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the 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 [email protected]. Please include File Number SR-NYSEMKT-2017-26 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-NYSEMKT-2017-26. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filed with the Commission, and all written communications relating to the proposed rule change between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR-NYSEMKT-2017-26 and should be submitted on or before June 12, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\61\ --------------------------------------------------------------------------- \61\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-10298 Filed 5-19-17; 8:45 am] BILLING CODE 8011-01-P
![23416 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
number of Equity and Options exchanges will pay the same fees based All submissions should refer to File
Execution Venues. on market share. Therefore, BX does not Number SR–BX–2017–023. This file
Finally, BX believes that the proposed believe that the fees will impose any number should be included on the
fees are reasonable because they would burden on the competition between subject line if email is used. To help the
provide ease of calculation, ease of ATSs and exchanges. Accordingly, BX Commission process and review your
billing and other administrative believes that the proposed fees will comments more efficiently, please use
functions, and predictability of a fixed minimize the potential for adverse only one method. The Commission will
fee. Such factors are crucial to effects on competition between CAT post all comments on the Commission’s
estimating a reliable revenue stream for Reporters in the market. Internet Web site (http://www.sec.gov/
the Company and for permitting CAT Furthermore, the tiered, fixed fee rules/sro.shtml). Copies of the
Reporters to reasonably predict their funding model limits the disincentives submission, all subsequent
payment obligations for budgeting to providing liquidity to the market. amendments, all written statements
purposes. Therefore, the proposed fees are with respect to the proposed rule
B. Self-Regulatory Organization’s structured to limit burdens on change that are filed with the
Statement on Burden on Competition competitive quoting and other liquidity Commission, and all written
provision in the market. communications relating to the
Section 6(b)(8) of the Act 55 requires proposed rule change between the
that SRO rules not impose any burden C. Self-Regulatory Organization’s Commission and any person, other than
on competition that is not necessary or Statement on Comments on the those that may be withheld from the
appropriate. BX does not believe that Proposed Rule Change Received From public in accordance with the
the proposed rule change will result in Members, Participants, or Others provisions of 5 U.S.C. 552, will be
any burden on competition that is not available for Web site viewing and
No written comments were either
necessary or appropriate in furtherance printing in the Commission’s Public
solicited or received.
of the purposes of the Act. BX notes that Reference Room, 100 F Street NE.,
the proposed rule change implements III. Date of Effectiveness of the Washington, DC 20549, on official
provisions of the CAT NMS Plan Proposed Rule Change and Timing for business days between the hours of
approved by the Commission, and is Commission Action 10:00 a.m. and 3:00 p.m. Copies of the
designed to assist BX in meeting its filing also will be available for
regulatory obligations pursuant to the The foregoing rule change has become
effective pursuant to Section inspection and copying at the principal
Plan. Similarly, all national securities office of the Exchange. All comments
exchanges and FINRA are proposing 19(b)(3)(A)(ii) of the Act.56 At any time
within 60 days of the filing of the received will be posted without change;
this proposed fee schedule to the Commission does not edit personal
implement the requirements of the CAT proposed rule change, the Commission
summarily may temporarily suspend identifying information from
NMS Plan. Therefore, this is not a submissions. You should submit only
competitive fee filing and, therefore, it such rule change if it appears to the
Commission that such action is (i) information that you wish to make
does not raise competition issues available publicly. All submissions
between and among the exchanges and necessary or appropriate in the public
interest; (ii) for the protection of should refer to File Number SR–BX–
FINRA. 2017–023, and should be submitted on
Moreover, as previously described, investors; or (iii) otherwise in
furtherance of the purposes of the Act. or before June 12, 2017.
BX believes that the proposed rule
change fairly and equitably allocates If the Commission takes such action, the For the Commission, by the Division of
Commission shall institute proceedings Trading and Markets, pursuant to delegated
costs among CAT Reporters. In authority.57
particular, the proposed fee schedule is to determine whether the proposed rule
should be approved or disapproved. Eduardo A. Aleman,
structured to impose comparable fees on
similarly situated CAT Reporters, and Assistant Secretary.
IV. Solicitation of Comments [FR Doc. 2017–10301 Filed 5–19–17; 8:45 am]
lessen the impact on smaller CAT
Reporters. CAT Reporters with similar Interested persons are invited to BILLING CODE 8011–01–P
levels of CAT activity will pay similar submit written data, views, and
fees. For example, Industry Members arguments concerning the foregoing,
(other than Execution Venue ATSs) with including whether the proposed rule SECURITIES AND EXCHANGE
higher levels of message traffic will pay change is consistent with the Act. COMMISSION
higher fees, and those with lower levels Comments may be submitted by any of [Release No. 34–80694; File No. SR–
of message traffic will pay lower fees. the following methods: NYSEMKT–2017–26]
Similarly, Execution Venue ATSs and Electronic Comments
other Execution Venues with larger Self-Regulatory Organizations; NYSE
market share will pay higher fees, and • Use the Commission’s Internet MKT LLC; Notice of Filing and
those with lower levels of market share comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed
will pay lower fees. Therefore, given rules/sro.shtml); or Change Amending the NYSE MKT
that there is generally a relationship • Send an email to rule-comments@ Equities Price List and the NYSE Amex
between message traffic and market sec.gov. Please include File Number SR– Options Fee Schedule
share to the CAT Reporter’s size, smaller BX–2017–023 on the subject line. May 16, 2017.
CAT Reporters generally pay less than
mstockstill on DSK30JT082PROD with NOTICES
Paper Comments Pursuant to Section 19(b)(1) 1 of the
larger CAT Reporters. Accordingly, the Securities Exchange Act of 1934 (the
Exchange does not believe that the CAT • Send paper comments in triplicate
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
Fees would have a disproportionate to Secretary, Securities and Exchange
effect on smaller or larger CAT Commission, 100 F Street NE., 57 17 CFR 200.30–3(a)(12).
Reporters. In addition, ATSs and Washington, DC 20549–1090. 1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
55 15 U.S.C. 78f(b)(8). 56 15 U.S.C. 78s(b)(3)(A)(ii). 3 17 CFR 240.19b–4.
VerDate Sep<11>2014 23:17 May 19, 2017 Jkt 241001 PO 00000 Frm 00247 Fmt 4703 Sfmt 4703 E:\FR\FM\22MYN1.SGM 22MYN1](https://thefederalregister.org/doc/82_FR_23513/page/1.svg)
![Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices 23417
notice is hereby given that, on May 10, NASDAQ PHLX LLC, The NASDAQ Fee Schedule which will require
2017, NYSE MKT LLC (the ‘‘Exchange’’ Stock Market LLC, New York Stock Industry Members that are NYSE MKT
or ‘‘NYSE MKT’’) filed with the Exchange LLC, NYSE MKT LLC, NYSE members to pay the CAT Fees
Securities and Exchange Commission Arca, Inc. and NYSE National, Inc.5 determined by the Operating
(the ‘‘Commission’’) the proposed rule (collectively, the ‘‘Participants’’) filed Committee.
change as described in Items I, II, and with the Commission, pursuant to
(1) Executive Summary
III below, which Items have been Section 11A of the Exchange Act 6 and
prepared by the self-regulatory Rule 608 of Regulation NMS The following provides an executive
organization. The Commission is thereunder,7 the CAT NMS Plan.8 The summary of the CAT funding model
publishing this notice to solicit Participants filed the Plan to comply approved by the Operating Committee,
comments on the proposed rule change with Rule 613 of Regulation NMS under as well as Industry Members’ rights and
from interested persons. the Exchange Act. The Plan was obligations related to the payment of
published for comment in the Federal CAT Fees calculated pursuant to the
I. Self-Regulatory Organization’s CAT funding model. A detailed
Register on May 17, 2016,9 and
Statement of the Terms of Substance of description of the CAT funding model
approved by the Commission, as
the Proposed Rule Change and the CAT Fees follows this executive
modified, on November 15, 2016.10 The
The Exchange proposes to amend the Plan is designed to create, implement summary.
NYSE MKT Equities Price List (‘‘Price and maintain a consolidated audit trail (A) CAT Funding Model
List’’) and the NYSE Amex Options Fee (‘‘CAT’’) that would capture customer
Schedule (‘‘Fee Schedule’’) to adopt the and order event information for orders • CAT Costs. The CAT funding model
fees for Industry Members related to the in NMS Securities and OTC Equity is designed to establish CAT-specific
National Market System Plan Governing Securities, across all markets, from the fees to collectively recover the costs of
the Consolidated Audit Trail (the ‘‘CAT time of order inception through routing, building and operating the CAT from all
NMS Plan’’ or ‘‘Plan’’). The proposed cancellation, modification, or execution CAT Reporters, including Industry
change is available on the Exchange’s in a single consolidated data source. Members and Participants. The overall
Web site at www.nyse.com, at the The Plan accomplishes this by creating CAT costs for the calculation of the CAT
principal office of the Exchange, and at CAT NMS, LLC (the ‘‘Company’’), of Fees in this fee filing are comprised of
the Commission’s Public Reference which each Participant is a member, to Plan Processor CAT costs and non-Plan
Room. operate the CAT.11 Under the CAT NMS Processor CAT costs incurred, and
Plan, the Operating Committee of the estimated to be incurred, from
II. Self-Regulatory Organization’s November 21, 2016 through November
Statement of the Purpose of, and Company (‘‘Operating Committee’’) has
discretion to establish funding for the 21, 2017. (See Section 3(a)(2)(E) [sic]
Statutory Basis for, the Proposed Rule below) 14
Company to operate the CAT, including
Change • Bifurcated Funding Model. The
establishing fees that the Participants
In its filing with the Commission, the CAT NMS Plan requires a bifurcated
will pay, and establishing fees for
self-regulatory organization included funding model, where costs associated
Industry Members that will be
statements concerning the purpose of, with building and operating the CAT
implemented by the Participants (‘‘CAT
and basis for, the proposed rule change would be borne by (1) Participants and
Fees’’).12 The Participants are required
and discussed any comments it received Industry Members that are Execution
to file with the SEC under Section 19(b) Venues for Eligible Securities through
on the proposed rule change. The text of the Exchange Act any such CAT Fees
of those statements may be examined at fixed tier fees based on market share,
applicable to Industry Members that the and (2) Industry Members (other than
the places specified in Item IV below. Operating Committee approves.13
The Exchange has prepared summaries, alternative trading systems (‘‘ATSs’’)
Accordingly, the Exchange submits this that execute transactions in Eligible
set forth in sections A, B, and C below, fee filing to amend the Price List and the
of the most significant parts of such Securities (‘‘Execution Venue ATSs’’))
statements. through fixed tier fees based on message
and Nasdaq ISE, LLC, respectively. See Securities
Exchange Act Release Nos. 80248 (March 15, 2017),
traffic for Eligible Securities. (See
A. Self-Regulatory Organization’s 82 FR 14547 (March 21, 2017); 80326 (March 29, Section 3(a)(2) [sic] below)
Statement of the Purpose of, and the 2017), 82 FR 16460 (April 4, 2017); and 80325 • Industry Member Fees. Each
Statutory Basis for, the Proposed Rule (March 29, 2017), 82 FR 16445 (April 4, 2017). Industry Member (other than Execution
Change 5 National Stock Exchange, Inc. has been renamed
Venue ATSs) will be placed into one of
NYSE National, Inc. See Securities Exchange Act
1. Purpose Release No. 79902 (January 30, 2017), 82 FR 9258
nine tiers of fixed fees, based on
(February 3, 2017). ‘‘message traffic’’ in Eligible Securities
Bats BYX Exchange, Inc., Bats BZX 6 15 U.S.C. 78k–1. for a defined period (as discussed
Exchange, Inc., Bats EDGA Exchange, 7 17 CFR 242.608. below). Prior to the start of CAT
Inc., Bats EDGX Exchange, Inc., BOX 8 See Letter from the Participants to Brent J.
reporting, ‘‘message traffic’’ will be
Options Exchange LLC, C2 Options Fields, Secretary, Commission, dated September 30, comprised of historical equity and
Exchange, Incorporated, Chicago Board 2014; and Letter from Participants to Brent J. Fields,
Secretary, Commission, dated February 27, 2015. equity options orders, cancels and
Options Exchange, Incorporated, On December 24, 2015, the Participants submitted quotes provided by each exchange and
Chicago Stock Exchange, Inc., Financial an amendment to the CAT NMS Plan. See Letter FINRA over the previous three months.
Industry Regulatory Authority, Inc. from Participants to Brent J. Fields, Secretary, After an Industry Member begins
(‘‘FINRA’’), Investors’ Exchange LLC, Commission, dated December 23, 2015.
reporting to the CAT, ‘‘message traffic’’
mstockstill on DSK30JT082PROD with NOTICES
9 See Securities Exchange Act Release No. 77724
Miami International Securities will be calculated based on the Industry
(April 27, 2016), 81 FR 30614 (May 17, 2016).
Exchange, LLC, MIAX PEARL, LLC, 10 See Securities Exchange Act Release No. 79318 Member’s Reportable Events reported to
NASDAQ BX, Inc., Nasdaq GEMX, LLC, (November 15, 2016), 81 FR 84696 (November 23, the CAT. Industry Members with lower
Nasdaq ISE, LLC, Nasdaq MRX, LLC,4 2016) (‘‘Approval Order’’).
11 The Plan also serves as the limited liability
14 The Commission notes that references to
4 ISEGemini, LLC, ISE Mercury, LLC and company agreement for the Company. Sections 3(a)(2) and 3(a)(3) in this Executive
12 Section 11.1(b) of the CAT NMS Plan.
International Securities Exchange, LLC have been Summary should be instead to Sections II.A.1.(2)
renamed Nasdaq GEMX, LLC, Nasdaq MRX, LLC, 13 Section 12.1(b) [sic] of the CAT NMS Plan. and II.A.1.(3), respectively.
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levels of message traffic will pay a lower ATSs. (See Section 3(a)(3)(B) [sic] The Commission believes that the
fee and Industry Members with higher below) proposed funding model reflects a reasonable
exercise of the Participants’ funding
levels of message traffic will pay a • Quarterly Invoices. Industry
authority to recover the Participants’ costs
higher fee. (See Section 3(a)(2)(B) [sic] Members will be billed quarterly for related to the CAT. The CAT is a regulatory
below) CAT Fees, with the invoices payable facility jointly owned by the Participants and
• Execution Venue Fees. Each Equity within 30 days. The quarterly invoices . . . the Exchange Act specifically permits
Execution Venue will be placed in one will identify within which tier the the Participants to charge their members fees
of two tiers of fixed fees based on Industry Member falls. (See Section to fund their self-regulatory obligations. The
market share, and each Options 3(a)(3)(C) [sic] below) Commission further believes that the
Execution Venue will be placed in one proposed funding model is designed to
• Centralized Payment. Each Industry impose fees reasonably related to the
of two tiers of fixed fees based on Member will receive from the Company
market share. Equity Execution Venue Participants’ self-regulatory obligations
one invoice for its applicable CAT Fees, because the fees would be directly associated
market share will be determined by not separate invoices from each with the costs of establishing and
calculating each Equity Execution Participant of which it is a member. The maintaining the CAT, and not unrelated SRO
Venue’s proportion of the total volume Industry Members will pay its CAT Fees services.18
of NMS Stock and OTC Equity shares to the Company via the centralized Accordingly, the funding model
reported by all Equity Execution Venues system for the collection of CAT Fees imposes fees on both Participants and
during the relevant time period. established by the Operating Committee. Industry Members.
Similarly, market share for Options (See Section 3(a)(3)(C) [sic] below) In addition, as discussed in Appendix
Execution Venues will be determined by
• Billing Commencement. Industry C of the CAT NMS Plan, the Operating
calculating each Options Execution Committee considered the advantages
Members will begin to receive invoices
Venue’s proportion of the total volume and disadvantages of a variety of
for CAT Fees as promptly as possible
of Listed Options contracts reported by alternative funding and cost allocation
following the establishment of a billing
all Options Execution Venues during models before selecting the proposed
mechanism. The Exchange will issue a
the relevant time period. Equity model.19 After analyzing the various
Execution Venues with a larger market Trader Update to its members when the
billing mechanism is established, alternatives, the Operating Committee
share will pay a larger CAT Fee than
specifying the date when such invoicing determined that the proposed tiered,
Equity Execution Venues with a smaller
of Industry Members will commence. fixed fee funding model provides a
market share. Similarly, Options
(See Section 3(a)(2)(G) [sic] below) variety of advantages in comparison to
Execution Venues with a larger market
the alternatives. First, the fixed fee
share will pay a larger CAT Fee than (2) Description of the CAT Funding model, as opposed to a variable fee
Options Execution Venues with a Model model, provides transparency, ease of
smaller market share. (See Section
Article XI of the CAT NMS Plan calculation, ease of billing and other
3(a)(2)(C) [sic] below)
requires the Operating Committee to administrative functions, and
• Cost Allocation. For the reasons
approve the operating budget, including predictability of a fixed fee. Such factors
discussed below, in designing the
projected costs of developing and are crucial to estimating a reliable
model, the Operating Committee
operating the CAT for the upcoming revenue stream for the Company and for
determined that 75 percent of total costs
year. As set forth in Article XI of the permitting CAT Reporters to reasonably
recovered would be allocated to
CAT NMS Plan, the CAT NMS Plan predict their payment obligations for
Industry Members (other than Execution
requires a bifurcated funding model, budgeting purposes.20
Venue ATSs) and 25 percent would be Additionally, a strictly variable or
allocated to Execution Venues. In where costs associated with building
and operating the Central Repository metered funding model based on
addition, the Operating Committee message volume would be far more
determined to allocate 75 percent of would be borne by (1) Participants and
Industry Members that are Execution likely to affect market behavior and
Execution Venue costs recovered to place an inappropriate burden on
Equity Execution Venues and 25 percent Venues through fixed tier fees based on
market share, and (2) Industry Members competition. Moreover, as the SEC
to Options Execution Venues. (See noted in approving the CAT NMS Plan,
Section 3(a)(2)(D) [sic] below) (other than Execution Venue ATSs)
‘‘[t]he Participants also have offered a
• Comparability of Fees. The CAT through fixed tier fees based on message
reasonable basis for establishing a
funding model requires that the CAT traffic. In its order approving the CAT
NMS Plan, the Commission determined funding model based on broad tiers, in
Fees charged to the CAT Reporters with that it be may be easier to
the most CAT-related activity (measured that the proposed funding model was
‘‘reasonable’’ 15 and ‘‘reflects a implement.’’ 21
by market share and/or message traffic, In addition, multiple reviews of
as applicable) are generally comparable reasonable exercise of the Participants’
current broker-dealer order and trading
(where, for these comparability funding authority to recover the
data submitted under existing reporting
purposes, the tiered fee structure takes Participants’ costs related to the
into consideration affiliations between CAT.’’ 16 18 Id. at 84794.
or among CAT Reporters, whether More specifically, the Commission 19 Section B.7, Appendix C of the CAT NMS Plan,
Execution Venues and/or Industry stated in approving the CAT NMS Plan Approval Order at 85006.
Members). (See Section 3(a)(2)(F) [sic] that ‘‘[t]he Commission believes that the 20 In choosing a tiered fee structure, the SROs
below) proposed funding model is reasonably concluded that the variety of benefits offered by a
tiered fee structure, discussed above, outweighed
designed to allocate the costs of the CAT
mstockstill on DSK30JT082PROD with NOTICES
(B) CAT Fees for Industry Members the fact that Industry Members in any particular tier
between the Participants and Industry would pay different rates per message traffic order
• Fee Schedule. The quarterly CAT Members.’’ 17 The Commission further event (e.g., an Industry Member with the largest
Fees for each tier for Industry Members noted the following: amount of message traffic in one tier would pay a
are set forth in the two fee schedules in smaller amount per order event than an Industry
Member in the same tier with the least amount of
the Consolidated Audit Trail Funding 15 Approval Order at 84796. message traffic). Such variation is the natural result
Fees, one for Equity ATSs and one for 16 Id. at 84794. of a tiered fee structure.
Industry Members other than Equity 17 Id. at 84795. 21 Approval Order at 84796.
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requirements showed a wide range in the fees payable by Industry Members operated on a ‘‘break-even’’ basis, with
activity among broker-dealers, with a (other than Execution Venue ATSs) will fees imposed to cover costs and an
number of broker-dealers submitting be based on the message traffic appropriate reserve. Any surpluses will
fewer than 1,000 orders per month and generated by such Industry Member.28 be treated as an operational reserve to
other broker-dealers submitting millions The CAT NMS Plan provides that the offset future fees and will not be
and even billions of orders in the same Operating Committee will use different distributed to the Participants as
period. Accordingly, the CAT NMS Plan criteria to establish fees for Execution profits.33 To ensure that the
includes a tiered approach to fees. The Venues and non-Execution Venues due Participants’ operation of the CAT will
tiered approach helps ensure that fees to the fundamental differences between not contribute to the funding of their
are equitably allocated among similarly the two types of entities. In particular, other operations, Section 11.1(c) of the
situated CAT Reporters and furthers the the CAT NMS Plan provides that fees CAT NMS Plan specifically states that
goal of lessening the impact on smaller charged to CAT Reporters that are ‘‘[a]ny surplus of the Company’s
firms.22 The self-regulatory Execution Venues will be based on the revenues over its expenses shall be
organizations considered several level of market share and that costs treated as an operational reserve to
approaches to developing a tiered charged to Industry Members (other offset future fees.’’ In addition, as set
model, including defining fee tiers than Execution Venue ATSs) will be forth in Article VIII of the CAT NMS
based on such factors as size of firm, based upon message traffic.29 Because Plan, the Company ‘‘intends to operate
message traffic or trading dollar volume. most Participant message traffic consists in a manner such that it qualifies as a
After analyzing the alternatives, it was of quotations, and Participants usually ‘business league’ within the meaning of
concluded that the tiering should be disseminate quotations in all Section 501(c)(6) of the [Internal
based on the relative impact of CAT instruments they trade, regardless of Revenue] Code.’’ To qualify as a
Reporters on the CAT System. execution volume, Execution Venues business league, an organization must
Accordingly, the CAT NMS Plan that are Participants generally ‘‘not [be] organized for profit and no
contemplates that costs will be allocated disseminate similar amounts of message part of the net earnings of [the
across the CAT Reporters on a tiered traffic. Accordingly, basing fees for organization can] inure[ ] to the benefit
basis to allocate costs to those CAT Execution Venues on message traffic of any private shareholder or
Reporters that contribute more to the would not provide the same degree of individual.’’ 34 As the SEC stated when
costs of creating, implementing and differentiation among Execution Venues approving the CAT NMS Plan, ‘‘the
maintaining the CAT.23 The fees to be that it does among Industry Members Commission believes that the
assessed at each tier are calculated so as (other than Execution Venue ATSs). In Company’s application for Section
to recoup a proportion of costs contrast, execution volume more 501(c)(6) business league status
appropriate to the message traffic or accurately delineates the different levels addresses issues raised by commenters
market share (as applicable) from CAT of trading activity of Execution about the Plan’s proposed allocation of
Reporters in each tier. Therefore, Venues.30 profit and loss by mitigating concerns
Industry Members generating the most The CAT NMS Plan’s funding model that the Company’s earnings could be
message traffic will be in the higher also is structured to avoid a ‘‘reduction used to benefit individual
tiers, and therefore be charged a higher in market quality.’’ 31 The tiered, fixed Participants.’’ 35
fee. Industry Members with lower levels fee funding model is designed to limit Finally, by adopting a CAT-specific
of message traffic will be in lower tiers the disincentives to providing liquidity fee, the Participants will be fully
and will be assessed a smaller fee for the to the market. For example, the transparent regarding the costs of the
CAT.24 Correspondingly, Execution Participants expect that a firm that had CAT. Charging a general regulatory fee,
Venues with the highest market share a large volume of quotes would likely be which would be used to cover CAT
will be in the top tier, and therefore will categorized in one of the upper tiers, costs as well as other regulatory costs,
be charged a higher fee. Execution and would not be assessed a fee for this would be less transparent than the
Venues with a lower market share will traffic directly as they would under a selected approach of charging a fee
be in the lower tier and will be assessed more directly metered model. In designated to cover CAT costs only.
a smaller fee for the CAT.25 contrast, strictly variable or metered A full description of the funding
The Commission also noted in model is set forth below. This
funding models based on message
approving the CAT NMS Plan that description includes the framework for
volume were far more likely to affect
‘‘[t]he Participants have offered a the funding model as set forth in the
market behavior. In approving the CAT
credible justification for using different CAT NMS Plan, as well as the details as
NMS Plan, the SEC stated that ‘‘[t]he
criteria to charge Execution Venues to how the funding model will be
(market share) and Industry Members Participants also offered a reasonable
basis for establishing a funding model applied in practice, including the
(message traffic)’’ 26 in the CAT funding number of fee tiers and the applicable
model. While there are multiple factors based on broad tiers, in that it may be
. . . less likely to have an incremental fees for each tier. The Exchange notes
that contribute to the cost of building, that the complete funding model is
maintaining and using the CAT, deterrent effect on liquidity
provision.’’ 32 described below, including those fees
processing and storage of incoming that are to be paid by the Participants.
message traffic is one of the most The CAT NMS Plan is structured to
avoid potential conflicts raised by the The proposed Consolidated Audit Trail
significant cost drivers for the CAT.27 Funding Fees, however, do not apply to
Thus, the CAT NMS Plan provides that Operating Committee determining fees
applicable to its own members—the the Participants; the proposed
mstockstill on DSK30JT082PROD with NOTICES
Participants. First, the Company will be Consolidated Audit Trail Funding Fees
22 Section B.7, Appendix C of the CAT NMS Plan,
only apply to Industry Members. The
Approval Order at 85006.
23 Approval Order at 85005. 28 Section11.3(b) of the CAT NMS Plan. CAT fees for Participants will be
24 Id. 29 Section11.2(c) of the CAT NMS Plan. imposed separately by the Operating
25 Id. 30 Section B.7, Appendix C of the CAT NMS Plan,
26 Id. at 84796. Approval Order at 85005. 33 Id.
at 84792.
27 Section B.7, Appendix C of the CAT NMS Plan, 31 Section 11.2(e) of the CAT NMS Plan. 34 26U.S.C. 501(c)(6).
Approval Order at 85005. 32 Approval Order at 84796. 35 Approval Order at 84793.
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![23422 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
Percentage
Percentage Percentage
of industry
Industry member tier of industry of total
member
members recovery
recovery
Tier 5 ............................................................................................................................................ 3.625 7.75 5.81
Tier 6 ............................................................................................................................................ 4.000 5.25 3.94
Tier 7 ............................................................................................................................................ 17.500 4.50 3.38
Tier 8 ............................................................................................................................................ 20.125 1.50 1.13
Tier 9 ............................................................................................................................................ 45.000 0.50 0.38
Total ...................................................................................................................................... 100 100 75
For the purposes of creating these order splits, partial cancels). Regulation ATS (excluding any such
tiers based on message traffic, the Furthermore, prior to the start of CAT ATS that does not execute orders).’’ 39
Operating Committee determined to reporting, quotes would be comprised of The Participants determined that
define the term ‘‘message traffic’’ information readily available to the ATSs should be included within the
separately for the period before the exchanges and FINRA, such as the total definition of Execution Venue. Given
commencement of CAT reporting and number of historical equity and equity the similarity between the activity of
for the period after the start of CAT options quotes received and originated exchanges and ATSs, both of which
reporting. The different definition for by a member of an exchange or FINRA meet the definition of an ‘‘exchange’’ as
message traffic is necessary as there will over the prior three-month period. set forth in the Exchange Act and the
be no Reportable Events as defined in After an Industry Member begins fact that the similar trading models
the Plan, prior to the commencement of reporting to the CAT, ‘‘message traffic’’ would have similar anticipated burdens
CAT reporting. Accordingly, prior to the will be calculated based on the Industry on the CAT, the Participants determined
start of CAT reporting, ‘‘message traffic’’ Member’s Reportable Events reported to that ATSs should be treated in the same
will be comprised of historical equity the CAT as will be defined in the manner as the exchanges for the
and equity options orders, cancels and Technical Specifications.38 purposes of determining the level of fees
quotes provided by each exchange and The Operating Committee has associated with the CAT.40
FINRA over the previous three determined to calculate fee tiers every Given the differences between
months.36 Prior to the start of CAT three months, on a calendar quarter Execution Venues that trade NMS
reporting, orders would be comprised of basis, based on message traffic from the Stocks and/or OTC Equity Securities
the total number of equity and equity prior three months. Based on its and Execution Venues that trade Listed
options orders received and originated analysis of historical data, the Operating Options, Section 11.3(a) addresses
by a member of an exchange or FINRA Committee believes that calculating tiers Execution Venues that trade NMS
over the previous three-month period, based on three months of data will Stocks and/or OTC Equity Securities
including principal orders, cancel/ provide the best balance between separately from Execution Venues that
replace orders, market maker orders reflecting changes in activity by trade Listed Options. Equity and
originated by a member of an exchange, Industry Members while still providing Options Execution Venues are treated
and reserve (iceberg) orders as well as predictability in the tiering for Industry separately for two reasons. First, the
order routes and executions originated Members. Because fee tiers will be differing quoting behavior of Equity and
by a member of FINRA, and excluding calculated based on message traffic from Options Execution Venues makes
order rejects and implied orders.37 In the prior three months, the Operating comparison of activity between
addition, prior to the start of CAT Committee will begin calculating Execution Venues difficult. Second,
reporting, cancels would be comprised message traffic based on an Industry Execution Venue tiers are calculated
of the total number of equity and equity Member’s Reportable Events reported to based on market share of share volume,
option cancels received and originated the CAT once the Industry Member has and it is therefore difficult to compare
by a member of an exchange or FINRA been reporting to the CAT for three market share between asset classes (i.e.,
over a three-month period, excluding months. Prior to that, fee tiers will be equity shares versus options contracts).
order modifications (e.g., order updates, calculated as discussed above with Discussed below is how the funding
regard to the period prior to CAT model treats the two types of Execution
36 The SEC approved exemptive relief permitting reporting. Venues.
Options Market Maker quotes to be reported to the
Central Repository by the relevant Options (C) Execution Venue Tiering (I) NMS Stocks and OTC Equity
Exchange in lieu of requiring that such reporting be
Under Section 11.3(a) of the CAT Securities
done by both the Options Exchange and the Options
Market Maker, as required by Rule 613 of NMS Plan, the Operating Committee is Section 11.3(a)(i) of the CAT NMS
Regulation NMS. See Securities Exchange Act required to establish fixed fees payable Plan states that each Execution Venue
Release No. 77265 (Mar. 1, 2017 [sic], 81 FR 11856 by Execution Venues. Section 1.1 of the that (i) executes transactions or, (ii) in
(Mar. 7, 2016). This exemption applies to Options
Market Maker quotes for CAT reporting purposes
CAT NMS Plan defines an Execution the case of a national securities
only. Therefore, notwithstanding the reporting Venue as ‘‘a Participant or an alternative association, has trades reported by its
exemption provided for Options Market Maker trading system (‘‘ATS’’) (as defined in members to its trade reporting facility or
quotes, Options Market Maker quotes will be Rule 300 of Regulation ATS) that facilities for reporting transactions
mstockstill on DSK30JT082PROD with NOTICES
included in the calculation of total message traffic
for Options Market Makers for purposes of tiering operates pursuant to Rule 301 of effected otherwise than on an exchange,
under the CAT funding model both prior to CAT
reporting and once CAT reporting commences. 38 If an Industry Member (other than an Execution 39 Although FINRA does not operate an execution
37 Consequently, firms that do not have ‘‘message Venue ATS) has no orders, cancels or quotes prior venue, because it is a Participant, it is considered
traffic’’ reported to an exchange or OATS before to the commencement of CAT Reporting, or no an ‘‘Execution Venue’’ under the Plan for purposes
they are reporting to the CAT would not be subject Reportable Events after CAT reporting commences, of determining fees.
to a fee until they begin to report information to then the Industry Member would not have a CAT 40 Section B.7, Appendix C of the CAT NMS Plan,
CAT. fee obligation. Approval Order at 85005.
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![Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices 23423
in NMS Stocks or OTC Equity Securities tiers for Equity Execution Venues, rather simpler and more appropriate to have
will pay a fixed fee depending on the than a larger number of tiers as fewer, rather than more, Execution
market share of that Execution Venue in established for non-Execution Venue Venue tiers to distinguish between
NMS Stocks and OTC Equity Securities, Industry Members, because the two tiers Execution Venues.
with the Operating Committee were sufficient to distinguish between The percentage of costs recovered by
establishing at least two and not more the smaller number of Equity Execution each Equity Execution Venue tier will
than five tiers of fixed fees, based on an Venues based on market share. be determined by predefined percentage
Execution Venue’s NMS Stocks and Furthermore, the incorporation of allocations (the ‘‘Equity Execution
OTC Equity Securities market share. For additional Equity Execution Venue tiers Venue Recovery Allocation’’). In
these purposes, market share for would result in significantly higher fees determining the fixed percentage
Execution Venues that execute for Tier 1 Equity Execution Venues and allocation of costs recovered for each
transactions will be calculated by share diminish comparability between tier, the Operating Committee
volume, and market share for a national Execution Venues and Industry
considered the impact of CAT Reporter
securities association that has trades Members.
market share activity on the CAT
reported by its members to its trade Each Equity Execution Venue will be
ranked by market share and tiered by System as well as the distribution of
reporting facility or facilities for
predefined Execution Venue total market volume across Equity
reporting transactions effected
percentages, (the ‘‘Equity Execution Execution Venues while seeking to
otherwise than on an exchange in NMS
Venue Percentages’’). In determining the maintain comparable fees among the
Stocks or OTC Equity Securities will be
fixed percentage of Equity Execution largest CAT Reporters. Accordingly,
calculated based on share volume of
Venues in each tier, the Operating following the determination of the
trades reported, provided, however, that
Committee looked at historical market percentage of Execution Venues in each
the share volume reported to such
national securities association by an share of share volume for execution tier, the Operating Committee identified
Execution Venue shall not be included venues. Equities Execution Venue the percentage of total market volume
in the calculation of such national market share of share volume were for each tier based on the historical
security association’s market share. sourced from market statistics made market share upon which Execution
In accordance with Section 11.3(a)(i) publicly-available by Bats Global Venues had been initially ranked.
of the CAT NMS Plan, the Operating Markets, Inc. (‘‘Bats’’). ATS market Taking this into account along with the
Committee approved a tiered fee share of share volume was sourced from resulting percentage of total recovery,
structure for Equity Execution Venues market statistics made publicly- the percentage allocation of costs
and Option Execution Venues. In available by FINRA. FINRA trading [sic] recovered for each tier were assigned,
determining the Equity Execution reporting facility (‘‘TRF’’) market share allocating higher percentages of
Venue Tiers, the Operating Committee of share volume was sourced from recovery to the tier with a higher level
considered the funding principles set market statistics made publicly of market share while avoiding any
forth in Section 11.2 of the CAT NMS available by Bats. As indicated by inappropriate burden on competition.
Plan, seeking to create funding tiers that FINRA, ATSs accounted for 37.80% of Furthermore, due to the similar levels of
take into account the relative impact on the share volume across the TRFs impact on the CAT System across
system resources of different Equity during the recent tiering period. A Execution Venues, there is less variation
Execution Venues, and that establish 37.80/62.20 split was applied to the in CAT Fees between the highest and
comparable fees among the CAT ATS and non-ATS breakdown of FINRA lowest of tiers for Execution Venues.
Reporters with the most Reportable market share, with FINRA tiered based Furthermore, by using percentages of
Events. Each Equity Execution Venue only on the non-ATS portion of its TRF Equity Execution Venues and costs
will be placed into one of two tiers of market share of share volume. recovered per tier, the Operating
fixed fees, based on the Execution Based on this, the Operating Committee sought to include stability
Venue’s NMS Stocks and OTC Equity Committee considered the distribution and elasticity within the funding model,
Securities market share. In choosing two of Execution Venues, and grouped allowing the funding model to respond
tiers, the Operating Committee together Execution Venues with similar to changes in either the total number of
performed an analysis similar to that levels of market share of share volume. Equity Execution Venues or changes in
discussed above with regard to the non- In doing so, the Participants considered market share.
Execution Venue Industry Members to that, as previously noted, Execution Based on this analysis, the Operating
determine the number of tiers for Equity Venues in many cases have similar Committee approved the following
Execution Venues. The Operating levels of message traffic due to quoting Equity Execution Venue Percentages
Committee determined to establish two activity, and determined that it was and Recovery Allocations:
Percentage Percentage Percentage
of equity of execution
Equity execution venue tier of total
execution venue recovery
venues recovery
Tier 1 ............................................................................................................................................ 25.00 26.00 6.50
Tier 2 ............................................................................................................................................ 75.00 49.00 12.25
Total ...................................................................................................................................... 100 75 18.75
mstockstill on DSK30JT082PROD with NOTICES
The following table exhibits the reviewing the table, note that while this funding model is directly driven not by
relative separation of market share of division was referenced as a data point market share thresholds, but rather by
share volume between Tier 1 and Tier to help differentiate between Equity fixed percentages of Equity Execution
2 Equity Execution Venues. In Execution Venue tiers, the proposed Venues across tiers to account for
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![23424 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
fluctuating levels of market share across the CAT NMS Plan, seeking to create publicly available market share of
time. Actual market share in any tier funding tiers that take into account the Options Execution Venues to group
will vary based on the actual market relative impact on system resources of Options Execution Venues with similar
activity in a given measurement period, different Options Execution Venues, market shares across the tiers. Options
as well as the number of Equity and that establish comparable fees Execution Venue market share of share
Execution Venues included in the among the CAT Reporters with the most volume were sourced from market
measurement period. The Equity Reportable Events. Each Options statistics made publicly-available by
Execution Venue Percentages and Execution Venue will be placed into one Bats. The process for developing the
Equity Execution Venue Recovery of two tiers of fixed fees, based on the Options Execution Venue Percentages
Allocation for each tier will remain Execution Venue’s Listed Options was the same as discussed above with
fixed with each Equity Execution Venue market share. In choosing two tiers, the regard to Equity Execution Venues.
tier to be reassigned periodically, as Operating Committee performed an The percentage of costs recovered by
described below in Section 3(a)(1)(I) analysis similar to that discussed above each Options Execution Venue tier will
[sic]. with regard to Industry Members (other be determined by predefined percentage
than Execution Venue ATSs) to allocations (the ‘‘Options Execution
Equity market determine the number of tiers for Venue Recovery Allocation’’). In
share of share
Equity execution venue tier volume Options Execution Venues. The determining the fixed percentage
(%) Operating Committee determined to allocation of costs recovered for each
establish two tiers for Options tier, the Operating Committee
Tier 1 .................................... ≥1 Execution Venues, rather than a larger considered the impact of CAT Reporter
Tier 2 .................................... <1 number of tiers as established for market share activity on the CAT
Industry Members (other than Execution System as well as the distribution of
(II) Listed Options Venue ATSs), because the two tiers total market volume across Options
Section 11.3(a)(ii) of the CAT NMS were sufficient to distinguish between Execution Venues while seeking to
Plan states that each Execution Venue the smaller number of Options maintain comparable fees among the
that executes transactions in Listed Execution Venues based on market largest CAT Reporters. Furthermore, by
Options will pay a fixed fee depending share. Furthermore, due to the smaller using percentages of Options Execution
on the Listed Options market share of number of Options Execution Venues, Venues and costs recovered per tier, the
that Execution Venue, with the the incorporation of additional Options Operating Committee sought to include
Operating Committee establishing at Execution Venue tiers would result in stability and elasticity within the
least two and no more than five tiers of significantly higher fees for Tier 1 funding model, allowing the funding
fixed fees, based on an Execution Options Execution Venues and reduce model to respond to changes in either
Venue’s Listed Options market share. comparability between Execution the total number of Options Execution
For these purposes, market share will be Venues and Industry Members. Venues or changes in market share. The
calculated by contract volume. Each Options Execution Venue will process for developing the Options
In accordance with Section 11.3(a)(ii) be ranked by market share and tiered by Execution Venue Recovery Allocation
of the CAT NMS Plan, the Operating predefined Execution Venue was the same as discussed above with
Committee approved a tiered fee percentages, (the ‘‘Options Execution regard to Equity Execution Venues.
structure for Options Execution Venues. Venue Percentages’’). To determine the Based on this analysis, the Operating
In determining the tiers, the Operating fixed percentage of Options Execution Committee approved the following
Committee considered the funding Venues in each tier, the Operating Options Execution Venue Percentages
principles set forth in Section 11.2 of Committee analyzed the historical and and Recovery Allocations:
Percentage Percentage Percentage
of options of execution
Options execution venue tier of total
execution venue recovery
venues recovery
Tier 1 ............................................................................................................................................ 75.00 20.00 5.00
Tier 2 ............................................................................................................................................ 25.00 5.00 1.25
Total ...................................................................................................................................... 100 25 6.25
The following table exhibits the activity in a given measurement period, Options
relative separation of market share of as well as the number of Options market share
share volume between Tier 1 and Tier Execution Venues included in the Options execution venue tier of share
volume
2 Options Execution Venues. In measurement period. The Options (%)
reviewing the table, note that while this Execution Venue Percentages and
division was referenced as a data point Equity Execution Venue Recovery Tier 1 .................................... ≥1
to help differentiate between Options Allocation for each tier will remain Tier 2 .................................... <1
Execution Venue tiers, the proposed fixed with each Options Execution
mstockstill on DSK30JT082PROD with NOTICES
funding model is directly driven, not by Venue tier to be reassigned periodically, (III) Market Share/Tier Assignments
market share thresholds, but rather by as described below in Section 3(a)(1)(I)
fixed percentages of Options Execution [sic]. The Operating Committee determined
Venues across tiers to account for that, prior to the start of CAT reporting,
fluctuating levels of market share across market share for Execution Venues
time. Actual market share in any tier would be sourced from publicly-
will vary based on the actual market available market data. Options and
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![Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices 23431
INDUSTRY MEMBER COMPLEXES—Continued
Total fees
Listing of industry Listing of
Industry member complex by IM
member tiers ATS tiers complex
Industry Member Complex 5 .................................................... • Tier 2 (x1) ............................ • Tier 2 (x1) ............................ 796,595
• Tier 3 (x1)
• Tier 4 (x1)
• Tier 7 (x1)
(G) Billing Onset Committee will review the distribution change the criteria for each tier or the
Under Section 11.1(c) of the CAT of Industry Members and Execution fee amount corresponding to each tier.
NMS Plan, to fund the development and Venues across tiers, and make any In performing the tri-monthly
implementation of the CAT, the updates to the percentage of CAT reassignments, the Exchange notes that
Company shall time the imposition and Reporters allocated to each tier as may the percentage of CAT Reporters in each
collection of all fees on Participants and be necessary. In addition, the reviews assigned tier is relative. Therefore, a
Industry Members in a manner will evaluate the estimated ongoing CAT Reporter’s assigned tier will
reasonably related to the timing when CAT costs and the level of the operating depend, not only on its own message
the Company expects to incur such reserve. To the extent that the total CAT
traffic or market share, but it also will
development and implementation costs. costs decrease, the fees would be
depend on the message traffic/market
The Company is currently incurring adjusted downward, and, to the extent
share across all CAT Reporters. For
such development and implementation that the total CAT costs increase, the
example, the percentage of Industry
costs and will continue to do so prior fees would be adjusted upward.49
Members (other than Execution Venue
to the commencement of CAT reporting Furthermore, any surplus of the
ATSs) in each tier is relative such that
and thereafter. For example, the Plan Company’s revenues over its expenses is
such Industry Member’s assigned tier
Processor has required up-front to be included within the operational
will depend on message traffic
payments to begin building the CAT. In reserve to offset future fees. The
generated across all CAT Reporters as
addition, the Company continues to limitations on more frequent changes to
well as the total number of CAT
incur consultant and legal expenses on the fee, however, are intended to
Reporters. The Operating Committee
an on-going basis to implement the provide budgeting certainty for the CAT
will inform CAT Reporters of their
CAT. Accordingly, the Operating Reporters and the Company.50 To the
assigned tier every three months
Committee determined that all CAT extent that the Operating Committee
following the periodic tiering process,
Reporters, including both Industry approves changes to the number of tiers
as the funding model will compare an
Members and Execution Venues in the funding model or the fees
individual CAT Reporter’s activity to
(including Participants), would begin to assigned to each tier, then the Exchange
that of other CAT Reporters in the
be invoiced as promptly as possible will file such changes with the SEC
marketplace.
following the establishment of a billing pursuant to Section 19(b) of the
mechanism. The Exchange will issue a Exchange Act, and any such changes The following demonstrates a tier
Trader Update to its members when the will become effective in accordance reassignment. In accordance with the
billing mechanism is established, with the requirements of Section 19(b). funding model, the top 75% of Options
specifying the date when such invoicing Execution Venues in market share are
(I) Initial and Periodic Tier categorized as Tier 1 while the bottom
of Industry Members will commence. Reassignments 25% of Options Execution Venues in
(H) Changes to Fee Levels and Tiers The Operating Committee has market share are categorized as Tier 2.
Section 11.3(d) of the CAT NMS Plan determined to calculate fee tiers every In the sample scenario below, Options
states that ‘‘[t]he Operating Committee three months based on market share or Execution Venue L is initially
shall review such fee schedule on at message traffic, as applicable, from the categorized as a Tier 2 Options
least an annual basis and shall make any prior three months. For the initial tier Execution Venue in Period A due to its
changes to such fee schedule that it assignments, the Company will market share. When market share is
deems appropriate. The Operating calculate the relevant tier for each CAT recalculated for Period B, the market
Committee is authorized to review such Reporter using the three months of data share of Execution Venue L increases,
fee schedule on a more regular basis, but prior to the commencement date. As and it is therefore subsequently
shall not make any changes on more with the initial tier assignment, for the reranked and reassigned to Tier 1 in
than a semi-annual basis unless, tri-monthly reassignments, the Period B. Correspondingly, Options
pursuant to a Supermajority Vote, the Company will calculate the relevant tier Execution Venue K, initially a Tier 1
Operating Committee concludes that using the three months of data prior to Options Execution Venue in Period A,
such change is necessary for the the relevant tri-monthly date. The is reassigned to Tier 2 in Period B due
adequate funding of the Company.’’ Exchange notes that any movement of to decreases in its market share of share
With such reviews, the Operating CAT Reporters between tiers will not volume.
mstockstill on DSK30JT082PROD with NOTICES
49 The CAT Fees are designed to recover the costs such as any changes in costs related to the 50 Section B.7, Appendix C of the CAT NMS Plan,
associated with the CAT. Accordingly, CAT Fees retirement of existing regulatory systems, such as Approval Order at 85006.
would not be affected by increases or decreases in OATS.
other non-CAT expenses incurred by the SROs,
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![Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices 23433
Percentage Quarterly
Tier of industry CAT fee
members
9 ............................................................................................................................................................................... 45.000 66
Paragraph (b)(2) of the proposed fee each Equity Execution Venue based on be ranked in Tier 1, and the Equity
schedule sets forth the CAT Fees its total market share of NMS Stocks and Execution Venues with the lower
applicable to Equity ATSs.52 These are OTC Equity Securities for the three quarterly market share will be ranked in
the same fees that Participants that trade months prior to the quarterly tier Tier 2. Specifically, paragraph (b)(2)
NMS Stocks and/or OTC Equity calculation day and assigning each states that, each quarter, each Equity
Securities will pay. Specifically, Equity Execution Venue to a tier based ATS shall pay the following CAT Fee
paragraph (b)(2) states that the Company on that ranking and predefined Equity corresponding to the tier assigned by the
will assign each Equity ATS to a fee tier Execution Venue percentages. The Company for such Equity ATS for that
once every quarter, where such tier Equity Execution Venues with the quarter:
assignment is calculated by ranking higher total quarterly market share will
Percentage
of equity Quarterly
Tier execution CAT fee
venues
1 ............................................................................................................................................................................... 25.00 $63,375
2 ............................................................................................................................................................................... 75.00 38,820
(C) Timing and Manner of Payment by the individual Participants. Each rate equal to the lesser of: (i) the Prime
Industry Member will receive from the Rate plus 300 basis points; or (ii) the
Section 11.4 of the CAT NMS Plan Company one invoice for its applicable maximum rate permitted by applicable
states that the Operating Committee CAT fees, not separate invoices from law.
shall establish a system for the each Participant of which it is a
collection of fees authorized under the 2. Statutory Basis
member. The Industry Members will
CAT NMS Plan. The Operating pay the CAT Fees to the Company via The Exchange believes that the
Committee may include such collection the centralized system for the collection proposed rule change is consistent with
responsibility as a function of the Plan of CAT fees established by the the provisions of Section 6(b)(4) of the
Processor or another administrator. To Company.53 Act,54 because it provides for the
implement the payment process to be Section 11.4 of the CAT NMS Plan equitable allocation of reasonable dues,
adopted by the Operating Committee, also states that Participants shall require fees, and other charges among members
paragraph (c)(1) of the proposed rule each Industry Member to pay all and issuers and other persons using its
change states that the Company will applicable authorized CAT Fees within facilities. The Exchange believes the
provide each Industry Member with one thirty days after receipt of an invoice or proposed rule change is also consistent
invoice each quarter for its CAT Fees as other notice indicating payment is due with Section 6(b)(5) of the Act,55 which
determined pursuant to paragraph (b) of (unless a longer payment period is requires, among other things, that the
the proposed fee change, regardless of otherwise indicated). Section 11.4 Exchange’s rules be designed to prevent
whether the Industry Member is a further states that, if an Industry fraudulent and manipulative acts and
member of multiple self-regulatory Member fails to pay any such fee when practices, to promote just and equitable
organizations. Paragraph (c)(1) further due, such Industry Member shall pay principles of trade, and, in general, to
states that each Industry Member will interest on the outstanding balance from protect investors and the public interest,
pay its CAT Fees to the Company via such due date until such fee is paid at and not designed to permit unfair
the centralized system for the collection a per annum rate equal to the lesser of: discrimination between customers,
of CAT Fees established by the (i) the Prime Rate plus 300 basis points; issuers, brokers and dealers. As
Company in the manner prescribed by or (ii) the maximum rate permitted by discussed above, the SEC approved the
the Company. The Exchange will applicable law. Therefore, in accordance bifurcated, tiered, fixed fee funding
provide Industry Members with details with Section 11.4 of the CAT NMS Plan, model in the CAT NMS Plan, finding it
regarding the manner of payment of proposed paragraph (c)(2) states that was reasonable and that it equitably
CAT Fees by Trader Update. each Industry Member shall pay CAT allocated fees among Participants and
Although the exact fee collection Fees within thirty days after receipt of Industry Members. The Exchange
system and processes for CAT fees has an invoice or other notice indicating believes that the proposed tiered fees
not yet been established, all CAT fees payment is due (unless a longer adopted pursuant to the funding model
will be billed and collected centrally payment period is otherwise indicated). approved by the SEC in the CAT NMS
through the Company, via the Plan If an Industry Member fails to pay any Plan are reasonable, equitably allocated
mstockstill on DSK30JT082PROD with NOTICES
Processor or otherwise. Although each such fee when due, such Industry and not unfairly discriminatory.
Participant will adopt its own fee Member shall pay interest on the The Exchange believes that this
schedule regarding CAT Fees, no CAT outstanding balance from such due date proposal is consistent with the Act
Fees or portion thereof will be collected until such fee is paid at a per annum because it implements, interprets or
52 Note that no fee schedule is provided for currently exist due trading restrictions related to 54 15 U.S.C. 78f(b)(4).
Execution Venue ATSs that execute transactions in Listed Options. 55 15 U.S.C. 78f(b)(6) [sic].
Listed Options, as no such Execution Venue ATSs 53 Section 11.4 of the CAT NMS Plan.
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![23434 Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices
clarifies the provisions of the Plan, and the Execution Venue portion of total structured to impose comparable fees on
is designed to assist the Exchange and costs between Equity and Options similarly situated CAT Reporters, and
its Industry Members in meeting Execution Venues, is reasonably lessen the impact on smaller CAT
regulatory obligations pursuant to the designed to allocate CAT costs among Reporters. CAT Reporters with similar
Plan. In approving the Plan, the SEC CAT Reporters. The 75/25 division levels of CAT activity will pay similar
noted that the Plan ‘‘is necessary and between Industry Members and fees. For example, Industry Members
appropriate in the public interest, for Execution Venues maintains the greatest (other than Execution Venue ATSs) with
the protection of investors and the level of comparability across the higher levels of message traffic will pay
maintenance of fair and orderly markets, funding model, keeping in view that higher fees, and those with lower levels
to remove impediments to, and perfect comparability should consider of message traffic will pay lower fees.
the mechanism of a national market affiliations among or between CAT Similarly, Execution Venue ATSs and
system, or is otherwise in furtherance of Reporters (e.g., firms with multiple other Execution Venues with larger
the purposes of the Act.’’ 56 To the Industry Members or exchange market share will pay higher fees, and
extent that this proposal implements, licenses). Similarly, the 75/25 division those with lower levels of market share
interprets or clarifies the Plan and between Equity and Options Execution will pay lower fees. Therefore, given
applies specific requirements to Venues maintains elasticity across the that there is generally a relationship
Industry Members, the Exchange funding model as well as the greatest between message traffic and market
believes that this proposal furthers the level of fee equitability and share to the CAT Reporter’s size, smaller
objectives of the Plan, as identified by comparability based on the current CAT Reporters generally pay less than
the SEC, and is therefore consistent with number of Equity and Options larger CAT Reporters. Accordingly, the
the Act. Execution Venues. Exchange does not believe that the CAT
The Exchange believes that the Finally, the Exchange believes that Fees would have a disproportionate
proposed tiered fees are reasonable. the proposed fees are reasonable effect on smaller or larger CAT
First, the total CAT Fees to be collected because they would provide ease of Reporters. In addition, ATSs and
would be directly associated with the calculation, ease of billing and other exchanges will pay the same fees based
costs of establishing and maintaining administrative functions, and on market share. Therefore, the
the CAT, where such costs include Plan predictability of a fixed fee. Such factors Exchange does not believe that the fees
Processor costs and costs related to are crucial to estimating a reliable will impose any burden on the
insurance, third party services and the revenue stream for the Company and for competition between ATSs and
operational reserve. The CAT Fees permitting CAT Reporters to reasonably exchanges. Accordingly, the Exchange
would not cover Participant services predict their payment obligations for believes that the proposed fees will
unrelated to the CAT. In addition, any budgeting purposes. minimize the potential for adverse
surplus CAT Fees cannot be distributed For the foregoing reasons, the effects on competition between CAT
to the individual Participants; such Exchange believes that the proposal is Reporters in the market.
surpluses must be used as a reserve to consistent with the Act. Furthermore, the tiered, fixed fee
offset future fees. Given the direct B. Self-Regulatory Organization’s funding model limits the disincentives
relationship between the fees and the Statement on Burden on Competition to providing liquidity to the market.
CAT costs, the Exchange believes that Therefore, the proposed fees are
the total level of the CAT Fees is Section 6(b)(8) of the Act 57 require
structured to limit burdens on
reasonable. [sic] that the Exchange’s rules not
competitive quoting and other liquidity
In addition, the Exchange believes impose any burden on competition that
provision in the market.
that the proposed CAT Fees are is not necessary or appropriate. The
reasonably designed to allocate the total Exchange does not believe that the C. Self-Regulatory Organization’s
costs of the CAT equitably between and proposed rule change will result in any Statement on Comments on the
among the Participants and Industry burden on competition that is not Proposed Rule Change Received From
Members, and are therefore not unfairly necessary or appropriate in furtherance Members, Participants, or Others
discriminatory. As discussed in detail of the purposes of the Act. The No written comments were solicited
above, the proposed tiered fees impose Exchange notes that the proposed rule or received with respect to the proposed
comparable fees on similarly situated change implements provisions of the rule change.
CAT Reporters. For example, those with CAT NMS Plan approved by the
a larger impact on the CAT (measured Commission, and is designed to assist III. Date of Effectiveness of the
via message traffic or market share) pay the Exchange in meeting its regulatory Proposed Rule Change and Timing for
higher fees, whereas CAT Reporters obligations pursuant to the Plan. Commission Action
with a smaller impact pay lower fees. Similarly, all national securities The foregoing rule change is effective
Correspondingly, the tiered structure exchanges and FINRA are proposing a upon filing pursuant to Section
lessens the impact on smaller CAT similar proposed fee change to 19(b)(3)(A) 58 of the Act and
Reporters by imposing smaller fees on implement the requirements of the CAT subparagraph (f)(2) of Rule 19b–4 59
those CAT Reporters with less market NMS Plan. Therefore, this is not a thereunder, because it establishes a due,
share or message traffic. In addition, the competitive fee filing and, therefore, it fee, or other charge imposed by the
funding model takes into consideration does not raise competition issues Exchange.
affiliations between CAT Reporters, between and among the exchanges and At any time within 60 days of the
imposing comparable fees on such FINRA. filing of such proposed rule change, the
mstockstill on DSK30JT082PROD with NOTICES
affiliated entities. Moreover, as previously described, Commission summarily may
Moreover, the Exchange believes that the Exchange believes that the proposed temporarily suspend such rule change if
the division of the total CAT costs rule change fairly and equitably it appears to the Commission that such
between Industry Members and allocates costs among CAT Reporters. In action is necessary or appropriate in the
Execution Venues, and the division of particular, the proposed fee schedule is
58 15 U.S.C. 78s(b)(3)(A).
56 Approval Order at 84697. 57 15 U.S.C. 78f(b)(8). 59 17 CFR 240.19b–4(f)(2).
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![Federal Register / Vol. 82, No. 97 / Monday, May 22, 2017 / Notices 23435
public interest, for the protection of available publicly. All submissions statements may be examined at the
investors, or otherwise in furtherance of should refer to File Number SR– places specified in Item IV below. The
the purposes of the Act. If the NYSEMKT–2017–26 and should be Exchange has prepared summaries, set
Commission takes such action, the submitted on or before June 12, 2017. forth in sections A, B, and C below, of
Commission shall institute proceedings For the Commission, by the Division of the most significant aspects of such
under Section 19(b)(2)(B) 60 of the Act to Trading and Markets, pursuant to delegated statements.
determine whether the proposed rule authority.61
change should be approved or Eduardo A. Aleman, A. Self-Regulatory Organization’s
disapproved. Assistant Secretary.
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
IV. Solicitation of Comments [FR Doc. 2017–10298 Filed 5–19–17; 8:45 am]
Change
BILLING CODE 8011–01–P
Interested persons are invited to
submit written data, views, and 1. Purpose
arguments concerning the foregoing, The purpose of the proposed rule
SECURITIES AND EXCHANGE
including whether the proposed rule change is to amend the Schedule of Fees
COMMISSION
change is consistent with the Act.
to modify fees charged and rebates
Comments may be submitted by any of [Release No. 34–80684; File No. SR–ISE–
2017–39] provided for orders executed in the
the following methods:
Price Improvement Mechanism (‘‘PIM’’).
Electronic Comments Self-Regulatory Organizations; Nasdaq In particular, the proposed rule change
• Use the Commission’s Internet ISE, LLC; Notice of Filing and makes the following changes for both
comment form (http://www.sec.gov/ Immediate Effectiveness of Proposed regular and complex orders in Select
rules/sro.shtml); or Rule Change To Amend the Schedule Symbols 3 and Non-Select Symbols: 4 (1)
• Send an email to rule-comments@ of Fees To Modify Fees and Rebates Amends the fee PIM orders other than
sec.gov. Please include File Number SR– for PIM Orders Priority Customer 5 orders to be $0.10
NYSEMKT–2017–26 on the subject line. per contract, regardless of the size of the
May 16, 2017.
order; (2) provides discounted fees for
Paper Comments Pursuant to section 19(b)(1) of the PIM orders such that members that
• Send paper comments in triplicate Securities Exchange Act of 1934
execute an average daily volume
to Secretary, Securities and Exchange (‘‘Act’’),1 and Rule 19b–4 thereunder,2
(‘‘ADV’’) of 7,500 or more contracts in
Commission, 100 F Street NE., notice is hereby given that on May 1,
the PIM in a given month will pay a fee
Washington, DC 20549–1090. 2017, Nasdaq ISE, LLC (‘‘ISE’’ or
of $0.05 per contract, and Members that
All submissions should refer to File ‘‘Exchange’’) filed with the Securities
execute an ADV of 12,500 or more
Number SR–NYSEMKT–2017–26. This and Exchange Commission
(‘‘Commission’’) the proposed rule contracts in the PIM in a given month
file number should be included on the will not pay a fee for PIM orders; (3)
subject line if email is used. To help the change as described in Items I and II,
below, which Items have been prepared amends the fee for Responses to PIM
Commission process and review your orders to be $0.20 per contract; and (4)
comments more efficiently, please use by the Exchange. The Commission is
publishing this notice to solicit eliminates the PIM break-up rebate.
only one method. The Commission will Each of these proposed changes are
post all comments on the Commission’s comments on the proposed rule change
from interested persons. described in more detail below.
Internet Web site (http://www.sec.gov/
rules/sro.shtml). Copies of the I. Self-Regulatory Organization’s Fee for PIM Orders
submission, all subsequent Statement of the Terms of Substance of
amendments, all written statements Currently, regular and complex PIM
the Proposed Rule Change
with respect to the proposed rule orders of 100 or fewer contracts in
The Exchange proposes to amend the Select and Non-Select Symbols are
change that are filed with the
Schedule of Fees to modify fees charged charged a fee of $0.05 per contract for
Commission, and all written
and rebates provided for orders Market Maker,6 Non-Nasdaq ISE Market
communications relating to the
executed in the Price Improvement Maker,7 Firm Proprietary,8 Broker-
proposed rule change between the
Mechanism.
Commission and any person, other than The text of the proposed rule change 3 ‘‘Select Symbols’’ are options overlying all
those that may be withheld from the is available on the Exchange’s Web site symbols listed on the Nasdaq ISE that are in the
public in accordance with the at www.ise.com, at the principal office Penny Pilot Program.
provisions of 5 U.S.C. 552, will be of the Exchange, and at the 4 ‘‘Non-Select Symbols’’ are options overlying all
available for Web site viewing and Commission’s Public Reference Room. symbols excluding Select Symbols.
printing in the Commission’s Public 5 A ‘‘Priority Customer’’ is a person or entity that
Reference Room, 100 F Street NE., II. Self-Regulatory Organization’s is not a broker/dealer in securities, and does not
Statement of the Purpose of, and place more than 390 orders in listed options per day
Washington, DC 20549 on official on average during a calendar month for its own
business days between the hours of Statutory Basis for, the Proposed Rule beneficial account(s), as defined in Nasdaq ISE Rule
10:00 a.m. and 3:00 p.m. Copies of the Change 100(a)(37A).
filing also will be available for In its filing with the Commission, the 6 The term ‘‘Market Makers’’ refers to
inspection and copying at the principal ‘‘Competitive Market Makers’’ and ‘‘Primary Market
Exchange included statements Makers’’ collectively. See Nasdaq ISE Rule
office of the Exchange. All comments
mstockstill on DSK30JT082PROD with NOTICES
concerning the purpose of and basis for 100(a)(25).
received will be posted without change; the proposed rule change and discussed 7 A ‘‘Non-Nasdaq ISE Market Maker’’ is a market
the Commission does not edit personal any comments it received on the maker as defined in section 3(a)(38) of the
identifying information from Securities Exchange Act of 1934, as amended,
proposed rule change. The text of these registered in the same options class on another
submissions. You should submit only options exchange.
information that you wish to make 61 17 CFR 200.30–3(a)(12). 8 A ‘‘Firm Proprietary’’ order is an order
1 15 U.S.C. 78s(b)(1). submitted by a member for its own proprietary
60 15 U.S.C. 78s(b)(2)(B). 2 17 CFR 240.19b–4. account.
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Document Created: 2018-11-08 08:50:37
Document Modified: 2018-11-08 08:50:37
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 23416 |
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