82_FR_9803 82 FR 9778 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change To Adopt the Rule 900A Series

82 FR 9778 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing of Proposed Rule Change To Adopt the Rule 900A Series

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 25 (February 8, 2017)

Page Range9778-9790
FR Document2017-02550

Federal Register, Volume 82 Issue 25 (Wednesday, February 8, 2017)
[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)]
[Notices]
[Pages 9778-9790]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02550]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79945; File No. SR-Phlx-2017-07]


Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing 
of Proposed Rule Change To Adopt the Rule 900A Series

February 2, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on January 30, 2017, NASDAQ PHLX LLC (``Phlx'' or ``Exchange'') filed 
with the Securities and Exchange Commission (``SEC'' or ``Commission'') 
the proposed rule change as described in Items I, II, and III, below, 
which Items have been prepared by the Exchange.\3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange originally filed this proposed rule change on 
January 17, 2017 under File No. SR-Phlx-2017-03, and the Exchange 
subsequently withdrew that filing on January 30, 2017 and filed this 
proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt the Rule 900A Series to implement 
the compliance rule (``Compliance Rule'') regarding the National Market 
System Plan Governing the Consolidated Audit Trail (the ``CAT NMS 
Plan'' or ``Plan'').\4\
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    \4\ Unless otherwise specified, capitalized terms used in this 
rule filing are defined as set forth herein or in the CAT NMS Plan.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaqphlx.cchwallstreet.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 Exchange 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 these 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 aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
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., International Securities Exchange, LLC, 
Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami 
International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, 
Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock 
Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE 
Arca, Inc. (collectively, the ``Participants'') filed with the 
Commission, pursuant to Section 11A of the Exchange Act \5\ and Rule 
608 of Regulation NMS thereunder,\6\ the CAT NMS Plan.\7\ 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,\8\ and approved by the Commission, as 
modified, on November 15, 2016.\9\
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    \5\ 15 U.S.C. 78k-1.
    \6\ 17 CFR 242.608.
    \7\ 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.
    \8\ Securities Exchange Act Release No. 77724 (Apr. 27, 2016), 
81 FR 30614 (May 17, 2016).
    \9\ Securities Exchange Act Release. No. 79318 (Nov. 15, 2016), 
81 FR 84696 (Nov. 23, 2016) (``Approval Order'').
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    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. Each Participant is required to enforce 
compliance by its Industry Members, as applicable, with the provisions 
of the Plan, by adopting a Compliance Rule applicable to their Industry 
Members.\10\ As is described more fully below, the Proposed Rule 900A 
Series sets forth the Compliance Rule to require Industry Members to 
comply with the provisions of the CAT NMS Plan. The Proposed Rule 900A 
Series includes twelve Proposed Rules covering the following areas: (1) 
Definitions; (2) clock synchronization; (3) Industry Member Data 
reporting; (4) Customer information reporting; (5) Industry Member 
information reporting; (6) time stamps; (7) clock synchronization rule 
violations; (8) connectivity and data transmission; (9) development and 
testing; (10) recordkeeping; (11) timely, accurate and complete data; 
and (12) compliance dates. Each of these Proposed Rules are discussed 
in detail below.
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    \10\ See SEC Rule 613(g)(1).
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(i) Definitions
    Proposed Rule 910A (Consolidated Audit Trail--Definitions) sets 
forth the definitions for the terms used in the Proposed Rule 900A 
Series. Each of the defined terms in Proposed Rule 910A is discussed in 
detail in this section.
(A) Account Effective Date
(I) Customer Information Approach
    SEC Rule 613 requires that numerous data elements be reported to 
the CAT to ensure there is sufficient information to create the 
lifecycle of an order, and provide regulators with sufficient detail

[[Page 9779]]

about an order to perform their regulatory duties. Certain required 
elements are intended to ensure that the regulators can identify the 
Customer's [sic] associated with orders. For example, SEC Rule 
613(c)(7)(i)(A) requires an Industry Member to report the ``Customer-
IDs'' for each Customer for the original receipt or origination of an 
order. ``Customer-ID'' is defined in SEC Rule 613(j)(5) to mean ``with 
respect to a customer, a code that uniquely and consistently identifies 
such customer for purposes of providing data to the Central 
Repository[sic].'' SEC Rule 613(c)(8) requires Industry Members to use 
the same Customer-ID for each Customer. The SEC granted the 
Participants exemptive relief to permit the use of an alternative 
approach to the requirement that an Industry Member report a Customer-
ID for every Customer upon original receipt or origination.\11\ The 
alternative approach is called the Customer Information Approach.
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    \11\ See Securities Exchange Act Release No. 77265 (March 1, 
2016), 81 FR 11856 (March 7, 2016) (``Exemption Order''). See also 
Letter from Participants to Brent J. Fields, Secretary, Commission, 
dated January 30, 2015 at 12 (``Exemptive Request Letter''); and CAT 
NMS Plan at Appendix C, Section A.1(a)(iii).
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    Under the Customer Information Approach, the CAT NMS Plan would 
require each Industry Member to assign a unique Firm Designated ID to 
each Customer. As the Firm Designated ID, Industry Members would be 
permitted to use an account number or any other identifier defined by 
the firm, provided each identifier is unique across the firm for each 
business date (i.e., a single firm may not have multiple separate 
customers with the same identifier on any given date). Prior to their 
commencement of reporting to the CAT, Industry Members would submit an 
initial set of Customer information to the Central Repository, 
including the Firm Designated ID, Customer Identifying Information and 
Customer Account Information (which may include, as applicable, the 
Customer's name, address, date of birth, individual tax payer 
identifier number (``ITIN'')/social security number (``SSN''), 
individual's role in the account (e.g., primary holder, joint holder, 
guardian, trustee, person with power of attorney, etc.) and LEI and/or 
Larger Trader ID (``LTID''). This process is referred to as the 
customer definition process.
    In accordance with the Customer Information Approach, Industry 
Members would be required to report only the Firm Designated ID for 
each new order submitted to the Central Repository, rather than the 
``Customer-ID'' with individual order events. Within the Central 
Repository, each Customer would be uniquely identified by identifiers 
or a combination of identifiers such as ITIN/SSN, date of birth, and as 
applicable, LEI and LTID. The Plan Processor would be required to use 
these unique identifiers to map orders to specific Customers across all 
Industry Members and Participants. To ensure information identifying a 
Customer is up to date, Industry Members would be required to submit to 
the Central Repository daily and periodic updates for reactivated 
accounts, newly established accounts, and revised Firm Designated IDs 
or associated reportable Customer information.
(II) Definition of Account Effective Date
    In connection with the Customer Information Approach, Industry 
Members would be required to report Customer Account Information to the 
Central Repository. ``Customer Account Information'' is defined in SEC 
Rule 613(j)(4) to ``include, but not be limited to, account number, 
account type, customer type, date account opened, and large trader 
identifier (if applicable).'' Therefore, when reporting Customer 
Account Information, an Industry Member is required to report the date 
an account was opened. The Participants requested and received an 
exemption to allow an ``Account Effective Date'' to be reported in lieu 
of an account open date in certain limited circumstances. The 
definition of ``Account Effective Date'' as set forth in Paragraph (a) 
of Proposed Rule 910A describes those limited circumstances in which an 
Industry Member may report an ``Account Effective Date'' rather than 
the account open date. The proposed definition is the same as the 
definition of ``Account Effective Date'' set forth in Section 1.1 of 
the CAT NMS Plan, provided, however, that specific dates have replaced 
the descriptions of those dates set forth in Section 1.1 of the Plan.
    Specifically, Paragraph (a)(1) defines ``Account Effective Date to 
mean, with regard to those circumstances in which an Industry Member 
has established a trading relationship with an institution but has not 
established an account with that institution: (1) When the trading 
relationship was established prior to November 15, 2018 for Industry 
Members other than Small Industry Members, or prior to November 15, 
2019 for Small Industry Members, either (a) the date the relationship 
identifier was established within the Industry Member; (b) the date 
when trading began (i.e., the date the first order was received) using 
the relevant relationship identifier; or (c) if both dates are 
available, the earlier date will be used to the extent that the dates 
differ; or (2) when the trading relationship was established on or 
after November 15, 2018 for Industry Members other than Small Industry 
Members, or on or after November 15, 2019 for Small Industry Members, 
the date the Industry Member established the relationship identifier, 
which would be no later than the date the first order was received.
    Paragraph (a)(2) of Proposed Rule 910A states that an ``Account 
Effective Date'' means, where an Industry Member changes back office 
providers or clearing firms prior to November 15, 2018 for Industry 
Members other than Small Industry Members, or prior to November 15, 
2019 for Small Industry Members, the date an account was established at 
the relevant Industry Member, either directly or via transfer.
    Paragraph (a)(3) states that an ``Account Effective Date'' means, 
where an Industry Member acquires another Industry Member prior to 
November 15, 2018 for Industry Members other than Small Industry 
Members, or prior to November 15, 2019 for Small Industry Members, the 
date an account was established at the relevant Industry Member, either 
directly or via transfer.
    Paragraph (a)(4) states that ``Account Effective Date'' means, 
where there are multiple dates associated with an account established 
prior to November 15, 2018 for Industry Members other than Small 
Industry Members, or prior to November 15, 2019 for Small Industry 
Members, the earliest available date.
    Paragraph (a)(5) states that an ``Account Effective Date'' means, 
with regard to Industry Member proprietary accounts established prior 
to November 15, 2018 for Industry Members other than Small Industry 
Members, or prior to November 15, 2019 for Small Industry Members: (1) 
The date established for the account in the Industry Member or in a 
system of the Industry Member or (2) the date when proprietary trading 
began in the account (i.e., the date on which the first orders were 
submitted from the account). With regard to paragraphs (a)(2)-(5), the 
Account Effective Date will be no later than the date trading occurs at 
the Industry Member or in the Industry Member's system.
(B) Active Account
    Under the Customer Information Approach, Industry Members are 
required to report Customer Identifying Information and Customer 
Account Information for only those accounts that are active. This will 
alleviate the need for Industry Members to update such

[[Page 9780]]

information for non-active accounts, but still ensure that the Central 
Repository will collect audit trail data for Customer accounts that 
have any Reportable Events. Accordingly, paragraph (b) of Proposed Rule 
910A defines an ``Active Account'' as an account that has had activity 
in Eligible Securities within the last six months. This is the same 
definition as set forth in Section 1.1 of the CAT NMS Plan.
(C) Allocation Report
(I) Allocation Report Approach
    SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record 
and report to the Central Repository ``the account number for any 
subaccounts to which the execution is allocated (in whole or in 
part).'' The Participants requested and received from the SEC exemptive 
relief from SEC Rule 613 for an alternative to this approach 
(``Allocation Report Approach''). The Allocation Report Approach would 
permit Industry Members to record and report to the Central Repository 
an Allocation Report that includes, among other things, the Firm 
Designated ID for any account(s) to which executed shares are allocated 
when an execution is allocated in whole or part in lieu of requiring 
the reporting of the account number for any subaccount to which an 
execution is allocated, as is required by SEC Rule 613.\12\ Under SEC 
Rule 613, regulators would be able to link the subaccount to which an 
allocation was made to a specific order. In contrast, under the 
Allocation Report Approach, regulators would only be able to link an 
allocation to the account to which it was made, and not to a specific 
order.
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    \12\ See Exemptive Request Letter at 26-27; and Exemption Order.
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(II) Definition of Allocation Report
    To assist in implementing the Allocation Report Approach, paragraph 
(c) of Proposed Rule 910A defines an ``Allocation Report.'' 
Specifically, an ``Allocation Report'' means a report made to the 
Central Repository by an Industry Member that identifies the Firm 
Designated ID for any account(s), including subaccount(s), to which 
executed shares are allocated and provides the security that has been 
allocated, the identifier of the firm reporting the allocation, the 
price per share of shares allocated, the side of shares allocated, the 
number of shares allocated to each account, and the time of the 
allocation; provided, for the avoidance of doubt, any such Allocation 
Report shall not be required to be linked to particular orders or 
executions. This is the same definition as set forth in Section 1.1 of 
the CAT NMS Plan.
(D) Business Clock
    To create the required audit trail, Industry Members are required 
to record the date and time of various Reportable Events to the Central 
Repository. Industry Members will use ``Business Clocks'' to record 
such dates and times. Accordingly, paragraph (d) of Proposed Rule 910A 
defines the term ``Business Clock'' as a clock used to record the date 
and time of any Reportable Event required to be reported under this 
Rule 900A Series. This is the same definition as set forth in Section 
1.1 of the CAT NMS Plan, except the Exchange proposes to replace the 
phrase ``under SEC Rule 613'' at the end of the definition in Section 
1.1 of the Plan with the phrase ``under this Rule Series.'' This change 
is intended to recognize that the Industry Members' obligations with 
regard to the CAT are set forth in this Rule 900A Series.
(E) CAT
    Paragraph (e) of Proposed Rule 910A defines the term ``CAT'' to 
mean the consolidated audit trail contemplated by SEC Rule 613. This is 
the same definition as set forth in Section 1.1 of the CAT NMS Plan.
(F) CAT NMS Plan
    Paragraph (f) of Proposed Rule 910A defines the term ``CAT NMS 
Plan'' to mean the National Market System Plan Governing the 
Consolidated Audit Trail, as amended from time to time.
(G) CAT-Order-ID
(I) Daisy Chain Approach
    Under the CAT NMS Plan, the Daisy Chain Approach is used to link 
and reconstruct the complete lifecycle of each Reportable Event in CAT. 
According to this Approach, Industry Members assign their own 
identifiers to each order event. Within the Central Repository, the 
Plan Processor later replaces the identifier provided by the Industry 
Member for each Reportable Event with a single identifier, called the 
CAT Order-ID, for all order events pertaining to the same order. This 
CAT Order-ID is used to link the Reportable Events related to the same 
order.
(II) Definition of CAT-Order-ID
    To implement the Daisy Chain Approach, Paragraph (g) of Proposed 
Rule 910A defines the term ``CAT-Order-ID.'' The term ``CAT-Order-ID'' 
is defined to mean a unique order identifier or series of unique order 
identifiers that allows the Central Repository to efficiently and 
accurately link all Reportable Events for an order, and all orders that 
result from the aggregation or disaggregation of such order. This is 
the same definition as set forth in SEC Rule 613(j)(1), and Section 1.1 
of the CAT NMS Plan defines ``CAT-Order-ID'' by reference to SEC Rule 
613(j)(1).
(H) CAT Reporting Agent
    The CAT NMS Plan permits an Industry Member to use a third party, 
such as a vendor, to report the required data to the Central Repository 
on behalf of the Industry Member.\13\ Such a third party, referred to 
in this Proposed Rule 900A Series as a ``CAT Reporting Agent,'' would 
be one type of a Data Submitter, that is, a party that submits data to 
the Central Repository. Paragraph (h) of Proposed Rule 910A defines the 
term ``CAT Reporting Agent'' to mean a Data Submitter that is a third 
party that enters into an agreement with an Industry Member pursuant to 
which the CAT Reporting Agent agrees to fulfill such Industry Member's 
reporting obligations under this Rule 900A Series.
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    \13\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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    This definition is based on FINRA's definition of a ``Reporting 
Agent'' as set forth in FINRA's rule related to its Order Audit Trail 
System (``OATS''). Specifically, FINRA Rule 7410(n) defines a 
``Reporting Agent'' as a third party that enters into any agreement 
with a member pursuant to which the Reporting Agent agrees to fulfill 
such member's obligations under Rule 7450. The Reporting Agent for OATS 
fulfills a similar role to the CAT Reporting Agent.
(I) Central Repository
    Paragraph (i) of Proposed Rule 910A defines the term ``Central 
Repository'' to mean the repository responsible for the receipt, 
consolidation, and retention of all information reported to the CAT 
pursuant to SEC Rule 613 and the CAT NMS Plan. This is the same 
definition as set forth in Section 1.1 of the CAT NMS Plan, except the 
Exchange uses the phrase ``CAT NMS Plan'' in place of the phrase ``this 
Agreement.''
(J) Compliance Threshold
    Paragraph (j) of Proposed Rule 910A defines the term ``Compliance 
Threshold'' as having the meaning set forth in Proposed Rule 993A(d). 
This definition has the same substantive meaning as the definition set 
forth in Section 1.1 of the CAT NMS Plan. As discussed in detail below 
with regard to Proposed Rule 993A(d), each Industry Member is required 
to meet a separate

[[Page 9781]]

compliance threshold which will be an Industry Member-specific rate 
that may be used as the basis for further review or investigation into 
the Industry Member's performance with regard to the CAT. This Industry 
Member-specific rate is the ``Compliance Threshold.''
(K) Customer
    Industry Members are required to submit to the Central Repository 
certain information related to their Customers, including Customer 
Identifying Information and Customer Account Information, as well as 
data related to their Customer's Reportable Events. Accordingly, 
Paragraph (k) of Proposed Rule 910A proposes to define the term 
``Customer.'' Specifically, the term ``Customer'' would be defined to 
mean: (1) The account holder(s) of the account at an Industry Member 
originating the order; and (2) any person from whom the Industry Member 
is authorized to accept trading instructions for such account, if 
different from the account holder(s). This is the same definition as 
set forth in SEC Rule 613(j)(3), except the Exchange proposes to 
replace the references to a registered broker-dealer or broker-dealer 
with a reference to an Industry Member for consistency of terms used in 
the Proposed Rule 900A Series. The Exchange also notes that Section 1.1 
of the CAT NMS Plan defines ``Customer'' by reference to SEC Rule 
613(j)(3).
(L) Customer Account Information
    As discussed above, under the Customer Information Approach, 
Industry Members are required to report Customer Account Information to 
the Central Repository as part of the customer definition process. 
Accordingly, the Exchange proposes to define the term ``Customer 
Account Information'' to clarify what customer information would need 
to be reported to the Central Repository.
    Paragraph (l) of Proposed Rule 910A defines the term ``Customer 
Account Information'' to include, in part, account number, account 
type, customer type, date account opened, and large trader identifier 
(if applicable). Proposed Rule 910A(l), however, provides an 
alternative definition of ``Customer Account Information'' in two 
limited circumstances. First, in those circumstances in which an 
Industry Member has established a trading relationship with an 
institution but has not established an account with that institution, 
the Industry Member will: (1) Provide the Account Effective Date in 
lieu of the ``date account opened''; (2) provide the relationship 
identifier in lieu of the ``account number''; and (3) identify the 
``account type'' as a ``relationship.'' Second, in those circumstances 
in which the relevant account was established prior to November 15, 
2018 for Industry Members other than Small Industry Members, or prior 
to November 15, 2019 for Small Industry Members, and no ``date account 
opened'' is available for the account, the Industry Member will provide 
the Account Effective Date in the following circumstances: (1) Where an 
Industry Member changes back office providers or clearing firms and the 
date account opened is changed to the date the account was opened on 
the new back office/clearing firm system; (2) where an Industry Member 
acquires another Industry Member and the date account opened is changed 
to the date the account was opened on the post-merger back office/
clearing firm system; (3) where there are multiple dates associated 
with an account in an Industry Member's system, and the parameters of 
each date are determined by the individual Industry Member; and (4) 
where the relevant account is an Industry Member proprietary account. 
The proposed definition is the same as the definition of ``Customer 
Account Information'' set forth in Section 1.1 of the CAT NMS Plan, 
provided, however, that specific dates have replaced the descriptions 
of those dates set forth in Section 1.1 of the Plan.
(M) Customer Identifying Information
    As discussed above, under the Customer Information Approach, 
Industry Members are required to report Customer Identifying 
Information to the Central Repository as part of the customer 
definition process. Accordingly, the Exchange proposes to define the 
term ``Customer Account Information'' to clarify what Customer 
information would need to be reported to the Central Repository.
    Paragraph (m) of Proposed Rule 910A defines the term ``Customer 
Identifying Information'' to mean information of sufficient detail to 
identify a Customer. With respect to individuals, ``Customer 
Identifying Information'' includes, but is not limited to: Name, 
address, date of birth, individual tax payer identification number 
(``ITIN'')/social security number (``SSN''), individual's role in the 
account (e.g., primary holder, joint holder, guardian, trustee, person 
with the power of attorney). With respect to legal entities, ``Customer 
Identifying Information'' includes, but is not limited to, name, 
address, Employer Identification Number (``EIN'')/Legal Entity 
Identifier (``LEI'') or other comparable common entity identifier, if 
applicable. The definition further notes that an Industry Member that 
has an LEI for a Customer must submit the Customer's LEI in addition to 
other information of sufficient detail to identify the Customer. This 
is the same definition as set forth in Section 1.1 of the CAT NMS Plan.
(N) Data Submitter
    The CAT NMS Plan uses the term ``Data Submitter'' to refer to any 
person that reports data to the Central Repository.\14\ Such Data 
Submitters may include those entities that are required to submit data 
to the Central Repository (e.g., national securities exchanges, 
national securities associations, and Industry Members), third-parties 
that may submit data to the CAT on behalf of CAT Reporters (i.e., CAT 
Reporting Agents), and outside parties that are not required to submit 
data to the CAT but from which the CAT may receive data (e.g., 
securities information processors (``SIPs'')). To include this term in 
the Proposed Rule 900A Series, the Exchange proposes to define ``Data 
Submitter'' in paragraph (n) of Proposed Rule 910A. Specifically, 
paragraph (n) of Proposed Rule 910A defines a ``Data Submitter'' to 
mean any person that reports data to the Central Repository, including 
national securities exchanges, national securities associations, 
broker-dealers, the SIPs for the CQS, CTA, UTP and Plan for Reporting 
of Consolidated Options Last Sale Reports and Quotation Information 
(``OPRA'') Plans, and certain other vendors or third parties that may 
submit data to the Central Repository on behalf of Industry Members.
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    \14\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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(O) Eligible Security
    The reporting requirements of the Proposed Rule 900A Series only 
apply to Reportable Events in Eligible Securities. Currently, an 
Eligible Security includes NMS Securities and OTC Equity Securities. 
Accordingly, paragraph (o) of Proposed Rule 910A defines the term 
``Eligible Security'' to include: (1) All NMS Securities; and (2) all 
OTC Equity Securities. The terms ``NMS Securities'' and ``OTC Equity 
Securities'' are defined, in turn, below. This is the same definition 
as set forth in Section 1.1 of the CAT NMS Plan.
(P) Error Rate
(I) Maximum Error Rate
    Under the CAT NMS Plan, the Operating Committee sets the maximum 
Error Rate that the Central Repository would tolerate from an Industry 
Member reporting data to the Central

[[Page 9782]]

Repository.\15\ The Operating Committee reviews and resets the maximum 
Error Rate, at least annually.\16\ If an Industry Member reports CAT 
data to the Central Repository with errors such that their error 
percentage exceeds the maximum Error Rate, then such Industry Member 
would not be in compliance with the CAT NMS Plan or Rule 613.\17\ As 
such, the Exchange or the SEC ``may take appropriate action against an 
Industry Member for failing to comply with its CAT reporting 
obligations.\18\ The CAT NMS Plan sets the initial Error Rate at 
5%.\19\ It is anticipated that the maximum Error Rate will be reviewed 
and lowered by the Operating Committee once Industry Members begin to 
report to the Central Repository.\20\
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    \15\ Section 6.5(d)(i) of the CAT NMS Plan.
    \16\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \17\ Appendix C, Section A.3(b) of the CAT NMS Plan; Rule 
613(g)-(h).
    \18\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \19\ Section 6.5(d)(i) of the CAT NMS Plan.
    \20\ Appendix C, Section A.3(b) of the CAT NMS Plan.
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    The CAT NMS Plan requires the Plan Processor to: (1) Measure and 
report errors every business day; (2) provide Industry Members daily 
statistics and error reports as they become available, including a 
description of such errors; (3) provide monthly reports to Industry 
Members that detail an Industry Member's performance and comparison 
statistics; (4) define educational and support programs for Industry 
Members to minimize Error Rates; and (5) identify, daily, all Industry 
Members exceeding the maximum allowable Error Rate. To timely correct 
data-submitted errors to the Central Repository, the CAT NMS Plan 
requires that the Central Repository receive and process error 
corrections at all times. Further, the CAT NMS Plan requires that 
Industry Members be able to submit error corrections to the Central 
Repository through a web-interface or via bulk uploads or file 
submissions, and that the Plan Processor, subject to the Operating 
Committee's approval, support the bulk replacement of records and the 
reprocessing of such records. The Participants, furthermore, require 
that the Plan Processor identify Industry Member data submission errors 
based on the Plan Processor's validation processes.\21\
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    \21\ Approval Order at 84718.
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(II) Definition of Error Rate
    To implement the requirements of the CAT NMS Plan related to the 
Error Rate, the Exchange proposes to define the term ``Error Rate'' in 
Proposed Rule 910A. Paragraph (p) of Proposed Rule 910A defines the 
term ``Error Rate'' to mean the percentage of Reportable Events 
collected by the Central Repository in which the data reported does not 
fully and accurately reflect the order event that occurred in the 
market. This is the same definition as set forth in SEC Rule 613(j)(6), 
and Section 1.1 of the CAT NMS Plan defines ``Error Rate'' by reference 
to SEC Rule 613(j)(6).
(Q) Firm Designated ID
    As discussed above, under the Customer Information Approach, the 
CAT NMS Plan would require each Industry Member to assign a unique Firm 
Designated ID to each Customer. Industry Members would be permitted to 
use as the Firm Designated ID an account number or any other identifier 
defined by the firm, provided each identifier is unique across the firm 
for each business date (i.e., a single firm may not have multiple 
separate customers with the same identifier on any given date). 
Industry Members would be required to report only the Firm Designated 
ID for each new order submitted to the Central Repository, rather than 
the ``Customer-ID'' with individual order events. Accordingly, the 
Exchange proposes to define the term ``Firm Designated ID'' in Proposed 
Rule 910A. Specifically, paragraph (q) of Proposed Rule 910A defines 
the term ``Firm Designated ID'' to mean a unique identifier for each 
trading account designated by Industry Members for purposes of 
providing data to the Central Repository, where each such identifier is 
unique among all identifiers from any given Industry Member for each 
business date. This is the same definition as set forth in Section 1.1 
of the CAT NMS Plan. Industry Members would be permitted to use an 
account number or any other identifier defined by the firm, provided 
each identifier is unique across the firm for each business date (i.e., 
a single firm may not have multiple separate customers with the same 
identifier on any given date).
(R) Industry Member
    Paragraph (r) of Proposed Rule 910A defines the term ``Industry 
Member'' to mean a member of a national securities exchange or a member 
of a national securities association.'' This is the same definition as 
set forth in Section 1.1 of the CAT NMS Plan.
(S) Industry Member Data
    Paragraph (s) of Proposed Rule 910A states that the term ``Industry 
Member Data'' has the meaning set forth in Proposed Rule 930A(a)(2). 
This definition has the same substantive meaning as the definition set 
forth in Section 1.1 of the CAT NMS Plan. The definition of ``Industry 
Member Data'' is discussed more fully in the discussion below regarding 
Proposed Rule 930A(a)(2).
(T) Initial Plan Processor
    Paragraph (t) of Proposed Rule 910A defines the term ``Initial Plan 
Processor'' to mean the first Plan Processor selected by the Operating 
Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS 
Plan and the National Market System Plan Governing the Process for 
Selecting a Plan Processor and Developing a Plan for the Consolidated 
Audit Trail. This is the same definition as set forth in Section 1.1 of 
the CAT NMS Plan, although the proposed definition uses the full name 
of the ``Selection Plan.''
(U) Listed Option or Option
    The CAT NMS Plan and this Proposed Rule 900A Series applies to 
Eligible Securities, which includes NMS Securities, which, in turn, 
includes Listed Options. Certain requirements of the Proposed Rule 900A 
Series apply specifically to Listed Options. Accordingly, Paragraph (u) 
of Proposed Rule 910A defines the term ``Listed Option'' or ``Option.'' 
Specifically, paragraph (u) of Proposed Rule 910A states that the term 
``Listed Option'' or ``Option'' has the meaning set forth in SEC Rule 
600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a 
listed option as ``any option traded on a registered national 
securities exchange or automated facility of a national securities 
association.'' The Exchange notes that the proposed definition of 
``Listed Option'' is the same definition as the definition set forth in 
Section 1.1 of the CAT NMS Plan.
(V) Manual Order Event
(I) Manual Order Event Approach
    The CAT NMS Plan sets forth clock synchronization and timestamp 
requirements for Industry Members which reflect exemptions for Manual 
Order Events granted by the Commission.\22\ Specifically, the Plan 
requires Industry Members to record and report the time of each 
Reportable Event using timestamps reflecting current industry standards 
(which must be at least to the millisecond) or, if an Industry 
Members[sic] uses timestamps in increments finer than milliseconds, 
such finer increments, when reporting to the Central Repository to the 
extent the Industry Member's order handling

[[Page 9783]]

or execution systems use increments finer than milliseconds. For Manual 
Order Events, however, the Plan provides that such events must be 
recorded in increments up to and including one second, provided that 
Industry Members record and report the time the event is captured 
electronically in an order handling and execution system (``Electronic 
Capture Time'') in milliseconds. In addition, Industry Members are 
required to synchronize their respective Business Clocks (other than 
such Business Clocks used solely for Manual Order Events) at a minimum 
to within 50 milliseconds of the time maintained by the National 
Institute of Standards and Technology (``NIST''), and maintain such a 
synchronization. Each Industry Member is required to synchronize their 
Business Clocks used solely for Manual Order Events, however, at a 
minimum to within one second of the time maintained by the NIST.
---------------------------------------------------------------------------

    \22\ Exemption Order.
---------------------------------------------------------------------------

(II) Definition of Manual Order Event
    In order to clarify what a Manual Order Event is for clock 
synchronization and time stamp purposes, the Exchange proposes to 
define the term ``Manual Order Event'' in Proposed Rule 910A. 
Specifically, paragraph (v) of Proposed Rule 910A defines the term 
``Manual Order Event'' to mean a non-electronic communication of order-
related information for which Industry Members must record and report 
the time of the event. This is the same definition as set forth in 
Section 1.1 of the CAT NMS Plan.
(W) Material Terms of the Order
    Proposed Rule 930A requires Industry Members to record and report 
to the Central Repository Material Terms of the Order with certain 
Reportable Events (e.g., for the original receipt or origination of an 
order, for the routing of an order). Accordingly, the Exchange proposes 
to define the term ``Material Terms of the Order'' in Proposed Rule 
910A. Specifically, paragraph (w) of Proposed Rule 910A defines the 
term ``Material Terms of the Order'' to include: The NMS Security or 
OTC Equity Security symbol; security type; price (if applicable); size 
(displayed and non-displayed); side (buy/sell); order type; if a sell 
order, whether the order is long, short, short exempt; open/close 
indicator (except on transactions in equities); time in force (if 
applicable); if the order is for a Listed Option, option type (put/
call), option symbol or root symbol, underlying symbol, strike price, 
expiration date, and open/close (except on market maker quotations); 
and any special handling instructions. This is the same definition as 
set forth in Section 1.1 of the CAT NMS Plan.
(X) NMS Security
    NMS Securities are one of the types of Eligible Securities for the 
CAT. Therefore, the Exchange proposes to define the term ``NMS 
Security'' in Proposed Rule 910A. Specifically, paragraph (x) of 
Proposed Rule 910A defines the term ``NMS Security'' to mean any 
security or class of securities for which transaction reports are 
collected, processed, and made available pursuant to an effective 
transaction reporting plan, or an effective national market system plan 
for reporting transactions in Listed Options. This is the same 
definition as set forth in Section 1.1 of the CAT NMS Plan.
(Y) NMS Stock
    Under the CAT NMS Plan, the Operating Committee may establish 
different Trading Days for NMS Stocks (as defined in SEC Rule 
600(b)(47)), Listed Options, OTC Equity Securities, and any other 
securities that are included as Eligible Securities from time to time. 
Accordingly, the Exchange proposes to define the term ``NMS Stock'' in 
Paragraph (y) of Proposed Rule 910A to mean any NMS Security other than 
an option. This is the same definition as set forth in SEC Rule 
600(b)(47) of Regulation NMS.
(Z) Operating Committee
    Paragraph (z) of Proposed Rule 910A defines the term ``Operating 
Committee'' to mean the governing body of the CAT NMS, LLC designated 
as such and described in Article IV of the CAT NMS Plan. This is the 
same definition as set forth in Section 1.1 of the CAT NMS Plan, except 
the Exchange proposes to use the phrase ``CAT NMS LLC'' in place of the 
phrase ``the Company'' for clarity.
(AA) Options Market Maker
(I) Options Market Maker Quote Exemption
    SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each 
Industry Member to record and electronically report to the Central 
Repository details for each order and each reportable event, including 
the routing and modification or cancellation of an order. SEC Rule 
613(j)(8) defines ``order'' to include ``any bid or offer.'' Therefore, 
under SEC Rule 613, the details for each Options Market Maker quotation 
must be reported to the Central Repository by both the Options Market 
Maker and the options exchange to which it routes its quote.
    The Participants, however, requested and received exemptive relief 
from SEC Rule 613 so that the CAT NMS Plan may permit 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 is required 
by SEC Rule 613.\23\ In accordance with the exemptive relief, Options 
Market Makers would be required to report to the options exchange the 
time at which a quote in a Listed Option is sent to the options 
exchange. Such time information also will be reported to the Central 
Repository by the options exchange in lieu of reporting by the Options 
Market Maker.
---------------------------------------------------------------------------

    \23\ See Exemptive Request Letter at 2, and Exemption Order.
---------------------------------------------------------------------------

(II) Definition of Options Market Maker
    To implement the requirements related to Option Market Maker 
quotes, the Exchange proposes to define the term ``Options Market 
Maker'' in Proposed Rule 910A. Specifically, paragraph (aa) of Proposed 
Rule 910A defines the term ``Options Market Maker'' to mean a broker-
dealer registered with an exchange for the purpose of making markets in 
options contracts traded on the exchange. This is the same definition 
as set forth in Section 1.1 of the CAT NMS Plan.
(BB) Order
    The Proposed Rule 900A Series requires each Industry Member to 
record and electronically report to the Central Repository certain 
details for each order. Accordingly, the Exchange proposes to define 
the term ``Order'' in Proposed Rule 910A. Specifically, paragraph (bb) 
of Proposed Rule 910A defines the term ``Order'', with respect to 
Eligible Securities, to include: (1) Any order received by an Industry 
Member from any person; (2) any order originated by an Industry Member; 
or (3) any bid or offer. This is the same definition as set forth in 
SEC Rule 613(j)(8), except the Exchange proposes to replace the phrase 
``member of a national securities exchange or national securities 
association'' with the term ``Industry Member.'' The Exchange notes 
that Section 1.1 of the CAT NMS Plan defines ``Order'' by reference to 
SEC Rule 613(j)(8).
(CC) OTC Equity Security
    OTC Equity Securities are one of the types of Eligible Securities 
for the CAT. Therefore, the Exchange proposes to define the term ``OTC 
Equity Security'' in Proposed Rule 910A. Specifically,

[[Page 9784]]

paragraph (cc) of Proposed Rule 910A defines the term ``OTC Equity 
Security'' to mean any equity security, other than an NMS Security, 
subject to prompt last sale reporting rules of a registered national 
securities association and reported to one of such association's equity 
trade reporting facilities. This is the same definition as set forth in 
Section 1.1 of the CAT NMS Plan.
(DD) Participant
    Paragraph (dd) of Proposed Rule 910A defines the term 
``Participant'' to mean each Person identified as such in Exhibit A of 
the CAT NMS Plan, as amended, in such Person's capacity as a 
Participant in CAT NMS, LLC. This is the same definition in substance 
as set forth in Section 1.1 of the CAT NMS Plan.
(EE) Person
    Paragraph (ee) of Proposed Rule 910A defines the term ``Person'' to 
mean any individual, partnership, limited liability company, 
corporation, joint venture, trust, business trust, cooperative or 
association and any heirs, executors, administrators, legal 
representatives, successors and assigns of such Person where the 
context so permits. This is the same definition as set forth in Section 
1.1 of the CAT NMS Plan.
(FF) Plan Processor
    Paragraph (ff) of Proposed Rule 910A defines the term ``Plan 
Processor'' to mean the Initial Plan Processor or any other Person 
selected by the Operating Committee pursuant to SEC Rule 613 and 
Sections 4.3(b)(i) and 6.1 of the CAT NMS Plan, and with regard to the 
Initial Plan Processor, the National Market System Plan Governing the 
Process for Selecting a Plan Processor and Developing a Plan for the 
Consolidated Audit Trail, to perform the CAT processing functions 
required by SEC Rule 613 and set forth in the CAT NMS Plan.
(GG) Received Industry Member Data
    Paragraph (gg) of Proposed Rule 910A states that the term 
``Received Industry Member Data'' has the meaning set forth in Proposed 
Rule 930A(a)(2). This definition has the same substantive meaning as 
the definition set forth in Section 1.1 of the CAT NMS Plan. The 
definition of ``Received Industry Member Data'' is discussed more fully 
in the discussion below regarding Proposed Rule 930A(a)(2).
(HH) Recorded Industry Member Data
    Paragraph (hh) of Proposed Rule 910A states that the term 
``Recorded Industry Member Data'' has the meaning set forth in Proposed 
Rule 930A(a)(1). This definition has the same substantive meaning as 
the definition set forth in in Section 1.1 of the CAT NMS Plan. The 
definition of ``Recorded Industry Member Data'' is discussed more fully 
in the discussion below regarding Proposed Rule 930A(a)(1).
(II) Reportable Event
    The Proposed Rule 900A Series requires each Industry Member to 
record and electronically report to the Central Repository certain 
details for each Reportable Event. To clarify these requirements, the 
Exchange proposes to define the term ``Reportable Event'' in Proposed 
Rule 910A. Specifically, paragraph (ii) of Proposed Rule 910A states 
that the term ``Reportable Event'' includes, but is not limited to, the 
original receipt or origination, modification, cancellation, routing, 
execution (in whole or in part) and allocation of an order, and receipt 
of a routed order. This is the same definition as set forth in Section 
1.1 of the CAT NMS Plan.
(JJ) SRO
    Paragraph (jj) of Proposed Rule 910A defines the term ``SRO'' to 
mean any self-regulatory organization within the meaning of Section 
3(a)(26) of the Exchange Act. This is the same definition as set forth 
in Section 1.1 of the CAT NMS Plan.
(KK) SRO-Assigned Market Participant Identifier
(I) Existing Identifier Approach
    The Participants requested and received exemptive relief from SEC 
Rule 613 so that the CAT NMS Plan may permit the Existing Identifier 
Approach, which would allow an Industry Member to report an existing 
SRO-Assigned Market Participant Identifier in lieu of requiring the 
reporting of a universal CAT-Reporter-ID (that is, a code that uniquely 
and consistently identifies an Industry Member for purposes of 
providing data to the Central Repository).\24\ The CAT NMS Plan 
reflects the ``Existing Identifier Approach'' for purposes of 
identifying each Industry Member associated with an order or Reportable 
Event. Under the Existing Identifier Approach, Industry Members are 
required to record and report to the Central Repository an SRO-Assigned 
Market Participant Identifier for orders and certain Reportable Events 
to be used by the Central Repository to assign a unique CAT-Reporter-ID 
to identify Industry Members.
---------------------------------------------------------------------------

    \24\ See Exemptive Request Letter at 19, and Exemption Order.
---------------------------------------------------------------------------

    For the Central Repository to link the SRO-Assigned Market 
Participant Identifier to the CAT-Reporter-ID, each SRO will submit to 
the Central Repository, on a daily basis, all SRO-Assigned Market 
Participant Identifiers used by its Industry Members, as well as 
information to identify each such Industry Member, including CRD number 
and LEI, if the SRO has collected such LEI of the Industry Member. 
Additionally, each Industry Member is required to submit to the Central 
Repository the CRD number of the Industry Member as well as the LEI of 
the Industry Member (if the Industry Member has an LEI). The Plan 
Processor will use this information to assign a CAT-Reporter-ID to each 
Industry Member for internal use within the Central Repository.
(II) Definition of SRO-Assigned Market Participant Identifier
    To implement the Existing Identifier Approach, the Exchange 
proposes to define the term ``SRO-Assigned Market Participant'' in 
Proposed Rule 910A. Specifically, paragraph (kk) of Proposed Rule 910A 
defines the term ``SRO-Assigned Market Participant Identifier'' to mean 
an identifier assigned to an Industry Member by an SRO, or an 
identifier used by a Participant. This is the same definition as set 
forth in Section 1.1 of the CAT NMS Plan. For example, an Industry 
Member would be permitted to use any existing SRO-Assigned Market 
Participant Identifier (e.g., FINRA MPID, NASDAQ MPID, NYSE Mnemonic, 
CBOE User Acronym and CHX Acronym) when reporting order information to 
the Central Repository.
(LL) Small Industry Member
    The requirements of the Proposed Rule 900A Series differ to some 
extent for Small Industry Members versus Industry Members other than 
Small Industry Members. For example, the compliance dates for reporting 
data to the CAT are different for Small Industry Members versus other 
Industry Members. Accordingly, to clarify the requirements that apply 
to which Industry Members, the Exchange proposes to define the term 
``Small Industry Member'' in Proposed Rule 910A. Specifically, 
paragraph (ll) of Proposed Rule 910A defines the term ``Small Industry 
Member'' to mean an Industry Member that qualifies as a small broker-
dealer as defined in Rule 0-10(c) under the Securities Exchange Act of 
1934, as amended. This is the same in substance as the definition of

[[Page 9785]]

``Small Industry Member'' as set forth in Section 1.1 of the CAT NMS 
Plan. Specifically, Section 1.1 of the CAT NMS Plan defines a ``Small 
Industry Member'' as ``an Industry Member that qualifies as a small 
broker-dealer as defined in SEC Rule 613.'' The definition of a small 
broker-dealer under SEC Rule 613, in turn, is a small broker-dealer as 
defined in SEC Rule 0-10(c).
(MM) Trading Day
    Proposed Rule 930A(b) establishes the deadlines for reporting 
certain data to the Central Repository using the term ``Trading Day.'' 
Accordingly, the Exchange proposes to define the term ``Trading Day'' 
in Proposed Rule 910A. Specifically, Paragraph (mm) of Proposed Rule 
910A states that the term ``Trading Day'' shall have the meaning as is 
determined by the Operating Committee. For the avoidance of doubt, the 
Operating Committee may establish different Trading Days for NMS Stocks 
(as defined in SEC Rule 600(b)(47), Listed Options, OTC Equity 
Securities, and any other securities that are included as Eligible 
Securities from time to time.
(ii) Clock Synchronization
    SEC Rule 613(d)(1) under Regulation NMS requires Industry Members 
to synchronize their Business Clocks to the time maintained by NIST, 
consistent with industry standards. To comply with this provision, 
Section 6.8 of the Plan sets forth the clock synchronization 
requirements for Industry Members.\25\ To implement these provisions 
with regard to its Industry Members, the Exchange proposes Rule 920A 
(Consolidated Audit Trail--Clock Synchronization) to require its 
Industry Members to comply with the clock synchronization requirements 
of the Plan.
---------------------------------------------------------------------------

    \25\ In addition, Section 6.7(a)(ii) of the Plan sets forth the 
timeline for CAT Reporters to comply with the clock synchronization 
requirements.
---------------------------------------------------------------------------

    Paragraph (a) of Proposed Rule 920A sets forth the manner in which 
Industry Members must synchronize their Business Clocks. Paragraph 
(a)(1) of Proposed Rule 920A requires each Industry Member to 
synchronize its Business Clocks, other than such Business Clocks used 
solely for Manual Order Events or used solely for the time of 
allocation on Allocation Reports, at a minimum to within a fifty (50) 
millisecond tolerance of the time maintained by the NIST atomic clock, 
and maintain such synchronization. This is the same requirement as set 
forth in Section 6.8(a)(ii)(A) of the CAT NMS Plan.
    Paragraph (a)(2) of Proposed Rule 920A requires each Industry 
Member to synchronize (1) its Business Clocks used solely for Manual 
Order Events and (2) its Business Clocks used solely for the time of 
allocation on Allocation Reports at a minimum to within a one second 
tolerance of the time maintained by the NIST atomic clock, and maintain 
such synchronization. This is the same requirement as set forth in 
Section 6.8(a)(iii) and (iv) of the CAT NMS Plan.
    Paragraph (a)(3) of Proposed Rule 920A clarifies that the tolerance 
described in paragraphs (a)(1) and (2) of the Proposed Rule 920A 
includes all of the following: (1) The time difference between the NIST 
atomic clock and the Industry Member's Business Clock; (2) the 
transmission delay from the source; and (3) the amount of drift of the 
Industry Member's Business Clock. This description of the clock 
synchronization tolerance is the same as set forth in paragraph (b) of 
FINRA Rule 4590 (Synchronization of Member Business Clocks).
    Paragraph (a)(4) of Proposed Rule 920A requires Industry Members to 
synchronize their Business Clocks every business day before market open 
to ensure that timestamps for Reportable Events are accurate. In 
addition, to maintain clock synchronization, Business Clocks must be 
checked against the NIST atomic clock and re-synchronized, as 
necessary, throughout the day. This description of the required 
frequency of clock synchronization is the same as set forth in 
paragraph (c) of FINRA Rule 4590 (Synchronization of Member Business 
Clocks).
    Paragraph (b) of Proposed Rule 920A sets forth documentation 
requirements with regard to clock synchronization. Specifically, 
paragraph (b) requires Industry Members to document and maintain their 
synchronization procedures for their Business Clocks. The Proposed Rule 
requires Industry Members to keep a log of the times when they 
synchronize their Business Clocks and the results of the 
synchronization process. This log is required to include notice of any 
time a Business Clock drifts more than the applicable tolerance 
specified in paragraph (a) of the Proposed Rule. Such logs must include 
results for a period of not less than five years ending on the then 
current date, or for the entire period for which the Industry Member 
has been required to comply with this Rule if less than five years. 
These documentation requirements are the same as those set forth in the 
``Sequencing Orders and Clock Synchronization'' section of Appendix C 
of the CAT NMS Plan. Moreover, these documentation requirements 
regarding clock synchronization are comparable to those set forth in 
Supplementary Material .01 of FINRA Rule 4590 (Synchronization of 
Member Business Clocks).
    Paragraph (c) of Proposed Rule 920A sets forth certification 
requirements with regard to clock synchronization. Specifically, 
paragraph (c) of Proposed Rule 920A requires each Industry Member to 
certify to the Exchange that its Business Clocks satisfy the 
synchronization requirements set forth in paragraph (a) of Proposed 
Rule 920A periodically in accordance with the certification schedule 
established by the Operating Committee pursuant to the CAT NMS Plan. 
This requirement is the same requirement as set forth in Section 
6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends 
to announce to its Industry Members the certification schedule 
established by the Operating Committee via an information circular 
(``Circular'').
    Paragraph (d) of Proposed Rule 920A establishes reporting 
requirements with regard to clock synchronization. Paragraph (d) of 
Proposed Rule 920A requires Industry Members to report to the Plan 
Processor and the Exchange violations of paragraph (a) of this Rule 
pursuant to the thresholds set by the Operating Committee pursuant to 
the CAT NMS Plan. This requirement is the same requirement as set forth 
in Section 6.8(a)(ii)(C), (iii) and (iv) of the CAT NMS Plan. The 
Exchange intends to announce to its Industry Members the relevant 
thresholds established by the Operating Committee via Circular.
(iii) Industry Member Data Reporting
    SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to 
set forth certain provisions requiring Industry Members to record and 
report data to the CAT. To comply with this provision, Section 6.4 of 
the CAT NMS Plan sets forth the data reporting requirements for 
Industry Members. To implement these provisions with regard to its 
Industry Members, the Exchange proposes Rule 930A (Consolidated Audit 
Trail--Industry Member Data Reporting) to require its Industry Members 
to comply with the Industry Member Data reporting requirements of the 
Plan. Proposed Rule 930A has six sections covering: (1) Recording and 
reporting Industry Member Data, (2) timing of the recording and 
reporting, (3) the applicable securities cover[sic] by the recording 
and reporting requirements, (4) format, (5) the security symbology to 
be used in the recording and reporting, and (6) error correction

[[Page 9786]]

requirements, each of which is described below.
(A) Recording and Reporting Industry Member Data
    Paragraph (a) of Proposed Rule 930A describes the recording and 
reporting of Industry Member Data to the Central Repository. Paragraph 
(a) consists of paragraphs (a)(1)-(a)(3), which cover Recorded Industry 
Member Data, Received Industry Member Data and Options Market Maker 
data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 930A set 
forth the recording and reporting requirements required in Section 
6.4(d)(i)-(iii) of the CAT NMS Plan, respectively.
    Paragraph (a)(1) requires, subject to paragraph (a)(3) regarding 
Options Market Makers, each Industry Member to record and 
electronically report to the Central Repository the following details 
for each order and each Reportable Event, as applicable (``Recorded 
Industry Member Data'') in the manner prescribed by the Operating 
Committee pursuant to the CAT NMS Plan:
     For original receipt or origination of an order: (1) Firm 
Designated ID(s) for each Customer; (2) CAT-Order-ID; (3) SRO-Assigned 
Market Participant Identifier of the Industry Member receiving or 
originating the order; (4) date of order receipt or origination; (5) 
time of order receipt or origination (using timestamps pursuant to 
Proposed Rule 960A); and (6) Material Terms of the Order;
     for the routing of an order: (1) CAT-Order-ID; (2) date on 
which the order is routed; (3) time at which the order is routed (using 
timestamps pursuant to Proposed Rule 960A); (4) SRO-Assigned Market 
Participant Identifier of the Industry Member routing the order; (5) 
SRO-Assigned Market Participant Identifier of the Industry Member or 
Participant to which the order is being routed; (6) if routed 
internally at the Industry Member, the identity and nature of the 
department or desk to which the order is routed; and (7) Material Terms 
of the Order;
     for the receipt of an order that has been routed, the 
following information: (1) CAT-Order-ID; (2) date on which the order is 
received; (3) time at which the order is received (using timestamps 
pursuant to Proposed Rule 960A); (4) SRO-Assigned Market Participant 
Identifier of the Industry Member receiving the order; (5) SRO-Assigned 
Market Participant Identifier of the Industry Member or Participant 
routing the order; and (6) Material Terms of the Order;
     if the order is modified or cancelled: (1) CAT-Order-ID; 
(2) date the modification or cancellation is received or originated; 
(3) time at which the modification or cancellation is received or 
originated (using timestamps pursuant to Proposed Rule 960A); (4) price 
and remaining size of the order, if modified; (5) other changes in the 
Material Terms of the Order, if modified; and (6) whether the 
modification or cancellation instruction was given by the Customer or 
was initiated by the Industry Member;
     if the order is executed, in whole or in part: (1) CAT-
Order-ID; (2) date of execution; (3) time of execution (using 
timestamps pursuant to Proposed Rule 960A; (4) execution capacity 
(principal, agency or riskless principal); (5) execution price and 
size; (6) SRO-Assigned Market Participant Identifier of the Industry 
Member executing the order; (7) whether the execution was reported 
pursuant to an effective transaction reporting plan or the Plan for 
Reporting of Consolidated Options Last Sale Reports and Quotation 
Information; and
     other information or additional events as may be 
prescribed pursuant to the CAT NMS Plan.
    Paragraph (a)(2) of Proposed Rule 930A requires, subject to 
paragraph (a)(3) regarding Options Market Makers, each Industry Member 
to record and report to the Central Repository the following, as 
applicable (``Received Industry Member Data'' and collectively with the 
information referred to in Rule 930A(a)(1) ``Industry Member Data'') in 
the manner prescribed by the Operating Committee pursuant to the CAT 
NMS Plan:
     If the order is executed, in whole or in part: (1) An 
Allocation Report; (2) SRO-Assigned Market Participant Identifier of 
the clearing broker or prime broker, if applicable; and (3) CAT-Order-
ID of any contra-side order(s);
     if the trade is cancelled, a cancelled trade indicator; 
and
     for original receipt or origination of an order, the Firm 
Designated ID for the relevant Customer, and in accordance with 
Proposed Rule 940A, Customer Account Information and Customer 
Identifying Information for the relevant Customer.
    Paragraph (a)(3) of Proposed Rule 930A states that each Industry 
Member that is an Options Market Maker is not required to report to the 
Central Repository the Industry Member Data regarding the routing, 
modification or cancellation of its quotes in Listed Options. Each 
Industry Member that is an Options Market Maker, however, is required 
to report to the Exchange the time at which its quote in a Listed 
Option is sent to the Exchange (and, if applicable, any subsequent 
quote modification time and/or cancellation time when such modification 
or cancellation is originated by the Options Market Maker). This 
paragraph implements the Options Market Maker Quote Exemption, as 
discussed above.
(B) Timing of Recording and Reporting
    Paragraph (b) of Proposed Rule 930A describes the requirements 
related to the timing of recording and reporting of Industry Member 
Data. Paragraphs (b)(1)-(b)(3) of Proposed Rule 930A set forth the 
requirements related to the timing of the recording and reporting 
requirements required in Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
    Paragraph (b)(1) of Proposed Rule 930A requires each Industry 
Member to record Recorded Industry Member Data contemporaneously with 
the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 930A 
requires each Industry Member to report: (1) Recorded Industry Member 
Data to the Central Repository by 8:00 a.m., Eastern Time, on the 
Trading Day following the day the Industry Member records such Recorded 
Industry Member Data; and (2) Received Industry Member Data to the 
Central Repository by 8:00 a.m., Eastern Time, on the Trading Day 
following the day the Industry Member receives such Received Industry 
Member Data. Paragraph (b)(3) states that Industry Members may, but are 
not required to, voluntarily report Industry Member Data prior to the 
applicable 8:00 a.m., Eastern Time, deadline.
(C) Applicable Securities
    Paragraph (c) of Proposed Rule 930A describes the securities to 
which the recording and reporting requirements of Proposed Rule 930A 
apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 930A set forth the 
description of applicable securities as set forth in Section 6.4(c)(i) 
and (ii) of the CAT NMS Plan, respectively. Paragraph (c)(1) of 
Proposed Rule 930A requires each Industry Member to record and report 
to the Central Repository the Industry Member Data as set forth in 
paragraph (a) of Proposed Rule 930A for each NMS Security registered or 
listed for trading on such exchange or admitted to unlisted trading 
privileges on such exchange. Paragraph (c)(2) of Proposed Rule 930A 
requires each Industry Member to record and report to the Central 
Repository the Industry Member Data as set forth in paragraph (a) of 
this Proposed Rule 930A for each Eligible Security for which 
transaction reports are required to be submitted to FINRA.

[[Page 9787]]

(D) Security Symbology
    Paragraph (d) of Proposed Rule 930A describes the security 
symbology that Industry Members are required to use when reporting 
Industry Member Data to the Central Repository. Paragraph (d)(1) of 
Proposed Rule 930A requires, for each exchange-listed Eligible 
Security, each Industry Member to report Industry Member Data to the 
Central Repository using the symbology format of the exchange listing 
the security. This requirement implements the requirement set forth in 
Section 2 of Appendix D of the CAT NMS Plan to use the listing exchange 
symbology when reporting data to the Central Repository for exchange-
listed Eligible Securities.
    For each Eligible Security that is not exchange-listed, however, 
there is no listing exchange to provide the symbology format. Moreover, 
to date, the requisite symbology format has not been determined. 
Therefore, Paragraph (d)(2) of Proposed Rule 930A requires, for each 
Eligible Security that is not exchange-listed, each Industry Member to 
report Industry Member Data to the Central Repository using such 
symbology format as approved by the Operating Committee pursuant to the 
CAT NMS Plan. The Exchange intends to announce to its Industry Members 
the relevant symbology formats established by the Operating Committee 
via Circular.
(E) Error Correction
    To ensure that the CAT contains accurate data, the CAT NMS Plan 
requires Industry Members to correct erroneous data submitted to the 
Central Repository. Therefore, the Exchange proposes to adopt paragraph 
(e) of Proposed Rule 930A, which addresses the correction of erroneous 
data reported to the Central Repository. Paragraph (e) of Proposed Rule 
930A requires, for each Industry Member for which errors in Industry 
Member Data submitted to the Central Repository have been identified by 
the Plan Processor or otherwise, that such Industry Member submit 
corrected Industry Member Data to the Central Repository by 8:00 a.m., 
Eastern Time, on T+3. This requirement implements the error correction 
requirement set forth in Section 6 of Appendix D of the CAT NMS Plan.
(iv) Customer Information Reporting
    Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to 
submit to the Central Repository certain information related to their 
Customers in accordance with the Customer Information Approach 
discussed above. The Exchange proposes Rule 940A (Consolidated Audit 
Trail--Customer Information Reporting) to implement this provision of 
the CAT NMS Plan with regard to its Industry Members. Specifically, 
paragraph (a) of Proposed Rule 940A requires each Industry Member to 
submit to the Central Repository the Firm Designated ID, Customer 
Account Information and Customer Identifying Information for each of 
its Customers with an Active Account prior to such Industry Member's 
commencement of reporting to the Central Repository and in accordance 
with the deadlines set forth in Rule 980A. Paragraph (b) of Proposed 
Rule 940A requires each Industry Member to submit to the Central 
Repository any updates, additions or other changes to the Firm 
Designated ID, Customer Account Information and Customer Identifying 
Information for each of its Customers with an Active Account on a daily 
basis. Paragraph (c) of Proposed Rule 940A requires each Industry 
Member, on a periodic basis as designated by the Plan Processor and 
approved by the Operating Committee, to submit to the Central 
Repository a complete set of Firm Designated IDs, Customer Account 
Information and Customer Identifying Information for each of its 
Customers with an Active Account. This periodic refresh is intended to 
ensure that the Central Repository has the most current information 
identifying a Customer. The Exchange intends to announce to its 
Industry Members when such a periodic refresh is required by the Plan 
Processor and the Operating Committee via Circular.
    Finally, paragraph (d) of Proposed Rule 940A addresses the 
correction of erroneous Customer data reported to the Central 
Repository to ensure an accurate audit trail. Paragraph (d) requires, 
for each Industry Member for which errors in Firm Designated ID, 
Customer Account Information and Customer Identifying Information for 
each of its Customers with an Active Account submitted to the Central 
Repository have been identified by the Plan Processor or otherwise, 
such Member to submit corrected data to the Central Repository by 5:00 
p.m. Eastern Time on T+3. This requirement implements the error 
correction requirement set forth in Appendix C of the CAT NMS Plan.
(v) Industry Member Information Reporting
    Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to 
submit to the Central Repository information sufficient to identify 
such Industry Member, including CRD number and LEI, if such LEI has 
been obtained, in accordance with the Existing Identifier Approach 
discussed above. The Exchange proposes Rule 950A (Consolidated Audit 
Trail--Industry Member Information Reporting) to implement this 
provision of the CAT NMS Plan with regard to its Industry Members. 
Specifically, Proposed Rule 950A requires each Industry Member to 
submit to the Central Repository information sufficient to identify 
such Industry Member, including CRD number and LEI, if such LEI has 
been obtained, prior to such Industry Member's commencement of 
reporting to the Central Repository and in accordance with the 
deadlines set forth in Rule 980A, and keep such information up to date 
as necessary.
(vi) Time Stamps
    SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for 
time stamps used by CAT Reporters in recording and reporting data to 
the CAT.\26\ To comply with this provision, Section 6.8(b) of the Plan 
sets forth time stamp requirements for Industry Members. To implement 
this provision with regard to its Industry Members, the Exchange 
proposes new Rule 960A (Consolidated Audit Trail--Time Stamps) to 
require its Industry Members to comply with the time stamp requirements 
of the Plan.
---------------------------------------------------------------------------

    \26\ 17 CFR 242.613(d)(3).
---------------------------------------------------------------------------

    Paragraph (a) of Proposed Rule 960A sets forth the time stamp 
increments to be used by Industry Members in their CAT reporting. 
Paragraph (a)(1) of Proposed Rule 960A requires each Industry Member to 
record and report Industry Member Data to the Central Repository with 
time stamps in milliseconds, subject to paragraphs (a)(2) and (b) of 
Proposed Rule 960A. To the extent that any Industry Member's order 
handling or execution systems utilize time stamps in increments finer 
than milliseconds, paragraph (a)(2) of Proposed Rule 960A requires such 
Industry Member to record and report Industry Member Data to the 
Central Repository with time stamps in such finer increment, subject to 
paragraph (b) of Proposed Rule 960A regarding Manual Order Events and 
Allocation Reports.
    Paragraph (b) of Proposed Rule 960A sets forth the permissible time 
stamp increments for Manual Order Events and Allocation Reports. 
Specifically, paragraph (b)(1) of Proposed Rule 960A permits each 
Industry Member to record and report Manual Order Events to the

[[Page 9788]]

Central Repository in increments up to and including one second, 
provided that each Industry Member is required to record and report the 
time when a Manual Order Event has been captured electronically in an 
order handling and execution system of such Member (``Electronic 
Capture Time'') in milliseconds. In addition, paragraph (b)(2) of 
Proposed Rule 960A permits each Industry Member to record and report 
the time of Allocation Reports in increments up to and including one 
second.
(vii) Clock Synchronization Rule Violations
    Proposed Rule 965A (Consolidated Audit Trail--Clock Synchronization 
Rule Violations) describes potential violations of the clock 
synchronization time period requirements set forth in the Proposed Rule 
900A Series. Proposed Rule 965A states that an Industry Member that 
engages in a pattern or practice of reporting Reportable Events outside 
of the required clock synchronization time period as set forth in this 
Rule Series without reasonable justification or exceptional 
circumstances may be considered in violation of this Rule. This 
provision implements the requirements of Section 6.8 of the CAT NMS 
Plan which requires the Compliance Rule to provide that a pattern or 
practice of reporting events outside of the required clock 
synchronization time period without reasonable justification or 
exceptional circumstances may be considered a violation of SEC Rule 613 
or the CAT NMS Plan.
(viii) Connectivity and Data Transmission
    Proposed Rule 970A (Consolidated Audit Trail--Connectivity and Data 
Transmission) addresses connectivity and data transmission requirements 
related to the CAT. Paragraph (a) of Proposed Rule 970A describes the 
format(s) for reporting Industry Member Data to the Central Repository, 
thereby implementing the formatting requirements as set forth in 
Section 6.4(a) of the CAT NMS Plan. Specifically, paragraph (a) of 
Proposed Rule 970A requires each Industry Member to transmit data as 
required under the CAT NMS Plan to the Central Repository utilizing 
such format(s) as may be provided by the Plan Processor and approved by 
the Operating Committee.
    Paragraph (b) of Proposed Rule 970A addresses connectivity 
requirements related to the CAT. Paragraph (b) of Proposed Rule 970A 
requires each Industry Member to connect to the Central Repository 
using a secure method(s), including, but not limited to, private 
line(s) and virtual private network connection(s). This provision 
implements the connectivity requirements set forth in Section 4 of 
Appendix D to the CAT NMS Plan.
    Paragraph (c) permits Industry Members to use CAT Reporting Agents 
to fulfill their data reporting obligations related to the CAT. 
Paragraph (c) is based on FINRA Rule 7450(c), which permits OATS 
Reporting Members to enter into agreements with Reporting Agents to 
fulfill the OATS obligations of the OATS Reporting Member. 
Specifically, Paragraph (c)(1) of Proposed Rule 970A states that any 
Industry Member may enter into an agreement with a CAT Reporting Agent 
pursuant to which the CAT Reporting Agent agrees to fulfill the 
obligations of such Industry Member under the Proposed Rule 900A 
Series. Any such agreement must be evidenced in writing, which 
specifies the respective functions and responsibilities of each party 
to the agreement that are required to effect full compliance with the 
requirements of the Proposed Rule 900A Series. The Exchange notes that, 
currently, no standardized form agreement for CAT Reporting Agent 
arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 970A 
requires that all written documents evidencing an agreement with a CAT 
Reporting Agent be maintained by each party to the agreement. Paragraph 
(c)(3) states that each Industry Member remains primarily responsible 
for compliance with the requirements of the Proposed Rule 900A Series, 
notwithstanding the existence of an agreement described in paragraph 
(c) of Proposed Rule 970A.
(ix) Development and Testing
    The Exchange proposes Rule 980A (Consolidated Audit Trail--
Development and Testing) to address requirements for Industry Members 
related to CAT development and testing. Paragraph (a) of Proposed Rule 
980A sets forth the testing requirements and deadlines for Industry 
Members to develop and commence reporting to the Central Repository. 
These requirements are set forth in Appendix C to the CAT NMS Plan.
    Paragraph (a)(1) sets forth the deadlines related to connectivity 
and acceptance testing. Industry Members (other than Small Industry 
Members) are required to begin connectivity and acceptance testing with 
the Central Repository no later than August 15, 2018, and Small 
Industry Members are required to begin connectivity and acceptance 
testing with the Central Repository no later than August 15, 2019.
    Paragraph (a)(2) sets forth the deadlines related to reporting 
Customer and Industry Member information. Paragraph (a)(2)(i) requires 
Industry Members (other than Small Industry Members) to begin reporting 
Customer and Industry Member information, as required by Rules 940A(a) 
and 950A, respectively, to the Central Repository for processing no 
later than October 15, 2018. Paragraph (a)(2)(ii) requires Small 
Industry Members to begin reporting Customer and Industry Member 
information, as required by Rules 940A(a) and 950A, respectively, to 
the Central Repository for processing no later than October 15, 2019.
    Paragraph (a)(3) sets forth the deadlines related to the submission 
of order data. Under paragraph (a)(3)(i), Industry Members (other than 
Small Industry Members) are permitted, but not required, to submit 
order data for testing purposes beginning no later than May 15, 2018. 
In addition, Industry Members (other than Small Industry Members) are 
required to participate in the coordinated and structured testing of 
order submission, which will begin no later than August 15, 2018. Under 
paragraph (a)(3)(ii), Small Industry Members are permitted, but not 
required, to submit order data for testing purposes beginning no later 
than May 15, 2019. In addition, Small Industry Members are required to 
participate in the coordinated and structured testing of order 
submission, which will begin no later than August 15, 2019.
    Paragraph (a)(4) states that Industry Members are permitted, but 
not required to, submit Quote Sent Times on Options Market Maker 
quotes, beginning no later than October 15, 2018.
    Paragraph (b) of Proposed Rule 980A implements the requirement 
under the CAT NMS Plan that Industry Members participate in required 
industry testing with the Central Repository.\27\ Specifically, 
Proposed Rule 980A requires that each Industry Member participate in 
testing related to the Central Repository, including any industry-wide 
disaster recovery testing, pursuant to the schedule established 
pursuant to the CAT NMS Plan. The Exchange intends to announce to its 
Industry Members the schedule established pursuant to the CAT NMS Plan 
via Circular.
---------------------------------------------------------------------------

    \27\ Adopting Release at 84725.
---------------------------------------------------------------------------

(x) Recordkeeping
    Proposed Rule 990A (Consolidated Audit Trail--Recordkeeping) sets 
forth

[[Page 9789]]

the recordkeeping obligations related to the CAT for Industry Members. 
Proposed Rule 990A requires each Industry Member to maintain and 
preserve records of the information required to be recorded under the 
Proposed Rule 900A Series for the period of time and accessibility 
specified in SEC Rule 17a-4(b). The records required to be maintained 
and preserved under the Proposed Rule 900A Series may be immediately 
produced or reproduced on ``micrographic media'' as defined in SEC Rule 
17a-4(f)(1)(i) or by means of ``electronic storage media'' as defined 
in SEC Rule 17a-4(f)(1)(ii) that meet the conditions set forth in SEC 
Rule 17a-4(f) and be maintained and preserved for the required time in 
that form. Proposed Rule 990A is based on FINRA Rule 7440(a)(5), which 
sets forth the recordkeeping requirements related to OATS.
(xi) Timely, Accurate and Complete Data
    SEC Rule 613 and the CAT NMS Plan emphasize the importance of the 
timeliness, accuracy, completeness and integrity of the data submitted 
to the CAT.\28\ Accordingly, Proposed Rule 993A (Consolidated Audit 
Trail--Timely, Accurate and Complete Data) implements this requirement 
with regard to Industry Members. Paragraph (a) of Proposed Rule 993A 
requires that Industry Members record and report data to the Central 
Repository as required by the Proposed Rule 900A Series in a manner 
that ensures the timeliness, accuracy, integrity and completeness of 
such data.
---------------------------------------------------------------------------

    \28\ See SEC Rule 613(e)(4)(i)(D)(ii); and Section 6.5(d) of the 
CAT NMS Plan.
---------------------------------------------------------------------------

    In addition, without limiting the general requirement as set forth 
in paragraph (a), paragraph (b) of Proposed Rule 993A requires Industry 
Members to accurately provide the LEIs in their records as required by 
the Proposed Rule 900A Series and states that Industry Members may not 
knowingly submit inaccurate LEIs to the Central Repository. Paragraph 
(b) notes, however, that this requirement does not impose any 
additional due diligence obligations on Industry Members with regard to 
LEIs for CAT purposes. Accordingly, this provision does not impose any 
due diligence obligations beyond those that may exist today with 
respect to information associated with an LEI. Although Industry 
Members will not be required to perform additional due diligence with 
regard to the LEIs for CAT purposes, Industry Members will be required 
to accurately provide the LEIs in their records and may not knowingly 
submit inaccurate LEIs to the CAT. Paragraph (b) is consistent with the 
SEC's statements in the Approval Order for the CAT NMS Plan regarding 
an Industry Member's obligations regarding LEIs.\29\
---------------------------------------------------------------------------

    \29\ Approval Order at 84745.
---------------------------------------------------------------------------

    Paragraph (c) states that, if an Industry Member reports data to 
the Central Repository with errors such that its error percentage 
exceeds the maximum Error Rate established by the Operating Committee 
pursuant to the CAT NMS Plan, then such Industry Member would not be in 
compliance with the Rule 900A Series. As discussed above, the initial 
maximum Error Rate is 5%, although the Error Rate is expected to be 
reduced over time. The Exchange intends to announce to its Industry 
Members changes to the Error Rate established pursuant to the CAT NMS 
Plan via Circular.
    Furthermore, paragraph (d) of Proposed Rule 993A addresses 
Compliance Thresholds related to reporting data to the CAT. Proposed 
Rule 993A states that each Industry Member is required to meet a 
separate compliance threshold which will be an Industry Member-specific 
rate that may be used as the basis for further review or investigation 
into the Industry Member's performance with regard to the CAT (the 
``Compliance Thresholds''). Compliance Thresholds will compare an 
Industry Member's error rate to the aggregate Error Rate over a period 
of time to be defined by the Operating Committee. Compliance Thresholds 
will be set by the Operating Committee, and will be calculated at 
intervals to be set by the Operating Committee.\30\ Compliance 
Thresholds will include compliance with the data reporting and clock 
synchronization requirements. Proposed Rule 993A states that an 
Industry Member's performance with respect to its Compliance Threshold 
will not signify, as a matter of law, that such Industry Member has 
violated this Proposed Rule Series.
---------------------------------------------------------------------------

    \30\ Appendix C of the CAT NMS Plan.
---------------------------------------------------------------------------

(xi) Compliance Dates
    Proposed Rule 995A (Consolidated Audi Trail--Compliance Dates) sets 
forth the compliance dates for the various provisions of the Proposed 
Rule 900A Series. Paragraph (a) of Proposed Rule 995A states that, 
except as set forth in paragraphs (b) and (c) of this Rule or otherwise 
set forth in this Rule Series, these rules are fully effective and 
members must comply with their terms.
    Paragraph (b) of Proposed Rule 995A establishes the compliance 
dates for the clock synchronization requirements as set forth in 
Proposed Rule 920A. Paragraph (b)(1) states that each Industry Member 
shall comply with Rule 920A with regard to Business Clocks that capture 
time in milliseconds commencing on or before March 15, 2017. Paragraph 
(b)(2) states that each Industry Member shall comply with Rule 920A 
with regard to Business Clocks that do not capture time in milliseconds 
commencing on or before February 19, 2018. The compliance date set 
forth in paragraph (b)(1) reflects the exemptive relief requested by 
the Participants with regard to the clock synchronization requirements 
related to Business Clocks that do not capture time in 
milliseconds.\31\
---------------------------------------------------------------------------

    \31\ See Letter from Participants to Brent J. Fields, Secretary, 
Commission, dated January 17, 2017.
---------------------------------------------------------------------------

    Paragraph (c) of Proposed Rule 995A establishes the compliance 
dates for the data recording and reporting requirements for Industry 
Members. Paragraph (c)(1) requires each Industry Member (other than 
Small Industry Members) to record and report the Industry Member Data 
to the Central Repository by November 15, 2018. Paragraph (c)(2) 
requires that each Industry Member that is a Small Industry Member to 
record and report the Industry Member Data to the Central Repository by 
November 15, 2019. Such compliance dates are consistent with the 
compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), and 
Section 6.7(a)(v) and (vi) of the CAT NMS Plan.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b)(5) of the Act,\32\ which requires, 
among other things, that the Exchange rules must 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 Section 6(b)(8) of the Act,\33\ which 
requires that Exchange rules not impose any burden on competition that 
is not necessary or appropriate.
---------------------------------------------------------------------------

    \32\ 15 U.S.C. 78f(b)(6).
    \33\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

    The Exchange believes that this proposal is consistent with the Act 
because it implements, interprets or 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

[[Page 9790]]

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.'' \34\ 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.
---------------------------------------------------------------------------

    \34\ Approval Order at 84697.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    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, and is designed to assist the Exchange in meeting its 
regulatory obligations pursuant to the Plan. The Exchange also notes 
that the Proposed Rule Series implementing provisions of the CAT NMS 
Plan will apply equally to all firms that trade NMS Securities and OTC 
Equity Securities. In addition, all national securities exchanges and 
FINRA are proposing this Proposed Rule 900A Series. Therefore, this is 
not a competitive rule filing, and, therefore, it does not impose a 
burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) By order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be disapproved.

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-Phlx-2017-07 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-Phlx-2017-07. 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-Phlx-2017-07 and 
should be submitted on or before March 1, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02550 Filed 2-7-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                    9778                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    communications relating to the                          I. Self-Regulatory Organization’s                     Plan to comply with Rule 613 of
                                                    proposed rule change between the                        Statement of the Terms of Substance of                Regulation NMS under the Exchange
                                                    Commission and any person, other than                   the Proposed Rule Change                              Act. The Plan was published for
                                                    those that may be withheld from the                        The Exchange proposes to adopt the                 comment in the Federal Register on
                                                    public in accordance with the                           Rule 900A Series to implement the                     May 17, 2016,8 and approved by the
                                                    provisions of 5 U.S.C. 552, will be                     compliance rule (‘‘Compliance Rule’’)                 Commission, as modified, on November
                                                    available for Web site viewing and                      regarding the National Market System                  15, 2016.9
                                                    printing in the Commission’s Public                     Plan Governing the Consolidated Audit                    The Plan is designed to create,
                                                    Reference Room, 100 F Street NE.,                       Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’).4            implement, and maintain a consolidated
                                                    Washington, DC 20549 on official                           The text of the proposed rule change               audit trail (‘‘CAT’’) that would capture
                                                    business days between the hours of                      is available on the Exchange’s Web site               customer and order event information
                                                    10:00 a.m. and 3:00 p.m. Copies of the                  at http://nasdaqphlx.cchwallstreet.com/               for orders in NMS Securities and OTC
                                                    filing also will be available for                       at the principal office of the Exchange,              Equity Securities, across all markets,
                                                    inspection and copying at the principal                 and at the Commission’s Public                        from the time of order inception through
                                                    office of the Exchange. All comments                    Reference Room.                                       routing, cancellation, modification, or
                                                    received will be posted without change;                                                                       execution in a single consolidated data
                                                                                                            II. Self-Regulatory Organization’s                    source. Each Participant is required to
                                                    the Commission does not edit personal
                                                                                                            Statement of the Purpose of, and                      enforce compliance by its Industry
                                                    identifying information from
                                                                                                            Statutory Basis for, the Proposed Rule                Members, as applicable, with the
                                                    submissions. You should submit only
                                                                                                            Change                                                provisions of the Plan, by adopting a
                                                    information that you wish to make
                                                    available publicly. All submissions                        In its filing with the Commission, the             Compliance Rule applicable to their
                                                    should refer to File Number SR–                         Exchange included statements                          Industry Members.10 As is described
                                                    BatsEDGX–2017–08 and should be                          concerning the purpose of and basis for               more fully below, the Proposed Rule
                                                    submitted on or before March 1, 2017.                   the proposed rule change and discussed                900A Series sets forth the Compliance
                                                                                                            any comments it received on the                       Rule to require Industry Members to
                                                      For the Commission, by the Division of
                                                                                                            proposed rule change. The text of these               comply with the provisions of the CAT
                                                    Trading and Markets, pursuant to delegated
                                                                                                            statements may be examined at the                     NMS Plan. The Proposed Rule 900A
                                                    authority.35
                                                                                                            places specified in Item IV below. The                Series includes twelve Proposed Rules
                                                    Robert W. Errett,                                       Exchange has prepared summaries, set                  covering the following areas: (1)
                                                    Deputy Secretary.                                       forth in sections A, B, and C below, of               Definitions; (2) clock synchronization;
                                                    [FR Doc. 2017–02554 Filed 2–7–17; 8:45 am]              the most significant aspects of such                  (3) Industry Member Data reporting; (4)
                                                    BILLING CODE 8011–01–P                                  statements.                                           Customer information reporting; (5)
                                                                                                            A. Self-Regulatory Organization’s                     Industry Member information reporting;
                                                                                                            Statement of the Purpose of, and                      (6) time stamps; (7) clock
                                                    SECURITIES AND EXCHANGE                                 Statutory Basis for, the Proposed Rule                synchronization rule violations; (8)
                                                    COMMISSION                                              Change                                                connectivity and data transmission; (9)
                                                                                                                                                                  development and testing; (10)
                                                    [Release No. 34–79945; File No. SR–Phlx–                1. Purpose                                            recordkeeping; (11) timely, accurate and
                                                    2017–07]                                                   Bats BYX Exchange, Inc., Bats BZX                  complete data; and (12) compliance
                                                                                                            Exchange, Inc., Bats EDGA Exchange,                   dates. Each of these Proposed Rules are
                                                    Self-Regulatory Organizations;                          Inc., Bats EDGX Exchange, Inc., BOX                   discussed in detail below.
                                                    NASDAQ PHLX LLC; Notice of Filing of                    Options Exchange LLC, C2 Options                      (i) Definitions
                                                    Proposed Rule Change To Adopt the                       Exchange, Incorporated, Chicago Board
                                                    Rule 900A Series                                        Options Exchange, Incorporated,                         Proposed Rule 910A (Consolidated
                                                                                                            Chicago Stock Exchange, Inc., Financial               Audit Trail—Definitions) sets forth the
                                                    February 2, 2017.                                                                                             definitions for the terms used in the
                                                                                                            Industry Regulatory Authority, Inc.,
                                                       Pursuant to Section 19(b)(1) of the                  International Securities Exchange, LLC,               Proposed Rule 900A Series. Each of the
                                                    Securities Exchange Act of 1934                         Investors’ Exchange LLC, ISE Gemini,                  defined terms in Proposed Rule 910A is
                                                    (‘‘Act’’),1 and Rule 19b–4 thereunder,2                 LLC, ISE Mercury, LLC, Miami                          discussed in detail in this section.
                                                    notice is hereby given that on January                  International Securities Exchange LLC,                (A) Account Effective Date
                                                    30, 2017, NASDAQ PHLX LLC (‘‘Phlx’’                     MIAX PEARL, LLC, NASDAQ BX, Inc.,
                                                    or ‘‘Exchange’’) filed with the Securities              NASDAQ PHLX LLC, The NASDAQ                           (I) Customer Information Approach
                                                    and Exchange Commission (‘‘SEC’’ or                     Stock Market LLC, National Stock                        SEC Rule 613 requires that numerous
                                                    ‘‘Commission’’) the proposed rule                       Exchange, Inc., New York Stock                        data elements be reported to the CAT to
                                                    change as described in Items I, II, and                 Exchange LLC, NYSE MKT LLC, and                       ensure there is sufficient information to
                                                    III, below, which Items have been                       NYSE Arca, Inc. (collectively, the                    create the lifecycle of an order, and
                                                    prepared by the Exchange.3 The                          ‘‘Participants’’) filed with the                      provide regulators with sufficient detail
                                                    Commission is publishing this notice to                 Commission, pursuant to Section 11A of
                                                    solicit comments on the proposed rule                   the Exchange Act 5 and Rule 608 of                    2014; and Letter from Participants to Brent J. Fields,
                                                    change from interested persons.                         Regulation NMS thereunder,6 the CAT                   Secretary, Commission, dated February 27, 2015.
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                                                                                                                                                                  On December 24, 2015, the Participants submitted
                                                                                                            NMS Plan.7 The Participants filed the                 an amendment to the CAT NMS Plan. See Letter
                                                      35 17 CFR 200.30–3(a)(12).                                                                                  from Participants to Brent J. Fields, Secretary,
                                                      1 15                                                    4 Unless otherwise specified, capitalized terms     Commission, dated December 23, 2015.
                                                           U.S.C. 78s(b)(1).
                                                      2 17 CFR 240.19b–4.                                   used in this rule filing are defined as set forth        8 Securities Exchange Act Release No. 77724

                                                      3 The Exchange originally filed this proposed rule    herein or in the CAT NMS Plan.                        (Apr. 27, 2016), 81 FR 30614 (May 17, 2016).
                                                                                                              5 15 U.S.C. 78k–1.                                     9 Securities Exchange Act Release. No. 79318
                                                    change on January 17, 2017 under File No. SR–
                                                                                                              6 17 CFR 242.608.                                   (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016)
                                                    Phlx–2017–03, and the Exchange subsequently
                                                    withdrew that filing on January 30, 2017 and filed        7 See Letter from the Participants to Brent J.      (‘‘Approval Order’’).
                                                    this proposed rule change.                              Fields, Secretary, Commission, dated September 30,       10 See SEC Rule 613(g)(1).




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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                              9779

                                                    about an order to perform their                         Within the Central Repository, each                   available, the earlier date will be used
                                                    regulatory duties. Certain required                     Customer would be uniquely identified                 to the extent that the dates differ; or (2)
                                                    elements are intended to ensure that the                by identifiers or a combination of                    when the trading relationship was
                                                    regulators can identify the Customer’s                  identifiers such as ITIN/SSN, date of                 established on or after November 15,
                                                    [sic] associated with orders. For                       birth, and as applicable, LEI and LTID.               2018 for Industry Members other than
                                                    example, SEC Rule 613(c)(7)(i)(A)                       The Plan Processor would be required to               Small Industry Members, or on or after
                                                    requires an Industry Member to report                   use these unique identifiers to map                   November 15, 2019 for Small Industry
                                                    the ‘‘Customer-IDs’’ for each Customer                  orders to specific Customers across all               Members, the date the Industry Member
                                                    for the original receipt or origination of              Industry Members and Participants. To                 established the relationship identifier,
                                                    an order. ‘‘Customer-ID’’ is defined in                 ensure information identifying a                      which would be no later than the date
                                                    SEC Rule 613(j)(5) to mean ‘‘with                       Customer is up to date, Industry                      the first order was received.
                                                    respect to a customer, a code that                      Members would be required to submit                      Paragraph (a)(2) of Proposed Rule
                                                    uniquely and consistently identifies                    to the Central Repository daily and                   910A states that an ‘‘Account Effective
                                                    such customer for purposes of providing                 periodic updates for reactivated                      Date’’ means, where an Industry
                                                    data to the Central Repository[sic].’’ SEC              accounts, newly established accounts,                 Member changes back office providers
                                                    Rule 613(c)(8) requires Industry                        and revised Firm Designated IDs or                    or clearing firms prior to November 15,
                                                    Members to use the same Customer-ID                     associated reportable Customer                        2018 for Industry Members other than
                                                    for each Customer. The SEC granted the                  information.                                          Small Industry Members, or prior to
                                                    Participants exemptive relief to permit                                                                       November 15, 2019 for Small Industry
                                                                                                            (II) Definition of Account Effective Date             Members, the date an account was
                                                    the use of an alternative approach to the
                                                    requirement that an Industry Member                        In connection with the Customer                    established at the relevant Industry
                                                    report a Customer-ID for every Customer                 Information Approach, Industry                        Member, either directly or via transfer.
                                                    upon original receipt or origination.11                 Members would be required to report                      Paragraph (a)(3) states that an
                                                    The alternative approach is called the                  Customer Account Information to the                   ‘‘Account Effective Date’’ means, where
                                                    Customer Information Approach.                          Central Repository. ‘‘Customer Account                an Industry Member acquires another
                                                       Under the Customer Information                       Information’’ is defined in SEC Rule                  Industry Member prior to November 15,
                                                    Approach, the CAT NMS Plan would                        613(j)(4) to ‘‘include, but not be limited            2018 for Industry Members other than
                                                    require each Industry Member to assign                  to, account number, account type,                     Small Industry Members, or prior to
                                                    a unique Firm Designated ID to each                     customer type, date account opened,                   November 15, 2019 for Small Industry
                                                    Customer. As the Firm Designated ID,                    and large trader identifier (if                       Members, the date an account was
                                                    Industry Members would be permitted                     applicable).’’ Therefore, when reporting              established at the relevant Industry
                                                    to use an account number or any other                   Customer Account Information, an                      Member, either directly or via transfer.
                                                    identifier defined by the firm, provided                Industry Member is required to report                    Paragraph (a)(4) states that ‘‘Account
                                                    each identifier is unique across the firm               the date an account was opened. The                   Effective Date’’ means, where there are
                                                    for each business date (i.e., a single firm             Participants requested and received an                multiple dates associated with an
                                                    may not have multiple separate                          exemption to allow an ‘‘Account                       account established prior to November
                                                    customers with the same identifier on                   Effective Date’’ to be reported in lieu of            15, 2018 for Industry Members other
                                                    any given date). Prior to their                         an account open date in certain limited               than Small Industry Members, or prior
                                                    commencement of reporting to the CAT,                   circumstances. The definition of                      to November 15, 2019 for Small
                                                    Industry Members would submit an                        ‘‘Account Effective Date’’ as set forth in            Industry Members, the earliest available
                                                    initial set of Customer information to                  Paragraph (a) of Proposed Rule 910A                   date.
                                                    the Central Repository, including the                   describes those limited circumstances in                 Paragraph (a)(5) states that an
                                                    Firm Designated ID, Customer                            which an Industry Member may report                   ‘‘Account Effective Date’’ means, with
                                                    Identifying Information and Customer                    an ‘‘Account Effective Date’’ rather than             regard to Industry Member proprietary
                                                    Account Information (which may                          the account open date. The proposed                   accounts established prior to November
                                                    include, as applicable, the Customer’s                  definition is the same as the definition              15, 2018 for Industry Members other
                                                    name, address, date of birth, individual                of ‘‘Account Effective Date’’ set forth in            than Small Industry Members, or prior
                                                    tax payer identifier number (‘‘ITIN’’)/                 Section 1.1 of the CAT NMS Plan,                      to November 15, 2019 for Small
                                                    social security number (‘‘SSN’’),                       provided, however, that specific dates                Industry Members: (1) The date
                                                    individual’s role in the account (e.g.,                 have replaced the descriptions of those               established for the account in the
                                                    primary holder, joint holder, guardian,                 dates set forth in Section 1.1 of the Plan.           Industry Member or in a system of the
                                                    trustee, person with power of attorney,                    Specifically, Paragraph (a)(1) defines             Industry Member or (2) the date when
                                                    etc.) and LEI and/or Larger Trader ID                   ‘‘Account Effective Date to mean, with                proprietary trading began in the account
                                                    (‘‘LTID’’). This process is referred to as              regard to those circumstances in which                (i.e., the date on which the first orders
                                                    the customer definition process.                        an Industry Member has established a                  were submitted from the account). With
                                                       In accordance with the Customer                      trading relationship with an institution              regard to paragraphs (a)(2)–(5), the
                                                    Information Approach, Industry                          but has not established an account with               Account Effective Date will be no later
                                                    Members would be required to report                     that institution: (1) When the trading                than the date trading occurs at the
                                                    only the Firm Designated ID for each                    relationship was established prior to                 Industry Member or in the Industry
                                                    new order submitted to the Central                      November 15, 2018 for Industry                        Member’s system.
                                                                                                            Members other than Small Industry
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                                                    Repository, rather than the ‘‘Customer-                                                                       (B) Active Account
                                                    ID’’ with individual order events.                      Members, or prior to November 15, 2019
                                                                                                            for Small Industry Members, either (a)                  Under the Customer Information
                                                       11 See Securities Exchange Act Release No. 77265     the date the relationship identifier was              Approach, Industry Members are
                                                    (March 1, 2016), 81 FR 11856 (March 7, 2016)            established within the Industry                       required to report Customer Identifying
                                                    (‘‘Exemption Order’’). See also Letter from             Member; (b) the date when trading                     Information and Customer Account
                                                    Participants to Brent J. Fields, Secretary,
                                                    Commission, dated January 30, 2015 at 12
                                                                                                            began (i.e., the date the first order was             Information for only those accounts that
                                                    (‘‘Exemptive Request Letter’’); and CAT NMS Plan        received) using the relevant relationship             are active. This will alleviate the need
                                                    at Appendix C, Section A.1(a)(iii).                     identifier; or (c) if both dates are                  for Industry Members to update such


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                                                    9780                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    information for non-active accounts, but                is the same definition as set forth in                link all Reportable Events for an order,
                                                    still ensure that the Central Repository                Section 1.1 of the CAT NMS Plan.                      and all orders that result from the
                                                    will collect audit trail data for Customer                                                                    aggregation or disaggregation of such
                                                                                                            (D) Business Clock
                                                    accounts that have any Reportable                                                                             order. This is the same definition as set
                                                    Events. Accordingly, paragraph (b) of                     To create the required audit trail,                 forth in SEC Rule 613(j)(1), and Section
                                                    Proposed Rule 910A defines an ‘‘Active                  Industry Members are required to record               1.1 of the CAT NMS Plan defines ‘‘CAT-
                                                    Account’’ as an account that has had                    the date and time of various Reportable               Order-ID’’ by reference to SEC Rule
                                                    activity in Eligible Securities within the              Events to the Central Repository.                     613(j)(1).
                                                    last six months. This is the same                       Industry Members will use ‘‘Business
                                                                                                            Clocks’’ to record such dates and times.              (H) CAT Reporting Agent
                                                    definition as set forth in Section 1.1 of
                                                    the CAT NMS Plan.                                       Accordingly, paragraph (d) of Proposed                   The CAT NMS Plan permits an
                                                                                                            Rule 910A defines the term ‘‘Business                 Industry Member to use a third party,
                                                    (C) Allocation Report                                   Clock’’ as a clock used to record the date            such as a vendor, to report the required
                                                    (I) Allocation Report Approach                          and time of any Reportable Event                      data to the Central Repository on behalf
                                                                                                            required to be reported under this Rule               of the Industry Member.13 Such a third
                                                       SEC Rule 613(c)(7)(vi)(A) requires                   900A Series. This is the same definition              party, referred to in this Proposed Rule
                                                    each Industry Member to record and                      as set forth in Section 1.1 of the CAT                900A Series as a ‘‘CAT Reporting
                                                    report to the Central Repository ‘‘the                  NMS Plan, except the Exchange                         Agent,’’ would be one type of a Data
                                                    account number for any subaccounts to                   proposes to replace the phrase ‘‘under                Submitter, that is, a party that submits
                                                    which the execution is allocated (in                    SEC Rule 613’’ at the end of the                      data to the Central Repository.
                                                    whole or in part).’’ The Participants                   definition in Section 1.1 of the Plan                 Paragraph (h) of Proposed Rule 910A
                                                    requested and received from the SEC                     with the phrase ‘‘under this Rule                     defines the term ‘‘CAT Reporting
                                                    exemptive relief from SEC Rule 613 for                  Series.’’ This change is intended to                  Agent’’ to mean a Data Submitter that is
                                                    an alternative to this approach                         recognize that the Industry Members’                  a third party that enters into an
                                                    (‘‘Allocation Report Approach’’). The                   obligations with regard to the CAT are                agreement with an Industry Member
                                                    Allocation Report Approach would                        set forth in this Rule 900A Series.                   pursuant to which the CAT Reporting
                                                    permit Industry Members to record and
                                                                                                            (E) CAT                                               Agent agrees to fulfill such Industry
                                                    report to the Central Repository an
                                                                                                                                                                  Member’s reporting obligations under
                                                    Allocation Report that includes, among                    Paragraph (e) of Proposed Rule 910A                 this Rule 900A Series.
                                                    other things, the Firm Designated ID for                defines the term ‘‘CAT’’ to mean the                     This definition is based on FINRA’s
                                                    any account(s) to which executed shares                 consolidated audit trail contemplated by              definition of a ‘‘Reporting Agent’’ as set
                                                    are allocated when an execution is                      SEC Rule 613. This is the same                        forth in FINRA’s rule related to its Order
                                                    allocated in whole or part in lieu of                   definition as set forth in Section 1.1 of             Audit Trail System (‘‘OATS’’).
                                                    requiring the reporting of the account                  the CAT NMS Plan.                                     Specifically, FINRA Rule 7410(n)
                                                    number for any subaccount to which an                                                                         defines a ‘‘Reporting Agent’’ as a third
                                                                                                            (F) CAT NMS Plan
                                                    execution is allocated, as is required by                                                                     party that enters into any agreement
                                                    SEC Rule 613.12 Under SEC Rule 613,                       Paragraph (f) of Proposed Rule 910A
                                                                                                            defines the term ‘‘CAT NMS Plan’’ to                  with a member pursuant to which the
                                                    regulators would be able to link the                                                                          Reporting Agent agrees to fulfill such
                                                    subaccount to which an allocation was                   mean the National Market System Plan
                                                                                                            Governing the Consolidated Audit Trail,               member’s obligations under Rule 7450.
                                                    made to a specific order. In contrast,                                                                        The Reporting Agent for OATS fulfills a
                                                    under the Allocation Report Approach,                   as amended from time to time.
                                                                                                                                                                  similar role to the CAT Reporting Agent.
                                                    regulators would only be able to link an                (G) CAT-Order-ID
                                                    allocation to the account to which it was                                                                     (I) Central Repository
                                                    made, and not to a specific order.                      (I) Daisy Chain Approach
                                                                                                                                                                     Paragraph (i) of Proposed Rule 910A
                                                                                                               Under the CAT NMS Plan, the Daisy                  defines the term ‘‘Central Repository’’ to
                                                    (II) Definition of Allocation Report
                                                                                                            Chain Approach is used to link and                    mean the repository responsible for the
                                                       To assist in implementing the                        reconstruct the complete lifecycle of                 receipt, consolidation, and retention of
                                                    Allocation Report Approach, paragraph                   each Reportable Event in CAT.                         all information reported to the CAT
                                                    (c) of Proposed Rule 910A defines an                    According to this Approach, Industry                  pursuant to SEC Rule 613 and the CAT
                                                    ‘‘Allocation Report.’’ Specifically, an                 Members assign their own identifiers to               NMS Plan. This is the same definition
                                                    ‘‘Allocation Report’’ means a report                    each order event. Within the Central                  as set forth in Section 1.1 of the CAT
                                                    made to the Central Repository by an                    Repository, the Plan Processor later                  NMS Plan, except the Exchange uses the
                                                    Industry Member that identifies the                     replaces the identifier provided by the               phrase ‘‘CAT NMS Plan’’ in place of the
                                                    Firm Designated ID for any account(s),                  Industry Member for each Reportable                   phrase ‘‘this Agreement.’’
                                                    including subaccount(s), to which                       Event with a single identifier, called the
                                                    executed shares are allocated and                       CAT Order-ID, for all order events                    (J) Compliance Threshold
                                                    provides the security that has been                     pertaining to the same order. This CAT                   Paragraph (j) of Proposed Rule 910A
                                                    allocated, the identifier of the firm                   Order-ID is used to link the Reportable               defines the term ‘‘Compliance
                                                    reporting the allocation, the price per                 Events related to the same order.                     Threshold’’ as having the meaning set
                                                    share of shares allocated, the side of                                                                        forth in Proposed Rule 993A(d). This
                                                                                                            (II) Definition of CAT-Order-ID
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                                                    shares allocated, the number of shares                                                                        definition has the same substantive
                                                    allocated to each account, and the time                    To implement the Daisy Chain                       meaning as the definition set forth in
                                                    of the allocation; provided, for the                    Approach, Paragraph (g) of Proposed                   Section 1.1 of the CAT NMS Plan. As
                                                    avoidance of doubt, any such Allocation                 Rule 910A defines the term ‘‘CAT-                     discussed in detail below with regard to
                                                    Report shall not be required to be linked               Order-ID.’’ The term ‘‘CAT-Order-ID’’ is              Proposed Rule 993A(d), each Industry
                                                    to particular orders or executions. This                defined to mean a unique order                        Member is required to meet a separate
                                                                                                            identifier or series of unique order
                                                      12 See Exemptive Request Letter at 26–27; and         identifiers that allows the Central                     13 Appendix C, Section A.1(a) of the CAT NMS

                                                    Exemption Order.                                        Repository to efficiently and accurately              Plan.



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                  9781

                                                    compliance threshold which will be an                   identify the ‘‘account type’’ as a                    that an Industry Member that has an LEI
                                                    Industry Member-specific rate that may                  ‘‘relationship.’’ Second, in those                    for a Customer must submit the
                                                    be used as the basis for further review                 circumstances in which the relevant                   Customer’s LEI in addition to other
                                                    or investigation into the Industry                      account was established prior to                      information of sufficient detail to
                                                    Member’s performance with regard to                     November 15, 2018 for Industry                        identify the Customer. This is the same
                                                    the CAT. This Industry Member-specific                  Members other than Small Industry                     definition as set forth in Section 1.1 of
                                                    rate is the ‘‘Compliance Threshold.’’                   Members, or prior to November 15, 2019                the CAT NMS Plan.
                                                                                                            for Small Industry Members, and no
                                                    (K) Customer                                                                                                  (N) Data Submitter
                                                                                                            ‘‘date account opened’’ is available for
                                                       Industry Members are required to                     the account, the Industry Member will                    The CAT NMS Plan uses the term
                                                    submit to the Central Repository certain                provide the Account Effective Date in                 ‘‘Data Submitter’’ to refer to any person
                                                    information related to their Customers,                 the following circumstances: (1) Where                that reports data to the Central
                                                    including Customer Identifying                          an Industry Member changes back office                Repository.14 Such Data Submitters may
                                                    Information and Customer Account                        providers or clearing firms and the date              include those entities that are required
                                                    Information, as well as data related to                 account opened is changed to the date                 to submit data to the Central Repository
                                                    their Customer’s Reportable Events.                     the account was opened on the new                     (e.g., national securities exchanges,
                                                    Accordingly, Paragraph (k) of Proposed                  back office/clearing firm system; (2)                 national securities associations, and
                                                    Rule 910A proposes to define the term                   where an Industry Member acquires                     Industry Members), third-parties that
                                                    ‘‘Customer.’’ Specifically, the term                    another Industry Member and the date                  may submit data to the CAT on behalf
                                                    ‘‘Customer’’ would be defined to mean:                  account opened is changed to the date                 of CAT Reporters (i.e., CAT Reporting
                                                    (1) The account holder(s) of the account                the account was opened on the post-                   Agents), and outside parties that are not
                                                    at an Industry Member originating the                   merger back office/clearing firm system;              required to submit data to the CAT but
                                                    order; and (2) any person from whom                     (3) where there are multiple dates                    from which the CAT may receive data
                                                    the Industry Member is authorized to                    associated with an account in an                      (e.g., securities information processors
                                                    accept trading instructions for such                    Industry Member’s system, and the                     (‘‘SIPs’’)). To include this term in the
                                                    account, if different from the account                  parameters of each date are determined                Proposed Rule 900A Series, the
                                                    holder(s). This is the same definition as               by the individual Industry Member; and                Exchange proposes to define ‘‘Data
                                                    set forth in SEC Rule 613(j)(3), except                 (4) where the relevant account is an                  Submitter’’ in paragraph (n) of Proposed
                                                    the Exchange proposes to replace the                    Industry Member proprietary account.                  Rule 910A. Specifically, paragraph (n)
                                                    references to a registered broker-dealer                The proposed definition is the same as                of Proposed Rule 910A defines a ‘‘Data
                                                    or broker-dealer with a reference to an                 the definition of ‘‘Customer Account                  Submitter’’ to mean any person that
                                                    Industry Member for consistency of                      Information’’ set forth in Section 1.1 of             reports data to the Central Repository,
                                                    terms used in the Proposed Rule 900A                    the CAT NMS Plan, provided, however,                  including national securities exchanges,
                                                    Series. The Exchange also notes that                    that specific dates have replaced the                 national securities associations, broker-
                                                    Section 1.1 of the CAT NMS Plan                         descriptions of those dates set forth in              dealers, the SIPs for the CQS, CTA, UTP
                                                    defines ‘‘Customer’’ by reference to SEC                Section 1.1 of the Plan.                              and Plan for Reporting of Consolidated
                                                    Rule 613(j)(3).                                                                                               Options Last Sale Reports and
                                                                                                            (M) Customer Identifying Information                  Quotation Information (‘‘OPRA’’) Plans,
                                                    (L) Customer Account Information
                                                                                                               As discussed above, under the                      and certain other vendors or third
                                                       As discussed above, under the                        Customer Information Approach,                        parties that may submit data to the
                                                    Customer Information Approach,                          Industry Members are required to report               Central Repository on behalf of Industry
                                                    Industry Members are required to report                 Customer Identifying Information to the               Members.
                                                    Customer Account Information to the                     Central Repository as part of the
                                                    Central Repository as part of the                       customer definition process.                          (O) Eligible Security
                                                    customer definition process.                            Accordingly, the Exchange proposes to                    The reporting requirements of the
                                                    Accordingly, the Exchange proposes to                   define the term ‘‘Customer Account                    Proposed Rule 900A Series only apply
                                                    define the term ‘‘Customer Account                      Information’’ to clarify what Customer                to Reportable Events in Eligible
                                                    Information’’ to clarify what customer                  information would need to be reported                 Securities. Currently, an Eligible
                                                    information would need to be reported                   to the Central Repository.                            Security includes NMS Securities and
                                                    to the Central Repository.                                 Paragraph (m) of Proposed Rule 910A                OTC Equity Securities. Accordingly,
                                                       Paragraph (l) of Proposed Rule 910A                  defines the term ‘‘Customer Identifying               paragraph (o) of Proposed Rule 910A
                                                    defines the term ‘‘Customer Account                     Information’’ to mean information of                  defines the term ‘‘Eligible Security’’ to
                                                    Information’’ to include, in part,                      sufficient detail to identify a Customer.             include: (1) All NMS Securities; and (2)
                                                    account number, account type, customer                  With respect to individuals, ‘‘Customer               all OTC Equity Securities. The terms
                                                    type, date account opened, and large                    Identifying Information’’ includes, but is            ‘‘NMS Securities’’ and ‘‘OTC Equity
                                                    trader identifier (if applicable).                      not limited to: Name, address, date of                Securities’’ are defined, in turn, below.
                                                    Proposed Rule 910A(l), however,                         birth, individual tax payer identification            This is the same definition as set forth
                                                    provides an alternative definition of                   number (‘‘ITIN’’)/social security number              in Section 1.1 of the CAT NMS Plan.
                                                    ‘‘Customer Account Information’’ in two                 (‘‘SSN’’), individual’s role in the
                                                    limited circumstances. First, in those                  account (e.g., primary holder, joint                  (P) Error Rate
                                                    circumstances in which an Industry                      holder, guardian, trustee, person with                (I) Maximum Error Rate
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                                                    Member has established a trading                        the power of attorney). With respect to                  Under the CAT NMS Plan, the
                                                    relationship with an institution but has                legal entities, ‘‘Customer Identifying                Operating Committee sets the maximum
                                                    not established an account with that                    Information’’ includes, but is not                    Error Rate that the Central Repository
                                                    institution, the Industry Member will:                  limited to, name, address, Employer                   would tolerate from an Industry
                                                    (1) Provide the Account Effective Date                  Identification Number (‘‘EIN’’)/Legal                 Member reporting data to the Central
                                                    in lieu of the ‘‘date account opened’’; (2)             Entity Identifier (‘‘LEI’’) or other
                                                    provide the relationship identifier in                  comparable common entity identifier, if                 14 Appendix C, Section A.1(a) of the CAT NMS

                                                    lieu of the ‘‘account number’’; and (3)                 applicable. The definition further notes              Plan.



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                                                    9782                         Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    Repository.15 The Operating Committee                     term ‘‘Error Rate’’ in Proposed Rule                  definition has the same substantive
                                                    reviews and resets the maximum Error                      910A. Paragraph (p) of Proposed Rule                  meaning as the definition set forth in
                                                    Rate, at least annually.16 If an Industry                 910A defines the term ‘‘Error Rate’’ to               Section 1.1 of the CAT NMS Plan. The
                                                    Member reports CAT data to the Central                    mean the percentage of Reportable                     definition of ‘‘Industry Member Data’’ is
                                                    Repository with errors such that their                    Events collected by the Central                       discussed more fully in the discussion
                                                    error percentage exceeds the maximum                      Repository in which the data reported                 below regarding Proposed Rule
                                                    Error Rate, then such Industry Member                     does not fully and accurately reflect the             930A(a)(2).
                                                    would not be in compliance with the                       order event that occurred in the market.
                                                                                                                                                                    (T) Initial Plan Processor
                                                    CAT NMS Plan or Rule 613.17 As such,                      This is the same definition as set forth
                                                    the Exchange or the SEC ‘‘may take                        in SEC Rule 613(j)(6), and Section 1.1 of               Paragraph (t) of Proposed Rule 910A
                                                    appropriate action against an Industry                    the CAT NMS Plan defines ‘‘Error Rate’’               defines the term ‘‘Initial Plan Processor’’
                                                    Member for failing to comply with its                     by reference to SEC Rule 613(j)(6).                   to mean the first Plan Processor selected
                                                    CAT reporting obligations.18 The CAT                                                                            by the Operating Committee in
                                                                                                              (Q) Firm Designated ID                                accordance with SEC Rule 613, Section
                                                    NMS Plan sets the initial Error Rate at
                                                    5%.19 It is anticipated that the                             As discussed above, under the                      6.1 of the CAT NMS Plan and the
                                                    maximum Error Rate will be reviewed                       Customer Information Approach, the                    National Market System Plan Governing
                                                    and lowered by the Operating                              CAT NMS Plan would require each                       the Process for Selecting a Plan
                                                    Committee once Industry Members                           Industry Member to assign a unique                    Processor and Developing a Plan for the
                                                    begin to report to the Central                            Firm Designated ID to each Customer.                  Consolidated Audit Trail. This is the
                                                    Repository.20                                             Industry Members would be permitted                   same definition as set forth in Section
                                                      The CAT NMS Plan requires the Plan                      to use as the Firm Designated ID an                   1.1 of the CAT NMS Plan, although the
                                                    Processor to: (1) Measure and report                      account number or any other identifier                proposed definition uses the full name
                                                    errors every business day; (2) provide                    defined by the firm, provided each                    of the ‘‘Selection Plan.’’
                                                    Industry Members daily statistics and                     identifier is unique across the firm for
                                                                                                                                                                    (U) Listed Option or Option
                                                    error reports as they become available,                   each business date (i.e., a single firm
                                                    including a description of such errors;                   may not have multiple separate                           The CAT NMS Plan and this Proposed
                                                                                                              customers with the same identifier on                 Rule 900A Series applies to Eligible
                                                    (3) provide monthly reports to Industry
                                                                                                              any given date). Industry Members                     Securities, which includes NMS
                                                    Members that detail an Industry
                                                                                                              would be required to report only the                  Securities, which, in turn, includes
                                                    Member’s performance and comparison
                                                                                                              Firm Designated ID for each new order                 Listed Options. Certain requirements of
                                                    statistics; (4) define educational and
                                                                                                              submitted to the Central Repository,                  the Proposed Rule 900A Series apply
                                                    support programs for Industry Members
                                                                                                              rather than the ‘‘Customer-ID’’ with                  specifically to Listed Options.
                                                    to minimize Error Rates; and (5)
                                                                                                              individual order events. Accordingly,                 Accordingly, Paragraph (u) of Proposed
                                                    identify, daily, all Industry Members
                                                                                                              the Exchange proposes to define the                   Rule 910A defines the term ‘‘Listed
                                                    exceeding the maximum allowable Error
                                                                                                              term ‘‘Firm Designated ID’’ in Proposed               Option’’ or ‘‘Option.’’ Specifically,
                                                    Rate. To timely correct data-submitted
                                                                                                              Rule 910A. Specifically, paragraph (q) of             paragraph (u) of Proposed Rule 910A
                                                    errors to the Central Repository, the                                                                           states that the term ‘‘Listed Option’’ or
                                                    CAT NMS Plan requires that the Central                    Proposed Rule 910A defines the term
                                                                                                              ‘‘Firm Designated ID’’ to mean a unique               ‘‘Option’’ has the meaning set forth in
                                                    Repository receive and process error                                                                            SEC Rule 600(b)(35) of Regulation NMS.
                                                    corrections at all times. Further, the                    identifier for each trading account
                                                                                                              designated by Industry Members for                    SEC Rule 600(b)(35), in turn, defines a
                                                    CAT NMS Plan requires that Industry                                                                             listed option as ‘‘any option traded on
                                                    Members be able to submit error                           purposes of providing data to the
                                                                                                              Central Repository, where each such                   a registered national securities exchange
                                                    corrections to the Central Repository                                                                           or automated facility of a national
                                                    through a web-interface or via bulk                       identifier is unique among all identifiers
                                                                                                              from any given Industry Member for                    securities association.’’ The Exchange
                                                    uploads or file submissions, and that the                                                                       notes that the proposed definition of
                                                    Plan Processor, subject to the Operating                  each business date. This is the same
                                                                                                              definition as set forth in Section 1.1 of             ‘‘Listed Option’’ is the same definition
                                                    Committee’s approval, support the bulk                                                                          as the definition set forth in Section 1.1
                                                    replacement of records and the                            the CAT NMS Plan. Industry Members
                                                                                                              would be permitted to use an account                  of the CAT NMS Plan.
                                                    reprocessing of such records. The
                                                    Participants, furthermore, require that                   number or any other identifier defined                (V) Manual Order Event
                                                    the Plan Processor identify Industry                      by the firm, provided each identifier is              (I) Manual Order Event Approach
                                                    Member data submission errors based                       unique across the firm for each business
                                                                                                              date (i.e., a single firm may not have                   The CAT NMS Plan sets forth clock
                                                    on the Plan Processor’s validation
                                                                                                              multiple separate customers with the                  synchronization and timestamp
                                                    processes.21
                                                                                                              same identifier on any given date).                   requirements for Industry Members
                                                    (II) Definition of Error Rate                                                                                   which reflect exemptions for Manual
                                                                                                              (R) Industry Member                                   Order Events granted by the
                                                       To implement the requirements of the
                                                    CAT NMS Plan related to the Error Rate,                     Paragraph (r) of Proposed Rule 910A                 Commission.22 Specifically, the Plan
                                                    the Exchange proposes to define the                       defines the term ‘‘Industry Member’’ to               requires Industry Members to record
                                                                                                              mean a member of a national securities                and report the time of each Reportable
                                                      15 Section   6.5(d)(i) of the CAT NMS Plan.             exchange or a member of a national                    Event using timestamps reflecting
                                                                                                                                                                    current industry standards (which must
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                                                      16 Appendix     C, Section A.3(b) of the CAT NMS        securities association.’’ This is the same
                                                    Plan.                                                     definition as set forth in Section 1.1 of             be at least to the millisecond) or, if an
                                                      17 Appendix C, Section A.3(b) of the CAT NMS
                                                                                                              the CAT NMS Plan.                                     Industry Members[sic] uses timestamps
                                                    Plan; Rule 613(g)–(h).                                                                                          in increments finer than milliseconds,
                                                      18 Appendix C, Section A.3(b) of the CAT NMS            (S) Industry Member Data                              such finer increments, when reporting
                                                    Plan.
                                                      19 Section 6.5(d)(i) of the CAT NMS Plan.                 Paragraph (s) of Proposed Rule 910A                 to the Central Repository to the extent
                                                      20 Appendix C, Section A.3(b) of the CAT NMS            states that the term ‘‘Industry Member                the Industry Member’s order handling
                                                    Plan.                                                     Data’’ has the meaning set forth in
                                                      21 Approval Order at 84718.                             Proposed Rule 930A(a)(2). This                          22 Exemption    Order.



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                       9783

                                                    or execution systems use increments                     the same definition as set forth in                     The Participants, however, requested
                                                    finer than milliseconds. For Manual                     Section 1.1 of the CAT NMS Plan.                      and received exemptive relief from SEC
                                                    Order Events, however, the Plan                                                                               Rule 613 so that the CAT NMS Plan may
                                                                                                            (X) NMS Security
                                                    provides that such events must be                                                                             permit Options Market Maker quotes to
                                                    recorded in increments up to and                           NMS Securities are one of the types                be reported to the Central Repository by
                                                    including one second, provided that                     of Eligible Securities for the CAT.                   the relevant options exchange in lieu of
                                                    Industry Members record and report the                  Therefore, the Exchange proposes to                   requiring that such reporting be done by
                                                    time the event is captured electronically               define the term ‘‘NMS Security’’ in                   both the options exchange and the
                                                    in an order handling and execution                      Proposed Rule 910A. Specifically,                     Options Market Maker, as is required by
                                                    system (‘‘Electronic Capture Time’’) in                 paragraph (x) of Proposed Rule 910A                   SEC Rule 613.23 In accordance with the
                                                    milliseconds. In addition, Industry                     defines the term ‘‘NMS Security’’ to                  exemptive relief, Options Market
                                                    Members are required to synchronize                     mean any security or class of securities              Makers would be required to report to
                                                    their respective Business Clocks (other                 for which transaction reports are                     the options exchange the time at which
                                                    than such Business Clocks used solely                   collected, processed, and made                        a quote in a Listed Option is sent to the
                                                    for Manual Order Events) at a minimum                   available pursuant to an effective                    options exchange. Such time
                                                    to within 50 milliseconds of the time                   transaction reporting plan, or an                     information also will be reported to the
                                                    maintained by the National Institute of                 effective national market system plan                 Central Repository by the options
                                                    Standards and Technology (‘‘NIST’’),                    for reporting transactions in Listed                  exchange in lieu of reporting by the
                                                    and maintain such a synchronization.                    Options. This is the same definition as               Options Market Maker.
                                                    Each Industry Member is required to                     set forth in Section 1.1 of the CAT NMS
                                                    synchronize their Business Clocks used                  Plan.                                                 (II) Definition of Options Market Maker
                                                    solely for Manual Order Events,                         (Y) NMS Stock                                            To implement the requirements
                                                    however, at a minimum to within one                                                                           related to Option Market Maker quotes,
                                                    second of the time maintained by the                      Under the CAT NMS Plan, the                         the Exchange proposes to define the
                                                    NIST.                                                   Operating Committee may establish                     term ‘‘Options Market Maker’’ in
                                                                                                            different Trading Days for NMS Stocks                 Proposed Rule 910A. Specifically,
                                                    (II) Definition of Manual Order Event                   (as defined in SEC Rule 600(b)(47)),                  paragraph (aa) of Proposed Rule 910A
                                                       In order to clarify what a Manual                    Listed Options, OTC Equity Securities,                defines the term ‘‘Options Market
                                                    Order Event is for clock synchronization                and any other securities that are                     Maker’’ to mean a broker-dealer
                                                    and time stamp purposes, the Exchange                   included as Eligible Securities from                  registered with an exchange for the
                                                    proposes to define the term ‘‘Manual                    time to time. Accordingly, the Exchange
                                                                                                                                                                  purpose of making markets in options
                                                    Order Event’’ in Proposed Rule 910A.                    proposes to define the term ‘‘NMS
                                                                                                                                                                  contracts traded on the exchange. This
                                                    Specifically, paragraph (v) of Proposed                 Stock’’ in Paragraph (y) of Proposed
                                                                                                                                                                  is the same definition as set forth in
                                                    Rule 910A defines the term ‘‘Manual                     Rule 910A to mean any NMS Security
                                                                                                                                                                  Section 1.1 of the CAT NMS Plan.
                                                    Order Event’’ to mean a non-electronic                  other than an option. This is the same
                                                    communication of order-related                          definition as set forth in SEC Rule                   (BB) Order
                                                    information for which Industry                          600(b)(47) of Regulation NMS.                            The Proposed Rule 900A Series
                                                    Members must record and report the                      (Z) Operating Committee                               requires each Industry Member to
                                                    time of the event. This is the same                                                                           record and electronically report to the
                                                    definition as set forth in Section 1.1 of                 Paragraph (z) of Proposed Rule 910A
                                                                                                                                                                  Central Repository certain details for
                                                    the CAT NMS Plan.                                       defines the term ‘‘Operating Committee’’
                                                                                                            to mean the governing body of the CAT                 each order. Accordingly, the Exchange
                                                    (W) Material Terms of the Order                         NMS, LLC designated as such and                       proposes to define the term ‘‘Order’’ in
                                                                                                            described in Article IV of the CAT NMS                Proposed Rule 910A. Specifically,
                                                       Proposed Rule 930A requires Industry                                                                       paragraph (bb) of Proposed Rule 910A
                                                    Members to record and report to the                     Plan. This is the same definition as set
                                                                                                            forth in Section 1.1 of the CAT NMS                   defines the term ‘‘Order’’, with respect
                                                    Central Repository Material Terms of                                                                          to Eligible Securities, to include: (1)
                                                    the Order with certain Reportable                       Plan, except the Exchange proposes to
                                                                                                            use the phrase ‘‘CAT NMS LLC’’ in                     Any order received by an Industry
                                                    Events (e.g., for the original receipt or                                                                     Member from any person; (2) any order
                                                    origination of an order, for the routing                place of the phrase ‘‘the Company’’ for
                                                                                                            clarity.                                              originated by an Industry Member; or (3)
                                                    of an order). Accordingly, the Exchange                                                                       any bid or offer. This is the same
                                                    proposes to define the term ‘‘Material                  (AA) Options Market Maker                             definition as set forth in SEC Rule
                                                    Terms of the Order’’ in Proposed Rule                                                                         613(j)(8), except the Exchange proposes
                                                    910A. Specifically, paragraph (w) of                    (I) Options Market Maker Quote
                                                                                                            Exemption                                             to replace the phrase ‘‘member of a
                                                    Proposed Rule 910A defines the term                                                                           national securities exchange or national
                                                    ‘‘Material Terms of the Order’’ to                         SEC Rule 613(c)(7) provides that the               securities association’’ with the term
                                                    include: The NMS Security or OTC                        CAT NMS Plan must require each                        ‘‘Industry Member.’’ The Exchange
                                                    Equity Security symbol; security type;                  Industry Member to record and                         notes that Section 1.1 of the CAT NMS
                                                    price (if applicable); size (displayed and              electronically report to the Central                  Plan defines ‘‘Order’’ by reference to
                                                    non-displayed); side (buy/sell); order                  Repository details for each order and                 SEC Rule 613(j)(8).
                                                    type; if a sell order, whether the order                each reportable event, including the
                                                    is long, short, short exempt; open/close                routing and modification or cancellation              (CC) OTC Equity Security
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                                                    indicator (except on transactions in                    of an order. SEC Rule 613(j)(8) defines                 OTC Equity Securities are one of the
                                                    equities); time in force (if applicable); if            ‘‘order’’ to include ‘‘any bid or offer.’’            types of Eligible Securities for the CAT.
                                                    the order is for a Listed Option, option                Therefore, under SEC Rule 613, the                    Therefore, the Exchange proposes to
                                                    type (put/call), option symbol or root                  details for each Options Market Maker                 define the term ‘‘OTC Equity Security’’
                                                    symbol, underlying symbol, strike price,                quotation must be reported to the                     in Proposed Rule 910A. Specifically,
                                                    expiration date, and open/close (except                 Central Repository by both the Options
                                                    on market maker quotations); and any                    Market Maker and the options exchange                   23 See Exemptive Request Letter at 2, and

                                                    special handling instructions. This is                  to which it routes its quote.                         Exemption Order.



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                                                    9784                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    paragraph (cc) of Proposed Rule 910A                    in Proposed Rule 930A(a)(1). This                     assign a unique CAT-Reporter-ID to
                                                    defines the term ‘‘OTC Equity Security’’                definition has the same substantive                   identify Industry Members.
                                                    to mean any equity security, other than                 meaning as the definition set forth in in               For the Central Repository to link the
                                                    an NMS Security, subject to prompt last                 Section 1.1 of the CAT NMS Plan. The                  SRO-Assigned Market Participant
                                                    sale reporting rules of a registered                    definition of ‘‘Recorded Industry                     Identifier to the CAT-Reporter-ID, each
                                                    national securities association and                     Member Data’’ is discussed more fully                 SRO will submit to the Central
                                                    reported to one of such association’s                   in the discussion below regarding                     Repository, on a daily basis, all SRO-
                                                    equity trade reporting facilities. This is              Proposed Rule 930A(a)(1).                             Assigned Market Participant Identifiers
                                                    the same definition as set forth in                                                                           used by its Industry Members, as well
                                                    Section 1.1 of the CAT NMS Plan.                        (II) Reportable Event                                 as information to identify each such
                                                                                                               The Proposed Rule 900A Series                      Industry Member, including CRD
                                                    (DD) Participant                                                                                              number and LEI, if the SRO has
                                                                                                            requires each Industry Member to
                                                      Paragraph (dd) of Proposed Rule 910A                                                                        collected such LEI of the Industry
                                                                                                            record and electronically report to the
                                                    defines the term ‘‘Participant’’ to mean                                                                      Member. Additionally, each Industry
                                                                                                            Central Repository certain details for
                                                    each Person identified as such in                                                                             Member is required to submit to the
                                                                                                            each Reportable Event. To clarify these
                                                    Exhibit A of the CAT NMS Plan, as                                                                             Central Repository the CRD number of
                                                                                                            requirements, the Exchange proposes to
                                                    amended, in such Person’s capacity as                                                                         the Industry Member as well as the LEI
                                                                                                            define the term ‘‘Reportable Event’’ in
                                                    a Participant in CAT NMS, LLC. This is                                                                        of the Industry Member (if the Industry
                                                                                                            Proposed Rule 910A. Specifically,
                                                    the same definition in substance as set                                                                       Member has an LEI). The Plan Processor
                                                                                                            paragraph (ii) of Proposed Rule 910A
                                                    forth in Section 1.1 of the CAT NMS                                                                           will use this information to assign a
                                                                                                            states that the term ‘‘Reportable Event’’
                                                    Plan.                                                                                                         CAT-Reporter-ID to each Industry
                                                                                                            includes, but is not limited to, the                  Member for internal use within the
                                                    (EE) Person                                             original receipt or origination,                      Central Repository.
                                                      Paragraph (ee) of Proposed Rule 910A                  modification, cancellation, routing,
                                                                                                            execution (in whole or in part) and                   (II) Definition of SRO-Assigned Market
                                                    defines the term ‘‘Person’’ to mean any
                                                                                                            allocation of an order, and receipt of a              Participant Identifier
                                                    individual, partnership, limited liability
                                                    company, corporation, joint venture,                    routed order. This is the same definition                To implement the Existing Identifier
                                                    trust, business trust, cooperative or                   as set forth in Section 1.1 of the CAT                Approach, the Exchange proposes to
                                                    association and any heirs, executors,                   NMS Plan.                                             define the term ‘‘SRO-Assigned Market
                                                    administrators, legal representatives,                  (JJ) SRO                                              Participant’’ in Proposed Rule 910A.
                                                    successors and assigns of such Person                                                                         Specifically, paragraph (kk) of Proposed
                                                    where the context so permits. This is the                 Paragraph (jj) of Proposed Rule 910A                Rule 910A defines the term ‘‘SRO-
                                                    same definition as set forth in Section                 defines the term ‘‘SRO’’ to mean any                  Assigned Market Participant Identifier’’
                                                    1.1 of the CAT NMS Plan.                                self-regulatory organization within the               to mean an identifier assigned to an
                                                                                                            meaning of Section 3(a)(26) of the                    Industry Member by an SRO, or an
                                                    (FF) Plan Processor                                     Exchange Act. This is the same                        identifier used by a Participant. This is
                                                      Paragraph (ff) of Proposed Rule 910A                  definition as set forth in Section 1.1 of             the same definition as set forth in
                                                    defines the term ‘‘Plan Processor’’ to                  the CAT NMS Plan.                                     Section 1.1 of the CAT NMS Plan. For
                                                    mean the Initial Plan Processor or any                                                                        example, an Industry Member would be
                                                    other Person selected by the Operating                  (KK) SRO-Assigned Market Participant                  permitted to use any existing SRO-
                                                    Committee pursuant to SEC Rule 613                      Identifier                                            Assigned Market Participant Identifier
                                                    and Sections 4.3(b)(i) and 6.1 of the                   (I) Existing Identifier Approach                      (e.g., FINRA MPID, NASDAQ MPID,
                                                    CAT NMS Plan, and with regard to the                                                                          NYSE Mnemonic, CBOE User Acronym
                                                    Initial Plan Processor, the National                      The Participants requested and                      and CHX Acronym) when reporting
                                                    Market System Plan Governing the                        received exemptive relief from SEC Rule               order information to the Central
                                                    Process for Selecting a Plan Processor                  613 so that the CAT NMS Plan may                      Repository.
                                                    and Developing a Plan for the                           permit the Existing Identifier Approach,
                                                                                                            which would allow an Industry Member                  (LL) Small Industry Member
                                                    Consolidated Audit Trail, to perform the
                                                    CAT processing functions required by                    to report an existing SRO-Assigned                       The requirements of the Proposed
                                                    SEC Rule 613 and set forth in the CAT                   Market Participant Identifier in lieu of              Rule 900A Series differ to some extent
                                                    NMS Plan.                                               requiring the reporting of a universal                for Small Industry Members versus
                                                                                                            CAT-Reporter-ID (that is, a code that                 Industry Members other than Small
                                                    (GG) Received Industry Member Data                      uniquely and consistently identifies an               Industry Members. For example, the
                                                      Paragraph (gg) of Proposed Rule 910A                  Industry Member for purposes of                       compliance dates for reporting data to
                                                    states that the term ‘‘Received Industry                providing data to the Central                         the CAT are different for Small Industry
                                                    Member Data’’ has the meaning set forth                 Repository).24 The CAT NMS Plan                       Members versus other Industry
                                                    in Proposed Rule 930A(a)(2). This                       reflects the ‘‘Existing Identifier                    Members. Accordingly, to clarify the
                                                    definition has the same substantive                     Approach’’ for purposes of identifying                requirements that apply to which
                                                    meaning as the definition set forth in                  each Industry Member associated with                  Industry Members, the Exchange
                                                    Section 1.1 of the CAT NMS Plan. The                    an order or Reportable Event. Under the               proposes to define the term ‘‘Small
                                                                                                                                                                  Industry Member’’ in Proposed Rule
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                                                    definition of ‘‘Received Industry                       Existing Identifier Approach, Industry
                                                    Member Data’’ is discussed more fully                   Members are required to record and                    910A. Specifically, paragraph (ll) of
                                                    in the discussion below regarding                       report to the Central Repository an SRO-              Proposed Rule 910A defines the term
                                                    Proposed Rule 930A(a)(2).                               Assigned Market Participant Identifier                ‘‘Small Industry Member’’ to mean an
                                                                                                            for orders and certain Reportable Events              Industry Member that qualifies as a
                                                    (HH) Recorded Industry Member Data                      to be used by the Central Repository to               small broker-dealer as defined in Rule
                                                      Paragraph (hh) of Proposed Rule 910A                                                                        0–10(c) under the Securities Exchange
                                                    states that the term ‘‘Recorded Industry                  24 See Exemptive Request Letter at 19, and          Act of 1934, as amended. This is the
                                                    Member Data’’ has the meaning set forth                 Exemption Order.                                      same in substance as the definition of


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                             9785

                                                    ‘‘Small Industry Member’’ as set forth in                  Paragraph (a)(2) of Proposed Rule                  these documentation requirements
                                                    Section 1.1 of the CAT NMS Plan.                        920A requires each Industry Member to                 regarding clock synchronization are
                                                    Specifically, Section 1.1 of the CAT                    synchronize (1) its Business Clocks used              comparable to those set forth in
                                                    NMS Plan defines a ‘‘Small Industry                     solely for Manual Order Events and (2)                Supplementary Material .01 of FINRA
                                                    Member’’ as ‘‘an Industry Member that                   its Business Clocks used solely for the               Rule 4590 (Synchronization of Member
                                                    qualifies as a small broker-dealer as                   time of allocation on Allocation Reports              Business Clocks).
                                                    defined in SEC Rule 613.’’ The                          at a minimum to within a one second                      Paragraph (c) of Proposed Rule 920A
                                                    definition of a small broker-dealer under               tolerance of the time maintained by the               sets forth certification requirements
                                                    SEC Rule 613, in turn, is a small broker-               NIST atomic clock, and maintain such                  with regard to clock synchronization.
                                                    dealer as defined in SEC Rule 0–10(c).                  synchronization. This is the same                     Specifically, paragraph (c) of Proposed
                                                                                                            requirement as set forth in Section                   Rule 920A requires each Industry
                                                    (MM) Trading Day                                        6.8(a)(iii) and (iv) of the CAT NMS Plan.             Member to certify to the Exchange that
                                                       Proposed Rule 930A(b) establishes the                   Paragraph (a)(3) of Proposed Rule                  its Business Clocks satisfy the
                                                    deadlines for reporting certain data to                 920A clarifies that the tolerance                     synchronization requirements set forth
                                                    the Central Repository using the term                   described in paragraphs (a)(1) and (2) of             in paragraph (a) of Proposed Rule 920A
                                                    ‘‘Trading Day.’’ Accordingly, the                       the Proposed Rule 920A includes all of                periodically in accordance with the
                                                    Exchange proposes to define the term                    the following: (1) The time difference                certification schedule established by the
                                                    ‘‘Trading Day’’ in Proposed Rule 910A.                  between the NIST atomic clock and the                 Operating Committee pursuant to the
                                                    Specifically, Paragraph (mm) of                         Industry Member’s Business Clock; (2)                 CAT NMS Plan. This requirement is the
                                                    Proposed Rule 910A states that the term                 the transmission delay from the source;               same requirement as set forth in Section
                                                    ‘‘Trading Day’’ shall have the meaning                  and (3) the amount of drift of the                    6.8(a)(ii)(B), (iii) and (iv) of the CAT
                                                    as is determined by the Operating                       Industry Member’s Business Clock. This                NMS Plan. The Exchange intends to
                                                    Committee. For the avoidance of doubt,                  description of the clock synchronization              announce to its Industry Members the
                                                    the Operating Committee may establish                   tolerance is the same as set forth in                 certification schedule established by the
                                                    different Trading Days for NMS Stocks                   paragraph (b) of FINRA Rule 4590                      Operating Committee via an information
                                                    (as defined in SEC Rule 600(b)(47),                     (Synchronization of Member Business                   circular (‘‘Circular’’).
                                                    Listed Options, OTC Equity Securities,                  Clocks).
                                                                                                               Paragraph (a)(4) of Proposed Rule                     Paragraph (d) of Proposed Rule 920A
                                                    and any other securities that are                                                                             establishes reporting requirements with
                                                    included as Eligible Securities from                    920A requires Industry Members to
                                                                                                            synchronize their Business Clocks every               regard to clock synchronization.
                                                    time to time.                                                                                                 Paragraph (d) of Proposed Rule 920A
                                                                                                            business day before market open to
                                                    (ii) Clock Synchronization                              ensure that timestamps for Reportable                 requires Industry Members to report to
                                                                                                            Events are accurate. In addition, to                  the Plan Processor and the Exchange
                                                       SEC Rule 613(d)(1) under Regulation
                                                                                                            maintain clock synchronization,                       violations of paragraph (a) of this Rule
                                                    NMS requires Industry Members to
                                                                                                            Business Clocks must be checked                       pursuant to the thresholds set by the
                                                    synchronize their Business Clocks to the
                                                                                                            against the NIST atomic clock and re-                 Operating Committee pursuant to the
                                                    time maintained by NIST, consistent
                                                                                                            synchronized, as necessary, throughout                CAT NMS Plan. This requirement is the
                                                    with industry standards. To comply
                                                                                                            the day. This description of the required             same requirement as set forth in Section
                                                    with this provision, Section 6.8 of the
                                                                                                            frequency of clock synchronization is                 6.8(a)(ii)(C), (iii) and (iv) of the CAT
                                                    Plan sets forth the clock
                                                                                                            the same as set forth in paragraph (c) of             NMS Plan. The Exchange intends to
                                                    synchronization requirements for
                                                                                                            FINRA Rule 4590 (Synchronization of                   announce to its Industry Members the
                                                    Industry Members.25 To implement
                                                                                                            Member Business Clocks).                              relevant thresholds established by the
                                                    these provisions with regard to its
                                                                                                               Paragraph (b) of Proposed Rule 920A                Operating Committee via Circular.
                                                    Industry Members, the Exchange
                                                    proposes Rule 920A (Consolidated                        sets forth documentation requirements                 (iii) Industry Member Data Reporting
                                                    Audit Trail—Clock Synchronization) to                   with regard to clock synchronization.
                                                                                                            Specifically, paragraph (b) requires                    SEC Rule 613(c) under Regulation
                                                    require its Industry Members to comply
                                                                                                            Industry Members to document and                      NMS requires the CAT NMS Plan to set
                                                    with the clock synchronization
                                                                                                            maintain their synchronization                        forth certain provisions requiring
                                                    requirements of the Plan.
                                                                                                            procedures for their Business Clocks.                 Industry Members to record and report
                                                       Paragraph (a) of Proposed Rule 920A
                                                                                                            The Proposed Rule requires Industry                   data to the CAT. To comply with this
                                                    sets forth the manner in which Industry
                                                                                                            Members to keep a log of the times                    provision, Section 6.4 of the CAT NMS
                                                    Members must synchronize their
                                                                                                            when they synchronize their Business                  Plan sets forth the data reporting
                                                    Business Clocks. Paragraph (a)(1) of
                                                                                                            Clocks and the results of the                         requirements for Industry Members. To
                                                    Proposed Rule 920A requires each
                                                                                                            synchronization process. This log is                  implement these provisions with regard
                                                    Industry Member to synchronize its
                                                                                                            required to include notice of any time                to its Industry Members, the Exchange
                                                    Business Clocks, other than such
                                                                                                            a Business Clock drifts more than the                 proposes Rule 930A (Consolidated
                                                    Business Clocks used solely for Manual
                                                                                                            applicable tolerance specified in                     Audit Trail—Industry Member Data
                                                    Order Events or used solely for the time
                                                                                                            paragraph (a) of the Proposed Rule.                   Reporting) to require its Industry
                                                    of allocation on Allocation Reports, at a
                                                                                                            Such logs must include results for a                  Members to comply with the Industry
                                                    minimum to within a fifty (50)
                                                                                                            period of not less than five years ending             Member Data reporting requirements of
                                                    millisecond tolerance of the time
                                                                                                            on the then current date, or for the                  the Plan. Proposed Rule 930A has six
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                                                    maintained by the NIST atomic clock,
                                                                                                            entire period for which the Industry                  sections covering: (1) Recording and
                                                    and maintain such synchronization.
                                                                                                            Member has been required to comply                    reporting Industry Member Data, (2)
                                                    This is the same requirement as set forth
                                                                                                            with this Rule if less than five years.               timing of the recording and reporting,
                                                    in Section 6.8(a)(ii)(A) of the CAT NMS
                                                                                                            These documentation requirements are                  (3) the applicable securities cover[sic]
                                                    Plan.
                                                                                                            the same as those set forth in the                    by the recording and reporting
                                                      25 In addition, Section 6.7(a)(ii) of the Plan sets   ‘‘Sequencing Orders and Clock                         requirements, (4) format, (5) the security
                                                    forth the timeline for CAT Reporters to comply with     Synchronization’’ section of Appendix                 symbology to be used in the recording
                                                    the clock synchronization requirements.                 C of the CAT NMS Plan. Moreover,                      and reporting, and (6) error correction


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                                                    9786                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    requirements, each of which is                          modification or cancellation is received              applicable, any subsequent quote
                                                    described below.                                        or originated; (3) time at which the                  modification time and/or cancellation
                                                                                                            modification or cancellation is received              time when such modification or
                                                    (A) Recording and Reporting Industry
                                                                                                            or originated (using timestamps                       cancellation is originated by the Options
                                                    Member Data
                                                                                                            pursuant to Proposed Rule 960A); (4)                  Market Maker). This paragraph
                                                      Paragraph (a) of Proposed Rule 930A                   price and remaining size of the order, if             implements the Options Market Maker
                                                    describes the recording and reporting of                modified; (5) other changes in the                    Quote Exemption, as discussed above.
                                                    Industry Member Data to the Central                     Material Terms of the Order, if
                                                    Repository. Paragraph (a) consists of                   modified; and (6) whether the                         (B) Timing of Recording and Reporting
                                                    paragraphs (a)(1)–(a)(3), which cover                   modification or cancellation instruction
                                                    Recorded Industry Member Data,                                                                                  Paragraph (b) of Proposed Rule 930A
                                                                                                            was given by the Customer or was
                                                    Received Industry Member Data and                                                                             describes the requirements related to the
                                                                                                            initiated by the Industry Member;
                                                    Options Market Maker data,                                 • if the order is executed, in whole or            timing of recording and reporting of
                                                    respectively. Paragraphs (a)(1)–(a)(3) of               in part: (1) CAT-Order-ID; (2) date of                Industry Member Data. Paragraphs
                                                    Proposed Rule 930A set forth the                        execution; (3) time of execution (using               (b)(1)–(b)(3) of Proposed Rule 930A set
                                                    recording and reporting requirements                    timestamps pursuant to Proposed Rule                  forth the requirements related to the
                                                    required in Section 6.4(d)(i)–(iii) of the              960A; (4) execution capacity (principal,              timing of the recording and reporting
                                                    CAT NMS Plan, respectively.                             agency or riskless principal); (5)                    requirements required in Section
                                                      Paragraph (a)(1) requires, subject to                 execution price and size; (6) SRO-                    6.4(b)(i)–(ii) of the CAT NMS Plan.
                                                    paragraph (a)(3) regarding Options                      Assigned Market Participant Identifier                  Paragraph (b)(1) of Proposed Rule
                                                    Market Makers, each Industry Member                     of the Industry Member executing the                  930A requires each Industry Member to
                                                    to record and electronically report to the              order; (7) whether the execution was                  record Recorded Industry Member Data
                                                    Central Repository the following details                reported pursuant to an effective                     contemporaneously with the applicable
                                                    for each order and each Reportable                      transaction reporting plan or the Plan                Reportable Event. Paragraph (b)(2) of
                                                    Event, as applicable (‘‘Recorded                        for Reporting of Consolidated Options                 Proposed Rule 930A requires each
                                                    Industry Member Data’’) in the manner                   Last Sale Reports and Quotation                       Industry Member to report: (1) Recorded
                                                    prescribed by the Operating Committee                   Information; and                                      Industry Member Data to the Central
                                                    pursuant to the CAT NMS Plan:                              • other information or additional                  Repository by 8:00 a.m., Eastern Time,
                                                      • For original receipt or origination of              events as may be prescribed pursuant to               on the Trading Day following the day
                                                    an order: (1) Firm Designated ID(s) for                 the CAT NMS Plan.                                     the Industry Member records such
                                                    each Customer; (2) CAT-Order-ID; (3)                       Paragraph (a)(2) of Proposed Rule                  Recorded Industry Member Data; and (2)
                                                    SRO-Assigned Market Participant                         930A requires, subject to paragraph                   Received Industry Member Data to the
                                                    Identifier of the Industry Member                       (a)(3) regarding Options Market Makers,               Central Repository by 8:00 a.m., Eastern
                                                    receiving or originating the order; (4)                 each Industry Member to record and                    Time, on the Trading Day following the
                                                    date of order receipt or origination; (5)               report to the Central Repository the                  day the Industry Member receives such
                                                    time of order receipt or origination                    following, as applicable (‘‘Received                  Received Industry Member Data.
                                                    (using timestamps pursuant to Proposed                  Industry Member Data’’ and collectively               Paragraph (b)(3) states that Industry
                                                    Rule 960A); and (6) Material Terms of                   with the information referred to in Rule              Members may, but are not required to,
                                                    the Order;                                              930A(a)(1) ‘‘Industry Member Data’’) in               voluntarily report Industry Member
                                                      • for the routing of an order: (1) CAT-               the manner prescribed by the Operating                Data prior to the applicable 8:00 a.m.,
                                                    Order-ID; (2) date on which the order is                Committee pursuant to the CAT NMS                     Eastern Time, deadline.
                                                    routed; (3) time at which the order is                  Plan:
                                                    routed (using timestamps pursuant to                       • If the order is executed, in whole or            (C) Applicable Securities
                                                    Proposed Rule 960A); (4) SRO-Assigned                   in part: (1) An Allocation Report; (2)
                                                    Market Participant Identifier of the                    SRO-Assigned Market Participant                          Paragraph (c) of Proposed Rule 930A
                                                    Industry Member routing the order; (5)                  Identifier of the clearing broker or prime            describes the securities to which the
                                                    SRO-Assigned Market Participant                         broker, if applicable; and (3) CAT-                   recording and reporting requirements of
                                                    Identifier of the Industry Member or                    Order-ID of any contra-side order(s);                 Proposed Rule 930A apply. Paragraphs
                                                    Participant to which the order is being                    • if the trade is cancelled, a cancelled           (c)(1) and (c)(2) of Proposed Rule 930A
                                                    routed; (6) if routed internally at the                 trade indicator; and                                  set forth the description of applicable
                                                    Industry Member, the identity and                          • for original receipt or origination of           securities as set forth in Section 6.4(c)(i)
                                                    nature of the department or desk to                     an order, the Firm Designated ID for the              and (ii) of the CAT NMS Plan,
                                                    which the order is routed; and (7)                      relevant Customer, and in accordance                  respectively. Paragraph (c)(1) of
                                                    Material Terms of the Order;                            with Proposed Rule 940A, Customer                     Proposed Rule 930A requires each
                                                      • for the receipt of an order that has                Account Information and Customer                      Industry Member to record and report to
                                                    been routed, the following information:                 Identifying Information for the relevant              the Central Repository the Industry
                                                    (1) CAT-Order-ID; (2) date on which the                 Customer.                                             Member Data as set forth in paragraph
                                                    order is received; (3) time at which the                   Paragraph (a)(3) of Proposed Rule                  (a) of Proposed Rule 930A for each NMS
                                                    order is received (using timestamps                     930A states that each Industry Member                 Security registered or listed for trading
                                                    pursuant to Proposed Rule 960A); (4)                    that is an Options Market Maker is not                on such exchange or admitted to
                                                    SRO-Assigned Market Participant                         required to report to the Central                     unlisted trading privileges on such
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                                                    Identifier of the Industry Member                       Repository the Industry Member Data                   exchange. Paragraph (c)(2) of Proposed
                                                    receiving the order; (5) SRO-Assigned                   regarding the routing, modification or                Rule 930A requires each Industry
                                                    Market Participant Identifier of the                    cancellation of its quotes in Listed                  Member to record and report to the
                                                    Industry Member or Participant routing                  Options. Each Industry Member that is                 Central Repository the Industry Member
                                                    the order; and (6) Material Terms of the                an Options Market Maker, however, is                  Data as set forth in paragraph (a) of this
                                                    Order;                                                  required to report to the Exchange the                Proposed Rule 930A for each Eligible
                                                      • if the order is modified or                         time at which its quote in a Listed                   Security for which transaction reports
                                                    cancelled: (1) CAT-Order-ID; (2) date the               Option is sent to the Exchange (and, if               are required to be submitted to FINRA.


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                             9787

                                                    (D) Security Symbology                                  Information Approach discussed above.                 Industry Member, including CRD
                                                       Paragraph (d) of Proposed Rule 930A                  The Exchange proposes Rule 940A                       number and LEI, if such LEI has been
                                                    describes the security symbology that                   (Consolidated Audit Trail—Customer                    obtained, in accordance with the
                                                    Industry Members are required to use                    Information Reporting) to implement                   Existing Identifier Approach discussed
                                                    when reporting Industry Member Data                     this provision of the CAT NMS Plan                    above. The Exchange proposes Rule
                                                                                                            with regard to its Industry Members.                  950A (Consolidated Audit Trail—
                                                    to the Central Repository. Paragraph
                                                                                                            Specifically, paragraph (a) of Proposed               Industry Member Information
                                                    (d)(1) of Proposed Rule 930A requires,
                                                                                                            Rule 940A requires each Industry                      Reporting) to implement this provision
                                                    for each exchange-listed Eligible
                                                                                                            Member to submit to the Central                       of the CAT NMS Plan with regard to its
                                                    Security, each Industry Member to
                                                                                                            Repository the Firm Designated ID,                    Industry Members. Specifically,
                                                    report Industry Member Data to the
                                                                                                            Customer Account Information and                      Proposed Rule 950A requires each
                                                    Central Repository using the symbology
                                                                                                            Customer Identifying Information for                  Industry Member to submit to the
                                                    format of the exchange listing the
                                                                                                            each of its Customers with an Active                  Central Repository information
                                                    security. This requirement implements
                                                                                                            Account prior to such Industry                        sufficient to identify such Industry
                                                    the requirement set forth in Section 2 of
                                                                                                            Member’s commencement of reporting                    Member, including CRD number and
                                                    Appendix D of the CAT NMS Plan to                       to the Central Repository and in                      LEI, if such LEI has been obtained, prior
                                                    use the listing exchange symbology                      accordance with the deadlines set forth               to such Industry Member’s
                                                    when reporting data to the Central                      in Rule 980A. Paragraph (b) of Proposed               commencement of reporting to the
                                                    Repository for exchange-listed Eligible                 Rule 940A requires each Industry                      Central Repository and in accordance
                                                    Securities.                                             Member to submit to the Central                       with the deadlines set forth in Rule
                                                       For each Eligible Security that is not               Repository any updates, additions or                  980A, and keep such information up to
                                                    exchange-listed, however, there is no                   other changes to the Firm Designated ID,              date as necessary.
                                                    listing exchange to provide the                         Customer Account Information and
                                                    symbology format. Moreover, to date,                                                                          (vi) Time Stamps
                                                                                                            Customer Identifying Information for
                                                    the requisite symbology format has not                  each of its Customers with an Active                     SEC Rule 613(d)(3) under Regulation
                                                    been determined. Therefore, Paragraph                   Account on a daily basis. Paragraph (c)               NMS sets forth requirements for time
                                                    (d)(2) of Proposed Rule 930A requires,                  of Proposed Rule 940A requires each                   stamps used by CAT Reporters in
                                                    for each Eligible Security that is not                  Industry Member, on a periodic basis as               recording and reporting data to the
                                                    exchange-listed, each Industry Member                   designated by the Plan Processor and                  CAT.26 To comply with this provision,
                                                    to report Industry Member Data to the                   approved by the Operating Committee,                  Section 6.8(b) of the Plan sets forth time
                                                    Central Repository using such                           to submit to the Central Repository a                 stamp requirements for Industry
                                                    symbology format as approved by the                     complete set of Firm Designated IDs,                  Members. To implement this provision
                                                    Operating Committee pursuant to the                     Customer Account Information and                      with regard to its Industry Members, the
                                                    CAT NMS Plan. The Exchange intends                      Customer Identifying Information for                  Exchange proposes new Rule 960A
                                                    to announce to its Industry Members the                 each of its Customers with an Active                  (Consolidated Audit Trail—Time
                                                    relevant symbology formats established                  Account. This periodic refresh is                     Stamps) to require its Industry Members
                                                    by the Operating Committee via                          intended to ensure that the Central                   to comply with the time stamp
                                                    Circular.                                               Repository has the most current                       requirements of the Plan.
                                                                                                            information identifying a Customer. The                  Paragraph (a) of Proposed Rule 960A
                                                    (E) Error Correction
                                                                                                            Exchange intends to announce to its                   sets forth the time stamp increments to
                                                      To ensure that the CAT contains                       Industry Members when such a periodic                 be used by Industry Members in their
                                                    accurate data, the CAT NMS Plan                         refresh is required by the Plan Processor             CAT reporting. Paragraph (a)(1) of
                                                    requires Industry Members to correct                    and the Operating Committee via                       Proposed Rule 960A requires each
                                                    erroneous data submitted to the Central                 Circular.                                             Industry Member to record and report
                                                    Repository. Therefore, the Exchange                       Finally, paragraph (d) of Proposed                  Industry Member Data to the Central
                                                    proposes to adopt paragraph (e) of                      Rule 940A addresses the correction of                 Repository with time stamps in
                                                    Proposed Rule 930A, which addresses                     erroneous Customer data reported to the               milliseconds, subject to paragraphs
                                                    the correction of erroneous data                        Central Repository to ensure an accurate              (a)(2) and (b) of Proposed Rule 960A. To
                                                    reported to the Central Repository.                     audit trail. Paragraph (d) requires, for              the extent that any Industry Member’s
                                                    Paragraph (e) of Proposed Rule 930A                     each Industry Member for which errors                 order handling or execution systems
                                                    requires, for each Industry Member for                  in Firm Designated ID, Customer                       utilize time stamps in increments finer
                                                    which errors in Industry Member Data                    Account Information and Customer                      than milliseconds, paragraph (a)(2) of
                                                    submitted to the Central Repository                     Identifying Information for each of its               Proposed Rule 960A requires such
                                                    have been identified by the Plan                        Customers with an Active Account                      Industry Member to record and report
                                                    Processor or otherwise, that such                       submitted to the Central Repository                   Industry Member Data to the Central
                                                    Industry Member submit corrected                        have been identified by the Plan                      Repository with time stamps in such
                                                    Industry Member Data to the Central                     Processor or otherwise, such Member to                finer increment, subject to paragraph (b)
                                                    Repository by 8:00 a.m., Eastern Time,                  submit corrected data to the Central                  of Proposed Rule 960A regarding
                                                    on T+3. This requirement implements                     Repository by 5:00 p.m. Eastern Time on               Manual Order Events and Allocation
                                                    the error correction requirement set                    T+3. This requirement implements the                  Reports.
                                                                                                                                                                     Paragraph (b) of Proposed Rule 960A
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                                                    forth in Section 6 of Appendix D of the                 error correction requirement set forth in
                                                    CAT NMS Plan.                                           Appendix C of the CAT NMS Plan.                       sets forth the permissible time stamp
                                                                                                                                                                  increments for Manual Order Events
                                                    (iv) Customer Information Reporting                     (v) Industry Member Information                       and Allocation Reports. Specifically,
                                                      Section 6.4(d)(iv) of the CAT NMS                     Reporting                                             paragraph (b)(1) of Proposed Rule 960A
                                                    Plan requires Industry Members to                         Section 6.4(d)(vi) of the CAT NMS                   permits each Industry Member to record
                                                    submit to the Central Repository certain                Plan requires Industry Members to                     and report Manual Order Events to the
                                                    information related to their Customers                  submit to the Central Repository
                                                    in accordance with the Customer                         information sufficient to identify such                 26 17   CFR 242.613(d)(3).



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                                                    9788                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    Central Repository in increments up to                  Central Repository using a secure                     acceptance testing with the Central
                                                    and including one second, provided that                 method(s), including, but not limited to,             Repository no later than August 15,
                                                    each Industry Member is required to                     private line(s) and virtual private                   2019.
                                                    record and report the time when a                       network connection(s). This provision                    Paragraph (a)(2) sets forth the
                                                    Manual Order Event has been captured                    implements the connectivity                           deadlines related to reporting Customer
                                                    electronically in an order handling and                 requirements set forth in Section 4 of                and Industry Member information.
                                                    execution system of such Member                         Appendix D to the CAT NMS Plan.                       Paragraph (a)(2)(i) requires Industry
                                                    (‘‘Electronic Capture Time’’) in                          Paragraph (c) permits Industry                      Members (other than Small Industry
                                                    milliseconds. In addition, paragraph                    Members to use CAT Reporting Agents                   Members) to begin reporting Customer
                                                    (b)(2) of Proposed Rule 960A permits                    to fulfill their data reporting obligations           and Industry Member information, as
                                                    each Industry Member to record and                      related to the CAT. Paragraph (c) is                  required by Rules 940A(a) and 950A,
                                                    report the time of Allocation Reports in                based on FINRA Rule 7450(c), which                    respectively, to the Central Repository
                                                    increments up to and including one                      permits OATS Reporting Members to                     for processing no later than October 15,
                                                    second.                                                 enter into agreements with Reporting                  2018. Paragraph (a)(2)(ii) requires Small
                                                                                                            Agents to fulfill the OATS obligations of             Industry Members to begin reporting
                                                    (vii) Clock Synchronization Rule                        the OATS Reporting Member.                            Customer and Industry Member
                                                    Violations                                              Specifically, Paragraph (c)(1) of                     information, as required by Rules
                                                      Proposed Rule 965A (Consolidated                      Proposed Rule 970A states that any                    940A(a) and 950A, respectively, to the
                                                    Audit Trail—Clock Synchronization                       Industry Member may enter into an                     Central Repository for processing no
                                                    Rule Violations) describes potential                    agreement with a CAT Reporting Agent                  later than October 15, 2019.
                                                    violations of the clock synchronization                 pursuant to which the CAT Reporting                      Paragraph (a)(3) sets forth the
                                                    time period requirements set forth in the               Agent agrees to fulfill the obligations of            deadlines related to the submission of
                                                    Proposed Rule 900A Series. Proposed                     such Industry Member under the                        order data. Under paragraph (a)(3)(i),
                                                    Rule 965A states that an Industry                       Proposed Rule 900A Series. Any such                   Industry Members (other than Small
                                                    Member that engages in a pattern or                     agreement must be evidenced in                        Industry Members) are permitted, but
                                                    practice of reporting Reportable Events                 writing, which specifies the respective               not required, to submit order data for
                                                    outside of the required clock                           functions and responsibilities of each                testing purposes beginning no later than
                                                    synchronization time period as set forth                party to the agreement that are required              May 15, 2018. In addition, Industry
                                                    in this Rule Series without reasonable                  to effect full compliance with the                    Members (other than Small Industry
                                                    justification or exceptional                            requirements of the Proposed Rule 900A                Members) are required to participate in
                                                    circumstances may be considered in                      Series. The Exchange notes that,                      the coordinated and structured testing
                                                    violation of this Rule. This provision                  currently, no standardized form                       of order submission, which will begin
                                                    implements the requirements of Section                  agreement for CAT Reporting Agent                     no later than August 15, 2018. Under
                                                    6.8 of the CAT NMS Plan which                           arrangements has been adopted.                        paragraph (a)(3)(ii), Small Industry
                                                    requires the Compliance Rule to provide                 Paragraph (c)(2) of Proposed Rule 970A                Members are permitted, but not
                                                    that a pattern or practice of reporting                 requires that all written documents                   required, to submit order data for testing
                                                    events outside of the required clock                    evidencing an agreement with a CAT                    purposes beginning no later than May
                                                    synchronization time period without                     Reporting Agent be maintained by each                 15, 2019. In addition, Small Industry
                                                    reasonable justification or exceptional                 party to the agreement. Paragraph (c)(3)              Members are required to participate in
                                                    circumstances may be considered a                       states that each Industry Member                      the coordinated and structured testing
                                                    violation of SEC Rule 613 or the CAT                    remains primarily responsible for                     of order submission, which will begin
                                                    NMS Plan.                                               compliance with the requirements of the               no later than August 15, 2019.
                                                                                                            Proposed Rule 900A Series,                               Paragraph (a)(4) states that Industry
                                                    (viii) Connectivity and Data
                                                                                                            notwithstanding the existence of an                   Members are permitted, but not required
                                                    Transmission
                                                                                                            agreement described in paragraph (c) of               to, submit Quote Sent Times on Options
                                                      Proposed Rule 970A (Consolidated                      Proposed Rule 970A.                                   Market Maker quotes, beginning no later
                                                    Audit Trail—Connectivity and Data                                                                             than October 15, 2018.
                                                    Transmission) addresses connectivity                    (ix) Development and Testing
                                                                                                                                                                     Paragraph (b) of Proposed Rule 980A
                                                    and data transmission requirements                         The Exchange proposes Rule 980A                    implements the requirement under the
                                                    related to the CAT. Paragraph (a) of                    (Consolidated Audit Trail—                            CAT NMS Plan that Industry Members
                                                    Proposed Rule 970A describes the                        Development and Testing) to address                   participate in required industry testing
                                                    format(s) for reporting Industry Member                 requirements for Industry Members                     with the Central Repository.27
                                                    Data to the Central Repository, thereby                 related to CAT development and testing.               Specifically, Proposed Rule 980A
                                                    implementing the formatting                             Paragraph (a) of Proposed Rule 980A                   requires that each Industry Member
                                                    requirements as set forth in Section                    sets forth the testing requirements and               participate in testing related to the
                                                    6.4(a) of the CAT NMS Plan.                             deadlines for Industry Members to                     Central Repository, including any
                                                    Specifically, paragraph (a) of Proposed                 develop and commence reporting to the                 industry-wide disaster recovery testing,
                                                    Rule 970A requires each Industry                        Central Repository. These requirements                pursuant to the schedule established
                                                    Member to transmit data as required                     are set forth in Appendix C to the CAT                pursuant to the CAT NMS Plan. The
                                                    under the CAT NMS Plan to the Central                   NMS Plan.                                             Exchange intends to announce to its
                                                    Repository utilizing such format(s) as                     Paragraph (a)(1) sets forth the
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                                                                                                                                                                  Industry Members the schedule
                                                    may be provided by the Plan Processor                   deadlines related to connectivity and                 established pursuant to the CAT NMS
                                                    and approved by the Operating                           acceptance testing. Industry Members                  Plan via Circular.
                                                    Committee.                                              (other than Small Industry Members) are
                                                      Paragraph (b) of Proposed Rule 970A                   required to begin connectivity and                    (x) Recordkeeping
                                                    addresses connectivity requirements                     acceptance testing with the Central                     Proposed Rule 990A (Consolidated
                                                    related to the CAT. Paragraph (b) of                    Repository no later than August 15,                   Audit Trail—Recordkeeping) sets forth
                                                    Proposed Rule 970A requires each                        2018, and Small Industry Members are
                                                    Industry Member to connect to the                       required to begin connectivity and                      27 Adopting   Release at 84725.



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                                                                                Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                         9789

                                                    the recordkeeping obligations related to                  LEIs in their records and may not                       Paragraph (b) of Proposed Rule 995A
                                                    the CAT for Industry Members.                             knowingly submit inaccurate LEIs to the               establishes the compliance dates for the
                                                    Proposed Rule 990A requires each                          CAT. Paragraph (b) is consistent with                 clock synchronization requirements as
                                                    Industry Member to maintain and                           the SEC’s statements in the Approval                  set forth in Proposed Rule 920A.
                                                    preserve records of the information                       Order for the CAT NMS Plan regarding                  Paragraph (b)(1) states that each
                                                    required to be recorded under the                         an Industry Member’s obligations                      Industry Member shall comply with
                                                    Proposed Rule 900A Series for the                         regarding LEIs.29                                     Rule 920A with regard to Business
                                                    period of time and accessibility                             Paragraph (c) states that, if an                   Clocks that capture time in milliseconds
                                                    specified in SEC Rule 17a–4(b). The                       Industry Member reports data to the                   commencing on or before March 15,
                                                    records required to be maintained and                     Central Repository with errors such that              2017. Paragraph (b)(2) states that each
                                                    preserved under the Proposed Rule                         its error percentage exceeds the                      Industry Member shall comply with
                                                    900A Series may be immediately                            maximum Error Rate established by the                 Rule 920A with regard to Business
                                                    produced or reproduced on                                 Operating Committee pursuant to the                   Clocks that do not capture time in
                                                    ‘‘micrographic media’’ as defined in                      CAT NMS Plan, then such Industry                      milliseconds commencing on or before
                                                    SEC Rule 17a–4(f)(1)(i) or by means of                    Member would not be in compliance                     February 19, 2018. The compliance date
                                                    ‘‘electronic storage media’’ as defined in                with the Rule 900A Series. As discussed               set forth in paragraph (b)(1) reflects the
                                                    SEC Rule 17a–4(f)(1)(ii) that meet the                    above, the initial maximum Error Rate is              exemptive relief requested by the
                                                    conditions set forth in SEC Rule 17a–                     5%, although the Error Rate is expected               Participants with regard to the clock
                                                    4(f) and be maintained and preserved                      to be reduced over time. The Exchange                 synchronization requirements related to
                                                    for the required time in that form.                       intends to announce to its Industry                   Business Clocks that do not capture
                                                    Proposed Rule 990A is based on FINRA                      Members changes to the Error Rate                     time in milliseconds.31
                                                    Rule 7440(a)(5), which sets forth the                     established pursuant to the CAT NMS                     Paragraph (c) of Proposed Rule 995A
                                                    recordkeeping requirements related to                     Plan via Circular.                                    establishes the compliance dates for the
                                                    OATS.                                                        Furthermore, paragraph (d) of                      data recording and reporting
                                                    (xi) Timely, Accurate and Complete                        Proposed Rule 993A addresses                          requirements for Industry Members.
                                                    Data                                                      Compliance Thresholds related to                      Paragraph (c)(1) requires each Industry
                                                                                                              reporting data to the CAT. Proposed                   Member (other than Small Industry
                                                       SEC Rule 613 and the CAT NMS Plan                                                                            Members) to record and report the
                                                    emphasize the importance of the                           Rule 993A states that each Industry
                                                                                                              Member is required to meet a separate                 Industry Member Data to the Central
                                                    timeliness, accuracy, completeness and                                                                          Repository by November 15, 2018.
                                                    integrity of the data submitted to the                    compliance threshold which will be an
                                                                                                              Industry Member-specific rate that may                Paragraph (c)(2) requires that each
                                                    CAT.28 Accordingly, Proposed Rule                                                                               Industry Member that is a Small
                                                    993A (Consolidated Audit Trail—                           be used as the basis for further review
                                                                                                              or investigation into the Industry                    Industry Member to record and report
                                                    Timely, Accurate and Complete Data)                                                                             the Industry Member Data to the Central
                                                    implements this requirement with                          Member’s performance with regard to
                                                                                                              the CAT (the ‘‘Compliance                             Repository by November 15, 2019. Such
                                                    regard to Industry Members. Paragraph                                                                           compliance dates are consistent with
                                                    (a) of Proposed Rule 993A requires that                   Thresholds’’). Compliance Thresholds
                                                                                                              will compare an Industry Member’s                     the compliance dates set forth in SEC
                                                    Industry Members record and report                                                                              Rule 613(a)(3)(v) and (vi), and Section
                                                    data to the Central Repository as                         error rate to the aggregate Error Rate
                                                                                                              over a period of time to be defined by                6.7(a)(v) and (vi) of the CAT NMS Plan.
                                                    required by the Proposed Rule 900A
                                                    Series in a manner that ensures the                       the Operating Committee. Compliance                   2. Statutory Basis
                                                    timeliness, accuracy, integrity and                       Thresholds will be set by the Operating
                                                                                                                                                                       The Exchange believes that the
                                                    completeness of such data.                                Committee, and will be calculated at
                                                                                                                                                                    proposed rule change is consistent with
                                                       In addition, without limiting the                      intervals to be set by the Operating
                                                                                                                                                                    the provisions of Section 6(b)(5) of the
                                                    general requirement as set forth in                       Committee.30 Compliance Thresholds
                                                                                                                                                                    Act,32 which requires, among other
                                                    paragraph (a), paragraph (b) of Proposed                  will include compliance with the data
                                                                                                                                                                    things, that the Exchange rules must be
                                                    Rule 993A requires Industry Members to                    reporting and clock synchronization
                                                                                                                                                                    designed to prevent fraudulent and
                                                    accurately provide the LEIs in their                      requirements. Proposed Rule 993A
                                                                                                                                                                    manipulative acts and practices, to
                                                    records as required by the Proposed                       states that an Industry Member’s
                                                                                                                                                                    promote just and equitable principles of
                                                    Rule 900A Series and states that                          performance with respect to its
                                                                                                                                                                    trade, and, in general, to protect
                                                    Industry Members may not knowingly                        Compliance Threshold will not signify,
                                                                                                                                                                    investors and the public interest, and
                                                    submit inaccurate LEIs to the Central                     as a matter of law, that such Industry
                                                                                                                                                                    Section 6(b)(8) of the Act,33 which
                                                    Repository. Paragraph (b) notes,                          Member has violated this Proposed Rule
                                                                                                                                                                    requires that Exchange rules not impose
                                                    however, that this requirement does not                   Series.
                                                                                                                                                                    any burden on competition that is not
                                                    impose any additional due diligence                       (xi) Compliance Dates                                 necessary or appropriate.
                                                    obligations on Industry Members with                                                                               The Exchange believes that this
                                                    regard to LEIs for CAT purposes.                            Proposed Rule 995A (Consolidated                    proposal is consistent with the Act
                                                    Accordingly, this provision does not                      Audi Trail—Compliance Dates) sets                     because it implements, interprets or
                                                    impose any due diligence obligations                      forth the compliance dates for the                    clarifies the provisions of the Plan, and
                                                    beyond those that may exist today with                    various provisions of the Proposed Rule               is designed to assist the Exchange and
                                                                                                              900A Series. Paragraph (a) of Proposed
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                                                    respect to information associated with                                                                          its Industry Members in meeting
                                                    an LEI. Although Industry Members will                    Rule 995A states that, except as set forth            regulatory obligations pursuant to the
                                                    not be required to perform additional                     in paragraphs (b) and (c) of this Rule or             Plan. In approving the Plan, the SEC
                                                    due diligence with regard to the LEIs for                 otherwise set forth in this Rule Series,              noted that the Plan ‘‘is necessary and
                                                    CAT purposes, Industry Members will                       these rules are fully effective and
                                                    be required to accurately provide the                     members must comply with their terms.                   31 See Letter from Participants to Brent J. Fields,

                                                                                                                                                                    Secretary, Commission, dated January 17, 2017.
                                                      28 See SEC Rule 613(e)(4)(i)(D)(ii); and Section          29 Approval   Order at 84745.                         32 15 U.S.C. 78f(b)(6).

                                                    6.5(d) of the CAT NMS Plan.                                 30 Appendix   C of the CAT NMS Plan.                  33 15 U.S.C. 78f(b)(8).




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                                                    9790                        Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    appropriate in the public interest, for                  IV. Solicitation of Comments                            For the Commission, by the Division of
                                                    the protection of investors and the                                                                            Trading and Markets, pursuant to delegated
                                                    maintenance of fair and orderly markets,                   Interested persons are invited to                   authority.35
                                                    to remove impediments to, and perfect                    submit written data, views, and                       Robert W. Errett,
                                                    the mechanism of a national market                       arguments concerning the foregoing,                   Deputy Secretary.
                                                    system, or is otherwise in furtherance of                including whether the proposed rule                   [FR Doc. 2017–02550 Filed 2–7–17; 8:45 am]
                                                    the purposes of the Act.’’ 34 To the                     change is consistent with the Act.                    BILLING CODE 8011–01–P
                                                    extent that this proposal implements,                    Comments may be submitted by any of
                                                    interprets or clarifies the Plan and                     the following methods:
                                                    applies specific requirements to                         Electronic Comments                                   SECURITIES AND EXCHANGE
                                                    Industry Members, the Exchange                                                                                 COMMISSION
                                                    believes that this proposal furthers the                   • Use the Commission’s Internet
                                                    objectives of the Plan, as identified by                 comment form (http://www.sec.gov/                     [Release No. 34–79937; File No. SR–MIAX–
                                                    the SEC, and is therefore consistent with                rules/sro.shtml); or                                  2017–03]
                                                    the Act.                                                   • Send an email to rule-comments@
                                                                                                                                                                   Self-Regulatory Organizations; Miami
                                                    B. Self-Regulatory Organization’s                        sec.gov. Please include File Number SR–               International Securities Exchange,
                                                    Statement on Burden on Competition                       Phlx–2017–07 on the subject line.                     LLC; Notice of Filing of a Proposed
                                                                                                             Paper Comments                                        Rule Change To Adopt Consolidated
                                                      The Exchange does not believe that                                                                           Audit Trail Compliance Rule (Rules
                                                    the proposed rule change will result in                    • Send paper comments in triplicate                 1701–1712) To Implement the
                                                    any burden on competition that is not                    to Brent J. Fields, Secretary, Securities             Compliance Rule Regarding the
                                                    necessary or appropriate in furtherance                  and Exchange Commission, 100 F Street                 National Market System Plan
                                                    of the purposes of the Act. The                          NE., Washington, DC 20549–1090.                       Governing the Consolidated Audit Trail
                                                    Exchange notes that the proposed rule
                                                    change implements provisions of the                      All submissions should refer to File                  February 2, 2017.
                                                    CAT NMS Plan, and is designed to                         Number SR–Phlx–2017–07. This file                        Pursuant to the provisions of Section
                                                    assist the Exchange in meeting its                       number should be included on the                      19(b)(1) of the Securities Exchange Act
                                                    regulatory obligations pursuant to the                   subject line if email is used. To help the            of 1934 (‘‘Act’’) 1 and Rule 19b–4
                                                    Plan. The Exchange also notes that the                   Commission process and review your                    thereunder,2 notice is hereby given that
                                                    Proposed Rule Series implementing                        comments more efficiently, please use                 on January 30, 2017, Miami
                                                    provisions of the CAT NMS Plan will                      only one method. The Commission will                  International Securities Exchange, LLC
                                                    apply equally to all firms that trade                    post all comments on the Commission’s                 (‘‘MIAX Options’’ or ‘‘Exchange’’) filed
                                                    NMS Securities and OTC Equity                            Internet Web site (http://www.sec.gov/                with the Securities and Exchange
                                                    Securities. In addition, all national                    rules/sro.shtml).                                     Commission (‘‘Commission’’) a
                                                    securities exchanges and FINRA are                          Copies of the submission, all                      proposed rule change as described in
                                                    proposing this Proposed Rule 900A                        subsequent amendments, all written                    Items I and II below, which Items have
                                                    Series. Therefore, this is not a                         statements with respect to the proposed               been prepared by the Exchange.3 The
                                                    competitive rule filing, and, therefore, it              rule change that are filed with the                   Commission is publishing this notice to
                                                    does not impose a burden on                              Commission, and all written                           solicit comments on the proposed rule
                                                    competition.                                             communications relating to the                        change from interested persons.
                                                    C. Self-Regulatory Organization’s                        proposed rule change between the                      I. Self-Regulatory Organization’s
                                                    Statement on Comments on the                             Commission and any person, other than                 Statement of the Terms of Substance of
                                                    Proposed Rule Change Received From                       those that may be withheld from the                   the Proposed Rule Change
                                                    Members, Participants, or Others                         public in accordance with the
                                                                                                             provisions of 5 U.S.C. 552, will be                      The Exchange proposes to adopt the
                                                      No written comments were either                        available for Web site viewing and                    Rules 1701–1712 to implement the
                                                    solicited or received.                                                                                         compliance rule (‘‘Compliance Rule’’)
                                                                                                             printing in the Commission’s Public
                                                                                                                                                                   regarding the National Market System
                                                    III. Date of Effectiveness of the                        Reference Room, 100 F Street NE.,
                                                                                                                                                                   Plan Governing the Consolidated Audit
                                                    Proposed Rule Change and Timing for                      Washington, DC 20549, on official
                                                                                                                                                                   Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’).4
                                                    Commission Action                                        business days between the hours of
                                                                                                             10:00 a.m. and 3:00 p.m. Copies of the                   The text of the proposed rule change
                                                       Within 45 days of the date of                         filing also will be available for                     is available on the Exchange’s Web site
                                                    publication of this notice in the Federal                inspection and copying at the principal               at http://www.miaxoptions.com/rule-
                                                    Register or within such longer period (i)                office of the Exchange. All comments                  filings, at MIAX’s principal office, and
                                                    as the Commission may designate up to                                                                          at the Commission’s Public Reference
                                                                                                             received will be posted without change;
                                                    90 days of such date if it finds such                                                                          Room.
                                                                                                             the Commission does not edit personal
                                                    longer period to be appropriate and                      identifying information from                            35 17 CFR 200.30–3(a)(12).
                                                    publishes its reasons for so finding or
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                                                                                                             submissions. You should submit only                     1 15 U.S.C. 78s(b)(1).
                                                    (ii) as to which the Exchange consents,                  information that you wish to make                       2 17 CFR 240.19b–4.
                                                    the Commission shall: (a) By order                       available publicly.                                     3 The Exchange originally filed this proposed rule
                                                    approve or disapprove such proposed                                                                            change on January 17, 2017 under File No. SR–
                                                    rule change, or (b) institute proceedings                   All submissions should refer to File               MIAX–2017–01, and the Exchange subsequently
                                                    to determine whether the proposed rule                   Number SR–Phlx–2017–07 and should                     withdrew that filing on January 30, 2017 and filed
                                                    change should be disapproved.                            be submitted on or before March 1,                    this proposed rule change.
                                                                                                                                                                     4 Unless otherwise specified, capitalized terms
                                                                                                             2017.
                                                                                                                                                                   used in this rule filing are defined as set forth
                                                      34 Approval   Order at 84697.                                                                                herein or in the CAT NMS Plan.



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Document Created: 2017-02-08 02:59:11
Document Modified: 2017-02-08 02:59:11
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 9778 

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