82 FR 9819 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt the Rule 16000 Series To Implement the Compliance Rule Regarding the National Market System Plan Governing the Consolidated Audit Trail
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 25 (February 8, 2017)
Federal Register Volume 82, Issue 25 (February 8, 2017)
| Page Range | 9819-9831 | |
| FR Document | 2017-02537 |
[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)] [Notices] [Pages 9819-9831] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02537] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79932; File No. SR-BOX-2017-07] Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing of a Proposed Rule Change To Adopt the Rule 16000 Series To Implement the Compliance Rule Regarding the National Market System Plan Governing the Consolidated Audit Trail 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 31, 2017, BOX Options Exchange LLC (``SRO'' or the ``Exchange'') filed with the Securities and Exchange Commission (``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the self-regulatory organization.\3\ The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ The Exchange originally filed this proposed rule change on January 17, 2017 under File No. SR-BOX-2017-04, and the Exchange subsequently withdrew that filing on January 31, 2017 and filed this proposed rule change. --------------------------------------------------------------------------- I. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to adopt Rule 16000 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''). The text of the proposed rule change is available from the principal office of the Exchange, at the Commission's Public Reference Room and also on the Exchange's Internet Web site at http://boxexchange.com. II. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization 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 \4\ and Rule 608 of Regulation NMS thereunder,\5\ the CAT NMS Plan.\6\ 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,\7\ and approved by the Commission, as modified, on November 15, 2016.\8\ --------------------------------------------------------------------------- \4\ 15 U.S.C. 78k-1. \5\ 17 CFR 242.608. \6\ 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. \7\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 FR 30614 (May 17, 2016). \8\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (``Approval Order''). --------------------------------------------------------------------------- The Plan is designed to create, implement and maintain a consolidated [[Page 9820]] 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.\9\ As is described more fully below, the Proposed Rule 16000 Series sets forth the Compliance Rule to require Industry Members to comply with the provisions of the CAT NMS Plan. The Proposed Rule 16000 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. --------------------------------------------------------------------------- \9\ See SEC Rule 613(g)(1). --------------------------------------------------------------------------- (i) Definitions Proposed Rule 16010 (Consolidated Audit Trail--Definitions) sets forth the definitions for the terms used in the Proposed Rule 16000 Series. Each of the defined terms in Proposed Rule 16010 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 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.'' 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.\10\ The alternative approach is called the Customer Information Approach. --------------------------------------------------------------------------- \10\ 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). --------------------------------------------------------------------------- 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) and LEI and/or Larger [sic] 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 16010 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 16010 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 [[Page 9821]] 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 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 16010 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 SROs 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.\11\ 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. --------------------------------------------------------------------------- \11\ See Exemptive Request Letter at 26-27; and Exemption Order. --------------------------------------------------------------------------- (II) Definition of Allocation Report To assist in implementing the Allocation Report Approach, paragraph (c) of Proposed Rule 16010 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 16010 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 16000 Series. This is the same definition as set forth in Section 1.1 of the CAT NMS Plan, except SRO 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 16000 Series. (E) CAT Paragraph (e) of Proposed Rule 16010 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 16010 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 links 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 16010 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 [[Page 9822]] of the Industry Member.\12\ Such a third party, referred to in this Proposed Rule 16000 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 16010 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 16000 Series. --------------------------------------------------------------------------- \12\ Appendix C, Section A.1(a) of the CAT NMS Plan. --------------------------------------------------------------------------- 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 16010 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 SRO uses the phrase ``CAT NMS Plan'' in place of the phrase ``this Agreement.'' (J) Compliance Threshold Paragraph (j) of Proposed Rule 16010 defines the term ``Compliance Threshold'' as having the meaning set forth in Proposed Rule 16093(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 16093(d), 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. 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 16010 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 SRO 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 16000 Series. SRO 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, SRO 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 16010 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 16010(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, SRO 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 16010 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 [[Page 9823]] Repository.\13\ 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 16000 Series, SRO proposes to define ``Data Submitter'' in paragraph (n) of Proposed Rule 16010. Specifically, paragraph (n) of Proposed Rule 16010 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. --------------------------------------------------------------------------- \13\ Appendix C, Section A.1(a) of the CAT NMS Plan. --------------------------------------------------------------------------- (O) Eligible Security The reporting requirements of the Proposed Rule 16000 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 16010 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 Repository.\14\ The Operating Committee reviews and resets the maximum Error Rate, at least annually.\15\ 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.\16\ As such, SRO or the SEC ``[sic] may take appropriate action against an Industry Member for failing to comply with its CAT reporting obligations.\17\ The CAT NMS Plan sets the initial Error Rate at 5%.\18\ 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.\19\ --------------------------------------------------------------------------- \14\ Section 6.5(d)(i) of the CAT NMS Plan. \15\ Appendix C, Section A.3(b) of the CAT NMS Plan. \16\ Appendix C, Section A.3(b) of the CAT NMS Plan; Rule 613(g)-(h). \17\ Appendix C, Section A.3(b) of the CAT NMS Plan. \18\ Section 6.5(d)(i) of the CAT NMS Plan. \19\ Appendix C, Section A.3(b) of the CAT NMS Plan. --------------------------------------------------------------------------- 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.\20\ --------------------------------------------------------------------------- \20\ Approval Order at 84718. --------------------------------------------------------------------------- (II) Definition of Error Rate To implement the requirements of the CAT NMS Plan related to the Error Rate, SRO proposes to define the term ``Error Rate'' in Proposed Rule 16010. Paragraph (p) of Proposed Rule 16010 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, SRO proposes to define the term ``Firm Designated ID'' in Proposed Rule 16010. Specifically, paragraph (q) of Proposed Rule 16010 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 16010 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 16010 states that the term ``Industry Member Data'' has the meaning set forth in Rule 16030(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 16030(a)(2). (T) Initial Plan Processor Paragraph (t) of Proposed Rule 16010 defines the term ``Initial Plan Processor'' [[Page 9824]] 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 16000 Series applies to Eligible Securities, which includes NMS Securities, which, in turn, includes Listed Options. Certain requirements of the Proposed Rule 16000 Series apply specifically to Listed Options. Accordingly, Paragraph (u) of Proposed Rule 16010 defines the term ``Listed Option'' or ``Option.'' Specifically, paragraph (u) of Proposed Rule 16010 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.'' SRO 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.\21\ 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 Member's order handling or execution system uses timestamps in increments finer than milliseconds, such finer increments, when reporting to the Central Repository. 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 Members [sic] 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. --------------------------------------------------------------------------- \21\ 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, SRO proposes to define the term ``Manual Order Event'' in Proposed Rule 16010. Specifically, paragraph (v) of Proposed Rule 16010 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 16030 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, SRO proposes to define the term ``Material Terms of the Order'' in Proposed Rule 16010. Specifically, paragraph (w) of Proposed Rule 16010 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, SRO proposes to define the term ``NMS Security'' in Proposed Rule 16010. Specifically, paragraph (x) of Proposed Rule 16010 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, SRO proposes to define the term ``NMS Stock'' in Paragraph (y) of Proposed Rule 16010 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 16010 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 SRO 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 SROs, 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.\22\ In accordance with the exemptive relief, Options Market [[Page 9825]] 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. --------------------------------------------------------------------------- \22\ 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, SRO proposes to define the term ``Options Market Maker'' in Proposed Rule 16010. Specifically, paragraph (aa) of Proposed Rule 16010 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 16000 Series requires each Industry Member to record and electronically report to the Central Repository certain details for each order. Accordingly, SRO proposes to define the term ``Order'' in Proposed Rule 16010. Specifically, paragraph (bb) of Proposed Rule 16010 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 SRO proposes to replace the phrase ``member of a national securities exchange or national securities association'' with the term ``Industry Member.'' SRO 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, SRO proposes to define the term ``OTC Equity Security'' in Proposed Rule 16010. Specifically, paragraph (cc) of Proposed Rule 16010 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 16010 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 16010 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 16010 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 16010 states that the term ``Received Industry Member Data'' has the meaning set forth in Rule 16030(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 16030(a)(2). (HH) Recorded Industry Member Data Paragraph (hh) of Proposed Rule 16010 states that the term ``Recorded Industry Member Data'' has the meaning set forth in Rule 16030(a)(1). This definition has the same substantive meaning as the definition set forth 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 16030(a)(1). (II) Reportable Event The Proposed Rule 16000 Series requires each Industry Member to record and electronically report to the Central Repository certain details for each Reportable Event. To clarify these requirements, SRO proposes to define the term ``Reportable Event'' in Proposed Rule 16010. Specifically, paragraph (ii) of Proposed Rule 16010 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 16010 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 SROs 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).\23\ 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. --------------------------------------------------------------------------- \23\ 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 [[Page 9826]] the Industry Member as well as the LEI of the Industry Member (if the Industry Member has a 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, SRO proposes to define the term ``SRO-Assigned Market Participant'' in Proposed Rule 16010. Specifically, paragraph (kk) of Proposed Rule 16010 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 16000 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, SRO proposes to define the term ``Small Industry Member'' in Proposed Rule 16010. Specifically, paragraph (ll) of Proposed Rule 16010 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 ``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 16030(b) establishes the deadlines for reporting certain data to the Central Repository using the term ``Trading Day.'' Accordingly, SRO proposes to define the term ``Trading Day'' in Proposed Rule 16010. Specifically, Paragraph (mm) of Proposed Rule 16010 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.\24\ To implement these provisions with regard to its Industry Members, SRO proposes Rule 16020 (Consolidated Audit Trail--Clock Synchronization) to require its Industry Members to comply with the clock synchronization requirements of the Plan. --------------------------------------------------------------------------- \24\ 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 16020 sets forth the manner in which Industry Members must synchronize their Business Clocks. Paragraph (a)(1) of Proposed Rule 16020 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 16020 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 16020 clarifies that the tolerance described in paragraphs (a)(1) and (2) of the Proposed Rule 16020 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 16020 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 16020 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 16020 sets forth certification requirements with regard to clock synchronization. Specifically, paragraph (c) of Proposed Rule 16020 requires each Industry Member to certify to SRO that its Business Clocks satisfy the synchronization requirements set forth in paragraph (a) of Proposed Rule 16020 periodically in accordance with the [[Page 9827]] 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. SRO intends to announce to its Industry Members the certification schedule established by the Operating Committee via Regulatory Circular. Paragraph (d) of Proposed Rule 16020 establishes reporting requirements with regard to clock synchronization. Paragraph (d) of Proposed Rule 16020 requires Industry Members to report to the Plan Processor and SRO 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. SRO intends to announce to its Industry Members the relevant thresholds established by the Operating Committee via Regulatory 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, SRO proposes Rule 16030 (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 16030 has six [sic] 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, [sic] (5) the security symbology to be used in the recording and reporting, and (6) error correction requirements, each of which is described below. (A) Recording and Reporting Industry Member Data Paragraph (a) of Proposed Rule 16030 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 16030 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 16060); 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 16060); (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 16060); (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 16060); (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 16060; (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 16030 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 16030(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 16040, Customer Account Information and Customer Identifying Information for the relevant Customer. Paragraph (a)(3) of Proposed Rule 16030 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 16030 describes the requirements related to the timing of recording and reporting of Industry Member Data. Paragraphs (b)(1-(b)(3) of Proposed Rule 16030 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. [[Page 9828]] Paragraph (b)(1) of Proposed Rule 16030 requires each Industry Member to record Recorded Industry Member Data contemporaneously with the applicable Reportable Event. Paragraph (b)(2) of Proposed Rule 16030 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 16030 describes the securities to which the recording and reporting requirements of Proposed Rule 16030 apply. Paragraphs (c)(1) and (c)(2) of Proposed Rule 16030 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 16030 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 16030 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 16030 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 16030 for each Eligible Security for which transaction reports are required to be submitted to FINRA. (D) Security Symbology Paragraph (d) of Proposed Rule 16030 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 16030 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 16030 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. SRO intends to announce to its Industry Members the relevant symbology formats established by the Operating Committee via Regulatory 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, SRO proposes to adopt paragraph (e) of Proposed Rule 16030, which addresses the correction of erroneous data reported to the Central Repository. Paragraph (e) of Proposed Rule 16030 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. SRO proposes Rule 16040 (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 16040 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 16080. Paragraph (b) of Proposed Rule 16040 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 16040 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. SRO intends to announce to its Industry Members when such a periodic refresh is required by the Plan Processor and the Operating Committee via Regulatory Circular. Finally, paragraph (d) of Proposed Rule 16040 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. SRO proposes Rule 16050 (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 16050 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 16080, and keep such information up to date as necessary. [[Page 9829]] (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.\25\ 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, SRO proposes new Rule 16060 (Consolidated Audit Trail--Time Stamps) to require its Industry Members to comply with the time stamp requirements of the Plan. --------------------------------------------------------------------------- \25\ 17 CFR 242.613(d)(3). --------------------------------------------------------------------------- Paragraph (a) of Proposed Rule 16060 sets forth the time stamp increments to be used by Industry Members in their CAT reporting. Paragraph (a)(1) of Proposed Rule 16060 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 16060. 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 16060 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 16060 regarding Manual Order Events and Allocation Reports. Paragraph (b) of Proposed Rule 16060 sets forth the permissible time stamp increments for Manual Order Events and Allocation Reports. Specifically, paragraph (b)(1) of Proposed Rule 16060 permits each Industry Member to record and report Manual Order Events to the 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 16060 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 16065 (Consolidated Audit Trail--Clock Synchronization Rule Violations [sic]) describes potential violations of the clock synchronization time period requirements set forth in the Proposed Rule 16000 Series. Proposed Rule 16065 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 16070 (Consolidated Audit Trail--Connectivity and Data Transmission) addresses connectivity and data transmission requirements related to the CAT. Paragraph (a) of Proposed Rule 16070 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 16070 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 16070 addresses connectivity requirements related to the CAT. Paragraph (b) of Proposed Rule 16070 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 16070 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 16000 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 16000 Series. SRO notes that, currently, no standardized form agreement for CAT Reporting Agent arrangements has been adopted. Paragraph (c)(2) of Proposed Rule 16070 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 16000 Series, notwithstanding the existence of an agreement described in paragraph (c) of Proposed Rule 16070. (ix) Development and Testing SRO proposes Rule 16080 (Consolidated Audit Trail--Development and Testing) to address requirements for Industry Members related to CAT development and testing. Paragraph (a) of Proposed Rule 16080 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 16040(a) and 16050, 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 16040(a) and 16050, 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), [[Page 9830]] 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 16080 implements the requirement under the CAT NMS Plan that Industry Members participate in required industry testing with the Central Repository.\26\ Specifically, Proposed Rule 16080 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. SRO intends to announce to its Industry Members the schedule established pursuant to the CAT NMS Plan via Regulatory Circular. --------------------------------------------------------------------------- \26\ Adopting Release [sic] at 84725. --------------------------------------------------------------------------- (x) Recordkeeping Proposed Rule 16090 (Consolidated Audit Trail--Recordkeeping) sets forth the recordkeeping obligations related to the CAT for Industry Members. Proposed Rule 16090 requires each Industry Member to maintain and preserve records of the information required to be recorded under the Proposed Rule 16000 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 16000 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 16090 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.\27\ Accordingly, Proposed Rule 16093 (Consolidated Audit Trail--Timely, Accurate and Complete Data) implements this requirement with regard to Industry Members. Paragraph (a) of Proposed Rule 16093 requires that Industry Members record and report data to the Central Repository as required by the Proposed Rule 16000 Series in a manner that ensures the timeliness, accuracy, integrity and completeness of such data. --------------------------------------------------------------------------- \27\ 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 16093 requires Industry Members to accurately provide the LEIs in their records as required by the Proposed Rule 16000 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.\28\ --------------------------------------------------------------------------- \28\ 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 16000 Series. As discussed above, the initial maximum Error Rate is 5%, although the Error Rate is expected to be reduced over time. SRO intends to announce to its Industry Members changes to the Error Rate established pursuant to the CAT NMS Plan via Regulatory Circular. Furthermore, paragraph (d) of Proposed Rule 16093 addresses Compliance Thresholds related to reporting data to the CAT. Proposed Rule 16093 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.\29\ Compliance Thresholds will include compliance with the data reporting and clock synchronization requirements. Proposed Rule 16093 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. --------------------------------------------------------------------------- \29\ Appendix C of the CAT NMS Plan. --------------------------------------------------------------------------- (xii) Compliance Dates Proposed Rule 16095 (Consolidated Audi [sic] Trail--Compliance Dates) sets forth the compliance dates for the various provisions of the Proposed Rule 16000 Series. Paragraph (a) of Proposed Rule 16095 states that, paragraphs (b) and (c) of this Rule set forth the additional details with respect to the compliance date of Rules 16000 through 16095. Unless otherwise noted, Rules 16000 through 16095 are fully effective and Members must comply with their terms. Paragraph (b) of Proposed Rule 16095 establishes the compliance dates for the clock synchronization requirements as set forth in Proposed Rule 16020. Paragraph (b)(1) states that each Industry Member shall comply with Rule 16020 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 16020 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 [[Page 9831]] Business Clocks that do not capture time in milliseconds.\30\ --------------------------------------------------------------------------- \30\ See Request for Exemptive Relief filed with the Commission on January 17, 2017. --------------------------------------------------------------------------- Paragraph (c) of Proposed Rule 16095 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 SRO believes that the proposed rule change is consistent with the provisions of Section 6(b)(5) of the Act,\31\ which require, among other things, that the SRO 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,\32\ which requires that SRO rules not impose any burden on competition that is not necessary or appropriate. --------------------------------------------------------------------------- \31\ 15 U.S.C. 78f(b)(6) [sic]. \32\ 15 U.S.C. 78f(b)(8). --------------------------------------------------------------------------- SRO 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 SRO and its Industry Members in meeting regulatory obligations pursuant to the Plan. In approving the Plan, the SEC noted that the Plan ``is necessary and appropriate in the public interest, for the protection of investors and the maintenance of fair and orderly markets, to remove impediments to, and perfect the mechanism of a national market system, or is otherwise in furtherance of the purposes of the Act.'' \33\ To the extent that this proposal implements, interprets or clarifies the Plan and applies specific requirements to Industry Members, SRO believes that this proposal furthers the objectives of the Plan, as identified by the SEC, and is therefore consistent with the Act. --------------------------------------------------------------------------- \33\ Approval Order at 84697. --------------------------------------------------------------------------- B. Self-Regulatory Organization's Statement on Burden on Competition SRO 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. SRO notes that the proposed rule change implements provisions of the CAT NMS Plan, and is designed to assist SRO in meeting its regulatory obligations pursuant to the Plan. SRO 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 16000 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 The Exchange has neither solicited nor received comments on the proposed rule change. 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 up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) By order approve or disapprove the 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-BOX-2017-07 on the subject line. Paper Comments Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090. All submissions should refer to File Number SR-BOX-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 such filing will also 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-BOX-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.\34\ --------------------------------------------------------------------------- \34\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2017-02537 Filed 2-7-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices 9819
proposed amended Plan, the amended For the Commission, by the Division of II. Self-Regulatory Organization’s
Plan should promote investor Trading and Markets, pursuant to delegated Statement of the Purpose of, and
protection. authority.21 Statutory Basis for, the Proposed Rule
The Commission is hereby declaring Robert W. Errett, Change
effective a plan that allocates regulatory Deputy Secretary. In its filing with the Commission, the
responsibility for certain provisions of [FR Doc. 2017–02546 Filed 2–7–17; 8:45 am] self-regulatory organization included
the federal securities laws, rules, and BILLING CODE 8011–01–P statements concerning the purpose of,
regulations as set forth in Exhibit A to and basis for, the proposed rule change
the Plan. The Commission notes that and discussed any comments it received
any amendment to the Plan must be SECURITIES AND EXCHANGE on the proposed rule change. The text
approved by the relevant Parties as set COMMISSION of these statements may be examined at
forth in Paragraph 22 of the Plan and the places specified in Item IV below.
must be filed with and approved by the [Release No. 34–79932; File No. SR–BOX– The self-regulatory organization has
Commission before it may become 2017–07] prepared summaries, set forth in
Sections A, B, and C below, of the most
effective.19
Self-Regulatory Organizations; BOX significant aspects of such statements.
Under paragraph (c) of Rule 17d–2, Options Exchange LLC; Notice of
the Commission may, after appropriate A. Self-Regulatory Organization’s
Filing of a Proposed Rule Change To Statement of the Purpose of, and
notice and comment, declare a plan, or Adopt the Rule 16000 Series To
any part of a plan, effective. In this Statutory Basis for, the Proposed Rule
Implement the Compliance Rule Change
instance, the Commission believes that Regarding the National Market System
appropriate notice and comment can Plan Governing the Consolidated Audit 1. Purpose
take place after the proposed Trail Bats BYX Exchange, Inc., Bats BZX
amendment is effective. In particular, Exchange, Inc., Bats EDGA Exchange,
the purpose of the amendment is to add February 2, 2017. Inc., Bats EDGX Exchange, Inc., BOX
MIAX PEARL as a Participating Pursuant to Section 19(b)(1) of the Options Exchange LLC, C2 Options
Organization. The Commission notes Securities Exchange Act of 1934 Exchange, Incorporated, Chicago Board
that the most recent prior amendment to (‘‘Act’’),1 and Rule 19b–4 thereunder,2 Options Exchange, Incorporated,
the Plan was published for comment notice is hereby given that on January Chicago Stock Exchange, Inc., Financial
and the Commission did not receive any 31, 2017, BOX Options Exchange LLC Industry Regulatory Authority, Inc.,
comments thereon.20 The Commission (‘‘SRO’’ or the ‘‘Exchange’’) filed with International Securities Exchange, LLC,
believes that the current amendment to Investors’ Exchange LLC, ISE Gemini,
the Securities and Exchange
the Plan does not raise any new LLC, ISE Mercury, LLC, Miami
Commission (‘‘Commission’’) the
regulatory issues that the Commission International Securities Exchange LLC,
proposed rule change as described in
has not previously considered, and MIAX PEARL, LLC, NASDAQ BX, Inc.,
Items I and II below, which Items have NASDAQ PHLX LLC, The NASDAQ
therefore believes that the amended been prepared by the self-regulatory
Plan should become effective without Stock Market LLC, National Stock
organization.3 The Commission is Exchange, Inc., New York Stock
any undue delay. publishing this notice to solicit Exchange LLC, NYSE MKT LLC, and
VI. Conclusion comments on the proposed rule change NYSE Arca, Inc. (collectively, the
from interested persons. ‘‘Participants’’) filed with the
This order gives effect to the amended Commission, pursuant to Section 11A of
Plan filed with the Commission that is I. Self-Regulatory Organization’s
Statement of the Terms of Substance of the Exchange Act 4 and Rule 608 of
contained in File No. 4–618. Regulation NMS thereunder,5 the CAT
the Proposed Rule Change
It is therefore ordered, pursuant to NMS Plan.6 The Participants filed the
Section 17(d) of the Act, that the Plan, The Exchange proposes to adopt Rule Plan to comply with Rule 613 of
as amended, filed with the Commission 16000 Series to implement the Regulation NMS under the Exchange
pursuant to Rule 17d–2 on January 25, compliance rule (‘‘Compliance Rule’’) Act. The Plan was published for
2017, is hereby approved and declared regarding the National Market System comment in the Federal Register on
effective. Plan Governing the Consolidated Audit May 17, 2016,7 and approved by the
Trail (the ‘‘CAT NMS Plan’’ or ‘‘Plan’’). Commission, as modified, on November
It is further ordered that those SRO
The text of the proposed rule change is 15, 2016.8
participants that are not the DREA as to The Plan is designed to create,
a particular common member are available from the principal office of the
implement and maintain a consolidated
relieved of those regulatory Exchange, at the Commission’s Public
responsibilities allocated to the common Reference Room and also on the 4 15 U.S.C. 78k–1.
member’s DREA under the amended Exchange’s Internet Web site at http:// 5 17 CFR 242.608.
Plan to the extent of such allocation. boxexchange.com. 6 See Letter from the Participants to Brent J.
Fields, Secretary, Commission, dated September 30,
2014; and Letter from Participants to Brent J. Fields,
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Secretary, Commission, dated February 27, 2015.
19 See Paragraph 22 of the Plan. The Commission 21 17 CFR 200.30–3(a)(34). On December 24, 2015, the Participants submitted
1 15 U.S.C. 78s(b)(1). an amendment to the CAT NMS Plan. See Letter
notes, however, that changes to Exhibit B to the
from Participants to Brent J. Fields, Secretary,
Plan (the allocation of Common Members to 2 17 CFR 240.19b–4.
Commission, dated December 23, 2015.
DREAs) are not required to be filed with, and 3 The Exchange originally filed this proposed rule 7 Securities Exchange Act Rel. No. 77724 (Apr.
approved by, the Commission before they become change on January 17, 2017 under File No. SR– 27, 2016), 81 FR 30614 (May 17, 2016).
effective. BOX–2017–04, and the Exchange subsequently 8 Securities Exchange Act Rel. No. 79318 (Nov.
20 See Securities Exchange Act Release No. 78552 withdrew that filing on January 31, 2017 and filed 15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
(August 11, 2016), 81 FR 54905 (August 17, 2016). this proposed rule change. Order’’).
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00111 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/1.svg)
![9820 Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices
audit trail (‘‘CAT’’) that would capture Participants exemptive relief to permit (II) Definition of Account Effective Date
customer and order event information the use of an alternative approach to the In connection with the Customer
for orders in NMS Securities and OTC requirement that an Industry Member Information Approach, Industry
Equity Securities, across all markets, report a Customer-ID for every Customer Members would be required to report
from the time of order inception through upon original receipt or origination.10 Customer Account Information to the
routing, cancellation, modification, or The alternative approach is called the Central Repository. ‘‘Customer Account
execution in a single consolidated data Customer Information Approach. Information’’ is defined in SEC Rule
source. Each Participant is required to Under the Customer Information
613(j)(4) to ‘‘include, but not be limited
enforce compliance by its Industry Approach, the CAT NMS Plan would
to, account number, account type,
Members, as applicable, with the require each Industry Member to assign
customer type, date account opened,
provisions of the Plan, by adopting a a unique Firm Designated ID to each
and large trader identifier (if
Compliance Rule applicable to their Customer. As the Firm Designated ID,
applicable).’’ Therefore, when reporting
Industry Members.9 As is described Industry Members would be permitted
Customer Account Information, an
more fully below, the Proposed Rule to use an account number or any other
Industry Member is required to report
16000 Series sets forth the Compliance identifier defined by the firm, provided
the date an account was opened. The
Rule to require Industry Members to each identifier is unique across the firm
for each business date (i.e., a single firm Participants requested and received an
comply with the provisions of the CAT exemption to allow an ‘‘Account
NMS Plan. The Proposed Rule 16000 may not have multiple separate
customers with the same identifier on Effective Date’’ to be reported in lieu of
Series includes twelve Proposed Rules an account open date in certain limited
covering the following areas: (1) any given date). Prior to their
commencement of reporting to the CAT, circumstances. The definition of
Definitions; (2) clock synchronization; ‘‘Account Effective Date’’ as set forth in
(3) Industry Member Data reporting; (4) Industry Members would submit an
initial set of Customer information to Paragraph (a) of Proposed Rule 16010
Customer information reporting; (5) describes those limited circumstances in
Industry Member information reporting; the Central Repository, including the
Firm Designated ID, Customer which an Industry Member may report
(6) time stamps; (7) clock an ‘‘Account Effective Date’’ rather than
synchronization rule violations; (8) Identifying Information and Customer
Account Information (which may the account open date. The proposed
connectivity and data transmission; (9) definition is the same as the definition
development and testing; (10) include, as applicable, the Customer’s
name, address, date of birth, individual of ‘‘Account Effective Date’’ set forth in
recordkeeping; (11) timely, accurate and Section 1.1 of the CAT NMS Plan,
complete data; and (12) compliance tax payer identifier number (‘‘ITIN’’)/
social security number (‘‘SSN’’), provided, however, that specific dates
dates. Each of these Proposed Rules are have replaced the descriptions of those
discussed in detail below. individual’s role in the account (e.g.,
primary holder, joint holder, guardian, dates set forth in Section 1.1 of the Plan.
(i) Definitions trustee, person with power of attorney) Specifically, Paragraph (a)(1) defines
and LEI and/or Larger [sic] Trader ID ‘‘Account Effective Date to mean, with
Proposed Rule 16010 (Consolidated regard to those circumstances in which
Audit Trail—Definitions) sets forth the (‘‘LTID’’). This process is referred to as
the customer definition process. an Industry Member has established a
definitions for the terms used in the trading relationship with an institution
Proposed Rule 16000 Series. Each of the In accordance with the Customer
Information Approach, Industry but has not established an account with
defined terms in Proposed Rule 16010 is that institution: (1) When the trading
discussed in detail in this section. Members would be required to report
only the Firm Designated ID for each relationship was established prior to
(A) Account Effective Date new order submitted to the Central November 15, 2018 for Industry
Repository, rather than the ‘‘Customer- Members other than Small Industry
(I) Customer Information Approach
ID’’ with individual order events. Members, or prior to November 15, 2019
SEC Rule 613 requires that numerous Within the Central Repository, each for Small Industry Members, either (a)
data elements be reported to the CAT to Customer would be uniquely identified the date the relationship identifier was
ensure there is sufficient information to by identifiers or a combination of established within the Industry
create the lifecycle of an order, and identifiers such as ITIN/SSN, date of Member; (b) the date when trading
provide regulators with sufficient detail birth, and as applicable, LEI and LTID. began (i.e., the date the first order was
about an order to perform their The Plan Processor would be required to received) using the relevant relationship
regulatory duties. Certain required use these unique identifiers to map identifier; or (c) if both dates are
elements are intended to ensure that the orders to specific Customers across all available, the earlier date will be used
regulators can identify the Customer’s Industry Members and Participants. To to the extent that the dates differ; or (2)
[sic] associated with orders. For ensure information identifying a when the trading relationship was
example, SEC Rule 613(c)(7)(i)(A) Customer is up to date, Industry established on or after November 15,
requires an Industry Member to report Members would be required to submit 2018 for Industry Members other than
the ‘‘Customer-IDs’’ for each Customer to the Central Repository daily and Small Industry Members, or on or after
for the original receipt or origination of periodic updates for reactivated November 15, 2019 for Small Industry
an order. ‘‘Customer-ID’’ is defined in accounts, newly established accounts, Members, the date the Industry Member
SEC Rule 613(j)(5) to mean ‘‘with and revised Firm Designated IDs or established the relationship identifier,
respect to a customer, a code that which would be no later than the date
asabaliauskas on DSK3SPTVN1PROD with NOTICES
associated reportable Customer
uniquely and consistently identifies information. the first order was received.
such customer for purposes of providing Paragraph (a)(2) of Proposed Rule
data to the Central Repository.’’ SEC 10 See Securities Exchange Act Release No. 77265 16010 states that an ‘‘Account Effective
Rule 613(c)(8) requires Industry (March 1, 2016), 81 FR 11856 (March 7, 2016) Date’’ means, where an Industry
Members to use the same Customer-ID (‘‘Exemption Order’’). See also Letter from Member changes back office providers
Participants to Brent J. Fields, Secretary,
for each Customer. The SEC granted the Commission, dated January 30, 2015 at 12
or clearing firms prior to November 15,
(‘‘Exemptive Request Letter’’); and CAT NMS Plan 2018 for Industry Members other than
9 See SEC Rule 613(g)(1). at Appendix C, Section A.1(a)(iii). Small Industry Members, or prior to
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/2.svg)
![Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices 9823
Repository.13 Such Data Submitters may CAT NMS Plan or Rule 613.16 As such, NMS Plan defines ‘‘Error Rate’’ by
include those entities that are required SRO or the SEC ‘‘[sic] may take reference to SEC Rule 613(j)(6).
to submit data to the Central Repository appropriate action against an Industry
(Q) Firm Designated ID
(e.g., national securities exchanges, Member for failing to comply with its
national securities associations and CAT reporting obligations.17 The CAT As discussed above, under the
Industry Members), third-parties that NMS Plan sets the initial Error Rate at Customer Information Approach, the
may submit data to the CAT on behalf 5%.18 It is anticipated that the CAT NMS Plan would require each
of CAT Reporters (i.e., CAT Reporting maximum Error Rate will be reviewed Industry Member to assign a unique
Agents), and outside parties that are not and lowered by the Operating Firm Designated ID to each Customer.
required to submit data to the CAT but Committee once Industry Members Industry Members would be permitted
from which the CAT may receive data begin to report to the Central to use as the Firm Designated ID an
(e.g., securities information processors Repository.19 account number or any other identifier
(‘‘SIPs’’)). To include this term in the The CAT NMS Plan requires the Plan defined by the firm, provided each
Proposed Rule 16000 Series, SRO Processor to: (1) Measure and report identifier is unique across the firm for
proposes to define ‘‘Data Submitter’’ in errors every business day; (2) provide each business date (i.e., a single firm
paragraph (n) of Proposed Rule 16010. Industry Members daily statistics and may not have multiple separate
Specifically, paragraph (n) of Proposed error reports as they become available, customers with the same identifier on
Rule 16010 defines a ‘‘Data Submitter’’ including a description of such errors; any given date). Industry Members
to mean any person that reports data to (3) provide monthly reports to Industry would be required to report only the
the Central Repository, including Members that detail an Industry Firm Designated ID for each new order
national securities exchanges, national Member’s performance and comparison submitted to the Central Repository,
securities associations, broker-dealers, statistics; (4) define educational and rather than the ‘‘Customer-ID’’ with
the SIPs for the CQS, CTA, UTP and support programs for Industry Members individual order events. Accordingly,
Plan for Reporting of Consolidated to minimize Error Rates; and (5) SRO proposes to define the term ‘‘Firm
Options Last Sale Reports and identify, daily, all Industry Members Designated ID’’ in Proposed Rule 16010.
Quotation Information (‘‘OPRA’’) Plans, exceeding the maximum allowable Error Specifically, paragraph (q) of Proposed
and certain other vendors or third Rate. To timely correct data-submitted Rule 16010 defines the term ‘‘Firm
parties that may submit data to the errors to the Central Repository, the Designated ID’’ to mean a unique
Central Repository on behalf of Industry CAT NMS Plan requires that the Central identifier for each trading account
Members. Repository receive and process error designated by Industry Members for
corrections at all times. Further, the purposes of providing data to the
(O) Eligible Security Central Repository, where each such
CAT NMS Plan requires that Industry
The reporting requirements of the Members be able to submit error identifier is unique among all identifiers
Proposed Rule 16000 Series only apply corrections to the Central Repository from any given Industry Member for
to Reportable Events in Eligible through a web-interface or via bulk each business date. This is the same
Securities. Currently, an Eligible uploads or file submissions, and that the definition as set forth in Section 1.1 of
Security includes NMS Securities and Plan Processor, subject to the Operating the CAT NMS Plan. Industry Members
OTC Equity Securities. Accordingly, Committee’s approval, support the bulk would be permitted to use an account
paragraph (o) of Proposed Rule 16010 replacement of records and the number or any other identifier defined
defines the term ‘‘Eligible Security’’ to reprocessing of such records. The by the firm, provided each identifier is
include: (1) All NMS Securities; and (2) Participants, furthermore, require that unique across the firm for each business
all OTC Equity Securities. The terms the Plan Processor identify Industry date (i.e., a single firm may not have
‘‘NMS Securities’’ and ‘‘OTC Equity Member data submission errors based multiple separate customers with the
Securities’’ are defined, in turn, below. on the Plan Processor’s validation same identifier on any given date).
This is the same definition as set forth processes.20 (R) Industry Member
in Section 1.1 of the CAT NMS Plan. Paragraph (r) of Proposed Rule 16010
(II) Definition of Error Rate
(P) Error Rate defines the term ‘‘Industry Member’’ to
To implement the requirements of the
mean a member of a national securities
(I) Maximum Error Rate CAT NMS Plan related to the Error Rate,
exchange or a member of a national
SRO proposes to define the term ‘‘Error
Under the CAT NMS Plan, the securities association.’’ This is the same
Rate’’ in Proposed Rule 16010.
Operating Committee sets the maximum definition as set forth in Section 1.1 of
Paragraph (p) of Proposed Rule 16010
Error Rate that the Central Repository the CAT NMS Plan.
defines the term ‘‘Error Rate’’ to mean
would tolerate from an Industry the percentage of Reportable Events (S) Industry Member Data
Member reporting data to the Central collected by the Central Repository in
Repository.14 The Operating Committee Paragraph (s) of Proposed Rule 16010
which the data reported does not fully states that the term ‘‘Industry Member
reviews and resets the maximum Error and accurately reflect the order event
Rate, at least annually.15 If an Industry Data’’ has the meaning set forth in Rule
that occurred in the market. This is the 16030(a)(2). This definition has the
Member reports CAT data to the Central same definition as set forth in SEC Rule
Repository with errors such that their same substantive meaning as the
613(j)(6), and Section 1.1 of the CAT
asabaliauskas on DSK3SPTVN1PROD with NOTICES
error percentage exceeds the maximum definition set forth in Section 1.1 of the
Error Rate, then such Industry Member CAT NMS Plan. The definition of
16 Appendix C, Section A.3(b) of the CAT NMS
would not be in compliance with the ‘‘Industry Member Data’’ is discussed
Plan; Rule 613(g)–(h).
17 Appendix C, Section A.3(b) of the CAT NMS
more fully in the discussion below
13 Appendix C, Section A.1(a) of the CAT NMS Plan. regarding Proposed Rule 16030(a)(2).
Plan. 18 Section 6.5(d)(i) of the CAT NMS Plan.
(T) Initial Plan Processor
14 Section 6.5(d)(i) of the CAT NMS Plan. 19 Appendix C, Section A.3(b) of the CAT NMS
15 Appendix C, Section A.3(b) of the CAT NMS Plan. Paragraph (t) of Proposed Rule 16010
Plan. 20 Approval Order at 84718. defines the term ‘‘Initial Plan Processor’’
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00115 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/5.svg)
![9824 Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices
to mean the first Plan Processor selected their respective Business Clocks (other reports are collected, processed, and
by the Operating Committee in than such Business Clocks used solely made available pursuant to an effective
accordance with SEC Rule 613, Section for Manual Order Events) at a minimum transaction reporting plan, or an
6.1 of the CAT NMS Plan and the to within 50 milliseconds of the time effective national market system plan
National Market System Plan Governing maintained by the National Institute of for reporting transactions in Listed
the Process for Selecting a Plan Standards and Technology (‘‘NIST’’), Options. This is the same definition as
Processor and Developing a Plan for the and maintain such a synchronization. set forth in Section 1.1 of the CAT NMS
Consolidated Audit Trail. This is the Each Industry Members [sic] is required Plan.
same definition as set forth in Section to synchronize their Business Clocks
(Y) NMS Stock
1.1 of the CAT NMS Plan, although the used solely for Manual Order Events,
proposed definition uses the full name however, at a minimum to within one Under the CAT NMS Plan, the
of the ‘‘Selection Plan.’’ second of the time maintained by the Operating Committee may establish
NIST. different Trading Days for NMS Stocks
(U) Listed Option or Option (as defined in SEC Rule 600(b)(47)),
(II) Definition of Manual Order Event Listed Options, OTC Equity Securities,
The CAT NMS Plan and this Proposed
Rule 16000 Series applies to Eligible In order to clarify what a Manual and any other securities that are
Securities, which includes NMS Order Event is for clock synchronization included as Eligible Securities from
Securities, which, in turn, includes and time stamp purposes, SRO proposes time to time. Accordingly, SRO
Listed Options. Certain requirements of to define the term ‘‘Manual Order proposes to define the term ‘‘NMS
the Proposed Rule 16000 Series apply Event’’ in Proposed Rule 16010. Stock’’ in Paragraph (y) of Proposed
specifically to Listed Options. Specifically, paragraph (v) of Proposed Rule 16010 to mean any NMS Security
Accordingly, Paragraph (u) of Proposed Rule 16010 defines the term ‘‘Manual other than an option. This is the same
Rule 16010 defines the term ‘‘Listed Order Event’’ to mean a non-electronic definition as set forth in SEC Rule
Option’’ or ‘‘Option.’’ Specifically, communication of order-related 600(b)(47) of Regulation NMS.
paragraph (u) of Proposed Rule 16010 information for which Industry
(Z) Operating Committee
states that the term ‘‘Listed Option’’ or Members must record and report the
time of the event. This is the same Paragraph (z) of Proposed Rule 16010
‘‘Option’’ has the meaning set forth in
definition as set forth in Section 1.1 of defines the term ‘‘Operating Committee’’
SEC Rule 600(b)(35) of Regulation NMS.
the CAT NMS Plan. to mean the governing body of the CAT
SEC Rule 600(b)(35), in turn, defines a
NMS, LLC designated as such and
listed option as ‘‘any option traded on (W) Material Terms of the Order described in Article IV of the CAT NMS
a registered national securities exchange Plan. This is the same definition as set
Proposed Rule 16030 requires
or automated facility of a national forth in Section 1.1 of the CAT NMS
Industry Members to record and report
securities association.’’ SRO notes that Plan, except SRO proposes to use the
to the Central Repository Material
the proposed definition of ‘‘Listed phrase ‘‘CAT NMS LLC’’ in place of the
Terms of the Order with certain
Option’’ is the same definition as the phrase ‘‘the Company’’ for clarity.
Reportable Events (e.g., for the original
definition set forth in Section 1.1 of the
receipt or origination of an order, for the (AA) Options Market Maker
CAT NMS Plan.
routing of an order). Accordingly, SRO
(V) Manual Order Event proposes to define the term ‘‘Material (I) Options Market Maker Quote
Terms of the Order’’ in Proposed Rule Exemption
(I) Manual Order Event Approach
16010. Specifically, paragraph (w) of SEC Rule 613(c)(7) provides that the
The CAT NMS Plan sets forth clock Proposed Rule 16010 defines the term CAT NMS Plan must require each
synchronization and timestamp ‘‘Material Terms of the Order’’ to Industry Member to record and
requirements for Industry Members include: The NMS Security or OTC electronically report to the Central
which reflect exemptions for Manual Equity Security symbol; security type; Repository details for each order and
Order Events granted by the price (if applicable); size (displayed and each reportable event, including the
Commission.21 Specifically, the Plan non-displayed); side (buy/sell); order routing and modification or cancellation
requires Industry Members to record type; if a sell order, whether the order of an order. SEC Rule 613(j)(8) defines
and report the time of each Reportable is long, short, short exempt; open/close ‘‘order’’ to include ‘‘any bid or offer.’’
Event using timestamps reflecting indicator (except on transactions in Therefore, under SEC Rule 613, the
current industry standards (which must equities); time in force (if applicable); if details for each Options Market Maker
be at least to the millisecond) or, if an the order is for a Listed Option, option quotation must be reported to the
Industry Member’s order handling or type (put/call), option symbol or root Central Repository by both the Options
execution system uses timestamps in symbol, underlying symbol, strike price, Market Maker and the options exchange
increments finer than milliseconds, expiration date, and open/close (except to which it routes its quote.
such finer increments, when reporting on market maker quotations); and any The SROs, however, requested and
to the Central Repository. For Manual special handling instructions. This is received exemptive relief from SEC Rule
Order Events, however, the Plan the same definition as set forth in 613 so that the CAT NMS Plan may
provides that such events must be Section 1.1 of the CAT NMS Plan. permit Options Market Maker quotes to
recorded in increments up to and be reported to the Central Repository by
including one second, provided that (X) NMS Security
asabaliauskas on DSK3SPTVN1PROD with NOTICES
the relevant options exchange in lieu of
Industry Members record and report the NMS Securities are one of the types requiring that such reporting be done by
time the event is captured electronically of Eligible Securities for the CAT. both the options exchange and the
in an order handling and execution Therefore, SRO proposes to define the Options Market Maker, as is required by
system (‘‘Electronic Capture Time’’) in term ‘‘NMS Security’’ in Proposed Rule SEC Rule 613.22 In accordance with the
milliseconds. In addition, Industry 16010. Specifically, paragraph (x) of exemptive relief, Options Market
Members are required to synchronize Proposed Rule 16010 defines the term
‘‘NMS Security’’ to mean any security or 22 See Exemptive Request Letter at 2, and
21 Exemption Order. class of securities for which transaction Exemption Order.
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00116 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/6.svg)
![Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices 9827
certification schedule established by the Paragraph (a)(1) requires, subject to execution price and size; (6) SRO-
Operating Committee pursuant to the paragraph (a)(3) regarding Options Assigned Market Participant Identifier
CAT NMS Plan. This requirement is the Market Makers, each Industry Member of the Industry Member executing the
same requirement as set forth in Section to record and electronically report to the order; (7) whether the execution was
6.8(a)(ii)(B), (iii) and (iv) of the CAT Central Repository the following details reported pursuant to an effective
NMS Plan. SRO intends to announce to for each order and each Reportable transaction reporting plan or the Plan
its Industry Members the certification Event, as applicable (‘‘Recorded for Reporting of Consolidated Options
schedule established by the Operating Industry Member Data’’) in the manner Last Sale Reports and Quotation
Committee via Regulatory Circular. prescribed by the Operating Committee Information; and
Paragraph (d) of Proposed Rule 16020 pursuant to the CAT NMS Plan: • other information or additional
establishes reporting requirements with • For original receipt or origination of events as may be prescribed pursuant to
regard to clock synchronization. an order: (1) Firm Designated ID(s) for the CAT NMS Plan.
Paragraph (d) of Proposed Rule 16020 each Customer; (2) CAT-Order-ID; (3) Paragraph (a)(2) of Proposed Rule
requires Industry Members to report to SRO-Assigned Market Participant 16030 requires, subject to paragraph
the Plan Processor and SRO violations Identifier of the Industry Member (a)(3) regarding Options Market Makers,
of paragraph (a) of this Rule pursuant to receiving or originating the order; (4) each Industry Member to record and
the thresholds set by the Operating date of order receipt or origination; (5) report to the Central Repository the
Committee pursuant to the CAT NMS time of order receipt or origination following, as applicable (‘‘Received
Plan. This requirement is the same (using timestamps pursuant to Proposed Industry Member Data’’ and collectively
requirement as set forth in Section Rule 16060); and (6) Material Terms of with the information referred to in Rule
6.8(a)(ii)(C), (iii) and (iv) of the CAT the Order; 16030(a)(1) ‘‘Industry Member Data’’))
NMS Plan. SRO intends to announce to • for the routing of an order: (1) CAT- in the manner prescribed by the
its Industry Members the relevant Order-ID; (2) date on which the order is Operating Committee pursuant to the
thresholds established by the Operating routed; (3) time at which the order is CAT NMS Plan:
Committee via Regulatory Circular. routed (using timestamps pursuant to • If the order is executed, in whole or
Proposed Rule 16060); (4) SRO- in part: (1) An Allocation Report; (2)
(iii) Industry Member Data Reporting Assigned Market Participant Identifier SRO-Assigned Market Participant
SEC Rule 613(c) under Regulation of the Industry Member routing the Identifier of the clearing broker or prime
NMS requires the CAT NMS Plan to set order; (5) SRO-Assigned Market broker, if applicable; and (3) CAT-
forth certain provisions requiring Participant Identifier of the Industry Order-ID of any contra-side order(s);
Industry Members to record and report Member or Participant to which the • if the trade is cancelled, a cancelled
data to the CAT. To comply with this order is being routed; (6) if routed trade indicator; and
provision, Section 6.4 of the CAT NMS internally at the Industry Member, the • for original receipt or origination of
Plan sets forth the data reporting identity and nature of the department or an order, the Firm Designated ID for the
requirements for Industry Members. To desk to which the order is routed; and relevant Customer, and in accordance
implement these provisions with regard (7) Material Terms of the Order; with Proposed Rule 16040, Customer
to its Industry Members, SRO proposes • for the receipt of an order that has Account Information and Customer
Rule 16030 (Consolidated Audit Trail— been routed, the following information: Identifying Information for the relevant
Industry Member Data Reporting) to (1) CAT-Order-ID; (2) date on which the Customer.
require its Industry Members to comply order is received; (3) time at which the Paragraph (a)(3) of Proposed Rule
with the Industry Member Data order is received (using timestamps 16030 states that each Industry Member
reporting requirements of the Plan. pursuant to Proposed Rule 16060); (4) that is an Options Market Maker is not
Proposed Rule 16030 has six [sic] SRO-Assigned Market Participant required to report to the Central
sections covering: (1) Recording and Identifier of the Industry Member Repository the Industry Member Data
reporting Industry Member Data, (2) receiving the order; (5) SRO-Assigned regarding the routing, modification or
timing of the recording and reporting, Market Participant Identifier of the cancellation of its quotes in Listed
(3) the applicable securities cover [sic] Industry Member or Participant routing Options. Each Industry Member that is
by the recording and reporting the order; and (6) Material Terms of the an Options Market Maker, however, is
requirements, (4) format, [sic] (5) the Order; required to report to the Exchange the
security symbology to be used in the • if the order is modified or time at which its quote in a Listed
recording and reporting, and (6) error cancelled: (1) CAT-Order-ID; (2) date the Option is sent to the Exchange (and, if
correction requirements, each of which modification or cancellation is received applicable, any subsequent quote
is 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 16060); (4) Market Maker). This paragraph
Paragraph (a) of Proposed Rule 16030 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 Paragraph (b) of Proposed Rule 16030
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Recorded Industry Member Data, was given by the Customer or was describes the requirements related to the
Received Industry Member Data and initiated by the Industry Member; timing of recording and reporting of
Options Market Maker data, • if the order is executed, in whole or Industry Member Data. Paragraphs
respectively. Paragraphs (a)(1)–(a)(3) of in part: (1) CAT-Order-ID; (2) date of (b)(1–(b)(3) of Proposed Rule 16030 set
Proposed Rule 16030 set forth the execution; (3) time of execution (using forth the requirements related to the
recording and reporting requirements timestamps pursuant to Proposed Rule timing of the recording and reporting
required in Section 6.4(d)(i)–(iii) of the 16060; (4) execution capacity (principal, requirements required in Section
CAT NMS Plan, respectively. agency or riskless principal); (5) 6.4(b)(i)–(ii) of the CAT NMS Plan.
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00119 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/9.svg)
![Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices 9829
(vi) Time Stamps Proposed Rule 16000 Series. Proposed such Industry Member under the
SEC Rule 613(d)(3) under Regulation Rule 16065 states that an Industry Proposed Rule 16000 Series. Any such
NMS sets forth requirements for time Member that engages in a pattern or agreement must be evidenced in
stamps used by CAT Reporters in practice of reporting Reportable Events writing, which specifies the respective
recording and reporting data to the outside of the required clock functions and responsibilities of each
synchronization time period as set forth party to the agreement that are required
CAT.25 To comply with this provision,
in this Rule Series without reasonable to effect full compliance with the
Section 6.8(b) of the Plan sets forth time
justification or exceptional requirements of the Proposed Rule
stamp requirements for Industry
circumstances may be considered in 16000 Series. SRO notes that, currently,
Members. To implement this provision
violation of this Rule. This provision no standardized form agreement for
with regard to its Industry Members,
implements the requirements of Section CAT Reporting Agent arrangements has
SRO proposes new Rule 16060
6.8 of the CAT NMS Plan which been adopted. Paragraph (c)(2) of
(Consolidated Audit Trail—Time
requires the Compliance Rule to provide Proposed Rule 16070 requires that all
Stamps) to require its Industry Members
that a pattern or practice of reporting written documents evidencing an
to comply with the time stamp
events outside of the required clock agreement with a CAT Reporting Agent
requirements of the Plan. synchronization time period without be maintained by each party to the
Paragraph (a) of Proposed Rule 16060 reasonable justification or exceptional agreement. Paragraph (c)(3) states that
sets forth the time stamp increments to circumstances may be considered a each Industry Member remains
be used by Industry Members in their violation of SEC Rule 613 or the CAT primarily responsible for compliance
CAT reporting. Paragraph (a)(1) of NMS Plan. with the requirements of the Proposed
Proposed Rule 16060 requires each Rule 16000 Series, notwithstanding the
Industry Member to record and report (viii) Connectivity and Data
existence of an agreement described in
Industry Member Data to the Central Transmission
paragraph (c) of Proposed Rule 16070.
Repository with time stamps in Proposed Rule 16070 (Consolidated
milliseconds, subject to paragraphs Audit Trail—Connectivity and Data (ix) Development and Testing
(a)(2) and (b) of Proposed Rule 16060. Transmission) addresses connectivity SRO proposes Rule 16080
To the extent that any Industry and data transmission requirements (Consolidated Audit Trail—
Member’s order handling or execution related to the CAT. Paragraph (a) of Development and Testing) to address
systems utilize time stamps in Proposed Rule 16070 describes the requirements for Industry Members
increments finer than milliseconds, format(s) for reporting Industry Member related to CAT development and testing.
paragraph (a)(2) of Proposed Rule 16060 Data to the Central Repository, thereby Paragraph (a) of Proposed Rule 16080
requires such Industry Member to implementing the formatting sets forth the testing requirements and
record and report Industry Member Data requirements as set forth in Section deadlines for Industry Members to
to the Central Repository with time 6.4(a) of the CAT NMS Plan. develop and commence reporting to the
stamps in such finer increment, subject Specifically, paragraph (a) of Proposed Central Repository. These requirements
to paragraph (b) of Proposed Rule 16060 Rule 16070 requires each Industry are set forth in Appendix C to the CAT
regarding Manual Order Events and Member to transmit data as required NMS Plan.
Allocation Reports. under the CAT NMS Plan to the Central Paragraph (a)(1) sets forth the
Paragraph (b) of Proposed Rule 16060 Repository utilizing such format(s) as deadlines related to connectivity and
sets forth the permissible time stamp may be provided by the Plan Processor acceptance testing. Industry Members
increments for Manual Order Events and approved by the Operating (other than Small Industry Members) are
and Allocation Reports. Specifically, Committee. required to begin connectivity and
paragraph (b)(1) of Proposed Rule 16060 Paragraph (b) of Proposed Rule 16070 acceptance testing with the Central
permits each Industry Member to record addresses connectivity requirements Repository no later than August 15,
and report Manual Order Events to the related to the CAT. Paragraph (b) of 2018, and Small Industry Members are
Central Repository in increments up to Proposed Rule 16070 requires each required to begin connectivity and
and including one second, provided that Industry Member to connect to the acceptance testing with the Central
each Industry Member is required to Central Repository using a secure Repository no later than August 15,
record and report the time when a method(s), including, but not limited to, 2019.
Manual Order Event has been captured private line(s) and virtual private Paragraph (a)(2) sets forth the
electronically in an order handling and network connection(s). This provision deadlines related to reporting Customer
execution system of such Member implements the connectivity and Industry Member information.
(‘‘Electronic Capture Time’’) in requirements set forth in Section 4 of Paragraph (a)(2)(i) requires Industry
milliseconds. In addition, paragraph Appendix D to the CAT NMS Plan. Members (other than Small Industry
(b)(2) of Proposed Rule 16060 permits Paragraph (c) permits Industry Members) to begin reporting Customer
each Industry Member to record and Members to use CAT Reporting Agents and Industry Member information, as
report the time of Allocation Reports in to fulfill their data reporting obligations required by Rules 16040(a) and 16050,
increments up to and including one related to the CAT. Paragraph (c) is respectively, to the Central Repository
second. based on FINRA Rule 7450(c), which for processing no later than October 15,
permits OATS Reporting Members to 2018. Paragraph (a)(2)(ii) requires Small
(vii) Clock Synchronization Rule enter into agreements with Reporting Industry Members to begin reporting
asabaliauskas on DSK3SPTVN1PROD with NOTICES
Violations Agents to fulfill the OATS obligations of Customer and Industry Member
Proposed Rule 16065 (Consolidated the OATS Reporting Member. information, as required by Rules
Audit Trail—Clock Synchronization Specifically, Paragraph (c)(1) of 16040(a) and 16050, respectively, to the
Rule Violations [sic]) describes potential Proposed Rule 16070 states that any Central Repository for processing no
violations of the clock synchronization Industry Member may enter into an later than October 15, 2019.
time period requirements set forth in the agreement with a CAT Reporting Agent Paragraph (a)(3) sets forth the
pursuant to which the CAT Reporting deadlines related to the submission of
25 17 CFR 242.613(d)(3). Agent agrees to fulfill the obligations of order data. Under paragraph (a)(3)(i),
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00121 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/11.svg)
![9830 Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices
Industry Members (other than Small recordkeeping requirements related to Rate established pursuant to the CAT
Industry Members) are permitted, but OATS. NMS Plan via Regulatory Circular.
not required, to submit order data for Furthermore, paragraph (d) of
(xi) Timely, Accurate and Complete
testing purposes beginning no later than Proposed Rule 16093 addresses
Data
May 15, 2018. In addition, Industry Compliance Thresholds related to
Members (other than Small Industry SEC Rule 613 and the CAT NMS Plan reporting data to the CAT. Proposed
Members) are required to participate in emphasize the importance of the Rule 16093 states that each Industry
the coordinated and structured testing timeliness, accuracy, completeness and Member is required to meet a separate
of order submission, which will begin integrity of the data submitted to the compliance threshold which will be an
no later than August 15, 2018. Under CAT.27 Accordingly, Proposed Rule Industry Member-specific rate that may
paragraph (a)(3)(ii), Small Industry 16093 (Consolidated Audit Trail— be used as the basis for further review
Members are permitted, but not Timely, Accurate and Complete Data) or investigation into the Industry
required, to submit order data for testing implements this requirement with Member’s performance with regard to
purposes beginning no later than May regard to Industry Members. Paragraph the CAT (the ‘‘Compliance
15, 2019. In addition, Small Industry (a) of Proposed Rule 16093 requires that Thresholds’’). Compliance Thresholds
Members are required to participate in Industry Members record and report will compare an Industry Member’s
the coordinated and structured testing data to the Central Repository as error rate to the aggregate Error Rate
of order submission, which will begin required by the Proposed Rule 16000 over a period of time to be defined by
no later than August 15, 2019. Series in a manner that ensures the the Operating Committee. Compliance
Paragraph (a)(4) states that Industry timeliness, accuracy, integrity and Thresholds will be set by the Operating
Members are permitted, but not required completeness of such data. Committee, and will be calculated at
to, submit Quote Sent Times on Options In addition, without limiting the intervals to be set by the Operating
Market Maker quotes, beginning no later general requirement as set forth in Committee.29 Compliance Thresholds
than October 15, 2018. paragraph (a), paragraph (b) of Proposed will include compliance with the data
Rule 16093 requires Industry Members reporting and clock synchronization
Paragraph (b) of Proposed Rule 16080
to accurately provide the LEIs in their requirements. Proposed Rule 16093
implements the requirement under the
records as required by the Proposed states that an Industry Member’s
CAT NMS Plan that Industry Members
Rule 16000 Series and states that performance with respect to its
participate in required industry testing
Industry Members may not knowingly Compliance Threshold will not signify,
with the Central Repository.26
submit inaccurate LEIs to the Central as a matter of law, that such Industry
Specifically, Proposed Rule 16080
Repository. Paragraph (b) notes, Member has violated this Proposed Rule
requires that each Industry Member
however, that this requirement does not Series.
participate in testing related to the
impose any additional due diligence
Central Repository, including any (xii) Compliance Dates
obligations on Industry Members with
industry-wide disaster recovery testing,
regard to LEIs for CAT purposes. Proposed Rule 16095 (Consolidated
pursuant to the schedule established
Accordingly, this provision does not Audi [sic] Trail—Compliance Dates) sets
pursuant to the CAT NMS Plan. SRO
impose any due diligence obligations forth the compliance dates for the
intends to announce to its Industry
beyond those that may exist today with various provisions of the Proposed Rule
Members the schedule established
respect to information associated with 16000 Series. Paragraph (a) of Proposed
pursuant to the CAT NMS Plan via
an LEI. Although Industry Members will Rule 16095 states that, paragraphs (b)
Regulatory Circular.
not be required to perform additional and (c) of this Rule set forth the
(x) Recordkeeping due diligence with regard to the LEIs for additional details with respect to the
CAT purposes, Industry Members will compliance date of Rules 16000 through
Proposed Rule 16090 (Consolidated
be required to accurately provide the 16095. Unless otherwise noted, Rules
Audit Trail—Recordkeeping) sets forth
LEIs in their records and may not 16000 through 16095 are fully effective
the recordkeeping obligations related to
knowingly submit inaccurate LEIs to the and Members must comply with their
the CAT for Industry Members.
CAT. Paragraph (b) is consistent with terms.
Proposed Rule 16090 requires each
the SEC’s statements in the Approval
Industry Member to maintain and Paragraph (b) of Proposed Rule 16095
Order for the CAT NMS Plan regarding
preserve records of the information establishes the compliance dates for the
an Industry Member’s obligations
required to be recorded under the clock synchronization requirements as
regarding LEIs.28
Proposed Rule 16000 Series for the set forth in Proposed Rule 16020.
Paragraph (c) states that, if an
period of time and accessibility Paragraph (b)(1) states that each
Industry Member reports data to the
specified in SEC Rule 17a–4(b). The Industry Member shall comply with
Central Repository with errors such that
records required to be maintained and Rule 16020 with regard to Business
its error percentage exceeds the
preserved under the Proposed Rule Clocks that capture time in milliseconds
maximum Error Rate established by the
16000 Series may be immediately commencing on or before March 15,
Operating Committee pursuant to the
produced or reproduced on 2017. Paragraph (b)(2) states that each
CAT NMS Plan, then such Industry
‘‘micrographic media’’ as defined in Industry Member shall comply with
Member would not be in compliance
SEC Rule 17a–4(f)(1)(i) or by means of Rule 16020 with regard to Business
with the Rule 16000 Series. As
‘‘electronic storage media’’ as defined in Clocks that do not capture time in
asabaliauskas on DSK3SPTVN1PROD with NOTICES
discussed above, the initial maximum
SEC Rule 17a–4(f)(1)(ii) that meet the milliseconds commencing on or before
Error Rate is 5%, although the Error
conditions set forth in SEC Rule 17a– February 19, 2018. The compliance date
Rate is expected to be reduced over
4(f) and be maintained and preserved set forth in paragraph (b)(1) reflects the
time. SRO intends to announce to its
for the required time in that form. exemptive relief requested by the
Industry Members changes to the Error
Proposed Rule 16090 is based on FINRA Participants with regard to the clock
Rule 7440(a)(5), which sets forth the 27 See SEC Rule 613(e)(4)(i)(D)(ii); and Section synchronization requirements related to
6.5(d) of the CAT NMS Plan.
26 Adopting Release [sic] at 84725. 28 Approval Order at 84745. 29 Appendix C of the CAT NMS Plan.
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00122 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/12.svg)
![Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices 9831
Business Clocks that do not capture necessary or appropriate in furtherance number should be included on the
time in milliseconds.30 of the purposes of the Act. SRO notes subject line if email is used. To help the
Paragraph (c) of Proposed Rule 16095 that the proposed rule change Commission process and review your
establishes the compliance dates for the implements provisions of the CAT NMS comments more efficiently, please use
data recording and reporting Plan, and is designed to assist SRO in only one method. The Commission will
requirements for Industry Members. meeting its regulatory obligations post all comments on the Commission’s
Paragraph (c)(1) requires each Industry pursuant to the Plan. SRO also notes Internet Web site (http://www.sec.gov/
Member (other than Small Industry that the Proposed Rule Series rules/sro.shtml). Copies of the
Members) to record and report the implementing provisions of the CAT submission, all subsequent
Industry Member Data to the Central NMS Plan will apply equally to all firms amendments, all written statements
Repository by November 15, 2018. that trade NMS Securities and OTC with respect to the proposed rule
Paragraph (c)(2) requires that each Equity Securities. In addition, all change that are filed with the
Industry Member that is a Small national securities exchanges and Commission, and all written
Industry Member to record and report FINRA are proposing this Proposed Rule communications relating to the
the Industry Member Data to the Central 16000 Series. Therefore, this is not a proposed rule change between the
Repository by November 15, 2019. Such competitive rule filing, and, therefore, it Commission and any person, other than
compliance dates are consistent with does not impose a burden on those that may be withheld from the
the compliance dates set forth in SEC competition. public in accordance with the
Rule 613(a)(3)(v) and (vi), and Section provisions of 5 U.S.C. 552, will be
C. Self-Regulatory Organization’s available for Web site viewing and
6.7(a)(v) and (vi) of the CAT NMS Plan.
Statement on Comments on the printing in the Commission’s Public
2. Statutory Basis Proposed Rule Change Received From Reference Room, 100 F Street NE.,
SRO believes that the proposed rule Members, Participants, or Others Washington, DC 20549, on official
change is consistent with the provisions The Exchange has neither solicited business days between the hours of
of Section 6(b)(5) of the Act,31 which nor received comments on the proposed 10:00 a.m. and 3:00 p.m. Copies of such
require, among other things, that the rule change. filing will also be available for
SRO rules must be designed to prevent inspection and copying at the principal
III. Date of Effectiveness of the office of the Exchange. All comments
fraudulent and manipulative acts and Proposed Rule Change and Timing for
practices, to promote just and equitable received will be posted without change;
Commission Action the Commission does not edit personal
principles of trade, and, in general, to
protect investors and the public interest, Within 45 days of the date of identifying information from
and Section 6(b)(8) of the Act,32 which publication of this notice in the Federal submissions. You should submit only
requires that SRO rules not impose any Register or within such longer period information that you wish to make
burden on competition that is not up to 90 days (i) as the Commission may available publicly. All submissions
necessary or appropriate. designate if it finds such longer period should refer to File Number SR–BOX–
SRO believes that this proposal is to be appropriate and publishes its 2017–07 and should be submitted on or
consistent with the Act because it reasons for so finding or (ii) as to which before March 1, 2017.
implements, interprets or clarifies the the self-regulatory organization For the Commission, by the Division of
provisions of the Plan, and is designed consents, the Commission will: Trading and Markets, pursuant to delegated
to assist SRO and its Industry Members (A) By order approve or disapprove authority.34
in meeting regulatory obligations the proposed rule change, or Robert W. Errett,
pursuant to the Plan. In approving the (B) institute proceedings to determine Deputy Secretary.
Plan, the SEC noted that the Plan ‘‘is whether the proposed rule change [FR Doc. 2017–02537 Filed 2–7–17; 8:45 am]
necessary and appropriate in the public should be disapproved.
BILLING CODE 8011–01–P
interest, for the protection of investors IV. Solicitation of Comments
and the maintenance of fair and orderly
Interested persons are invited to SECURITIES AND EXCHANGE
markets, to remove impediments to, and
submit written data, views, and COMMISSION
perfect the mechanism of a national
arguments concerning the foregoing,
market system, or is otherwise in [Release No. 34–79935; File No. SR–
including whether the proposed rule
furtherance of the purposes of the NASDAQ–2017–008]
change is consistent with the Act.
Act.’’ 33 To the extent that this proposal
Comments may be submitted by any of
implements, interprets or clarifies the Self-Regulatory Organizations; The
the following methods:
Plan and applies specific requirements NASDAQ Stock Market LLC; Notice of
to Industry Members, SRO believes that Electronic Comments Filing of Proposed Rule Change To
this proposal furthers the objectives of • Use the Commission’s Internet Adopt Rules Regarding the CAT NMS
the Plan, as identified by the SEC, and comment form (http://www.sec.gov/ Plan
is therefore consistent with the Act. rules/sro.shtml); or February 2, 2017.
B. Self-Regulatory Organization’s • Send an email to rule-comments@ Pursuant to Section 19(b)(1) of the
Statement on Burden on Competition sec.gov. Please include File Number SR– Securities Exchange Act of 1934
BOX–2017–07 on the subject line.
asabaliauskas on DSK3SPTVN1PROD with NOTICES
SRO does not believe that the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
proposed rule change will result in any Paper Comments notice is hereby given that on January
burden on competition that is not 31, 2017, The NASDAQ Stock Market
• Send paper comments in triplicate LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
to Secretary, Securities and Exchange with the Securities and Exchange
30 See Request for Exemptive Relief filed with the
Commission on January 17, 2017.
Commission, 100 F Street NE.,
31 15 U.S.C. 78f(b)(6) [sic]. Washington, DC 20549–1090. 34 17 CFR 200.30–3(a)(12).
32 15 U.S.C. 78f(b)(8). All submissions should refer to File 1 15 U.S.C. 78s(b)(1).
33 Approval Order at 84697. Number SR–BOX–2017–07. This file 2 17 CFR 240.19b–4.
VerDate Sep<11>2014 17:36 Feb 07, 2017 Jkt 241001 PO 00000 Frm 00123 Fmt 4703 Sfmt 4703 E:\FR\FM\08FEN1.SGM 08FEN1](https://thefederalregister.org/doc/82_FR_9844/page/13.svg)
Document Created: 2017-02-08 02:59:03
Document Modified: 2017-02-08 02:59:03
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 82 FR 9819 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR