82_FR_9856 82 FR 9831 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Adopt Rules Regarding the CAT NMS Plan

82 FR 9831 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Adopt Rules Regarding the CAT NMS Plan

SECURITIES AND EXCHANGE COMMISSION

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

Page Range9831-9846
FR Document2017-02540

Federal Register, Volume 82 Issue 25 (Wednesday, February 8, 2017)
[Federal Register Volume 82, Number 25 (Wednesday, February 8, 2017)]
[Notices]
[Pages 9831-9846]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-02540]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79935; File No. SR-NASDAQ-2017-008]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Adopt Rules Regarding the 
CAT NMS Plan

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, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange

[[Page 9832]]

Commission (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III, below, which Items have been 
prepared by the Exchange.\3\ The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ The Exchange originally filed this proposed rule change on 
January 17, 2017 under File No. SR-NASDAQ-2017-006, proposing new 
NASDAQ Equity Rule Series 6800. The Exchange withdrew that filing on 
January 31, 2017 and filed this proposed rule change.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt rules to implement the compliance 
rule (``Compliance Rule'') regarding the National Market System Plan 
Governing the Consolidated Audit Trail (the ``CAT NMS Plan'' or 
``Plan'').\4\
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    \4\ Unless otherwise specified, capitalized terms used in this 
rule filing are defined as set forth herein or in the CAT NMS Plan.
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    The text of the proposed rule change is available on the Exchange's 
Web site at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Bats BYX Exchange, Inc., Bats BZX Exchange, Inc., Bats EDGA 
Exchange, Inc., Bats EDGX Exchange, Inc., BOX Options Exchange LLC, C2 
Options Exchange, Incorporated, Chicago Board Options Exchange, 
Incorporated, Chicago Stock Exchange, Inc., Financial Industry 
Regulatory Authority, Inc., International Securities Exchange, LLC, 
Investors' Exchange LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami 
International Securities Exchange LLC, MIAX PEARL, LLC, NASDAQ BX, 
Inc., NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, National Stock 
Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE 
Arca, Inc. (collectively, the ``Participants'') filed with the 
Commission, pursuant to Section 11A of the Exchange Act \5\ and Rule 
608 of Regulation NMS thereunder,\6\ the CAT NMS Plan.\7\ The 
Participants filed the Plan to comply with Rule 613 of Regulation NMS 
under the Exchange Act. The Plan was published for comment in the 
Federal Register on May 17, 2016,\8\ and approved by the Commission, as 
modified, on November 15, 2016.\9\
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    \5\ 15 U.S.C. 78k-1.
    \6\ 17 CFR 242.608.
    \7\ See Letter from the Participants to Brent J. Fields, 
Secretary, Commission, dated September 30, 2014; and Letter from 
Participants to Brent J. Fields, Secretary, Commission, dated 
February 27, 2015. On December 24, 2015, the Participants submitted 
an amendment to the CAT NMS Plan. See Letter from Participants to 
Brent J. Fields, Secretary, Commission, dated December 23, 2015.
    \8\ Securities Exchange Act Rel. No. 77724 (Apr. 27, 2016), 81 
FR 30614 (May 17, 2016).
    \9\ Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 
FR 84696 (Nov. 23, 2016) (``Approval Order'').
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    The Plan is designed to create, implement, and maintain a 
consolidated audit trail (``CAT'') that would capture customer and 
order event information for orders in NMS Securities and OTC Equity 
Securities, across all markets, from the time of order inception 
through routing, cancellation, modification, or execution in a single 
consolidated data source. Each Participant is required to enforce 
compliance by its Industry Members, as applicable, with the provisions 
of the Plan, by adopting a Compliance Rule applicable to their Industry 
Members.\10\ As is described more fully below, the proposed Equity Rule 
6800 Series and proposed Options Rule Chapter IX, Section 8 (``Proposed 
Rules'') set forth the Compliance Rule to require Industry Members to 
comply with the provisions of the CAT NMS Plan on both the Nasdaq 
equity and options markets. The Proposed Rules include twelve Proposed 
Rules covering the following areas: (1) Definitions; (2) clock 
synchronization; (3) Industry Member Data reporting; (4) Customer 
information reporting; (5) Industry Member information reporting; (6) 
time stamps; (7) clock synchronization rule violations; (8) 
connectivity and data transmission; (9) development and testing; (10) 
recordkeeping; (11) timely, accurate and complete data; and (12) 
compliance dates. Each of these Proposed Rules are discussed in detail 
below.
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    \10\ See SEC Rule 613(g)(1).
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(i) Definitions
    Proposed Rule 6810 and paragraph (a) of Proposed Chapter IX, 
Section 8 (Consolidated Audit Trail--Definitions) set forth the 
definitions for the terms used in the Proposed Rules. Each of the 
defined terms in Proposed Rule 6810 and paragraph (a) of Proposed 
Chapter IX, Section 8 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[sic].'' SEC Rule 613(c)(8) requires Industry Members to use 
the same Customer-ID for each Customer. The SEC granted the 
Participants exemptive relief to permit the use of an alternative 
approach to the requirement that an Industry Member report a Customer-
ID for every Customer upon original receipt or origination.\11\ The 
alternative approach is called the Customer Information Approach.
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    \11\ See Securities Exchange Act Release No. 77265 (March 1, 
2016), 81 FR 11856 (March 7, 2016) (``Exemption Order''). See also 
Letter from Participants to Brent J. Fields, Secretary, Commission, 
dated January 30, 2015 at 12 (``Exemptive Request Letter''); and CAT 
NMS Plan at Appendix C, Section A.1(a)(iii).
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    Under the Customer Information Approach, the CAT NMS Plan would 
require each Industry Member to assign a unique Firm Designated ID to 
each Customer. As the Firm Designated ID, Industry Members would be 
permitted to use an account number or any other identifier defined by 
the firm, provided each identifier is unique across the firm for each 
business date (i.e., a single firm may not have multiple separate 
customers with the same identifier on any given date). Prior to their 
commencement of reporting to the CAT, Industry Members would submit an 
initial set of Customer information to

[[Page 9833]]

the Central Repository, including the Firm Designated ID, Customer 
Identifying Information and Customer Account Information (which may 
include, as applicable, the Customer's name, address, date of birth, 
individual tax payer identifier number (``ITIN'')/social security 
number (``SSN''), individual's role in the account (e.g., primary 
holder, joint holder, guardian, trustee, person with power of attorney, 
etc.) and LEI and/or Larger Trader ID (``LTID'')). This process is 
referred to as the customer definition process.
    In accordance with the Customer Information Approach, Industry 
Members would be required to report only the Firm Designated ID for 
each new order submitted to the Central Repository, rather than the 
``Customer-ID'' with individual order events. Within the Central 
Repository, each Customer would be uniquely identified by identifiers 
or a combination of identifiers such as ITIN/SSN, date of birth, and as 
applicable, LEI and LTID. The Plan Processor would be required to use 
these unique identifiers to map orders to specific Customers across all 
Industry Members and Participants. To ensure information identifying a 
Customer is up to date, Industry Members would be required to submit to 
the Central Repository daily and periodic updates for reactivated 
accounts, newly established accounts, and revised Firm Designated IDs 
or associated reportable Customer information.
(II) Definition of Account Effective Date
    In connection with the Customer Information Approach, Industry 
Members would be required to report Customer Account Information to the 
Central Repository. ``Customer Account Information'' is defined in SEC 
Rule 613(j)(4) to ``include, but not be limited to, account number, 
account type, customer type, date account opened, and large trader 
identifier (if applicable).'' Therefore, when reporting Customer 
Account Information, an Industry Member is required to report the date 
an account was opened. The Participants requested and received an 
exemption to allow an ``Account Effective Date'' to be reported in lieu 
of an account open date in certain limited circumstances. The 
definition of ``Account Effective Date'' as set forth in paragraph (a) 
of Proposed Rule 6810 and paragraph (a)(i) of Proposed Chapter IX, 
Section 8 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, the rules define ``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 6810 and paragraph (a)(i)(2) of 
Proposed Chapter IX, Section 8 state that an ``Account Effective Date'' 
means, where an Industry Member changes back office providers or 
clearing firms prior to November 15, 2018 for Industry Members other 
than Small Industry Members, or prior to November 15, 2019 for Small 
Industry Members, the date an account was established at the relevant 
Industry Member, either directly or via transfer.
    Paragraph (a)(3) of Proposed Rule 6810 and paragraph (a)(i)(3) of 
Proposed Chapter IX, Section 8 state 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) of Proposed Rule 6810 and paragraph (a)(i)(4) of 
Proposed Chapter IX, Section 8 state 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) of Proposed Rule 6810 and paragraph (a)(i)(5) of 
Proposed Chapter IX, Section 8 state 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) of Proposed Rule 6810 and (a)(i)(2)-(5) of 
Proposed Chapter IX, Section 8, 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 6810 and paragraph 
(a)(ii) of Proposed Chapter IX, Section 8 define an ``Active Account'' 
as an account that has had activity in Eligible Securities within the 
last six months. This is the same definition as set forth in Section 
1.1 of the CAT NMS Plan.
(C) Allocation Report
(I) Allocation Report Approach
    SEC Rule 613(c)(7)(vi)(A) requires each Industry Member to record 
and report to the Central Repository ``the account number for any 
subaccounts to which the execution is allocated (in whole or in 
part).'' The Participants requested and received from the SEC exemptive 
relief from SEC Rule 613 for an alternative to this approach 
(``Allocation Report Approach''). The Allocation Report Approach would 
permit Industry Members to record and report to the Central Repository 
an Allocation Report that includes, among other things, the Firm 
Designated ID for any account(s) to which executed shares are allocated 
when an execution is allocated in whole or part in lieu of requiring 
the reporting of the account

[[Page 9834]]

number for any subaccount to which an execution is allocated, as is 
required by SEC Rule 613.\12\ Under SEC Rule 613, regulators would be 
able to link the subaccount to which an allocation was made to a 
specific order. In contrast, under the Allocation Report Approach, 
regulators would only be able to link an allocation to the account to 
which it was made, and not to a specific order.
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    \12\ See Exemptive Request Letter at 26-27; and Exemption Order.
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(II) Definition of Allocation Report
    To assist in implementing the Allocation Report Approach, paragraph 
(c) of Proposed Rule 6810 and paragraph (a)(iii) of Proposed Chapter 
IX, Section 8 define 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 6810 
and paragraph (a)(iv) of Proposed Chapter IX, Section 8 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 6800 
Series. This is the same definition as set forth in Section 1.1 of the 
CAT NMS Plan, except the Exchange proposes to replace the phrase 
``under SEC Rule 613'' at the end of the definition in Section 1.1 of 
the Plan with the phrase ``under this Rule Series.'' This change is 
intended to recognize that the Industry Members' obligations with 
regard to the CAT are set forth in the Proposed Rules.
(E) CAT
    Paragraph (e) of Proposed Rule 6810 and paragraph (a)(v) of 
Proposed Chapter IX, Section 8 define 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 6810 paragraph (a)(vi) of Proposed 
Chapter IX, Section 8 define the term ``CAT NMS Plan'' to mean the 
National Market System Plan Governing the Consolidated Audit Trail, as 
amended from time to time.
(G) CAT-Order-ID
(I) Daisy Chain Approach
    Under the CAT NMS Plan, the Daisy Chain Approach is used to link 
and reconstruct the complete lifecycle of each Reportable Event in CAT. 
According to this Approach, Industry Members assign their own 
identifiers to each order event. Within the Central Repository, the 
Plan Processor later replaces the identifier provided by the Industry 
Member for each Reportable Event with a single identifier, called the 
CAT Order-ID, for all order events pertaining to the same order. This 
CAT Order-ID is used to link the Reportable Events related to the same 
order.
(II) Definition of CAT-Order-ID
    To implement the Daisy Chain Approach, paragraph (g) of Proposed 
Rule 6810 and paragraph (a)(vii) of Proposed Chapter IX, Section 8 
define the term ``CAT-Order-ID.'' The term ``CAT-Order-ID'' is defined 
to mean a unique order identifier or series of unique order identifiers 
that allows the Central Repository to efficiently and accurately link 
all Reportable Events for an order, and all orders that result from the 
aggregation or disaggregation of such order. This is the same 
definition as set forth in SEC Rule 613(j)(1), and Section 1.1 of the 
CAT NMS Plan defines ``CAT-Order-ID'' by reference to SEC Rule 
613(j)(1).
(H) CAT Reporting Agent
    The CAT NMS Plan permits an Industry Member to use a third party, 
such as a vendor, to report the required data to the Central Repository 
on behalf of the Industry Member.\13\ Such a third party, referred to 
in these Proposed Rules 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 6810 and paragraph (a)(viii) 
of Proposed Chapter IX, Section 8 define 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 the Proposed Rules.
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    \13\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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    This definition is based on FINRA's definition of a ``Reporting 
Agent'' as set forth in FINRA's rule related to its Order Audit Trail 
System (``OATS''). Specifically, FINRA Rule 7410(n) defines a 
``Reporting Agent'' as a third party that enters into any agreement 
with a member pursuant to which the Reporting Agent agrees to fulfill 
such member's obligations under Rule 7450. The Reporting Agent for OATS 
fulfills a similar role to the CAT Reporting Agent.
(I) Central Repository
    Paragraph (i) of Proposed Rule 6810 and paragraph (a)(ix) of 
Proposed Chapter IX, Section 8 define the term ``Central Repository'' 
to mean the repository responsible for the receipt, consolidation, and 
retention of all information reported to the CAT pursuant to SEC Rule 
613 and the CAT NMS Plan. This is the same definition as set forth in 
Section 1.1 of the CAT NMS Plan, except the Exchange uses the phrase 
``CAT NMS Plan'' in place of the phrase ``this Agreement.''
(J) Compliance Threshold
    Paragraph (j) of Proposed Rule 6810 and paragraph (a)(x) of 
Proposed Chapter IX, Section 8 define the term ``Compliance Threshold'' 
as having the meaning set forth in Proposed Rule 6893(d) and paragraph 
(k) of Proposed Chapter IX, Section 8. 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 
6893(d) and paragraph (k) of Proposed Chapter IX, Section 8, 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 6810 and paragraph (a)(xi) of Proposed 
Chapter IX, Section 8 propose to define the term ``Customer.'' 
Specifically, the term ``Customer''

[[Page 9835]]

would be defined to mean: (1) The account holder(s) of the account at 
an Industry Member originating the order; and (2) any person from whom 
the Industry Member is authorized to accept trading instructions for 
such account, if different from the account holder(s). This is the same 
definition as set forth in SEC Rule 613(j)(3), except the Exchange 
proposes to replace the references to a registered broker-dealer or 
broker-dealer with a reference to an Industry Member for consistency of 
terms used in the Proposed Rule 6800 Series and Proposed Chapter IX, 
Section 8. The Exchange also notes that Section 1.1 of the CAT NMS Plan 
defines ``Customer'' by reference to SEC Rule 613(j)(3).
(L) Customer Account Information
    As discussed above, under the Customer Information Approach, 
Industry Members are required to report Customer Account Information to 
the Central Repository as part of the customer definition process. 
Accordingly, the Exchange proposes to define the term ``Customer 
Account Information'' to clarify what customer information would need 
to be reported to the Central Repository.
    Paragraph (l) of Proposed Rule 6810 and paragraph (a)(xii) of 
Proposed Chapter IX, Section 8 define 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 6810(l) and paragraph (a)(xii) of Proposed 
Chapter IX, Section 8, however, provide an alternative definition of 
``Customer Account Information'' in two limited circumstances. First, 
in those circumstances in which an Industry Member has established a 
trading relationship with an institution but has not established an 
account with that institution, the Industry Member will: (1) Provide 
the Account Effective Date in lieu of the ``date account opened''; (2) 
provide the relationship identifier in lieu of the ``account number''; 
and (3) identify the ``account type'' as a ``relationship.'' Second, in 
those circumstances in which the relevant account was established prior 
to November 15, 2018 for Industry Members other than Small Industry 
Members, or prior to November 15, 2019 for Small Industry Members, and 
no ``date account opened'' is available for the account, the Industry 
Member will provide the Account Effective Date in the following 
circumstances: (1) Where an Industry Member changes back office 
providers or clearing firms and the date account opened is changed to 
the date the account was opened on the new back office/clearing firm 
system; (2) where an Industry Member acquires another Industry Member 
and the date account opened is changed to the date the account was 
opened on the post-merger back office/clearing firm system; (3) where 
there are multiple dates associated with an account in an Industry 
Member's system, and the parameters of each date are determined by the 
individual Industry Member; and (4) where the relevant account is an 
Industry Member proprietary account. The proposed definition is the 
same as the definition of ``Customer Account Information'' set forth in 
Section 1.1 of the CAT NMS Plan, provided, however, that specific dates 
have replaced the descriptions of those dates set forth in Section 1.1 
of the Plan.
(M) Customer Identifying Information
    As discussed above, under the Customer Information Approach, 
Industry Members are required to report Customer Identifying 
Information to the Central Repository as part of the customer 
definition process. Accordingly, the Exchange proposes to define the 
term ``Customer Account Information'' to clarify what Customer 
information would need to be reported to the Central Repository.
    Paragraph (m) of Proposed Rule 6810 and paragraph (a)(xiii) of 
Proposed Chapter IX, Section 8 define the term ``Customer Identifying 
Information'' to mean information of sufficient detail to identify a 
Customer. With respect to individuals, ``Customer Identifying 
Information'' includes, but is not limited to: Name, address, date of 
birth, individual tax payer identification number (``ITIN'')/social 
security number (``SSN''), individual's role in the account (e.g., 
primary holder, joint holder, guardian, trustee, person with the power 
of attorney). With respect to legal entities, ``Customer Identifying 
Information'' includes, but is not limited to, name, address, Employer 
Identification Number (``EIN'')/Legal Entity Identifier (``LEI'') or 
other comparable common entity identifier, if applicable. The 
definition further notes that an Industry Member that has an LEI for a 
Customer must submit the Customer's LEI in addition to other 
information of sufficient detail to identify the Customer. This is the 
same definition as set forth in Section 1.1 of the CAT NMS Plan.
(N) Data Submitter
    The CAT NMS Plan uses the term ``Data Submitter'' to refer to any 
person that reports data to the Central Repository.\14\ Such Data 
Submitters may include those entities that are required to submit data 
to the Central Repository (e.g., national securities exchanges, 
national securities associations, and Industry Members), third-parties 
that may submit data to the CAT on behalf of CAT Reporters (i.e., CAT 
Reporting Agents), and outside parties that are not required to submit 
data to the CAT but from which the CAT may receive data (e.g., 
securities information processors (``SIPs'')). To include this term in 
the Proposed Rule 6800 Series and in Proposed Chapter IX, Section 8, 
the Exchange proposes to define ``Data Submitter'' in paragraph (n) of 
Proposed Rule 6810 and paragraph (a)(xiv) of Proposed Chapter IX, 
Section 8. Specifically, paragraph (n) of Proposed Rule 6810 and 
paragraph (a)(xiv) of Proposed Chapter IX, Section 8 define a ``Data 
Submitter'' to mean any person that reports data to the Central 
Repository, including national securities exchanges, national 
securities associations, broker-dealers, the SIPs for the CQS, CTA, UTP 
and Plan for Reporting of Consolidated Options Last Sale Reports and 
Quotation Information (``OPRA'') Plans, and certain other vendors or 
third parties that may submit data to the Central Repository on behalf 
of Industry Members.
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    \14\ Appendix C, Section A.1(a) of the CAT NMS Plan.
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(O) Eligible Security
    The reporting requirements of the Proposed Rule 6800 Series and 
Proposed Chapter IX, Section 8 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 6810 and paragraph (a)(xv) of Proposed Chapter IX, 
Section 8 define 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.\15\ The Operating 
Committee reviews and resets the maximum Error

[[Page 9836]]

Rate, at least annually.\16\ If an Industry Member reports CAT data to 
the Central Repository with errors such that their error percentage 
exceeds the maximum Error Rate, then such Industry Member would not be 
in compliance with the CAT NMS Plan or Rule 613.\17\ As such, the 
Exchange or the SEC ``may take appropriate action against an Industry 
Member for failing to comply with its CAT reporting obligations.\18\ 
The CAT NMS Plan sets the initial Error Rate at 5%.\19\ It is 
anticipated that the maximum Error Rate will be reviewed and lowered by 
the Operating Committee once Industry Members begin to report to the 
Central Repository.\20\
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    \15\ Section 6.5(d)(i) of the CAT NMS Plan.
    \16\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \17\ Appendix C, Section A.3(b) of the CAT NMS Plan; Rule 
613(g)-(h).
    \18\ Appendix C, Section A.3(b) of the CAT NMS Plan.
    \19\ Section 6.5(d)(i) of the CAT NMS Plan.
    \20\ Appendix C, Section A.3(b) of the CAT NMS Plan.
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    The CAT NMS Plan requires the Plan Processor to: (1) Measure and 
report errors every business day; (2) provide Industry Members daily 
statistics and error reports as they become available, including a 
description of such errors; (3) provide monthly reports to Industry 
Members that detail an Industry Member's performance and comparison 
statistics; (4) define educational and support programs for Industry 
Members to minimize Error Rates; and (5) identify, daily, all Industry 
Members exceeding the maximum allowable Error Rate. To timely correct 
data-submitted errors to the Central Repository, the CAT NMS Plan 
requires that the Central Repository receive and process error 
corrections at all times. Further, the CAT NMS Plan requires that 
Industry Members be able to submit error corrections to the Central 
Repository through a web-interface or via bulk uploads or file 
submissions, and that the Plan Processor, subject to the Operating 
Committee's approval, support the bulk replacement of records and the 
reprocessing of such records. The Participants, furthermore, require 
that the Plan Processor identify Industry Member data submission errors 
based on the Plan Processor's validation processes.\21\
---------------------------------------------------------------------------

    \21\ Approval Order at 84718.
---------------------------------------------------------------------------

(II) Definition of Error Rate
    To implement the requirements of the CAT NMS Plan related to the 
Error Rate, the Exchange proposes to define the term ``Error Rate'' in 
Proposed Rule 6810 and paragraph (a)(xvi) of Proposed Chapter IX, 
Section 8. Paragraph (p) of Proposed Rule 6810 and paragraph (a)(xvi) 
of Proposed Chapter IX, Section 8 define the term ``Error Rate'' to 
mean the percentage of Reportable Events collected by the Central 
Repository in which the data reported does not fully and accurately 
reflect the order event that occurred in the market. This is the same 
definition as set forth in SEC Rule 613(j)(6), and Section 1.1 of the 
CAT NMS Plan defines ``Error Rate'' by reference to SEC Rule 613(j)(6).
(Q) Firm Designated ID
    As discussed above, under the Customer Information Approach, the 
CAT NMS Plan would require each Industry Member to assign a unique Firm 
Designated ID to each Customer. Industry Members would be permitted to 
use as the Firm Designated ID an account number or any other identifier 
defined by the firm, provided each identifier is unique across the firm 
for each business date (i.e., a single firm may not have multiple 
separate customers with the same identifier on any given date). 
Industry Members would be required to report only the Firm Designated 
ID for each new order submitted to the Central Repository, rather than 
the ``Customer-ID'' with individual order events. Accordingly, the 
Exchange proposes to define the term ``Firm Designated ID'' in Proposed 
Rule 6810 and Proposed Chapter IX, Section 8. Specifically, paragraph 
(q) of Proposed Rule 6810 and paragraph (a)(xvii) of Proposed Chapter 
IX, Section 8 define 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 6810 and paragraph (a)(xiii) of 
Proposed Chapter IX, Section 8 define 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 6810 and paragraph (a)(xix) of 
Proposed Chapter IX, Section 8 state that the term ``Industry Member 
Data'' has the meaning set forth in Proposed Rule 6830(a)(2) and 
paragraph (c)(i)(2) of Proposed Chapter IX, Section 8, respectively. 
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 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter 
IX, Section 8, respectively.
(T) Initial Plan Processor
    Paragraph (t) of Proposed Rule 6810 and paragraph (a)(xx) of 
Proposed Chapter IX, Section 8 define the term ``Initial Plan 
Processor'' to mean the first Plan Processor selected by the Operating 
Committee in accordance with SEC Rule 613, Section 6.1 of the CAT NMS 
Plan and the National Market System Plan Governing the Process for 
Selecting a Plan Processor and Developing a Plan for the Consolidated 
Audit Trail. This is the same definition as set forth in Section 1.1 of 
the CAT NMS Plan, although the proposed definition uses the full name 
of the ``Selection Plan.''
(U) Listed Option or Option
    The CAT NMS Plan and this Proposed Rule 6800 Series applies to 
Eligible Securities, which includes NMS Securities, which, in turn, 
includes Listed Options. Certain requirements of the Proposed Rules 
apply specifically to Listed Options. Accordingly, Paragraph (u) of 
Proposed Rule 6810 and paragraph (a)(xxi) of Proposed Chapter IX, 
Section 8 define the term ``Listed Option'' or ``Option.'' 
Specifically, paragraph (u) of Proposed Rule 6810 and paragraph 
(a)(xxi) of Proposed Chapter IX, Section 8 states that the term 
``Listed Option'' or ``Option'' has the meaning set forth in SEC Rule 
600(b)(35) of Regulation NMS. SEC Rule 600(b)(35), in turn, defines a 
listed option as ``any option traded on a registered national 
securities exchange or automated facility of a national securities 
association.'' The Exchange notes that the proposed definition of 
``Listed Option'' is the same definition as the definition set forth in 
Section 1.1 of the CAT NMS Plan.
(V) Manual Order Event
(I) Manual Order Event Approach
    The CAT NMS Plan sets forth clock synchronization and timestamp 
requirements for Industry Members

[[Page 9837]]

which reflect exemptions for Manual Order Events granted by the 
Commission.\22\ Specifically, the Plan requires Industry Members to 
record and report the time of each Reportable Event using timestamps 
reflecting current industry standards (which must be at least to the 
millisecond) or, if an Industry Members[sic] uses timestamps in 
increments finer than milliseconds, such finer increments, when 
reporting to the Central Repository to the extent the Industry Member's 
order handling or execution systems use increments finer than 
milliseconds. For Manual Order Events, however, the Plan provides that 
such events must be recorded in increments up to and including one 
second, provided that Industry Members record and report the time the 
event is captured electronically in an order handling and execution 
system (``Electronic Capture Time'') in milliseconds. In addition, 
Industry Members are required to synchronize their respective Business 
Clocks (other than such Business Clocks used solely for Manual Order 
Events) at a minimum to within 50 milliseconds of the time maintained 
by the National Institute of Standards and Technology (``NIST''), and 
maintain such a synchronization. Each Industry Member is required to 
synchronize their Business Clocks used solely for Manual Order Events, 
however, at a minimum to within one second of the time maintained by 
the NIST.
---------------------------------------------------------------------------

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

(II) Definition of Manual Order Event
    In order to clarify what a Manual Order Event is for clock 
synchronization and time stamp purposes, the Exchange proposes to 
define the term ``Manual Order Event'' in Proposed Rule 6810 and 
paragraph (a)(xxii) of Proposed Chapter IX, Section 8. Specifically, 
paragraph (v) of Proposed Rule 6810 and paragraph (a)(xxii) of Proposed 
Chapter IX, Section 8 define 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 6830 and paragraph (c) of Proposed Chapter IX, 
Section 8 require Industry Members to record and report to the Central 
Repository Material Terms of the Order with certain Reportable Events 
(e.g., for the original receipt or origination of an order, for the 
routing of an order). Accordingly, the Exchange proposes to define the 
term ``Material Terms of the Order'' in Proposed Rule 6810 and 
paragraph (a)(xxiii) of Proposed Chapter IX, Section 8. Specifically, 
paragraph (w) of Proposed Rule 6810 and paragraph (a)(xxiii) of 
Proposed Chapter IX, Section 8 define the term ``Material Terms of the 
Order'' to include: The NMS Security or OTC Equity Security symbol; 
security type; price (if applicable); size (displayed and non-
displayed); side (buy/sell); order type; if a sell order, whether the 
order is long, short, short exempt; open/close indicator (except on 
transactions in equities); time in force (if applicable); if the order 
is for a Listed Option, option type (put/call), option symbol or root 
symbol, underlying symbol, strike price, expiration date, and open/
close (except on market maker quotations); and any special handling 
instructions. This is the same definition as set forth in Section 1.1 
of the CAT NMS Plan.
(X) NMS Security
    NMS Securities are one of the types of Eligible Securities for the 
CAT. Therefore, the Exchange proposes to define the term ``NMS 
Security'' in Proposed Rule 6810 and paragraph (a)(xxiv) of Proposed 
Chapter IX, Section 8. Specifically, paragraph (x) of Proposed Rule 
6810 and paragraph (a)(xxiv) of Proposed Chapter IX, Section 8 define 
the term ``NMS Security'' to mean any security or class of securities 
for which transaction reports are collected, processed, and made 
available pursuant to an effective transaction reporting plan, or an 
effective national market system plan for reporting transactions in 
Listed Options. This is the same definition as set forth in Section 1.1 
of the CAT NMS Plan.
(Y) NMS Stock
    Under the CAT NMS Plan, the Operating Committee may establish 
different Trading Days for NMS Stocks (as defined in SEC Rule 
600(b)(47)), Listed Options, OTC Equity Securities, and any other 
securities that are included as Eligible Securities from time to time. 
Accordingly, the Exchange proposes to define the term ``NMS Stock'' in 
Paragraph (y) of Proposed Rule 6810 and paragraph (a)(xxv) of Proposed 
Chapter IX, Section 8 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 6810 and paragraph (a)(xxvi) of 
Proposed Chapter IX, Section 8 define the term ``Operating Committee'' 
to mean the governing body of the CAT NMS, LLC designated as such and 
described in Article IV of the CAT NMS Plan. This is the same 
definition as set forth in Section 1.1 of the CAT NMS Plan, except the 
Exchange proposes to use the phrase ``CAT NMS LLC'' in place of the 
phrase ``the Company'' for clarity.
(AA) Options Market Maker
(I) Options Market Maker Quote Exemption
    SEC Rule 613(c)(7) provides that the CAT NMS Plan must require each 
Industry Member to record and electronically report to the Central 
Repository details for each order and each reportable event, including 
the routing and modification or cancellation of an order. SEC Rule 
613(j)(8) defines ``order'' to include ``any bid or offer.'' Therefore, 
under SEC Rule 613, the details for each Options Market Maker quotation 
must be reported to the Central Repository by both the Options Market 
Maker and the options exchange to which it routes its quote.
    The Participants, however, requested and received exemptive relief 
from SEC Rule 613 so that the CAT NMS Plan may permit Options Market 
Maker quotes to be reported to the Central Repository by the relevant 
options exchange in lieu of requiring that such reporting be done by 
both the options exchange and the Options Market Maker, as is required 
by SEC Rule 613.\23\ In accordance with the exemptive relief, Options 
Market Makers would be required to report to the options exchange the 
time at which a quote in a Listed Option is sent to the options 
exchange. Such time information also will be reported to the Central 
Repository by the options exchange in lieu of reporting by the Options 
Market Maker.
---------------------------------------------------------------------------

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

(II) Definition of Options Market Maker
    To implement the requirements related to Option Market Maker 
quotes, the Exchange proposes to define the term ``Options Market 
Maker'' in Proposed Rule 6810 and paragraph (a)(xxvii) of Proposed 
Chapter IX, Section 8. Specifically, paragraph (aa) of Proposed Rule 
6810 and paragraph (a)(xxvii) of Proposed Chapter IX, Section 8 define 
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.

[[Page 9838]]

(BB) Order
    The Proposed Rules require each Industry Member to record and 
electronically report to the Central Repository certain details for 
each order. Accordingly, the Exchange proposes to define the term 
``Order'' in Proposed Rule 6810 and paragraph (a)(xxviii) of Proposed 
Chapter IX, Section 8. Specifically, paragraph (bb) of Proposed Rule 
6810 and paragraph (a)(xxviii) of Proposed Chapter IX, Section 8 define 
the term ``Order'', with respect to Eligible Securities, to include: 
(1) Any order received by an Industry Member from any person; (2) any 
order originated by an Industry Member; or (3) any bid or offer. This 
is the same definition as set forth in SEC Rule 613(j)(8), except the 
Exchange proposes to replace the phrase ``member of a national 
securities exchange or national securities association'' with the term 
``Industry Member.'' The Exchange notes that Section 1.1 of the CAT NMS 
Plan defines ``Order'' by reference to SEC Rule 613(j)(8).
(CC) OTC Equity Security
    OTC Equity Securities are one of the types of Eligible Securities 
for the CAT. Therefore, the Exchange proposes to define the term ``OTC 
Equity Security'' in Proposed Rule 6810 and paragraph (a)(xxix) of 
Proposed Chapter IX, Section 8. Specifically, paragraph (cc) of 
Proposed Rule 6810 and paragraph (a)(xxix) of Proposed Chapter IX, 
Section 8 define 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 6810 and paragraph (a)(xxx) of 
Proposed Chapter IX, Section 8 define 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 6810 and paragraph (a)(xxxi) of 
Proposed Chapter IX, Section 8 define 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 6810 and paragraph (a)(xxxii) of 
Proposed Chapter IX, Section 8 define 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 6810 and paragraph (a)(xxxiii) of 
Proposed Chapter IX, Section 8 state that the term ``Received Industry 
Member Data'' has the meaning set forth in Proposed Rule 6830(a)(2) and 
paragraph (c)(i)(2) of Proposed Chapter IX, Section 8. 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 6830(a)(2) and paragraph (c)(i)(2) of Proposed Chapter 
IX, Section 8.
(HH) Recorded Industry Member Data
    Paragraph (hh) of Proposed Rule 6810 and paragraph (a)(xxxiv) of 
Proposed Chapter IX, Section 8 state that the term ``Recorded Industry 
Member Data'' has the meaning set forth in Proposed Rule 6830(a)(1) and 
paragraph (c)(i)(1) of Proposed Chapter IX, Section 8. This definition 
has the same substantive meaning as the definition set forth in in 
Section 1.1 of the CAT NMS Plan. The definition of ``Recorded Industry 
Member Data'' is discussed more fully in the discussion below regarding 
Proposed Rule 6830(a)(1) and paragraph (c)(i)(1) of Proposed Chapter 
IX, Section 8.
(II) Reportable Event
    The Proposed Rules require each Industry Member to record and 
electronically report to the Central Repository certain details for 
each Reportable Event. To clarify these requirements, the Exchange 
proposes to define the term ``Reportable Event'' in Proposed Rule 6810 
and paragraph (a)(xxxv) of Proposed Chapter IX, Section 8. 
Specifically, paragraph (ii) of Proposed Rule 6810 and paragraph 
(a)(xxxv) of Proposed Chapter IX, Section 8 state 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 6810 and paragraph (a)(xxxvi) of 
Proposed Chapter IX, Section 8 define the term ``SRO'' to mean any 
self-regulatory organization within the meaning of Section 3(a)(26) of 
the Exchange Act. This is the same definition as set forth in Section 
1.1 of the CAT NMS Plan.
(KK) SRO-Assigned Market Participant Identifier
(I) Existing Identifier Approach
    The Participants requested and received exemptive relief from SEC 
Rule 613 so that the CAT NMS Plan may permit the Existing Identifier 
Approach, which would allow an Industry Member to report an existing 
SRO-Assigned Market Participant Identifier in lieu of requiring the 
reporting of a universal CAT-Reporter-ID (that is, a code that uniquely 
and consistently identifies an Industry Member for purposes of 
providing data to the Central Repository).\24\ The CAT NMS Plan 
reflects the ``Existing Identifier Approach'' for purposes of 
identifying each Industry Member associated with an order or Reportable 
Event. Under the Existing Identifier Approach, Industry Members are 
required to record and report to the Central Repository an SRO-Assigned 
Market Participant Identifier for orders and certain Reportable Events 
to be used by the Central Repository to assign a unique CAT-Reporter-ID 
to identify Industry Members.
---------------------------------------------------------------------------

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

    For the Central Repository to link the SRO-Assigned Market 
Participant Identifier to the CAT-Reporter-ID, each SRO will submit to 
the Central Repository, on a daily basis, all SRO-Assigned Market 
Participant Identifiers used by its Industry Members, as well as 
information to identify each such Industry Member, including CRD number 
and LEI, if the SRO has collected such LEI of the Industry Member. 
Additionally, each Industry Member is required to submit to the

[[Page 9839]]

Central Repository the CRD number of the Industry Member as well as the 
LEI of the Industry Member (if the Industry Member has an LEI). The 
Plan Processor will use this information to assign a CAT-Reporter-ID to 
each Industry Member for internal use within the Central Repository.
(II) Definition of SRO-Assigned Market Participant Identifier
    To implement the Existing Identifier Approach, the Exchange 
proposes to define the term ``SRO-Assigned Market Participant'' in 
Proposed Rule 6810 and paragraph (a)(xxxvii) of Proposed Chapter IX, 
Section 8. Specifically, paragraph (kk) of Proposed Rule 6810 and 
paragraph (a)(xxxvii) of Proposed Chapter IX, Section 8 define 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 6800 Series differ to some 
extent for Small Industry Members versus Industry Members other than 
Small Industry Members. For example, the compliance dates for reporting 
data to the CAT are different for Small Industry Members versus other 
Industry Members. Accordingly, to clarify the requirements that apply 
to which Industry Members, the Exchange proposes to define the term 
``Small Industry Member'' in Proposed Rule 6810 and paragraph 
(a)(xxxviii) of Proposed Chapter IX, Section 8. Specifically, paragraph 
(ll) of Proposed Rule 6810 and paragraph (a)(xxxviii) of Proposed 
Chapter IX, Section 8 define 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 6830(b) and paragraph (c)(ii) of Proposed Chapter IX, 
Section 8 establishes the deadlines for reporting certain data to the 
Central Repository using the term ``Trading Day.'' Accordingly, the 
Exchange proposes to define the term ``Trading Day'' in Proposed Rule 
6810 and paragraph (a)(xxxix) of Proposed Chapter IX, Section 8. 
Specifically, Paragraph (mm) of Proposed Rule 6810 and paragraph 
(a)(xxxix) of Proposed Chapter IX, Section 8 state that the term 
``Trading Day'' shall have the meaning as is determined by the 
Operating Committee. For the avoidance of doubt, the Operating 
Committee may establish different Trading Days for NMS Stocks (as 
defined in SEC Rule 600(b)(47), Listed Options, OTC Equity Securities, 
and any other securities that are included as Eligible Securities from 
time to time.
(ii) Clock Synchronization
    SEC Rule 613(d)(1) under Regulation NMS requires Industry Members 
to synchronize their Business Clocks to the time maintained by NIST, 
consistent with industry standards. To comply with this provision, 
Section 6.8 of the Plan sets forth the clock synchronization 
requirements for Industry Members.\25\ To implement these provisions 
with regard to its Industry Members, the Exchange proposes Rule 6820 
and paragraph (b) of Proposed Chapter IX, Section 8 (Consolidated Audit 
Trail--Clock Synchronization) to require its Industry Members to comply 
with the clock synchronization requirements of the Plan.
---------------------------------------------------------------------------

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

    Paragraph (a) of Proposed Rule 6820 and paragraph (b)(i) of 
Proposed Chapter IX, Section 8 sets forth the manner in which Industry 
Members must synchronize their Business Clocks. Paragraph (a)(1) of 
Proposed Rule 6820 and paragraph (b)(i)(1) of Proposed Chapter IX, 
Section 8 require 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 6820 and paragraph (b)(i)(2) of 
Proposed Chapter IX, Section 8 require 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 6820 and paragraph (b)(i)(3) of 
Proposed Chapter IX, Section 8 clarify that the tolerance described in 
paragraphs (a)(1) and (2) of Proposed Rule 6820 and paragraph (b)(i)(1) 
and (b)(i)(2) of Proposed Chapter IX, Section 8 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 6820 and paragraph (b)(i)(4) of 
Proposed Chapter IX, Section 8 require 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 6820 and paragraph (b)(ii) of 
Proposed Chapter IX, Section 8 set forth documentation requirements 
with regard to clock synchronization. Specifically, those paragraphs 
require 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

[[Page 9840]]

paragraph (a) of the Proposed Rule 6820 and paragraph (b)(i) of 
Proposed Chapter IX, Section 8, respectively. 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 6820 and paragraph (b)(iii) of 
Proposed Chapter IX, Section 8 set forth certification requirements 
with regard to clock synchronization. Specifically, paragraph (c) of 
Proposed Rule 6820 and paragraph (b)(iii) of Proposed Chapter IX, 
Section 8 require each Industry Member to certify to the Exchange that 
its Business Clocks satisfy the synchronization requirements set forth 
in paragraph (a) of Proposed Rule 6820 and paragraph (b)(i) of Proposed 
Chapter IX, Section 8 periodically in accordance with the certification 
schedule established by the Operating Committee pursuant to the CAT NMS 
Plan. This requirement is the same requirement as set forth in Section 
6.8(a)(ii)(B), (iii) and (iv) of the CAT NMS Plan. The Exchange intends 
to announce to its Industry Members the certification schedule 
established by the Operating Committee via an information circular 
(``Circular'').
    Paragraph (d) of Proposed Rule 6820 and paragraph (b)(iv) of 
Proposed Chapter IX, Section 8 establish reporting requirements with 
regard to clock synchronization. Paragraph (d) of Proposed Rule 6820 
and paragraph (b)(iv) of Proposed Chapter IX, Section 8 require 
Industry Members to report to the Plan Processor and the Exchange 
violations of paragraph (a) of Proposed Rule 6820 and paragraph (b)(i) 
of Proposed Chapter IX, Section 8 pursuant to the thresholds set by the 
Operating Committee pursuant to the CAT NMS Plan. This requirement is 
the same requirement as set forth in Section 6.8(a)(ii)(C), (iii) and 
(iv) of the CAT NMS Plan. The Exchange intends to announce to its 
Industry Members the relevant thresholds established by the Operating 
Committee via Circular.
(iii) Industry Member Data Reporting
    SEC Rule 613(c) under Regulation NMS requires the CAT NMS Plan to 
set forth certain provisions requiring Industry Members to record and 
report data to the CAT. To comply with this provision, Section 6.4 of 
the CAT NMS Plan sets forth the data reporting requirements for 
Industry Members. To implement these provisions with regard to its 
Industry Members, the Exchange proposes Rule 6830 and paragraph (c) of 
Proposed Chapter IX, Section 8 (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 6830 has six sections covering: (1) Recording and reporting 
Industry Member Data, (2) timing of the recording and reporting, (3) 
the applicable securities cover[sic] by the recording and reporting 
requirements, (4) format, (5) the security symbology to be used in the 
recording and reporting, and (6) error correction requirements, each of 
which is described below.
(A) Recording and Reporting Industry Member Data
    Paragraph (a) of Proposed Rule 6830 and paragraph (c)(i) of 
Proposed Chapter IX, Section 8 describe the recording and reporting of 
Industry Member Data to the Central Repository. Paragraph (a) of 
Proposed Rule 6830 and paragraph (c)(i) of Proposed Chapter IX, Section 
8 each consist of three paragraphs, which cover Recorded Industry 
Member Data, Received Industry Member Data and Options Market Maker 
data, respectively. Paragraphs (a)(1)-(a)(3) of Proposed Rule 6830 and 
paragraph (c)(i)(1)-(i)(3) of Proposed Chapter IX, Section 8 set forth 
the recording and reporting requirements required in Section 6.4(d)(i)-
(iii) of the CAT NMS Plan, respectively.
    Paragraph (a)(1) of Proposed Rule 6830 and paragraph (c)(i)(1) of 
Proposed Chapter IX, Section 8 require, subject to paragraph (a)(3) and 
paragraph (c)(i)(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 6860 and paragraph (f) of Proposed Chapter IX, Section 
8); 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 6860 and paragraph (f) of Proposed 
Chapter IX, Section 8); (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 6860 and paragraph (f) of Proposed Chapter 
IX, Section 8); (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 6860 and 
paragraph (f) of Proposed Chapter IX, Section 8); (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 6860 and paragraph (f) of Proposed 
Chapter IX, Section 8; (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

[[Page 9841]]

     other information or additional events as may be 
prescribed pursuant to the CAT NMS Plan.
    Paragraph (a)(2) of Proposed Rule 6830 and paragraph (c)(i)(2) of 
Proposed Chapter IX, Section 8 require, subject to paragraph (a)(3) and 
paragraph (c)(i)(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 paragraph (c)(i)(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 6840 and paragraph (d) of Proposed Chapter IX, Section 8, 
Customer Account Information and Customer Identifying Information for 
the relevant Customer.
    Paragraph (a)(3) of Proposed Rule 6830 and paragraph (c)(i)(3) of 
Proposed Chapter IX, Section 8 state 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 6830 and paragraph (c)(ii) of 
Proposed Chapter IX, Section 8 describe the requirements related to the 
timing of recording and reporting of Industry Member Data. Paragraphs 
(b)(1)-(b)(3) of Proposed Rule 6830 and paragraph (c)(ii)(1)-(3) of 
Proposed Chapter IX, Section 8 set forth the requirements related to 
the timing of the recording and reporting requirements required in 
Section 6.4(b)(i)-(ii) of the CAT NMS Plan.
    Paragraph (b)(1) of Proposed Rule 6830 and paragraph (c)(ii)(1) of 
Proposed Chapter IX, Section 8 require each Industry Member to record 
Recorded Industry Member Data contemporaneously with the applicable 
Reportable Event. Paragraph (b)(2) of Proposed Rule 6830 and paragraph 
(c)(ii)(2) of Proposed Chapter IX, Section 8 require 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) 
and paragraph (c)(ii)(3) of Proposed Chapter IX, Section 8 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 6830 and paragraph (c)(iii) of 
Proposed Chapter IX, Section 8 describe the securities to which the 
recording and reporting requirements of Proposed Rule 6830 and 
paragraph (c)(iii) of Proposed Chapter IX, Section 8 apply. Paragraphs 
(c)(1) and (c)(2) of Proposed Rule 6830 and paragraph (c)(iii)(1) and 
(2) of Proposed Chapter IX, Section 8 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 6830 and 
paragraph (c)(iii)(1) of Proposed Chapter IX, Section 8 require each 
Industry Member to record and report to the Central Repository the 
Industry Member Data as set forth in paragraph (a) of Proposed Rule 
6830 and paragraph (c)(i) of Proposed Chapter IX, Section 8 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 6830 and paragraph (c)(iii)(2) of Proposed 
Chapter IX, Section 8 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 6830 and paragraph (c)(i) of Proposed 
Chapter IX, Section 8 for each Eligible Security for which transaction 
reports are required to be submitted to FINRA.
(D) Security Symbology
    Paragraph (d) of Proposed Rule 6830 and paragraph (c)(iv) of 
Proposed Chapter IX, Section 8 describe 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 6830 
and paragraph (c)(iv)(1) of Proposed Chapter IX, Section 8 require, 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 6830 and paragraph 
(c)(iv)(2) of Proposed Chapter IX, Section 8 require, for each Eligible 
Security that is not exchange-listed, each Industry Member to report 
Industry Member Data to the Central Repository using such symbology 
format as approved by the Operating Committee pursuant to the CAT NMS 
Plan. The Exchange intends to announce to its Industry Members the 
relevant symbology formats established by the Operating Committee via 
Circular.
(E) Error Correction
    To ensure that the CAT contains accurate data, the CAT NMS Plan 
requires Industry Members to correct erroneous data submitted to the 
Central Repository. Therefore, the Exchange proposes to adopt paragraph 
(e) of Proposed Rule 6830 and paragraph (c)(v) of Proposed Chapter IX, 
Section 8, which addresses the correction of erroneous data reported to 
the Central Repository. Paragraph (e) of Proposed Rule 6830 and 
paragraph (c)(v) of Proposed Chapter IX, Section 8 require, 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.

[[Page 9842]]

(iv) Customer Information Reporting
    Section 6.4(d)(iv) of the CAT NMS Plan requires Industry Members to 
submit to the Central Repository certain information related to their 
Customers in accordance with the Customer Information Approach 
discussed above. The Exchange proposes Rule 6840 and paragraph (d) of 
Proposed Chapter IX, Section 8 (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 6840 and paragraph (d)(i) of Proposed Chapter IX, Section 
8 require 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 6880 and paragraph (i) of Proposed Chapter IX, Section 8. 
Paragraph (b) of Proposed Rule 6840 and paragraph (d)(ii) of Proposed 
Chapter IX, Section 8 require 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 6840 and paragraph (d)(iii) of 
Proposed Chapter IX, Section 8 require each Industry Member, on a 
periodic basis as designated by the Plan Processor and approved by the 
Operating Committee, to submit to the Central Repository a complete set 
of Firm Designated IDs, Customer Account Information and Customer 
Identifying Information for each of its Customers with an Active 
Account. This periodic refresh is intended to ensure that the Central 
Repository has the most current information identifying a Customer. The 
Exchange intends to announce to its Industry Members when such a 
periodic refresh is required by the Plan Processor and the Operating 
Committee via Circular.
    Finally, paragraph (d) of Proposed Rule 6840 and paragraph (d)(iv) 
of Proposed Chapter IX, Section 8 address the correction of erroneous 
Customer data reported to the Central Repository to ensure an accurate 
audit trail. Paragraph (d) and paragraph (d)(iv) require, for each 
Industry Member for which errors in Firm Designated ID, Customer 
Account Information and Customer Identifying Information for each of 
its Customers with an Active Account submitted to the Central 
Repository have been identified by the Plan Processor or otherwise, 
such Member to submit corrected data to the Central Repository by 5:00 
p.m. Eastern Time on T+3. This requirement implements the error 
correction requirement set forth in Appendix C of the CAT NMS Plan.
(v) Industry Member Information Reporting
    Section 6.4(d)(vi) of the CAT NMS Plan requires Industry Members to 
submit to the Central Repository information sufficient to identify 
such Industry Member, including CRD number and LEI, if such LEI has 
been obtained, in accordance with the Existing Identifier Approach 
discussed above. The Exchange proposes Rule 6850 and paragraph (e) of 
Proposed Chapter IX, Section 8 (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 6850 and paragraph (e) of Proposed Chapter IX, Section 8 require 
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 6880 and paragraph (i) of Proposed 
Chapter IX, Section 8, and keep such information up to date as 
necessary.
(vi) Time Stamps
    SEC Rule 613(d)(3) under Regulation NMS sets forth requirements for 
time stamps used by CAT Reporters in recording and reporting data to 
the CAT.\26\ To comply with this provision, Section 6.8(b) of the Plan 
sets forth time stamp requirements for Industry Members. To implement 
this provision with regard to its Industry Members, the Exchange 
proposes new Rule 6860 and paragraph (f) of Proposed Chapter IX, 
Section 8 (Consolidated Audit Trail--Time Stamps) to require its 
Industry Members to comply with the time stamp requirements of the 
Plan.
---------------------------------------------------------------------------

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

    Paragraph (a) of Proposed Rule 6860 and paragraph (f)(i) of 
Proposed Chapter IX, Section 8 set forth the time stamp increments to 
be used by Industry Members in their CAT reporting. Paragraph (a)(1) of 
Proposed Rule 6860 and paragraph (f)(i)(1) of Proposed Chapter IX, 
Section 8 require 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 6860 and 
subparagraphs (f)(i)(2) and (f)(ii) of Proposed Chapter IX, Section 8. 
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 6860 and paragraph (f)(i)(2) of 
Proposed Chapter IX, Section 8 require 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 6860 and paragraph (f)(ii) of Proposed Chapter IX, Section 8 
regarding Manual Order Events and Allocation Reports.
    Paragraph (b) of Proposed Rule 6860 and paragraph (f)(ii) of 
Proposed Chapter IX, Section 8 set forth the permissible time stamp 
increments for Manual Order Events and Allocation Reports. 
Specifically, paragraph (b)(1) of Proposed Rule 6860 and paragraph 
(f)(ii)(1) of Proposed Chapter IX, Section 8 permit 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 
6860 and paragraph (f)(ii)(2) of Proposed Chapter IX, Section 8 permit 
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 6865 and paragraph (g) of Proposed Chapter IX, 
Section 8 (Consolidated Audit Trail--Clock Synchronization Rule 
Violations) describe potential violations of the clock synchronization 
time period requirements set forth in the Proposed Rule 6800 Series and 
Proposed Chapter IX, Section 8. Proposed Rule 6865 and paragraph (g) of 
Proposed Chapter IX, Section 8 state 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

[[Page 9843]]

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 6870 and paragraph (h) of Proposed Chapter IX, 
Section 8 (Consolidated Audit Trail--Connectivity and Data 
Transmission) addresses connectivity and data transmission requirements 
related to the CAT. Paragraph (a) of Proposed Rule 6870 and paragraph 
(h)(i) of Proposed Chapter IX, Section 8 describe 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 6870 
and paragraph (h)(i) of Proposed Chapter IX, Section 8 require 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 6870 and paragraph (h)(ii) of 
Proposed Chapter IX, Section 8 address connectivity requirements 
related to the CAT. Paragraph (b) of Proposed Rule 6870 and paragraph 
(h)(ii) of Proposed Chapter IX, Section 8 require 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) of Proposed Rule 6870 and paragraph (h)(iii) of 
Proposed Chapter IX, Section 8 permit Industry Members to use CAT 
Reporting Agents to fulfill their data reporting obligations related to 
the CAT. Paragraph (c) of Proposed Rule 6870 and paragraph (h)(iii) of 
Proposed Chapter IX, Section 8 are 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 6870 and paragraph 
(h)(iii)(1) of Proposed Chapter IX, Section 8 state 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 6800 Series and Proposed 
Chapter IX, Section 8. 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 6800 Series and Proposed Chapter 
IX, Section 8, as applicable. The Exchange notes that, currently, no 
standardized form agreement for CAT Reporting Agent arrangements has 
been adopted. Paragraph (c)(2) of Proposed Rule 6870 and paragraph 
(h)(iii)(2) of Proposed Chapter IX, Section 8 require that all written 
documents evidencing an agreement with a CAT Reporting Agent be 
maintained by each party to the agreement. Paragraph (c)(3) of Proposed 
Rule 6870 and paragraph (h)(iii)(3) of Proposed Chapter IX, Section 8 
state that each Industry Member remains primarily responsible for 
compliance with the requirements of the Proposed Rule 6800 Series and 
Proposed Chapter IX, Section 8, as applicable, notwithstanding the 
existence of an agreement described in paragraph (c) of Proposed Rule 
6870 and paragraph (h)(iii) of Proposed Chapter IX, Section 8.
(ix) Development and Testing
    The Exchange proposes Rule 6880 and paragraph (i) of Proposed 
Chapter IX, Section 8 (Consolidated Audit Trail--Development and 
Testing) to address requirements for Industry Members related to CAT 
development and testing. Paragraph (a) of Proposed Rule 6880 and 
paragraph (i)(i) of Proposed Chapter IX, Section 8 set 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) of Proposed Rule 6880 and paragraph (i)(i)(1) of 
Proposed Chapter IX, Section 8 set 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) of Proposed Rule 6880 and paragraph (i)(i)(2) of 
Proposed Chapter IX, Section 8 set forth the deadlines related to 
reporting Customer and Industry Member information. Paragraph (a)(2)(i) 
of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter 
IX, Section 8 requires Industry Members (other than Small Industry 
Members) to begin reporting Customer and Industry Member information, 
as required by Proposed Rules 6840(a) and 6850 and paragraphs (d)(i) 
and (e) of Proposed Chapter IX, Section 8, respectively, to the Central 
Repository for processing no later than October 15, 2018. Paragraph 
(a)(2)(ii) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) of Proposed 
Chapter IX, Section 8 require Small Industry Members to begin reporting 
Customer and Industry Member information, as required by Rules 6840(a) 
and 6850 and paragraphs (d)(i) and (e) of Proposed Chapter IX, Section 
8, respectively, to the Central Repository for processing no later than 
October 15, 2019.
    Paragraph (a)(3) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) 
of Proposed Chapter IX, Section 8 sets forth the deadlines related to 
the submission of order data. Under paragraph (a)(3)(i) of Proposed 
Rule 6880 and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8, 
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) of Proposed Rule 6880 
and paragraph (i)(i)(2)(i) of Proposed Chapter IX, Section 8, 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) of Proposed Rule 6880 and paragraph (i)(i)(2)(i) 
of Proposed Chapter IX, Section 8 state 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 6880 and paragraph (i)(ii) of 
Proposed Chapter IX, Section 8 implement the requirement under the CAT 
NMS Plan that Industry Members participate in required industry testing 
with the

[[Page 9844]]

Central Repository.\27\ Specifically, Proposed Rule 6880 and paragraph 
(i)(ii) of Proposed Chapter IX, Section 8 require that each Industry 
Member participate in testing related to the Central Repository, 
including any industry-wide disaster recovery testing, pursuant to the 
schedule established pursuant to the CAT NMS Plan. The Exchange intends 
to announce to its Industry Members the schedule established pursuant 
to the CAT NMS Plan via Circular.
---------------------------------------------------------------------------

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

(x) Recordkeeping
    Proposed Rule 6890 and paragraph (j) of Proposed Chapter IX, 
Section 8 (Consolidated Audit Trail--Recordkeeping) set forth the 
recordkeeping obligations related to the CAT for Industry Members. 
Proposed Rule 6890 and paragraph (j) of Proposed Chapter IX, Section 8 
require each Industry Member to maintain and preserve records of the 
information required to be recorded under the Proposed Rule 6800 Series 
and Proposed Chapter IX, Section 8, as applicable, 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 6800 
Series and Proposed Chapter IX, Section 8, as applicable, 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 6890 and paragraph (j) of 
Proposed Chapter IX, Section 8 are based on FINRA Rule 7440(a)(5), 
which sets forth the recordkeeping requirements related to OATS.
(xi) Timely, Accurate and Complete Data
    SEC Rule 613 and the CAT NMS Plan emphasize the importance of the 
timeliness, accuracy, completeness and integrity of the data submitted 
to the CAT.\28\ Accordingly, Proposed Rule 6893 and paragraph (k) of 
Proposed Chapter IX, Section 8 (Consolidated Audit Trail--Timely, 
Accurate and Complete Data) implement this requirement with regard to 
Industry Members. Paragraph (a) of Proposed Rule 6893 and paragraph 
(k)(i) of Proposed Chapter IX, Section 8 require that Industry Members 
record and report data to the Central Repository as required by the 
Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as 
applicable, in a manner that ensures the timeliness, accuracy, 
integrity and completeness of such data.
---------------------------------------------------------------------------

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

    In addition, without limiting the general requirement as set forth 
in paragraph (a) of Proposed Rule 6893 and paragraph (k)(i) of Proposed 
Chapter IX, Section 8, paragraph (b) of Proposed Rule 6893 and 
paragraph (k)(ii) of Proposed Chapter IX, Section 8 require Industry 
Members to accurately provide the LEIs in their records as required by 
the Proposed Rule 6800 Series and Proposed Chapter IX, Section 8, as 
applicable, and state that Industry Members may not knowingly submit 
inaccurate LEIs to the Central Repository. Paragraph (b) of Proposed 
Rule 6893 and paragraph (k)(ii) of Proposed Chapter IX, Section 8 note, 
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) of Proposed Rule 6893 and 
paragraph (k)(ii) of Proposed Chapter IX, Section 8 are consistent with 
the SEC's statements in the Approval Order for the CAT NMS Plan 
regarding an Industry Member's obligations regarding LEIs.\29\
---------------------------------------------------------------------------

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

    Paragraph (c) of Proposed Rule 6893 and paragraph (k)(iii) of 
Proposed Chapter IX, Section 8 state 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 6800 Series and Proposed Chapter IX, 
Section 8, as applicable. As discussed above, the initial maximum Error 
Rate is 5%, although the Error Rate is expected to be reduced over 
time. The Exchange intends to announce to its Industry Members changes 
to the Error Rate established pursuant to the CAT NMS Plan via 
Circular.
    Furthermore, paragraph (d) of Proposed Rule 6893 and paragraph 
(k)(iv) of Proposed Chapter IX, Section 8 address Compliance Thresholds 
related to reporting data to the CAT. Proposed Rule 6893(d) and 
paragraph (k)(iv) of Proposed Chapter IX, Section 8 state that each 
Industry Member is required to meet a separate compliance threshold 
which will be an Industry Member-specific rate that may be used as the 
basis for further review or investigation into the Industry Member's 
performance with regard to the CAT (the ``Compliance Thresholds''). 
Compliance Thresholds will compare an Industry Member's error rate to 
the aggregate Error Rate over a period of time to be defined by the 
Operating Committee. Compliance Thresholds will be set by the Operating 
Committee, and will be calculated at intervals to be set by the 
Operating Committee.\30\ Compliance Thresholds will include compliance 
with the data reporting and clock synchronization requirements. 
Proposed Rule 6893(d) and paragraph (k)(iv) of Proposed Chapter IX, 
Section 8 state that an Industry Member's performance with respect to 
its Compliance Threshold will not signify, as a matter of law, that 
such Industry Member has violated this Proposed Rule Series.
---------------------------------------------------------------------------

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

(xii) Compliance Dates
    Proposed Rule 6895 and paragraph (l) of Proposed Chapter IX, 
Section 8 (Consolidated Audi Trail--Compliance Dates) sets forth the 
compliance dates for the various provisions of the Proposed Rule 6800 
Series and Proposed Chapter IX, Section 8, as applicable. Paragraph (a) 
of Proposed Rule 6895 and paragraph (l)(i) of Proposed Chapter IX, 
Section 8 state that, except as set forth in paragraphs (b) and (c) of 
Proposed Rule 6895 and paragraph (l)(ii) and (l)(iii) of Proposed 
Chapter IX, Section 8, as applicable, or otherwise set forth in the 
Proposed Rules, these rules are fully effective and members must comply 
with their terms.
    Paragraph (b) of Proposed Rule 6895 and paragraph (l)(ii) of 
Proposed Chapter IX, Section 8 establish the compliance dates for the 
clock synchronization requirements as set forth in Proposed Rule 6820 
and paragraph (b) of Proposed Chapter IX, Section 8. Paragraph (b)(1) 
of Proposed Rule 6895 and paragraph (l)(ii)(1) of Proposed Chapter IX, 
Section 8 state that each Industry Member shall comply with Proposed 
Rule 6820 and paragraph (b) of Proposed Chapter IX, Section 8, as 
applicable, with regard to Business Clocks that capture time in 
milliseconds commencing on or before March 15,

[[Page 9845]]

2017. Paragraph (b)(2) of Proposed Rule 6895 and paragraph (l)(ii)(2) 
of Proposed Chapter IX, Section 8 state that each Industry Member shall 
comply with Proposed Rule 6820 and paragraph (b) of Proposed Chapter 
IX, Section 8, as applicable, 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) of Proposed 
Rule 6895 and paragraph (l)(ii)(1) of Proposed Chapter IX, Section 8 
reflect the exemptive relief requested by the Participants with regard 
to the clock synchronization requirements related to Business Clocks 
that do not capture time in milliseconds.\31\
---------------------------------------------------------------------------

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

    Paragraph (c) of Proposed Rule 6895 and paragraph (l)(iii) of 
Proposed Chapter IX, Section 8 establish the compliance dates for the 
data recording and reporting requirements for Industry Members. 
Paragraph (c)(1) of Proposed Rule 6895 and paragraph (l)(iii)(1) of 
Proposed Chapter IX, Section 8 require 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) of 
Proposed Rule 6895 and paragraph (l)(iii)(2) of Proposed Chapter IX, 
Section 8 require that each Industry Member that is a Small Industry 
Member to record and report the Industry Member Data to the Central 
Repository by November 15, 2019. Such compliance dates are consistent 
with the compliance dates set forth in SEC Rule 613(a)(3)(v) and (vi), 
and Section 6.7(a)(v) and (vi) of the CAT NMS Plan.

2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6(b)(5) of the Act,\32\ which require, 
among other things, that the Exchange rules must be designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, and, in general, to protect investors 
and the public interest, and Section 6(b)(8) of the Act,\33\ which 
requires that Exchange rules not impose any burden on competition that 
is not necessary or appropriate.
---------------------------------------------------------------------------

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

    The Exchange believes that this proposal is consistent with the Act 
because it implements, interprets or clarifies the provisions of the 
Plan, and is designed to assist the Exchange and its Industry Members 
in meeting regulatory obligations pursuant to the Plan. In approving 
the Plan, the SEC noted that the Plan ``is necessary and appropriate in 
the public interest, for the protection of investors and the 
maintenance of fair and orderly markets, to remove impediments to, and 
perfect the mechanism of a national market system, or is otherwise in 
furtherance of the purposes of the Act.'' \34\ To the extent that this 
proposal implements, interprets or clarifies the Plan and applies 
specific requirements to Industry Members, the Exchange believes that 
this proposal furthers the objectives of the Plan, as identified by the 
SEC, and is therefore consistent with the Act.
---------------------------------------------------------------------------

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

B. Self-Regulatory Organization's Statement on Burden on Competition
    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. The Exchange 
notes that the proposed rule change implements provisions of the CAT 
NMS Plan, and is designed to assist the Exchange in meeting its 
regulatory obligations pursuant to the Plan. The Exchange also notes 
that the Proposed Rule Series implementing provisions of the CAT NMS 
Plan will apply equally to all firms that trade NMS Securities and OTC 
Equity Securities. In addition, all national securities exchanges and 
FINRA are proposing the rules reflected in the Proposed Rule 6800 
Series and Proposed Chapter IX, Section 8. Therefore, this is not a 
competitive rule filing, and, therefore, it does not impose a burden on 
competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others
    No written comments were either solicited or received.

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

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

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2017-008 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2017-008. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml).
    Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for Web site viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly.
    All submissions should refer to File Number SR-NASDAQ-2017-008 and 
should be submitted on or before March 1, 2017.


[[Page 9846]]


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

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

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-02540 Filed 2-7-17; 8:45 am]
BILLING CODE 8011-01-P



                                                                               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.




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                                                    9832                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    Commission (‘‘SEC’’ or ‘‘Commission’’)                  NASDAQ PHLX LLC, The NASDAQ                              Proposed Rules are discussed in detail
                                                    the proposed rule change as described                   Stock Market LLC, National Stock                         below.
                                                    in Items I, II, and III, below, which Items             Exchange, Inc., New York Stock                           (i) Definitions
                                                    have been prepared by the Exchange.3                    Exchange LLC, NYSE MKT LLC, and
                                                    The Commission is publishing this                       NYSE Arca, Inc. (collectively, the                          Proposed Rule 6810 and paragraph (a)
                                                    notice to solicit comments on the                       ‘‘Participants’’) filed with the                         of Proposed Chapter IX, Section 8
                                                    proposed rule change from interested                    Commission, pursuant to Section 11A of                   (Consolidated Audit Trail—Definitions)
                                                    persons.                                                the Exchange Act 5 and Rule 608 of                       set forth the definitions for the terms
                                                                                                                                                                     used in the Proposed Rules. Each of the
                                                    I. Self-Regulatory Organization’s                       Regulation NMS thereunder,6 the CAT
                                                                                                                                                                     defined terms in Proposed Rule 6810
                                                    Statement of the Terms of Substance of                  NMS Plan.7 The Participants filed the
                                                                                                                                                                     and paragraph (a) of Proposed Chapter
                                                    the Proposed Rule Change                                Plan to comply with Rule 613 of                          IX, Section 8 is discussed in detail in
                                                       The Exchange proposes to adopt rules                 Regulation NMS under the Exchange                        this section.
                                                    to implement the compliance rule                        Act. The Plan was published for
                                                                                                            comment in the Federal Register on                       (A) Account Effective Date
                                                    (‘‘Compliance Rule’’) regarding the
                                                    National Market System Plan Governing                   May 17, 2016,8 and approved by the                       (I) Customer Information Approach
                                                    the Consolidated Audit Trail (the ‘‘CAT                 Commission, as modified, on November                        SEC Rule 613 requires that numerous
                                                    NMS Plan’’ or ‘‘Plan’’).4                               15, 2016.9                                               data elements be reported to the CAT to
                                                       The text of the proposed rule change                    The Plan is designed to create,                       ensure there is sufficient information to
                                                    is available on the Exchange’s Web site                 implement, and maintain a consolidated                   create the lifecycle of an order, and
                                                    at http://nasdaq.cchwallstreet.com, at                  audit trail (‘‘CAT’’) that would capture                 provide regulators with sufficient detail
                                                    the principal office of the Exchange, and               customer and order event information                     about an order to perform their
                                                    at the Commission’s Public Reference                    for orders in NMS Securities and OTC                     regulatory duties. Certain required
                                                    Room.                                                   Equity Securities, across all markets,                   elements are intended to ensure that the
                                                    II. Self-Regulatory Organization’s                      from the time of order inception through                 regulators can identify the
                                                    Statement of the Purpose of, and                        routing, cancellation, modification, or                  Customer’s[sic] associated with orders.
                                                    Statutory Basis for, the Proposed Rule                  execution in a single consolidated data                  For example, SEC Rule 613(c)(7)(i)(A)
                                                    Change                                                  source. Each Participant is required to                  requires an Industry Member to report
                                                                                                            enforce compliance by its Industry                       the ‘‘Customer-IDs’’ for each Customer
                                                       In its filing with the Commission, the                                                                        for the original receipt or origination of
                                                    Exchange included statements                            Members, as applicable, with the
                                                                                                            provisions of the Plan, by adopting a                    an order. ‘‘Customer-ID’’ is defined in
                                                    concerning the purpose of and basis for                                                                          SEC Rule 613(j)(5) to mean ‘‘with
                                                    the proposed rule change and discussed                  Compliance Rule applicable to their
                                                                                                                                                                     respect to a customer, a code that
                                                    any comments it received on the                         Industry Members.10 As is described
                                                                                                                                                                     uniquely and consistently identifies
                                                    proposed rule change. The text of these                 more fully below, the proposed Equity
                                                                                                                                                                     such customer for purposes of providing
                                                    statements may be examined at the                       Rule 6800 Series and proposed Options
                                                                                                                                                                     data to the Central Repository[sic].’’ SEC
                                                    places specified in Item IV below. The                  Rule Chapter IX, Section 8 (‘‘Proposed                   Rule 613(c)(8) requires Industry
                                                    Exchange has prepared summaries, set                    Rules’’) set forth the Compliance Rule to                Members to use the same Customer-ID
                                                    forth in sections A, B, and C below, of                 require Industry Members to comply                       for each Customer. The SEC granted the
                                                    the most significant aspects of such                    with the provisions of the CAT NMS                       Participants exemptive relief to permit
                                                    statements.                                             Plan on both the Nasdaq equity and                       the use of an alternative approach to the
                                                                                                            options markets. The Proposed Rules                      requirement that an Industry Member
                                                    A. Self-Regulatory Organization’s                       include twelve Proposed Rules covering
                                                    Statement of the Purpose of, and                                                                                 report a Customer-ID for every Customer
                                                                                                            the following areas: (1) Definitions; (2)                upon original receipt or origination.11
                                                    Statutory Basis for, the Proposed Rule
                                                                                                            clock synchronization; (3) Industry                      The alternative approach is called the
                                                    Change
                                                                                                            Member Data reporting; (4) Customer                      Customer Information Approach.
                                                    1. Purpose                                              information reporting; (5) Industry                         Under the Customer Information
                                                       Bats BYX Exchange, Inc., Bats BZX                    Member information reporting; (6) time                   Approach, the CAT NMS Plan would
                                                    Exchange, Inc., Bats EDGA Exchange,                     stamps; (7) clock synchronization rule                   require each Industry Member to assign
                                                    Inc., Bats EDGX Exchange, Inc., BOX                     violations; (8) connectivity and data                    a unique Firm Designated ID to each
                                                    Options Exchange LLC, C2 Options                        transmission; (9) development and                        Customer. As the Firm Designated ID,
                                                    Exchange, Incorporated, Chicago Board                   testing; (10) recordkeeping; (11) timely,                Industry Members would be permitted
                                                    Options Exchange, Incorporated,                         accurate and complete data; and (12)                     to use an account number or any other
                                                    Chicago Stock Exchange, Inc., Financial                 compliance dates. Each of these                          identifier defined by the firm, provided
                                                    Industry Regulatory Authority, Inc.,                                                                             each identifier is unique across the firm
                                                    International Securities Exchange, LLC,                   5 15  U.S.C. 78k–1.                                    for each business date (i.e., a single firm
                                                    Investors’ Exchange LLC, ISE Gemini,                      6 17  CFR 242.608.                                     may not have multiple separate
                                                    LLC, ISE Mercury, LLC, Miami                               7 See Letter from the Participants to Brent J.        customers with the same identifier on
                                                                                                            Fields, Secretary, Commission, dated September 30,       any given date). Prior to their
                                                    International Securities Exchange LLC,                  2014; and Letter from Participants to Brent J. Fields,
                                                    MIAX PEARL, LLC, NASDAQ BX, Inc.,                       Secretary, Commission, dated February 27, 2015.
                                                                                                                                                                     commencement of reporting to the CAT,
asabaliauskas on DSK3SPTVN1PROD with NOTICES




                                                                                                            On December 24, 2015, the Participants submitted         Industry Members would submit an
                                                      3 The Exchange originally filed this proposed rule    an amendment to the CAT NMS Plan. See Letter             initial set of Customer information to
                                                    change on January 17, 2017 under File No. SR–           from Participants to Brent J. Fields, Secretary,
                                                    NASDAQ–2017–006, proposing new NASDAQ                   Commission, dated December 23, 2015.                        11 See Securities Exchange Act Release No. 77265
                                                                                                               8 Securities Exchange Act Rel. No. 77724 (Apr.
                                                    Equity Rule Series 6800. The Exchange withdrew                                                                   (March 1, 2016), 81 FR 11856 (March 7, 2016)
                                                    that filing on January 31, 2017 and filed this          27, 2016), 81 FR 30614 (May 17, 2016).                   (‘‘Exemption Order’’). See also Letter from
                                                    proposed rule change.                                      9 Securities Exchange Act Rel. No. 79318 (Nov.
                                                                                                                                                                     Participants to Brent J. Fields, Secretary,
                                                      4 Unless otherwise specified, capitalized terms       15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval       Commission, dated January 30, 2015 at 12
                                                    used in this rule filing are defined as set forth       Order’’).                                                (‘‘Exemptive Request Letter’’); and CAT NMS Plan
                                                    herein or in the CAT NMS Plan.                             10 See SEC Rule 613(g)(1).                            at Appendix C, Section A.1(a)(iii).



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                             9833

                                                    the Central Repository, including the                   Effective Date’’ set forth in Section 1.1             for Small Industry Members, the earliest
                                                    Firm Designated ID, Customer                            of the CAT NMS Plan, provided,                        available date.
                                                    Identifying Information and Customer                    however, that specific dates have                        Paragraph (a)(5) of Proposed Rule
                                                    Account Information (which may                          replaced the descriptions of those dates              6810 and paragraph (a)(i)(5) of Proposed
                                                    include, as applicable, the Customer’s                  set forth in Section 1.1 of the Plan.                 Chapter IX, Section 8 state that an
                                                    name, address, date of birth, individual                   Specifically, the rules define                     ‘‘Account Effective Date’’ means, with
                                                    tax payer identifier number (‘‘ITIN’’)/                 ‘‘Account Effective Date to mean, with                regard to Industry Member proprietary
                                                    social security number (‘‘SSN’’),                       regard to those circumstances in which                accounts established prior to November
                                                    individual’s role in the account (e.g.,                 an Industry Member has established a                  15, 2018 for Industry Members other
                                                    primary holder, joint holder, guardian,                 trading relationship with an institution              than Small Industry Members, or prior
                                                    trustee, person with power of attorney,                 but has not established an account with               to November 15, 2019 for Small
                                                    etc.) and LEI and/or Larger Trader ID                   that institution: (1) When the trading                Industry Members: (1) The date
                                                    (‘‘LTID’’)). This process is referred to as             relationship was established prior to                 established for the account in the
                                                    the customer definition process.                        November 15, 2018 for Industry                        Industry Member or in a system of the
                                                       In accordance with the Customer                      Members other than Small Industry                     Industry Member or (2) the date when
                                                    Information Approach, Industry                          Members, or prior to November 15, 2019                proprietary trading began in the account
                                                    Members would be required to report                     for Small Industry Members, either (a)                (i.e., the date on which the first orders
                                                    only the Firm Designated ID for each                    the date the relationship identifier was              were submitted from the account). With
                                                    new order submitted to the Central                      established within the Industry                       regard to paragraphs (a)(2)–(5) of
                                                    Repository, rather than the ‘‘Customer-                 Member; (b) the date when trading                     Proposed Rule 6810 and (a)(i)(2)–(5) of
                                                    ID’’ with individual order events.                      began (i.e., the date the first order was             Proposed Chapter IX, Section 8, the
                                                    Within the Central Repository, each                     received) using the relevant relationship             Account Effective Date will be no later
                                                    Customer would be uniquely identified                   identifier; or (c) if both dates are                  than the date trading occurs at the
                                                    by identifiers or a combination of                      available, the earlier date will be used              Industry Member or in the Industry
                                                    identifiers such as ITIN/SSN, date of                   to the extent that the dates differ; or (2)           Member’s system.
                                                    birth, and as applicable, LEI and LTID.                 when the trading relationship was
                                                    The Plan Processor would be required to                                                                       (B) Active Account
                                                                                                            established on or after November 15,
                                                    use these unique identifiers to map                     2018 for Industry Members other than                     Under the Customer Information
                                                    orders to specific Customers across all                 Small Industry Members, or on or after                Approach, Industry Members are
                                                    Industry Members and Participants. To                   November 15, 2019 for Small Industry                  required to report Customer Identifying
                                                    ensure information identifying a                        Members, the date the Industry Member                 Information and Customer Account
                                                    Customer is up to date, Industry                        established the relationship identifier,              Information for only those accounts that
                                                    Members would be required to submit                     which would be no later than the date                 are active. This will alleviate the need
                                                    to the Central Repository daily and                     the first order was received.                         for Industry Members to update such
                                                    periodic updates for reactivated                                                                              information for non-active accounts, but
                                                                                                               Paragraph (a)(2) of Proposed Rule
                                                    accounts, newly established accounts,                                                                         still ensure that the Central Repository
                                                                                                            6810 and paragraph (a)(i)(2) of Proposed
                                                    and revised Firm Designated IDs or                                                                            will collect audit trail data for Customer
                                                                                                            Chapter IX, Section 8 state that an
                                                    associated reportable Customer                                                                                accounts that have any Reportable
                                                                                                            ‘‘Account Effective Date’’ means, where
                                                    information.                                                                                                  Events. Accordingly, paragraph (b) of
                                                                                                            an Industry Member changes back office
                                                    (II) Definition of Account Effective Date               providers or clearing firms prior to                  Proposed Rule 6810 and paragraph
                                                                                                            November 15, 2018 for Industry                        (a)(ii) of Proposed Chapter IX, Section 8
                                                       In connection with the Customer
                                                                                                            Members other than Small Industry                     define an ‘‘Active Account’’ as an
                                                    Information Approach, Industry
                                                    Members would be required to report                     Members, or prior to November 15, 2019                account that has had activity in Eligible
                                                    Customer Account Information to the                     for Small Industry Members, the date an               Securities within the last six months.
                                                    Central Repository. ‘‘Customer Account                  account was established at the relevant               This is the same definition as set forth
                                                    Information’’ is defined in SEC Rule                    Industry Member, either directly or via               in Section 1.1 of the CAT NMS Plan.
                                                    613(j)(4) to ‘‘include, but not be limited              transfer.                                             (C) Allocation Report
                                                    to, account number, account type,                          Paragraph (a)(3) of Proposed Rule
                                                                                                            6810 and paragraph (a)(i)(3) of Proposed              (I) Allocation Report Approach
                                                    customer type, date account opened,
                                                    and large trader identifier (if                         Chapter IX, Section 8 state that an                      SEC Rule 613(c)(7)(vi)(A) requires
                                                    applicable).’’ Therefore, when reporting                ‘‘Account Effective Date’’ means, where               each Industry Member to record and
                                                    Customer Account Information, an                        an Industry Member acquires another                   report to the Central Repository ‘‘the
                                                    Industry Member is required to report                   Industry Member prior to November 15,                 account number for any subaccounts to
                                                    the date an account was opened. The                     2018 for Industry Members other than                  which the execution is allocated (in
                                                    Participants requested and received an                  Small Industry Members, or prior to                   whole or in part).’’ The Participants
                                                    exemption to allow an ‘‘Account                         November 15, 2019 for Small Industry                  requested and received from the SEC
                                                    Effective Date’’ to be reported in lieu of              Members, the date an account was                      exemptive relief from SEC Rule 613 for
                                                    an account open date in certain limited                 established at the relevant Industry                  an alternative to this approach
                                                    circumstances. The definition of                        Member, either directly or via transfer.              (‘‘Allocation Report Approach’’). The
                                                    ‘‘Account Effective Date’’ as set forth in                 Paragraph (a)(4) of Proposed Rule                  Allocation Report Approach would
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                                                    paragraph (a) of Proposed Rule 6810 and                 6810 and paragraph (a)(i)(4) of Proposed              permit Industry Members to record and
                                                    paragraph (a)(i) of Proposed Chapter IX,                Chapter IX, Section 8 state that                      report to the Central Repository an
                                                    Section 8 describes those limited                       ‘‘Account Effective Date’’ means, where               Allocation Report that includes, among
                                                    circumstances in which an Industry                      there are multiple dates associated with              other things, the Firm Designated ID for
                                                    Member may report an ‘‘Account                          an account established prior to                       any account(s) to which executed shares
                                                    Effective Date’’ rather than the account                November 15, 2018 for Industry                        are allocated when an execution is
                                                    open date. The proposed definition is                   Members other than Small Industry                     allocated in whole or part in lieu of
                                                    the same as the definition of ‘‘Account                 Members, or prior to November 15, 2019                requiring the reporting of the account


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                                                    9834                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    number for any subaccount to which an                   trail contemplated by SEC Rule 613.                   agreement with an Industry Member
                                                    execution is allocated, as is required by               This is the same definition as set forth              pursuant to which the CAT Reporting
                                                    SEC Rule 613.12 Under SEC Rule 613,                     in Section 1.1 of the CAT NMS Plan.                   Agent agrees to fulfill such Industry
                                                    regulators would be able to link the                                                                          Member’s reporting obligations under
                                                                                                            (F) CAT NMS Plan
                                                    subaccount to which an allocation was                                                                         the Proposed Rules.
                                                    made to a specific order. In contrast,                     Paragraph (f) of Proposed Rule 6810                  This definition is based on FINRA’s
                                                    under the Allocation Report Approach,                   paragraph (a)(vi) of Proposed Chapter                 definition of a ‘‘Reporting Agent’’ as set
                                                    regulators would only be able to link an                IX, Section 8 define the term ‘‘CAT                   forth in FINRA’s rule related to its Order
                                                    allocation to the account to which it was               NMS Plan’’ to mean the National Market                Audit Trail System (‘‘OATS’’).
                                                    made, and not to a specific order.                      System Plan Governing the                             Specifically, FINRA Rule 7410(n)
                                                                                                            Consolidated Audit Trail, as amended                  defines a ‘‘Reporting Agent’’ as a third
                                                    (II) Definition of Allocation Report                    from time to time.                                    party that enters into any agreement
                                                       To assist in implementing the                        (G) CAT-Order-ID                                      with a member pursuant to which the
                                                    Allocation Report Approach, paragraph                                                                         Reporting Agent agrees to fulfill such
                                                    (c) of Proposed Rule 6810 and paragraph                 (I) Daisy Chain Approach                              member’s obligations under Rule 7450.
                                                    (a)(iii) of Proposed Chapter IX, Section                   Under the CAT NMS Plan, the Daisy                  The Reporting Agent for OATS fulfills a
                                                    8 define an ‘‘Allocation Report.’’                      Chain Approach is used to link and                    similar role to the CAT Reporting Agent.
                                                    Specifically, an ‘‘Allocation Report’’                  reconstruct the complete lifecycle of                 (I) Central Repository
                                                    means a report made to the Central                      each Reportable Event in CAT.
                                                    Repository by an Industry Member that                   According to this Approach, Industry                     Paragraph (i) of Proposed Rule 6810
                                                    identifies the Firm Designated ID for                   Members assign their own identifiers to               and paragraph (a)(ix) of Proposed
                                                    any account(s), including subaccount(s),                each order event. Within the Central                  Chapter IX, Section 8 define the term
                                                    to which executed shares are allocated                  Repository, the Plan Processor later                  ‘‘Central Repository’’ to mean the
                                                    and provides the security that has been                 replaces the identifier provided by the               repository responsible for the receipt,
                                                    allocated, the identifier of the firm                   Industry Member for each Reportable                   consolidation, and retention of all
                                                    reporting the allocation, the price per                 Event with a single identifier, called the            information reported to the CAT
                                                    share of shares allocated, the side of                  CAT Order-ID, for all order events                    pursuant to SEC Rule 613 and the CAT
                                                    shares allocated, the number of shares                  pertaining to the same order. This CAT                NMS Plan. This is the same definition
                                                    allocated to each account, and the time                 Order-ID is used to link the Reportable               as set forth in Section 1.1 of the CAT
                                                    of the allocation; provided, for the                    Events related to the same order.                     NMS Plan, except the Exchange uses the
                                                    avoidance of doubt, any such Allocation                                                                       phrase ‘‘CAT NMS Plan’’ in place of the
                                                                                                            (II) Definition of CAT-Order-ID                       phrase ‘‘this Agreement.’’
                                                    Report shall not be required to be linked
                                                    to particular orders or executions. This                   To implement the Daisy Chain                       (J) Compliance Threshold
                                                    is the same definition as set forth in                  Approach, paragraph (g) of Proposed
                                                    Section 1.1 of the CAT NMS Plan.                        Rule 6810 and paragraph (a)(vii) of                      Paragraph (j) of Proposed Rule 6810
                                                                                                            Proposed Chapter IX, Section 8 define                 and paragraph (a)(x) of Proposed
                                                    (D) Business Clock                                      the term ‘‘CAT-Order-ID.’’ The term                   Chapter IX, Section 8 define the term
                                                       To create the required audit trail,                  ‘‘CAT-Order-ID’’ is defined to mean a                 ‘‘Compliance Threshold’’ as having the
                                                    Industry Members are required to record                 unique order identifier or series of                  meaning set forth in Proposed Rule
                                                    the date and time of various Reportable                 unique order identifiers that allows the              6893(d) and paragraph (k) of Proposed
                                                    Events to the Central Repository.                       Central Repository to efficiently and                 Chapter IX, Section 8. This definition
                                                    Industry Members will use ‘‘Business                    accurately link all Reportable Events for             has the same substantive meaning as the
                                                    Clocks’’ to record such dates and times.                an order, and all orders that result from             definition set forth in Section 1.1 of the
                                                    Accordingly, paragraph (d) of Proposed                  the aggregation or disaggregation of such             CAT NMS Plan. As discussed in detail
                                                    Rule 6810 and paragraph (a)(iv) of                      order. This is the same definition as set             below with regard to Proposed Rule
                                                    Proposed Chapter IX, Section 8 defines                  forth in SEC Rule 613(j)(1), and Section              6893(d) and paragraph (k) of Proposed
                                                    the term ‘‘Business Clock’’ as a clock                  1.1 of the CAT NMS Plan defines ‘‘CAT-                Chapter IX, Section 8, each Industry
                                                    used to record the date and time of any                 Order-ID’’ by reference to SEC Rule                   Member is required to meet a separate
                                                    Reportable Event required to be reported                613(j)(1).                                            compliance threshold which will be an
                                                    under this Rule 6800 Series. This is the                                                                      Industry Member-specific rate that may
                                                                                                            (H) CAT Reporting Agent                               be used as the basis for further review
                                                    same definition as set forth in Section
                                                    1.1 of the CAT NMS Plan, except the                        The CAT NMS Plan permits an                        or investigation into the Industry
                                                    Exchange proposes to replace the phrase                 Industry Member to use a third party,                 Member’s performance with regard to
                                                    ‘‘under SEC Rule 613’’ at the end of the                such as a vendor, to report the required              the CAT. This Industry Member-specific
                                                    definition in Section 1.1 of the Plan                   data to the Central Repository on behalf              rate is the ‘‘Compliance Threshold.’’
                                                    with the phrase ‘‘under this Rule                       of the Industry Member.13 Such a third                (K) Customer
                                                    Series.’’ This change is intended to                    party, referred to in these Proposed
                                                    recognize that the Industry Members’                    Rules as a ‘‘CAT Reporting Agent,’’                     Industry Members are required to
                                                    obligations with regard to the CAT are                  would be one type of a Data Submitter,                submit to the Central Repository certain
                                                    set forth in the Proposed Rules.                        that is, a party that submits data to the             information related to their Customers,
                                                                                                                                                                  including Customer Identifying
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                                                                                                            Central Repository. Paragraph (h) of
                                                    (E) CAT                                                 Proposed Rule 6810 and paragraph                      Information and Customer Account
                                                       Paragraph (e) of Proposed Rule 6810                  (a)(viii) of Proposed Chapter IX, Section             Information, as well as data related to
                                                    and paragraph (a)(v) of Proposed                        8 define the term ‘‘CAT Reporting                     their Customer’s Reportable Events.
                                                    Chapter IX, Section 8 define the term                   Agent’’ to mean a Data Submitter that is              Accordingly, paragraph (k) of Proposed
                                                    ‘‘CAT’’ to mean the consolidated audit                  a third party that enters into an                     Rule 6810 and paragraph (a)(xi) of
                                                                                                                                                                  Proposed Chapter IX, Section 8 propose
                                                      12 See Exemptive Request Letter at 26–27; and           13 Appendix C, Section A.1(a) of the CAT NMS        to define the term ‘‘Customer.’’
                                                    Exemption Order.                                        Plan.                                                 Specifically, the term ‘‘Customer’’


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                  9835

                                                    would be defined to mean: (1) The                       account opened is changed to the date                 Repository.14 Such Data Submitters may
                                                    account holder(s) of the account at an                  the account was opened on the new                     include those entities that are required
                                                    Industry Member originating the order;                  back office/clearing firm system; (2)                 to submit data to the Central Repository
                                                    and (2) any person from whom the                        where an Industry Member acquires                     (e.g., national securities exchanges,
                                                    Industry Member is authorized to accept                 another Industry Member and the date                  national securities associations, and
                                                    trading instructions for such account, if               account opened is changed to the date                 Industry Members), third-parties that
                                                    different from the account holder(s).                   the account was opened on the post-                   may submit data to the CAT on behalf
                                                    This is the same definition as set forth                merger back office/clearing firm system;              of CAT Reporters (i.e., CAT Reporting
                                                    in SEC Rule 613(j)(3), except the                       (3) where there are multiple dates                    Agents), and outside parties that are not
                                                    Exchange proposes to replace the                        associated with an account in an                      required to submit data to the CAT but
                                                    references to a registered broker-dealer                Industry Member’s system, and the                     from which the CAT may receive data
                                                    or broker-dealer with a reference to an                 parameters of each date are determined                (e.g., securities information processors
                                                    Industry Member for consistency of                      by the individual Industry Member; and                (‘‘SIPs’’)). To include this term in the
                                                    terms used in the Proposed Rule 6800                    (4) where the relevant account is an                  Proposed Rule 6800 Series and in
                                                    Series and Proposed Chapter IX, Section                 Industry Member proprietary account.                  Proposed Chapter IX, Section 8, the
                                                    8. The Exchange also notes that Section                 The proposed definition is the same as                Exchange proposes to define ‘‘Data
                                                    1.1 of the CAT NMS Plan defines                         the definition of ‘‘Customer Account                  Submitter’’ in paragraph (n) of Proposed
                                                    ‘‘Customer’’ by reference to SEC Rule                   Information’’ set forth in Section 1.1 of             Rule 6810 and paragraph (a)(xiv) of
                                                    613(j)(3).                                              the CAT NMS Plan, provided, however,                  Proposed Chapter IX, Section 8.
                                                                                                            that specific dates have replaced the                 Specifically, paragraph (n) of Proposed
                                                    (L) Customer Account Information
                                                                                                            descriptions of those dates set forth in              Rule 6810 and paragraph (a)(xiv) of
                                                       As discussed above, under the                        Section 1.1 of the Plan.
                                                    Customer Information Approach,                                                                                Proposed Chapter IX, Section 8 define a
                                                    Industry Members are required to report                 (M) Customer Identifying Information                  ‘‘Data Submitter’’ to mean any person
                                                    Customer Account Information to the                        As discussed above, under the                      that reports data to the Central
                                                    Central Repository as part of the                       Customer Information Approach,                        Repository, including national securities
                                                    customer definition process.                            Industry Members are required to report               exchanges, national securities
                                                    Accordingly, the Exchange proposes to                   Customer Identifying Information to the               associations, broker-dealers, the SIPs for
                                                    define the term ‘‘Customer Account                      Central Repository as part of the                     the CQS, CTA, UTP and Plan for
                                                    Information’’ to clarify what customer                  customer definition process.                          Reporting of Consolidated Options Last
                                                    information would need to be reported                   Accordingly, the Exchange proposes to                 Sale Reports and Quotation Information
                                                    to the Central Repository.                              define the term ‘‘Customer Account                    (‘‘OPRA’’) Plans, and certain other
                                                       Paragraph (l) of Proposed Rule 6810                  Information’’ to clarify what Customer                vendors or third parties that may submit
                                                    and paragraph (a)(xii) of Proposed                      information would need to be reported                 data to the Central Repository on behalf
                                                    Chapter IX, Section 8 define the term                   to the Central Repository.                            of Industry Members.
                                                    ‘‘Customer Account Information’’ to                        Paragraph (m) of Proposed Rule 6810
                                                                                                                                                                  (O) Eligible Security
                                                    include, in part, account number,                       and paragraph (a)(xiii) of Proposed
                                                    account type, customer type, date                       Chapter IX, Section 8 define the term                    The reporting requirements of the
                                                    account opened, and large trader                        ‘‘Customer Identifying Information’’ to               Proposed Rule 6800 Series and
                                                    identifier (if applicable). Proposed Rule               mean information of sufficient detail to              Proposed Chapter IX, Section 8 only
                                                    6810(l) and paragraph (a)(xii) of                       identify a Customer. With respect to                  apply to Reportable Events in Eligible
                                                    Proposed Chapter IX, Section 8,                         individuals, ‘‘Customer Identifying                   Securities. Currently, an Eligible
                                                    however, provide an alternative                         Information’’ includes, but is not                    Security includes NMS Securities and
                                                    definition of ‘‘Customer Account                        limited to: Name, address, date of birth,             OTC Equity Securities. Accordingly,
                                                    Information’’ in two limited                            individual tax payer identification                   paragraph (o) of Proposed Rule 6810
                                                    circumstances. First, in those                          number (‘‘ITIN’’)/social security number              and paragraph (a)(xv) of Proposed
                                                    circumstances in which an Industry                      (‘‘SSN’’), individual’s role in the                   Chapter IX, Section 8 define the term
                                                    Member has established a trading                        account (e.g., primary holder, joint                  ‘‘Eligible Security’’ to include: (1) All
                                                    relationship with an institution but has                holder, guardian, trustee, person with                NMS Securities; and (2) all OTC Equity
                                                    not established an account with that                    the power of attorney). With respect to               Securities. The terms ‘‘NMS Securities’’
                                                    institution, the Industry Member will:                  legal entities, ‘‘Customer Identifying                and ‘‘OTC Equity Securities’’ are
                                                    (1) Provide the Account Effective Date                  Information’’ includes, but is not                    defined, in turn, below. This is the same
                                                    in lieu of the ‘‘date account opened’’; (2)             limited to, name, address, Employer                   definition as set forth in Section 1.1 of
                                                    provide the relationship identifier in                  Identification Number (‘‘EIN’’)/Legal                 the CAT NMS Plan.
                                                    lieu of the ‘‘account number’’; and (3)                 Entity Identifier (‘‘LEI’’) or other
                                                    identify the ‘‘account type’’ as a                      comparable common entity identifier, if               (P) Error Rate
                                                    ‘‘relationship.’’ Second, in those                      applicable. The definition further notes              (I) Maximum Error Rate
                                                    circumstances in which the relevant                     that an Industry Member that has an LEI
                                                    account was established prior to                        for a Customer must submit the                          Under the CAT NMS Plan, the
                                                    November 15, 2018 for Industry                          Customer’s LEI in addition to other                   Operating Committee sets the maximum
                                                    Members other than Small Industry
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                                                                                                            information of sufficient detail to                   Error Rate that the Central Repository
                                                    Members, or prior to November 15, 2019                  identify the Customer. This is the same               would tolerate from an Industry
                                                    for Small Industry Members, and no                      definition as set forth in Section 1.1 of             Member reporting data to the Central
                                                    ‘‘date account opened’’ is available for                the CAT NMS Plan.                                     Repository.15 The Operating Committee
                                                    the account, the Industry Member will                                                                         reviews and resets the maximum Error
                                                    provide the Account Effective Date in                   (N) Data Submitter
                                                    the following circumstances: (1) Where                     The CAT NMS Plan uses the term                       14 Appendix C, Section A.1(a) of the CAT NMS

                                                    an Industry Member changes back office                  ‘‘Data Submitter’’ to refer to any person             Plan.
                                                    providers or clearing firms and the date                that reports data to the Central                        15 Section 6.5(d)(i) of the CAT NMS Plan.




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                                                    9836                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    Rate, at least annually.16 If an Industry               Proposed Rule 6810 and paragraph                      (S) Industry Member Data
                                                    Member reports CAT data to the Central                  (a)(xvi) of Proposed Chapter IX, Section                 Paragraph (s) of Proposed Rule 6810
                                                    Repository with errors such that their                  8 define the term ‘‘Error Rate’’ to mean              and paragraph (a)(xix) of Proposed
                                                    error percentage exceeds the maximum                    the percentage of Reportable Events                   Chapter IX, Section 8 state that the term
                                                    Error Rate, then such Industry Member                   collected by the Central Repository in                ‘‘Industry Member Data’’ has the
                                                    would not be in compliance with the                     which the data reported does not fully                meaning set forth in Proposed Rule
                                                    CAT NMS Plan or Rule 613.17 As such,                    and accurately reflect the order event                6830(a)(2) and paragraph (c)(i)(2) of
                                                    the Exchange or the SEC ‘‘may take                      that occurred in the market. This is the              Proposed Chapter IX, Section 8,
                                                    appropriate action against an Industry                  same definition as set forth in SEC Rule              respectively. This definition has the
                                                    Member for failing to comply with its                   613(j)(6), and Section 1.1 of the CAT                 same substantive meaning as the
                                                    CAT reporting obligations.18 The CAT                    NMS Plan defines ‘‘Error Rate’’ by                    definition set forth in Section 1.1 of the
                                                    NMS Plan sets the initial Error Rate at                 reference to SEC Rule 613(j)(6).                      CAT NMS Plan. The definition of
                                                    5%.19 It is anticipated that the                                                                              ‘‘Industry Member Data’’ is discussed
                                                    maximum Error Rate will be reviewed                     (Q) Firm Designated ID
                                                                                                                                                                  more fully in the discussion below
                                                    and lowered by the Operating                               As discussed above, under the                      regarding Proposed Rule 6830(a)(2) and
                                                    Committee once Industry Members                         Customer Information Approach, the                    paragraph (c)(i)(2) of Proposed Chapter
                                                    begin to report to the Central                          CAT NMS Plan would require each                       IX, Section 8, respectively.
                                                    Repository.20                                           Industry Member to assign a unique
                                                      The CAT NMS Plan requires the Plan                    Firm Designated ID to each Customer.                  (T) Initial Plan Processor
                                                    Processor to: (1) Measure and report                    Industry Members would be permitted                      Paragraph (t) of Proposed Rule 6810
                                                    errors every business day; (2) provide                  to use as the Firm Designated ID an                   and paragraph (a)(xx) of Proposed
                                                    Industry Members daily statistics and                   account number or any other identifier                Chapter IX, Section 8 define the term
                                                    error reports as they become available,                 defined by the firm, provided each                    ‘‘Initial Plan Processor’’ to mean the first
                                                    including a description of such errors;                 identifier is unique across the firm for              Plan Processor selected by the Operating
                                                    (3) provide monthly reports to Industry                 each business date (i.e., a single firm               Committee in accordance with SEC Rule
                                                    Members that detail an Industry                         may not have multiple separate                        613, Section 6.1 of the CAT NMS Plan
                                                    Member’s performance and comparison                     customers with the same identifier on                 and the National Market System Plan
                                                    statistics; (4) define educational and                  any given date). Industry Members                     Governing the Process for Selecting a
                                                    support programs for Industry Members                   would be required to report only the                  Plan Processor and Developing a Plan
                                                    to minimize Error Rates; and (5)                        Firm Designated ID for each new order                 for the Consolidated Audit Trail. This is
                                                    identify, daily, all Industry Members                   submitted to the Central Repository,                  the same definition as set forth in
                                                    exceeding the maximum allowable Error                   rather than the ‘‘Customer-ID’’ with                  Section 1.1 of the CAT NMS Plan,
                                                    Rate. To timely correct data-submitted                  individual order events. Accordingly,                 although the proposed definition uses
                                                    errors to the Central Repository, the                   the Exchange proposes to define the                   the full name of the ‘‘Selection Plan.’’
                                                    CAT NMS Plan requires that the Central                  term ‘‘Firm Designated ID’’ in Proposed
                                                    Repository receive and process error                                                                          (U) Listed Option or Option
                                                                                                            Rule 6810 and Proposed Chapter IX,
                                                    corrections at all times. Further, the                  Section 8. Specifically, paragraph (q) of                The CAT NMS Plan and this Proposed
                                                    CAT NMS Plan requires that Industry                     Proposed Rule 6810 and paragraph                      Rule 6800 Series applies to Eligible
                                                    Members be able to submit error                         (a)(xvii) of Proposed Chapter IX, Section             Securities, which includes NMS
                                                    corrections to the Central Repository                   8 define the term ‘‘Firm Designated ID’’              Securities, which, in turn, includes
                                                    through a web-interface or via bulk                     to mean a unique identifier for each                  Listed Options. Certain requirements of
                                                    uploads or file submissions, and that the               trading account designated by Industry                the Proposed Rules apply specifically to
                                                    Plan Processor, subject to the Operating                Members for purposes of providing data                Listed Options. Accordingly, Paragraph
                                                    Committee’s approval, support the bulk                  to the Central Repository, where each                 (u) of Proposed Rule 6810 and
                                                    replacement of records and the                          such identifier is unique among all                   paragraph (a)(xxi) of Proposed Chapter
                                                    reprocessing of such records. The                       identifiers from any given Industry                   IX, Section 8 define the term ‘‘Listed
                                                    Participants, furthermore, require that                 Member for each business date. This is                Option’’ or ‘‘Option.’’ Specifically,
                                                    the Plan Processor identify Industry                    the same definition as set forth in                   paragraph (u) of Proposed Rule 6810
                                                    Member data submission errors based                     Section 1.1 of the CAT NMS Plan.                      and paragraph (a)(xxi) of Proposed
                                                    on the Plan Processor’s validation                      Industry Members would be permitted                   Chapter IX, Section 8 states that the
                                                    processes.21                                            to use an account number or any other                 term ‘‘Listed Option’’ or ‘‘Option’’ has
                                                    (II) Definition of Error Rate                           identifier defined by the firm, provided              the meaning set forth in SEC Rule
                                                                                                            each identifier is unique across the firm             600(b)(35) of Regulation NMS. SEC Rule
                                                       To implement the requirements of the                                                                       600(b)(35), in turn, defines a listed
                                                                                                            for each business date (i.e., a single firm
                                                    CAT NMS Plan related to the Error Rate,                                                                       option as ‘‘any option traded on a
                                                                                                            may not have multiple separate
                                                    the Exchange proposes to define the                                                                           registered national securities exchange
                                                                                                            customers with the same identifier on
                                                    term ‘‘Error Rate’’ in Proposed Rule                                                                          or automated facility of a national
                                                                                                            any given date).
                                                    6810 and paragraph (a)(xvi) of Proposed                                                                       securities association.’’ The Exchange
                                                    Chapter IX, Section 8. Paragraph (p) of                 (R) Industry Member                                   notes that the proposed definition of
                                                                                                               Paragraph (r) of Proposed Rule 6810                ‘‘Listed Option’’ is the same definition
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                                                      16 Appendix C, Section A.3(b) of the CAT NMS

                                                    Plan.                                                   and paragraph (a)(xiii) of Proposed                   as the definition set forth in Section 1.1
                                                      17 Appendix C, Section A.3(b) of the CAT NMS          Chapter IX, Section 8 define the term                 of the CAT NMS Plan.
                                                    Plan; Rule 613(g)–(h).                                  ‘‘Industry Member’’ to mean a member
                                                      18 Appendix C, Section A.3(b) of the CAT NMS
                                                                                                                                                                  (V) Manual Order Event
                                                                                                            of a national securities exchange or a
                                                    Plan.                                                                                                         (I) Manual Order Event Approach
                                                      19 Section 6.5(d)(i) of the CAT NMS Plan.             member of a national securities
                                                      20 Appendix C, Section A.3(b) of the CAT NMS          association.’’ This is the same definition               The CAT NMS Plan sets forth clock
                                                    Plan.                                                   as set forth in Section 1.1 of the CAT                synchronization and timestamp
                                                      21 Approval Order at 84718.                           NMS Plan.                                             requirements for Industry Members


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                                                                                Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                                       9837

                                                    which reflect exemptions for Manual                      Exchange proposes to define the term                  Chapter IX, Section 8 define the term
                                                    Order Events granted by the                              ‘‘Material Terms of the Order’’ in                    ‘‘Operating Committee’’ to mean the
                                                    Commission.22 Specifically, the Plan                     Proposed Rule 6810 and paragraph                      governing body of the CAT NMS, LLC
                                                    requires Industry Members to record                      (a)(xxiii) of Proposed Chapter IX,                    designated as such and described in
                                                    and report the time of each Reportable                   Section 8. Specifically, paragraph (w) of             Article IV of the CAT NMS Plan. This
                                                    Event using timestamps reflecting                        Proposed Rule 6810 and paragraph                      is the same definition as set forth in
                                                    current industry standards (which must                   (a)(xxiii) of Proposed Chapter IX,                    Section 1.1 of the CAT NMS Plan,
                                                    be at least to the millisecond) or, if an                Section 8 define the term ‘‘Material                  except the Exchange proposes to use the
                                                    Industry Members[sic] uses timestamps                    Terms of the Order’’ to include: The                  phrase ‘‘CAT NMS LLC’’ in place of the
                                                    in increments finer than milliseconds,                   NMS Security or OTC Equity Security                   phrase ‘‘the Company’’ for clarity.
                                                    such finer increments, when reporting                    symbol; security type; price (if
                                                                                                                                                                   (AA) Options Market Maker
                                                    to the Central Repository to the extent                  applicable); size (displayed and non-
                                                    the Industry Member’s order handling                     displayed); side (buy/sell); order type; if           (I) Options Market Maker Quote
                                                    or execution systems use increments                      a sell order, whether the order is long,              Exemption
                                                    finer than milliseconds. For Manual                      short, short exempt; open/close                          SEC Rule 613(c)(7) provides that the
                                                    Order Events, however, the Plan                          indicator (except on transactions in                  CAT NMS Plan must require each
                                                    provides that such events must be                        equities); time in force (if applicable); if          Industry Member to record and
                                                    recorded in increments up to and                         the order is for a Listed Option, option              electronically report to the Central
                                                    including one second, provided that                      type (put/call), option symbol or root                Repository details for each order and
                                                    Industry Members record and report the                   symbol, underlying symbol, strike price,              each reportable event, including the
                                                    time the event is captured electronically                expiration date, and open/close (except               routing and modification or cancellation
                                                    in an order handling and execution                       on market maker quotations); and any                  of an order. SEC Rule 613(j)(8) defines
                                                    system (‘‘Electronic Capture Time’’) in                  special handling instructions. This is                ‘‘order’’ to include ‘‘any bid or offer.’’
                                                    milliseconds. In addition, Industry                      the same definition as set forth in                   Therefore, under SEC Rule 613, the
                                                    Members are required to synchronize                      Section 1.1 of the CAT NMS Plan.                      details for each Options Market Maker
                                                    their respective Business Clocks (other                                                                        quotation must be reported to the
                                                                                                             (X) NMS Security
                                                    than such Business Clocks used solely                                                                          Central Repository by both the Options
                                                    for Manual Order Events) at a minimum                       NMS Securities are one of the types                Market Maker and the options exchange
                                                    to within 50 milliseconds of the time                    of Eligible Securities for the CAT.                   to which it routes its quote.
                                                    maintained by the National Institute of                  Therefore, the Exchange proposes to                      The Participants, however, requested
                                                    Standards and Technology (‘‘NIST’’),                     define the term ‘‘NMS Security’’ in                   and received exemptive relief from SEC
                                                    and maintain such a synchronization.                     Proposed Rule 6810 and paragraph                      Rule 613 so that the CAT NMS Plan may
                                                    Each Industry Member is required to                      (a)(xxiv) of Proposed Chapter IX,                     permit Options Market Maker quotes to
                                                    synchronize their Business Clocks used                   Section 8. Specifically, paragraph (x) of             be reported to the Central Repository by
                                                    solely for Manual Order Events,                          Proposed Rule 6810 and paragraph                      the relevant options exchange in lieu of
                                                    however, at a minimum to within one                      (a)(xxiv) of Proposed Chapter IX,                     requiring that such reporting be done by
                                                    second of the time maintained by the                     Section 8 define the term ‘‘NMS                       both the options exchange and the
                                                    NIST.                                                    Security’’ to mean any security or class              Options Market Maker, as is required by
                                                                                                             of securities for which transaction                   SEC Rule 613.23 In accordance with the
                                                    (II) Definition of Manual Order Event
                                                                                                             reports are collected, processed, and                 exemptive relief, Options Market
                                                       In order to clarify what a Manual                     made available pursuant to an effective               Makers would be required to report to
                                                    Order Event is for clock synchronization                 transaction reporting plan, or an                     the options exchange the time at which
                                                    and time stamp purposes, the Exchange                    effective national market system plan                 a quote in a Listed Option is sent to the
                                                    proposes to define the term ‘‘Manual                     for reporting transactions in Listed                  options exchange. Such time
                                                    Order Event’’ in Proposed Rule 6810                      Options. This is the same definition as               information also will be reported to the
                                                    and paragraph (a)(xxii) of Proposed                      set forth in Section 1.1 of the CAT NMS               Central Repository by the options
                                                    Chapter IX, Section 8. Specifically,                     Plan.                                                 exchange in lieu of reporting by the
                                                    paragraph (v) of Proposed Rule 6810                                                                            Options Market Maker.
                                                    and paragraph (a)(xxii) of Proposed                      (Y) NMS Stock
                                                    Chapter IX, Section 8 define the term                      Under the CAT NMS Plan, the                         (II) Definition of Options Market Maker
                                                    ‘‘Manual Order Event’’ to mean a non-                    Operating Committee may establish                        To implement the requirements
                                                    electronic communication of order-                       different Trading Days for NMS Stocks                 related to Option Market Maker quotes,
                                                    related information for which Industry                   (as defined in SEC Rule 600(b)(47)),                  the Exchange proposes to define the
                                                    Members must record and report the                       Listed Options, OTC Equity Securities,                term ‘‘Options Market Maker’’ in
                                                    time of the event. This is the same                      and any other securities that are                     Proposed Rule 6810 and paragraph
                                                    definition as set forth in Section 1.1 of                included as Eligible Securities from                  (a)(xxvii) of Proposed Chapter IX,
                                                    the CAT NMS Plan.                                        time to time. Accordingly, the Exchange               Section 8. Specifically, paragraph (aa) of
                                                                                                             proposes to define the term ‘‘NMS                     Proposed Rule 6810 and paragraph
                                                    (W) Material Terms of the Order
                                                                                                             Stock’’ in Paragraph (y) of Proposed                  (a)(xxvii) of Proposed Chapter IX,
                                                      Proposed Rule 6830 and paragraph (c)                   Rule 6810 and paragraph (a)(xxv) of                   Section 8 define the term ‘‘Options
                                                    of Proposed Chapter IX, Section 8
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                                                                                                             Proposed Chapter IX, Section 8 to mean                Market Maker’’ to mean a broker-dealer
                                                    require Industry Members to record and                   any NMS Security other than an option.                registered with an exchange for the
                                                    report to the Central Repository Material                This is the same definition as set forth              purpose of making markets in options
                                                    Terms of the Order with certain                          in SEC Rule 600(b)(47) of Regulation                  contracts traded on the exchange. This
                                                    Reportable Events (e.g., for the original                NMS.                                                  is the same definition as set forth in
                                                    receipt or origination of an order, for the                                                                    Section 1.1 of the CAT NMS Plan.
                                                    routing of an order). Accordingly, the                   (Z) Operating Committee
                                                                                                               Paragraph (z) of Proposed Rule 6810                   23 See Exemptive Request Letter at 2, and
                                                      22 Exemption   Order.                                  and paragraph (a)(xxvi) of Proposed                   Exemption Order.



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                                                    9838                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    (BB) Order                                              association and any heirs, executors,                 Proposed Rule 6810 and paragraph
                                                       The Proposed Rules require each                      administrators, legal representatives,                (a)(xxxv) of Proposed Chapter IX,
                                                    Industry Member to record and                           successors and assigns of such Person                 Section 8. Specifically, paragraph (ii) of
                                                    electronically report to the Central                    where the context so permits. This is the             Proposed Rule 6810 and paragraph
                                                    Repository certain details for each order.              same definition as set forth in Section               (a)(xxxv) of Proposed Chapter IX,
                                                    Accordingly, the Exchange proposes to                   1.1 of the CAT NMS Plan.                              Section 8 state that the term ‘‘Reportable
                                                    define the term ‘‘Order’’ in Proposed                                                                         Event’’ includes, but is not limited to,
                                                                                                            (FF) Plan Processor                                   the original receipt or origination,
                                                    Rule 6810 and paragraph (a)(xxviii) of
                                                                                                               Paragraph (ff) of Proposed Rule 6810               modification, cancellation, routing,
                                                    Proposed Chapter IX, Section 8.
                                                    Specifically, paragraph (bb) of Proposed                and paragraph (a)(xxxii) of Proposed                  execution (in whole or in part) and
                                                    Rule 6810 and paragraph (a)(xxviii) of                  Chapter IX, Section 8 define the term                 allocation of an order, and receipt of a
                                                    Proposed Chapter IX, Section 8 define                   ‘‘Plan Processor’’ to mean the Initial                routed order. This is the same definition
                                                    the term ‘‘Order’’, with respect to                     Plan Processor or any other Person                    as set forth in Section 1.1 of the CAT
                                                    Eligible Securities, to include: (1) Any                selected by the Operating Committee                   NMS Plan.
                                                    order received by an Industry Member                    pursuant to SEC Rule 613 and Sections
                                                                                                                                                                  (JJ) SRO
                                                    from any person; (2) any order                          4.3(b)(i) and 6.1 of the CAT NMS Plan,
                                                                                                            and with regard to the Initial Plan                      Paragraph (jj) of Proposed Rule 6810
                                                    originated by an Industry Member; or (3)
                                                                                                            Processor, the National Market System                 and paragraph (a)(xxxvi) of Proposed
                                                    any bid or offer. This is the same
                                                                                                            Plan Governing the Process for Selecting              Chapter IX, Section 8 define the term
                                                    definition as set forth in SEC Rule
                                                                                                            a Plan Processor and Developing a Plan                ‘‘SRO’’ to mean any self-regulatory
                                                    613(j)(8), except the Exchange proposes
                                                                                                            for the Consolidated Audit Trail, to                  organization within the meaning of
                                                    to replace the phrase ‘‘member of a
                                                                                                            perform the CAT processing functions                  Section 3(a)(26) of the Exchange Act.
                                                    national securities exchange or national
                                                                                                            required by SEC Rule 613 and set forth                This is the same definition as set forth
                                                    securities association’’ with the term
                                                                                                            in the CAT NMS Plan.                                  in Section 1.1 of the CAT NMS Plan.
                                                    ‘‘Industry Member.’’ The Exchange
                                                    notes that Section 1.1 of the CAT NMS                   (GG) Received Industry Member Data                    (KK) SRO-Assigned Market Participant
                                                    Plan defines ‘‘Order’’ by reference to                                                                        Identifier
                                                                                                               Paragraph (gg) of Proposed Rule 6810
                                                    SEC Rule 613(j)(8).                                                                                           (I) Existing Identifier Approach
                                                                                                            and paragraph (a)(xxxiii) of Proposed
                                                    (CC) OTC Equity Security                                Chapter IX, Section 8 state that the term                The Participants requested and
                                                       OTC Equity Securities are one of the                 ‘‘Received Industry Member Data’’ has                 received exemptive relief from SEC Rule
                                                    types of Eligible Securities for the CAT.               the meaning set forth in Proposed Rule                613 so that the CAT NMS Plan may
                                                    Therefore, the Exchange proposes to                     6830(a)(2) and paragraph (c)(i)(2) of                 permit the Existing Identifier Approach,
                                                    define the term ‘‘OTC Equity Security’’                 Proposed Chapter IX, Section 8. This                  which would allow an Industry Member
                                                    in Proposed Rule 6810 and paragraph                     definition has the same substantive                   to report an existing SRO-Assigned
                                                    (a)(xxix) of Proposed Chapter IX,                       meaning as the definition set forth in                Market Participant Identifier in lieu of
                                                    Section 8. Specifically, paragraph (cc) of              Section 1.1 of the CAT NMS Plan. The                  requiring the reporting of a universal
                                                    Proposed Rule 6810 and paragraph                        definition of ‘‘Received Industry                     CAT-Reporter-ID (that is, a code that
                                                    (a)(xxix) of Proposed Chapter IX,                       Member Data’’ is discussed more fully                 uniquely and consistently identifies an
                                                    Section 8 define the term ‘‘OTC Equity                  in the discussion below regarding                     Industry Member for purposes of
                                                    Security’’ to mean any equity security,                 Proposed Rule 6830(a)(2) and paragraph                providing data to the Central
                                                    other than an NMS Security, subject to                  (c)(i)(2) of Proposed Chapter IX, Section             Repository).24 The CAT NMS Plan
                                                    prompt last sale reporting rules of a                   8.                                                    reflects the ‘‘Existing Identifier
                                                    registered national securities association              (HH) Recorded Industry Member Data                    Approach’’ for purposes of identifying
                                                    and reported to one of such                                                                                   each Industry Member associated with
                                                    association’s equity trade reporting                       Paragraph (hh) of Proposed Rule 6810               an order or Reportable Event. Under the
                                                    facilities. This is the same definition as              and paragraph (a)(xxxiv) of Proposed                  Existing Identifier Approach, Industry
                                                    set forth in Section 1.1 of the CAT NMS                 Chapter IX, Section 8 state that the term             Members are required to record and
                                                    Plan.                                                   ‘‘Recorded Industry Member Data’’ has                 report to the Central Repository an SRO-
                                                                                                            the meaning set forth in Proposed Rule                Assigned Market Participant Identifier
                                                    (DD) Participant                                        6830(a)(1) and paragraph (c)(i)(1) of                 for orders and certain Reportable Events
                                                       Paragraph (dd) of Proposed Rule 6810                 Proposed Chapter IX, Section 8. This                  to be used by the Central Repository to
                                                    and paragraph (a)(xxx) of Proposed                      definition has the same substantive                   assign a unique CAT-Reporter-ID to
                                                    Chapter IX, Section 8 define the term                   meaning as the definition set forth in in             identify Industry Members.
                                                    ‘‘Participant’’ to mean each Person                     Section 1.1 of the CAT NMS Plan. The                     For the Central Repository to link the
                                                    identified as such in Exhibit A of the                  definition of ‘‘Recorded Industry                     SRO-Assigned Market Participant
                                                    CAT NMS Plan, as amended, in such                       Member Data’’ is discussed more fully                 Identifier to the CAT-Reporter-ID, each
                                                    Person’s capacity as a Participant in                   in the discussion below regarding                     SRO will submit to the Central
                                                    CAT NMS, LLC. This is the same                          Proposed Rule 6830(a)(1) and paragraph                Repository, on a daily basis, all SRO-
                                                    definition in substance as set forth in                 (c)(i)(1) of Proposed Chapter IX, Section             Assigned Market Participant Identifiers
                                                    Section 1.1 of the CAT NMS Plan.                        8.                                                    used by its Industry Members, as well
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                                                    (EE) Person                                             (II) Reportable Event                                 as information to identify each such
                                                                                                                                                                  Industry Member, including CRD
                                                       Paragraph (ee) of Proposed Rule 6810                    The Proposed Rules require each                    number and LEI, if the SRO has
                                                    and paragraph (a)(xxxi) of Proposed                     Industry Member to record and                         collected such LEI of the Industry
                                                    Chapter IX, Section 8 define the term                   electronically report to the Central                  Member. Additionally, each Industry
                                                    ‘‘Person’’ to mean any individual,                      Repository certain details for each                   Member is required to submit to the
                                                    partnership, limited liability company,                 Reportable Event. To clarify these
                                                    corporation, joint venture, trust,                      requirements, the Exchange proposes to                  24 See Exemptive Request Letter at 19, and

                                                    business trust, cooperative or                          define the term ‘‘Reportable Event’’ in               Exemption Order.



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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                              9839

                                                    Central Repository the CRD number of                    SEC Rule 613, in turn, is a small broker-               in Section 6.8(a)(ii)(A) of the CAT NMS
                                                    the Industry Member as well as the LEI                  dealer as defined in SEC Rule 0–10(c).                  Plan.
                                                    of the Industry Member (if the Industry                                                                            Paragraph (a)(2) of Proposed Rule
                                                                                                            (MM) Trading Day                                        6820 and paragraph (b)(i)(2) of Proposed
                                                    Member has an LEI). The Plan Processor
                                                    will use this information to assign a                      Proposed Rule 6830(b) and paragraph                  Chapter IX, Section 8 require each
                                                    CAT-Reporter-ID to each Industry                        (c)(ii) of Proposed Chapter IX, Section 8               Industry Member to synchronize (1) its
                                                    Member for internal use within the                      establishes the deadlines for reporting                 Business Clocks used solely for Manual
                                                    Central Repository.                                     certain data to the Central Repository                  Order Events and (2) its Business Clocks
                                                                                                            using the term ‘‘Trading Day.’’                         used solely for the time of allocation on
                                                    (II) Definition of SRO-Assigned Market                  Accordingly, the Exchange proposes to                   Allocation Reports at a minimum to
                                                    Participant Identifier                                  define the term ‘‘Trading Day’’ in                      within a one second tolerance of the
                                                       To implement the Existing Identifier                 Proposed Rule 6810 and paragraph                        time maintained by the NIST atomic
                                                    Approach, the Exchange proposes to                      (a)(xxxix) of Proposed Chapter IX,                      clock, and maintain such
                                                    define the term ‘‘SRO-Assigned Market                   Section 8. Specifically, Paragraph (mm)                 synchronization. This is the same
                                                    Participant’’ in Proposed Rule 6810 and                 of Proposed Rule 6810 and paragraph                     requirement as set forth in Section
                                                    paragraph (a)(xxxvii) of Proposed                       (a)(xxxix) of Proposed Chapter IX,                      6.8(a)(iii) and (iv) of the CAT NMS Plan.
                                                    Chapter IX, Section 8. Specifically,                    Section 8 state that the term ‘‘Trading                    Paragraph (a)(3) of Proposed Rule
                                                    paragraph (kk) of Proposed Rule 6810                    Day’’ shall have the meaning as is                      6820 and paragraph (b)(i)(3) of Proposed
                                                    and paragraph (a)(xxxvii) of Proposed                   determined by the Operating                             Chapter IX, Section 8 clarify that the
                                                    Chapter IX, Section 8 define the term                   Committee. For the avoidance of doubt,                  tolerance described in paragraphs (a)(1)
                                                    ‘‘SRO-Assigned Market Participant                       the Operating Committee may establish                   and (2) of Proposed Rule 6820 and
                                                                                                            different Trading Days for NMS Stocks                   paragraph (b)(i)(1) and (b)(i)(2) of
                                                    Identifier’’ to mean an identifier
                                                                                                            (as defined in SEC Rule 600(b)(47),                     Proposed Chapter IX, Section 8 includes
                                                    assigned to an Industry Member by an
                                                                                                            Listed Options, OTC Equity Securities,                  all of the following: (1) The time
                                                    SRO, or an identifier used by a
                                                                                                            and any other securities that are                       difference between the NIST atomic
                                                    Participant. This is the same definition
                                                                                                            included as Eligible Securities from                    clock and the Industry Member’s
                                                    as set forth in Section 1.1 of the CAT
                                                                                                            time to time.                                           Business Clock; (2) the transmission
                                                    NMS Plan. For example, an Industry
                                                                                                                                                                    delay from the source; and (3) the
                                                    Member would be permitted to use any                    (ii) Clock Synchronization                              amount of drift of the Industry
                                                    existing SRO-Assigned Market
                                                                                                               SEC Rule 613(d)(1) under Regulation                  Member’s Business Clock. This
                                                    Participant Identifier (e.g., FINRA MPID,
                                                                                                            NMS requires Industry Members to                        description of the clock synchronization
                                                    NASDAQ MPID, NYSE Mnemonic,                                                                                     tolerance is the same as set forth in
                                                    CBOE User Acronym and CHX                               synchronize their Business Clocks to the
                                                                                                            time maintained by NIST, consistent                     paragraph (b) of FINRA Rule 4590
                                                    Acronym) when reporting order                                                                                   (Synchronization of Member Business
                                                    information to the Central Repository.                  with industry standards. To comply
                                                                                                            with this provision, Section 6.8 of the                 Clocks).
                                                    (LL) Small Industry Member                              Plan sets forth the clock                                  Paragraph (a)(4) of Proposed Rule
                                                                                                            synchronization requirements for                        6820 and paragraph (b)(i)(4) of Proposed
                                                       The requirements of the Proposed                                                                             Chapter IX, Section 8 require Industry
                                                                                                            Industry Members.25 To implement
                                                    Rule 6800 Series differ to some extent                                                                          Members to synchronize their Business
                                                                                                            these provisions with regard to its
                                                    for Small Industry Members versus                                                                               Clocks every business day before market
                                                                                                            Industry Members, the Exchange
                                                    Industry Members other than Small                                                                               open to ensure that timestamps for
                                                                                                            proposes Rule 6820 and paragraph (b) of
                                                    Industry Members. For example, the                                                                              Reportable Events are accurate. In
                                                                                                            Proposed Chapter IX, Section 8
                                                    compliance dates for reporting data to                                                                          addition, to maintain clock
                                                                                                            (Consolidated Audit Trail—Clock
                                                    the CAT are different for Small Industry                                                                        synchronization, Business Clocks must
                                                                                                            Synchronization) to require its Industry
                                                    Members versus other Industry                                                                                   be checked against the NIST atomic
                                                                                                            Members to comply with the clock
                                                    Members. Accordingly, to clarify the                                                                            clock and re-synchronized, as necessary,
                                                                                                            synchronization requirements of the
                                                    requirements that apply to which                                                                                throughout the day. This description of
                                                                                                            Plan.
                                                    Industry Members, the Exchange                                                                                  the required frequency of clock
                                                                                                               Paragraph (a) of Proposed Rule 6820
                                                    proposes to define the term ‘‘Small                                                                             synchronization is the same as set forth
                                                                                                            and paragraph (b)(i) of Proposed
                                                    Industry Member’’ in Proposed Rule                                                                              in paragraph (c) of FINRA Rule 4590
                                                                                                            Chapter IX, Section 8 sets forth the
                                                    6810 and paragraph (a)(xxxviii) of                                                                              (Synchronization of Member Business
                                                                                                            manner in which Industry Members
                                                    Proposed Chapter IX, Section 8.                                                                                 Clocks).
                                                                                                            must synchronize their Business Clocks.
                                                    Specifically, paragraph (ll) of Proposed                                                                           Paragraph (b) of Proposed Rule 6820
                                                                                                            Paragraph (a)(1) of Proposed Rule 6820
                                                    Rule 6810 and paragraph (a)(xxxviii) of                                                                         and paragraph (b)(ii) of Proposed
                                                                                                            and paragraph (b)(i)(1) of Proposed
                                                    Proposed Chapter IX, Section 8 define                                                                           Chapter IX, Section 8 set forth
                                                                                                            Chapter IX, Section 8 require each
                                                    the term ‘‘Small Industry Member’’ to                                                                           documentation requirements with
                                                                                                            Industry Member to synchronize its
                                                    mean an Industry Member that qualifies                                                                          regard to clock synchronization.
                                                                                                            Business Clocks, other than such
                                                    as a small broker-dealer as defined in                                                                          Specifically, those paragraphs require
                                                                                                            Business Clocks used solely for Manual
                                                    Rule 0–10(c) under the Securities                                                                               Industry Members to document and
                                                                                                            Order Events or used solely for the time
                                                    Exchange Act of 1934, as amended. This                                                                          maintain their synchronization
                                                                                                            of allocation on Allocation Reports, at a
                                                    is the same in substance as the                                                                                 procedures for their Business Clocks.
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                                                                                                            minimum to within a fifty (50)
                                                    definition of ‘‘Small Industry Member’’                                                                         The Proposed Rule requires Industry
                                                                                                            millisecond tolerance of the time
                                                    as set forth in Section 1.1 of the CAT                                                                          Members to keep a log of the times
                                                                                                            maintained by the NIST atomic clock,
                                                    NMS Plan. Specifically, Section 1.1 of                                                                          when they synchronize their Business
                                                                                                            and maintain such synchronization.
                                                    the CAT NMS Plan defines a ‘‘Small                                                                              Clocks and the results of the
                                                                                                            This is the same requirement as set forth
                                                    Industry Member’’ as ‘‘an Industry                                                                              synchronization process. This log is
                                                    Member that qualifies as a small broker-                  25 In addition, Section 6.7(a)(ii) of the Plan sets   required to include notice of any time
                                                    dealer as defined in SEC Rule 613.’’ The                forth the timeline for CAT Reporters to comply with     a Business Clock drifts more than the
                                                    definition of a small broker-dealer under               the clock synchronization requirements.                 applicable tolerance specified in


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                                                    9840                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    paragraph (a) of the Proposed Rule 6820                 (iii) Industry Member Data Reporting                  date of order receipt or origination; (5)
                                                    and paragraph (b)(i) of Proposed                          SEC Rule 613(c) under Regulation                    time of order receipt or origination
                                                    Chapter IX, Section 8, respectively.                    NMS requires the CAT NMS Plan to set                  (using timestamps pursuant to Proposed
                                                    Such logs must include results for a                    forth certain provisions requiring                    Rule 6860 and paragraph (f) of Proposed
                                                    period of not less than five years ending               Industry Members to record and report                 Chapter IX, Section 8); and (6) Material
                                                    on the then current date, or for the                    data to the CAT. To comply with this                  Terms of the Order;
                                                    entire period for which the Industry                    provision, Section 6.4 of the CAT NMS                    • for the routing of an order: (1) CAT-
                                                    Member has been required to comply                      Plan sets forth the data reporting                    Order-ID; (2) date on which the order is
                                                    with this Rule if less than five years.                 requirements for Industry Members. To                 routed; (3) time at which the order is
                                                    These documentation requirements are                    implement these provisions with regard                routed (using timestamps pursuant to
                                                    the same as those set forth in the                      to its Industry Members, the Exchange                 Proposed Rule 6860 and paragraph (f) of
                                                    ‘‘Sequencing Orders and Clock                           proposes Rule 6830 and paragraph (c) of               Proposed Chapter IX, Section 8); (4)
                                                    Synchronization’’ section of Appendix                   Proposed Chapter IX, Section 8                        SRO-Assigned Market Participant
                                                    C of the CAT NMS Plan. Moreover,                        (Consolidated Audit Trail—Industry                    Identifier of the Industry Member
                                                    these documentation requirements                        Member Data Reporting) to require its                 routing the order; (5) SRO-Assigned
                                                    regarding clock synchronization are                     Industry Members to comply with the                   Market Participant Identifier of the
                                                                                                            Industry Member Data reporting                        Industry Member or Participant to
                                                    comparable to those set forth in
                                                                                                            requirements of the Plan. Proposed Rule               which the order is being routed; (6) if
                                                    Supplementary Material .01 of FINRA
                                                                                                            6830 has six sections covering: (1)                   routed internally at the Industry
                                                    Rule 4590 (Synchronization of Member
                                                                                                            Recording and reporting Industry                      Member, the identity and nature of the
                                                    Business Clocks).
                                                                                                            Member Data, (2) timing of the                        department or desk to which the order
                                                       Paragraph (c) of Proposed Rule 6820                                                                        is routed; and (7) Material Terms of the
                                                                                                            recording and reporting, (3) the
                                                    and paragraph (b)(iii) of Proposed                      applicable securities cover[sic] by the               Order;
                                                    Chapter IX, Section 8 set forth                         recording and reporting requirements,                    • for the receipt of an order that has
                                                    certification requirements with regard to               (4) format, (5) the security symbology to             been routed, the following information:
                                                    clock synchronization. Specifically,                    be used in the recording and reporting,               (1) CAT-Order-ID; (2) date on which the
                                                    paragraph (c) of Proposed Rule 6820 and                 and (6) error correction requirements,                order is received; (3) time at which the
                                                    paragraph (b)(iii) of Proposed Chapter                  each of which is described below.                     order is received (using timestamps
                                                    IX, Section 8 require each Industry                                                                           pursuant to Proposed Rule 6860 and
                                                    Member to certify to the Exchange that                  (A) Recording and Reporting Industry                  paragraph (f) of Proposed Chapter IX,
                                                    its Business Clocks satisfy the                         Member Data                                           Section 8); (4) SRO-Assigned Market
                                                    synchronization requirements set forth                     Paragraph (a) of Proposed Rule 6830                Participant Identifier of the Industry
                                                    in paragraph (a) of Proposed Rule 6820                  and paragraph (c)(i) of Proposed Chapter              Member receiving the order; (5) SRO-
                                                    and paragraph (b)(i) of Proposed                        IX, Section 8 describe the recording and              Assigned Market Participant Identifier
                                                    Chapter IX, Section 8 periodically in                   reporting of Industry Member Data to                  of the Industry Member or Participant
                                                    accordance with the certification                       the Central Repository. Paragraph (a) of              routing the order; and (6) Material
                                                    schedule established by the Operating                   Proposed Rule 6830 and paragraph (c)(i)               Terms of the Order;
                                                    Committee pursuant to the CAT NMS                       of Proposed Chapter IX, Section 8 each                   • if the order is modified or
                                                    Plan. This requirement is the same                      consist of three paragraphs, which cover              cancelled: (1) CAT-Order-ID; (2) date the
                                                    requirement as set forth in Section                     Recorded Industry Member Data,                        modification or cancellation is received
                                                    6.8(a)(ii)(B), (iii) and (iv) of the CAT                Received Industry Member Data and                     or originated; (3) time at which the
                                                    NMS Plan. The Exchange intends to                       Options Market Maker data,                            modification or cancellation is received
                                                    announce to its Industry Members the                    respectively. Paragraphs (a)(1)–(a)(3) of             or originated (using timestamps
                                                    certification schedule established by the               Proposed Rule 6830 and paragraph                      pursuant to Proposed Rule 6860 and
                                                    Operating Committee via an information                  (c)(i)(1)–(i)(3) of Proposed Chapter IX,              paragraph (f) of Proposed Chapter IX,
                                                    circular (‘‘Circular’’).                                Section 8 set forth the recording and                 Section 8); (4) price and remaining size
                                                                                                            reporting requirements required in                    of the order, if modified; (5) other
                                                       Paragraph (d) of Proposed Rule 6820                  Section 6.4(d)(i)–(iii) of the CAT NMS                changes in the Material Terms of the
                                                    and paragraph (b)(iv) of Proposed                       Plan, respectively.                                   Order, if modified; and (6) whether the
                                                    Chapter IX, Section 8 establish reporting                  Paragraph (a)(1) of Proposed Rule                  modification or cancellation instruction
                                                    requirements with regard to clock                       6830 and paragraph (c)(i)(1) of Proposed              was given by the Customer or was
                                                    synchronization. Paragraph (d) of                       Chapter IX, Section 8 require, subject to             initiated by the Industry Member;
                                                    Proposed Rule 6820 and paragraph                        paragraph (a)(3) and paragraph (c)(i)(3)                 • if the order is executed, in whole or
                                                    (b)(iv) of Proposed Chapter IX, Section                 regarding Options Market Makers, each                 in part: (1) CAT-Order-ID; (2) date of
                                                    8 require Industry Members to report to                 Industry Member to record and                         execution; (3) time of execution (using
                                                    the Plan Processor and the Exchange                     electronically report to the Central                  timestamps pursuant to Proposed Rule
                                                    violations of paragraph (a) of Proposed                 Repository the following details for each             6860 and paragraph (f) of Proposed
                                                    Rule 6820 and paragraph (b)(i) of                       order and each Reportable Event, as                   Chapter IX, Section 8; (4) execution
                                                    Proposed Chapter IX, Section 8                          applicable (‘‘Recorded Industry Member                capacity (principal, agency or riskless
                                                    pursuant to the thresholds set by the                   Data’’) in the manner prescribed by the               principal); (5) execution price and size;
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                                                    Operating Committee pursuant to the                     Operating Committee pursuant to the                   (6) SRO-Assigned Market Participant
                                                    CAT NMS Plan. This requirement is the                   CAT NMS Plan:                                         Identifier of the Industry Member
                                                    same requirement as set forth in Section                   • For original receipt or origination of           executing the order; (7) whether the
                                                    6.8(a)(ii)(C), (iii) and (iv) of the CAT                an order: (1) Firm Designated ID(s) for               execution was reported pursuant to an
                                                    NMS Plan. The Exchange intends to                       each Customer; (2) CAT-Order-ID; (3)                  effective transaction reporting plan or
                                                    announce to its Industry Members the                    SRO-Assigned Market Participant                       the Plan for Reporting of Consolidated
                                                    relevant thresholds established by the                  Identifier of the Industry Member                     Options Last Sale Reports and
                                                    Operating Committee via Circular.                       receiving or originating the order; (4)               Quotation Information; and


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                            9841

                                                       • other information or additional                       Paragraph (b)(1) of Proposed Rule                  Chapter IX, Section 8 describe the
                                                    events as may be prescribed pursuant to                 6830 and paragraph (c)(ii)(1) of                      security symbology that Industry
                                                    the CAT NMS Plan.                                       Proposed Chapter IX, Section 8 require                Members are required to use when
                                                       Paragraph (a)(2) of Proposed Rule                    each Industry Member to record                        reporting Industry Member Data to the
                                                    6830 and paragraph (c)(i)(2) of Proposed                Recorded Industry Member Data                         Central Repository. Paragraph (d)(1) of
                                                    Chapter IX, Section 8 require, subject to               contemporaneously with the applicable                 Proposed Rule 6830 and paragraph
                                                    paragraph (a)(3) and paragraph (c)(i)(3)                Reportable Event. Paragraph (b)(2) of                 (c)(iv)(1) of Proposed Chapter IX,
                                                    regarding Options Market Makers, each                   Proposed Rule 6830 and paragraph                      Section 8 require, for each exchange-
                                                    Industry Member to record and report to                 (c)(ii)(2) of Proposed Chapter IX, Section            listed Eligible Security, each Industry
                                                    the Central Repository the following, as                8 require each Industry Member to                     Member to report Industry Member Data
                                                    applicable (‘‘Received Industry Member                  report: (1) Recorded Industry Member                  to the Central Repository using the
                                                    Data’’ and collectively with the                        Data to the Central Repository by 8:00                symbology format of the exchange
                                                    information referred to in paragraph                    a.m., Eastern Time, on the Trading Day
                                                                                                                                                                  listing the security. This requirement
                                                    (c)(i)(1) ‘‘Industry Member Data’’) in the              following the day the Industry Member
                                                    manner prescribed by the Operating                                                                            implements the requirement set forth in
                                                                                                            records such Recorded Industry Member
                                                    Committee pursuant to the CAT NMS                       Data; and (2) Received Industry Member                Section 2 of Appendix D of the CAT
                                                    Plan:                                                   Data to the Central Repository by 8:00                NMS Plan to use the listing exchange
                                                       • If the order is executed, in whole or              a.m., Eastern Time, on the Trading Day                symbology when reporting data to the
                                                    in part: (1) An Allocation Report; (2)                  following the day the Industry Member                 Central Repository for exchange-listed
                                                    SRO-Assigned Market Participant                         receives such Received Industry                       Eligible Securities.
                                                    Identifier of the clearing broker or prime              Member Data. Paragraph (b)(3) and                        For each Eligible Security that is not
                                                    broker, if applicable; and (3) CAT-                     paragraph (c)(ii)(3) of Proposed Chapter              exchange-listed, however, there is no
                                                    Order-ID of any contra-side order(s);                   IX, Section 8 states that Industry                    listing exchange to provide the
                                                       • if the trade is cancelled, a cancelled             Members may, but are not required to,                 symbology format. Moreover, to date,
                                                    trade indicator; and                                    voluntarily report Industry Member                    the requisite symbology format has not
                                                       • for original receipt or origination of             Data prior to the applicable 8:00 a.m.,               been determined. Therefore, Paragraph
                                                    an order, the Firm Designated ID for the                Eastern Time, deadline.                               (d)(2) of Proposed Rule 6830 and
                                                    relevant Customer, and in accordance
                                                    with Proposed Rule 6840 and paragraph                   (C) Applicable Securities                             paragraph (c)(iv)(2) of Proposed Chapter
                                                    (d) of Proposed Chapter IX, Section 8,                                                                        IX, Section 8 require, for each Eligible
                                                                                                               Paragraph (c) of Proposed Rule 6830
                                                    Customer Account Information and                        and paragraph (c)(iii) of Proposed                    Security that is not exchange-listed,
                                                    Customer Identifying Information for                    Chapter IX, Section 8 describe the                    each Industry Member to report
                                                    the relevant Customer.                                  securities to which the recording and                 Industry Member Data to the Central
                                                       Paragraph (a)(3) of Proposed Rule                    reporting requirements of Proposed Rule               Repository using such symbology format
                                                    6830 and paragraph (c)(i)(3) of Proposed                6830 and paragraph (c)(iii) of Proposed               as approved by the Operating
                                                    Chapter IX, Section 8 state that each                   Chapter IX, Section 8 apply. Paragraphs               Committee pursuant to the CAT NMS
                                                    Industry Member that is an Options                      (c)(1) and (c)(2) of Proposed Rule 6830               Plan. The Exchange intends to
                                                    Market Maker is not required to report                  and paragraph (c)(iii)(1) and (2) of                  announce to its Industry Members the
                                                    to the Central Repository the Industry                  Proposed Chapter IX, Section 8 set forth              relevant symbology formats established
                                                    Member Data regarding the routing,                      the description of applicable securities              by the Operating Committee via
                                                    modification or cancellation of its                     as set forth in Section 6.4(c)(i) and (ii)            Circular.
                                                    quotes in Listed Options. Each Industry                 of the CAT NMS Plan, respectively.
                                                    Member that is an Options Market                        Paragraph (c)(1) of Proposed Rule 6830                (E) Error Correction
                                                    Maker, however, is required to report to                and paragraph (c)(iii)(1) of Proposed                    To ensure that the CAT contains
                                                    the Exchange the time at which its quote                Chapter IX, Section 8 require each                    accurate data, the CAT NMS Plan
                                                    in a Listed Option is sent to the                       Industry Member to record and report to               requires Industry Members to correct
                                                    Exchange (and, if applicable, any                       the Central Repository the Industry                   erroneous data submitted to the Central
                                                    subsequent quote modification time                      Member Data as set forth in paragraph                 Repository. Therefore, the Exchange
                                                    and/or cancellation time when such                      (a) of Proposed Rule 6830 and paragraph               proposes to adopt paragraph (e) of
                                                    modification or cancellation is                         (c)(i) of Proposed Chapter IX, Section 8              Proposed Rule 6830 and paragraph
                                                    originated by the Options Market                        for each NMS Security registered or                   (c)(v) of Proposed Chapter IX, Section 8,
                                                    Maker). This paragraph implements the                   listed for trading on such exchange or
                                                                                                                                                                  which addresses the correction of
                                                    Options Market Maker Quote                              admitted to unlisted trading privileges
                                                                                                                                                                  erroneous data reported to the Central
                                                    Exemption, as discussed above.                          on such exchange. Paragraph (c)(2) of
                                                                                                                                                                  Repository. Paragraph (e) of Proposed
                                                                                                            Proposed Rule 6830 and paragraph
                                                    (B) Timing of Recording and Reporting                                                                         Rule 6830 and paragraph (c)(v) of
                                                                                                            (c)(iii)(2) of Proposed Chapter IX,
                                                       Paragraph (b) of Proposed Rule 6830                                                                        Proposed Chapter IX, Section 8 require,
                                                                                                            Section 8 requires each Industry
                                                    and paragraph (c)(ii) of Proposed                       Member to record and report to the                    for each Industry Member for which
                                                    Chapter IX, Section 8 describe the                      Central Repository the Industry Member                errors in Industry Member Data
                                                    requirements related to the timing of                   Data as set forth in paragraph (a) of                 submitted to the Central Repository
                                                    recording and reporting of Industry                                                                           have been identified by the Plan
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                                                                                                            Proposed Rule 6830 and paragraph (c)(i)
                                                    Member Data. Paragraphs (b)(1)–(b)(3) of                of Proposed Chapter IX, Section 8 for                 Processor or otherwise, that such
                                                    Proposed Rule 6830 and paragraph                        each Eligible Security for which                      Industry Member submit corrected
                                                    (c)(ii)(1)–(3) of Proposed Chapter IX,                  transaction reports are required to be                Industry Member Data to the Central
                                                    Section 8 set forth the requirements                    submitted to FINRA.                                   Repository by 8:00 a.m., Eastern Time,
                                                    related to the timing of the recording                                                                        on T+3. This requirement implements
                                                    and reporting requirements required in                  (D) Security Symbology                                the error correction requirement set
                                                    Section 6.4(b)(i)–(ii) of the CAT NMS                     Paragraph (d) of Proposed Rule 6830                 forth in Section 6 of Appendix D of the
                                                    Plan.                                                   and paragraph (c)(iv) of Proposed                     CAT NMS Plan.


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                                                    9842                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    (iv) Customer Information Reporting                     each of its Customers with an Active                    Chapter IX, Section 8 require each
                                                       Section 6.4(d)(iv) of the CAT NMS                    Account submitted to the Central                        Industry Member to record and report
                                                    Plan requires Industry Members to                       Repository have been identified by the                  Industry Member Data to the Central
                                                    submit to the Central Repository certain                Plan Processor or otherwise, such                       Repository with time stamps in
                                                    information related to their Customers                  Member to submit corrected data to the                  milliseconds, subject to paragraphs
                                                    in accordance with the Customer                         Central Repository by 5:00 p.m. Eastern                 (a)(2) and (b) of Proposed Rule 6860 and
                                                    Information Approach discussed above.                   Time on T+3. This requirement                           subparagraphs (f)(i)(2) and (f)(ii) of
                                                    The Exchange proposes Rule 6840 and                     implements the error correction                         Proposed Chapter IX, Section 8. To the
                                                    paragraph (d) of Proposed Chapter IX,                   requirement set forth in Appendix C of                  extent that any Industry Member’s order
                                                    Section 8 (Consolidated Audit Trail—                    the CAT NMS Plan.                                       handling or execution systems utilize
                                                    Customer Information Reporting) to                                                                              time stamps in increments finer than
                                                                                                            (v) Industry Member Information
                                                    implement this provision of the CAT                                                                             milliseconds, paragraph (a)(2) of
                                                                                                            Reporting
                                                    NMS Plan with regard to its Industry                                                                            Proposed Rule 6860 and paragraph
                                                                                                              Section 6.4(d)(vi) of the CAT NMS                     (f)(i)(2) of Proposed Chapter IX, Section
                                                    Members. Specifically, paragraph (a) of                 Plan requires Industry Members to
                                                    Proposed Rule 6840 and paragraph (d)(i)                                                                         8 require such Industry Member to
                                                                                                            submit to the Central Repository                        record and report Industry Member Data
                                                    of Proposed Chapter IX, Section 8                       information sufficient to identify such
                                                    require each Industry Member to submit                                                                          to the Central Repository with time
                                                                                                            Industry Member, including CRD                          stamps in such finer increment, subject
                                                    to the Central Repository the Firm                      number and LEI, if such LEI has been                    to paragraph (b) of Proposed Rule 6860
                                                    Designated ID, Customer Account                         obtained, in accordance with the                        and paragraph (f)(ii) of Proposed
                                                    Information and Customer Identifying                    Existing Identifier Approach discussed                  Chapter IX, Section 8 regarding Manual
                                                    Information for each of its Customers                   above. The Exchange proposes Rule                       Order Events and Allocation Reports.
                                                    with an Active Account prior to such                    6850 and paragraph (e) of Proposed                         Paragraph (b) of Proposed Rule 6860
                                                    Industry Member’s commencement of                       Chapter IX, Section 8 (Consolidated                     and paragraph (f)(ii) of Proposed
                                                    reporting to the Central Repository and                 Audit Trail—Industry Member                             Chapter IX, Section 8 set forth the
                                                    in accordance with the deadlines set                    Information Reporting) to implement                     permissible time stamp increments for
                                                    forth in Rule 6880 and paragraph (i) of                 this provision of the CAT NMS Plan                      Manual Order Events and Allocation
                                                    Proposed Chapter IX, Section 8.                         with regard to its Industry Members.                    Reports. Specifically, paragraph (b)(1) of
                                                    Paragraph (b) of Proposed Rule 6840                     Specifically, Proposed Rule 6850 and                    Proposed Rule 6860 and paragraph
                                                    and paragraph (d)(ii) of Proposed                       paragraph (e) of Proposed Chapter IX,                   (f)(ii)(1) of Proposed Chapter IX, Section
                                                    Chapter IX, Section 8 require each                      Section 8 require each Industry Member                  8 permit each Industry Member to
                                                    Industry Member to submit to the                        to submit to the Central Repository                     record and report Manual Order Events
                                                    Central Repository any updates,                         information sufficient to identify such                 to the Central Repository in increments
                                                    additions or other changes to the Firm                  Industry Member, including CRD                          up to and including one second,
                                                    Designated ID, Customer Account                         number and LEI, if such LEI has been                    provided that each Industry Member is
                                                    Information and Customer Identifying                    obtained, prior to such Industry                        required to record and report the time
                                                    Information for each of its Customers                   Member’s commencement of reporting                      when a Manual Order Event has been
                                                    with an Active Account on a daily basis.                to the Central Repository and in                        captured electronically in an order
                                                    Paragraph (c) of Proposed Rule 6840 and                 accordance with the deadlines set forth                 handling and execution system of such
                                                    paragraph (d)(iii) of Proposed Chapter                  in Rule 6880 and paragraph (i) of                       Member (‘‘Electronic Capture Time’’) in
                                                    IX, Section 8 require each Industry                     Proposed Chapter IX, Section 8, and                     milliseconds. In addition, paragraph
                                                    Member, on a periodic basis as                          keep such information up to date as                     (b)(2) of Proposed Rule 6860 and
                                                    designated by the Plan Processor and                    necessary.                                              paragraph (f)(ii)(2) of Proposed Chapter
                                                    approved by the Operating Committee,                                                                            IX, Section 8 permit each Industry
                                                    to submit to the Central Repository a                   (vi) Time Stamps
                                                                                                                                                                    Member to record and report the time of
                                                    complete set of Firm Designated IDs,                      SEC Rule 613(d)(3) under Regulation                   Allocation Reports in increments up to
                                                    Customer Account Information and                        NMS sets forth requirements for time                    and including one second.
                                                    Customer Identifying Information for                    stamps used by CAT Reporters in
                                                    each of its Customers with an Active                    recording and reporting data to the                     (vii) Clock Synchronization Rule
                                                    Account. This periodic refresh is                       CAT.26 To comply with this provision,                   Violations
                                                    intended to ensure that the Central                     Section 6.8(b) of the Plan sets forth time                Proposed Rule 6865 and paragraph (g)
                                                    Repository has the most current                         stamp requirements for Industry                         of Proposed Chapter IX, Section 8
                                                    information identifying a Customer. The                 Members. To implement this provision                    (Consolidated Audit Trail—Clock
                                                    Exchange intends to announce to its                     with regard to its Industry Members, the                Synchronization Rule Violations)
                                                    Industry Members when such a periodic                   Exchange proposes new Rule 6860 and                     describe potential violations of the clock
                                                    refresh is required by the Plan Processor               paragraph (f) of Proposed Chapter IX,                   synchronization time period
                                                    and the Operating Committee via                         Section 8 (Consolidated Audit Trail—                    requirements set forth in the Proposed
                                                    Circular.                                               Time Stamps) to require its Industry                    Rule 6800 Series and Proposed Chapter
                                                       Finally, paragraph (d) of Proposed                   Members to comply with the time stamp                   IX, Section 8. Proposed Rule 6865 and
                                                    Rule 6840 and paragraph (d)(iv) of                      requirements of the Plan.                               paragraph (g) of Proposed Chapter IX,
                                                    Proposed Chapter IX, Section 8 address                    Paragraph (a) of Proposed Rule 6860                   Section 8 state that an Industry Member
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                                                    the correction of erroneous Customer                    and paragraph (f)(i) of Proposed Chapter                that engages in a pattern or practice of
                                                    data reported to the Central Repository                 IX, Section 8 set forth the time stamp                  reporting Reportable Events outside of
                                                    to ensure an accurate audit trail.                      increments to be used by Industry                       the required clock synchronization time
                                                    Paragraph (d) and paragraph (d)(iv)                     Members in their CAT reporting.                         period as set forth in this Rule Series
                                                    require, for each Industry Member for                   Paragraph (a)(1) of Proposed Rule 6860                  without reasonable justification or
                                                    which errors in Firm Designated ID,                     and paragraph (f)(i)(1) of Proposed                     exceptional circumstances may be
                                                    Customer Account Information and                                                                                considered in violation of this Rule.
                                                    Customer Identifying Information for                      26 17   CFR 242.613(d)(3).                            This provision implements the


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                                                                               Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                            9843

                                                    requirements of Section 6.8 of the CAT                  with a CAT Reporting Agent pursuant to                Chapter IX, Section 8 set forth the
                                                    NMS Plan which requires the                             which the CAT Reporting Agent agrees                  deadlines related to reporting Customer
                                                    Compliance Rule to provide that a                       to fulfill the obligations of such Industry           and Industry Member information.
                                                    pattern or practice of reporting events                 Member under the Proposed Rule 6800                   Paragraph (a)(2)(i) of Proposed Rule
                                                    outside of the required clock                           Series and Proposed Chapter IX, Section               6880 and paragraph (i)(i)(2)(i) of
                                                    synchronization time period without                     8. Any such agreement must be                         Proposed Chapter IX, Section 8 requires
                                                    reasonable justification or exceptional                 evidenced in writing, which specifies                 Industry Members (other than Small
                                                    circumstances may be considered a                       the respective functions and                          Industry Members) to begin reporting
                                                    violation of SEC Rule 613 or the CAT                    responsibilities of each party to the                 Customer and Industry Member
                                                    NMS Plan.                                               agreement that are required to effect full            information, as required by Proposed
                                                                                                            compliance with the requirements of the               Rules 6840(a) and 6850 and paragraphs
                                                    (viii) Connectivity and Data
                                                                                                            Proposed Rule 6800 Series and                         (d)(i) and (e) of Proposed Chapter IX,
                                                    Transmission
                                                                                                            Proposed Chapter IX, Section 8, as                    Section 8, respectively, to the Central
                                                       Proposed Rule 6870 and paragraph (h)                 applicable. The Exchange notes that,                  Repository for processing no later than
                                                    of Proposed Chapter IX, Section 8                       currently, no standardized form                       October 15, 2018. Paragraph (a)(2)(ii) of
                                                    (Consolidated Audit Trail—                              agreement for CAT Reporting Agent                     Proposed Rule 6880 and paragraph
                                                    Connectivity and Data Transmission)                     arrangements has been adopted.                        (i)(i)(2)(i) of Proposed Chapter IX,
                                                    addresses connectivity and data                         Paragraph (c)(2) of Proposed Rule 6870                Section 8 require Small Industry
                                                    transmission requirements related to the                and paragraph (h)(iii)(2) of Proposed                 Members to begin reporting Customer
                                                    CAT. Paragraph (a) of Proposed Rule                     Chapter IX, Section 8 require that all                and Industry Member information, as
                                                    6870 and paragraph (h)(i) of Proposed                   written documents evidencing an                       required by Rules 6840(a) and 6850 and
                                                    Chapter IX, Section 8 describe the                      agreement with a CAT Reporting Agent                  paragraphs (d)(i) and (e) of Proposed
                                                    format(s) for reporting Industry Member                 be maintained by each party to the                    Chapter IX, Section 8, respectively, to
                                                    Data to the Central Repository, thereby                 agreement. Paragraph (c)(3) of Proposed               the Central Repository for processing no
                                                    implementing the formatting                             Rule 6870 and paragraph (h)(iii)(3) of                later than October 15, 2019.
                                                    requirements as set forth in Section                    Proposed Chapter IX, Section 8 state                     Paragraph (a)(3) of Proposed Rule
                                                    6.4(a) of the CAT NMS Plan.                             that each Industry Member remains                     6880 and paragraph (i)(i)(2)(i) of
                                                    Specifically, paragraph (a) of Proposed                 primarily responsible for compliance                  Proposed Chapter IX, Section 8 sets
                                                    Rule 6870 and paragraph (h)(i) of                       with the requirements of the Proposed                 forth the deadlines related to the
                                                    Proposed Chapter IX, Section 8 require                  Rule 6800 Series and Proposed Chapter                 submission of order data. Under
                                                    each Industry Member to transmit data                   IX, Section 8, as applicable,                         paragraph (a)(3)(i) of Proposed Rule
                                                    as required under the CAT NMS Plan to                   notwithstanding the existence of an
                                                    the Central Repository utilizing such                                                                         6880 and paragraph (i)(i)(2)(i) of
                                                                                                            agreement described in paragraph (c) of               Proposed Chapter IX, Section 8,
                                                    format(s) as may be provided by the                     Proposed Rule 6870 and paragraph
                                                    Plan Processor and approved by the                                                                            Industry Members (other than Small
                                                                                                            (h)(iii) of Proposed Chapter IX, Section              Industry Members) are permitted, but
                                                    Operating Committee.                                    8.
                                                       Paragraph (b) of Proposed Rule 6870                                                                        not required, to submit order data for
                                                    and paragraph (h)(ii) of Proposed                       (ix) Development and Testing                          testing purposes beginning no later than
                                                    Chapter IX, Section 8 address                              The Exchange proposes Rule 6880                    May 15, 2018. In addition, Industry
                                                    connectivity requirements related to the                and paragraph (i) of Proposed Chapter                 Members (other than Small Industry
                                                    CAT. Paragraph (b) of Proposed Rule                     IX, Section 8 (Consolidated Audit                     Members) are required to participate in
                                                    6870 and paragraph (h)(ii) of Proposed                  Trail—Development and Testing) to                     the coordinated and structured testing
                                                    Chapter IX, Section 8 require each                      address requirements for Industry                     of order submission, which will begin
                                                    Industry Member to connect to the                       Members related to CAT development                    no later than August 15, 2018. Under
                                                    Central Repository using a secure                       and testing. Paragraph (a) of Proposed                paragraph (a)(3)(ii) of Proposed Rule
                                                    method(s), including, but not limited to,               Rule 6880 and paragraph (i)(i) of                     6880 and paragraph (i)(i)(2)(i) of
                                                    private line(s) and virtual private                     Proposed Chapter IX, Section 8 set forth              Proposed Chapter IX, Section 8, Small
                                                    network connection(s). This provision                   the testing requirements and deadlines                Industry Members are permitted, but not
                                                    implements the connectivity                             for Industry Members to develop and                   required, to submit order data for testing
                                                    requirements set forth in Section 4 of                  commence reporting to the Central                     purposes beginning no later than May
                                                    Appendix D to the CAT NMS Plan.                         Repository. These requirements are set                15, 2019. In addition, Small Industry
                                                       Paragraph (c) of Proposed Rule 6870                  forth in Appendix C to the CAT NMS                    Members are required to participate in
                                                    and paragraph (h)(iii) of Proposed                      Plan.                                                 the coordinated and structured testing
                                                    Chapter IX, Section 8 permit Industry                      Paragraph (a)(1) of Proposed Rule                  of order submission, which will begin
                                                    Members to use CAT Reporting Agents                     6880 and paragraph (i)(i)(1) of Proposed              no later than August 15, 2019.
                                                    to fulfill their data reporting obligations             Chapter IX, Section 8 set forth the                      Paragraph (a)(4) of Proposed Rule
                                                    related to the CAT. Paragraph (c) of                    deadlines related to connectivity and                 6880 and paragraph (i)(i)(2)(i) of
                                                    Proposed Rule 6870 and paragraph                        acceptance testing. Industry Members                  Proposed Chapter IX, Section 8 state
                                                    (h)(iii) of Proposed Chapter IX, Section                (other than Small Industry Members) are               that Industry Members are permitted,
                                                    8 are based on FINRA Rule 7450(c),                      required to begin connectivity and                    but not required to, submit Quote Sent
                                                    which permits OATS Reporting                            acceptance testing with the Central                   Times on Options Market Maker quotes,
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                                                    Members to enter into agreements with                   Repository no later than August 15,                   beginning no later than October 15,
                                                    Reporting Agents to fulfill the OATS                    2018, and Small Industry Members are                  2018.
                                                    obligations of the OATS Reporting                       required to begin connectivity and                       Paragraph (b) of Proposed Rule 6880
                                                    Member. Specifically, Paragraph (c)(1)                  acceptance testing with the Central                   and paragraph (i)(ii) of Proposed
                                                    of Proposed Rule 6870 and paragraph                     Repository no later than August 15,                   Chapter IX, Section 8 implement the
                                                    (h)(iii)(1) of Proposed Chapter IX,                     2019.                                                 requirement under the CAT NMS Plan
                                                    Section 8 state that any Industry                          Paragraph (a)(2) of Proposed Rule                  that Industry Members participate in
                                                    Member may enter into an agreement                      6880 and paragraph (i)(i)(2) of Proposed              required industry testing with the


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                                                    9844                        Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                    Central Repository.27 Specifically,                       report data to the Central Repository as              (k)(iv) of Proposed Chapter IX, Section
                                                    Proposed Rule 6880 and paragraph (i)(ii)                  required by the Proposed Rule 6800                    8 address Compliance Thresholds
                                                    of Proposed Chapter IX, Section 8                         Series and Proposed Chapter IX, Section               related to reporting data to the CAT.
                                                    require that each Industry Member                         8, as applicable, in a manner that                    Proposed Rule 6893(d) and paragraph
                                                    participate in testing related to the                     ensures the timeliness, accuracy,                     (k)(iv) of Proposed Chapter IX, Section
                                                    Central Repository, including any                         integrity and completeness of such data.              8 state that each Industry Member is
                                                    industry-wide disaster recovery testing,                     In addition, without limiting the                  required to meet a separate compliance
                                                    pursuant to the schedule established                      general requirement as set forth in                   threshold which will be an Industry
                                                    pursuant to the CAT NMS Plan. The                         paragraph (a) of Proposed Rule 6893 and               Member-specific rate that may be used
                                                    Exchange intends to announce to its                       paragraph (k)(i) of Proposed Chapter IX,              as the basis for further review or
                                                    Industry Members the schedule                             Section 8, paragraph (b) of Proposed                  investigation into the Industry
                                                    established pursuant to the CAT NMS                       Rule 6893 and paragraph (k)(ii) of                    Member’s performance with regard to
                                                    Plan via Circular.                                        Proposed Chapter IX, Section 8 require                the CAT (the ‘‘Compliance
                                                                                                              Industry Members to accurately provide                Thresholds’’). Compliance Thresholds
                                                    (x) Recordkeeping                                         the LEIs in their records as required by              will compare an Industry Member’s
                                                       Proposed Rule 6890 and paragraph (j)                   the Proposed Rule 6800 Series and                     error rate to the aggregate Error Rate
                                                    of Proposed Chapter IX, Section 8                         Proposed Chapter IX, Section 8, as                    over a period of time to be defined by
                                                    (Consolidated Audit Trail—                                applicable, and state that Industry                   the Operating Committee. Compliance
                                                    Recordkeeping) set forth the                              Members may not knowingly submit                      Thresholds will be set by the Operating
                                                    recordkeeping obligations related to the                  inaccurate LEIs to the Central                        Committee, and will be calculated at
                                                    CAT for Industry Members. Proposed                        Repository. Paragraph (b) of Proposed                 intervals to be set by the Operating
                                                    Rule 6890 and paragraph (j) of Proposed                   Rule 6893 and paragraph (k)(ii) of                    Committee.30 Compliance Thresholds
                                                    Chapter IX, Section 8 require each                        Proposed Chapter IX, Section 8 note,                  will include compliance with the data
                                                    Industry Member to maintain and                           however, that this requirement does not               reporting and clock synchronization
                                                    preserve records of the information                       impose any additional due diligence                   requirements. Proposed Rule 6893(d)
                                                    required to be recorded under the                         obligations on Industry Members with                  and paragraph (k)(iv) of Proposed
                                                    Proposed Rule 6800 Series and                             regard to LEIs for CAT purposes.                      Chapter IX, Section 8 state that an
                                                    Proposed Chapter IX, Section 8, as                        Accordingly, this provision does not                  Industry Member’s performance with
                                                    applicable, for the period of time and                    impose any due diligence obligations                  respect to its Compliance Threshold
                                                    accessibility specified in SEC Rule 17a–                  beyond those that may exist today with                will not signify, as a matter of law, that
                                                    4(b). The records required to be                          respect to information associated with                such Industry Member has violated this
                                                    maintained and preserved under the                        an LEI. Although Industry Members will                Proposed Rule Series.
                                                    Proposed Rule 6800 Series and                             not be required to perform additional
                                                                                                              due diligence with regard to the LEIs for             (xii) Compliance Dates
                                                    Proposed Chapter IX, Section 8, as
                                                    applicable, may be immediately                            CAT purposes, Industry Members will                     Proposed Rule 6895 and paragraph (l)
                                                    produced or reproduced on                                 be required to accurately provide the                 of Proposed Chapter IX, Section 8
                                                    ‘‘micrographic media’’ as defined in                      LEIs in their records and may not                     (Consolidated Audi Trail—Compliance
                                                    SEC Rule 17a–4(f)(1)(i) or by means of                    knowingly submit inaccurate LEIs to the               Dates) sets forth the compliance dates
                                                    ‘‘electronic storage media’’ as defined in                CAT. Paragraph (b) of Proposed Rule                   for the various provisions of the
                                                    SEC Rule 17a–4(f)(1)(ii) that meet the                    6893 and paragraph (k)(ii) of Proposed                Proposed Rule 6800 Series and
                                                    conditions set forth in SEC Rule 17a–                     Chapter IX, Section 8 are consistent                  Proposed Chapter IX, Section 8, as
                                                    4(f) and be maintained and preserved                      with the SEC’s statements in the                      applicable. Paragraph (a) of Proposed
                                                    for the required time in that form.                       Approval Order for the CAT NMS Plan                   Rule 6895 and paragraph (l)(i) of
                                                    Proposed Rule 6890 and paragraph (j) of                   regarding an Industry Member’s                        Proposed Chapter IX, Section 8 state
                                                    Proposed Chapter IX, Section 8 are                        obligations regarding LEIs.29                         that, except as set forth in paragraphs (b)
                                                    based on FINRA Rule 7440(a)(5), which                        Paragraph (c) of Proposed Rule 6893                and (c) of Proposed Rule 6895 and
                                                    sets forth the recordkeeping                              and paragraph (k)(iii) of Proposed                    paragraph (l)(ii) and (l)(iii) of Proposed
                                                    requirements related to OATS.                             Chapter IX, Section 8 state that, if an               Chapter IX, Section 8, as applicable, or
                                                                                                              Industry Member reports data to the                   otherwise set forth in the Proposed
                                                    (xi) Timely, Accurate and Complete                        Central Repository with errors such that              Rules, these rules are fully effective and
                                                    Data                                                      its error percentage exceeds the                      members must comply with their terms.
                                                      SEC Rule 613 and the CAT NMS Plan                       maximum Error Rate established by the                   Paragraph (b) of Proposed Rule 6895
                                                    emphasize the importance of the                           Operating Committee pursuant to the                   and paragraph (l)(ii) of Proposed
                                                    timeliness, accuracy, completeness and                    CAT NMS Plan, then such Industry                      Chapter IX, Section 8 establish the
                                                    integrity of the data submitted to the                    Member would not be in compliance                     compliance dates for the clock
                                                    CAT.28 Accordingly, Proposed Rule                         with the Rule 6800 Series and Proposed                synchronization requirements as set
                                                    6893 and paragraph (k) of Proposed                        Chapter IX, Section 8, as applicable. As              forth in Proposed Rule 6820 and
                                                    Chapter IX, Section 8 (Consolidated                       discussed above, the initial maximum                  paragraph (b) of Proposed Chapter IX,
                                                    Audit Trail—Timely, Accurate and                          Error Rate is 5%, although the Error                  Section 8. Paragraph (b)(1) of Proposed
                                                    Complete Data) implement this                             Rate is expected to be reduced over                   Rule 6895 and paragraph (l)(ii)(1) of
                                                                                                                                                                    Proposed Chapter IX, Section 8 state
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                                                    requirement with regard to Industry                       time. The Exchange intends to
                                                    Members. Paragraph (a) of Proposed                        announce to its Industry Members                      that each Industry Member shall comply
                                                    Rule 6893 and paragraph (k)(i) of                         changes to the Error Rate established                 with Proposed Rule 6820 and paragraph
                                                    Proposed Chapter IX, Section 8 require                    pursuant to the CAT NMS Plan via                      (b) of Proposed Chapter IX, Section 8, as
                                                    that Industry Members record and                          Circular.                                             applicable, with regard to Business
                                                                                                                 Furthermore, paragraph (d) of                      Clocks that capture time in milliseconds
                                                      27 Adopting  Release at 84725.                          Proposed Rule 6893 and paragraph                      commencing on or before March 15,
                                                      28 See SEC Rule 613(e)(4)(i)(D)(ii); and Section
                                                    6.5(d) of the CAT NMS Plan.                                 29 Approval   Order at 84745.                         30 Appendix   C of the CAT NMS Plan.



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                                                                                 Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices                                            9845

                                                    2017. Paragraph (b)(2) of Proposed Rule                  regulatory obligations pursuant to the                to determine whether the proposed rule
                                                    6895 and paragraph (l)(ii)(2) of Proposed                Plan. In approving the Plan, the SEC                  change should be disapproved.
                                                    Chapter IX, Section 8 state that each                    noted that the Plan ‘‘is necessary and
                                                                                                                                                                   IV. Solicitation of Comments
                                                    Industry Member shall comply with                        appropriate in the public interest, for
                                                    Proposed Rule 6820 and paragraph (b)                     the protection of investors and the                     Interested persons are invited to
                                                    of Proposed Chapter IX, Section 8, as                    maintenance of fair and orderly markets,              submit written data, views, and
                                                    applicable, with regard to Business                      to remove impediments to, and perfect                 arguments concerning the foregoing,
                                                    Clocks that do not capture time in                       the mechanism of a national market                    including whether the proposed rule
                                                    milliseconds commencing on or before                     system, or is otherwise in furtherance of             change is consistent with the Act.
                                                    February 19, 2018. The compliance date                   the purposes of the Act.’’ 34 To the                  Comments may be submitted by any of
                                                    set forth in paragraph (b)(1) of Proposed                extent that this proposal implements,                 the following methods:
                                                    Rule 6895 and paragraph (l)(ii)(1) of                    interprets or clarifies the Plan and
                                                    Proposed Chapter IX, Section 8 reflect                   applies specific requirements to                      Electronic Comments
                                                    the exemptive relief requested by the                    Industry Members, the Exchange
                                                                                                             believes that this proposal furthers the                • Use the Commission’s Internet
                                                    Participants with regard to the clock
                                                                                                             objectives of the Plan, as identified by              comment form (http://www.sec.gov/
                                                    synchronization requirements related to
                                                                                                             the SEC, and is therefore consistent with             rules/sro.shtml); or
                                                    Business Clocks that do not capture
                                                    time in milliseconds.31                                  the Act.                                                • Send an email to rule-comments@
                                                      Paragraph (c) of Proposed Rule 6895                                                                          sec.gov. Please include File Number SR–
                                                                                                             B. Self-Regulatory Organization’s
                                                    and paragraph (l)(iii) of Proposed                                                                             NASDAQ–2017–008 on the subject line.
                                                                                                             Statement on Burden on Competition
                                                    Chapter IX, Section 8 establish the                                                                            Paper Comments
                                                    compliance dates for the data recording                     The Exchange does not believe that
                                                    and reporting requirements for Industry                  the proposed rule change will result in                 • Send paper comments in triplicate
                                                    Members. Paragraph (c)(1) of Proposed                    any burden on competition that is not                 to Brent J. Fields, Secretary, Securities
                                                    Rule 6895 and paragraph (l)(iii)(1) of                   necessary or appropriate in furtherance               and Exchange Commission, 100 F Street
                                                    Proposed Chapter IX, Section 8 require                   of the purposes of the Act. The                       NE., Washington, DC 20549–1090.
                                                    each Industry Member (other than Small                   Exchange notes that the proposed rule
                                                    Industry Members) to record and report                   change implements provisions of the                   All submissions should refer to File
                                                    the Industry Member Data to the Central                  CAT NMS Plan, and is designed to                      Number SR–NASDAQ–2017–008. This
                                                    Repository by November 15, 2018.                         assist the Exchange in meeting its                    file number should be included on the
                                                    Paragraph (c)(2) of Proposed Rule 6895                   regulatory obligations pursuant to the                subject line if email is used. To help the
                                                    and paragraph (l)(iii)(2) of Proposed                    Plan. The Exchange also notes that the                Commission process and review your
                                                    Chapter IX, Section 8 require that each                  Proposed Rule Series implementing                     comments more efficiently, please use
                                                    Industry Member that is a Small                          provisions of the CAT NMS Plan will                   only one method. The Commission will
                                                    Industry Member to record and report                     apply equally to all firms that trade                 post all comments on the Commission’s
                                                    the Industry Member Data to the Central                  NMS Securities and OTC Equity                         Internet Web site (http://www.sec.gov/
                                                    Repository by November 15, 2019. Such                    Securities. In addition, all national                 rules/sro.shtml).
                                                    compliance dates are consistent with                     securities exchanges and FINRA are                       Copies of the submission, all
                                                    the compliance dates set forth in SEC                    proposing the rules reflected in the                  subsequent amendments, all written
                                                    Rule 613(a)(3)(v) and (vi), and Section                  Proposed Rule 6800 Series and                         statements with respect to the proposed
                                                    6.7(a)(v) and (vi) of the CAT NMS Plan.                  Proposed Chapter IX, Section 8.                       rule change that are filed with the
                                                                                                             Therefore, this is not a competitive rule             Commission, and all written
                                                    2. Statutory Basis                                       filing, and, therefore, it does not impose            communications relating to the
                                                       The Exchange believes that the                        a burden on competition.                              proposed rule change between the
                                                    proposed rule change is consistent with                  C. Self-Regulatory Organization’s                     Commission and any person, other than
                                                    the provisions of Section 6(b)(5) of the                 Statement on Comments on the                          those that may be withheld from the
                                                    Act,32 which require, among other                        Proposed Rule Change Received From                    public in accordance with the
                                                    things, that the Exchange rules must be                  Members, Participants, or Others                      provisions of 5 U.S.C. 552, will be
                                                    designed to prevent fraudulent and                                                                             available for Web site viewing and
                                                    manipulative acts and practices, to                        No written comments were either                     printing in the Commission’s Public
                                                    promote just and equitable principles of                 solicited or received.                                Reference Room, 100 F Street NE.,
                                                    trade, and, in general, to protect                       III. Date of Effectiveness of the                     Washington, DC 20549, on official
                                                    investors and the public interest, and                   Proposed Rule Change and Timing for                   business days between the hours of
                                                    Section 6(b)(8) of the Act,33 which                      Commission Action                                     10:00 a.m. and 3:00 p.m. Copies of the
                                                    requires that Exchange rules not impose                                                                        filing also will be available for
                                                    any burden on competition that is not                       Within 45 days of the date of
                                                                                                                                                                   inspection and copying at the principal
                                                    necessary or appropriate.                                publication of this notice in the Federal
                                                                                                                                                                   office of the Exchange. All comments
                                                       The Exchange believes that this                       Register or within such longer period (i)
                                                                                                                                                                   received will be posted without change;
                                                    proposal is consistent with the Act                      as the Commission may designate up to
                                                                                                                                                                   the Commission does not edit personal
                                                                                                             90 days of such date if it finds such
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                                                    because it implements, interprets or                                                                           identifying information from
                                                    clarifies the provisions of the Plan, and                longer period to be appropriate and
                                                                                                                                                                   submissions. You should submit only
                                                    is designed to assist the Exchange and                   publishes its reasons for so finding or
                                                                                                                                                                   information that you wish to make
                                                    its Industry Members in meeting                          (ii) as to which the Exchange consents,
                                                                                                                                                                   available publicly.
                                                                                                             the Commission shall: (a) By order
                                                      31 See Letter from Participants to Brent J. Fields,    approve or disapprove such proposed                      All submissions should refer to File
                                                    Secretary, Commission, dated January 17, 2017.           rule change, or (b) institute proceedings             Number SR–NASDAQ–2017–008 and
                                                      32 15 U.S.C. 78f(b)(6).                                                                                      should be submitted on or before March
                                                      33 15 U.S.C. 78f(b)(8).                                  34 Approval   Order at 84697.                       1, 2017.


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                                                    9846                       Federal Register / Vol. 82, No. 25 / Wednesday, February 8, 2017 / Notices

                                                      For the Commission, by the Division of                II. Self-Regulatory Organization’s                       audit trail (‘‘CAT’’) that would capture
                                                    Trading and Markets, pursuant to delegated              Statement of the Purpose of, and                         customer and order event information
                                                    authority.35                                            Statutory Basis for, the Proposed Rule                   for orders in NMS Securities and OTC
                                                    Robert W. Errett,                                       Change                                                   Equity Securities, across all markets,
                                                    Deputy Secretary.                                          In its filing with the Commission, the                from the time of order inception through
                                                    [FR Doc. 2017–02540 Filed 2–7–17; 8:45 am]              Exchange included statements                             routing, cancellation, modification, or
                                                                                                            concerning the purpose of and basis for                  execution in a single consolidated data
                                                    BILLING CODE 8011–01–P
                                                                                                            the proposed rule change and discussed                   source. Each Participant is required to
                                                                                                            any comments it received on the                          enforce compliance by its Industry
                                                    SECURITIES AND EXCHANGE                                 proposed rule change. The text of these                  Members, as applicable, with the
                                                                                                            statements may be examined at the                        provisions of the Plan, by adopting a
                                                    COMMISSION
                                                                                                            places specified in Item IV below. The                   Compliance Rule applicable to their
                                                                                                            Exchange has prepared summaries, set                     Industry Members.10 As is described
                                                    [Release No. 34–79944; File No. SR–                                                                              more fully below, the Proposed Rules
                                                    BatsBYX–2017–02]                                        forth in Sections A, B, and C below, of
                                                                                                            the most significant parts of such                       4.5 through 4.16 set forth the
                                                                                                            statements.                                              Compliance Rule to require Industry
                                                    Self-Regulatory Organizations; Bats                                                                              Members to comply with the provisions
                                                    BYX Exchange, Inc.; Notice of Filing of                 (A) Self-Regulatory Organization’s                       of the CAT NMS Plan. The Proposed
                                                    a Proposed Rule Change To Adopt                         Statement of the Purpose of, and                         Rules 4.5 through 4.16 include twelve
                                                    Rules 4.5 Through 4.16 To Implement                     Statutory Basis for, the Proposed Rule                   Proposed Rules covering the following
                                                    the Compliance Rule Regarding the                       Change                                                   areas: (1) Definitions; (2) clock
                                                    National Market System Plan                                                                                      synchronization; (3) Industry Member
                                                    Governing the Consolidated Audit Trail                  1. Purpose
                                                                                                                                                                     Data reporting; (4) Customer
                                                                                                               Bats BYX Exchange, Inc., Bats BZX                     information reporting; (5) Industry
                                                    February 2, 2017.                                       Exchange, Inc., Bats EDGA Exchange,                      Member information reporting; (6) time
                                                       Pursuant to Section 19(b)(1) of the                  Inc., Bats EDGX Exchange, Inc., BOX                      stamps; (7) clock synchronization rule
                                                    Securities Exchange Act of 1934 (the                    Options Exchange LLC, C2 Options                         violations; (8) connectivity and data
                                                    ‘‘Act’’),1 and Rule 19b–4 thereunder,2                  Exchange, Incorporated, Chicago Board                    transmission; (9) development and
                                                    notice is hereby given that on January                  Options Exchange, Incorporated,                          testing; (10) recordkeeping; (11) timely,
                                                    30, 2017, Bats BYX Exchange, Inc. (the                  Chicago Stock Exchange, Inc., Financial                  accurate and complete data; and (12)
                                                    ‘‘Exchange’’ or ‘‘BYX’’) filed with the                 Industry Regulatory Authority, Inc.,                     compliance dates. Each of these
                                                    Securities and Exchange Commission                      International Securities Exchange, LLC,                  Proposed Rules are discussed in detail
                                                                                                            Investors’ Exchange LLC, ISE Gemini,                     below.
                                                    (‘‘Commission’’) the proposed rule
                                                                                                            LLC, ISE Mercury, LLC, Miami
                                                    change as described in Items I, II and III                                                                       (i) Definitions
                                                                                                            International Securities Exchange LLC,
                                                    below, which Items have been prepared                   MIAX PEARL, LLC, NASDAQ BX, Inc.,
                                                    by the Exchange.3 The Commission is                                                                                Proposed Rule 4.5 (Consolidated
                                                                                                            NASDAQ PHLX LLC, The NASDAQ                              Audit Trail—Definitions) sets forth the
                                                    publishing this notice to solicit                       Stock Market LLC, National Stock                         definitions for the terms used in the
                                                    comments on the proposed rule change                    Exchange, Inc., New York Stock                           Proposed Rules 4.5 through 4.16. Each
                                                    from interested persons.                                Exchange LLC, NYSE MKT LLC, and                          of the defined terms in Proposed Rule
                                                    I. Self-Regulatory Organization’s                       NYSE Arca, Inc. (collectively, the                       4.5 is discussed in detail in this section.
                                                    Statement of the Terms of Substance of                  ‘‘Participants’’) filed with the
                                                                                                            Commission, pursuant to Section 11A of                   (A) Account Effective Date
                                                    the Proposed Rule Change
                                                                                                            the Exchange Act 5 and Rule 608 of                       (I) Customer Information Approach
                                                       The Exchange filed a proposal to                     Regulation NMS thereunder,6 the CAT
                                                                                                                                                                        SEC Rule 613 requires that numerous
                                                    adopt Rules 4.5 through 4.16 to                         NMS Plan.7 The Participants filed the
                                                                                                                                                                     data elements be reported to the CAT to
                                                    implement the compliance rule                           Plan to comply with Rule 613 of
                                                                                                                                                                     ensure there is sufficient information to
                                                    (‘‘Compliance Rule’’) regarding the                     Regulation NMS under the Exchange
                                                                                                                                                                     create the lifecycle of an order, and
                                                    National Market System Plan Governing                   Act. The Plan was published for
                                                                                                                                                                     provide regulators with sufficient detail
                                                    the Consolidated Audit Trail (the ‘‘CAT                 comment in the Federal Register on
                                                                                                                                                                     about an order to perform their
                                                    NMS Plan’’ or ‘‘Plan’’).4                               May 17, 2016,8 and approved by the
                                                                                                                                                                     regulatory duties. Certain required
                                                                                                            Commission, as modified, on November
                                                       The text of the proposed rule change                                                                          elements are intended to ensure that the
                                                                                                            15, 2016.9
                                                    is available at the Exchange’s Web site                                                                          regulators can identify the Customer’s
                                                                                                               The Plan is designed to create,
                                                    at www.bats.com, at the principal office                                                                         associated with orders. For example,
                                                                                                            implement and maintain a consolidated
                                                    of the Exchange, and at the                                                                                      SEC Rule 613(c)(7)(i)(A) requires an
                                                    Commission’s Public Reference Room.                       5 15  U.S.C. 78k–1.
                                                                                                                                                                     Industry Member to report the
                                                                                                              6 17  CFR 242.608.                                     ‘‘Customer-ID’’ for each Customer for
                                                                                                               7 See Letter from the Participants to Brent J.        the original receipt or origination of an
                                                      35 17 CFR 200.30–3(a)(12).                            Fields, Secretary, Commission, dated September 30,       order. ‘‘Customer-ID’’ is defined in SEC
                                                      1 15 U.S.C. 78s(b)(1).                                2014; and Letter from Participants to Brent J. Fields,   Rule 613(j)(5) to mean ‘‘with respect to
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                                                      2 17 CFR 240.19b–4.                                   Secretary, Commission, dated February 27, 2015.
                                                                                                            On December 24, 2015, the Participants submitted
                                                                                                                                                                     a customer, a code that uniquely and
                                                      3 The Exchange originally filed this proposed rule
                                                                                                            an amendment to the CAT NMS Plan. See Letter             consistently identifies such customer for
                                                    change on January 17, 2017 under File No. SR–
                                                                                                            from Participants to Brent J. Fields, Secretary,         purposes of providing data to the
                                                    BatsBYX–2017–01, and the Exchange subsequently          Commission, dated December 23, 2015.
                                                    withdrew that filing on January 30, 2017 and filed
                                                                                                                                                                     Central Repository.’’ SEC Rule 613(c)(8)
                                                                                                               8 Securities Exchange Act Rel. No. 77724 (Apr.
                                                    this proposed rule change.                                                                                       requires Industry Members to use the
                                                                                                            27, 2016), 81 FR 30614 (May 17, 2016).
                                                      4 Unless otherwise specified, capitalized terms          9 Securities Exchange Act Rel. No. 79318 (Nov.        same Customer-ID for each Customer.
                                                    used in this rule filing are defined as set forth       15, 2016), 81 FR 84696 (Nov. 23, 2016) (‘‘Approval
                                                    herein or in the CAT NMS Plan.                          Order’’).                                                 10 See   SEC Rule 613(g)(1).



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Document Created: 2017-02-08 02:58:58
Document Modified: 2017-02-08 02:58:58
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 9831 

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