Notice2021-25748
Joint Industry Plan; Notice of Filing of the Fifty-First Amendment to the Joint Self-Regulatory Organization Plan Governing the Collection, Consolidation and Dissemination of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privileges Basis
Primary source
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Published
November 26, 2021
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 86 Issue 225 (Friday, November 26, 2021)</title>
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[Federal Register Volume 86, Number 225 (Friday, November 26, 2021)]
[Notices]
[Pages 67541-67555]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-25748]
[[Page 67541]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93620; File No. S7-24-89]
Joint Industry Plan; Notice of Filing of the Fifty-First
Amendment to the Joint Self-Regulatory Organization Plan Governing the
Collection, Consolidation and Dissemination of Quotation and
Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis
November 19, 2021.
Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 608 thereunder,\2\ notice is hereby given that
on November 5, 2021,\3\ the Participants \4\ in the Joint Self-
Regulatory Organization Plan Governing the Collection, Consolidation
and Dissemination of Quotation and Transaction Information for Nasdaq-
Listed Securities Traded on Exchanges on an Unlisted Trading Privileges
Basis (``UTP Plan'' or ``Plan'') filed with the Securities and Exchange
Commission (``Commission'') a proposal to amend the UTP Plan. The
amendment represents the Fifty-First Amendment to the Plan
(``Amendment''). Under the Amendment, the Participants propose to amend
the UTP Plan to implement the non-fee-related aspects of the
Commission's Market Data Infrastructure Rules (``MDI Rules'').\5\ The
Participants have submitted a separate amendment to the UTP Plan to
adopt fees for the receipt of the expanded content of consolidated
market data pursuant to the MDI Rules.
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\1\ 15 U.S.C. 78k-1.
\2\ 17 CFR 242.608.
\3\ See Letter from Robert Books, Chair, UTP Operating
Committee, to Vanessa Countryman, Secretary, Commission (Nov. 5,
2021).
\4\ The Participants are: Cboe BYX Exchange, Inc., Cboe BZX
Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc.,
Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
The Investors' Exchange LLC, Long-Term Stock Exchange, Inc., MEMX
LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq PHLX,
Inc., The Nasdaq Stock Market LLC, New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE
National, Inc. (collectively, the ``Participants'').
\5\ Securities Exchange Act Release No. 90610, 86 FR 18596
(April 9, 2021) (File No. S7-03-20) (``MDI Rules Release'').
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The proposed Amendment has been filed by the Participants pursuant
to Rule 608(b)(2) under Regulation NMS.\6\ The Commission is publishing
this notice to solicit comments from interested persons on the proposed
Amendment. Set forth in Sections I and II, which were prepared and
submitted to the Commission by the Participants, is the statement of
the purpose and summary of the Amendment, along with information
pursuant to Rules 608(a) and 601(a) under the Act. A copy of the Plan
marked to show the proposed Amendment is Attachment A to this notice.
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\6\ 17 CFR 242.608(b)(2).
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I. Rule 608(a)
A. Purpose of the Amendments
On December 9, 2020, the Commission adopted amendments to
Regulation NMS. The effective date of the final MDI Rules was June 8,
2021. New Rule 614(e) of Regulation NMS, as set forth in the MDI rules,
provides that, ``[t]he participants to the effective national market
system plan(s) for NMS stocks shall file with the Commission . . . an
amendment that includes [the provisions specified in Rule 614(e)(1)-
(5)] within 150 calendar days from June 8, 2021[,]'' which is November
5, 2021. The Participants are filing the above-captioned amendment to
comply with Rule 614(e) requirements. As further specified in the MDI
Rules Release, the Participants must also submit updated fees regarding
the receipt and use of the expanded content of consolidated market
data.\7\ The Participants are submitting a separate amendment to the
UTP Plan to propose such fees.
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\7\ MDI Rules Release at 18699.
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Below, the Participants summarize the proposed amendment to the UTP
Plan to comply with Rule 614(e) of the MDI Rules.\8\
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\8\ As the Commission is aware, some of the SROs (the
``Petitioners'') have challenged the MDI Rules Release in the D.C.
Circuit. The Petitioners have joined in this submission, including
the statement that the Plan amendments comply with the MDI Rules
Release, solely to satisfy the requirements of the MDI Rules Release
and Rule 608. Nothing in this submission should be construed as
abandoning any arguments asserted in the D.C. Circuit, as an
agreement by Petitioners with any analysis or conclusions set forth
in the MDI Rules Release, or as a concession by Petitioners
regarding the legality of the MDI Rules Release. Petitioners reserve
all rights in connection with their pending challenge of the MDI
Rules Release, including inter alia, the right to withdraw the
proposed amendment or assert that any action relating to the
proposed amendment has been rendered null and void, depending on the
outcome of the pending challenge. Petitioners further reserve all
rights with respect to this submission, including inter alia, the
right to assert legal challenges regarding the Commission's
disposition of this submission.
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Section III
The Participants propose adding a statement that terms used in the
UTP Plan will have the same meaning as such terms are defined in Rule
600(b) under the Securities Exchange Act of 1934 (the ``Exchange
Act''). The Participants also propose adding a definition of ``Primary
Listing Exchange'' to comply with the requirements of the MDI Rules.
The definition of ``Primary Listing Exchange'' replaces the definition
``Listing Market'' previously in the UTP Plan.
The Participants also propose amending the definition of
``Quotation Information'' and ``Transaction Reports'' to track more
closely the requirements of the MDI Rules.
Finally, the Participants proposing amending the definition of
``News Service'' and ``Vendor'' to reference Competing Consolidators as
a potential source of Quotation Information or Transaction Reports.
Section IV
The Participants propose to amend Section IV.B to include
references to Competing Consolidators and Self-Aggregators.
Additionally, the Participants propose to add the requirements that the
Operating Committee will publish on the UTP Plan's website: (1) The
Primary Listing Exchange for each Eligible Security; and (2) on a
monthly basis, the consolidated market data gross revenues for Eligible
Securities. This addition is designed to comply with the requirements
of Rule 614(e)(4) and (5)(ii).
Section VII
The Participants propose to amend Section VII by referring to the
Administrator rather than the Processor since the Administrative
Functions being described in that Section are more appropriately
ascribed to the Administrator.
Section VIII
The Participants propose adding new Section VIII--and renumbering
the remaining sections--to describe the process for evaluating
Competing Consolidators. The proposed additions state that, on an
annual basis, the Operating Committee will assess the performance of
Competing Consolidators, prepare an annual report containing such
assessment, and furnish the report to the Commission prior to the
second quarterly meeting of the Operating Committee. These additions
are designed to comply with the requirements of Rule 614(e)(3).
In addition, Rule 614(d)(5) requires Competing Consolidators to
publish prominently on their websites monthly performance metrics,
which are to be defined by the UTP Plan. Accordingly, the Participants
propose to amend Section VIII to define such ``monthly performance
metrics,'' in accordance
[[Page 67542]]
with the requirements of Rule 614(d)(5) and sub-paragraphs (i)-(v)
thereof.\9\
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\9\ MDI Rules Release at 18673.
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Section IX (Previously Section VIII)
The Participants propose to amend Section IX to reference Competing
Consolidators and Self- Aggregators.
The Participants propose to amend Sections IX.A and IX.B to add the
requirement that each Participant agrees to collect and transmit to
Competing Consolidators and Self-Aggregators all quotation information
and transaction reports required to be made available pursuant to Rule
603(b) of Regulation NMS in the same manner and using the same methods,
including all methods of access and the same format, as such
Participant makes available any information with respect to quotations
for and transactions in Eligible Securities to any person. The
Participants also propose amending Sections IX.A and IX.B to require
that quotation information and transaction reports include the time
that the Participant made such information available to Competing
Consolidators and Self-Aggregators. These additions are designed to
comply with the requirements of Rule 614(e)(1) and (2).
Section XI (Previously Section X)
The Participants propose revising Section XI to include references
to notifying Competing Consolidators and Self-Aggregators in addition
to the Processor in connection with Regulatory and Operational Halts.
The Participants believe these additions are consistent with the
requirements of Rule 614(e)(1) and are necessary to ensure that such
entities are notified of information related to Regulatory and
Operational Halts and, with respect to Competing Consolidators, can
further disseminate such information to their customers.
The Participants also propose replacing the term ``Listing Market''
with ``Primary Listing Exchange'' to align with the terminology used in
the MDI Rules.
Section XII (Previously Section XI)
The Participants propose amending Section XII to include references
to Competing Consolidators and Self-Aggregators.
Section XIV (Previously Section XIII)
The Participants propose amending Section XIV.C by referring to the
Administrator rather than the Processor since the responsibilities
being described in that Section are more appropriately ascribed to the
Administrator.
Section XV (Previously Section XIV)
The Participants propose amending Section XV to include references
to Competing Consolidators and Self-Aggregators.
Section XVIII (Previously Section XVII)
The Participants propose amending Section XVIII to include
references to Competing Consolidators and Self-Aggregators.
Section XIX (Previously Section XVIII)
The Participants propose amending Section XIX to include references
to Competing Consolidators and Self-Aggregators.
Section XXI
The Participants propose deleting former Section XXI (Depth of Book
Display). The Participants believe that this provision is obsolete
given the MDI Rules.
B. Governing or Constituent Documents
Not applicable.
C. Implementation of Amendments
All of the Participants have manifested their approval of the
proposed amendments by means of their execution of the UTP Plan
Amendment. The UTP Plan Amendment would become operational upon
approval by the Commission.
D. Development and Implementation Phases
The amendments proposed herein would be implemented to coincide
with the phased implementation of the MDI Rules as required by the
Commission.
E. Analysis of Impact on Competition
The Participants believe that the proposed amendments comply with
the requirements of the MDI Rules, which have been approved by the
Commission.
F. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plans
Not applicable.
G. Approval by Sponsors in Accordance With Plan
Section IV.C.1.a of the UTP Plan requires the Participants to
unanimously approve the amendments proposed herein. They have so
approved it.
H. Description of Operation of Facility Contemplated by the Proposed
Amendment
Not applicable.
I. Terms and Conditions of Access
Not applicable.
J. Method of Determination and Imposition, and Amount of, Fees and
Charges
Not applicable.
K. Method and Frequency of Processor Evaluation
Not applicable.
L. Dispute Resolution
Not applicable.
II. Rule 601(a)
A. Reporting Requirements
Not applicable.
B. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information
The Participants propose to amend Section IX.B to add the
requirement that each Participant agrees to collect and transmit to
Competing Consolidators and Self-Aggregators all transaction reports
required to be made available pursuant to Rule 603(b) of Regulation NMS
in the same manner and using the same methods, including all methods of
access and the same format, as such Participant makes available any
information with respect to transactions in Eligible Securities to any
person. The Participants also propose amending Section IX.B to require
that transaction reports include the time that the Participant made
such information available to Competing Consolidators and Self-
Aggregators. These additions are designed to comply with the
requirements of the MDI Rules.
C. Manner of Consolidation
Not applicable.
D. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports
Not applicable.
E. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination
Not applicable.
F. Terms of Access to Transaction Reports
Not applicable.
G. Identification of Marketplace of Execution
Not applicable.
III. Solicitation of Comments
The Commission seeks comments on the Amendment. Interested persons
are invited to submit written data, views, and arguments concerning the
foregoing, including whether the proposed Amendment is consistent with
[[Page 67543]]
the Act and the rules and regulations thereunder applicable to national
market system plans. Comments may be submitted by any of the following
methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#ea989f868fc7898587878f849e99aa998f89c48d859c"><span class="__cf_email__" data-cfemail="7a080f161f57191517171f140e093a091f19541d150c">[email protected]</span></a>. Please include
File Number S7-24-89 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number S7-24-89. 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 website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>). Copies of
the submission, all written statements with respect to the proposed
Amendment that are filed with the Commission, and all written
communications relating to the proposed Amendment between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for website viewing and printing in the Commission's Public
Reference Room, 100 F Street NE, Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
the filing will also be available for website viewing and printing at
the principal office of the Plan. All comments received will be posted
without change. Persons submitting comments are cautioned that we do
not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number S7-24-
89 and should be submitted on or before December 17, 2021.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(85).
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J. Matthew DeLesDernier,
Assistant Secretary.
Attachment A--Proposed Changes to the UTP Plan
Attachment A
Proposed Amendments to the NASDAQ/UTP Plan
Marked To Show Changes From the Existing Plan
(Additions are italicized; Deletions are in [brackets])
I. Participants
The Participants include the following:
A. Participants
1. Cboe BYX Exchange, Inc., 400 South LaSalle Street, Chicago, Illinois
60605
2. Cboe BZX Exchange, Inc., 400 South LaSalle Street, Chicago, Illinois
60605
3. Cboe EDGA Exchange, Inc., 400 South LaSalle Street, Chicago,
Illinois 60605
4. Cboe EDGX Exchange, Inc., 400 South LaSalle Street, Chicago,
Illinois 60605
5. Cboe Exchange, Inc., 400 South LaSalle Street, Chicago, Illinois
60605
6. Financial Industry Regulatory Authority, Inc., 1735 K Street NW,
Washington, DC 20006
7. Investors' Exchange LLC, 3 World Trade Center, 58th Floor, New York,
New York 10007
8. Long-Term Stock Exchange, Inc., 300 Montgomery St., Ste. 790, San
Francisco, CA 94104
9. MEMX LLC, 111 Town Square Place, Suite 520, Jersey City, New Jersey
07310
10. MIAX PEARL, LLC, 7 Roszel Road, Suite 1A, Princeton, New Jersey
08540
11. Nasdaq BX, Inc., One Liberty Plaza, 165 Broadway, New York, New
York 10006
12. Nasdaq ISE, LLC, One Liberty Plaza, 165 Broadway, New York, New
York 10006
13. Nasdaq PHLX LLC, FMC Tower, Level 8, 2929 Walnut Street,
Philadelphia, Pennsylvania 19104
14. The Nasdaq Stock Market LLC, One Liberty Plaza, 165 Broadway, New
York, NY 10006
15. New York Stock Exchange LLC, 11 Wall Street, New York, New York
10005
16. NYSE American LLC, 11 Wall Street, New York, New York 10005
17. NYSE Arca, Inc., 11 Wall Street, New York, New York 10005
18. NYSE Chicago, Inc., 11 Wall Street, New York, New York 10005
19. NYSE National, Inc., 101 Hudson, Suite 1200, Jersey City, NJ 07302
B. Additional Participants
Any other national securities association or national securities
exchange, in whose market Eligible Securities become traded, may become
a Participant, provided that said organization executes a copy of this
Plan and pays its share of development costs as specified in Section
XIII.
II. Purpose of Plan
The purpose of this Plan is to provide for the collection,
consolidation and dissemination of Quotation Information and
Transaction Reports in Eligible Securities from the Participants in a
manner consistent with the Exchange Act.
It is expressly understood that each Participant shall be
responsible for the collection of Quotation Information and Transaction
Reports within its market and that nothing in this Plan shall be deemed
to govern or apply to the manner in which each Participant does so.
III. Definitions
Terms used in this plan have the same meaning as the terms defined
in Rule 600(b) under the Act.
A. ``Current'' means, with respect to Transaction Reports or
Quotation Information, such Transaction Reports or Quotation
Information during the fifteen (15) minute period immediately following
the initial transmission thereof by the Processor.
B. ``Eligible Security'' means any Nasdaq Global Market or Nasdaq
Capital Market security, as defined in NASDAQ Rule 4200. Eligible
Securities under this Nasdaq UTP Plan shall not include any security
that is defined as an ``Eligible Security'' within Section VII of the
Consolidated Tape Association Plan.
A security shall cease to be an Eligible Security for purposes of
this Plan if: (i) The security does not substantially meet the
requirements from time to time in effect for continued listing on
Nasdaq, and thus is suspended from trading; or (ii) the security has
been suspended from trading because the issuer thereof is in
liquidation, bankruptcy or other similar type proceedings. The
determination as to whether a security substantially meets the criteria
of the definition of Eligible Security shall be made by the exchange on
which such
[[Page 67544]]
security is listed provided, however, that if such security is listed
on more than one exchange then such determination shall be made by the
exchange on which, the greatest number of the transactions in such
security were effected during the previous twelve-month period.
C. ``Commission'' and ``SEC'' shall mean the U.S. Securities and
Exchange Commission.
D. ``Exchange Act'' means the Securities Exchange Act of 1934, as
amended.
E. ``Market'' shall mean (i) when used with respect to Quotation
Information, FINRA in the case of a FINRA Participant, or the
Participant on whose floor or through whose facilities the quotation
was disseminated; and (ii) when used with respect to Transaction
Reports, the Participant through whose facilities the transaction took
place or is reported, or the Participant to whose facilities the order
was sent for execution.
F. ``FINRA'' means the Financial Industry Regulatory Authority,
Inc.
G. ``FINRA Participant'' means a FINRA member that is registered as
a market maker or an electronic communications network or otherwise
utilizes the facilities of FINRA pursuant to applicable FINRA rules.
H. ``Transaction Reporting System'' means the System provided for
in the Transaction Reporting Plan filed with and approved by the
Commission pursuant to SEC Rule 11Aa3-1, subsequently re-designated as
Rule 601 of Regulation NMS, governing the reporting of transactions in
Nasdaq securities.
I. ``UTP Quote Data Feed'' means the service that provides
Subscribers with the National Best Bid and Offer quotations, size and
market center identifier, as well as the Best Bid and Offer quotations,
size and market center identifier from each individual Participant in
Eligible Securities and, in the case of FINRA, the FINRA Participant(s)
that constitutes FINRA's Best Bid and Offer quotations.
J. ``Nasdaq System'' means the automated quotation system operated
by Nasdaq.
K. ``UTP Trade Data Feed'' means the service that provides Vendors
and Subscribers with Transaction Reports.
L. ``Nasdaq Security'' or ``Nasdaq-listed Security'' means any
security listed on the Nasdaq Global Market or Nasdaq Capital Market.
M. ``News Service'' means a person who receives Transaction Reports
or Quotation Information provided by the Systems or provided by a
Competing Consolidators or Vendor, on a Current basis, in connection
with such person's business of furnishing such information to
newspapers, radio and television stations and other news media, for
publication at least fifteen (15) minutes following the time when the
information first has been published by the Processor or Competing
Consolidator.
N. ``OTC Montage Data Feed'' means the data stream of information
that provides Vendors and Subscribers with quotations and sizes from
each FINRA Participant.
O. ``Participant'' means a registered national securities exchange
or national securities association that is a signatory to this Plan.
P. ``Plan'' means this Nasdaq UTP Plan, as from time to time
amended according to its provisions, governing the collection,
consolidation and dissemination of Quotation Information and
Transaction Reports in Eligible Securities.
Q. ``Primary Listing Exchange'' means the national securities
exchange on which an Eligible Security is listed. If an Eligible
Security is listed on more than one national securities exchange,
Primary Listing Exchange means the exchange on which the security has
been listed the longest.
[Q]R. ``Processor'' means the entity selected by the Participants
to perform the processing functions set forth in the Plan.
[R]S. ``Quotation Information'' means all [bids, offers, displayed
quotation sizes, the market center identifiers and, in the case of
FINRA, the FINRA Participant that entered the quotation, withdrawals
and other information pertaining to quotations]information with respect
to quotations for[ in] Eligible Securities required to be collected and
made available to the Processor, Competing Consolidators, and Self-
Aggregators pursuant to this Plan, including all data necessary to
generate consolidated market data.
[S]T. ``Regulatory Halt'' means a trade suspension or halt called
for the purpose of dissemination of material news, as described at
Section X hereof or that is called for where there are regulatory
problems relating to an Eligible Security that should be clarified
before trading therein is permitted to continue, including a trading
halt for extraordinary market activity due to system misuse or
malfunction under Section X.E.1. of the Plan (``Extraordinary Market
Regulatory Halt'').
[T]U. ``Subscriber'' means a person who receives Current Quotation
Information or Transaction Reports provided by the Processor or
Competing Consolidator or provided by a Vendor, for its own use or for
distribution on a non-Current basis, other than in connection with its
activities as a Vendor.
[U]V. ``Transaction Reports'' means all information with respect to
transactions in Eligible Securities required to be collected and made
available to the Processor, Competing Consolidators, and Self-
Aggregators pursuant to this Plan, including all data necessary to
generate consolidated market data[reports required to be collected and
made available pursuant to this Plan containing the stock symbol,
price, and size of the transaction executed, the Market in which the
transaction was executed, and related information, including a buy/
sell/cross indicator and trade modifiers, reflecting completed
transactions in Eligible Securities].
[V]W. ``Upon Effectiveness of the Plan'' means July 12, 1993, the
date on which the Participants commenced publication of Quotation
Information and Transaction Reports on Eligible Securities as
contemplated by this Plan.
[W]X. ``Vendor'' means a person who receives Current Quotation
Information or Transaction Reports provided by the Processor, Competing
Consolidator, or [provided by] a Vendor, in connection with such
person's business of distributing, publishing, or otherwise furnishing
such information on a Current basis to Subscribers, News Services or
other Vendors.
IV. Administration of Plan
A. Operating Committee: Composition
The Plan shall be administered by the Participants through an
operating committee (``Operating Committee''), which shall be composed
of one representative designated by each Participant. Each Participant
may designate an alternate representative or representatives who shall
be authorized to act on behalf of the Participant in the absence of the
designated representative. Within the areas of its responsibilities and
authority, decisions made or actions taken by the Operating Committee,
directly or by duly delegated individuals, committees as may be
established from time to time, or others, shall be binding upon each
Participant, without prejudice to the rights of any Participant to seek
redress from the SEC pursuant to Rule 608 of Regulation NMS under the
Exchange Act or in any other appropriate forum.
An Electronic Communications Network, Alternative Trading System,
Broker-Dealer or other securities organization (``Organization'') which
is
[[Page 67545]]
not a Participant, but has an actively pending Form 1 Application on
file with the Commission to become a national securities exchange, will
be permitted to appoint one representative and one alternate
representative to attend regularly scheduled Operating Committee
meetings in the capacity of an observer/advisor. If the Organization's
Form 1 petition is withdrawn, returned, or is otherwise not actively
pending with the Commission for any reason, then the Organization will
no longer be eligible to be represented in the Operating Committee
meetings. The Operating Committee shall have the discretion, in limited
instances, to deviate from this policy if, as indicated by majority
vote, the Operating Committee agrees that circumstances so warrant.
Nothing in this section or elsewhere within the Plan shall
authorize any person or organization other than Participants, their
representatives, and members of the Advisory Committee to participate
on the Operating Committee in any manner other than as an advisor or
observer. Only the Participants and their representatives as well as
Commission staff may participate in Executive Sessions of the Operating
Committee.
B. Operating Committee: Authority
The Operating Committee shall be responsible for:
1. Overseeing the consolidation of Quotation Information and
Transaction Reports in Eligible Securities from the Participants for
dissemination to Competing Consolidators, Self-Aggregators, Vendors,
Subscribers, News Services and others in accordance with the provisions
of the Plan;
2. Periodically evaluating the Processor and Competing
Consolidators;
3. Setting the level of fees to be paid by Competing Consolidators,
Self-Aggregators, Vendors, Subscribers, News Services or others for
services relating to Quotation Information or Transaction Reports in
Eligible Securities, and taking action in respect thereto in accordance
with the provisions of the Plan;
4. Determining matters involving the interpretation of the
provisions of the Plan;
5. Determining matters relating to the Plan's provisions for cost
allocation and revenue-sharing; [and]
6. Publishing on the Plan's website the Primary Listing Exchange
for each Eligible Security;
7. Calculating and publishing on a monthly basis consolidated
market data gross revenues for Eligible Securities; and
8. Carrying out such other specific responsibilities as provided
under the Plan.
C. Operating Committee: Voting
Each Participant shall have one vote on all matters considered by
the Operating Committee.
1. The affirmative and unanimous vote of all Participants entitled
to vote shall be necessary to constitute the action of the Operating
Committee with respect to:
a. Amendments to the Plan;
b. amendments to contracts between the Processor and Vendors,
Subscribers, News Services and others receiving Quotation Information
and Transaction Reports in Eligible Securities; and
c. termination of the Processor, except for termination for cause,
which shall be governed by Section V(B) hereof.
2. The affirmative vote of two-thirds of the Participants entitled
to vote shall be necessary to constitute the action of the Operating
Committee with respect to the establishment of new fees, the deletion
of existing fees, or increases or reductions in existing fees relating
to Quotation Information and Transaction Reports in Eligible
Securities.
3. The affirmative vote of a majority of the Participants entitled
to vote shall be necessary to constitute the action of the Operating
Committee with respect to:
a. Requests for system changes;
b. interpretive matters and decisions of the Operating Committee
arising under, or specifically required to be taken by, the provisions
of the Plan as written;
c. interpretive matters arising under Rules 601 and 602 of
Regulation NMS;
d. denials of access (other than for breach of contract, which
shall be handled by the Processor); and
e. all other matters not specifically addressed by the Plan.
4. It is expressly agreed and understood that neither this Plan nor
the Operating Committee shall have authority in any respect over any
Participant's proprietary systems. Nor shall the Plan or the Operating
Committee have any authority over the collection and dissemination of
quotation or transaction information in Eligible Securities in any
Participant's marketplace, or, in the case of FINRA, from FINRA
Participants.
D. Operating Committee: Meetings
Regular meetings of the Operating Committee may be attended by each
Participant's designated representative and/or its alternate
representative(s), and may be attended by one or more other
representatives of the parties. Meetings shall be held at such times
and locations as shall from time to time be determined by the Operating
Committee.
Quorum: Any action requiring a vote only can be taken at a meeting
in which a quorum of all Participants is present. For actions requiring
a simple majority vote of all Participants, a quorum of greater than
50% of all Participants entitled to vote must be present at the meeting
before such a vote may be taken. For actions requiring a 2/3rd majority
vote of all Participants, a quorum of at least 2/3rd of all
Participants entitled to vote must be present at the meeting before
such a vote may be taken. For actions requiring a unanimous vote of all
Participants, a quorum of all Participants entitled to vote must be
present at the meeting before such a vote may be taken.
A Participant is considered present at a meeting only if a
Participant's designated representative or alternate representative(s)
is either in physical attendance at the meeting or is participating by
conference telephone, or other acceptable electronic means.
Any action sought to be resolved at a meeting must be sent to each
Participant entitled to vote on such matter at least one week prior to
the meeting via electronic mail, regular U.S. or private mail, or
facsimile transmission, provided however that this requirement may be
waived by the vote of the percentage of the Committee required to vote
on any particular matter, under Section C above.
Any action may be taken without a meeting if a consent in writing,
setting forth the action so taken, is sent to and signed by all
Participant representatives entitled to vote with respect to the
subject matter thereof. All the approvals evidencing the consent shall
be delivered to the Chairman of the Operating Committee to be filed in
the Operating Committee records. The action taken shall be effective
when the minimum number of Participants entitled to vote have approved
the action, unless the consent specifies a different effective date.
The Chairman of the Operating Committee shall be elected annually
by and from among the Participants by a majority vote of all
Participants entitled to vote. The Chairman shall designate a person to
act as Secretary to record the minutes of each meeting. The location of
meetings shall be rotated among the locations of the principal offices
of the Participants, or such other locations as may from time to time
be determined by the Operating Committee.
Meetings may be held by conference telephone and action may be
taken
[[Page 67546]]
without a meeting if the representatives of all Participants entitled
to vote consent thereto in writing or other means the Operating
Committee deems acceptable.
E. Advisory Committee
(a) Formation. Notwithstanding any other provision of this Plan, an
Advisory Committee to the Plan shall be formed and shall function in
accordance with the provisions set forth in this section.
(b) Composition. Members of the Advisory Committee shall be
selected for two year terms as follows:
(1) Operating Committee Selections. By affirmative vote of a
majority of the Participants entitled to vote, the Operating Committee
shall select at least one representative from each of the following
categories to be members of the Advisory Committee:
(i) A broker-dealer with a substantial retail investor customer
base, ( ) a broker-dealer with a substantial institutional investor
customer base, (iii) an alternative trade system, (iv) a data vendor,
and (v) an investor.
(2) Participant Selections. Each Participant shall have the right
to select one member of the Advisory Committee. A Participant shall not
select any person employed by or affiliated with any participant or its
affiliates or facilities.
(c) Function. Members of the Advisory Committee shall have the
right to submit their views to the Operating Committee on Plan matters,
prior to a decision by the Operating Committee on such matters. Such
matters shall include, but not be limited to, any new or modified
product, fee, contract, or pilot program that is offered or used
pursuant to the Plan.
(d) Meetings and Information. Members of the Advisory Committee
shall have the right to attend all meetings of the Operating Committee
and to receive any information concerning Plan matters that is
distributed to the Operating Committee; provided, however, that the
Operating Committee may meet in executive session if, by affirmative
vote of a majority of the Participants entitled to vote, the Operating
Committee determines that an item of Plan business requires
confidential treatment.
F. Potential Conflicts of Interests
1. Disclosure Requirements. The Participants, the Processor, the
Plan Administrator, members of the Advisory Committee, and each service
provider or subcontractor engaged in Plan business (including the audit
of subscribers' data usage) that has access to Restricted or Highly
Confidential Plan information (for purposes of this section,
``Disclosing Parties'') shall complete the applicable questionnaire to
provide the required disclosures set forth below to disclose all
material facts necessary to identify potential conflicts of interest.
The Operating Committee, a Participant, Processor, or Administrator may
not use a service provider or subcontractor on Plan business unless
that service provider or subcontractor has agreed in writing to provide
the disclosures required by this section and has submitted completed
disclosures to the Administrator prior to starting work. If state laws,
rules, or regulations, or applicable professional ethics rules or
standards of conduct, would act to restrict or prohibit a Disclosing
Party from making any particular required disclosure, a Disclosing
Party shall refer to such law, rule, regulation, or professional ethics
rule or standard and include in response to that disclosure the basis
for its inability to provide a complete response. This does not relieve
the Disclosing Party from disclosing any information it is not
restricted from providing.
a. A potential conflict of interest may exist when personal,
business, financial, or employment relationships could be perceived by
a reasonable objective observer to affect the ability of a person to be
impartial.
b. Updates to Disclosures. Following a material change in the
information disclosed pursuant to subparagraph F.1, a Disclosing Party
shall promptly update its disclosures. Additionally, a Disclosing Party
shall update annually any inaccurate information prior to the Operating
Committee's first quarterly meeting of a calendar year.
c. Public Dissemination of Disclosures. The Disclosing Parties
shall provide the Administrator with its disclosures and any required
updates. The Administrator shall ensure that the disclosures are
promptly posted to the Plan's website.
2. Recusal.
a. A Disclosing Party may not appoint as its representative a
person that is responsible for or involved with the development,
modeling, pricing, licensing, or sale of proprietary data products
offered to customers of a securities information processor if the
person has a financial interest (including compensation) that is tied
directly to the exchange's proprietary data business and if that
compensation would cause a reasonable objective observer to expect the
compensation to affect the impartiality of the representative.
b. A Disclosing Party (including its representative(s), employees,
and agents) will be recused from participating in Plan activities if it
has not submitted a required disclosure form or the Operating Committee
votes that its disclosure form is materially deficient. The recusal
will be in effect until the Disclosing Party submits a sufficiently
complete disclosure form to the Administrator.
c. A Disclosing Party, including its representative(s), and its
affiliates and their representative(s), are recused from voting on
matters in which it or its affiliate (i) are seeking a position or
contract with the Plan or (ii) have a position or contract with the
Plan and whose performance is being evaluated by the Plan.
d. All recusals, including a person's determination of whether to
voluntarily recuse himself or herself, shall be reflected in the
meeting minutes.
* * * * *
Required Disclosures for the UTP Plan As part of the disclosure
regime, the Participants, the Processors, the Administrators, members
of the Advisory Committee, and service providers and subcontractors
must respond to questions that are tailored to elicit responses that
disclose the potential conflicts of interest.
The Participants must respond to the following questions and
instructions:
<bullet> Is the Participant's firm for profit or not-for-profit? If
the Participant's firm is for profit, is it publicly or privately
owned? If privately owned, list any owner with an interest of 5% or
more of the Participant, where to the Participant's knowledge, such
owner, or any affiliate controlling, controlled by, or under common
control with the owner, subscribes, directly or through a third-party
vendor, to SIP and/or exchange Proprietary Market Data products.
<bullet> Does the Participant firm offer real-time proprietary
equity market data that is filed with the SEC (``Proprietary Market
Data'')? If yes, list each product, describe its content, and provide a
link to where fees for each product are disclosed.
<bullet> Provide the names of the representative and any
alternative representatives designated by the Participant who are
authorized under the Plans to vote on behalf of the Participant. Also
provide a narrative description of the representatives' roles within
the Participant organization, including the title of each individual as
well as any direct responsibilities related to the development,
dissemination, sales, or marketing of the Participant's Proprietary
Market Data, and the nature of those responsibilities
[[Page 67547]]
sufficient for the public to identify the nature of any potential
conflict of interest that could be perceived by a reasonable objective
observer as having an effect on the Plan. If the representative works
in or with the Participant's Proprietary Market Data business, describe
the representative's roles and describe how that business and the
representative's Plan responsibilities impacts his or her compensation.
In addition, describe how a representative's responsibilities with the
Proprietary Market Data business may present a conflict of interest
with his or her responsibilities to the Plan.
<bullet> Does the Participant, its representative, or its
alternative representative, or any affiliate have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
The Processors must respond to the following questions and
instructions:
<bullet> Is the Processor an affiliate of or affiliated with any
Participant? If yes, disclose the Participant(s) and describe the
nature of the affiliation. Include an entity-level organizational chart
depicting the Processor and its affiliates.
<bullet> Provide a narrative description of the functions directly
performed by senior staff, the manager employed by the Processor to
provide Processor services to the Plans, and the staff that reports to
that manager (collectively, the ``Plan Processor'').
<bullet> Does the Plan Processor provide any services for any
Participant's Proprietary Market Data products or other Plans? If Yes,
disclose the services the Plan Processor performs and identify which
Plans. Does the Plan Processor have any profit or loss responsibility
for a Participant's Proprietary Market Data products or any other
professional involvement with persons the Processor knows are engaged
in the Participant's Proprietary Market Data business? If so, describe.
<bullet> List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan Processor.
<bullet> Does the Processor, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential conflicts of interest and the
effects they may have on the Plan.
The Administrators must respond to the following questions and
instructions:
<bullet> Is the Administrator an affiliate of or affiliated with
any Participant? If yes, disclose the Participant(s) and describe the
nature of the affiliation. Include an entity-level organizational chart
depicting the Administrator and its affiliates.
<bullet> Provide a narrative description of the functions directly
performed by senior staff, the administrative services manager, and the
staff that reports to that manager (collectively, the ``Plan
Administrator'').
<bullet> Does the Plan Administrator provide any services for any
Participant's Proprietary Market Data products? If yes, what services?
Does the Plan Administrator have any profit or loss responsibility, or
licensing responsibility, for a Participant's Proprietary Market Data
products or any other professional involvement with persons the
Administrator knows are engaged in the Participant's Proprietary Market
Data business? If so, describe.
<bullet> List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan
Administrator.
<bullet> Does the Administrator, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential conflicts of interest and the
effects they may have on the Plan.
The Members of the Advisory Committee must respond to the following
questions and instructions:
<bullet> Provide the Advisor's title and a brief description of the
Advisor's role within the firm.
<bullet> Does the Advisor have responsibilities related to the
firm's use or procurement of market data?
<bullet> Does the Advisor have responsibilities related to the
firm's trading or brokerage services?
<bullet> Does the Advisor's firm use the SIP? Does the Advisor's
firm use exchange Proprietary Market Data products?
<bullet> Does the Advisor's firm have an ownership interest of 5%
or more in one or more Participants? If yes, list the Participant(s).
<bullet> Does the Advisor actively participate in any litigation
against the Plans?
<bullet> Does the Advisor or the Advisor's firm have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
<bullet> Pursuant to Section IV.F.1. of the Plan, each service
provider or subcontractor that has agreed in writing to provide
required disclosures and be treated as a Disclosing Party pursuant to
Section IV.F of the Plan shall respond to the following questions and
instructions:
<bullet> Is the service provider or subcontractor affiliated with a
Participant, Processor, Administrator, or member of the Advisory
Committee? If yes, disclose with whom the person is affiliated and
describe the nature of the affiliation.
<bullet> If the service provider's or subcontractor's compensation
is on a commission basis or is tied to specific metrics, provide a
detailed narrative summary of how compensation is determined for
performing work on behalf of the Plan.
<bullet> Is the service provider or subcontractor subject to
policies and procedures (including information barriers) concerning the
protection of confidential information that includes affiliates? If so,
describe. If not, explain their absence.
<bullet> Does the service provider or subcontractor, or its
representative, have additional relationships or material economic
interests that could be perceived by a reasonable objective observer to
present a potential conflict of interest with its responsibilities to
the Plan? If so, provide a detailed narrative discussion of all
material facts necessary to identify the potential conflicts of
interest and the effects they may have on the Plan.
The responses to these questions will be posted on the Plan's
website. If a Disclosing Party has any material changes in its
responses, the Disclosing Party must promptly update its disclosures.
Additionally, the Disclosing Parties must update the disclosures on an
annual basis to reflect any changes. This annual update must be made
before the first quarterly session meeting of each calendar year, which
is generally held in mid-February.
[[Page 67548]]
G. Confidentiality Policy
The Participants have adopted the confidentiality policy set forth
in Exhibit 4 to the Plan.
V. Selection and Evaluation of the Processor
A. Generally
The Processor's performance of its functions under the Plan shall
be subject to review by the Operating Committee at least every two
years, or from time to time upon the request of any two Participants
but not more frequently than once each year. Based on this review, the
Operating Committee may choose to make a recommendation to the
Participants with respect to the continuing operation of the Processor.
The Operating Committee shall notify the SEC of any recommendations the
Operating Committee shall make pursuant to the Operating Committee's
review of the Processor and shall supply the Commission with a copy of
any reports that may be prepared in connection therewith.
B. Termination of the Processor for Cause
If the Operating Committee determines that the Processor has failed
to perform its functions in a reasonably acceptable manner in
accordance with the provisions of the Plan or that its reimbursable
expenses have become excessive and are not justified on a cost basis,
the Processor may be terminated at such time as may be determined by a
majority vote of the Operating Committee.
C. Factors To Be Considered in Termination for Cause
Among the factors to be considered in evaluating whether the
Processor has performed its functions in a reasonably acceptable manner
in accordance with the provisions of the Plan shall be the
reasonableness of its response to requests from Participants for
technological changes or enhancements pursuant to Section IV(C)(3)
hereof. The reasonableness of the Processor's response to such requests
shall be evaluated by the Operating Committee in terms of the cost to
the Processor of purchasing the same service from a third party and
integrating such service into the Processor's existing systems and
operations as well as the extent to which the requested change would
adversely impact the then current technical (as opposed to business or
competitive) operations of the Processor.
D. Processor's Right To Appeal Termination for Cause
The Processor shall have the right to appeal to the SEC a
determination of the Operating Committee terminating the Processor for
cause and no action shall become final until the SEC has ruled on the
matter and all legal appeals of right therefrom have been exhausted.
E. Process for Selecting New Processor
At any time following effectiveness of the Plan, but no later than
upon the termination of the Processor, whether for cause pursuant to
Section IV(C)(1)(c) or V(B) of the Plan or upon the Processor's
resignation, the Operating Committee shall establish procedures for
selecting a new Processor (the ``Selection Procedures''). The Operating
Committee, as part of the process of establishing Selection Procedures,
may solicit and consider the timely comment of any entity affected by
the operation of this Plan. The Selection Procedures shall be
established by a majority vote of the Plan Participants, and shall set
forth, at a minimum:
1. The entity that will:
(a) Draft the Operating Committee's request for proposal for bids
on a new processor;
(b) assist the Operating Committee in evaluating bids for the new
processor; and
(c) otherwise provide assistance and guidance to the Operating
Committee in the selection process.
2. the minimum technical and operational requirements to be
fulfilled by the Processor;
3. the criteria to be considered in selecting the Processor; and
4. the entities (other than Plan Participants) that are eligible to
comment on the selection of the Processor.
The affirmative vote of two-thirds of the Participants entitled to
vote shall be required to select a new processor or to approve any
agreement between the Participants and a processor or any amendment to
any such agreement. Nothing in this provision shall be interpreted as
limiting Participants' rights under Section IV or Section V of the Plan
or other Commission order.
VI. Functions of the Processor
A. Generally
The Processor shall collect from the Participants, and consolidate
and disseminate to Vendors, Subscribers and News Services, Quotation
Information and Transaction Reports in Eligible Securities in a manner
designed to assure the prompt, accurate and reliable collection,
processing and dissemination of information with respect to all
Eligible Securities in a fair and non-discriminatory manner. The
Processor shall commence operations upon the Processor's notification
to the Participants that it is ready and able to commence such
operations.
B. Collection and Consolidation of Information
For as long as Nasdaq is the Processor, the Processor shall be
capable of receiving Quotation Information and Transaction Reports in
Eligible Securities from Participants by the Plan-approved, Processor
sponsored interface, and shall consolidate and disseminate such
information via the UTP Quote Data Feed, the UTP Trade Data Feed, and
the OTC Montage Data Feed to Vendors, Subscribers and News Services.
C. Dissemination of Information
The Processor shall disseminate consolidated Quotation Information
and Transaction Reports in Eligible Securities via the UTP Quote Data
Feed, the UTP Trade Data Feed, and the OTC Montage Data Feed to
authorized Vendors, Subscribers and News Services in a fair and non-
discriminatory manner. The Processor shall specifically be permitted to
enter into agreements with Vendors, Subscribers and News Services for
the dissemination of quotation or transaction information on Eligible
Securities to foreign (non-U.S.) marketplaces or in foreign countries.
The Processor shall, in such instance, disseminate consolidated
quotation or transaction information on Eligible Securities from all
Participants.
Nothing herein shall be construed so as to prohibit or restrict in
any way the right of any Participant to distribute quotation,
transaction or other information with respect to Eligible Securities
quoted on or traded in its marketplace to a marketplace outside the
United States solely for the purpose of supporting an intermarket
linkage, or to distribute information within its own marketplace
concerning Eligible Securities in accordance with its own format. If a
Participant requests, the Processor shall make information about
Eligible Securities in the Participant's marketplace available to a
foreign marketplace on behalf of the requesting Participant, in which
event the cost shall be borne by that Participant.
1. Best Bid and Offer
The Processor shall disseminate on the UTP Quote Data Feed the best
bid and offer information supplied by each Participant, including the
FINRA Participant(s) that constitutes FINRA's
[[Page 67549]]
single Best Bid and Offer quotations, and shall also calculate and
disseminate on the UTP Quote Data Feed a national best bid and asked
quotation with size based upon Quotation Information for Eligible
Securities received from Participants. The Processor shall not
calculate the best bid and offer for any individual Participant,
including FINRA.
The Participant responsible for each side of the best bid and asked
quotation making up the national best bid and offer shall be identified
by an appropriate symbol. If the quotations of more than one
Participant shall be the same best price, the largest displayed size
among those shall be deemed to be the best. If the quotations of more
than one Participant are the same best price and best displayed size,
the earliest among those measured by the time reported shall be deemed
to be the best. A reduction of only bid size and/or ask size will not
change the time priority of a Participant's quote for the purposes of
determining time reported, whereas an increase of the bid size and/or
ask size will result in a new time reported. The consolidated size
shall be the size of the Participant that is at the best.
If the best bid/best offer results in a locked or crossed
quotation, the Processor shall forward that locked or crossed quote on
the appropriate output lines (i.e., a crossed quote of bid 12, ask
11.87 shall be disseminated). The Processor shall normally cease the
calculation of the best bid/best offer after 6:30 p.m., Eastern Time.
2. Quotation Data Streams
The Processor shall disseminate on the UTP Quote Data Feed a data
stream of all Quotation Information regarding Eligible Securities
received from Participants. Each quotation shall be designated with a
symbol identifying the Participant from which the quotation emanates
and, in the case of FINRA, the FINRA Participant(s) that constitutes
FINRA's Best Bid and Offer quotations. In addition, the Processor shall
separately distribute on the OTC Montage Data Feed the Quotation
Information regarding Eligible Securities from all FINRA Participants
from which quotations emanate.
3. Transaction Reports
The Processor shall disseminate on the UTP Trade Data Feed a data
stream of all Transaction Reports in Eligible Securities received from
Participants. Each transaction report shall be designated with a symbol
identifying the Participant in whose Market the transaction took place.
D. Closing Reports
At the conclusion of each trading day, the Processor shall
disseminate a ``closing price'' for each Eligible Security. Such
``closing price'' shall be the price of the last Transaction Report in
such security received prior to dissemination. The Processor shall also
tabulate and disseminate at the conclusion of each trading day the
aggregate volume reflected by all Transaction Reports in Eligible
Securities reported by the Participants.
E. Statistics
The Processor shall maintain quarterly, semi-annual and annual
transaction and volume statistical counts. The Processor shall, at cost
to the user Participant(s), make such statistics available in a form
agreed upon by the Operating Committee, such as a secure website.
VII. Administrative Functions [of the Processor]
Subject to the general direction of the Operating Committee, the
[Processor] Administrator shall be responsible for carrying out all
administrative functions necessary to the operation and maintenance of
the consolidated information collection and dissemination system
provided for in this Plan, including, but not limited to, record
keeping, billing, contract administration, and the preparation of
financial reports.
VIII. Evaluation of Competing Consolidators
On an annual basis, the Operating Committee shall assess the
performance of Competing Consolidators, including an analysis with
respect to speed, reliability, and cost of data provision. The
Operating Committee shall prepare an annual report containing such
assessment and furnish such report to the SEC prior to the second
quarterly meeting of the Operating Committee. In conducting its
analysis, the Operating Committee shall review the monthly performance
metrics published by Competing Consolidators pursuant to Rule
614(d)(5). ``Monthly performance metrics'' shall include:
A. Capacity statistics, including system tested capacity, system
output capacity, total transaction capacity, and total transaction peak
capacity;
B. Message rate and total statistics, including peak output rates
on the following bases: 1-millisecond, 10-millisecond, 100-millisecond,
500-millisecond, 1-second, and 5-second;
C. System availability statistics, including system up-time
percentage and cumulative amount of outage time;
D. Network delay statistics, including quote and trade zero window
size events, quote and trade retransmit events, and quote and trade
message total; and
E. Latency statistics, including distribution statistics up to the
99.99th percentile, for the following:
1. When a Participant sends an inbound message to a Competing
Consolidator and when the Competing Consolidator receives the inbound
message;
2. When the Competing Consolidator receives the inbound message and
when the Competing Consolidator sends the corresponding consolidated
message to a customer of the Competing Consolidator; and
3. When a Participant sends an inbound message to a Competing
Consolidator and when the Competing Consolidator sends the
corresponding consolidated message to a customer of the Competing
Consolidator.
[VIII.]IX. Transmission of Information to Processor, Competing
Consolidators, and Self-Aggregators by Participants
A. Quotation Information
Each Participant shall, during the time it is open for trading be
responsible promptly to collect and transmit to the Processor accurate
Quotation Information in Eligible Securities through any means
prescribed herein. Each Participant further agrees to collect and
transmit to Competing Consolidators and Self Aggregators all quotation
information required to be made available by such Participant by Rule
603(b) of Regulation NMS, including all data necessary to generated
consolidated market data. Each Participant agrees to make available
quotation information, and changes in any such information, to the
Competing Consolidator and Self-Aggregators in the same manner and
using the same methods, including all methods of access and the same
format, as such Participant makes available any information with
respect to quotations for and transactions in NMS stocks to any person.
Quotation Information shall include:
1. Identification of the Eligible Security, using the Nasdaq
Symbol;
2. the price bid and offered, together with size;
3. the FINRA Participant along with the FINRA Participant's market
participant identification or Participant from which the quotation
emanates;
4. identification of quotations that are not firm; and
[[Page 67550]]
5. through appropriate codes and messages, withdrawals and similar
matters.
In addition, Quotation Information shall include:
(A) In the case of a national securities exchange, the reporting
Participant's matching engine publication timestamp (reported in
microseconds); or
(B) in the case of FINRA, the quotation publication timestamp that
FINRA's bidding or offering member reports to FINRA's quotation
facility in accordance with FINRA rules.
Each bid and offer with respect to an Eligible Security furnished
to Competing Consolidators and Self-Aggregators by any Participant
pursuant to this Plan shall also be accompanied by the time the
Participant made such bid and offer available to Competing
Consolidators and Self Aggregators (reported in microseconds).
In addition, if FINRA's quotation facility provides a proprietary
feed of its quotation information, then the quotation facility shall
also furnish the Processor, Competing Consolidators, and Self-
Aggregators with the time of the quotation as published on the
quotation facility's proprietary feed.
FINRA shall convert any quotation times reported to it in seconds
or milliseconds to microseconds and shall furnish such times to the
Processor, Competing Consolidators, and Self-Aggregators in
microseconds.
B. Transaction Reports
Each Participant shall (i) transmit all Transaction Reports in
Eligible Securities as soon as practicable, but not later than 10
seconds, after the time of execution, (ii) establish and maintain
collection and reporting procedures and facilities reasonably designed
to comply with this requirement, and (iii) designate as ``late'' any
last sale price not collected and reported in accordance with the
above-referenced procedures or as to which the Participant has
knowledge that the time interval after the time of execution is
significantly greater than the time period referred to above. Each
Participant agrees to make available Transaction Reports to the
Competing Consolidators, and Self-Aggregators in the same manner and
using the same methods, including all methods of access and the same
format, as such Participant makes available any information with
respect to quotations for and transactions in NMS stocks to any person.
[The Participants shall seek to reduce the time period for reporting
last sale prices to the Processor as conditions warrant.]
With respect to orders sent by one Participant Market to another
Participant Market for execution, each Participant shall adopt
procedures governing the reporting of transactions in Eligible
Securities specifying that the transaction will be reported by the
Participant whose member sold the security. This provision shall apply
only to transactions between Plan Participants.
Transaction Reports shall include:
1. Identification of the Eligible Security, using the Nasdaq
Symbol;
2. the number of shares in the transaction;
3. the price at which the shares were purchased or sold;
4. the buy/sell/cross indicator;
5. the Market of execution; and,
6. through appropriate codes and messages, late or out-of-sequence
trades, corrections and similar matters.
In addition, Transaction Reports shall include the time of the
transaction (reported in microseconds) as identified in the
Participant's matching engine publication timestamp and, with respect
to reports to Competing Consolidators and Self-Aggregators, the time
that the Participant made such information available to Competing
Consolidators and Self-Aggregators (reported in microseconds). However,
in the case of FINRA, the time of the transaction shall be the time of
execution that a FINRA member reports to a FINRA trade reporting
facility in accordance with FINRA rules. In addition, if the FINRA
trade reporting facility provides a proprietary feed of trades reported
by the trade reporting facility to the Processor, Competing
Consolidators, and Self-Aggregators, then the FINRA trade reporting
facility shall also furnish the Processor with the time of the
transmission as published on the facility's proprietary feed.
FINRA shall convert times that its members report to it in seconds
or milliseconds to microseconds and shall furnish such times to the
Processor, Competing Consolidators, and Self-Aggregators in
microseconds.
The following types of transactions are not required to be reported
to the Processor, Competing Consolidators, or Self-Aggregators pursuant
to the Plan:
1. Transactions that are part of a primary distribution by an
issuer or of a registered secondary distribution or of an unregistered
secondary distribution;
2. transactions made in reliance on Section 4(2) of the Securities
Act of 1933;
3. transactions in which the buyer and the seller have agreed to
trade at a price unrelated to the Current Market for the security,
e.g., to enable the seller to make a gift;
4. the acquisition of securities by a broker-dealer as principal in
anticipation of making an immediate exchange distribution or exchange
offering on an exchange;
5. purchases of securities pursuant to a tender offer; and
6. purchases or sales of securities effected upon the exercise of
an option pursuant to the terms thereof or the exercise of any other
right to acquire securities at a pre-established consideration
unrelated to the Current Market.
C. Symbols for Market Identification for Quotation Information and
Transaction Reports
The following symbols shall be used to denote the marketplaces:
Code Participant
A NYSE American LLC
Z Cboe BZX Exchange, Inc.
Y Cboe BYX Exchange, Inc.
B Nasdaq BX, Inc.
W Cboe Exchange, Inc.
M NYSE Chicago, Inc.
J Cboe EDGA Exchange, Inc.
K Cboe EDGX Exchange, Inc.
I Nasdaq ISE, LLC
V Investors' Exchange LLC
D Financial Industry Regulatory Authority, Inc.
Q The Nasdaq Stock Market LLC
C NYSE National, Inc.
N New York Stock Exchange LLC
P NYSE Arca, Inc.
X Nasdaq PHLX LLC
L Long-Term Stock Exchange Inc.
U MEMX LLC
H MIAX PEARL, LLC
D. Whenever a Participant determines that a level of trading
activity or other unusual market conditions prevent it from collecting
and transmitting Quotation Information or Transaction Reports to the
Processor, Competing Consolidators, and Self-Aggregators, or where a
trading halt or suspension in an Eligible Security is in effect in its
Market, the Participant shall promptly notify the Processor, Competing
Consolidators, and Self-Aggregators of such condition or event and
shall resume collecting and transmitting Quotation Information and
Transaction Reports to it as soon as the condition or event is
terminated. In the event of a system malfunction resulting in the
inability of a Participant or its members to transmit Quotation
Information or Transaction Reports to the Processor, Competing
Consolidators, and Self-Aggregators, the Participant shall promptly
notify the Processor, Competing Consolidators, and Self-Aggregators of
such event or condition.
[[Page 67551]]
Upon receiving such notification, the Processor shall take appropriate
action, including either closing the quotation or purging the system of
the affected quotations.
[IX]X. Market Access
Pursuant to the requirements of Rule 610 of Regulation NMS, a
Participant that operates an SRO trading facility shall provide for
fair and efficient order execution access to quotations in each
Eligible Security displayed through its trading facility. In the case
of a Participant that operates an SRO display-only quotation facility,
trading centers posting quotations through such SRO display-only
quotation facility must provide for fair and efficient order execution
access to quotations in each Eligible Security displayed through the
SRO display-only quotation facility. A Participant that operates an SRO
trading facility may elect to allow such access to its quotations
through the utilization of private electronic linkages between the
Participant and other trading centers. In the case of a Participant
that operates an SRO display-only quotation facility, trading centers
posting quotations through such SRO display-only quotation facility may
elect to allow such access to their quotations through the utilization
of private electronic linkages between the trading center and SRO
trading facilities of Participants and/or other trading centers.
In accordance with Regulation NMS, a Participant shall not impose,
or permit to be imposed, any fee or fees for the execution of an order
against a protected quotation of the Participant or of a trading center
posting quotes through a Participant's SRO display-only quotation
facility in an Eligible Security or against any other quotation
displayed by the Participant in an Eligible Security that is the
Participant's displayed best bid or offer for that Eligible Security,
where such fee or fees exceed the limits provided for in Rule 610(c) of
Regulation NMS. As required under Regulation NMS, the terms of access
to a Participant's quotations or of a trading center posting quotes
through a Participant's SRO display-only quotation facility in an
Eligible Security may not be unfairly discriminatory so as to prevent
or inhibit any person from obtaining efficient access to such displayed
quotations through a member of the Participant or a subscriber of a
trading center.
If quotations in an Eligible Security are displayed by a
Participant that operates an SRO trading facility (or are displayed by
a trading center that posts quotations through an SRO display-only
quotation facility) that complies with the fair and efficient access
requirements of Regulation NMS (an ``NMS Compliant Facility''),
including prior to the compliance date of such access requirements,
that Participant (or trading center posting quotes through an SRO
display-only quotation facility) shall no longer be required to permit
each FINRA market participant to have direct telephone access to the
specialist, trading post, market maker and supervisory center in such
Eligible Security that trades on that NMS Compliant Facility. For
quotations in Eligible Securities that are displayed by a Participant
that operates an SRO trading facility that is not an NMS Compliant
Facility, such telephone access requirement will continue to be
applicable to the Participant.
[Section X]XI. Regulatory and Operational Halts
A. Definitions for Purposes of Section XI.
1. ``Extraordinary Market Activity'' means a disruption or
malfunction of any electronic quotation, communication, reporting, or
execution system operated by, or linked to, the Processor or a Trading
Center or a member of such Trading Center that has a severe and
continuing negative impact, on a market-wide basis, on quoting, order,
or trading activity or on the availability of market information
necessary to maintain a fair and orderly market. For purposes of this
definition, a severe and continuing negative impact on quoting, order,
or trading activity includes (i) a series of quotes, orders, or
transactions at prices substantially unrelated to the current market
for the security or securities; (ii) duplicative or erroneous quoting,
order, trade reporting, or other related message traffic between one or
more Trading Centers or their members; or (iii) the unavailability of
quoting, order, transaction information, or regulatory messages for a
sustained period.
2. ``Limit Up Limit Down'' means the Plan to Address Extraordinary
Market Volatility pursuant to Rule 608 of Regulation NMS under the
Exchange Act.
3. ``Market'' means (i) in respect of FINRA, the facilities through
which FINRA members display quotations and report transactions in
Eligible Securities to FINRA and (ii) in respect of each Participant
other than FINRA, the marketplace for Eligible Securities that the
Participant operates.
4. ``Market-Wide Circuit Breaker'' means a halt in trading in all
stocks in all Markets under the rules of a [Primary Listing Market]
Primary Listing Exchange.
5. ``Material SIP Latency'' means a delay of quotation or last sale
price information in one or more securities between the time data is
received by the Processor and the time the Processor disseminates the
data over the Processor's vendor lines, which delay the [Primary
Listing Market] Primary Listing Exchange determines, in consultation
with, and in accordance with, publicly disclosed guidelines established
by Operating Committee, to be (a) material and (b) unlikely to be
resolved in the near future.
6. ``Member Firm'' means a member as that term is defined in
Section 3(a)(3) of the Exchange Act.
7. ``Operational Halt'' means a halt in trading in one or more
securities only on a Market declared by such Participant and is not a
Regulatory Halt.
[8. ``Primary Listing Market'' means the national securities
exchange on which an Eligible Security is listed. If an Eligible
Security is listed on more than one national securities exchange,
Primary Listing Market means the exchange on which the security has
been listed the longest.]
[9]8. ``Regular Trading Hours'' has the meaning provided in Rule
600(b)(68) of Regulation NMS. Regular Trading Hours can end earlier
than 4:00 p.m. ET in the case of an early scheduled close.
[10.]9. ``Regulatory Halt'' means a halt declared by the Primary
Listing Market in trading in one or more securities on all Trading
Centers for regulatory purposes, including for the dissemination of
material news, news pending, suspensions, or where otherwise necessary
to maintain a fair and orderly market. A Regulatory Halt includes a
trading pause triggered by Limit Up Limit Down, a halt based on
Extraordinary Market Activity, a trading halt triggered by a Market-
Wide Circuit Breaker, and a SIP Halt.
[11.]10. ``SIP Halt'' means a Regulatory Halt to trading in one or
more securities that a [Primary Listing Market] Primary Listing
Exchange declares in the event of a SIP Outage or Material SIP Latency.
[12.]11. ``SIP Halt Resume Time'' means the time that the [Primary
Listing Market] Primary Listing Exchange determines as the end of a SIP
Halt.
[13.]12. ``SIP Outage'' means a situation in which the Processor
has ceased, or anticipates being unable, to provide updated and/or
accurate quotation or last sale price information in one or more
securities for a material period that exceeds the time thresholds for
an orderly failover to backup facilities established by mutual
[[Page 67552]]
agreement among the Processor, the [Primary Listing Market] Primary
Listing Exchange for the affected securities, and the Operating
Committee unless the [Primary Listing Market] Primary Listing Exchange,
in consultation with the Processor and the Operating Committee,
determines that resumption of accurate data is expected in the near
future.
[14. ``Trading Center'' has the same meaning as that term is
defined in Rule 600(b)(82) of Regulation NMS.]
B. Operational Halts. A Participant shall notify the Processor,
Competing Consolidators, and Self-Aggregators if it has concerns about
its ability to collect and transmit Quotation Information or
Transaction Reports, or where it has declared an Operational Halt or
suspension of trading in one or more Eligible Securities, pursuant to
the procedures adopted by the Operating Committee.
C. Regulatory Halts.
1. The [Primary Listing Market] Primary Listing Exchange may
declare a Regulatory Halt in trading for any security for which it is
the [Primary Listing Market] Primary Listing Exchange:
(a) As provided for in the rules of the [Primary Listing Market]
Primary Listing Exchange;
(b) if it determines there is a SIP Outage, Material SIP Latency,
or Extraordinary Market Activity; or
(c) in the event of national, regional, or localized disruption
that necessitates a Regulatory Halt to maintain a fair and orderly
market.
2. In making a determination to declare a Regulatory Halt under
subparagraph C.1, the [Primary Listing Market] Primary Listing Exchange
will consider the totality of information available concerning the
severity of the issue, its likely duration, and potential impact on
Member Firms and other market participants and will make a good-faith
determination that the criteria of subparagraph C.1 have been satisfied
and that a Regulatory Halt is appropriate. The [Primary Listing Market]
Primary Listing Exchange will consult, if feasible, with the affected
Trading Center(s), other Participants, or the Processor, as applicable,
regarding the scope of the issue and what steps are being taken to
address the issue. Once a Regulatory Halt based under subparagraph C.1
has been declared, the [Primary Listing Market] Primary Listing
Exchange will continue to evaluate the circumstances to determine when
trading may resume in accordance with the rules of the [Primary Listing
Market] Primary Listing Exchange.
D. Initiating a Regulatory Halt.
1. The start time of a Regulatory Halt is when the Primary Listing
Market declares the halt, regardless of whether an issue with
communications impacts the dissemination of the notice.
2. If the Processor is unable to disseminate notice of a Regulatory
Halt or the [Primary Listing Market] Primary Listing Exchange is not
open for trading, the [Primary Listing Market] Primary Listing Exchange
will take reasonable steps to provide notice of a Regulatory Halt,
which shall include both the type and start time of the Regulatory
Halt, by dissemination through:
(a) Proprietary data feeds containing quotation and last sale price
information that the [Primary Listing Market] Primary Listing Exchange
also sends to the Processor;
(b) posting on a publicly-available Participant website; or
(c) system status messages.
3. Except in exigent circumstances, the [Primary Listing Market]
Primary Listing Exchange will not declare a Regulatory Halt retroactive
to a time earlier than the notice of such halt.
E. Resumption of Trading After Regulatory Halts Other Than SIP
Halts.
1. The [Primary Listing Market] Primary Listing Exchange will
declare a resumption of trading when it makes a good-faith
determination that trading may resume in a fair and orderly manner and
in accordance with its rules.
2. For a Regulatory Halt that is initiated by another Participant
that is a [Primary Listing Market] Primary Listing Exchange, a
Participant may resume trading after the Participant receives
notification from the [Primary Listing Market] Primary Listing Exchange
that the Regulatory Halt has been terminated.
F. Resumption of Trading After SIP Halt.
1. The [Primary Listing Market] Primary Listing Exchange will
determine the SIP Halt Resume Time. In making such determination, the
[Primary Listing Market] Primary Listing Exchange will make a good-
faith determination and consider the totality of information to
determine whether resuming trading would promote a fair and orderly
market, including input from the Processor, the Operating Committee, or
the operator of the system in question (as well as any Trading
Center(s) to which such system is linked), regarding operational
readiness to resume trading. The [Primary Listing Market] Primary
Listing Exchange retains discretion to delay the SIP Halt Resume Time
if it believes trading will not resume in a fair and orderly manner.
2. The [Primary Listing Market] Primary Listing Exchange will
terminate a SIP Halt with a notification that specifies a SIP Halt
Resume Time. The [Primary Listing Market] Primary Listing Exchange
shall provide a minimum notice of a SIP Halt Resume Time, as specified
by the rules of the [Primary Listing Market] Primary Listing Exchange,
during which period market participants may enter quotes and orders in
the affected securities. During Regular Trading Hours, the last SIP
Halt Resume Time before the end of Regular Trading Hours shall be an
amount of time as specified by the rules of the [Primary Listing
Market] Primary Listing Exchange. The [Primary Listing Market] Primary
Listing Exchange may stagger the SIP Halt Resume Times for multiple
symbols in order to reopen in a fair and orderly manner.
3. During Regular Trading Hours, if the [Primary Listing Market]
Primary Listing Exchange does not open a security within the amount of
time as specified by the rules of the [Primary Listing Market] Primary
Listing Exchange after the SIP Halt Resume Time, a Participant may
resume trading in that security. Outside Regular Trading Hours, a
Participant may resume trading immediately after the SIP Halt Resume
Time.
G. Participant to Halt Trading During Regulatory Halt. A
Participant will halt trading for any security traded on its Market if
the [Primary Listing Market] Primary Listing Exchange declares a
Regulatory Halt for the security.
H. Communications. Whenever, in the exercise of its regulatory
functions, the [Primary Listing Market] Primary Listing Exchange for an
Eligible Security determines it is appropriate to initiate a Regulatory
Halt, the [Primary Listing Market] Primary Listing Exchange will notify
all other Participants and the Processor, Competing Consolidators, and
Self-Aggregators of such Regulatory Halt as well as provide notice that
a Regulatory Halt has been lifted using such protocols and other
emergency procedures as may be mutually agreed to between the Operating
Committee and the [Primary Listing Market] Primary Listing Exchange.
The Processor shall disseminate to Participants notice of the
Regulatory Halt (as well as notice of the lifting of a Regulatory Halt)
through (i) the Quote Data Feed and the Trade Data Feed, and (ii) any
other means the Processor, in its sole discretion, considers
appropriate. Each Participant shall be required to continuously monitor
these communication protocols established by the Operating Committee
and the Processor during market hours, and the
[[Page 67553]]
failure of a Participant to do so shall not prevent the [Primary
Listing Market] Primary Listing Exchange from initiating a Regulatory
Halt in accordance with the procedures specified herein.
[XI.]XII. Hours of Operation
A. Quotation Information may be entered by Participants as to all
Eligible Securities in which they make a market between 9:30 a.m. and
4:00 p.m. Eastern Time (``ET'') on all days the Processor is in
operation. Transaction Reports shall be entered between 9:30 a.m. and
4:01:30 p.m. ET by Participants as to all Eligible Securities in which
they execute transactions between 9:30 a.m. and 4:00 p.m. ET on all
days the Processor is in operation.
B. Participants that execute transactions in Eligible Securities
outside the hours of 9:30 a.m. ET and 4:00 p.m., ET, shall be report
such transactions as follows:
(i) Transactions in Eligible Securities executed between 4:00 a.m.
and 9:29:59 a.m. ET and between 4:00:01 and 8:00 p.m. ET, shall be
designated as ``.T'' trades to denote their execution outside normal
market hours;
(ii) transactions in Eligible Securities executed after 8:00 p.m.
and before 12:00 a.m. (midnight) shall be reported to the Processor,
Competing Consolidators, and Self-Aggregators between the hours of 4:00
a.m. and 8:00 p.m. ET on the next business day (T+1), and shall be
designated ``as/of'' trades to denote their execution on a prior day,
and be accompanied by the time of execution;
(iii) transactions in Eligible Securities executed between 12:00
a.m. (midnight) and 4:00 a.m. ET shall be transmitted to the Processor,
Competing Consolidators, and Self-Aggregators between 4:00 a.m. and
9:30 a.m. ET, on trade date, shall be designated as ``.T'' trades to
denote their execution outside normal market hours, and shall be
accompanied by the time of execution;
(iv) transactions reported pursuant to this provision of the Plan
shall be included in the calculation of total trade volume for purposes
of determining net distributable operating revenue, but shall not be
included in the calculation of the daily high, low, or last sale.
C. Late trades shall be reported in accordance with the rules of
the Participant in whose Market the transaction occurred and can be
reported between the hours of 4:00 a.m. and 8:00 p.m.
D. The Processor shall collect, process and disseminate Quotation
Information in Eligible Securities at other times between 4:00 a.m. and
9:30 a.m. ET, and after 4:00 p.m. ET, when any Participant or FINRA
Participant is open for trading, until 8:00 p.m. ET (the ``Additional
Period''); provided, however, that the national best bid and offer
quotation will not be disseminated before 4:00 a.m. or after 8:00 p.m.
ET. Participants that enter Quotation Information or submit Transaction
Reports to the Processor, Competing Consolidators, and Self-Aggregators
during the Additional Period shall do so for all Eligible Securities in
which they enter quotations.
[XII.]XIII. Undertaking by All Participants
The filing with and approval by the Commission of this Plan shall
obligate each Participant to enforce compliance by its members with the
provisions thereof. In all other respects not inconsistent herewith,
the rules of each Participant shall apply to the actions of its members
in effecting, reporting, honoring and settling transactions executed
through its facilities, and the entry, maintenance and firmness of
quotations to ensure that such occurs in a manner consistent with just
and equitable principles of trade.
[XIII.]XIV. Financial Matters
A. Development Costs
Any Participant becoming a signatory to this Plan after June 26,
1990, shall, as a condition to becoming a Participant, pay to the other
Plan Participants a proportionate share of the aggregate development
costs previously paid by Plan Participants to the Processor, which
aggregate development costs totaled $439,530, with the result that each
Participant's share of all development costs is the same.
Each Participant shall bear the cost of implementation of any
technical enhancements to the Nasdaq system made at its request and
solely for its use, subject to reapportionment should any other
Participant subsequently make use of the enhancement, or the
development thereof.
B. Cost Allocation, Revenue Sharing, and Fees
The provisions governing cost allocation and revenue sharing among
the Participants are set forth in Exhibit 1 to the Plan.
C. Maintenance of Financial Records
The [Processor]Administrator shall maintain records of revenues
generated and development and operating expenditures incurred in
connection with the Plan. In addition, the [Processor]Administrator
shall provide the Participants with: (a) A statement of financial and
operational condition on a quarterly basis; and (b) an audited
statement of financial and operational condition on an annual basis.
[XIV.]XV. Indemnification
Each Participant agrees, severally and not jointly, to indemnify
and hold harmless each other Participant, Nasdaq, and each of its
directors, officers, employees and agents (including the Operating
Committee and its employees and agents) from and against any and all
loss, liability, claim, damage and expense whatsoever incurred or
threatened against such persons as a result of any Transaction Reports,
Quotation Information or other information reported to the Processor,
Competing Consolidators, and Self-Aggregators by such Participant and
disseminated by the Processor, Competing Consolidators, and Self-
Aggregators[ to Vendors]. This indemnity agreement shall be in addition
to any liability that the indemnifying Participant may otherwise have.
Promptly after receipt by an indemnified Participant of notice of
the commencement of any action, such indemnified Participant will, if a
claim in respect thereof is to be made against an indemnifying
Participant, notify the indemnifying Participant in writing of the
commencement thereof; but the omission to so notify the indemnifying
Participant will not relieve the indemnifying Participant from any
liability which it may have to any indemnified Participant. In case any
such action is brought against any indemnified Participant and it
promptly notifies an indemnifying Participant of the commencement
thereof, the indemnifying Participant will be entitled to participate
in, and, to the extent that it may wish, jointly with any other
indemnifying Participant similarly notified, to assume and control the
defense thereof with counsel chosen by it. After notice from the
indemnifying Participant of its election to assume the defense thereof,
the indemnifying Participant will not be liable to such indemnified
Participant for any legal or other expenses subsequently incurred by
such indemnified Participant in connection with the defense thereof but
the indemnified Participant may, at its own expense, participate in
such defense by counsel chosen by it without, however, impairing the
indemnifying Participant's control of the defense. The indemnifying
Participant may negotiate a compromise or settlement of any such
action, provided that such compromise or settlement does not require a
[[Page 67554]]
contribution by the indemnified Participant.
[XV.]XVI. Withdrawal
Any Participant may withdraw from the Plan at any time on not less
than 30 days prior written notice to each of the other Participants.
Any Participant withdrawing from the Plan shall remain liable for, and
shall pay upon demand, any fees for equipment or services being
provided to such Participant pursuant to the contract executed by it or
an agreement or schedule of fees covering such then in effect. A
withdrawing Participant shall also remain liable for its proportionate
share, without any right of recovery, of administrative and operating
expenses, including startup costs and other sums for which it may be
responsible pursuant to Section XIV hereof. Except as aforesaid, a
withdrawing Participant shall have no further obligation under the Plan
or to any of the other Participants with respect to the period
following the effectiveness of its withdrawal.
[XVI.]XVII. Modifications to the Plan
Except as the Plan otherwise provides, the Plan may be modified
from time to time when authorized by the agreement of all of the
Participants, subject to the approval of the Commission or when such
modification otherwise becomes effective pursuant to Section 11A of the
Exchange Act and Rule 608 of Regulation NMS.
In the case of a ``Ministerial Amendment,'' the Chairman of the
Plan's Operating Committee may modify the Plan by submitting to the
Commission an appropriate amendment that sets forth the modification,
provided that the amendment is the subject of advance notice to the
Participants of not less than 48 hours. Such an amendment shall only
become effective in accordance with Section 11A of the Exchange Act and
Rule 608 of Regulation NMS.
``Ministerial Amendment'' means an amendment to the Plan that
pertains solely to any one or more of the following:
(1) Admitting a new Participant into the Plan;
(2) changing the name or address of a Participant;
(3) incorporating a change that the Commission has implemented by
rule and that requires no conforming language to the text of the Plan
(e.g., the Commission rule establishing the Advisory Committee);
(4) incorporating a change (i) that the Commission has implemented
by rule, (ii) that requires conforming language to the text of the Plan
(e.g., the Commission rule amending the revenue allocation formula),
and (iii) that a majority of all Participants has voted to approve;
(5) incorporating a purely technical change, such as correcting an
error or an inaccurate reference to a statutory provision, or removing
language that has become obsolete (e.g., language regarding ITS).
[XVII.]XVIII. Applicability of Securities Exchange Act of 1934
The rights and obligations of the Participants and of Competing
Consolidators, Self-Aggregators, Vendors, News Services, Subscribers
and other persons contracting with Participant in respect of the
matters covered by the Plan shall at all times be subject to any
applicable provisions of the Act, as amended, and any rules and
regulations promulgated thereunder.
[XVIII.]XIX. Operational Issues
A. Each Participant shall be responsible for collecting and
validating quotes and last sale reports within its own system prior to
transmitting this data to the Processor, Competing Consolidators, and
Self-Aggregators.
B. Each Participant may utilize a dedicated Participant line into
the Processor to transmit trade and quote information in Eligible
Securities to the Processor. The Processor shall accept from Exchange
Participants input for only those issues that are deemed Eligible
Securities.
C. The Processor shall consolidate trade and quote information from
each Participant and disseminate this information on the Processor's
existing vendor lines.
D. The Processor shall perform gross validation processing for
quotes and last sale messages in addition to the collection and
dissemination functions, as follows:
1. Basic Message Validation
(a) The Processor may validate format for each type of message, and
reject nonconforming messages.
(b) Input must be for an Eligible Security.
2. Logging Function--The Processor shall return all Participant
input messages that do not pass the validation checks (described above)
to the inputting Participant, on the entering Participant line, with an
appropriate reject notation. For all accepted Participant input
messages (i.e., those that pass the validation check), the information
shall be retained in the Processor system.
[XIX.]XX. Headings
The section and other headings contained in this Plan are for
reference purposes only and shall not be deemed to be a part of this
Plan or to affect the meaning or interpretation of any provisions of
this Plan.
[XX.]XXI. Counterparts
This Plan may be executed by the Participants in any number of
counterparts, no one of which need contain the signature of all
Participants. As many such counterparts as shall together contain all
such signatures shall constitute one and the same instrument.
[XXI. Depth of Book Display
The Operating Committee has determined that the entity that
succeeds Nasdaq as the Processor should have the ability to collect,
consolidate, and disseminate quotations at multiple price levels beyond
the best bid and best offer from any Participant that voluntarily
chooses to submit such quotations while determining that no Participant
shall be required to submit such information. The Operating Committee
has further determined that the costs of developing, collecting,
processing, and disseminating such depth of book data shall be borne
exclusively by those Participants that choose to submit this
information to the Processor, by whatever allocation those Participants
may choose among themselves. The Operating Committee has determined
further that the primary purpose of the Processor is the collection,
processing and dissemination of best bid, best offer and last sale
information (``core data''), and as such, the Participants will adopt
procedures to ensure that such functionality in no way hinders the
collecting, processing and dissemination of this core data.
Therefore, implementing the depth of book display functionality
will require a plan amendment that addresses all pertinent issues,
including:
(1) Procedures for ensuring that the fully-loaded cost of the
collection, processing, and dissemination of depth-of-book information
will be tracked and invoiced directly to those Plan Participants that
voluntarily choose to send that data, voluntarily, to the Processor
allocating in whatever manner those Participants might agree; and
(2) Necessary safeguards the Processor will take to ensure that its
processing of depth-of-book data will not impede or hamper, in any way,
its core Processor functionality of collecting, consolidating, and
disseminating National Best Bid and Offer data,
[[Page 67555]]
exchange best bid and offer data, and consolidated last sale data.
Upon approval of a Plan amendment implementing depth of book
display, this article of the Plan shall be automatically deleted.]
[FR Doc. 2021-25748 Filed 11-24-21; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on November 26, 2021.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.