Notice2023-10781
Extension: Rule 613 of Regulation NMS
Primary source
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Published
May 19, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 97 (Friday, May 19, 2023)</title>
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[Federal Register Volume 88, Number 97 (Friday, May 19, 2023)]
[Notices]
[Pages 32260-32261]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-10781]
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SECURITIES AND EXCHANGE COMMISSION
[SEC File No. 270-616, OMB Control No. 3235-0671]
Extension: Rule 613 of Regulation NMS
Upon Written Request, Copies Available From: Securities and Exchange
Commission; Office of FOIA Services; 100 F Street NE, Washington, DC
20549-2736
Notice is hereby given that pursuant to the Paperwork Reduction Act
of 1995 (``PRA'') (44 U.S.C. 3501 et seq.), the Securities and Exchange
Commission (``Commission'') is soliciting comments on the existing
collection of information provided for in connection with a National
Market System (NMS) Plan filed with the Commission under Rule 613 (17
CFR 242.613), under the Securities Exchange Act of 1934 (15 U.S.C. 78a
et seq.). The Commission plans to submit this existing collection of
information to the Office of Management and Budget (``OMB'') for
extension and approval.
Rule 613 of Regulation NMS (17 CFR part 242) required national
securities exchanges and national securities associations
(``Participants'') to jointly submit to the Commission a national
market system (``NMS'') plan to govern the creation, implementation,
and maintenance of a consolidated audit trail (``CAT'') and Central
Repository for the collection of information for NMS securities. On
February 27, 2015, the Participants submitted the CAT NMS Plan to the
Commission.\1\ On April 27, 2016, the Commission published a notice
soliciting comments from the public (``CAT NMS Plan Notice'').\2\ On
November 15, 2016, the Commission approved the CAT NMS Plan (``CAT NMS
Plan Order''), including the information collections proposed in the
CAT NMS Plan Notice, and certain additional information collections.\3\
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\1\ See Letter from Participants to Brent J. Fields, Secretary,
Commission, dated February 27, 2015. The Participants filed the CAT
NMS Plan on September 30, 2014. See Letter from the Participants, to
Brent J. Fields, Secretary, Commission, dated September 30, 2014.
The CAT NMS Plan filed on February 27, 2015, was an amendment to and
replacement of the Initial CAT NMS Plan (the ``Amended and Restated
CAT NMS Plan''). On December 24, 2015, the Participants submitted an
Amendment to the Amended and Restated CAT NMS Plan. See Letter from
Participants to Brent J. Fields, Secretary, Commission, dated
December 23, 2015 (the ``Amendment''). On February 9, 2016, the
Participants filed with the Commission an identical, but unmarked,
version of the Amended and Restated CAT NMS Plan, dated February 27,
2015, as modified by the Amendment, as well as a copy of the request
for proposal issued by the Participants to solicit Bids from parties
interested in serving as the Plan Processor for the consolidated
audit trail. Unless the context otherwise requires, the ``CAT NMS
Plan'' shall refer to the Amended and Restated CAT NMS Plan, as
modified by the Amendment.
\2\ See Securities Exchange Act Release No. 77724 (April 27,
2016), 81 FR 30613 (May 17, 2016). The burdens associated with the
CAT NMS Plan Notice were submitted under OMB number 3235-0671 which
relates to the NMS Plan required to be filed under Rule 613.
\3\ See Securities Exchange Act Release No. 79318 (November 15,
2016), 81 FR 84696 (November 23, 2016), available at <a href="https://www.sec.gov/rules/sro/nms/2016/34-79318.pdf">https://www.sec.gov/rules/sro/nms/2016/34-79318.pdf</a> (``CAT NMS Plan
Order'').
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Since July 2020, the date of the last PRA renewal, the Commission
believes one additional information collection was completed: a one-
time independent audit of the fees, costs, and expenses incurred by the
Participants on behalf of CAT NMS, LLC prior to the Effective Date \4\
of the Plan; \5\ In addition. certain information collection
requirements have completed at least the implementation stage, although
certain ongoing costs remain, including: (1) development of a Central
Repository tasked with the receipt, consolidation, and retention of
reported order and execution information submitted by Participants and
their members; \6\ (2) the requirement that each Participant, and any
member of such Participant, record and electronically report to the
Central Repository details for each order and Reportable Event
documenting the life of an order through the process of original
receipt or origination, routing, modification, cancellation, and
execution (in whole or in part) for each NMS security; \7\ (3) the
requirement that the CAT NMS Plan require the Central Repository to
collect and retain on a current and continuous basis NBBO information
for each NMS security, transaction reports reported pursuant to an
effective transaction reporting plan, and Last Sale Reports reported
pursuant to the Options Price Reporting Authority Plan; \8\ (4) the
requirement that the CAT NMS Plan must require that every national
securities exchange and national securities association develop and
implement a surveillance system, or enhance existing surveillance
systems, reasonably designed to make use of the consolidated
information contained in the consolidated audit trail; \9\ (5) an
annual requirement that that the CAT LLC financials be (i) in
compliance with GAAP, (ii) be audited by an independent public
accounting firm, and (iii) be made publicly available; \10\ and (6) a
requirement that each Participant conduct background checks for its
employees and contractors that will use the CAT System.\11\
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\4\ The ``Effective Date'' is the date the Commission approved
the CAT NMS Plan, which is November 15, 2016. See id.
\5\ See CAT NMS Plan Order, supra note 3, at 84940.
\6\ See 17 CFR 242.613.
\7\ See 17 CFR 242.613(c)(1), (c)(5), (c)(6), (c)(7).
\8\ See 17 CFR 242.613(e)(7).
\9\ See 17 CFR 242.613(f).
\10\ Id.
\11\ Id. The Commission believes that these background checks
are necessary to ensure that only authorized and qualified persons
are using the CAT System.
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This Notice addresses both the ongoing information collection
requirements noted above and the remaining information collection
requirements noticed in the CAT NMS Plan Notice and certain additional
information collections of the CAT NMS Plan Order, which are: (1) a
one-time report from the Participants discussing the feasibility and
advisability of allowing Industry Members to bulk download the Raw Data
that it has submitted to the Central Repository; \12\ (2) a one-time
assessment of the nature and extent of errors in the Customer
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information submitted to the Central Repository and whether the
correction of certain data fields over others should be prioritized
from the Participants; \13\ (3) a one-time report on the impact of
tiered fees on market liquidity, including an analysis of the impact of
the tiered-fee structure on Industry Members provision of liquidity
from the Participants; \14\ and (4) an assessment of the projected
impact of any Material Systems Change on the Maximum Error Rate, prior
to the implementation of such Material Systems Change from the
Participants; \15\
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\12\ Id. at 84941.
\13\ Id.
\14\ Id. at 84941-84942.
\15\ Id. at 84942. The Commission believes that four assessments
would be filed annually.
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The Commission believes that the CAT NMS Plan, once fully
implemented, will improve the quality of the data available to
regulators in four areas that affect the ultimate effectiveness of core
regulatory efforts--completeness, accuracy, accessibility and
timeliness.\16\ The improvements in these data qualities would
substantially improve regulators' ability to perform analysis and
reconstruction of market events, and market analysis and research to
inform policy decisions, as well as perform regulatory activities, in
particular market surveillance, examinations, investigations, and other
enforcement functions.
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\16\ See CAT NMS Plan Order, supra note 3, at 45727 (discussing
four ``qualities'' of trade and order data that impact the
effectiveness of core Participant and Commission regulatory efforts:
accuracy, completeness, accessibility, and timeliness).
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The Commission estimates that 1375 respondents \17\ will require an
aggregate total of approximately 4,931,332 hours per year to comply
with the collection of information. The Commission further estimates
that the aggregate cost to comply with the collection of information
will be approximately $328,627,524 per year.
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\17\ The Commission notes that 25 Participants (the 24 national
securities exchanges and one national securities association) and
1,350 broker-dealers subject to information collections requirements
pursuant to Rule 613 and the CAT NMS Plan.
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Written comments are invited on: (a) whether the proposed
collection of information is necessary for the proper performance of
the functions of the Commission, including whether the information
shall have practical utility; (b) the accuracy of the Commission's
estimates of the burden of the proposed collection of information; (c)
ways to enhance the quality, utility, and clarity of the information
collected; and (d) ways to minimize the burden of the collection of
information on respondents, including through the use of automated
collection techniques or other forms of information technology.
Consideration will be given to comments and suggestions submitted by
July 18, 2023.
An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information under the PRA unless it
displays a currently valid OMB control number.
Please direct your written comments to: David Bottom, Director/
Chief Information Officer, Securities and Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington, DC 20549, or send an email to:
<a href="/cdn-cgi/l/email-protection#0e5e5c4f51436f67626c61764e7d6b6d20696178"><span class="__cf_email__" data-cfemail="1e4e4c5f41537f77727c71665e6d7b7d30797168">[email protected]</span></a>.
Dated: May 16, 2023.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-10781 Filed 5-18-23; 8:45 am]
BILLING CODE 8011-01-P
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