Notice2024-09067
Joint Industry Plan; Order Instituting Proceedings To Determine Whether To Approve or Disapprove a National Market System Plan Regarding Consolidated Equity Market Data
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Published
April 29, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 83 (Monday, April 29, 2024)</title>
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[Federal Register Volume 89, Number 83 (Monday, April 29, 2024)]
[Notices]
[Pages 33412-33414]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-09067]
[[Page 33412]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100017; File No. 4-757]
Joint Industry Plan; Order Instituting Proceedings To Determine
Whether To Approve or Disapprove a National Market System Plan
Regarding Consolidated Equity Market Data
April 23, 2024.
I. Introduction
On October 23, 2023, Cboe BYX Exchange, Inc., Cboe BZX Exchange,
Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe
Exchange, Inc., Investors Exchange LLC, Long Term Stock Exchange, Inc.,
MEMX LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq
PHLX LLC, Nasdaq Stock Market LLC, New York Stock Exchange LLC, NYSE
American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., NYSE National, Inc.,
and Financial Industry Regulatory Authority, Inc. (collectively, the
``SROs'' or ``Participants'') filed with the Securities and Exchange
Commission (``Commission'') a proposed new single national market
system plan governing the public dissemination of real-time
consolidated equity market data for national market system (``NMS'')
stocks (the ``CT Plan''). The proposed CT Plan was published for
comment in the Federal Register on January 25, 2024.\1\
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\1\ See Joint Industry Plan; Notice of Filing of a National
Market System Plan Regarding Consolidated Equity Market Data,
Securities Exchange Act Release No. 99403 (Jan. 19, 2024), 89 FR
5002 (Jan. 25, 2024) (``Notice'').
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This order institutes proceedings, under Rule 608(b)(2)(i) of
Regulation NMS,\2\ to determine whether to approve or disapprove the
proposed CT Plan or to approve it with any changes or subject to any
conditions the Commission deems necessary or appropriate after
considering public comment.\3\
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\2\ 17 CFR 242.608(b)(2)(i).
\3\ Comments received in response to the Notice can be found on
the Commission's website at <a href="https://www.sec.gov/comments/4-757/4-757.htm">https://www.sec.gov/comments/4-757/4-757.htm</a>.
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II. Background
On September 1, 2023, the Commission issued an amended order
directing the SROs to submit a new national market system plan (``NMS
plan'') regarding consolidated equity market data to replace the three
NMS plans (``Equity Data Plans'') \4\ that govern the public
dissemination of real-time consolidated market data for NMS stocks,\5\
and to include specified provisions in the proposed NMS plan.\6\ The
SROs filed the proposed CT Plan pursuant to the Amended Governance
Order.\7\
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\4\ The three Equity Data Plans that currently govern the
collection, consolidation, processing, and dissemination of
consolidated equity market data via the exclusive securities
information processors (``SIPs'') are: (1) the Consolidated Tape
Association Plan (``CTA Plan''); (2) the Consolidated Quotation Plan
(``CQ Plan''); and (3) 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'').
\5\ Amended Order Directing the Exchanges and the Financial
Industry Regulatory Authority, Inc., to File a National Market
System Plan Regarding Consolidated Equity Market Data, Securities
Exchange Act Release No. 98271 (Sept. 1, 2023), 88 FR 61630, 61631
(Sept. 7, 2023) (File No. 4-757) (``Amended Governance Order'').
\6\ See id. at 61639-41.
\7\ See Notice, supra note 1, 89 FR at 5003.
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III. Proceedings To Determine Whether To Approve or Disapprove the
Proposed CT Plan
The Commission is instituting proceedings pursuant to Rule
608(b)(2)(i) of Regulation NMS,\8\ and Rules 700 and 701 of the
Commission's Rules of Practice,\9\ to determine whether to approve or
disapprove the proposed CT Plan or to approve it with any changes or
subject to any conditions the Commission deems necessary or appropriate
after considering public comment. The Commission is instituting
proceedings to have sufficient time to consider the issues raised by
the proposed CT Plan, including comments received. Institution of
proceedings does not indicate that the Commission has reached any
conclusions with respect to any of the issues involved. Rather, the
Commission seeks and encourages interested persons to provide
additional comment on the proposed CT Plan to inform the Commission's
analysis.
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\8\ 17 CFR 242.608.
\9\ 17 CFR 201.700; 17 CFR 201.701.
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Rule 608(b)(2) of Regulation NMS provides that the Commission
``shall approve a national market system plan . . ., with such changes
or subject to such conditions as the Commission may deem necessary or
appropriate, if it finds that such plan . . . is necessary or
appropriate in the public interest, for the protection of investors and
the maintenance of fair and orderly markets, to remove impediments to,
and perfect the mechanisms of, a national market system, or otherwise
in furtherance of the purposes of'' the Securities Exchange Act of 1934
(``Exchange Act'').\10\ Rule 608(b)(2) of Regulation NMS further
provides that the Commission shall disapprove a national market system
plan or proposed amendment if it does not make such a finding.\11\ In
this order, pursuant to Rule 608(b)(2)(i) of Regulation NMS,\12\ the
Commission is providing notice of the grounds for disapproval under
consideration:
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\10\ See 17 CFR 242.608(b)(2).
\11\ See id.
\12\ 17 CFR 242.608(b)(2)(i).
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1. Whether the proposed CT Plan is consistent with the Amended
Governance Order;
2. Whether, consistent with Rule 608(b)(2) of Regulation NMS,\13\
the terms of the proposed CT Plan are necessary or appropriate in the
public interest, for the protection of investors and the maintenance of
fair and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system, or otherwise in furtherance of
the purposes of the Exchange Act;
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\13\ See 17 CFR 242.608(b)(2).
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3. Whether modifications to the proposed CT Plan, or conditions to
its approval, would be necessary to make the proposed plan necessary or
appropriate in the public interest, for the protection of investors and
the maintenance of fair and orderly markets, to remove impediments to,
and perfect the mechanisms of, a national market system, or otherwise
in furtherance of the purposes of the Exchange Act;
4. Whether the proposed CT Plan is consistent with Congress's
finding, in section 11A(a)(1)(C)(iii) of the Exchange Act, that it is
in the public interest and appropriate for the protection of investors
and the maintenance of fair and orderly markets to ensure ``the
availability to brokers, dealers, and investors of information with
respect to quotations for and transactions in securities''; \14\
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\14\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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5. Whether, consistent with the purposes of section 11A(c)(1)(B) of
the Exchange Act, the proposed CT Plan is appropriately structured, and
whether its provisions are appropriately drafted, to support the
prompt, accurate, reliable, and fair collection, processing,
distribution, and publication of information with respect to quotations
for and transactions in NMS stocks, and the fairness and usefulness of
the form and content of such information; \15\ and
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\15\ See 15 U.S.C. 78k-1(c)(1)(B).
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6. Whether, consistent with Rule 608(b)(2) of Regulation NMS,\16\
the proposed timeline for implementation in Exhibit F \17\ of the
proposed CT Plan is necessary or appropriate in the public interest,
for the protection of investors
[[Page 33413]]
and the maintenance of fair and orderly markets, to remove impediments
to, and perfect the mechanisms of, a national market system, or
otherwise in furtherance of the purposes of the Exchange Act.
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\16\ See 17 CFR 242.608(b)(2).
\17\ See Notice, supra note 1, 89 FR at 5027-29.
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Under the Commission's Rules of Practice, the ``burden to
demonstrate that a NMS plan filing is consistent with the Exchange Act
and the rules and regulations issued thereunder . . . is on the plan
participants that filed the NMS plan filing.'' \18\ The description of
the NMS plan filing, its purpose and operation, its effect, and a legal
analysis of its consistency with applicable requirements must all be
sufficiently detailed and specific to support an affirmative Commission
finding.\19\ Any failure by the Participants to provide such detail and
specificity may result in the Commission not having a sufficient basis
to make an affirmative finding that the NMS plan filing is consistent
with the Exchange Act and the applicable rules and regulations
thereunder.\20\
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\18\ 17 CFR 201.701(b)(3)(ii).
\19\ Id.
\20\ Id.
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IV. Commission's Solicitation of Comments
The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposed CT Plan. The Commission asks that commenters address
the sufficiency and merit of the Participants' statements in support of
the proposed CT Plan, in addition to any other comments they may wish
to submit about the proposed CT Plan. In particular, the Commission
seeks comment on the following:
1. What are commenters' views on whether the proposed CT Plan is
consistent with Section 11A or any other provisions of the Exchange
Act, or the rules and regulations thereunder?
2. Should any elements of the proposed timeline in Exhibit F \21\
of the proposed CT Plan be shortened to ensure that implementation of
the proposed CT Plan can be achieved within a reasonable time? If so,
which ones and why? Should any elements of the proposed timeline be
extended? If so, which ones and why? If the Commission should modify
any elements of the proposed timeline, how specifically should it
change them? Should the Commission modify the proposed CT Plan to
include a specific required end date for implementation? Why or why
not? And if so, what should that date be and why?
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\21\ See Notice, supra note 1, 89 FR at 5027-29.
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3. Should the Commission modify the sequence of implementation
steps identified in Exhibit F of the proposed CT Plan \22\ to provide
for greater efficiencies, such as through increased parallel
performance of workstream tasks? \23\ If so, what changes should be
made? Do commenters believe that the proposed implementation schedule's
dependencies--the steps that need to be completed before other steps
can begin--are justified or otherwise reasonable? Are there
dependencies that could be removed or modified to accelerate
implementation of the proposed CT Plan? If so, which ones and why? What
advantages or disadvantages, including risks or complications, would be
associated with such modifications to the implementation timeline?
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\22\ See id.
\23\ Generally, the SROs believe there are six workstreams
associated with the implementation of the proposed CT Plan: (1)
Setting up the proposed CT Plan's governance; (2) Developing the
proposed CT Plan's fees, policies, and data subscriber agreements;
(3) Selecting the new Administrator; (4) Contract negotiations with
the new Administrator; (5) Administrator setup; and (6) Retirement
of the CTA Plan, CQ Plan, and UTP Plan. See Notice, supra note 1, 89
FR at 5003.
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4. What are commenters' views of Section 14.1 of the proposed CT
Plan,\24\ which would allow the Operating Committee to lengthen the
implementation timelines in Exhibit F by an affirmative vote of the
Operating Committee? \25\ Should the proposed CT Plan include specific
standards to be met before the implementation timelines are lengthened?
Should any such changes be subject to Commission approval? Why or why
not?
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\24\ See Notice, supra note 1, 89 FR at 5021.
\25\ Section 14.1 of the proposed CT Plan provides that the
Operating Committee must make a reasonable determination that the
timeline needs to be extended and provide written progress reports
to the Commission noting the adjustments. See id.
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5. Should the Commission modify the proposed CT Plan to allow the
Operating Committee to appoint one or more of the current Equity Data
Plan administrators to serve as interim Administrator(s) for the
proposed CT Plan pending the selection and onboarding of a permanent
independent Administrator that meets the Amended Governance Order's
requirement that the independent plan Administrator shall not ``be
owned or controlled by a corporate entity that, either directly or via
another subsidiary, offers for sale its own proprietary market data
product for NMS stocks''? \26\ How might an interim Administrator
affect the implementation schedule for the proposed CT Plan? If the
Commission modified the proposed CT Plan to permit interim
Administrator(s), should it modify the implementation schedule
accordingly? If so, how? What would be the advantages and disadvantages
associated with the appointment of such an interim Administrator(s)?
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\26\ Amended Governance Order, supra note 5, 88 FR at 61640.
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6. Are there additional actions of the proposed CT Plan Operating
Committee that should not be subject to the two-thirds-vote requirement
in Section 4.3(b) of the proposed CT Plan? \27\ If so, which actions
and why?
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\27\ For example, Section 4.3(c) of the proposed CT Plan lists
actions that may be taken by simple majority vote. See Notice, supra
note 1, 89 FR at 5011.
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Although there do not appear to be any issues relevant to approval
or disapproval that would be facilitated by an oral presentation of
views, data, and arguments, the Commission will consider, pursuant to
Rule 608(b)(2)(i) of Regulation NMS,\28\ any request for an opportunity
to make an oral presentation.\29\
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\28\ 17 CFR 242.608(b)(2)(i).
\29\ Rule 700(c)(ii) of the Commission's Rules of Practice
provides that ``[t]he Commission, in its sole discretion, may
determine whether any issues relevant to approval or disapproval
would be facilitated by the opportunity for an oral presentation of
views.'' 17 CFR 201.700(c)(ii).
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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#deacabb2bbf3bdb1b3b3bbb0aaad9eadbbbdf0b9b1a8"><span class="__cf_email__" data-cfemail="3f4d4a535a125c5052525a514b4c7f4c5a5c11585049">[email protected]</span></a>. Please include
File Number 4-757 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 4-757. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed CT Plan that are filed with the
Commission, and all written communications relating to the proposed CT
Plan between the Commission and any person, other than those that may
be withheld from the public in accordance with the
[[Page 33414]]
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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the Participants' principal offices. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number 4-757 and should be submitted
on or before May 20, 2024. Rebuttal comments should be submitted by
June 3, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(85).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-09067 Filed 4-26-24; 8:45 am]
BILLING CODE 8011-01-P
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