Notice2025-19315
Order Granting Conditional Exemptive Relief, Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 608(e) of Regulation NMS Thereunder, From Certain Requirements of the National Market System Plan Governing the Consolidated Audit Trail, Rule 613 of Regulation NMS, and Rule 17a-1 Under the Exchange Act
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
October 2, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 90 Issue 189 (Thursday, October 2, 2025)</title>
</head>
<body><pre>
[Federal Register Volume 90, Number 189 (Thursday, October 2, 2025)]
[Notices]
[Pages 47853-47858]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-19315]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104144]
Order Granting Conditional Exemptive Relief, Pursuant to Section
36(a)(1) of the Securities Exchange Act of 1934 (``Exchange Act'') and
Rule 608(e) of Regulation NMS Thereunder, From Certain Requirements of
the National Market System Plan Governing the Consolidated Audit Trail,
Rule 613 of Regulation NMS, and Rule 17a-1 Under the Exchange Act
September 30, 2025.
I. Introduction
The Securities and Exchange Commission (the ``Commission'' or the
``SEC'') has determined to grant the Participants conditional exemptive
relief from certain requirements of the national market system plan
governing the consolidated audit trail (the ``CAT NMS Plan''), Rule 613
of Regulation NMS, and Rule 17a-1 under the Exchange Act in order to
reduce the operating costs of the consolidated audit trail (the
``CAT'').\1\ These requirements, and the conditional exemptive relief
granted, are described in more detail below.
---------------------------------------------------------------------------
\1\ 17 CFR 240.17a-1.
---------------------------------------------------------------------------
On July 18, 2012, the Commission adopted Rule 613 of Regulation
NMS, which required national securities exchanges and national
securities associations (the ``Participants'') \2\ to jointly develop
and submit to the Commission the CAT NMS Plan.\3\ The goal of Rule 613
was to create a modernized audit trail system that would provide
regulators with timely access to a comprehensive set of trading data,
thus enabling regulators to more efficiently and effectively analyze
and reconstruct market events, monitor market behavior, conduct market
analysis to support regulatory decisions, and perform surveillance,
investigation, and enforcement activities.\4\ On November 15, 2016, the
Commission approved the national market system plan required by Rule
613--the CAT NMS Plan.\5\
---------------------------------------------------------------------------
\2\ The Participants include 24X National Exchange, BOX Exchange
LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2
Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc.,
Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
Investors Exchange LLC, Long-Term Stock Exchange, Inc., MEMX LLC,
Miami International Securities Exchange LLC, MIAX Emerald, LLC, MIAX
PEARL, LLC, MIAX Sapphire, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC,
Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock
Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE
Arca, Inc., NYSE National, Inc., and NYSE Texas, Inc.
\3\ See Securities Exchange Act Release No. 67457 (July 18,
2012), 77 FR 45722 (Aug. 1, 2012) (``Rule 613 Adopting Release'');
17 CFR 242.613.
\4\ See id. at 45730-33.
\5\ Securities Exchange Act Release No. 79318 (Nov. 15, 2016),
81 FR 84696, (Nov. 23, 2016) (``CAT NMS Plan Approval Order''). The
CAT NMS Plan is Exhibit A to the CAT NMS Plan Approval Order. See
CAT NMS Plan Approval Order, at 84943-85034. The CAT NMS Plan
functions as the limited liability company agreement of the jointly
owned limited liability company formed under Delaware State law
through which the Participants conduct the activities of the CAT.
Each Participant is a member of the company and jointly owns the
company on an equal basis. The Participants submitted to the
Commission a proposed amendment to the CAT NMS Plan on Aug. 29,
2019, which they designated as effective on filing. Under the
amendment, the limited liability company agreement of a new limited
liability company named Consolidated Audit Trail, LLC (the
``Company'') serves as the CAT NMS Plan, replacing in its entirety
the CAT NMS Plan. See Securities Exchange Act Release No. 87149
(Sept. 27, 2019), 84 FR 52905 (Oct. 3, 2019).
---------------------------------------------------------------------------
In the CAT NMS Plan Approval Order issued in 2016, the Commission
estimated that the ongoing annual costs associated with maintaining and
operating the Central Repository \6\ would be approximately $55.8
million.\7\ But CAT operating costs have far exceeded these estimates
\8\ due largely to increases in trading activity, which impacts various
CAT cost drivers like storage, data processing, and message
[[Page 47854]]
traffic.\9\ These increases have led both the Commission and the
Participants to take steps to manage and contain CAT costs in the
past.\10\ The conditional exemptive relief granted herein further
responds to these increases in CAT costs, as well as to other
regulatory and judicial developments.
---------------------------------------------------------------------------
\6\ ``Central Repository'' means ``the repository responsible
for the receipt, consolidation, and retention of all information
reported to the CAT pursuant to SEC Rule 613 and [the CAT NMS
Plan].'' See CAT NMS Plan, supra note 5, at section 1.1.
\7\ See, e.g., CAT NMS Plan Approval Order, supra note 5, at
84918-20.
\8\ The CAT budget initially approved by the Participants for
2025 exceeded $248 million. See <a href="https://catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf">https://catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf</a>. In May 2025, the Participants revised the CAT budget to
approximately $228 million to account for cost savings realized
through the implementation of the cost savings measures approved by
the Commission in 2024 (the ``2024 Cost Savings Amendment'') and
other optimizations. See <a href="https://catnmsplan.com/sites/default/files/2025-05/05.19.25-CAT-LLC-2025-Financial_and_Operating-Budget.pdf">https://catnmsplan.com/sites/default/files/2025-05/05.19.25-CAT-LLC-2025-Financial_and_Operating-Budget.pdf</a>;
see also Securities Exchange Act Release No. 101901 (Dec. 12, 2024),
89 FR 103033 (Dec. 18, 2024). The Commission now understands,
through communications with the Participants, that the CAT budget,
prior to the issuance of this conditional exemptive relief, is
projected to be approximately $196 million due to further
implementation of the 2024 Cost Savings Amendment and other
optimizations.
\9\ See, e.g., Securities Exchange Act Release No. 98290 (Sept.
6, 2023), 88 FR 62628, 62641 (Sept. 12, 2023).
\10\ See, e.g., 2024 Cost Savings Amendment, supra note 8.
---------------------------------------------------------------------------
For instance, there have been changes to CAT funding since the CAT
NMS Plan was approved in 2016. On September 6, 2023, the Commission
approved a proposal that amended the method by which CAT fees would be
calculated and implemented a funding model to allocate costs between
Participants and Industry Members \11\ (the ``Funding Model
Order'').\12\ On July 25, 2025, however, the United States Court of
Appeals for the Eleventh Circuit issued an opinion vacating the Funding
Model Order and remanding the matter to the Commission for further
proceedings consistent with its opinion.\13\ The Court stayed the
effect of its judgment for sixty days from the issuance of its
mandate.\14\ Moreover, while this case was pending, the Chairman of the
Commission instructed the staff to undertake a comprehensive review of
the CAT that includes consideration of mechanisms to address CAT
costs.\15\ The Participants have also recently proposed amendments to
the CAT NMS Plan designed to further reduce CAT costs,\16\ and various
Industry Members have submitted rule-making proposals.\17\
---------------------------------------------------------------------------
\11\ ``Industry Member'' is defined in section 1.1 of the CAT
NMS Plan as ``a member of a national securities exchange or a member
of a national securities association.''
\12\ See note 9 supra.
\13\ See Opinion, ASA v. Commission, No. 23-113396 (11th Cir.
July 25, 2025).
\14\ Id. On September 5, 2025, the Participants filed a new
proposed amendment to the CAT NMS Plan to implement a revised
funding model. See Letter from Robert Walley, CAT NMS Plan Operating
Committee Chair, to Vanessa Countryman, Secretary, Commission (Sept.
5, 2025), available at <a href="https://catnmsplan.com/sites/default/files/2025-09/09.05.25_Plan_Amendment-2025_CAT_Funding_Model.pdf">https://catnmsplan.com/sites/default/files/2025-09/09.05.25_Plan_Amendment-2025_CAT_Funding_Model.pdf</a>. The
Company then sought an extension of the Court's stay for an
additional 90 days to give the Commission, the Company, and the
Participants additional time to address the Court's ruling. See
Intervenor Consolidated Audit Trail, LLC's Petition for Panel
Rehearing, ASA v. Commission, No. 23-113396 (11th Cir. Sept. 8,
2025).
\15\ See Prepared Remarks Before SEC Speaks, Chairman Paul S.
Atkins, May 19, 2025, available at <a href="https://www.sec.gov/newsroom/speeches-statements/atkins-prepared-remarks-sec-speaks-051925">https://www.sec.gov/newsroom/speeches-statements/atkins-prepared-remarks-sec-speaks-051925</a>.
\16\ See, e.g., Securities Exchange Act Release No. 103288 (June
17, 2025), 90 FR 26637 (June 23, 2025) (the ``CAIS Amendment'').
\17\ See, e.g., Letter from Joanna Mallers, Secretary, FIA
Principal Traders Group (June 26, 2025), available at <a href="https://www.sec.gov/comments/4-853/4853-618547-1815754.pdf">https://www.sec.gov/comments/4-853/4853-618547-1815754.pdf</a>; Letter from
James Toes, President and CEO, Security Traders Association (June
25, 2025), available at <a href="https://www.sec.gov/comments/4-853/4853-616887-1809874.pdf">https://www.sec.gov/comments/4-853/4853-616887-1809874.pdf</a>; Letter from Joseph Corcoran, Managing Director
and Associate General Counsel, and Gerald O'Hara, Vice President and
Assistant General Counsel, Securities Industry and Financial Markets
Association (June 6, 2025), available at <a href="https://www.sec.gov/comments/4-698/4698-610487-1785814.pdf">https://www.sec.gov/comments/4-698/4698-610487-1785814.pdf</a>.
---------------------------------------------------------------------------
It will take the Commission and its staff time to appropriately
respond to these judicial and regulatory developments. In the meantime,
it is appropriate to take immediate steps where possible to attempt to
contain the cost burden of the CAT, which may also reduce challenges
associated with future funding models.
The Commission has determined that the conditional exemptive relief
granted herein is appropriate in the public interest and consistent
with the protection of investors under section 36(a)(1) of the Exchange
Act,\18\ as well as consistent with the public interest, the protection
of investors, the maintenance of fair and orderly markets and the
removal of impediments to, and perfection of the mechanisms of, a
national market system under Rule 608(e) of Regulation NMS,\19\ because
it allows the Participants to expeditiously and meaningfully reduce CAT
operational costs,\20\ while retaining its core regulatory
functionality and thereby continuing to advance the regulatory goals
that Rule 613 and the CAT NMS Plan were intended to promote. In
granting this relief, the Commission considered its own experience with
the CAT, as well as communications with the Participants and Industry
Members regarding potential cost savings measures,\21\ to identify
areas that could provide immediate cost savings without having an undue
impact on regulatory use of the CAT.
---------------------------------------------------------------------------
\18\ 15 U.S.C. 78mm(a)(1).
\19\ 17 CFR 242.608(e).
\20\ See Parts II.A.-D infra for further discussion of estimated
cost savings.
\21\ See, e.g., notes 16-17 supra; see also, e.g., Letter from
John A. Zecca, Executive Vice President, Global Chief Legal, Risk &
Regulatory Officer, Nasdaq, and J. Patrick Sexton, Executive Vice
President, General Counsel & Corporate Secretary, Cboe (Apr. 24,
2025), available at <a href="https://www.sec.gov/comments/4-698/4698-598775-1738922.pdf">https://www.sec.gov/comments/4-698/4698-598775-1738922.pdf</a>; Letter from Jaime Klima, General Counsel, New York
Stock Exchange (Apr. 24, 2025), available at <a href="https://www.sec.gov/comments/4-698/4698-598195-1737842.pdf">https://www.sec.gov/comments/4-698/4698-598195-1737842.pdf</a>.
---------------------------------------------------------------------------
The Commission emphasizes that this conditional exemptive relief
constitutes an interim step while the staff continues its comprehensive
review of the CAT, and while the Commission considers the proposed CAIS
Amendment pending before it, which--if approved--would provide more
expansive and permanent changes to the CAT. The Commission remains
willing to consider alternative solutions that achieve the regulatory
goals of Rule 613 and the CAT NMS Plan in a more cost-effective manner.
II. Discussion and Exemptive Relief
There are four areas of conditional exemptive relief addressed by
this Order: (A) requirements to create lifecycle linkages by T+1 at
noon Eastern Time; (B) requirements for re-processing of late records;
(C) requirements to provide an online targeted query tool (``OTQT'');
and (D) requirements related to data storage and retention.
A. Requirements To Create Lifecycle Linkages by T+1 at Noon Eastern
Time
Appendix D, section 6.1 of the CAT NMS Plan states that ``Noon
Eastern Time T+1 (transaction date + one day)'' is the deadline for
``[i]nitial data validation, lifecycle linkages and communication of
errors to CAT Reporters.'' \22\ The CAT NMS Plan further explains that
the Plan Processor \23\ must ``link and create the order lifecycle''
using a ``daisy chain approach,'' in which ``a series of unique order
identifiers, assigned to all order events handled by CAT Reporters[,]
are linked together by the Central Repository and assigned a single
CAT-generated CAT-Order-ID that is associated with each individual
order event and used to create the complete lifecycle of an order.''
\24\ The Plan Processor provides the lifecycle linkages that are
required on T+1 by assigning an interim CAT Order ID.\25\ A final CAT
[[Page 47855]]
Order ID is then assigned when corrected and linked data is processed
and made available to regulators on T+5 at 8 a.m. Eastern Time.\26\
---------------------------------------------------------------------------
\22\ See CAT NMS Plan, supra note 5, at Appendix D, section 6.1;
see id. at section 1.1 (defining ``CAT Reporter'' as ``each national
securities exchange, national securities association and Industry
Member that is required to record and report information to the
Central Repository pursuant to SEC Rule 613(c)'').
\23\ ``Plan Processor'' is defined as ``the Initial Plan
Processor or any other Person selected by the Operating Committee
pursuant to SEC Rule 613 and sections 4.3(b)(i) and 6.1, and with
regard to the Initial Plan Processor, the Selection Plan, to perform
the CAT processing functions required by SEC Rule 613 and set forth
in [the CAT NMS Plan].'' See CAT NMS Plan, supra note 5, at section
1.1.
\24\ Id. at Appendix D, section 3.
\25\ The ``CAT Order ID'' is ``a unique order identifier or
series of unique order identifiers that allows the central
repository to efficiently and accurately link all reportable events
for an order, and all orders that result from the aggregation or
disaggregation of such order.'' See 17 CFR 242.613(j)(1); see also
CAT NMS Plan, supra note 5, at section 1.1 (```CAT-Order-ID' has the
same meaning provided in SEC Rule 613(j)(1).''). See Securities
Exchange Act Release No. 95234 (July 8, 2022), 87 FR 42247, 42250-51
(July 14, 2022), for further discussion of the lifecycle linkage
requirements of the CAT NMS Plan.
\26\ See CAT NMS Plan, supra note 5, at Appendix D, section 6.1.
---------------------------------------------------------------------------
On November 2, 2023, the Commission issued an order that granted
exemptive relief from these requirements (the ``November 2023 Order''),
subject to certain conditions, including the condition that the Plan
Processor maintain or improve the existing performance of functionality
providing lifecycle linkages for all order events by T+1 at 9 p.m.
Eastern Time, except an interim CAT Order ID was not required for
Options Market Maker quotes in Listed Options (``OMM Quotes'').\27\ On
December 12, 2024, the Commission subsequently approved the 2024 Cost
Savings Amendment, which removed the requirement that OMM Quotes be
subject to ``any requirement to link and create an order lifecycle,''
such that OMM Quotes need not ``undergo any linkage validation, linkage
feedback, or lifecycle enrichment processing, but will undergo
ingestion validation.'' \28\
---------------------------------------------------------------------------
\27\ See Securities Exchange Act Release No. 98848 (Nov. 2,
2023), 88 FR 77128, 77130 (Nov. 8, 2023) (``November 2023 Order'').
An ``Options Market Maker'' is a ``broker-dealer registered with an
exchange for the purpose of making markets in options contracts on
the exchange.'' See CAT NMS Plan, supra note 5, at section 1.1. Each
Participant has also promulgated rules for its members that
generally govern what constitutes a ``market maker quote'' and/or
``market maker quotation'' for that Participant. See, e.g., The
Nasdaq Stock Market LLC Rules, Options 2, section 5, ``Market Maker
Quotations''; Cboe Exchange, Inc. Rule 5.52, ``Market Maker
Quotes''; NYSE Arca, Inc. Rule 6.37AP-O, ``Market Maker
Quotations.'' A ``Listed Option'' is ``any option traded on a
registered national securities exchange or automated facility of a
national securities association.'' See 17 CFR 242.600(b)(52) of
Regulation NMS; see also CAT NMS Plan, supra note 5, at section 1.1.
(defining a ``Listed Option'' as having ``the meaning set forth in
Rule 600(b)(35) of Regulation NMS,'' which provision has been
redesignated as Rule 600(b)(52) without any changes to its terms).
\28\ See CAT NMS Plan, supra note 5, at Appendix D, section 3.4;
see also 2024 Cost Savings Amendment, supra note 8, at 103034-38.
---------------------------------------------------------------------------
To further reduce CAT costs, the Commission has now determined to
grant conditional exemptive relief to allow the Participants to further
relax requirements related to the provision of lifecycle linkages on
T+1. Specifically, the Commission grants conditional exemptive relief
from the requirements in Appendix D, sections 3 and 6.1 of the CAT NMS
Plan that lifecycle linkages be created by T+1 at noon Eastern Time,
subject to the following conditions:
<bullet> The Plan Processor must provide lifecycle linkages with a
final CAT Order ID for all order events by T+5 at 8 a.m. Eastern Time,
except that lifecycle linkages will not be required for OMM Quotes
consistent with the provisions approved by the 2024 Cost Savings
Amendment.
<bullet> Upon requests made by authorized regulatory users from the
Participants or the Commission, the Plan Processor shall create interim
CAT Order IDs for a specified trade date or dates and thereby provide
linked lifecycles to regulators before T+5 at 8 a.m. Eastern Time.\29\
---------------------------------------------------------------------------
\29\ While the Commission understands that the timing and cost
of creating an interim CAT Order ID ad hoc may vary based on the
number of trade dates and data volumes to be processed in the
request, the Commission understands that interim CAT Order IDs can
generally be created by T+2 at 9 p.m. Eastern Time if the request is
received prior to T+2 at 4 a.m. Eastern Time, or within 14 hours of
receiving the request if such request is received after T+2 at 4
a.m. Eastern Time.
---------------------------------------------------------------------------
This conditional exemptive relief granted in this Order is intended
to supersede the conditional exemptive relief set forth in the November
2023 Order with respect to lifecycle linkage timeframes.\30\
---------------------------------------------------------------------------
\30\ See November 2023 Order, supra note 27, at 77130. The
conditional exemptive relief provided by the November 2023 Order
continues to be in force for the other areas addressed therein,
except as provided in Parts II.C-D.
---------------------------------------------------------------------------
Timely access to linked data was one of the regulatory goals of
Rule 613 and the CAT NMS Plan. Under the conditional exemptive relief
granted herein, regulators will be able to access linked and corrected
audit trail data by T+5 in the regular course, which should generally
continue to be faster than was possible before the CAT existed.\31\
Moreover, regulators will be able to request linked data from the Plan
Processor before T+5, as well as to access and analyze raw unprocessed
data between T+2 at 8 a.m. Eastern Time and T+5 at 8 a.m. Eastern Time,
which functionality should continue to enable regulatory users to
effectively and expeditiously review data in the case of a major market
event, albeit slightly slower than is currently possible. The
conditional exemptive relief granted herein should therefore preserve
the core regulatory benefits of Rule 613 and the CAT NMS Plan, while
enabling the Participants to realize meaningful cost savings.\32\ The
Commission determines that it therefore satisfies the standards of
section 36(a)(1) of the Exchange Act and Rule 608(e) of Regulation NMS.
---------------------------------------------------------------------------
\31\ See CAT NMS Plan Approval Order, supra note 5, at 84783
(noting that corrected and linked CAT Data would be accessible on
T+5, compared to OATS Data, which was not available until T+8).
\32\ The Commission understands from its communications with the
Participants that such measures could save approximately $2-3
million annually.
---------------------------------------------------------------------------
B. Requirements for Re-Processing of Late Records
Appendix D, section 3 of the CAT NMS Plan requires that ``[a]ll CAT
Data reported to the Central Repository must be processed and assembled
to create the complete lifecycle of each Reportable Event.'' \33\ The
CAT NMS Plan sets a deadline of T+3 at 8 a.m. Eastern Time for the
``[r]esubmission of corrected data'' and a deadline of T+5 at 8 a.m.
Eastern Time for the Plan Processor to make ``[c]orrected data
available to Participant regulatory staff and the SEC.'' \34\ For data
corrections received after T+5, the CAT NMS Plan specifies that
``Participants' regulatory staff and the SEC must be notified and
informed as to how re-processing will be completed.'' \35\
---------------------------------------------------------------------------
\33\ ``CAT Data'' is defined as ``data derived from Participant
Data, Industry Member Data, SIP Data, and such other data as the
Operating Committee may designate as `CAT Data' from time to time.''
See CAT NMS Plan, supra note 5, at section 1.1.
\34\ See CAT NMS Plan, supra note 5, at Appendix D, section 6.1.
\35\ See id. at Appendix D, section 6.2.
---------------------------------------------------------------------------
The November 2023 Order granted exemptive relief from these
requirements, subject to the following conditions:
<bullet> The Plan Processor was required to maintain its
implementation of functionality that was approved by the Operating
Committee on January 14, 2022 (the ``Late to the Lifecycle process'')
and on September 20, 2022 (the ``Targeted Replay process'')
(collectively, the ``Enhanced Late to the Lifecycle process''). Prior
to the implementation of this functionality, in the limited
circumstances in which there was a missing link between two disjoined
segments of an order lifecycle, new or corrected data would join only
one of the pre-existing segments and would be assigned to only one of
the relevant lifecycle CAT Order IDs for the disjoined segment and
evaluated for further re-processing. Under the Enhanced Late to the
Lifecycle process, all late records (i.e., records received after T+5)
\36\ include the date of the correction and, if applicable, the record
identifier of the record being corrected as part of normal re-
processing. In addition, the late record became associated with all
relevant lifecycles as part of normal re-processing, such that
[[Page 47856]]
order event lifecycles may be associated with more than one CAT Order
ID.
---------------------------------------------------------------------------
\36\ For the purposes of the November 2023 Order and this Order,
references to data received after T+5, or to post-T+5 data,
submissions, or reports, are to data received after T+4 at 8 a.m.
Eastern Time. See November 2023 Order, supra note 27, at 77130.
---------------------------------------------------------------------------
<bullet> The Participants were required to approve a change order
to adopt:
[cir] Functionality to create a lifecycle mapping which indicates
all lifecycle associations made during the Enhanced Late to the
Lifecycle process;
[cir] Functionality to present to regulatory users post-T+5 data in
a manner substantially similar to how such data would have been
represented if it had been reported prior to T+5, including by
replicating and replaying records with enrichments impacted by post-T+5
submissions, creating updated enrichments, and persisting the
replicated records within the underlying data (the ``Full Replay
process''); and
[cir] Functionality to enhance the OTQT, including the ability to
include or exclude any records that were created or replaced as a
result of the Full Replay process.
<bullet> The Plan Processor was required to schedule the Enhanced
Late to the Lifecycle process and the Full Replay process to run
weekly, such that late reported data received through Friday of the
prior week are available for regulatory users on the following business
day at 8 a.m. Eastern Time, absent extraordinary circumstances, for
data within the prior 18 months. For data outside of this 18-month
window, the Participants were required to schedule the Enhanced Late to
the Lifecycle process and the Full Replay process to run no less
frequently than quarterly.\37\
---------------------------------------------------------------------------
\37\ See November 2023 Order, supra note 27, at 77130-31.
---------------------------------------------------------------------------
However, the Commission now understands from communications with
the Participants that these relaxed requirements were extremely costly
to implement even for a relatively limited amount of CAT Data.
Accordingly, the Commission has now determined to grant conditional
exemptive relief to allow the Participants to further reduce
requirements related to the re-processing of late records.
Specifically, the Commission grants conditional exemptive relief from
the re-processing requirements for late records in Appendix D, sections
3, 6.1, and 6.2 of the CAT NMS Plan, subject to the following
conditions:
<bullet> The Plan Processor must maintain its implementation of the
above-described Enhanced Late to the Lifecycle process for late records
from trade dates within the prior 3 years. For data outside of this 3-
year window, no re-processing is required.
<bullet> For all late records, the Plan Processor must run the
above-described Enhanced Late to the Lifecycle process no less
frequently than quarterly.
<bullet> The Plan Processor must maintain the above-described
functionality that creates a lifecycle mapping which indicates all
lifecycle associations made during the Enhanced Late to the Lifecycle
process.
<bullet> Upon requests made by authorized regulatory users from the
Participants or the Commission, the Plan Processor must perform the
Full Replay process on specified data, such that late records received
through Friday of the prior week are available for regulatory users on
the following business day at 8 a.m. Eastern Time, absent extraordinary
circumstances.\38\
---------------------------------------------------------------------------
\38\ The Commission expects that the timing and cost of
performing the Full Replay process would likely vary based on the
number of trade dates and data volumes to be processed in the
request, as well as on the availability of compute resources.
Although the Commission does not expect regulatory users to utilize
the Full Replay process frequently, it may be appropriate for the
Participants to budget for its potential use.
---------------------------------------------------------------------------
<bullet> For late records received after T+5 at 8 a.m. Eastern
Time, the Plan Processor must continue to notify regulatory users how
re-processing will be completed.
This conditional exemptive relief granted in this Order is intended
to supersede the conditional exemptive relief set forth in the November
2023 Order with respect to re-processing of data received after
T+5.\39\
---------------------------------------------------------------------------
\39\ See November 2023 Order, supra note 27, at 77130-31. The
conditional exemptive relief provided by the November 2023 Order
continues to be in force for the other areas addressed therein,
except as provided in Parts II.A and II.C.
---------------------------------------------------------------------------
Even though the conditional exemptive relief granted herein will
allow the Participants to relax existing requirements related to the
processing of order event lifecycles that include late records, the
Commission believes that the core lifecycle linkage functionality
envisioned by Rule 613 and the CAT NMS Plan will be preserved.\40\ The
Commission understands from communications with the Participants that
most order event lifecycles would be unaffected by the conditional
exemptive relief granted herein--the vast majority of order event
lifecycles are currently completed on time, and the vast majority of
late-reported data does not impact lifecycle linkages. For the less
than 1% of late-reported data that does require additional re-
processing to construct an order event lifecycle, requiring the
Participants to run the Enhanced Late to the Lifecycle process
quarterly for trade dates within the prior 3 years should still provide
regulatory users with the ability to quickly and reliably identify and
link all relevant lifecycles associated with the late-reported data
that is most frequently needed and accessed by regulatory users.
Although this approach requires some manual intervention by regulatory
users, the Commission believes this is a reasonable trade-off for the
millions of dollars of cost savings the Commission expects will likely
flow from significantly reducing the usage of the Full Replay process
and any additional costs savings that may be realized from requiring
the Plan Processor to perform the Enhanced Late to the Lifecycle
process quarterly instead of weekly.\41\ Moreover, under the
conditional exemptive relief granted herein, regulatory users will be
able to request that the Plan Processor perform the Full Replay process
on specified data, which should continue to enable regulatory users to
react to major market events in an effective and expeditious way.
---------------------------------------------------------------------------
\40\ See, e.g., Securities Exchange Act Release No. 77724 (Apr.
27, 2016), 81 FR 30614, 30693 (May 17, 2016) (``Currently regulators
can spend days and up to months processing data they receive into a
useful format. Part of this delay is due to the need to combine data
across sources that could have non-uniform formats and to link data
about the same event both within and across data sources. . . .
[T]he Commission preliminarily believes that the Plan would reduce
or eliminate the delays associated with merging and linking order
events within the same lifecycle.'' (footnote omitted)); see also
id. at 30670 (``Regardless of whether order lifecycle reports are
reflected in the same or different data sources, the process of
linking lifecycle events is complex and can create inaccuracies. . .
. The inability to link all records affects the accuracy of the
resulting data and can force an inefficient manual linkage process
that would delay the completion of the data collection and analysis
portion of the examination, investigation, or reconstruction.'').
\41\ The Commission estimates, based on its communications with
the Participants, that such measures could save approximately $4.5-6
million annually.
---------------------------------------------------------------------------
The Commission therefore determines that the conditional exemptive
relief granted herein satisfies the standards of section 36(a)(1) of
the Exchange Act and Rule 608(e) of Regulation NMS.
C. Requirement To Provide an OTQT
Section 6.10(c)(i) of the CAT NMS Plan requires the Plan Processor
to provide the Participants and the Commission with access to processed
CAT Data through different methods, including an OTQT and user-defined
direct queries and bulk extracts.\42\ Specifically, the CAT NMS Plan
specifies that the OTQT ``will provide
[[Page 47857]]
authorized users with the ability to retrieve CAT Data via an online
query screen that includes the ability to choose from a variety of pre-
defined selection criteria.'' \43\ Section 8.1, including sections
8.1.1-8.1.3, of Appendix D of the CAT NMS Plan sets forth certain
performance requirements for the OTQT, subject to certain conditional
exemptive relief granted by the Commission in the November 2023
Order.\44\
---------------------------------------------------------------------------
\42\ The OTQT functionality implemented by the Plan Processor is
implemented through various tools, which are referred to as
``DIVER,'' ``MIRS,'' ``OLA Viewer,'' and ``ARLE.'' The user-defined
query tool is referred to as ``BDSQL,'' and the bulk extract tool as
``Direct Read.''
\43\ See CAT NMS Plan, supra note 5, at section 6.10(c)(i)(A).
\44\ See November 2023 Order, supra note 27, at 77130, 77132-34.
---------------------------------------------------------------------------
To allow for cost savings, the Commission has now determined to
grant conditional exemptive relief from the requirements for DIVER,
ARLE, OLA Viewer, and MIRS volume concentration and market replay
tools. Specifically, for these tools, the Commission grants conditional
exemptive relief from the above-described provisions in the CAT NMS
Plan directing the Participants to maintain an OTQT and setting forth
performance requirements for the OTQT, subject to the following
conditions:
<bullet> To ensure that the remaining CAT query tools continue to
perform at the same level in the absence of certain OTQT functionality,
the Plan Processor must maintain currently-existing performance
requirements, controls, monitoring, logging, and reporting for the
user-defined direct queries (BDSQL) and bulk extract (Direct Read)
tools, as well as for the MIRS reporting statistics tools that provide
regulatory users with access to compliance information.
<bullet> To enable Participants and the Commission sufficient time
to adjust their regulatory programs to use any necessary replacement
tools, OTQT functionality may not be eliminated earlier than 2 months
after the publication of this Order in the Federal Register.
This conditional exemptive relief granted in this Order is intended
to supersede the conditional exemptive relief set forth in the November
2023 Order with respect to OTQT performance requirements.\45\
---------------------------------------------------------------------------
\45\ See id. The conditional exemptive relief provided by the
November 2023 Order continues to be in force for the other areas
addressed therein, except as provided in Parts II.A-B.
---------------------------------------------------------------------------
The Commission understands, based on communications with the
Participants, that elimination of the OTQT will generate meaningful
cost savings,\46\ and the Commission does not believe that elimination
of the OTQT functionality would unduly impact regulators' oversight of
the markets. The elimination of OTQT functionality would not in any way
impact the underlying CAT Data that is made available for regulators.
Although the Commission has previously observed that certain OTQT
functionality may enable ``regulatory users with less expertise in
sophisticated programming skills to access CAT Data,'' insofar as BDSQL
and Direct Read ``require programming skills in remote data processing
and/or knowledge of structured query programming language,'' \47\ the
Commission understands from its communications with the Participants
that their regulatory groups would be able to conduct their regulatory
programs using only BDSQL and Direct Read or otherwise could adjust by
creating their own internal tools to replicate the same targeted
queries they would otherwise run on DIVER. The Commission likewise
believes that its own regulatory program would not be impaired by the
loss of certain OTQT functionality. Staff already have the necessary
skill sets to use the BDSQL and Direct Read tools, which will be
maintained by the Plan Processor, and the Commission has already
developed internal tools that replicate functionality supplied by the
DIVER, ARLE, OLA Viewer, and MIRS volume concentration and market
replay tools that may not be available if the Participants utilize this
exemptive relief. The Commission therefore determines that the
conditional exemptive relief described above satisfies the standard of
section 36(a)(1) of the Exchange Act and Rule 608(e) of Regulation NMS.
---------------------------------------------------------------------------
\46\ The Commission understands from its communications with the
Participants that such measures could save approximately $2.35-2.85
million annually.
\47\ See 2024 Cost Savings Amendment, supra note 8, at 103036.
---------------------------------------------------------------------------
D. Requirements Related to Data Storage and Retention
Several data storage and retention requirements govern the
Participants' storage of data and/or data stored within the CAT. First,
the Participants are subject to the storage requirements of Rule 17a-1,
which states, among other things, that ``[e]very national securities
exchange [and] national securities association . . . shall keep and
preserve at least one copy of all documents, including all
correspondence, memoranda, papers, books, notices, accounts, and other
such records as shall be made or received by it in the course of its
business as such and in the conduct of its self-regulatory activity,''
and that ``[e]very national securities exchange [and] national
securities association . . . shall keep such documents for a period of
not less than five years, the first two years in an easily accessible
place, subject to the destruction and disposition provisions of Rule
17a-6.'' \48\
---------------------------------------------------------------------------
\48\ See 17 CFR 240.17a-1.
---------------------------------------------------------------------------
Second, Rule 613(e)(8) states that the CAT NMS Plan must require
the Central Repository to ``retain the information collected pursuant
to paragraph (c)(7) and (e)(7) . . . in a convenient and usable
standard electronic data format that is directly available and
searchable electronically without any manual intervention for a period
of not less than five years.'' \49\
---------------------------------------------------------------------------
\49\ See 17 CFR 242.613(e)(8).
---------------------------------------------------------------------------
The CAT NMS Plan itself imposes several storage requirements with
respect to CAT Data, including requirements in section 6.5(b) that the
Central Repository retain ``the information collected pursuant to
paragraphs (c)(7) and (e)(7) of SEC Rule 613 in a convenient and usable
standard electronic data format that is directly available and
searchable electronically without any manual intervention by the Plan
Processor for a period of not less than six (6) years.'' \50\
Additionally, pursuant to section 1.4 of Appendix D of the CAT NMS
Plan, ``[t]he Plan Processor must develop a formal record retention
policy and program for the CAT, to be approved by the Operating
Committee, which will, at a minimum . . . [m]ake data directly
available and searchable electronically without manual intervention for
at least six years . . . .'' Section 6.3 of Appendix D of the CAT NMS
Plan provides an exception to these requirements for several kinds of
data, including ``Interim Operational Data older than 15 days,'' \51\
which may be retained in an archive storage tier, meaning such data is
not directly available and searchable without manual intervention.\52\
---------------------------------------------------------------------------
\50\ See CAT NMS Plan, supra note 5, at section 6.5(d). Section
6.1(d)(i) of the CAT NMS Plan also requires the Plan Processor to
comply with the recordkeeping requirements of Rule 613(e)(8).
\51\ ``Interim Operational Data'' is defined as ``all processed,
validated and unlinked data made available to regulators by T+1 at
12:00 p.m. ET and all iterations of processed data made available to
regulators between T+1 and T+5, but excludes the final version of
corrected data that is made available at T+5 at 8:00 a.m. ET,'' and
``[f]or the avoidance of doubt, `Interim Operational Data' does not
include processed data relating to Options Market Maker quotes in
Listed Options made available to regulators by T+1 at 12:00 p.m.
ET.'' See CAT NMS Plan, supra note 5, at Appendix D, section 6.3;
see also Part II.A supra, for a discussion of conditional exemptive
relief that would affect the definition of this data.
\52\ The CAT NMS Plan states that the Plan Processor will
restore archived data to an accessible storage tier upon request to
the CAT Help Desk by an authorized regulatory user from the
Participants or a senior officer from the SEC. See CAT NMS Plan,
supra note 5, Appendix D, section 6.3.
---------------------------------------------------------------------------
[[Page 47858]]
The Commission understands from communications with the
Participants that storage costs represent approximately 40% of monthly
cloud services fees, as the CAT continues to accrue volume toward its
six-year storage requirement and as data volumes continue to increase.
Moreover, it appears to the Commission that the storage needs for the
CAT far exceed what was envisioned when the CAT was first established.
For example, the CAT NMS Plan approved by the Commission stated that it
``is expected that the Central Repository will grow to more than 29
petabytes of raw, uncompressed data,'' \53\ but the Commission
understands that the Plan Processor currently projects that cumulative
storage will exceed 1 exabyte (or 1,000 petabytes) in 2025--more than
37 times this original estimate. Given their significant contribution
to increasing CAT costs, the Commission has determined to grant
conditional exemptive relief to allow the Participants to immediately
reduce the usage of storage and retention of CAT Data.
---------------------------------------------------------------------------
\53\ See CAT NMS Plan Approval Order, supra note 5, at 85023.
---------------------------------------------------------------------------
Specifically, the Commission grants conditional exemptive relief
from the above-described requirements of Rule 17a-1,\54\ Rule
613(e)(8), sections 6.1(d)(i) and 6.5(b) of the CAT NMS Plan, and
sections 1.4 and 6.3 of Appendix D of the CAT NMS Plan, to the extent
necessary to allow the Participants to:
---------------------------------------------------------------------------
\54\ Because the CAT is a facility of the Participants, it is
subject to the record-keeping provisions of Rule 17a-1. See, e.g.,
id. at 84736. The Participants require exemptive relief from Rule
17a-1 to delete OMM Quotes data after one year from the CAT System
and to delete Interim Operational Data older than 15 days.
Conditions enabling the Participants to delete all CAT Data older
than five years and/or to move CAT Data older than three years to a
more cost-effective storage tier are already consistent with or more
generous than Rule 17a-1, although they are more lenient than the
requirements otherwise contained in Rule 613 and/or the CAT NMS
Plan.
---------------------------------------------------------------------------
<bullet> Delete all CAT Data older than five years.
<bullet> Move CAT Data older than three years to a more cost-
effective storage tier (i.e., a tier requiring some ``manual
intervention'' to retrieve data), subject to the condition that the
Plan Processor will restore archived CAT data which is older than three
years old to an accessible storage tier upon request to the CAT Help
Desk by an authorized regulatory user from the Participants or from the
SEC.\55\
---------------------------------------------------------------------------
\55\ The Commission understands from communications with the
Participants that CAT Data is currently stored in four storage
tiers: S3 Frequent Access, S3 Infrequent Access, S3 Instant Archive
Access, and S3 Glacier Deep Archive. Data files that are either new
or that have recently been read by regulatory users are stored in S3
Frequent Access. If a file is not read by a regulatory user for 30
days, then it moves to S3 Infrequent Access. Similarly, if a file is
not read by a regulatory user for 90 days, then it moves to S3
Archive Instant Access. Finally, the CAT NMS Plan permits certain
kinds of data, including Interim Operational Data older than 15
days, to be moved to S3 Glacier Deep Archive. See, e.g., CAT NMS
Plan, supra note 5, at Appendix D, section 6.3. The conditional
exemptive relief granted herein would likewise permit the
Participants to move all CAT Data older than three years to a
storage tier like S3 Glacier Deep Archive.
---------------------------------------------------------------------------
<bullet> Delete OMM Quotes data after one year from the CAT System.
<bullet> Delete Interim Operational Data older than 15 days.
The Commission does not believe the reduced data storage and
shorter data retention periods permitted by the conditional exemptive
relief granted herein would unduly impact regulators' ability to
oversee the markets. In addition, permitting the Plan Processor to
delete all CAT Data older than five years from the CAT System is
consistent with the data storage and retention requirements otherwise
applicable to the Participants as national securities exchanges and
national securities associations.\56\
---------------------------------------------------------------------------
\56\ See 17 CFR 240.17a-1; 17 CFR 242.613(e)(8). See also, e.g.,
CAT NMS Plan Approval Order, supra note 5, at 84758 (stating that
the CAT is a facility of each of the Participants).
---------------------------------------------------------------------------
Allowing the movement of CAT Data older than three years to a more
cost-effective storage tier, subject to the condition identified above,
would allow the Participants to use lower-cost archive storage options
while simultaneously maintaining records for regulatory use as needed.
The first three years of CAT Data, which the Commission believes will
be more frequently accessed and needed by regulatory users based on its
experience in using the CAT and CAT Data, will still be maintained in a
convenient and usable standard electronic data format that is directly
available and searchable electronically without any manual intervention
by the Plan Processor.\57\ Although the Commission has stated that OMM
Quotes data has substantial regulatory value,\58\ based on Commission
experience in using the CAT and CAT Data, the Commission expects that
regulators are less likely to access OMM Quotes data after a period of
one year and thus the costs of maintaining older OMM Quotes data in the
CAT are not sufficiently justified by its regulatory benefits.\59\
Permitting the Participants to delete all OMM Quotes data after one
year will significantly reduce the CAT's storage requirements, which
should result in significant cost savings. To the extent older data is
required, the Commission could request access to or analysis of OMM
Quotes data directly from options exchanges, because Rule 17a-1
requires them to maintain OMM Quotes data for five years.\60\ Finally,
deleting Interim Operational Data older than 15 days will likely have
little effect, as the Commission understands from communications with
the Participants that it has not been used after nearly five years of
CAT operation.
---------------------------------------------------------------------------
\57\ This framework exceeds the applicable requirements set
forth in Rule 17a-1, which requires that records be kept for ``the
first two years in an easily accessible place.'' See 17 CFR 240.17a-
1.
\58\ See, e.g., 2024 Cost Savings Amendment, supra note 8, at
103037.
\59\ According to information provided by the Participants in
2024, OMM Quotes data is the single largest data source for the CAT,
comprising approximately 98% of all options data and approximately
75% of all transaction volume stored in the CAT. Id.
\60\ 17 CFR 240.17a-1.
---------------------------------------------------------------------------
The Commission therefore determines that it satisfies the standards
of section 36(a)(1) of the Exchange Act and Rule 608(e) of Regulation
NMS to grant this conditional exemptive relief, which will not unduly
impede the intended regulatory benefits of Rule 17a-1, Rule 613, and/or
the CAT NMS Plan, while enabling the Participants to realize meaningful
cost savings.\61\
---------------------------------------------------------------------------
\61\ The Commission understands from its communications with the
Participants that such measures could save approximately $11-15
million annually.
---------------------------------------------------------------------------
III. Conclusion
Accordingly, it is hereby ordered, pursuant to section 36(a)(1) of
the Exchange Act \62\ and Rule 608(e) under Regulation NMS,\63\ that
the above-described conditional exemptive relief be granted.
---------------------------------------------------------------------------
\62\ 15 U.S.C. 78mm(a)(1).
\63\ 17 CFR 242.608(e).
By the Commission.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-19315 Filed 10-1-25; 8:45 am]
BILLING CODE 8011-01-P
</pre></body>
</html>Indexed from Federal Register on October 2, 2025.
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.