Notice2025-24050
Joint Industry Plan; Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail To Further Reduce the Costs of the Consolidated Audit Trail
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Published
December 31, 2025
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 90 Issue 247 (Wednesday, December 31, 2025)</title>
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[Federal Register Volume 90, Number 247 (Wednesday, December 31, 2025)]
[Notices]
[Pages 61506-61584]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-24050]
[[Page 61505]]
Vol. 90
Wednesday,
No. 247
December 31, 2025
Part II
Securities and Exchange Commission
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Joint Industry Plan; Notice of Filing of Amendment to the National
Market System Plan Governing the Consolidated Audit Trail To Further
Reduce the Costs of the Consolidated Audit Trail; Notice
Federal Register / Vol. 90 , No. 247 / Wednesday, December 31, 2025 /
Notices
[[Page 61506]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104504; File No. 4-698]
Joint Industry Plan; Notice of Filing of Amendment to the
National Market System Plan Governing the Consolidated Audit Trail To
Further Reduce the Costs of the Consolidated Audit Trail
December 23, 2025.
I. Introduction
On December 18, 2025, the Consolidated Audit Trail, LLC (``CAT
LLC''), on behalf of the following parties to the National Market
System Plan Governing the Consolidated Audit Trail (the ``CAT NMS
Plan'' or ``Plan''): \1\ 24X National Exchange LLC, 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. (collectively, the
``Participants,'' ``self-regulatory organizations,'' or ``SROs'') filed
with the Securities and Exchange Commission (``SEC'' or ``Commission'')
pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934
(``Exchange Act''),\2\ and Rule 608 thereunder,\3\ a proposed amendment
(the ``2025 Cost Savings Amendment'') to further reduce the costs of
the consolidated audit trail (the ``CAT'').\4\ Exhibit A sets forth the
proposed revisions to the CAT NMS Plan to be made under the 2025 Cost
Savings Amendment. Exhibit B sets forth the proposed revisions to the
CAT NMS Plan to implement the ``Reduced Linkage Processing Timeline
Component of the Original CAT LLC Proposal.'' Exhibit C sets forth the
changes proposed revisions to the CAT NMS Plan to implement the ``Full
Elimination of CAIS/CCID Component of Original CAT LLC Proposal.''
Exhibit D sets forth: (i) a chart providing a comparison of Rule
613(c)(7) and Section 6.3(d) of the CAT NMS Plan, and Industry Member
Data, as defined in Section 6.4(d)(ii) of the CAT NMS Plan; and (ii) a
chart providing a comparison of Rule 613(e)(7) under the Exchange Act
and Section 6.5(a)(ii) of the CAT NMS Plan. The Commission is
publishing this notice to solicit comments from interested persons on
the 2025 Cost Savings Amendment.
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\1\ In July 2012, the Commission adopted Rule 613 of Regulation
NMS, which required the Participants to jointly develop and submit
to the Commission a national market system plan to create,
implement, and maintain a consolidated audit trail (the ``CAT'').
See Securities Exchange Act Release No. 67457 (July 18, 2012), 77 FR
45722 (Aug. 1, 2012 (``Rule 613 Adopting Release''); 17 CFR 242.613.
On November 15, 2016, the Commission approved the CAT NMS Plan. See
Securities Exchange Act Release No. 78318 (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.
\2\ 15 U.S.C 78k-1(a)(3).
\3\ 17 CFR 242.608.
\4\ See letter to Vanessa Countryman, Secretary, Commission,
from Robert Walley, CAT NMS Plan Operating Committee Chair, dated
December 18, 2025.
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II. Description of the Plan Amendment
Set forth in this Section II is the description of the proposed
2025 Cost Savings Amendment, along with information required by Rule
608(a) under the Exchange Act,\5\ as prepared and submitted by the
Participants to the Commission.\6\
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\5\ See 17 CFR 242.608(a).
\6\ See supra note 4. Unless otherwise defined herein,
capitalized terms used herein are defined as set forth in the CAT
NMS Plan.
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CAT LLC strongly supports meaningful reductions in CAT costs while
preserving the system's core regulatory functionality. To this end, CAT
LLC and the Plan Processor have continuously pursued cost savings
measures within their control and have achieved meaningful cost
reductions within the significant regulatory restraints of the CAT NMS
Plan.\7\ In addition, CAT LLC has proposed to the Commission a series
of cost savings amendments, exemptive relief requests, and no action
requests to allow the CAT to operate on a more efficient and cost-
effective basis.\8\ While the Participants have achieved meaningful
savings to date, more comprehensive cost reductions require Commission
approval to permit their implementation.
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\7\ Under CAT NMS Plan requirements, the CAT must process and
store extremely large data volumes within strict requirements that
leave little room for flexibility or discretion. However, as a
result of the optimizations pursued by CAT LLC and the Plan
Processor, per unit costs have decreased significantly, allowing
cloud fees to remain generally flat over the last three years
despite 41% growth in data volumes over the same three-year period--
$136 million and 109 trillion events in 2022, $128 million and 116
trillion events in 2023, and $135 million and 154 trillion events in
2024.
\8\ Prior CAT NMS Plan amendments, exemptive relief requests,
and no-action requests are available on the CAT website at
<a href="http://www.catnmsplan.com">www.catnmsplan.com</a>. For example, last year, CAT LLC sought and
received SEC approval of a cost savings amendment that would permit
more efficient processing and storage of Options Market Maker Quotes
in Listed Options. See Exchange Act Release No. 101901 (Dec. 12,
2024), 89 FR 103033 (Dec. 18, 2024) (``2024 Cost Savings
Amendment''). This amendment was originally estimated to result in
roughly $20 million in additional annual savings in the first year,
but actual savings have proven better than anticipated and are now
projected to be approximately $30 million in the first year. More
recently, the Commission instituted proceedings on another Plan
amendment that would permit CAT LLC to fully eliminate Customer
names, addresses, and dates of birth information from the CAT, which
would achieve an estimated $7 to $9 million in annual cost savings.
See Exchange Act Release No. 103288 (June 17, 2025), 90 FR 26637
(June 23, 2025) (``CAIS Amendment'').
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The CAT operating budget initially approved by the Operating
Committee for 2025 was approximately $249 million.\9\ In May 2025, the
Participants revised the budget down by $21 million dollars to
approximately $228 million to reflect cost savings achieved through the
implementation of the 2024 Cost Savings Amendment and other
optimizations.\10\ In November 2025, the Participants further revised
the budget down by another $40 million to approximately $188 million
due to further implementation of the 2024 Cost Savings Amendment and
other optimizations.\11\ This $188 million budget includes
approximately $122 million in cloud hosting fees, $54 million in Plan
Processor operating fees and expenses, and other general and
administrative costs.
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\9\ See Consolidated Audit Trail, LLC 2025 Financial and
Operating Budget (Nov. 20, 2024), <a href="https://www.catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf">https://www.catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf</a>.
\10\ See Consolidated Audit Trail, LLC 2025 Financial and
Operating Budget (May 19, 2024), <a href="https://www.catnmsplan.com/sites/default/files/2025-05/05.19.25-CAT-LLC-2025-Financial_and_Operating-Budget.pdf">https://www.catnmsplan.com/sites/default/files/2025-05/05.19.25-CAT-LLC-2025-Financial_and_Operating-Budget.pdf</a>.
\11\ See Consolidated Audit Trail, LLC 2025 Financial and
Operating Budget (Nov. 7, 2025), <a href="https://www.catnmsplan.com/sites/default/files/2025-11/11.07.25-CAT-LLC-2025-Finacial_and_Operating-Budget.pdf">https://www.catnmsplan.com/sites/default/files/2025-11/11.07.25-CAT-LLC-2025-Finacial_and_Operating-Budget.pdf</a>. This most recent budget does not reflect the potential
cost savings related to the 2025 Cost Savings Exemptive Order. See
Exchange Act Release No. 104144 (Sept. 30, 2025), 90 FR 47853 (Oct.
2, 2025) (``2025 Cost Savings Exemptive Order''). Any such cost
savings would be reflected in 2026 or subsequent years after
technology and other changes related to the 2025 Cost Savings
Exemptive Order are implemented.
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Based on current estimates, CAT LLC anticipates that this 2025 Cost
Savings Amendment may reduce CAT costs (currently operating with an
approximate $188 million annual budget) by approximately $55 to $73
million per year, without compromising the regulatory purposes of the
CAT.\12\
[[Page 61507]]
CAT LLC notes that these estimated cost savings are based on current
costs for 2025 and are inclusive of potential cost savings related to
the 2025 Cost Savings Exemptive Order recently issued by the
Commission. As detailed below, several components of this 2025 Cost
Savings Amendment would codify and/or build upon elements of the 2025
Cost Savings Exemptive Order; these savings are consolidated and should
not be combined with savings described in the 2025 Cost Savings
Exemptive Order to avoid double-counting. CAT LLC respectfully urges
the Commission to approve this 2025 Cost Savings Amendment
expeditiously so that these cost savings measures may be implemented as
soon as possible.
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\12\ All cost and savings projections described in this proposed
amendment are estimates only and reflect the current state and costs
of CAT operations, including the current number of exchanges. Cost
savings estimates are based on, among other factors: current CAT NMS
Plan requirements; reporting by Participants, Industry Members and
market data providers; observed data rates and volumes; current
discounts, reservations and cost savings plans and associated cloud
fees. Actual future savings could be more or less than estimated due
to changes in any of these variables. Savings projections are
primarily based on production environments, which represent
approximately two-thirds of all cloud fees. Factors considered in
the cost savings estimates are further discussed below. All cost
savings projections provided in this 2025 Cost Savings Amendment are
the Plan Processor's best estimates based on the current costs and
state of the CAT System and are subject to change based on ongoing
improvements to cloud computing or other changes that may impact
current CAT costs. Furthermore, certain cost estimates are subject
to further contract negotiations with CAT LLC's vendors. In
approving prior CAT LLC cost savings amendments, ``[t]he Commission
acknowledge[d] the necessity of using simplifying assumptions to
generate estimates and that such assumptions can affect the
precision of the estimates,'' and that, even where the Commission
identified potential issues with such assumptions that ``could
affect the magnitude of the cost estimates,'' approval was warranted
in that case because ``the cost savings will be meaningful
regardless of these issues.'' 2024 Cost Savings Amendment Approval
Order at 103046. See also Exchange Act Release No. 98290, 88 FR
62628, 62641 (Sept. 12, 2023) (``The Commission does not believe it
is possible for the Participants to predict with certainty how the
magnitude of each driver of CAT costs will change over time.'') CAT
LLC believes that the cost savings under the 2025 Cost Savings
Amendment will be meaningful, even if the magnitude of the estimated
savings cannot be determined with absolute certainty, and that the
estimates and assumptions described herein provide an adequate basis
for the Commission to evaluate the costs and benefits of the
proposed amendment. CAT LLC further notes that the estimated cost
savings are based on current costs for 2025, which do not reflect or
incorporate potential cost savings related to the 2025 Cost Savings
Exemptive Order. CAT LLC also notes that, in some cases as noted
below, the potential cost savings allowed under the 2025 Cost
Savings Exemptive Order and the cost savings described in this 2025
Cost Savings Amendment may differ.
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In developing this 2025 Cost Savings Amendment, CAT LLC, with the
Plan Processor, thoroughly considered a range of alternatives and
variations to the proposals described in this amendment, balancing the
potential costs and benefits of each, including regulatory impact. In
particular, and as discussed below, CAT LLC prepared an initial
proposal (``Original CAT LLC Proposal'') that was then presented to
certain Industry Members for feedback. Based on feedback from the
Advisory Committee and others in the industry, CAT LLC determined to
amend the Original CAT LLC Proposal and to propose this 2025 Cost
Savings Amendment instead. As a result, the 2025 Cost Savings Amendment
is the product of ongoing discussions among the SEC staff,
Participants, the Plan Processor, the Advisory Committee and Industry
Members to identify changes to the CAT that would allow the CAT to
operate more efficiently while preserving its regulatory benefits. It
is an ongoing priority for the CAT to operate in a cost-effective
manner, and CAT LLC will continue to explore cost savings opportunities
that do not compromise the regulatory goals of the CAT.
Original CAT LLC Proposal to Maximize Cost Savings (Estimated
Savings of ~$70 to $90 Million). CAT LLC developed a proposal designed
to maximize cost savings while preserving the CAT's core regulatory
functionality (``Original CAT LLC Proposal''). The Original CAT LLC
Proposal is estimated to provide approximately $70 to $90 million in
annual cost savings, which includes an annual reduction in cloud
hosting fees of $55 to $75 million, and approximately $15 million in
total Plan Processor operating fees.\13\
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\13\ The Plan Processor's estimates of Plan Processor operating
fees for the Original CAT LLC Proposal and the modified proposal as
set forth in this 2025 Cost Savings Amendment are preliminary and
directional and are subject to change based on the final, SEC-
approved requirements and execution of a new definitive agreement
between CAT LLC and Plan Processor. These estimates are annualized
for 2026 based on the estimated Plan Processor operating fees for
the reduced scope of work reflected in the Original CAT LLC Proposal
and the Modified Proposal, as applicable. The ``contract year'' for
the Plan Processor Agreement with FINRA CAT is offset from the
calendar year, and so the actual total Plan Processor operating fees
for calendar year 2026 will vary from these annualized estimates.
The Plan Processor operating fees for future years will also be
subject to adjustments as agreed between CAT LLC and FINRA CAT
(e.g., change orders, market data providers and inflation
adjustments based on a cost of labor index).
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As described below, the Original CAT LLC Proposal calls for the
full elimination of the CAT Customer & Account Information System
(``CAIS'') and the CAT Customer ID (``CCID''). As noted above, the
current 2025 CAT budget of $188 million includes an estimated $122
million in cloud hosting services and $54 million in total Plan
Processor fees.\14\ Under the Original CAT LLC Proposal, the current
CAIS-related cloud hosting services fees, estimated at $6.5 to $9
million, would be eliminated. The current CAIS-related Plan Processor
fees, estimated at $24.5 million ($20.7 million in operating fees and
$3.8 million in licensing fees), would also be eliminated, but would be
offset in part by other estimated increases in Plan Processor fees,
resulting in total Plan Processor fees of approximately $39 million on
an annualized basis. Thus, overall, the Plan Processor has proposed a
$15 million reduction ($54 million reduced to $39 million) in total
Plan Processor fees under the Original CAT LLC Proposal.
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\14\ Note that the $54 million figure for 2025 does not include
certain other technology expenses that have been budgeted such as
market data vendor fees ($538,639) and change requests ($1,900,000
actual costs and an additional $325,000 budget placeholder). For
additional details about CAIS-related expenses, see Letter from
Brandon Becker, CAT NMS Plan Operating Committee Chair, to Vanessa
Countryman, Secretary, Commission (Mar. 7, 2025); Letter from
Brandon Becker, CAT NMS Plan Operating Committee Chair, to Vanessa
Countryman, Secretary, Commission (May 28, 2025); Letter from Robert
Walley, CAT NMS Plan Operating Committee Chair, to Vanessa
Countryman, Secretary, Commission (Dec. 1, 2025).
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The Original CAT LLC Proposal includes the following eight
components:
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Estimated annual
reduction of cloud
No. Amendment Description hosting fees from
november 2025 budget
(million)
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1.................................... Interim CAT-Order-ID Elimination of Interim $2-$3
Amendment. CAT-Order-ID/Maintain
Ad Hoc Capability.
2.................................... Data Storage Amendment. Reduction of Retention 23.5-32
Period for Certain
Categories of CAT Data.
[[Page 61508]]
3.................................... Late Data Re-Processing Elimination of Late 14-19
Amendment. Data Re-Processing.
4.................................... OTQT Amendment......... Elimination of Online 2.5-3.5
Targeted Query Tool
(OTQT).
5.................................... Rejected Message Elimination of 0.5
Amendment. Participant Reporting
of Rejected Messages.
6.................................... Data Availability Adopt More Cost- 1.5-2
Amendment. Efficient Data
Availability Timeline.
7.................................... Full Elimination of Elimination of CAIS, 6.5-9
CAIS/CCID. Reporting of Customer
and Account
Information, and CCID.
8.................................... Reduced Linkage Reduction of Linkage 6-8
Processing Timeline. Processing Timeline
from Four Days to Two
Days.
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Total Estimated Annual Savings ....................... ....................... 55-75
for Cloud Hosting Services.
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Total Estimated Annual Savings ....................... ....................... 15
for Plan Processor Operating
Fees.
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Total Estimated Annual ....................... ....................... 70-90
Savings from November 2025
Budget.
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Discussions with Industry regarding Original CAT LLC Proposal. CAT
LLC discussed two aspects of the Original CAT LLC Proposal--the Full
Elimination of CAIS/CCID component and the Reduced Linkage Processing
Timeline component--that would, if approved, have a direct impact on
Industry Members with members of the Advisory Committee, the Securities
Industry and Financial Markets Association (``SIFMA'') and the
Financial Information Forum (``FIF''). While CAT LLC understands that
not all Industry Members share the same views on these proposals, the
clear consensus of these discussions was that, while these proposals
would achieve significant CAT cost savings, they would impose certain
compliance costs on Industry Members. Based on industry feedback from
these discussions, CAT LLC determined to modify these two components of
the Original CAT LLC Proposal as follows for the 2025 Cost Savings
Amendment.
<bullet> CAT LLC is proposing the Reference Data Amendment (as
described below) instead of the Full Elimination of CAIS/CCID component
of the Original CAT LLC Proposal. With this change, potential cost
savings in annual cloud hosting costs would be reduced from
approximately $6.5 to $9 million to approximately $4 to $6 million.
<bullet> CAT LLC has determined not to include the Reduced Linkage
Processing Timeline Component of the Original CAT LLC Proposal in the
2025 Cost Savings Amendment.
With this change, potential cost savings in annual cloud hosting
costs would be reduced by approximately $6 to $8 million.
In addition to the reduction in cost savings for cloud hosting
services, by changing these two components of the Original CAT LLC
Proposal, cost savings related to reduced Plan Processor operating fees
would be reduced by approximately $8 million.
2025 Cost Savings Amendment (Estimated Savings of ~$55 to $73
Million). The 2025 Cost Savings Amendment would consist of the
following seven items described below with their estimated annual
savings. Note that the first six items of the 2025 Cost Savings
Amendment are the same as the first six items of the Original CAT LLC
Proposal.
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Estimated annual
reduction of cloud
No. Amendment Description hosting fees from
November 2025 budget
(million)
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1.................................... Interim CAT-Order-ID Elimination of Interim $2-$3
Amendment. CAT-Order-ID/Maintain
Ad Hoc Capability.
2.................................... Data Storage Amendment. Reduction of Retention 23.5-32
Period for Certain
Categories of CAT Data.
3.................................... Late Data Re-Processing Elimination of Late 14-19
Amendment. Data Re-Processing.
4.................................... OTQT Amendment......... Elimination of Online 2.5-3.5
Targeted Query Tool
(OTQT).
5.................................... Rejected Message Elimination of 0.5
Amendment. Participant Reporting
of Rejected Messages.
6.................................... Data Availability Adopt More Cost- 1.5-2
Amendment. Efficient Data
Availability Timeline.
[[Page 61509]]
7.................................... Reference Data Elimination of CAIS and 4-6
Amendment. Reporting of Customer
and Account
Information/Adoption
of Reference Data
Approach to Generate
CCIDs.
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Total Estimated Annual Savings ....................... ....................... 48-66
for Cloud Hosting Services.
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Total Estimated Annual Savings ....................... ....................... 7
for Plan Processor Operating
Fees.
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Total Estimated Annual ....................... ....................... 55-73
Savings from November 2025
Budget.
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Additionally, as described below, CAT LLC proposes to amend the CAT
NMS Plan to adopt a spending cap provision that is designed to
safeguard against future requests or interpretations that would expand
the then-existing functionality or system operations of the CAT without
a clear assessment of whether the costs outweigh any associated
benefits.
The proposed changes to the CAT NMS Plan to implement the 2025 Cost
Savings Amendment are set forth in Exhibit A \15\ to this filing.\16\
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\15\ Exhibit A reflects proposed amendments to the current
version of the CAT NMS Plan; it does not reflect changes separately
before the Commission in the pending CAIS Amendment. CAT LLC
recognizes that the CAIS Amendment and this amendment propose
changes related to CAIS and the reporting of Customer Identifying
Information and Customer Account Information. To the extent that
this amendment were approved prior to the CAIS Amendment, the CAIS
Amendment would no longer be relevant and CAT LLC would withdraw the
CAIS Amendment. If the CAIS Amendment were approved prior to this
amendment, then CAT LLC would update this amendment to reflect the
changes made in the CAIS Amendment.
\16\ Because the Commission has acknowledged that Appendix C was
not intended to be continually updated once the CAT NMS Plan was
approved, CAT LLC is not proposing to update Appendix C to reflect
the proposed amendments. See Exchange Act Release No. 89632 (Aug.
21, 2020), 85 FR 65990 (Oct. 16, 2020).
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The timing of when these cost savings will be realized will depend
on the timing of Commission action on this 2025 Cost Savings Amendment.
As described in further detail below, the Plan Processor has proposed
one-time implementation costs and timelines for each component of the
2025 Cost Savings Amendment, if approved by the Commission, as follows.
1. Interim CAT-Order-ID Amendment: $225,000 (6 to 8 weeks).
2. Data Storage Amendment: $165,000 to $265,000: (3 to 4 months).
3. Late Data Re-Processing Amendment: $250,000 to $500,000 (2 to 4
months).
4. OTQT Amendment: $135,000 (8 to 10 weeks).
5. Rejected Message Amendment: $75,000 to $150,000 (2 to 4 months).
6. Data Availability Amendment: $200,000 to $400,000 (3 to 6
months).
7. Reference Data Amendment: $2.5 to $3.5 million (9 to 12 months).
Request for Comment on Alternative Proposals. Although CAT LLC is
proposing more modest cost savings measures based on industry feedback
than what could be achieved under the Original CAT LLC Proposal, CAT
LLC agrees with Chairman Atkins' comments that ``CAT must be more
efficient and cost-effective.'' \17\ CAT LLC also recognizes that the
Commission has previously exercised its authority to modify proposed
amendments to the CAT NMS Plan.\18\ CAT LLC believes the Participants
can satisfy their self-regulatory obligations were the Commission to
determine to maximize CAT costs savings and modify this amendment to
incorporate the Original CAT LLC Proposal.
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\17\ Press Release, SEC Issues Order to Reduce Operating Costs
of Consolidated Audit Trail (Sept. 30, 2025).
\18\ See, e.g., Exchange Act Release No. 103275 (June 16, 2025),
90 FR 26337 (June 20, 2025).
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To this end, CAT LLC urges the Commission to request comment and
quantitative data from Industry Members on the relative cost and
benefits of the Original CAT LLC Proposal versus this 2025 Cost Savings
Amendment. In particular, the Commission should request comment
regarding whether Industry Members support the continued existence of
the CCID (under the Reference Data Amendment or otherwise) or would
support its full elimination, and the costs and benefits that could
result from either approach. Based on discussions with Industry
Members, CAT LLC understands that while many Industry Members support
the continued existence of the CCID, some believe that regulators
should not have the ability to identify a market participant's trading
activity across multiple CAT Reporters and would support its full
elimination. In addition, the Commission should request comment
regarding whether Industry Members support a reduction of the linkage
processing timeline from four days to two days as discussed in the
Original CAT LLC Proposal, and the costs and benefits that could result
from either approach. Based on discussions with Industry Members, CAT
LLC understands that while many Industry Members support the existing
timeline, some believe a reduction may be possible if it would not have
an adverse effect on firm processing and compliance statistics.
The following table summarizes the differences in estimated cost
savings between the Original CAT LLC Proposal versus the proposal as
modified based on industry feedback (reflected in this 2025 Cost
Savings Amendment), based on the November 2025 budget.
[[Page 61510]]
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Modified proposal based on
Original CAT LLC proposal industry feedback--2025 Cost
(million) Savings Amendment (million)
----------------------------------------------------------------------------------------------------------------
Total CAT Costs Under November 2025 Budget......... $188 $188
Total Estimated Annual Savings for Cloud Hosting 55-75 48-66
Services..........................................
Total Estimated Reduction in Plan Processor 15 7
Operating Fee.....................................
Total Estimated Savings............................ 70-90 55-73
Total Estimated Resulting Annual CAT Costs After 98-118 115-133
Cost Savings Measures.............................
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Requirements Pursuant to Rule 608(a)
A. Description of the Proposed Amendments to the CAT NMS Plan
1. Interim CAT-Order-ID Amendment: Elimination of Interim CAT-Order-ID/
Maintain Ad Hoc Capability
CAT LLC proposes to amend the CAT NMS Plan to provide for delivery
of an interim CAT-Order-ID on an ``as requested by the SEC'' basis,
rather than on a daily basis (the ``Interim CAT-Order-ID
Amendment'').\19\ The Interim CAT-Order-ID Amendment would reduce CAT
annual costs for cloud hosting services by approximately $2 to $3
million annually, subject to incremental costs incurred for any SEC-
initiated ad hoc requests (as discussed further below).
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\19\ CAT LLC originally filed this proposal with the SEC on
March 27, 2024 as part of the 2024 Cost Savings Amendments. Letter
from Brandon Becker, CAT NMS Plan Operating Committee Chair, to
Vanessa Countryman, Secretary, Commission (March 27, 2024), <a href="https://catnmsplan.com/sites/default/files/2024-03/03.27.24-Proposed-CAT-NMS-Plan-Amendment-Cost-Savings-Amendment.pdf">https://catnmsplan.com/sites/default/files/2024-03/03.27.24-Proposed-CAT-NMS-Plan-Amendment-Cost-Savings-Amendment.pdf</a>. After discussions
with the SEC staff, however, CAT LLC withdrew the proposal. Letter
from Brandon Becker, CAT NMS Plan Operating Committee Chair, to
Vanessa Countryman, Secretary, Commission, (Sept. 20, 2024), at 2,
<a href="https://www.catnmsplan.com/sites/default/files/2024-09/09.20.2024-Cost-Savings-Amendment-OIP-Response.pdf">https://www.catnmsplan.com/sites/default/files/2024-09/09.20.2024-Cost-Savings-Amendment-OIP-Response.pdf</a>. Notwithstanding the
withdrawal of the prior filing based on discussions with the SEC
staff, CAT LLC continues to believe that the anticipated savings
associated with this change substantially outweigh any minimal
regulatory impact. Accordingly, CAT LLC has determined to re-file
this proposal with the Commission.
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The Interim CAT-Order-ID Amendment is consistent with and would
codify the exemptive relief related to the interim CAT-Order-ID as set
forth in the 2025 Cost Savings Exemptive Order.\20\ Correspondingly,
the estimated cost savings for the Interim CAT-Order-ID Amendment are
the same as expected with regard to the implementation of the exemptive
relief in the 2025 Cost Savings Exemptive Order related to the interim
CAT-Order-ID.\21\ The following compares the estimated annual cost
savings for cloud hosting services for the exemptive relief related to
the interim CAT-Order-ID in the 2025 Cost Savings Exemptive Order and
the Interim-CAT-Order ID Amendment.
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\20\ 2025 Cost Savings Exemptive Order at 47854-55.
\21\ See 2025 Cost Savings Exemptive Order at 47874, n.23.
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Estimated annual cost
savings for cloud hosting
services (million)
----------------------------------------------------------------------------------------------------------------
Cost Savings: 2025 Cost Savings Amendment...... Interim CAT-Order-ID Amendment... $2-$3
Cost Savings: 2025 Cost Savings Exemptive Order Requirements To Create Lifecycle 2-3
Linkages by T+1 at Noon Eastern
Time.
----------------------------------------------------------------------------------------------------------------
a. Current CAT NMS Plan Requirements
Section 6.1 of Appendix D of the CAT NMS Plan states that ``Noon
Eastern Time T+1 (transaction date + one day)'' is the deadline for
``initial data validation, lifecycle linkages and communication of
errors to CAT Reporters.'' The CAT NMS Plan further explains that the
Plan Processor 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.'' \22\
With regard to these provisions, the Commission has stated that
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\22\ Section 3 of Appendix D of the CAT NMS Plan at D-8.
But the CAT NMS Plan does expressly require the creation of
lifecycle linkages by noon Eastern Time on T+1. And the obligation to
assign CAT Order IDs--the mechanism by which the Plan Processor creates
lifecycle linkages--by noon Eastern Time on T+1 necessarily follows
from that requirement.\23\
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\23\ Exchange Act Release No. 95234 (July 8, 2022), 87 FR 42247,
42251 (July 14, 2022) (``July 2022 Exemptive Order''). See also
Exchange Act Release No. 97530 (May 18, 2023), 88 FR 33655 (May 24,
2023); Exchange Act Release No. 90688 (Dec. 16, 2020), 85 FR 83634
(Dec. 22, 2020).
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In its November 2023 Exemptive Order, the Commission granted
exemptive relief from the requirement to assign an interim CAT-Order-ID
by T+1 at noon ET, subject to certain conditions. One condition is the
requirement for the Plan Processor to maintain or improve the existing
performance of functionality providing lifecycle linkages for all order
events by T+1 at 9 p.m. ET, except an interim CAT-Order-ID was not
required for Options Market Maker quotes in Listed Options (``OMM
Quotes'').\24\ 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.'' \25\
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\24\ Exchange Act Release No. 98848 (Nov. 2, 2023), 88 FR 77130
(Nov. 8, 2023) (``November 2023 Exemptive Order'').
\25\ 2024 Cost Savings Amendment at 103034-38.
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Accordingly, pursuant to the current CAT NMS Plan and the November
2023 Exemptive Order, the Plan Processor currently assigns an interim
CAT-Order-ID by T+1 at 9 p.m. ET, rather than by T+1 at noon ET,\26\
except with regard to OMM Quotes, and subsequently provides a final
CAT-Order-ID at T+5 at
[[Page 61511]]
8 a.m. ET pursuant to the following timeline:
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\26\ See November 2023 Exemptive Order.
T+1 @ 8 a.m. ET: Initial submissions due
T+1 @ 12 p.m. ET: Initial data validation, communication of errors to
CAT Reporters; unlinked data available to regulators
T+1 @ 9 p.m. ET: Interim CAT-Order-ID available \27\
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\27\ The Plan Processor is not required to create lifecycle
linkages for Options Market Maker quotes. Section 3.4 of Appendix D
of the CAT NMS Plan at D-10.
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T+3 @ 8 a.m. ET: Resubmission of corrected data
T+4 @ 8 a.m. ET: Final lifecycle assembly begins, reprocessing of late
submissions and corrections
T+5 @ 8 a.m. ET: Corrected data available to Participant regulatory
staff and the SEC.\28\
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\28\ Section 6.1 of Appendix D of the CAT NMS Plan.
---------------------------------------------------------------------------
b. Conditional Exemptive Relief Regarding the Interim CAT-Order-ID
Pursuant to 2025 Cost Savings Exemptive Order
In its 2025 Cost Savings Exemptive Order, the Commission granted
conditional exemptive relief to allow the Participants to further relax
requirements related to the provision of the Interim CAT-Order-ID.\29\
Specifically, the Commission granted conditional exemptive relief from
the requirements in Sections 3 and 6.1 of Appendix D of the CAT NMS
Plan that lifecycle linkages be created by T+1 at noon Eastern Time,
subject to the following conditions:
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\29\ 2025 Cost Savings Exemptive Order at 47854-55.
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<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.\30\
---------------------------------------------------------------------------
\30\ Id. at 47855.
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The conditional exemptive relief granted in the 2025 Cost Savings
Exemptive Order supersedes the conditional exemptive relief set forth
in the November 2023 Exemptive Order with respect to lifecycle linkage
timeframes.\31\ In providing this exemptive relief, the Commission
determined that such relief should ``preserve the core regulatory
benefits of Rule 613 and the CAT NMS Plan, while enabling the
Participants to realize meaningful cost savings.'' \32\
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\31\ Id.
\32\ Id.
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c. Proposed Revisions to the CAT NMS Plan
CAT LLC proposes to amend the Plan to state that the Plan does not
require assignment of interim CAT-Order-IDs on a regular ongoing basis;
rather, interim CAT-Order-IDs shall be provided only on an ``as
requested by the SEC'' basis. To implement this change, CAT LLC
proposes the following changes to the CAT NMS Plan.
CAT LLC proposes to amend the CAT NMS Plan to eliminate the
requirement to provide an interim CAT-Order-ID on a regular ongoing
basis. Specifically, CAT LLC proposes to delete the phrase ``lifecycle
linkages'' from the following bullet in Section 6.1 of Appendix D of
the CAT NMS Plan: ``Noon Eastern Time T+1 (transaction date + one day)-
Initial data validation, lifecycle linkages and communication of errors
to CAT Reporters.'' Similarly, CAT LLC proposes to delete the phrase
``Life Cycle Linkage'' from the second box in Figure A in Section 6.1
of Appendix D of the CAT NMS Plan, which currently states: ``12:00 p.m.
ET T+1 Initial Validation, Life Cycle Linkage, Communication of
Errors.''
CAT LLC also proposes to amend the CAT NMS Plan to require CAT LLC
to provide an interim CAT-Order-ID on an ``as requested by the SEC''
basis. Specifically, CAT LLC proposes to add the following provision to
Section 6.1 of Appendix D of the CAT NMS Plan:
Upon request of a senior officer of the SEC's Division of
Trading and Markets, the SEC's Division of Enforcement, or the SEC's
Division of Examinations to CAT LLC, the Plan Processor shall be
directed to create an interim CAT-Order-ID and make it available to
regulators. The timing and cost of ad hoc runs of the interim CAT-
Order-ID would be based on the number of trade dates and the data
volumes to be processed in the request, but generally would be
anticipated to be processed by T+2 at 9 p.m. ET if the request is
received prior to T+2 at 4 a.m. ET, or within 14 hours of receiving
the request if such request was received after T+2 at 4 a.m. ET.
As indicated in the draft language, such ad hoc requests for an
interim CAT-Order-ID may be made by the designated representatives of
the SEC, not the Participants. The Participants rely on the final CAT-
Order-ID and do not require an interim CAT-Order-ID.
CAT LLC also proposes to revise Section 6.1 of Appendix D of the
CAT NMS Plan to clarify that the data made available to Participant
regulatory staff and the SEC on T+5 must not only be corrected but also
linked. Specifically, CAT LLC proposes to revise the following bullet
in Section 6.1 of Appendix D of the CAT NMS Plan: ``8:00 a.m. Eastern
Time T+5 (transaction date + five days)-Corrected data available to
Participant regulatory staff and the SEC'' by adding the phrase ``and
linked.'' With this change, this bullet would read ``8:00 a.m. Eastern
Time T+5 (transaction date + five days)-Corrected and linked data
available to Participant regulatory staff and the SEC.'' \33\
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\33\ As reflected in Exhibit A to this filing, CAT LLC
separately proposes changing the reference to ``T+5 (transaction
data + five days)'' in this sentence to ``T+6 (transaction date +
six days)'' as part of the Data Availability Amendment.
---------------------------------------------------------------------------
d. The Benefits of the Interim CAT-Order-ID Amendment Significantly
Outweigh Its Costs
i. The Interim CAT-Order-ID Amendment Would Result in an Estimated $2
to $3 Million in Annual Cost Savings for Cloud Hosting Services
Based on current data volumes, delivery of an interim CAT-Order-ID
on an ``as requested by the SEC'' basis, rather than on a regular
ongoing basis, is estimated to result in approximately $2 to $3 million
in annual savings for cloud hosting services.\34\ These cost savings
estimates are based on certain assumptions and the current scope of the
CAT, and may vary based on, among other things, the details of the
requirements in any final amendment approved by the Commission.\35\
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\34\ The average typical daily compute costs for interim
lifecycle processing is estimated to be approximately $8,000/day to
$12,000/day for a typical day based on current data volumes and
compute reservations, which totals approximately $2 to $3 million
per year based on 252 trading days per year.
\35\ See supra notes 9 and 10.
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CAT LLC would add a separate line item to its budget to reflect
costs related to any SEC requests to generate an interim CAT-Order-ID.
The estimated cost of an ad hoc interim CAT-Order-ID delivery could
range from approximately $8,000 to $12,000, but ultimately would depend
on various unknowns including the then-current availability of compute
resources and the size of the data volumes to be processed in the
request.\36\
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\36\ This estimate includes compute and storage costs for a
daily ad hoc interim lifecycle processing and is based on demand
rates for a typical day with average data volumes. The estimated
number of authorized ad hoc runs per year that would be requested by
the SEC cannot be predicted by CAT LLC or the Plan Processor.
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[[Page 61512]]
To implement the proposal, the Plan Processor has proposed a one-
time change request fee of approximately $225,000. The Plan Processor
estimates it would take approximately 6 to 8 weeks to fully implement
the changes for the Interim CAT-Order-ID Amendment. One-time
implementation costs will generally consist of Plan Processor labor
costs associated with coding and software development, as well as any
related cloud fees associated with the development, testing, and load
testing of the proposed changes for the proposed amendment. Even
accounting for this one-time implementation cost, the proposal would
allow CAT LLC to achieve substantial cost savings in the first
year.\37\
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\37\ CAT LLC plans to rely upon the exemptive relief provided by
the SEC in its 2025 Cost Savings Exemptive Order regarding the
Interim CAT-Order-ID. Based on discussions with the Plan Processor,
CAT LLC understands that approximately 65% of the cost savings
related to the Interim CAT-Order-ID Amendment would begin to accrue
after the completion of the first phase of work related to the
exemptive relief provided with regard to the Interim CAT-Order-ID in
the 2025 Cost Savings Exemptive Order.
---------------------------------------------------------------------------
ii. The Interim CAT-Order-ID Amendment Would Preserve the Core
Regulatory Purposes of the CAT
CAT LLC further believes the Interim CAT-Order-ID Amendment would
have limited regulatory impact. CAT LLC has determined that eliminating
the automatic regular assignment of the interim CAT-Order-ID, while
maintaining the option of assigning an interim CAT-Order-ID on an ad
hoc basis, would not adversely affect the regulatory objectives of the
CAT, including market oversight.
First, as regulators, the Participants rely on the final CAT-Order-
ID and do not require an interim CAT-Order-ID. The interim CAT-Order-ID
is currently provided on T+1 at 9 p.m. ET, and the final CAT-Order-ID,
which replaces the interim CAT-Order-ID, is currently provided four
days later at T+5 at 8 a.m. ET. As the SEC noted in its 2025 Cost
Savings Exemptive Order, making the final CAT-Order-ID available by T+5
``should generally continue to be faster than was possible before the
CAT existed.'' \38\ Moreover, the final CAT-Order-ID reflects reporting
errors that have been rectified within the Plan's allowed processing
window. Accordingly, because the CAT is not a real-time system, and the
final CAT-Order-ID is provided only a short time after the interim CAT-
Order-ID is currently provided, the Participants do not believe that
elimination of the interim CAT-Order-ID would impact their regulatory
programs.
---------------------------------------------------------------------------
\38\ 2025 Cost Savings Exemptive Order at 47855.
---------------------------------------------------------------------------
Second, as the SEC noted in the 2025 Cost Savings Exemptive Order,
regulators will be able to access and analyze raw unprocessed data
prior to 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.'' \39\
---------------------------------------------------------------------------
\39\ Id.
---------------------------------------------------------------------------
Third, for those limited instances in which an interim CAT-Order-ID
is necessary for regulatory purposes, CAT LLC will make the interim
CAT-Order-ID available upon request of a senior officer of the SEC's
Division of Trading and Markets, the SEC's Division of Enforcement, or
the SEC's Division of Examinations to CAT LLC. CAT LLC proposes
limiting this ability to a senior officer (as opposed to any regulatory
user of the SEC) to limit the frequency of such requests given the
significant number of SEC regulatory users and to ensure that the costs
associated with processing such requests (which could range from
approximately $8,000 to $12,000, or more, per request) are closely
aligned with the Commission's priorities. This would preserve the SEC's
ability to obtain an interim CAT-Order-ID on an as-needed basis (for
example, in the case of a major market event), while avoiding the
substantial cost of delivering an interim CAT-Order-ID on a regular
ongoing basis.
The Participants believe the availability of such data, combined
with the ability of the senior officers of the SEC to request an
interim CAT-Order-ID on an ad hoc basis and the delivery of the final
CAT-Order-ID, is sufficient for regulatory purposes. Because the CAT is
a historical regulatory audit trail rather than a real-time system, the
de minimis benefit that may result from producing an interim CAT-Order-
ID slightly earlier than a final CAT-Order-ID would not justify the
significant cost.
iii. The Interim CAT-Order-ID Amendment Would Not Adversely Impact
Industry Members
CAT LLC also believes the Interim CAT-Order-ID Amendment would
reduce costs with limited regulatory impact without adversely impacting
Industry Members. The interim CAT-Order-ID is an internal function
within CAT, and, therefore, does not directly affect the requirements
applicable to CAT Reporters. Accordingly, CAT LLC does not anticipate
that the Interim CAT-Order-ID Amendment would have an adverse impact on
Industry Members or their costs.
iv. The Interim CAT-Order-ID Amendment Would Enhance Market Efficiency
CAT LLC also believes the Interim CAT-Order-ID Amendment would
enhance the efficiency of the securities markets. As discussed above,
the Interim-CAT-Order-ID Amendment would provide significant annual
cost savings for CAT LLC. Such cost savings would not only benefit CAT
LLC, but would also provide cost savings for any Participants and
Industry Members that are required to fund the CAT in accordance with
the CAT NMS Plan. Ultimately, such cost savings would benefit investors
and the U.S. markets as a whole, thereby facilitating the goals of the
Exchange Act.
2. Data Storage Amendment: Reduction of Retention Period for Certain
Categories of CAT Data
CAT LLC proposes to amend the CAT NMS Plan to permit the Plan
Processor to delete (i) all CAT Data older than three years (other than
CAT Data with a shorter retention period as described below); (ii) OMM
Quotes older than six months; (iii) Interim Operational Data older than
15 days; and (iv) quote and NBBO data included in the SIP Data \40\
from the OPRA Plan or any successor SIP \41\ for Listed Options \42\
(``Options SIP Data'') older than six months (the ``Data Storage
Amendment''). The Data Storage Amendment would reduce annual CAT costs
for cloud hosting services by approximately $23.5 to $32 million
annually.\43\ To the extent the Commission deems it necessary to grant
exemptive relief from the recordkeeping and data retention requirements
of SEC Rule 17a-1 or any other provision under the Exchange Act or the
CAT NMS Plan in order to effectuate this proposal, for the same reasons
as discussed herein, CAT LLC requests that the Commission utilize its
authority under Section 36(a)(1) of the Exchange Act \44\ and Rule
[[Page 61513]]
608(e) of Regulation NMS \45\ to grant such exemptive relief.
---------------------------------------------------------------------------
\40\ See Section 6.5 of the CAT NMS Plan for the definition of
``SIP Data.''
\41\ See Section 1.1 of the CAT NMS Plan for the definition of
``SIP.''
\42\ See Section 1.1 of the CAT NMS Plan for the definition of
``Listed Options.''
\43\ See supra, note 9.
\44\ See 15 U.S.C. 78mm(a)(1), which provides, in relevant part,
that the ``Commission, by rule, regulation, or order, may
conditionally or unconditionally exempt any person, security, or
transaction, or any class or classes of persons, securities, or
transactions, from any provision or provisions of this title or of
any rule or regulation thereunder, to the extent that such exemption
is necessary or appropriate in the public interest, and is
consistent with the protection of investors.''
\45\ See 17 CFR 242.608(e), which provides that ``[t]he
Commission may exempt from the provisions of this section, either
unconditionally or on specified terms and conditions, any self-
regulatory organization, member thereof, or specified security, if
the Commission determines that such exemption is 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.''
---------------------------------------------------------------------------
As discussed further below, the Data Storage Amendment expands upon
the substance of the exemptive relief related to data storage and
retention granted by the Commission in the 2025 Cost Savings Exemptive
Order and further increases the anticipated cost savings related to
data storage and retention by approximately $6.5 to $9 million.
Specifically, the Data Storage Amendment expands upon the exemptive
relief related to data storage and retention as set forth in the 2025
Cost Savings Exemptive Order by:
<bullet> Deleting all CAT Data older than three years, rather than
older than five years;
<bullet> Deleting OMM Quotes older than six months, rather than
older than one year; and
<bullet> Deleting Options SIP Data older than six months, rather
than older than five years.
Both the Data Storage Amendment and the exemptive relief provided
in the 2025 Cost Savings Exemptive Order would allow for the deletion
of Interim Operational Data older than 15 days. The following compares
the estimated annual cost savings related to data storage and retention
relief granted in the 2025 Cost Savings Exemptive Order \46\ and the
Data Storage Amendment.
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\46\ 2025 Cost Savings Exemptive Order at 47857-58. In the 2025
Cost Savings Exemptive Order, the SEC states that it ``understands
from its communications with the Participants that such measures
could save approximately $11-15 million annually.'' Id. at 47858.
The estimated cost savings set forth in this chart reflect updated
cost estimates.
\47\ The cost savings estimate provided in the 2025 Cost Savings
Exemptive Order for requirements related to data storage and
retention was $11 to $15 million per year. That estimate was based
on costs actually incurred through April 2025. The $17 to $23
million estimate provided in this filing has been updated to reflect
costs actually incurred through September 2025.
------------------------------------------------------------------------
Estimated annual cloud
hosting cost savings
(million)
------------------------------------------------------------------------
Cost Savings: 2025 Cost Data Storage $23.5-$32
Savings Amendment. Amendment.
Cost Savings: 2025 Cost Requirements \47\ 17-23
Savings Exemptive Order. Related to Data
Storage and
Retention.
------------------------------------------------------------------------
a. Current CAT NMS Plan Requirements
Section 6.1(d)(i) of the CAT NMS Plan requires the Plan Processor
to comply with the recordkeeping requirements of SEC Rule 613(e)(8). In
turn, SEC Rule 613(e)(8) requires that the Central Repository retain
information collected pursuant to SEC Rule 613(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.
Section 6.5(d) of the CAT NMS Plan provides: ``Consistent with
Appendix D, Data Retention Requirements, the Central Repository shall
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, subject to the exceptions in Section 6.3
of Appendix D.''
Section 1.4 of Appendix D of the CAT NMS Plan provides, in relevant
part, that ``[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, subject to the exceptions in
Section 6.3 of Appendix D.''
Section 3.4 of Appendix D (Requirements for Options Market Maker
Quotes in Listed Options) governs the processing and storage of OMM
Quotes.
Section 6.3 of Appendix D (Exceptions to Data Availability
Requirements) provides that ``Raw Unprocessed Data'' older than 15
days, ``Interim Operational Data'' older than 15 days, and all
submission and feedback files older than 15 days may be retained in an
archive storage tier, and that such archived data ``is not directly
available and searchable electronically without manual intervention and
will not be subject to any query tool performance requirements until it
is restored to an accessible storage tier.'' Pursuant to Section 6.3 of
Appendix D, ``[t]he 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.''
b. Conditional Exemptive Relief Regarding Data Storage and Retention
Pursuant to 2025 Cost Savings Exemptive Order
In its 2025 Cost Savings Exemptive Order, the Commission granted
conditional exemptive relief from SEC Rule 17a-1, SEC 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:
<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.
<bullet> Delete OMM Quotes data after one year from the CAT System.
<bullet> Delete Interim Operational Data older than 15 days.\48\
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\48\ 2025 Cost Savings Exemptive Order at 47858.
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In granting this exemptive relief, the Commission stated it ``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.'' \49\ The
SEC stated in the 2025 Cost Savings Exemptive Order that it
``understands from its communications with the Participants that such
measures [with regard to the exemptive relief regarding data storage
and retention) could save
[[Page 61514]]
approximately $11-$15 million annually.'' \50\
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\49\ Id.
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c. Proposed Revisions to the CAT NMS Plan
With the Data Storage Amendment, CAT LLC proposes to amend the CAT
NMS Plan to permit the Plan Processor to delete (i) all CAT Data older
than three years; (ii) OMM Quotes older than six months; (iii) Interim
Operational Data older than 15 days; and (iv) Options SIP Data older
than six months. The Data Storage Amendment expands upon the exemptive
relief related to data storage and retention as set forth in the 2025
Cost Savings Exemptive Order by:
<bullet> Deleting all CAT Data older than three years, rather than
older than five years;
<bullet> Deleting OMM Quotes older than six months, rather than
older than one year; and
<bullet> Deleting Options SIP Data older than six months, rather
than older than five years.
Both the Data Storage Amendment and the exemptive relief provided
in the 2025 Cost Savings Exemptive Order would allow for the deletion
of Interim Operational Data older than 15 days. The Data Storage
Amendment would reduce CAT costs for cloud hosting services by
approximately $23.5-$32 million annually. The following chart indicates
the estimated cost savings for cloud hosting services with regard to
each of the four components of the Data Storage Amendment.
----------------------------------------------------------------------------------------------------------------
Estimated reduction in cloud Estimated reduction in cloud
Proposal hosting fees (low range) hosting fees (high range)
(million) (million)
----------------------------------------------------------------------------------------------------------------
Delete CAT Data older than three years (other than $8.8 $12
CAT Data with shorter retention periods)...........
Delete OMM Quotes older than six months............. 9.2 12.4
Delete Interim Operational Data older than 15 days.. 1.9 2.6
Delete Options SIP Data older than six months....... 3.7 5.0
----------------------------------------------------------------------------------------------------------------
To implement the Data Storage Amendment, CAT LLC proposes to make
the following changes to the CAT NMS Plan.
i. Section 6.1(d)(i) of the CAT NMS Plan
Section 6.1(d)(i) of the CAT NMS Plan states, in relevant part,
that ``[t]he Plan Processor shall . . . comply with . . . the
recordkeeping requirements of SEC Rule 613(e)(8).'' CAT LLC proposes to
replace the requirement to comply with ``the recordkeeping requirements
of SEC Rule 613(e)(8)'' with a requirement to comply with ``the
recordkeeping requirements of Section 6.5 and Appendix D.'' \51\ This
change would simplify Section 6.1(d)(i) by referring to the data
retention provisions in the CAT NMS Plan itself, and would eliminate
any confusion or perceived inconsistency regarding legacy language in
Rule 613 that data be made ``directly available and searchable
electronically without any manual intervention for a period of not less
than five years.''
---------------------------------------------------------------------------
\50\ Id. at 47858, n.61.
\51\ SEC Rule 613(e)(8) applies to the ``national market system
plan submitted pursuant to this section'' and was satisfied by the
original filing of the CAT NMS Plan.
---------------------------------------------------------------------------
ii. Section 6.5(b)(i) of the CAT NMS Plan
CAT LLC proposes to amend Section 6.5(b)(i) of the CAT NMS Plan to
permit the Plan Processor to delete CAT Data older than three years.
Section 6.5(b)(i) of the CAT NMS Plan currently states:
Consistent with Appendix D, Data Retention Requirements, the
Central Repository shall 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, subject
to the exceptions in Section 6.3 of Appendix D. Such data when
available to the Participant regulatory staff and the SEC shall be
linked.
First, CAT LLC proposes to amend this provision to state that CAT
Data will be retained for a period of not less than three years, and in
a convenient and usable standard electronic data format that is
directly available and searchable electronically without any manual
intervention by the Plan Processor.
Second, CAT LLC proposes to simplify this provision by replacing
the references to ``the information collected pursuant to paragraphs
(c)(7) and (e)(7) of SEC Rule 613'' with ``CAT Data.'' CAT Data is
defined in Section 1.1 of the CAT NMS Plan to mean ``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.'' Participant Data, as defined in Section 6.3(d) of the CAT NMS
Plan, and Industry Member Data, as defined in Section 6.4(d)(ii) of the
CAT NMS Plan, collectively, correspond to the information set forth in
paragraph (c)(7) of SEC Rule 613, subject to certain changes approved
by the Commission. A comparison of the Plan provisions and the
corresponding provisions in SEC Rule 613 is set forth in Chart 1 in
Exhibit D. Similarly, SIP Data, as defined in Section 6.5(a)(ii) of the
CAT NMS Plan, corresponds to the information set forth in paragraph
(e)(7) of SEC Rule 613, subject to certain changes approved by the
Commission. A comparison of the Plan provisions and the corresponding
provisions in SEC Rule 613 is set forth in Chart 2 in Exhibit D. In
light of the differences between paragraphs (c)(7) and (e)(7) of SEC
Rule 613 and the corresponding provisions of the CAT NMS Plan, and to
eliminate any confusion or perceived inconsistency regarding legacy
language in SEC Rule 613, CAT LLC believes it is appropriate to refer
to ``CAT Data'' as defined in the Plan rather than to provisions of SEC
Rule 613.
Third, CAT LLC proposes to add a reference to Section 3.4 of
Appendix D of the CAT NMS Plan, which governs the storage of OMM
Quotes, and a reference to proposed Section 6.4, which describes the
reduced retention period for Interim Operational Data and Options SIP
Data (as discussed below).
With these proposed changes, Section 6.5(b)(i) of the CAT NMS Plan
would read as follows:
Consistent with Appendix D, Data Retention Requirements, the
Central Repository shall retain CAT Data for a period of not less
than three (3) years, and in a convenient and usable standard
electronic data format that is directly available and searchable
electronically without any manual intervention by the Plan
Processor, subject to the exceptions in Section 3.4, Section 6.3 and
Section 6.4 of Appendix D. Such data when available to the
Participant regulatory staff and the SEC shall be linked.
iii. Section 1.4 of Appendix D of the CAT NMS Plan
Correspondingly, CAT LLC proposes to amend Section 1.4 of Appendix
D of the CAT NMS Plan to replace the
[[Page 61515]]
existing provision that requires the Plan Processor to develop a formal
record retention policy and program for the CAT, which will at a
minimum ``[m]ake data directly available and searchable electronically
without manual intervention for at least six years, subject to the
exceptions in Section 6.3 of Appendix D'' with the following provision:
``Retain CAT Data for a period of not less than three (3) years and
make it directly available and searchable electronically without manual
intervention, subject to the exceptions in Section 3.4, Section 6.3 and
Section 6.4 of Appendix D.''
iv. Section 3.4 of Appendix D of the CAT NMS Plan
CAT LLC proposes to amend Section 3.4 of Appendix D of the CAT NMS
Plan to add the following sentence: ``Notwithstanding any other
provision of the CAT NMS Plan, this Appendix D, or Exchange Act Rule
17a-1, Options Market Maker quotes in Listed Options older than six
months may be deleted by the Plan Processor.''
The Plan Participant Technical Specifications currently define
three types of events used to report Options Market Maker Quotes:
Option Quote (OQ), Option Quote Cancel (OQC) and Option Complex Quote
(OCQ) events.\52\ Under the proposal, Option Quote (OQ), Option Quote
Cancel (OQC), and Option Complex Quote (OCQ) events would be deleted
from the CAT after six months. Trades resulting from an Options Market
Maker Quote would continue to be reportable as Option Trade (OT)
events; however, the OT event will not be associated with any OMM
Quote.
---------------------------------------------------------------------------
\52\ See Section 5.1 of the CAT Reporting Technical
Specifications for Plan Participant v. 2.0-r1 (Aug. 22, 2025),
<a href="https://www.catnmsplan.com/sites/default/files/2025-08/08.22.2025-CAT_Reporting_Technical_Specifications_for_Participants_4.2.0-r1.pdf">https://www.catnmsplan.com/sites/default/files/2025-08/08.22.2025-CAT_Reporting_Technical_Specifications_for_Participants_4.2.0-r1.pdf</a>.
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v. Section 6.3 of Appendix D of the CAT NMS Plan
CAT LLC proposes to amend Section 6.3 of Appendix D of the CAT NMS
Plan to remove the references to archiving of Interim Operational Data
older than 15 days. Instead, CAT LLC proposes to delete Interim
Operational Data older than 15 days. As a result, CAT LLC proposes to
delete the following from Section 6.3 of Appendix D of the CAT NMS
Plan:
<bullet> Interim Operational Data older than 15 days. ``Interim
Operational Data'' means 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. For 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.
CAT LLC proposes to address the retention period of Interim
Operational Data in new Section 6.4 of Appendix D of the CAT NMS Plan,
as discussed below.
vi. Section 6.4 of Appendix D of the CAT NMS Plan
CAT LLC proposes to add a new Section 6.4 to Appendix D of the CAT
NMS Plan to describe the reduced retention periods for Interim
Operational Data and Options SIP Data. Specifically, proposed Section
6.4 of Appendix D of the CAT NMS Plan would state the following:
Notwithstanding any other provision of the CAT NMS Plan, this
Appendix D, or Exchange Act Rule 17a-1, the following may be deleted
from the CAT by the Plan Processor:
<bullet> Interim Operational Data older than 15 days. ``Interim
Operational Data'' means all processed, validated and unlinked data
made available to regulators by T+2 at 8:00 a.m. ET and all iterations
of processed data made available to regulators between T+2 and T+6, but
excludes the final version of corrected data that is made available by
T+6 at 8:00 a.m. ET. For 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+2 at 8:00
a.m. ET.
<bullet> Options SIP Data older than six months. ``Options SIP
Data'' means quote and NBBO data included in the SIP Data from the OPRA
Plan or any successor SIP for Listed Options.
d. The Benefits of the Data Storage Amendment Significantly Outweigh
Its Costs
The benefits of the Data Storage Amendment significantly outweigh
its costs. This proposal would allow CAT LLC to achieve an estimated
$23.5-$32 million in annual cost savings for cloud hosting services,
materially advancing CAT LLC's ongoing efforts to reduce CAT operating
costs. Moreover, the Data Storage Amendment would not adversely affect
the core regulatory purposes of the CAT.
i. The Data Storage Amendment Would Result in an Estimated $23.5-$32
Million in Annual Cost Savings for Cloud Hosting Services
CAT LLC, after consultation with the Plan Processor, has determined
the Data Storage Amendment would allow CAT LLC to achieve approximately
$23.5-$32 million in annual cost savings for cloud hosting
services.\53\ These cost savings estimates are based on certain
assumptions and the current scope of the CAT, and may vary based on,
among other things, the details of the requirements in any final
amendment approved by the Commission.\54\
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\53\ When the Participants originally evaluated the retention
period for CAT Data when proposing the CAT NMS Plan, it was
recognized that longer retention periods would increase costs for
the CAT. See CAT NMS Plan Approval Order at 84778 (noting that
lengthier retention periods would impact ``the maintenance costs
associated with the CAT'').
\54\ See supra notes 9 and 10.
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When the CAT NMS Plan was adopted in 2016, it was ``expected that
the Central Repository will grow to more than 29 petabytes of raw,
uncompressed data.'' \55\ The Plan Processor currently projects,
however, that cumulative storage will be approximately 820 to 830
petabytes for 2025--more than 28 times this original estimate. CAT LLC
and the Plan Processor have continually implemented optimizations that
have significantly decreased per-unit storage costs despite increasing
data volumes, but storage costs remain a significant component of
overall CAT costs. Since the implementation of the 2024 Cost Savings
Amendment in April 2025, storage costs during the period Q2 2025
through Q3 2025 have ranged from 32% to 41% of monthly cloud hosting
services fees.
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\55\ See CAT NMS Plan Approval Order at 85203; Section 1.3 of
Appendix D of the CAT NMS Plan, at Appendix D-5. Section 6.3 of
Appendix D provides that raw unprocessed data, interim operational
data, and submission and feedback files older than 15 days may be
retained in an archive storage tier.
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One major driver of storage costs to date is the requirement that
CAT Data must be ``directly available and searchable electronically
without any manual intervention by the Plan Processor for a period of
not less than six (6) years,'' subject to narrow exceptions approved as
part of the 2024 Cost Savings Amendment.\56\ The retention of six years
of CAT Data (or
[[Page 61516]]
even five years of CAT Data under the 2025 Cost Savings Exemptive
Order, which has not yet been implemented) would continue to lead to
significant costs that outstrip regulatory need.\57\
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\56\ CAT NMS Plan at Section 6.5(b)(i). Section 6.3 of Appendix
D (Exceptions to Data Availability Requirements) provides that ``Raw
Unprocessed Data'' older than 15 days, ``Interim Operational Data''
older than 15 days, and all submission and feedback files older than
15 days may be retained in an archive storage tier.
\57\ CAT proposes to delete data older than three years rather
than moving such data to deep archive due to the greater cost
savings. For example, deleting data from 2019 and 2020, rather than
moving it to deep archive, would result in additional savings of
$1.2 million-$1.5 million. This number would fluctuate year-over-
year commensurate with the amount of data eligible for deletion in
any given year. For example, the effective savings for years beyond
2021 would increase due to greater amounts of data in those later
years as a result of the implementation of later CAT reporting
phases and organic market volume growth.
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Another major driver of storage costs is OMM Quotes. OMM Quotes
(the vast majority of which result in a cancellation) are the single
largest data source for the CAT, comprising approximately 98% of all
Options Exchange events and approximately 44% of all transaction
volume.\58\ The Participants have been working to limit the costs
related to OMM Quotes since the inception of the CAT.\59\ Although
these prior efforts have realized significant cost savings, the costs
associated with storing six years of OMM Quotes under the CAT NMS Plan
(or even one year under the 2025 Cost Savings Exemptive Order), remains
high in light of the limited regulatory uses and benefits of such data,
as described in more detail in Section A.2.d.ii below. Accordingly, CAT
proposes to delete OMM Quotes older than six months.\60\
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\58\ Under Section 1.1 of the CAT NMS Plan, a ``Reportable
Event'' ``includes, but is not limited to, the original receipt or
origination, modification, cancellation, routing, execution (in
whole or in part) and allocation of an order, and receipt of a
routed order.'' Section 1.1 of the CAT NMS Plan states that an
``order'' ``has, with respect to Eligible Securities, the meaning
set forth in SEC Rule 613(j)(8).'' SEC Rule 613(j)(8), in turn,
states that ``[t]he term order shall include: (i) Any order received
by a member of a national securities exchange or national securities
association from any person; (ii) Any order originated by a member
of a national securities exchange or national securities
association; or (iii) Any bid or offer.'' Accordingly, the
definition of an ``order'' includes OMM Quotes, and Reportable
Events include events related to OMM Quotes.
\59\ In March 2016, the Commission granted exemptive relief
permitting OMM Quotes to be reported to the Central Repository by
the relevant Options Exchange in lieu of requiring that such
reporting be done by both the Options Exchange and the Options
Market Maker, as required by Rule 613. Exchange Act Release No.
77265 (Mar. 1, 2016), 81 FR 11856 (Mar. 7, 2016). In November 2023,
the Commission granted exemptive relief allowing the Plan Processor
to create lifecycle linkages for OMM Quotes only once by T+2 at 8
a.m. ET (as opposed to requiring both an interim lifecycle by T+1 at
9 p.m. ET and a final lifecycle by T+5 at 8 a.m. ET). See November
2023 Exemptive Order. In December 2024, the Commission approved the
2024 Cost Savings Amendment, which provides that OMM Quotes would no
longer undergo any linkage validation, linkage feedback, or
lifecycle enrichment processing. See 2024 Cost Savings Amendment
Approval Order.
\60\ The 2025 Cost Savings Exemptive Order provides relief for
OMM Quotes older than a year, but CAT LLC does not believe that this
is sufficient for cost savings purposes.
---------------------------------------------------------------------------
Relatedly, the CAT is required to maintain copies of Options SIP
Data for six years under the CAT NMS Plan (or five years under the 2025
Cost Savings Exemptive Order). However, such data is voluminous and
imposes significant costs on the CAT. Options SIP Data currently
represents 25% of storage costs. Accordingly, like with OMM Quotes, CAT
proposes to delete Options SIP Data older than six months.
Furthermore, the CAT is required to maintain all copies of Interim
Operational Data.\61\ After five years of CAT operation, the
Participants have not used Interim Operational Data for regulatory
purposes. Therefore, the cost of retaining this data, even in a lower-
priced archival storage tier, is not justified given its limited usage.
---------------------------------------------------------------------------
\61\ Section 6.3 of Appendix D of the CAT NMS Plan (Exceptions
to Data Availability Requirements) describes ``Interim Operational
Data'' to mean ``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.''
---------------------------------------------------------------------------
To implement the Data Storage Amendment, the Plan Processor has
proposed a one-time change request setting forth an implementation fee
of approximately $165,000-$265,000. The Plan Processor estimates that
it would take approximately three to four months to fully implement the
changes for the Data Storage Amendment. One-time implementation costs
will generally consist of Plan Processor labor costs associated with
coding and software development, as well as any related cloud fees
associated with the development, testing, and load testing of the
proposed changes for the proposed amendment. Even accounting for this
one-time implementation cost, the proposal would allow CAT LLC to
achieve substantial cost savings in the first year.
ii. The Data Storage Amendment Would Preserve the Core Regulatory
Purposes of the CAT
CAT LLC believes the cost savings associated with the Data Storage
Amendment are readily justified given the minimal impact on the
regulatory purposes of the CAT.
First, with regard to the proposed three-year retention period for
CAT Data, based on their regulatory experiences to date, the
Participants do not anticipate generally needing CAT Data older than
three years to support their regulatory programs. In addition, as the
SEC noted with regard to its own use of the CAT, the first three years
of CAT Data ``will be more frequently accessed and needed by regulatory
users based on its experience in using the CAT.'' \62\ In addition,
although the Plan Processor does not have insight into how bulk data
extracted from the repository (via BDSQL or Direct Read) is used by
regulators, OTQT usage metrics (via DIVER) from January to November
2025 demonstrate that only 2% of DIVER requests (750 out of 38,028
requests) were for trade dates older than three years.
---------------------------------------------------------------------------
\62\ 2025 Cost Savings Exemptive Order at 47858.
---------------------------------------------------------------------------
Second, the vast majority of OMM Quote lifecycles do not involve
any execution or allocation and Participant regulatory users very
rarely access such data. The SEC recognized that the costs of retaining
older OMM Quotes exceed their regulatory benefit, stating in the 2025
Cost Savings Exemptive Order that ``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.'' \63\ The
Participants believe the Commission's reasoning is also applicable to
OMM Quotes older than six months, not just OMM Quotes older than one
year.
---------------------------------------------------------------------------
\63\ Id.
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Third, the Participants also do not believe that the cost of
retaining Options SIP Data for more than six months is justified by
regulatory need. Based on their regulatory experiences to date, the
Participants generally do not anticipate needing Options SIP Data older
than six months to support their regulatory programs.
Fourth, as noted above, Interim Operational Data generally does not
provide any regulatory value after the final corrected version of CAT
Data is delivered by T+5 at 8 a.m. ET. Regulators generally access the
latest, corrected version of CAT Data, and after five years of
operation, the Participants have not made use of the Interim
Operational Data for regulatory purposes. Under the 2024 Cost Savings
Amendment, Interim Operational Data may be retained in a low-cost
archive storage tier, but the costs associated with storing this data
even in an archive storage tier continue to outweigh any regulatory
benefit. The SEC agreed with this conclusion when it stated that
``deleting Interim Operational Data older
[[Page 61517]]
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.'' \64\
---------------------------------------------------------------------------
\64\ Id.
---------------------------------------------------------------------------
Finally, to the extent any Participant or the SEC determined a need
for CAT Data that would be deleted pursuant to these proposed
revisions, the data could be copied and stored separately within its
own environment for its own use. In addition, the underlying
Participant and Industry Member data would continue to be available to
the SEC for the full retention periods mandated by SEC Rule 17a-1 and
SEC Rule 17a-4.\65\ Accordingly, in the unlikely event that a regulator
required such data, the regulator could request such data directly from
Participants or Industry Members, as appropriate. Based on their
regulatory experiences to date, however, the Participants expect that
such instances would be rare, and, as result, such costs would be de
minimis.
---------------------------------------------------------------------------
\65\ SEC Rule 17a-1(b) requires national securities exchanges
and national securities association to retain documents described
therein for at least five years. SEC Rule 17a-4(a) requires broker-
dealers to retain the information described therein for a six-year
time frame. In addition, the CAT Compliance Rules of each of the
Participants set forth the recordkeeping obligations related to the
CAT for Industry Members. See, e.g., FINRA Rule 6890.
---------------------------------------------------------------------------
iii. The Data Storage Amendment Would Not Adversely Impact Industry
Members
CAT LLC also believes the Data Storage Amendment would reduce costs
with limited regulatory impact without having an adverse impact on
Industry Members. Data storage and retention is an internal function
within CAT and facilitates access to CAT Data by regulatory users of
CAT, and, therefore, does not directly affect the reporting and other
requirements applicable to Industry Members. Accordingly, CAT LLC does
not anticipate that the Data Storage Amendment would have an adverse
impact on Industry Members or their costs.
iv. The Data Storage Amendment Would Enhance Market Efficiency
CAT LLC also believes the Data Storage Amendment would enhance the
efficiency of the securities markets because it would significantly
reduce costs with limited regulatory impact. Importantly, the amount of
data reported to CAT and that must be stored by CAT LLC is orders of
magnitude in excess of that expected at the time that the Plan was
approved. As noted above, when the CAT NMS Plan was adopted in 2016, it
was ``expected that the Central Repository will grow to more than 29
petabytes of raw, uncompressed data.'' \66\ The Plan Processor
currently projects cumulative storage will be approximately 820 to 830
petabytes for 2025. As discussed above, the Data Storage Amendment
would provide significant annual cost savings for CAT LLC. Such cost
savings would not only benefit CAT LLC, but would also provide cost
savings for any Participants and Industry Members that are required to
fund the CAT in accordance with the CAT NMS Plan. Ultimately, such cost
savings would benefit investors and the U.S. markets as a whole,
thereby facilitating the goals of the Exchange Act.
---------------------------------------------------------------------------
\66\ See CAT NMS Plan Approval Order at 85203; Appendix D,
Section 1.3 of the CAT NMS Plan at Appendix D-5.
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3. The Late Data Re-Processing Amendment: Elimination of Late Data Re-
Processing
CAT LLC proposes to amend the CAT NMS Plan to discontinue re-
processing for late or corrected data received after T+4 at 8:00 a.m.
Eastern Time \67\ (``Late Reported Data'') (the ``Late Data Re-
Processing Amendment''). The Late Data Re-Processing Amendment would
reduce CAT costs for cloud hosting services by approximately $14-$19
million annually, plus a $300,000 reduction in the Plan Processor
annual operating fee, which is accounted for in the Plan Processor
operating fee discussion above.\68\
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\67\ Note that, for purposes of this document, 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.''
\68\ See introduction to this filing.
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As discussed further below, the Late Data Re-Processing Amendment
would expand upon the substance of the exemptive relief related to late
data re-processing granted by the Commission in the 2025 Cost Savings
Exemptive Order and increases the anticipated cost savings related to
late data re-processing exemptive relief.\69\ Specifically, the Late
Data Re-Processing Amendment expands upon the exemptive relief related
to late data re-processing as set forth in the 2025 Cost Savings
Exemptive Order by eliminating all late re-processing. The following
compares the estimated annual cost savings related to late data re-
processing relief granted in the 2025 Cost Savings Exemptive Order and
the Late Data Re-Processing Storage Amendment. Note that the $14-$19
million cost savings for the Late Data Re-Processing Amendment includes
the $12.5-17 million estimated to be achieved though the exemptive
relief provided by the 2025 Cost Savings Exemptive Order related to
late data re-processing, an incremental savings of approximately $1.5
to $2 million.
---------------------------------------------------------------------------
\69\ 2025 Cost Savings Exemptive Order at 47855-56.
----------------------------------------------------------------------------------------------------------------
Estimated annual cloud
hosting cost savings
(million)
----------------------------------------------------------------------------------------------------------------
Cost Savings: 2025 Cost Savings Amendment...... Late Data Re-Processing Amendment $14-$19
Cost Savings: 2025 Cost Savings Exemptive Order Requirements for Re-Processing of $12.5-$17
Late Records.
----------------------------------------------------------------------------------------------------------------
a. Current CAT NMS Plan Requirements
[[Page 61518]]
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.'' \70\ The CAT NMS Plan
sets a deadline of T+3 at 8:00 a.m. Eastern Time for the
``[r]esubmission of corrected data'' and a deadline of T+5 at 8:00 a.m.
Eastern Time for the Plan Processor to make ``[c]orrected data
available to Participant regulatory staff and the SEC.'' \71\ 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.'' \72\ The
Commission has stated that ``[t]ogether, these sections require the
Plan Processor to process and assemble any corrected CAT Data received
after T+5 into complete order event lifecycles and to notify regulatory
users as to how such re-processing will be completed.'' \73\
---------------------------------------------------------------------------
\70\ Section 3 of Appendix D of the CAT NMS Plan at D-8. Note,
however, that OMM Quotes in Listed Options are not subject to any
linkage requirements. Id. at D-10.
\71\ Section 6.1 of Appendix D of the CAT NMS Plan at D-19.
\72\ Section 6.2 of Appendix D of the CAT NMS Plan at D-20.
\73\ July 2022 Exemptive Order.
---------------------------------------------------------------------------
b. Exemptive Relief Pursuant to November 2023 Exemptive Order
In November 2023, the Commission granted conditional exemptive
relief from the re-processing requirements for corrected data received
after T+5 that are set forth in Section 3 of Appendix D of the CAT NMS
Plan and Section 6.2 of the CAT NMS Plan.\74\
---------------------------------------------------------------------------
\74\ November 2023 Exemptive Order at 77130-31.
---------------------------------------------------------------------------
The vast majority of lifecycles are complete as of T+5, and the
vast majority of Late Reported Data does not impact lifecycle
linkages.\75\ However, in the limited circumstances in which there is a
missing link between two disjoined segments of an order lifecycle,\76\
full re-processing of the entire set of data for each trade for which
Late Reported Data is received (including assigning a new CAT-Order-ID
for the entire lifecycle) would be exceedingly costly. Accordingly, the
Participants developed, and the Commission granted exemptive relief
permitting, the ``Enhanced Late to the Lifecycle'' process.''
Specifically, the exemptive relief provided the following:
---------------------------------------------------------------------------
\75\ 2025 Cost Savings Exemptive Order at 47856.
\76\ November 2023 Exemptive Order at 77130.
The Plan Processor must maintain its implementation of
functionality related to late data lifecycle association 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''). Under the Enhanced Late to the Lifecycle
process, all late records (i.e., records received after T+5) 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 is now associated with all relevant
lifecycles as part of normal re-processing, such that order event
lifecycles may now be associated with more than one CAT Order
ID.\77\
---------------------------------------------------------------------------
\77\ Id. 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.
The Commission further required, as a condition to the November
2023 exemptive relief, that the Participants implement so-called ``Full
Replay'' functionality. ``Full Replay'' presents 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. Specifically, the
exemptive relief provided the following:
<bullet> The following functionality must be fully implemented and
made available to regulatory users:
[cir] Functionality that creates a lifecycle mapping which
indicates all lifecycle associations made during the Enhanced Late to
the Lifecycle process;
[cir] Functionality that presents 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 that enhances the OTQT, including the ability
to include or exclude any records that were created or replaced as a
result of the Full Replay process.
Such functionality must be fully implemented and made available to
regulatory users within twelve months of the change order's approval by
the Participants.
<bullet> The Plan Processor must 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 must schedule the Enhanced Late to the Lifecycle process
and the Full Replay process to run no less frequently than
quarterly.\78\
---------------------------------------------------------------------------
\78\ Id.
---------------------------------------------------------------------------
The cost of implementing the ``Full Replay'' functionality required
by the Commission included $1.76 million in one-time costs, $360,000 in
recurring annual Plan Processor operating fees. In addition, the
functionality has led to millions of dollars each year in ongoing cloud
hosting services fees. For example, in the six months following
implementation of the ``Full Replay'' process required by the
Commission, total production costs associated with late data processing
were $7.16 million, reaching a high monthly cost of $1.6 million in May
2025--more than 18% of the overall cloud costs for May 2025. Since the
start of 2025, only 1% of the overall linkable volume processed by the
Central Repository required re-processing. Accordingly, the millions of
dollars in costs associated with re-processing a relatively small
percentage of overall CAT Data are disproportionately significant and
continue to far outweigh the regulatory benefit.
c. Conditional Exemptive Relief Regarding Late Data Re-Processing
Pursuant to 2025 Cost Savings Exemptive Order
Recognizing that ``these relaxed requirements were extremely costly
to implement even for a relatively limited amount of CAT Data,'' \79\
the Commission granted in its 2025 Cost Savings Exemptive Order
``conditional exemptive relief to allow the Participants to further
reduce requirements related to the re-processing of late records.''
\80\ Specifically, the Commission granted conditional exemptive relief
from the re-processing requirements for late records in Sections 3,
6.1, and 6.2 of Appendix D of the CAT NMS Plan, subject to the
following conditions:
---------------------------------------------------------------------------
\79\ 2025 Cost Savings Exemptive Order at 47856.
\80\ Id.
---------------------------------------------------------------------------
<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
[[Page 61519]]
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.
<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.\81\
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\81\ Id.
---------------------------------------------------------------------------
This conditional exemptive relief is intended to supersede the
conditional exemptive relief set forth in the November 2023 Exemptive
Order with respect to re-processing of data received after T+5.\82\
---------------------------------------------------------------------------
\82\ Id.
---------------------------------------------------------------------------
The Commission stated the following in support of its exemptive
relief:
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. 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.
d. Proposed Revisions to the CAT NMS Plan
With the Late Data Re-Processing Amendment, Late Reported Data
would not be subject to any re-processing and would be added to the
audit trail without any lifecycle enrichments. Specifically, CAT LLC
proposes to discontinue all Enhanced Late to the Lifecycle and all Full
Replay re-processing.\83\ To eliminate the requirement to re-process
Late Reported Data, CAT LLC proposes to revise Section 6.2 of Appendix
D of the CAT NMS Plan, which currently states, in relevant part:
---------------------------------------------------------------------------
\83\ CAT LLC understands that, with this proposed change, the
Plan Processor would retain the ability to perform Late to the
Lifecycle and Full Replay re-processing on an ad hoc basis if
required for regulatory purposes. CAT LLC understands that there
would be no material impact to FINRA CAT's proposed operating fees
to maintain the functionality, as it is an extension of other
required system elements (e.g., linkage). The only ongoing cost for
any such ad hoc processing of Late Reported Data would be due to
incremental cloud hosting fees associated with each ad hoc
processing request.
If corrections are received after T+5, Participants' regulatory
staff and the SEC must be notified and informed as to how re-
processing will be completed. The Operating Committee will be
involved with decisions on how to re-process the data; however, this
does not relieve the Plan Processor of notifying the Participants'
---------------------------------------------------------------------------
regulatory staff and the SEC.
CAT LLC proposes to amend Section 6.2 of Appendix D of the CAT NMS
Plan to modify the re-processing requirements for data received after
T+5. CAT LLC proposes to revise Section 6.2 of Appendix D of the CAT
NMS Plan to state that ``[n]otwithstanding any other requirements of
the CAT NMS Plan, or the Exchange Act or the rules and regulations
thereunder, records received after T+4 at 8:00 a.m. Eastern Time will
not be subject to any re-processing and will be added to the audit
trail without any lifecycle enrichments.'' This change also clarifies
that the cut-off time is T+4 at 8:00 a.m. Eastern Time, rather than
T+5. Correspondingly, CAT LLC proposes to remove the requirement that,
``[i]f corrections are received after T+5, Participants' regulatory
staff and the SEC must be notified and informed as to how re-processing
will be completed.'' In addition, CAT LLC proposes to remove from
Section 6.2 of Appendix D of the CAT NMS Plan the statement that
``[t]he Operating Committee will be involved with decisions on how to
re-process the data; however, this does not relieve the Plan Processor
of notifying the Participants' regulatory staff and the SEC.''
As revised, the relevant portion of Section 6.2 of Appendix D would
read as follows:
Notwithstanding any other requirements of the CAT NMS Plan, or
the Exchange Act or the rules and regulations thereunder, records
received after T+4 at 8:00 a.m. Eastern Time will not be subject to
any re-processing and will be added to the audit trail without any
lifecycle enrichments.
With this proposed change, the Plan Processor will continue to
provide data regarding late submissions to CAT Reporters and
regulators. The Plan Processor will continue to make available summary
statistics on late submission through its report card program.\84\
Additionally, FINRA CAT will continue to publish detailed information
regarding late submissions and other issues to regulators through its
data issue search system, and to send summary emails describing new
data issues to all query tool users on a weekly basis.\85\ Finally, the
distinction between trade date and submission date continues to be
available on a record-by-record basis within the Central Repository.
Accordingly, regulators can identify and review late data submissions
by leveraging summary statistics provided by the Plan Processor, by
reviewing the catalog of data issues updated daily in the data issue
search system, and by reviewing the underlying records themselves.
---------------------------------------------------------------------------
\84\ See Section 10.4 of Appendix D of the CAT NMS Plan
(requiring compliance report cards to include the ``[n]umber of
transactions submitted later than reporting deadlines'').
\85\ See Appendix C of the CAT NMS Plan at C-12.
---------------------------------------------------------------------------
e. The Benefits of the Late Data Re-Processing Amendment Significantly
Outweigh Its Costs
CAT LLC believes that the anticipated savings associated with the
Late Data Re-Processing Amendment would substantially outweigh the
limited regulatory impact on the CAT. The Late Data Re-Processing
Amendment would allow CAT LLC to achieve an estimated $14-$19 million
in annual cost savings for cloud hosting services, which would
materially advance CAT LLC's ongoing efforts to reduce CAT operating
costs. Moreover, these cost reductions would not adversely affect the
regulatory purposes of the CAT.
i. The Late Data Re-Processing Amendment Would Result in an Estimated
$14-$19 Million in Annual Cost Savings for Cloud Hosting Services
CAT LLC, after consultation with the Plan Processor, has determined
that eliminating Late Data Re-Processing would allow CAT LLC to achieve
[[Page 61520]]
approximately $14-$19 million in annual cost savings in cloud hosting
services. These cost savings estimates are based on certain assumptions
and the current scope of the CAT, and may vary based on, among other
things, the details of the requirements in any final amendment approved
by the Commission.\86\
---------------------------------------------------------------------------
\86\ See supra notes 9 and 10.
---------------------------------------------------------------------------
To implement the proposal, the Plan Processor has proposed a one-
time change request implementation fee of approximately $250,000 to
$500,000. The Plan Processor estimates that it would take approximately
two to four months to fully implement the changes for the Late Data Re-
Processing Amendment. One-time implementation costs will generally
consist of Plan Processor labor costs associated with coding and
software development, as well as any related cloud fees associated with
the development, testing, and load testing of the proposed changes for
the proposed amendment. Even accounting for this one-time
implementation cost, the proposal would allow CAT LLC to achieve
substantial cost savings in the first year.
Although only a small portion of CAT Data is Late Reported Data,
the costs of the re-processing of such data are disproportionately
significant. CAT LLC does not believe that the significant costs of
linking such a small percentage of the overall CAT Data are
justified.\87\
---------------------------------------------------------------------------
\87\ During the period from May 2025 through October 2025: (1)
late reprocessing, including Full Replay processing, represented
approximately 31% of compute costs (approximately $5.5 million); (2)
of that 31%, Full Replay processing accounts for 57% (approximately
$3.2 million). The Plan Processor ceased Full Replay processing in
November 2025 and has observed a 50% reduction in late processing-
related costs from 31% to 15% of the total monthly compute cost
(where compute costs for late processing in November 2025 were
approximately $400,000 compared to $1 million in May).
---------------------------------------------------------------------------
ii. The Late Data Re-Processing Amendment Would Preserve the Core
Regulatory Purposes of the CAT
CAT LLC further believes that the Late Data Re-Processing Amendment
would have limited regulatory impact. All Participants believe that
this approach would be sufficient for their regulatory purposes and is
vastly preferable to routinely incurring the current, significant costs
of regular, automated re-processing.
CAT LLC has had substantial experience with the reporting of CAT
Data for several years now. Based on such experience, CAT LLC has seen
substantial compliance with the CAT reporting timelines.\88\ For
example, in the past year, only 0.82% of Reportable Events were
reported late, and only 0.07% of Reportable Events required re-
processing. In addition, the following provides the percentage of late
reports through the first ten months of 2025 for (1) new records and
(2) corrections \89\ and repairs \90\ for each indicated time period:
---------------------------------------------------------------------------
\88\ Each of the Participants require their members to report
CAT Data to the CAT in a timely matter. See, e.g., FINRA Rule 6893,
which states that ``Industry Members are required to record and
report data to the Central Repository as required by this Rule
Series in a manner that ensures the timeliness, accuracy, integrity
and completeness of such data.'' Such rule requirements have been
enforced through disciplinary actions for failure to timely report
CAT Data. See, e.g., Instinet, LLC, FINRA Case No. 2020067139101,
Aug. 16, 2023.
\89\ ``Corrections'' refer to reporting errors self-identified
by CAT Reporters that are repaired and re-submitted. See CAT
Reporting Technical Specifications for Industry Members at 364-65
(Nov. 12, 2025), <a href="https://www.catnmsplan.com/sites/default/files/2025-11/11.14.25_CAT_Reporting_Technical_Specifications_for_Industry_Members_v4.1.0r12_CLEAN.pdf">https://www.catnmsplan.com/sites/default/files/2025-11/11.14.25_CAT_Reporting_Technical_Specifications_for_Industry_Members_v4.1.0r12_CLEAN.pdf</a> (``Errors found during CAT processing and found
by CAT Reporters subsequent to transmission must be repaired . . .
Corrections may be reported for any previously submitted event'').
\90\ ``Repairs'' refer to reporting errors identified by the
Plan Processor during the data validation process that must be
repaired and re-submitted by CAT Reporters. See CAT Reporting
Technical Specifications for Industry Members at 365 (Nov. 12,
2025), <a href="https://www.catnmsplan.com/sites/default/files/2025-11/11.14.25_CAT_Reporting_Technical_Specifications_for_Industry_Members_v4.1.0r12_CLEAN.pdf">https://www.catnmsplan.com/sites/default/files/2025-11/11.14.25_CAT_Reporting_Technical_Specifications_for_Industry_Members_v4.1.0r12_CLEAN.pdf</a> (``A repair is instructed when repairing events
for which a CAT Error was provided in feedback.'').
------------------------------------------------------------------------
New records Corrections &
Reported (%) repairs (%)
------------------------------------------------------------------------
By T+4 8 a.m........................ 99.72 3.49
Between T+4 and T+10................ 0.05 0.78
Between T+10 and T+30............... 0.02 0.53
Between T+30 and T+60............... 0.20 1.08
Beyond T+60......................... 0.00 94.12
------------------------------------------------------------------------
The chart demonstrates that the vast majority of first-time
``late'' data (99.72%) is reported by T+4 8 a.m. When firms submit
repairs and corrections, most of the corrections and repairs (94.2%)
are submitted beyond T+60. This data indicates that changes to feedback
timing would not dramatically impact how regulators perceive CAT Data
when measured in the aggregate.
Moreover, Late Reported Data would continue to be ingested by the
CAT, and, therefore, it would continue to be available to regulators if
necessary.
iii. The Late Data Re-Processing Amendment Would Not Adversely Impact
Industry Members
CAT LLC also believes that the Late Data Re-Processing Amendment
would reduce costs with limited regulatory impact without having an
adverse impact on Industry Members. Late data re-processing is an
internal function within CAT, and, therefore, does not directly affect
the reporting and other requirements applicable to Industry Members.
Industry Members are currently subject to regulatory requirements to
report CAT Data in a timely manner.\91\ This proposed amendment does
not change that requirement in any fashion. Accordingly, CAT LLC does
not anticipate that the Late Data Re-Processing Amendment would have an
adverse impact on Industry Members' reporting or their costs.
---------------------------------------------------------------------------
\91\ See supra, note 85.
---------------------------------------------------------------------------
Furthermore, based on discussions with the Participants, CAT LLC
does not believe that the Late Data Re-Processing Amendment would lead
to material increases in Electronic Blue Sheet or other follow-up
requests to confirm the data for investigations or enforcement actions.
iv. The Late Data Re-Processing Amendment Would Enhance Market
Efficiency
CAT LLC also believes that the Late Data Re-Processing Amendment
would enhance the efficiency of the securities markets. Late data re-
processing is an internal function within CAT, and, therefore, does not
directly affect the requirements applicable to CAT Reporters. As
discussed above, however, the Late Data Re-Processing Amendment would
provide significant cost savings for CAT LLC. Such cost savings would
not only benefit CAT LLC, but they would also benefit any Participants
and Industry Members that are required to fund the CAT in accordance
with the
[[Page 61521]]
CAT NMS Plan. Ultimately, such cost savings would benefit investors and
the U.S. markets as a whole, thereby facilitating the goals of the
Exchange Act.
4. OTQT Amendment: Elimination of Online Targeted Query Tool (OTQT)
CAT LLC proposes to amend the CAT NMS Plan to eliminate the
requirement to provide an online targeted query tool (``OTQT'') (the
``OTQT Amendment''). The OTQT Amendment would reduce CAT cloud hosting
services costs by approximately $2.5-$3.5 million annually.
The OTQT Amendment is consistent with and would codify the
exemptive relief related to the OTQT as set forth in the 2025 Cost
Savings Exemptive Order.'' \92\ Correspondingly, the estimated cost
savings for the OTQT Amendment are the same as expected with regard to
the implementation of the exemptive relief related to the OTQT in the
2025 Cost Savings Exemptive Order. The following compares the estimated
annual cost savings for the exemptive relief related to the OTQT in the
2025 Cost Savings Exemptive Order and the OTQT Amendment.
---------------------------------------------------------------------------
\92\ 2025 Cost Savings Exemptive Order at 47856-7.
\93\ The SEC stated in the 2025 Cost Savings Exemptive Order
that ``[t]he Commission understands from its communications with the
Participants that such measures could save approximately $2.35-2.85
million annually.'' 2025 Cost Savings Exemptive Order at 47857,
n.46. The cost savings set forth here are updated cost estimates.
----------------------------------------------------------------------------------------------------------------
Estimated annual cloud
hosting cost savings
(million)
----------------------------------------------------------------------------------------------------------------
Cost Savings: 2025 Cost Savings Amendment...... OTQT Amendment................... $2.5-$3.5
Cost Savings: 2025 Cost Savings Exemptive Order Requirement To Provide an OTQT... \93\ $2.5-$3.5
----------------------------------------------------------------------------------------------------------------
a. Current CAT NMS Plan Requirements
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 an OTQT. Section 6.10(c)(i)(A) of the CAT NMS Plan
provides: ``The online targeted query tool will provide 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. Targeted queries must include date(s) and/or time
range(s), as well as one or more of a variety of fields.'' 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, including
timeframes by which results must be returned for various types of
queries.
In connection with the settlement of litigation brought by the
Participants, in November 2023, the Commission granted conditional
relief from the OTQT performance requirements, subject to the OTQT
satisfying the performance requirements set forth in the November 2023
Exemptive Order.\94\
---------------------------------------------------------------------------
\94\ See November 2023 Exemptive Order.
---------------------------------------------------------------------------
b. Conditional Exemptive Relief Regarding OTQT Pursuant to 2025 Cost
Savings Exemptive Order
In its 2025 Cost Savings Exemptive Order, the Commission granted
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 granted 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 certain conditions.
The conditional exemptive relief granted in the 2025 Cost Savings
Exemptive Order supersedes the conditional exemptive relief set forth
in the November 2023 Exemptive Order with respect to OTQT performance
standards. In providing this exemptive relief, the Commission stated
that it ``understands, based on communications with the Participants,
that elimination of the OTQT will generate meaningful cost savings, and
the Commission does not believe that elimination of the OTQT
functionality would unduly impact regulators' oversight of the
markets.'' \95\ The SEC stated in the 2025 Cost Savings Exemptive Order
that this exemptive relief regarding the OTQT functionality was
anticipated to reduce CAT cloud hosting services costs by approximately
$2.35-$2.85 million annually.\96\
---------------------------------------------------------------------------
\95\ 2025 Cost Savings Exemptive Order at 47857.
\96\ Id. at 47857, n.46.
---------------------------------------------------------------------------
c. Proposed Revisions to CAT NMS Plan
With the OTQT Amendment, CAT LLC would propose to amend the CAT NMS
Plan to eliminate the requirement to provide the OTQT.\97\ The OTQT
Amendment would be consistent with the exemptive relief related to the
OTQT as set forth in the 2025 Cost Savings Exemptive Order, and,
therefore, the OTQT Amendment would incorporate the estimated $2.5-$3.5
million annual reduction in cloud hosting services costs into the Plan.
To eliminate the requirement that regulators be provided with access to
CAT Data through the OTQT from the CAT NMS Plan, CAT LLC proposes to
make the following changes to the CAT NMS Plan.
---------------------------------------------------------------------------
\97\ As a part of the elimination of the OTQT, the Plan
Processor also would schedule for deletion any copies of data
produced solely for access via OTQT or to meet OTQT performance
requirements (e.g., DIVER-optimized copies of IM Event data and OLA
Events, which would no longer be accessible following the removal of
DIVER).
---------------------------------------------------------------------------
i. Section 6.10(c) of the CAT NMS Plan
CAT LLC proposes to amend Section 6.10(c) of the CAT NMS Plan to
eliminate the requirement to provide access to CAT Data via the OTQT.
The introductory paragraph in Section 6.10(c) of the CAT NMS Plan
states:
Consistent with Appendix D, Functionality of the CAT System, the
Plan Processor shall provide Participants and the SEC with access to
all CAT Data stored in the Central Repository. Regulators will have
access to processed CAT Data through two different methods; an
online targeted query tool, and user-defined direct queries and bulk
extracts.
CAT LLC proposes to delete from this provision the reference to
``two different methods'' and the reference to ``an online targeted
query tool.''
In addition, CAT LLC proposes to delete paragraph (A) of Section
6.10(c)(i) of the CAT NMS Plan and replace it with a ``Reserved''
designation. Paragraph (A) currently states:
The online targeted query tool will provide 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. Targeted queries must include date(s) and/or
time range(s), as well as one or more of a variety of fields.
ii. Appendix D of the CAT NMS Plan
CAT LLC also proposes deleting certain sections of Appendix D of
the
[[Page 61522]]
CAT NMS Plan that address requirements related to the OTQT.
CAT LLC proposes to delete Section 8.1.1 of Appendix D (``Online
Targeted Query Tool'') and Section 8.1.2 of Appendix D (``Online
Targeted Query Tool Performance Requirements'') in their entirety and
to redesignate these sections as ``Reserved.''
CAT LLC proposes to revise the title of Section 8.1.3 of Appendix
D, which reads ``Online Targeted Query Tool Access and Administration''
to delete the reference to the ``Online Targeted Query Tool Access,''
and clarify the reference to Administration by revising the title to
read ``Administration of Regulatory Access.'' In addition, CAT LLC
proposes to delete the following sentence including the reference to
the OTQT: ``PII data must not be available via the online targeted
query tool or the user-defined direct query interface.''
CAT LLC proposes to revise Section 8.2 of Appendix D to remove the
sentence that currently states that ``[t]he CAT System must contain the
same level of control, monitoring, logging and reporting as the online
targeted query tool.'' The deletion of this sentence does not affect
the comparable requirements related to user-defined direct queries or
bulk extracts, as the requirement being deleted is repetitive of
requirements regarding control, monitoring, logging and reporting set
forth in Section 8.2.2 of Appendix D of the CAT NMS Plan.
Finally, CAT LLC also proposes to delete other remaining references
to the OTQT from Appendix D of the CAT NMS Plan, including from
Sections 3.4, 8.1, and 8.4. These amendments are set forth in Exhibit
A.
d. The Benefits of the OTQT Amendment Significantly Outweigh Its Costs
i. The OTQT Amendment Would Result in an Estimated $2.5-$3.5 Million in
Annual Cost Savings for Cloud Hosting Services
CAT LLC, after consultation with the Plan Processor, has determined
that eliminating the OTQT, as permitted pursuant to the 2025 Cost
Savings Exemptive Order and as described in this OTQT Amendment, would
allow CAT LLC to achieve a total of approximately $2.5-$3.5 million in
annual cost savings for cloud hosting services. These cost savings
estimates are based on certain assumptions and the current scope of the
CAT, and may vary based on, among other things, the details of the
requirements in any final amendment approved by the Commission.\98\
---------------------------------------------------------------------------
\98\ See supra, notes 9 and 10.
---------------------------------------------------------------------------
To implement the proposal, the Plan Processor has proposed a one-
time change request implementation fee of approximately $135,000. The
Plan Processor estimates that it would take approximately eight to ten
weeks to fully implement the changes for the OTQT Amendment. One-time
implementation costs will generally consist of Plan Processor labor
costs associated with coding and software development, as well as any
related cloud fees associated with the development, testing, and load
testing of the proposed changes for the proposed amendment. Even
accounting for this one-time implementation cost, the proposal would
allow CAT LLC to achieve substantial cost savings in the first full
year.
ii. The OTQT Amendment Would Preserve the Core Regulatory Purposes of
the CAT
CAT LLC further believes that this OTQT Amendment would have
limited regulatory impact. Based on the current regulatory use of the
OTQT, CAT LLC has determined that the elimination of the OTQT would not
adversely affect market oversight.
First, as the SEC noted in the 2025 Cost Savings Exemptive Order,
``[t]he elimination of OTQT functionality would not in any way impact
the underlying CAT Data that is made available to regulators.'' \99\
The proposed change only would affect the manner in which CAT Data is
accessed by regulatory users at the SEC and the Participants.
---------------------------------------------------------------------------
\99\ 2025 Cost Savings Exemptive Order at 47857.
---------------------------------------------------------------------------
Second, the Participants and the Commission agree that their
regulatory programs would not be impaired by the loss of the OTQT
functionality. Section 6.10(c)(i) of the CAT NMS Plan requires the Plan
Processor to provide Participants and the SEC with access to CAT Data
through two different methods in addition to the OTQT: (1) user-defined
direct queries; and (2) bulk extracts. Currently, the user-defined
query tool is ``BDSQL,'' and the bulk extract tool is ``Direct Read.''
The ``BDSQL'' and ``Direct Read'' interfaces represent significantly
more sophisticated and cost-efficient methods of providing access to
CAT Data than the OTQT. The Participants unanimously agree that each of
their regulatory groups would be able to conduct their regulatory
programs using only BDSQL and Direct Read, and could otherwise adjust
by creating and operating, or continuing to operate, their own internal
tools to replicate the queries they would otherwise run on the
OTQT.\100\ In addition, having regulators develop and use their own
bespoke and diverse tools could promote innovation as opposed to every
regulator being wed to the same tool.
---------------------------------------------------------------------------
\100\ The SEC recognized this point in the 2025 Cost Savings
Exemptive Order. 2025 Cost Savings Exemptive Order at 47857. See
also 2024 Cost Savings Amendment Approval Order at 103038, 103050.
---------------------------------------------------------------------------
In the 2025 Cost Savings Exemptive Order, the Commission stated
that ``[t]he Commission likewise believes that its own regulatory
program would not be impaired by the loss of certain OTQT
functionality.'' \101\ The Commission explained that the ``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.'' \102\ As a result, the
Commission determined to provide conditional exemptive relief with
regard to the requirement to provide the OTQT.
---------------------------------------------------------------------------
\101\ Id.
\102\ Id.
---------------------------------------------------------------------------
iii. The OTQT Amendment Would Not Adversely Impact Industry Members
CAT LLC also believes that the OTQT Amendment would reduce costs
with limited regulatory impact without having an adverse impact on
Industry Members. The OTQT is an internal function within CAT and a
tool available for use by regulatory users of CAT, and, therefore, does
not directly affect the reporting and other requirements applicable to
Industry Members. Accordingly, CAT LLC does not anticipate that the
OTQT Amendment would have an adverse impact on Industry Members or
their costs.
iv. The OTQT Amendment Would Enhance Market Efficiency
CAT LLC also believes that the OTQT Amendment would enhance the
efficiency of the securities markets because it would reduce costs with
limited regulatory impact. As discussed above, the OTQT Amendment would
provide significant annual cost savings for CAT LLC. Such cost savings
would not only benefit CAT LLC, but also would provide cost savings for
any Participants and Industry Members that are required to fund the CAT
in accordance with the CAT NMS Plan. Ultimately, such cost savings
would benefit investors and the U.S. markets as
[[Page 61523]]
a whole, thereby facilitating the goals of the Exchange Act.
In addition, CAT LLC does not believe that the OTQT Amendment would
adversely affect market efficiency because it understands that the
Participants have already built their own tools to use in place of the
OTQT, or rely on other Participants that have done so. Accordingly, the
OTQT Amendment would only enhance efficiency by removing redundant
regulatory systems from the market. In addition, reliance on tools that
are tailored to the needs of the various regulators also would enhance
efficiency, rather than relying on one uniform tool for all regulators.
Moreover, the OTQT Amendment does not propose to change the other means
provided by the CAT for accessing CAT Data (e.g., bulk extract).
5. Rejected Message Amendment: Elimination of Participant Reporting of
Rejected Messages
CAT LLC proposes to amend the CAT NMS Plan to eliminate the
requirement for Participants to report rejected order messages (the
``Rejected Message Amendment''). The Rejected Message Amendment would
reduce CAT costs for cloud hosting services by approximately $500,000
annually.
The 2025 Cost Savings Exemptive Order did not address rejected
messages. Accordingly, the estimated cost savings of approximately
$500,000 annually are over and above the cost savings allowed via the
2025 Cost Savings Exemptive Order.
a. Current CAT NMS Plan Requirements
Section 6.3(d)(i) of the CAT NMS Plan requires Participants to
``record and electronically report to the Central Repository'' certain
information for ``each order and each Reportable Event,'' including
``for original receipt or origination of an order.'' The CAT NMS Plan
specifies that ``order'' has ``the meaning set forth in Rule
613(j)(8),'' \103\ which further defines ``order'' to include: ``(i)
[a]ny order received by a member of a national securities exchange or
national securities association from any person; (ii) [a]ny order
originated by a member of a national securities exchange or national
securities association; or (iii) [a]ny bid or offer.'' The SEC has
stated the following regarding these provisions:
---------------------------------------------------------------------------
\103\ Section 1.1 of the CAT NMS Plan.
These provisions require the Participants to report all orders
that are ``received,'' not just those orders that are ``received and
successfully processed by the matching engine,'' those orders that
are ``received and accepted,'' and/or those orders that are
``received and assigned an order ID''; the reporting requirement is
not conditioned on how a Participant acts on an order that is
received. For example, if a Participant receives a message that
contains all of the terms necessary for an order to be executed,
that message still constitutes a ``received'' order that must be
reported pursuant to the provisions of Section 6.3(d) of the CAT NMS
Plan regardless of whether it is subsequently rejected. Moreover, as
``CAT Data,'' rejected orders must also be ``processed and assembled
to create the complete lifecycle of each Reportable Event'' under
Appendix D, Section 3 of the CAT NMS Plan.\104\
---------------------------------------------------------------------------
\104\ July 2022 Exemptive Order at 42256.
The Commission recognized that ``the Participants continue to
disagree with its interpretation of these requirements and challenge
the feasibility of strict compliance with that interpretation.'' \105\
---------------------------------------------------------------------------
\105\ November 2023 Exemptive Order at 77132 n.33.
---------------------------------------------------------------------------
b. Conditional Exemptive Relief Regarding Rejected Messages Pursuant to
November 2023 Exemptive Order
In connection with the settlement of litigation brought by the
Participants, in November 2023, the Commission granted conditional
exemptive relief from the requirements set forth in Rule 613(c)(7),
Section 6.3(d)(i) of the CAT NMS Plan, and Appendix D, Section 3 of the
CAT NMS Plan relating to Participant reporting of rejected orders and
subsequent linkage of such orders, subject to the below
conditions.\106\ The Commission stated that this relief ``does not
resolve the parties' interpretive disagreement on this issue, but
instead provides exemptive relief that renders resolution of the issue
unnecessary.'' \107\
---------------------------------------------------------------------------
\106\ Id at 77132.
\107\ Id. at 77132 n.33. The SEC has addressed rejected orders
in prior exemptive orders as well. See July 2022 Exemptive Order at
42256-57.
---------------------------------------------------------------------------
<bullet> The Participants must maintain or improve their existing
reporting of orders that are received and subsequently rejected,
including maintenance by Participants of any existing reporting or
linkage of the keys necessary for the linkage processing specified
below. The Plan Processor must maintain its existing validations of
such orders.
<bullet> The Participants must approve a change order to adopt the
below-described functionality no later than 60 days following the
effective date of this Order:
[cir] Functionality that will attempt ``forward lifecycle linkage''
processing, including all enrichments currently provided for other
order events, of Industry Member MEOR, MOOR, and MEMR Order Route
events containing a routeRejectedFlag populated as ``true'' with their
corresponding Participant Reject Message events described in the
Participant Technical Specifications in instances where the keys
necessary for such linkage are available (i.e., Symbol (or Option ID),
RoutingParty, RoutedOrderID, Session). Such functionality must be fully
implemented and made available to regulatory users within twelve months
of the change order's approval by the Participants.
The Participant Technical Specifications reflect the exemptive
relief provided in the 2023 November 2023 Exemptive Order.\108\
---------------------------------------------------------------------------
\108\ See Section 3.7.4 of the Participant Technical
Specifications (Reject Message Event).
---------------------------------------------------------------------------
c. Proposed Revisions to CAT NMS Plan
With the Rejected Message Amendment, CAT LLC proposes to amend the
CAT NMS Plan to eliminate the requirement for Participants to report
rejected order messages to the CAT. The Rejected Message Amendment
would reduce CAT cloud hosting services costs by approximately $500,000
annually. To implement the Rejected Message Amendment, CAT LLC proposes
to add paragraph (h) to Section 6.3 of the CAT NMS Plan, which would
state the following:
Rejected Messages. Notwithstanding any provision of the CAT NMS
Plan (including Appendix D) or the Exchange Act, no Participant
shall be required to record and electronically report to the Central
Repository any order rejected by the Participant nor any Reportable
Events related to such rejected order. For the avoidance of doubt,
an order that is received by the Participant but not accepted by the
Participant is an order rejected by the Participant for purposes of
this paragraph.
d. The Benefits of the Rejected Message Amendment Significantly
Outweigh Its Costs
i. The Rejected Message Amendment Would Result in an Estimated $500,000
in Annual Cost Savings for Cloud Hosting Services
CAT LLC, after consultation with the Plan Processor, has determined
that eliminating the requirement for Participants to report rejected
order messages would allow CAT LLC to achieve approximately $500,000 in
cost savings for cloud services annually. This cost savings estimate is
based on certain assumptions and the current scope of the CAT, and may
vary based on, among other things, the details of the requirements in
any final amendment approved by the Commission.\109\ In addition, the
[[Page 61524]]
Participants estimate that the Rejected Message Amendment would provide
material cost savings for the Participants collectively as well.
---------------------------------------------------------------------------
\109\ See supra notes 9 and 10.
---------------------------------------------------------------------------
To implement the proposal, the Plan Processor has proposed a one-
time change request setting forth an implementation fee of
approximately $75,000 to $150,000. The Plan Processor estimates that it
would take approximately two to four months to fully implement the
changes for the Rejected Message Amendment. One-time implementation
costs will generally consist of Plan Processor labor costs associated
with coding and software development, as well as any related cloud fees
associated with the development, testing, and load testing of the
proposed changes for the proposed amendment. Even accounting for this
one-time implementation cost, the proposal would allow CAT LLC to
achieve substantial cost savings in the first year.
ii. The Rejected Message Amendment Would Preserve the Core Regulatory
Purposes of the CAT
CAT LLC believes that the Rejected Message Amendment would have
limited regulatory impact. Based on the current regulatory use of the
CAT, CAT LLC has determined that the elimination of the reporting of
rejected messages would not adversely affect market oversight. CAT LLC
understands that the Participants have not used rejected message data
reported for regulatory purposes to date. Accordingly, the data
collected with respect to such messages may be of little beneficial use
to regulators.
iii. The Rejected Message Amendment Would Not Adversely Impact Industry
Members
CAT LLC also believes that the Rejected Message Amendment would
reduce costs with limited regulatory impact without having an adverse
impact on Industry Members. The requirement to report rejected order
messages applies to Participants, not Industry Members, and, therefore,
does not directly affect the reporting and other requirements
applicable to Industry Members. Accordingly, CAT LLC does not believe
that the Rejected Message Amendment would have an adverse impact on
Industry Members or their costs.
iv. The Rejected Message Amendment Would Enhance Market Efficiency
CAT LLC also believes that the Rejected Message Amendment would
enhance the efficiency of the securities markets because it would
reduce costs with limited regulatory impact. As discussed above, the
Rejected Message Amendment would provide significant annual cost
savings for CAT LLC. It also would reduce costs of Participants
required to report rejected messages. Such cost savings would not only
benefit CAT LLC, but also would provide cost savings for any
Participants and Industry Members that are required to fund the CAT in
accordance with the CAT NMS Plan. Ultimately, such cost savings would
benefit investors and the U.S. markets as a whole, thereby facilitating
the goals of the Exchange Act.
6. Data Availability Amendment: Adopt More Cost-Effective Data
Availability Timeline
CAT LLC proposes to amend the CAT NMS Plan to adopt a more cost-
effective data availability timeline (the ``Data Availability
Amendment''). The Data Availability Amendment would (1) extend the time
by which raw unprocessed data must be made available to Participants'
regulatory staff and SEC from 12:00 p.m. Eastern Time on T+1 to 8:00
a.m. Eastern Time on T+2, and (2) extend the time by which final data
must be ready for regulators from 8:00 a.m. Eastern Time on T+5 to 8:00
a.m. Eastern Time on T+6. The Data Availability Amendment would reduce
CAT costs for cloud hosting services by approximately $1.5-$2 million
annually. Extending the timelines permits flexibility in the deployment
of compute resources, permitting cost reduction through optimization.
The 2025 Cost Savings Exemptive Order did not address the timeline
changes included in the Data Availability Amendment. Accordingly, the
estimated cost savings of approximately $1.5-$2 million annually are
over and above the cost savings allowed via the 2025 Cost Savings
Exemptive Order.
a. Current CAT NMS Plan Requirements
Section 6.1 of Appendix D of the CAT NMS Plan (Data Processing)
sets forth the following timeframes (also reflected in Figure A of
Section 6.1) regarding data availability:
<bullet> Noon Eastern Time T+1 (transaction date + one day)--
Initial data validation, lifecycle linkages and communication of errors
to CAT Reporters;
<bullet> 8:00 a.m. Eastern Time T+5 (transaction date + five
days)--Corrected data available to Participant regulatory staff and the
SEC.
Section 6.2 of Appendix D of the CAT NMS Plan (Data Availability
Requirements) provides that ``[p]rior to 12:00 p.m. Eastern Time on
T+1, raw unprocessed data that has been ingested by the Plan Processor
must be available to Participants' regulatory staff and the SEC,'' and
that ``[b]etween 12:00 p.m. Eastern Time on T+1 and T+5, access to all
iterations of processed data must be available to Participants'
regulatory staff and the SEC.''
Section 6.3 of Appendix D of the CAT NMS Plan (Exceptions to Data
Availability Requirements) describes ``Raw Unprocessed Data'' to mean
``data that has been ingested by the Plan Processor and made available
to regulators prior to 12:00 p.m. Eastern Time on T+1,'' and describes
``Interim Operational Data'' to mean ``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.''
b. Proposed Revisions to CAT NMS Plan
CAT LLC proposes to revise references in Sections 6.1, 6.2 and 6.3
of Appendix D of the CAT NMS Plan to reflect the proposed revised
timeline.\110\
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\110\ CAT LLC has previously sought exemptive relief from the
requirement to provide linkage feedback by T+1 at noon ET, and from
the requirement that CAT Reporters resubmit corrected data to CAT by
T+3 at 8 a.m. ET. See Letter from Michael Simon, CAT NMS Plan
Operating Committee Chair, to Vanessa Countryman, Secretary,
Commission, dated December 4, 2024, <a href="https://www.catnmsplan.com/sites/default/files/2020-12/12.04.20-CAT-Exemption-Request-Data-Validation.pdf">https://www.catnmsplan.com/sites/default/files/2020-12/12.04.20-CAT-Exemption-Request-Data-Validation.pdf</a>; Letter from Michael Simon, CAT NMS Plan Operating
Committee Chair, to Vanessa Countryman, Secretary, Commission, dated
December 4, 2024, <a href="https://www.catnmsplan.com/sites/default/files/2020-12/12.04.20-CAT-Exemption-Request-Error-Correction.pdf">https://www.catnmsplan.com/sites/default/files/2020-12/12.04.20-CAT-Exemption-Request-Error-Correction.pdf</a>.
------------------------------------------------------------------------
Current Proposal
------------------------------------------------------------------------
Initial Data Submission....... 8:00 a.m. ET 8:00 a.m. ET
T+1 T+1
[[Page 61525]]
Initial Validation, Error 12:00 p.m. ET 12:00 p.m. ET
Feedback \111\. T+1 T+1
Resubmission of Errors Due.... 8:00 a.m. ET 8:00 a.m. ET
T+3 T+3
Reprocessing of Error T+4 T+4
Corrections.
Data Ready for Regulators..... 8:00 a.m. 8:00 a.m.
T+5 T+6 \112\
------------------------------------------------------------------------
With regard to Section 6.1 of Appendix D of the CAT NMS Plan, CAT
LLC proposes to revise the following bullet in Section 6.1 of Appendix
D of the CAT NMS Plan: ``8:00 a.m. Eastern Time T+5 (transaction date +
five days)--Corrected data available to Participant regulatory staff
and the SEC,'' by replacing the reference to 8:00 a.m. Eastern Time T+5
with 8:00 a.m. Eastern Time T+6. Moreover, CAT LLC proposes to make
corresponding changes to the times in Figure A in Section 6.1 of
Appendix D of the CAT NMS Plan.
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\111\ In connection with the Interim CAT-Order-ID Amendment
discussed above, CAT LLC proposes to delete the phrase ``Life Cycle
Linkage'' from the second box in Figure A in Section 6.1 of Appendix
D of the CAT NMS Plan, which currently states: ``12:00 p.m. ET T+1
Initial Validation, Life Cycle Linkage, Communication of Errors.''
\112\ Assuming CAT Data is required to be made available on a
daily basis, expanding the data availability timeline beyond T+2
and/or T+6 would not result in additional material cost savings
because the Plan Processor would still be required to process the
same amount of data.
---------------------------------------------------------------------------
CAT LLC also proposes the following changes to Section 6.2 of
Appendix D:
<bullet> CAT LLC proposes to replace the reference to 12:00 p.m.
Eastern Time on T+1 with a reference to 8:00 a.m. Eastern Time on T+2
in the following sentence in Section 6.2 of Appendix D of the CAT NMS
Plan: ``Prior to 12:00 p.m. Eastern Time on T+1, raw unprocessed data
that has been ingested by the Plan Processor must be available to
Participants' regulatory staff and the SEC.''
<bullet> CAT LLC proposes to replace the reference to 12:00 p.m.
Eastern Time on T+1 with a reference to 8:00 a.m. Eastern Time on T+2,
and the reference to T+5 with T+6 in the following sentence in Section
6.2 of Appendix D of the CAT NMS Plan: ``Between 12:00 p.m. Eastern
Time on T+1 and T+5, access to all iterations of processed data must be
available to Participants' regulatory staff and the SEC.''
<bullet> CAT LLC proposes to revise the third paragraph of Section
6.2 of Appendix D of the CAT NMS Plan to change the reference to a
five-day process to a ``six-day process,'' and to change the reference
to T+5 to T+6.
In addition, CAT LLC proposes to revise the timeline for providing
raw unprocessed data to regulators by replacing the reference to
``12:00 p.m. Eastern Time on T+1'' with the reference to ``8:00 a.m.
Eastern Time on T+2.'' As a result, this statement would read as
follows: ``Raw Unprocessed Data older than 15 days. `Raw Unprocessed
Data' means data that has been ingested by the Plan Processor and made
available to regulators prior to 8:00 a.m. Eastern Time on T+2.''
c. The Benefits of the Data Availability Amendment Significantly
Outweigh Any Regulatory Impact
i. The Data Availability Amendment Would Result in an Estimated $1.5-$2
Million in Annual Cost Savings for Cloud Hosting Services
CAT LLC, after consultation with the Plan Processor, has determined
that adopting the more cost-efficient data availability deadlines as
set forth in this Data Availability Amendment would allow CAT LLC to
achieve approximately $1.5-$2 million in annual cost savings in cloud
hosting services. Extending the timelines permits flexibility in the
deployment of compute resources, permitting cost reduction through
optimization. These cost savings estimates are based on certain
assumptions and the current scope of the CAT, and may vary based on,
among other things, the details of the requirements in any final
amendment approved by the Commission.\113\
---------------------------------------------------------------------------
\113\ See supra notes 9 and 10.
---------------------------------------------------------------------------
To implement the proposal, the Plan Processor has proposed a one-
time change request setting forth an implementation fee of
approximately $200,000-$400,000. The Plan Processor estimates that it
would take approximately three to six months to fully implement the
changes for the Data Availability Amendment. One-time implementation
costs will generally consist of Plan Processor labor costs associated
with coding and software development, as well as any related cloud fees
associated with the development, testing, and load testing of the
proposed changes for the proposed amendment. Even accounting for this
one-time implementation cost, the proposal would allow CAT LLC to
achieve substantial cost savings in the first year.
ii. The Data Availability Amendment Would Preserve the Core Regulatory
Purposes of the CAT
The CAT is not a real-time system. As a result, CAT LLC believes
that this Data Availability Amendment would have limited regulatory
impact. The Participants unanimously agree that obtaining a final
lifecycle by T+6, in lieu of T+5, is sufficient to conduct their
regulatory programs, and that the cost savings associated with
modifying the current processing timelines substantially outweigh any
limited delay associated with this shift to T+6, particularly given
that regulators will continue to have access to raw unprocessed data
ingested by the Plan Processor prior to T+2 at 8:00 a.m. ET and will
continue to have access to all processed data between T+2 at 8:00 a.m.
ET and T+6 at 8:00 a.m. ET. Accordingly, CAT LLC has determined that
the modified data availability timeline proposed herein would not
adversely affect market oversight.
iii. The Data Availability Amendment Would Not Adversely Impact
Industry Members
CAT LLC also believes that the Data Availability Amendment would
reduce costs with limited regulatory impact without having an adverse
impact on Industry Members. Changing the timelines for providing data
to the regulators would not directly affect the reporting and other
requirements applicable to Industry Members. Accordingly, CAT LLC does
not anticipate that the Data Availability Amendment would have an
adverse impact on Industry Members' reporting or their costs.
iv. The Data Availability Amendment Would Enhance Market Efficiency
CAT LLC also believes that this Data Availability Amendment would
enhance the efficiency of the securities markets. For many years, CAT
LLC has received extensive feedback from the Plan Processor regarding
various technical and operational issues
[[Page 61526]]
associated with satisfying current Plan processing deadlines. In
particular, the Plan Processor has long highlighted the inherent
complexity and substantial cost of processing extremely large volumes
of data in a short period of time. By extending the timelines for
providing regulators with data by mere hours, the Plan Processor would
have additional time to process the data in a more cost-efficient
manner.
In addition, as discussed above, the Data Availability Amendment
would provide significant annual cost savings for CAT LLC. Such cost
savings would not only benefit CAT LLC, but it would also provide cost
savings for any Participants and Industry Members that are required to
fund the CAT in accordance with the CAT NMS Plan. Ultimately, such cost
savings would benefit investors and the U.S. markets as a whole,
thereby facilitating the goals of the Exchange Act.
7. Reference Data Amendment: Elimination of CAIS and Reporting of
Customer and Account Information/Adoption of Reference Data Approach To
Generate CCIDs
CAT LLC proposes to amend the CAT NMS Plan to eliminate both the
requirement to report Customer Account Information and Customer
Identifying Information to the CAT and to eliminate CAIS from the CAT,
and to adopt a new more, focused approach for the CCID that would allow
for the generation of a CCID while minimizing the data needed for its
creation. This ``Reference Data Amendment'' would reduce CAT costs for
cloud hosting services by approximately $4-$6 million annually, as well
as provide for potential reductions in the operating fees for the Plan
Processor.\114\ As discussed in more detail in subsection 9.a below, in
direct response to industry feedback, CAT LLC determined to propose
this Reference Data Amendment instead of the Full Elimination of the
CAIS/CCID Component of the Original CAT LLC Proposal, despite the lower
cost savings associated with the Reference Data Amendment.
---------------------------------------------------------------------------
\114\ As noted above, the potential cost savings related to the
operating fees for the Plan Processor with regard to the 2025 Cost
Savings Amendment are $7 million. The November 2025 budget includes
approximately $24.5 million in CAIS-related Plan Processor fees,
including a $20.7 million in CAIS operating fee and a $3.8 million
license fee.
---------------------------------------------------------------------------
The 2025 Cost Savings Exemptive Order did not address the proposed
changes to CAIS. Accordingly, the estimated cost savings related to the
elimination of CAIS and its replacement by the Reference Data Amendment
are separate and apart from the cost savings described in the 2025 Cost
Savings Exemptive Order.
As previously noted, the current 2025 CAT budget of $188 million
includes an estimated $122 million in cloud hosting services and $54
million in total Plan Processor fees.\115\ Under the Reference Data
Amendment, the current CAIS-related cloud hosting services fees,
estimated at $6.5 to $9 million, would be reduced by approximately $4
to $6 million annually, resulting in an estimated $2.5 to $3 million in
cloud hosting fees on an annualized basis. The current CAIS-related
Plan Processor fees, estimated at $24.5 million ($20.7 million in
operating fees and $3.8 million in licensing fees), would also be
eliminated, but would be offset in part by other estimated increases in
Plan Processor fees, resulting in total Plan Processor fees of
approximately $47 million on an annualized basis (inclusive of
approximately $4 million in licensing fees). Thus, overall, the Plan
Processor has estimated a $7 million reduction ($54 million reduced to
$47 million) in total Plan Processor fees under the proposed 2025 Cost
Savings Amendment. Accordingly, the difference in total Plan Processor
fees between the Original CAT LLC Proposal ($39 million) and this 2025
Cost Savings Amendment ($47 million) is approximately $8 million, which
includes approximately $4 million in licensing fees.
---------------------------------------------------------------------------
\115\ See supra, note 11.
---------------------------------------------------------------------------
a. Customer Information Approach
The CAT NMS Plan originally adopted the Customer Information
Approach, which is ``a reporting model that requires broker-dealers to
provide detailed account and Customer information to the Central
Repository, including the specific identities of all Customers
associated with each account, and have the Central Repository correlate
the Customer information across broker-dealers, assign a unique
customer identifier to each Customer (i.e., the CAT-Customer-ID), and
use that unique customer identifier consistently across all CAT Data.''
\116\
---------------------------------------------------------------------------
\116\ Section A.1(a)(iii) of Appendix C of the CAT NMS Plan.
---------------------------------------------------------------------------
The Customer Information Approach requires each Industry Member to
assign a unique Firm Designated ID or FDID \117\ to each customer
account. Under the Customer Information Approach in the original CAT
NMS Plan, an FDID is a unique and persistent identifier for each
trading account designated by Industry Members for purposes of
providing data to the Central Repository.\118\ According to the CAT NMS
Plan, Industry Members must submit an initial set of Customer
information to the Central Repository, including, as applicable, (1)
the FDID; (2) the Customer's name, address, date of birth, Individual
Taxpayer Identification Number (``ITIN'')/Social Security Number
(``SSN''), and individual's role in the account (e.g., primary holder,
joint holder, guardian, trustee, person with power of attorney); and
(3) Legal Entity Identifier (``LEI''), and/or Large Trader ID
(``LTID''), if applicable, which would be updated as set forth in the
CAT NMS Plan.\119\
---------------------------------------------------------------------------
\117\ The term ``Firm Designated ID'' is defined in the CAT NMS
Plan as: ``(1) a unique and persistent identifier for each trading
account designated by Industry Members for purposes of providing
data to the Central Repository provided, however, such identifier
may not be the account number for such trading account if the
trading account is not a proprietary account; (2) a unique and
persistent relationship identifier when an Industry Member does not
have an account number available to its order handling and/or
execution system at the time of order receipt, provided, however,
such identifier must be masked; or (3) a unique and persistent
entity identifier when an employee of an Industry Member is
exercising discretion over multiple client accounts and creates an
aggregated order for which a trading account number of the Industry
Member is not available at the time of order origination, where each
such identifier is unique among all identifiers from any given
Industry Member.'' Section 1.1 of the CAT NMS Plan.
\118\ Section 1.1 of the CAT NMS Plan.
\119\ Section A.1(a)(iii) of Appendix C of the CAT NMS Plan.
---------------------------------------------------------------------------
Under the CAT NMS Plan, for each new order submitted to the
transaction database of the CAT Central Repository, broker-dealers are
required to report the FDID for such new order, and the Plan Processor
must associate specific Customers and their CAT-Customer-IDs with
individual order events based on the reported FDIDs. Within the Central
Repository, each Customer would be uniquely identified by identifiers
or a combination of identifiers such as an ITIN/SSN, date of birth,
and, as applicable, LEI and LTID. The Plan Processor is required to use
these unique identifiers to map orders to specific Customers across all
broker-dealers.\120\
---------------------------------------------------------------------------
\120\ Id.
---------------------------------------------------------------------------
Under the Customer Information Approach, the Plan Processor must
maintain information of sufficient detail to uniquely and consistently
identify each Customer across all CAT Reporters, and associated
accounts from each CAT Reporter, and must document and publish, with
the approval of the Operating Committee, the minimum list of attributes
to be captured to maintain this association.\121\ In addition, the Plan
Processor must maintain valid Customer
[[Page 61527]]
Identifying Information and Customer Account Information for each
trading day and provide a method for Participants and the Commission to
easily obtain historical changes to that information (e.g., name
changes, address changes).\122\
---------------------------------------------------------------------------
\121\ Section 9.1 of Appendix D of the CAT NMS Plan.
\122\ Section A.1(a)(iii) of Appendix C of the CAT NMS Plan.
---------------------------------------------------------------------------
Customer Identifying Information is defined in Section 1.1 of the
CAT NMS Plan to mean:
information of sufficient detail to identify a Customer, including,
but not limited to, (a) with respect to individuals: name, address,
date of birth, individual tax payer identification number
(``ITIN'')/social security number (``SSN''), individual's role in
the account (e.g., primary holder, joint holder, guardian, trustee,
person with the power of attorney); and (b) with respect to legal
entities: name, address, Employer Identification Number (``EIN'')/
Legal Entity Identifier (``LEI'') or other comparable common entity
identifier, if applicable; provided, however, that an Industry
Member that has an LEI for a Customer must submit the Customer's LEI
in addition to other information of sufficient detail to identify a
Customer.
Customer Account Information is defined in Section 1.1 of the CAT
NMS Plan to include, but not be limited to:
account type, customer type, date account opened, and large trader
identifier (if applicable); except, however, that (a) in those
circumstances in which an Industry Member has established a trading
relationship with an institution but has not established an account
with that institution, the Industry Member will (i) provide the
Account Effective Date in lieu of the ``date account opened''; (ii)
provide the relationship identifier in lieu of the ``account
number''; and (iii) identify the ``account type'' as a
``relationship''; (b) in those circumstances in which the relevant
account was established prior to the implementation date of the CAT
NMS Plan applicable to the relevant CAT Reporter (as set forth in
Rule 613(a)(3)(v) and (vi)), and no ``date account opened'' is
available for the account, the Industry Member will provide the
Account Effective Date in the following circumstances: (i) where an
Industry Member changes back office providers or clearing firms and
the date account opened is changed to the date the account was
opened on the new back office/clearing firm system; (ii) where an
Industry Member acquires another Industry Member and the date
account opened is changed to the date the account was opened on the
post-merger back office/clearing firm system; (iii) where there are
multiple dates associated with an account in an Industry Member's
system, and the parameters of each date are determined by the
individual Industry Member; and (iv) where the relevant account is
an Industry Member proprietary account.\123\
---------------------------------------------------------------------------
\123\ Section 1.1 of the CAT NMS Plan.
---------------------------------------------------------------------------
b. CCID Alternative
On March 17, 2020, the Commission granted exemptive relief related
to the reporting of SSNs/ITINs, dates of birth, and account numbers to
the CAT (``2020 CCID Alternative Exemptive Order'').\124\ Instead of
reporting dates of birth and account numbers, Industry Members are
required to report years of birth and FDIDs. In addition, the 2020 CCID
Alternative Exemptive Order also permitted the implementation of the
CCID Alternative. Under the CCID Alternative, the Plan Processor
generates a unique identifier for a Customer, called a CCID, using a
two-phase transformation process that avoids the requirement to have
SSNs/ITINs reported to the CAT as originally contemplated by SEC Rule
613 and the CAT NMS Plan. In the first transformation phase, a CAT
Reporter transforms the SSN/ITIN into an interim transformed value.
This transformed value, and not the SSN/ITIN, is submitted to a
separate system within the CAT, referred to as the CCID Subsystem. The
transformed value is sent to the CAT separate and apart from the other
Customer and account information. The CCID Subsystem then performs a
second transformation to create a globally unique CCID for each
Customer that is not known to, and not shared with, the original CAT
Reporter. The CCID is then sent to CAIS, where it is linked with the
other Customer and account information. The CCID may then be used by
the Participants' regulatory staff and the SEC in queries and analyses
of CAT Data. CAT LLC currently operates in accordance with the CCID
Alternative.
---------------------------------------------------------------------------
\124\ Exchange Act Rel No. 88393 (Mar. 17, 2020), 85 FR 16152
(Mar. 20, 2020) (``2020 CCID Alternative Exemptive Order'').
---------------------------------------------------------------------------
c. 2025 CAIS Exemptive Order
On February 10, 2025, the Commission published an order (the ``2025
CAIS Exemptive Order'') sua sponte, granting exemptive relief related
to the reporting of names, addresses, and years of birth for natural
persons reported with transformed SSNs or ITINs to CAIS.\125\ Upon
review of this order, CAT LLC noted certain limitations.
---------------------------------------------------------------------------
\125\ Exchange Act Release No. 102386 (Feb. 10, 2025), 90 FR
9642 (Feb. 14, 2025) (``2025 CAIS Exemptive Order'').
---------------------------------------------------------------------------
First, CAT LLC and the Participants understand that the 2025 CAIS
Exemptive Order is permissive at the discretion of Industry Members
(meaning that Industry Members may choose to take advantage of the
exemptive relief or choose to continue reporting names, addresses, and
years of birth for natural persons reported with transformed SSNs or
ITINs to CAIS) and only applies to natural persons reported with
transformed SSNs or ITINs, and not to natural persons reported without
transformed SSNs/ITINs, including foreign nationals, or to legal
entities. As a result, the Plan Processor must maintain all software
that is required to continue to accept such Customer information for
those Industry Members who choose to continue reporting it, as well as
to support regulatory queries of names, addresses, and years of birth
for non-exempted persons. Consequently, the 2025 CAIS Exemptive Order
will not result in any cost savings.
Second, in granting its 2025 CAIS Exemptive Order, the SEC cited
security considerations, concluding that the benefits of reporting
names, addresses, and years of birth for natural persons reported with
transformed SSNs or ITINs no longer justify the potential risks.\126\
However, the 2025 CAIS Exemptive Order only applies to the reporting of
such Customer information after the date of the order, and only to the
extent that Industry Members choose to discontinue reporting such
exempted Customer information. In addition, the 2025 CAIS Exemptive
Order does not address the deletion of existing, previously reported
Customer information currently stored in CAIS. Further, the 2025 CAIS
Exemptive Order does not apply to natural persons who are not reported
with transformed SSNs or ITINs (e.g., foreign nationals) or legal
entities.
---------------------------------------------------------------------------
\126\ See 2025 CAIS Exemptive Order at 9643-44.
---------------------------------------------------------------------------
In light of these issues, on March 7, 2025, CAT LLC filed with the
SEC a proposed amendment to the CAT NMS Plan relating to the CAIS.\127\
This proposed amendment would eliminate requirements that Industry
Members report Customer names, Customer addresses, account names,
account addresses, years of birth, and authorized trader names, would
provide for the deletion of previously reported Customer information,
and would achieve significant annual savings in CAT operating costs.
The SEC has not yet approved or disapproved this proposed amendment.
---------------------------------------------------------------------------
\127\ Exchange Act Release No. 102665 (Mar. 13, 2025), 90 FR
12845 (Mar. 29, 2025) (``2025 Proposed CAIS Plan Amendment'').
---------------------------------------------------------------------------
d. Description of Reference Data Approach
With this Reference Data Amendment, CAT LLC proposes to amend the
CAT NMS Plan to adopt the Reference Data
[[Page 61528]]
Approach. The following describes the Reference Data Approach.
i. Submission of Data to CAT by Industry Members
Under the Reference Data Approach, Industry Members would be
required to report to the CAT a smaller subset of the data than they
are currently required to report to the CAT. The following describes
the data that Industry Members would be required to submit to the CAT
under the Reference Data Approach.
Industry Members would be required to collect and record certain
identification information for their Customers (such as SSNs, ITINs,
Employer Identification Numbers (``EINs'') or foreign identifiers).
However, Industry Members would not provide such Customer
identification information to the CAT. Instead, for each Customer other
than foreign Customers, each Industry Member would submit to the
Reference Database of the CAT (the information system of the CAT that
would contain Reference Data) (1) the hashed version of each Customer's
identification information, which would be referred to as the
Transformed Identifier or TID, as well as (2) the type of identifier
used to create the Transformed Identifier (e.g., SSN/ITIN, EIN or
foreign identifier), and such type of identifier would be referred to
as the Transformed Identifier Type or TID Type. For foreign Customers,
each Industry Member would be required to submit two items in addition
to the TID and TID Type; Industry Members also would be required to
submit (1) the Foreign TID Type, which is the type of foreign
identifier used to create the TID (e.g., passport, LEI, driver's
license), and (2) the Foreign TID Country Code, which is the country
that issued the foreign identifier used to create the TID. This data is
collectively referred to as ``CCID Generation Data.''
In addition, Industry Members would be required to submit to the
Reference Database the following ``CCID Transaction Enrichment Data''
for each account and Customer, as applicable:
<bullet> Firm Designated ID;
<bullet> Date FDID Opened, which means the date the account was
opened (or the Account Effective Date);
<bullet> Date FDID Closed, which means the date the account was
closed (or relationship or entity identifier was ended) at the Industry
Member;
<bullet> Customer Role Start Date, which means the date the
Customer became associated with the account; and
<bullet> Customer Role End Date, which means the date the Customer
is no longer associated with the account.
Furthermore, Industry Members would be required to report to the
Reference Database the following data types: account type, clearing
broker, branch office, registered representative, and individual's role
in the account. Industry Members would be required to report this data
to the Reference Database, not to CAIS. This data, along with CCID
Generation Data and CCID Transaction Enrichment Data would be referred
to as Reference Data. These five categories of data would assist
regulatory surveillance programs and would help to reduce Electronic
Blue Sheet requests and other inquiries from the Participants and the
SEC. CAT LLC requests comment on the inclusion of these five categories
of data as Reference Data.
In addition, the definition of Reference Data would not include the
Large Trader ID (``LTID'').\128\ Accordingly, CAT LLC also requests
comment on the exclusion of the LTID from the Reference Database.
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\128\ For a discussion of LTIDs and the large trader
requirements under Rule 13h-1 under the Exchange Act with regard to
the CAT NMS Plan, see CAT NMS Plan Approval Order at 84777-8.
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ii. Reference Database
Under the Reference Data Approach, Industry Members would no longer
report Customer Account Information and Customer Identifying
Information to CAIS, and CAIS would be eliminated. Instead, the
Reference Data, which includes CCID Generation Data, CCID Transaction
Enrichment Data, and account type, clearing broker, branch office,
registered representative, and individual's role in the account, would
be reported to and collected in the Reference Database.
Correspondingly, the regulatory and other features related to CAIS and
the collection of Customer information (e.g., Regulatory Portal, CAIS
Report Card, CCID Rotation) also would eliminated.
iii. Generation of CCID
The process for generating the CCID under the Reference Data
Approach is materially the same as the current process. Using a
combination of the TID and the TID Type (or, for foreign Customers, a
combination of TID, TID Type, Foreign TID Type and Foreign TID Country
Code), the Plan Processor would create a CCID for each Customer. The
CCID is a globally unique identifier generated for each combination of
TID and TID Type (or, for foreign Customers, a combination of TID, TID
Type, Foreign TID Type and Foreign TID Country Code). Each time any
Industry Member submits the same combination of these two field values
(or these four field values for foreign customers), the same CCID would
be generated within the CAT such that each unique Customer would only
be assigned a single CCID.
iv. Enrichment of Reportable Events With CCID
The Plan Processor would enrich Reportable Events for an order with
the CCID for the relevant Customer using the FDID as the key. The
output of this enrichment process would be a mapping of CCIDs to FDIDs
that would allow regulators to associate a Customer with transaction
data. The Plan Processor would use the CCID Transaction Enrichment Data
reported by Industry Members to the Reference Database (i.e., FDID,
Date FDID Opened, Date FDID Closed, Customer Role Start Date and
Customer Role End Date) to enrich Reportable Events with the CCID. The
Date FDID Opened and Date FDID Closed are necessary to determine which
Reportable Events are eligible for enrichment with the appropriate
CCID, and the Customer Role Start Date and Customer Role End Date are
necessary to determine which CCIDs were associated with the FDID on the
date of the Reportable Event. Once the Plan Processor enriches
Reportable Events with the CCID, regulators can track the same CCID and
Customer across different FDIDs and across different Industry Members.
v. Regulatory Access to Reference Data
The Plan Processor will continue to create a CCID:FDID mapping
table, which allows regulators to connect accounts with customers.
However, under the Reference Data Approach, the mapping table will be
expanded to include the additional Reference Data elements. In
addition, relevant historical CCID, FDID and Reference Data will be
migrated to the updated mapping table; with such migration, such
relevant historical data would not be eliminated.
With the elimination of CAIS, the CAIS regulatory portal also would
be eliminated. With the Reference Data Approach, regulators would
access the FDID, CCID and Reference Data via the FDID:CCID mapping
table. The mapping table with the FDID, CCID and Reference Data would
be made available to regulators via the CAT query tools (i.e., the user
defined direct query and bulk extraction tools), or a regulator's own
regulatory applications for the CAT. In addition, to the extent that a
regulator needs to use a social security number, EIN, or foreign
identifier (which it has obtained from outside the CAT) to investigate
CAT activity, the Plan Processor would provide a method (e.g., an
application programming
[[Page 61529]]
interface (``API'')) that would permit regulators to use the social
security number to look up a CCID.
e. Proposed Revisions to the CAT NMS Plan
To incorporate the Reference Data Approach in the CAT NMS Plan, CAT
LLC proposes the following revisions to CAT NMS Plan.
i. Definitions
CAT LLC proposes adding certain new defined terms to Section 1.1 of
the CAT NMS Plan, and deleting terms that would be obsolete with the
adoption of the Reference Data Approach. Specifically, CAT LLC would
add the following new defined terms and their definitions:
<bullet> ``CCID Transaction Enrichment Data'' shall mean Firm
Designated ID, Date FDID Opened, Date FDID Closed, Customer Role Start
Date, and Customer Role End Date.
<bullet> ``CCID Generation Data'' shall mean the Transformed
Identifier and Transformed Identifier Type.
<bullet> ``Customer Role Start Date'' means the date the Customer
became associated with the relevant account for the order.
<bullet> ``Customer Role End Date'' means the date the Customer is
no longer associated with the relevant account for the order.
<bullet> ``Date FDID Closed'' means the date the relevant account
for the order was closed (or relationship or entity identifier was
ended) at the Industry Member.
<bullet> ``Date FDID Opened'' means the date the relevant account
for the order was opened; except, however, that (a) in those
circumstances in which an Industry Member has established a trading
relationship with an institution but has not established an account
with that institution, the Industry Member will provide the Account
Effective Date in lieu of the ``Date FDID Opened;'' and (b) in those
circumstances in which the relevant account was established prior to
the implementation date of the CAT NMS Plan applicable to the relevant
CAT Reporter (as set forth in Rule 613(a)(3)(v) and (vi)), and no
``date account opened'' is available for the account, the Industry
Member will provide the Account Effective Date in the following
circumstances: (i) where an Industry Member changes back office
providers or clearing firms and the date account opened is changed to
the date the account was opened on the new back office/clearing firm
system; (ii) where an Industry Member acquires another Industry Member
and the date account opened is changed to the date the account was
opened on the post-merger back office/clearing firm system; (iii) where
there are multiple dates associated with an account in an Industry
Member's system, and the parameters of each date are determined by the
individual Industry Member; and (iv) where the relevant account is an
Industry Member proprietary account.\129\
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\129\ Note that the language in paragraphs (a) and (b) of the
proposed definition of ``Date FDID Opened'' track the language in
the current definition of ``Customer Account Information.'' Section
1.1 of the CAT NMS Plan.
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<bullet> ``Foreign TID Country Code'' means the country that issued
the foreign identifier used to create the Transformed Identifier.
<bullet> ``Foreign TID Type'' means, for foreign customers, the
type of foreign identifier used to create the Transformed Identifier
(e.g., passport, Legal Entity Identifier (``LEI''), or driver's
license).
<bullet> ``Reference Data'' means CCID Generation Data, CCID
Transaction Enrichment Data, account type, clearing broker, branch
office, registered representative, and individual's role in the
account.
<bullet> ``Reference Database'' means the information system of the
CAT containing Reference Data.
<bullet> ``Transformed Identifier Type'' or ``TID Type'' means the
type of identifier used to create the Transformed Identifier (e.g.,
SSN/ITIN, EIN or foreign identifier).
<bullet> ``Transformed Identifier'' or ``TID'' means the
transformed version of the input used to identify unique Customers,
where such inputs may include, but are not limited to, individual tax
payer identification number (``ITIN'') or social security number
(``SSN''), Employer Identification Number (EIN, including QI-EIN, WP-
EIN, and WT-EIN), or certain foreign identifiers.
CAT LLC would also add the phrase ``or `CAT-Customer-ID' or `CCID'
'' to the current definition of ``Customer-ID.'' The revised definition
would read as follows `` `Customer-ID' or `CAT-Customer-ID' or `CCID'
has the same meaning provided in SEC Rule 613(j)(5).''
Finally, CAT LLC proposes to eliminate the terms ``Customer Account
Information'' and ``Customer Identifying Information'' and ``PII''
\130\ as they would no longer be relevant under the Reference Data
Approach.\131\ However, as noted above, with the Reference Data
Approach, Industry Members would be required to report ``account type''
to the Reference Database; ``account type'' is currently included in
the definition of ``Customer Account Information.'' Similarly, Industry
Members would be required to report ``the individual's role in the
account''; this item is currently included in the definition of
``Customer Identifying Information.''
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\130\ CAT LLC proposes to eliminate the references to and
discussion of PII in Sections 6.2(b)(v)(F) and 6.10(c)(ii) of the
CAT NMS Plan, as well as Section 4.1, 4.1.2, 4.1.4, 4.1.6 (in its
entirety), 6.2, 8.1.3, 8.2 and 8.2.2 of Appendix D of the CAT NMS
Plan. CAT LLC also proposes to delete the reference to ``Customer
Account Information and Customer Identifying Information'' from
Section 6.2(a)(v)(C) of the CAT NMS Plan, which addresses
obligations of the Chief Compliance Officer.
\131\ CAT LLC also proposes to note in Section 1.1 of the CAT
NMS Plan that the terms ``Customer Account Information'' and
``Customer Identifying Information'' as used in the Financial
Accountability Milestones (Initial Industry Member Core Equity
Reporting; Full Implementation of Core Equity Reporting; Full
Availability and Regulatory Utilization of Transactional Database
Functionality; and Full Implementation of CAT NMS Plan Requirements)
are no longer defined terms.
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ii. Section 6.4 of the CAT NMS Plan
CAT LLC proposes to revise Section 6.4 of the CAT NMS Plan to
reflect the Reference Data Approach. Section 6.4(d)(ii)(C) of the CAT
NMS Plan requires each Participant, via its CAT Compliance Rule, to
require its Industry Members to record and report to the Central
Repository the following: ``for the original receipt or origination of
an order, the Firm Designated ID for the relevant Customer, and in
accordance with Section 6.4(d)(iv), Customer Account Information and
Customer Identifying Information for the relevant Customer.'' CAT LLC
proposes to revise this provision to indicate that, under the Reference
Data Approach, Industry Members are required to provide the CCID
Transaction Enrichment Data for the relevant account for the order and
the CCID Generation Data for the relevant Customer for the order, not
the Customer Account Information or Customer Identifying Information.
Accordingly, CAT LLC proposes to revise Section 6.4(d)(ii)(C) of the
CAT NMS Plan to require Industry Members to provide the following:
``with respect to the original receipt or origination of an order, the
CCID Transaction Enrichment Data for the relevant account for the
order, and the CCID Generation Data for the relevant Customer for the
order, in accordance with Section 6.4(d)(iv).''
In addition, CAT LLC proposes to revise Section 6.4(d)(iv) of the
CAT NMS Plan to reflect the Reference Data Approach as well. Section
6.4(d)(iv) of the CAT NMS Plan currently states the following:
Each Industry Member must submit an initial set of the Customer
information
[[Page 61530]]
required in Section 6.4(d)(ii)(C) for Active Accounts to the Central
Repository upon the Industry Member's commencement of reporting to
the Central Repository. Each Industry Member must submit to the
Central Repository any updates, additions or other changes to the
Customer information required in Section 6.4(d)(ii)(C) on a daily
basis for all Active Accounts. In addition, on a periodic basis as
designated by the Plan Processor and approved by the Operating
Committee, each Industry Member will be required to submit to the
Central Repository a complete set of all Customer information
required in Section 6.4(d)(ii)(C). The Plan Processor will correlate
such Customer information across all Industry Members, use it to
assign a Customer-ID for each Customer, and use the Customer-ID to
link all Reportable Events associated with an order for a Customer.
CAT LLC proposes to replace the references to Customer information
with ``Reference Data,'' which includes CCID Generation Data, CCID
Transaction Enrichment Data and additional data elements, in the first
two sentences. As a result, Industry Members would be required to
submit Reference Data for each Customer with an Active Account, not
Customer information or Active Accounts, to the CAT.
In addition, CAT LLC proposes to eliminate the periodic refresh of
data, and therefore proposes to delete the following sentence from
Section 6.4(d)(iv) of the CAT NMS Plan: ``In addition, on a periodic
basis as designated by the Plan Processor and approved by the Operating
Committee, each Industry Member will be required to submit to the
Central Repository a complete set of all Customer information required
in Section 6.4(d)(ii)(C).'' \132\ The periodic refresh requirement has
been used with the existing approach to Customer information to provide
a means to update Customer information that may change (e.g., name
changes due to marriage, address changes due to moves). With the
Reference Data Amendment, CAT reporting of this type of Customer
information would no longer be required. Furthermore, Reportable Events
would be submitted with an FDID, which would continue to be subject to
validations by the Plan Processor.
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\132\ Note that the deletion of the periodic refresh requirement
is not intended to change the current practice that allows Industry
Members to report full account lists, rather than just the changes
to such account lists, on a daily basis. See, e.g., CAT FAQ 16,
<a href="https://www.catnmsplan.com/faq">https://www.catnmsplan.com/faq</a>.
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Finally, CAT LLC proposes to revise the last sentence of Section
6.4(d)(iv) of the CAT NMS Plan to reflect the Reference Data Approach.
It would state that ``[t]he Plan Processor will use the CCID Generation
Data to assign a Customer-ID for each Customer, and use the CCID
Transaction Enrichment Data to enrich and link all Reportable Events
associated with an order with the CCID for a Customer.''
With these changes, Section 6.4(d)(iv) of the CAT NMS Plan would
read as follows:
Each Industry Member must submit an initial set of the Reference
Data required in Section 6.4(d)(ii)(C) for each Customer with an
Active Account(s) to the Central Repository upon the Industry
Member's commencement of reporting to the Central Repository. Each
Industry M
[…truncated; see source link]Indexed from Federal Register on December 31, 2025.
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