Notice2026-01609
Order Extending Temporary Conditional Exemptive Relief, Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 608(e) of Regulation NMS Thereunder, From Certain Requirements of Appendix D, Section 3 of the National Market System Plan Governing the Consolidated Audit Trail Related to Representative Orders
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Published
January 27, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 91 Issue 17 (Tuesday, January 27, 2026)</title>
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[Federal Register Volume 91, Number 17 (Tuesday, January 27, 2026)]
[Notices]
[Pages 3601-3602]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01609]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104663]
Order Extending Temporary Conditional Exemptive Relief, Pursuant
to Section 36(a)(1) of the Securities Exchange Act of 1934 (``Exchange
Act'') and Rule 608(e) of Regulation NMS Thereunder, From Certain
Requirements of Appendix D, Section 3 of the National Market System
Plan Governing the Consolidated Audit Trail Related to Representative
Orders
January 23, 2026.
I. Introduction
On July 18, 2012, the Securities and Exchange Commission (the
``Commission'' or the ``SEC'') adopted Rule 613 of Regulation NMS,
which required the national securities exchanges and national
securities associations (the ``Participants'') \1\ to jointly develop
and submit to the Commission a national market system plan to create,
implement, and maintain the consolidated audit trail (``CAT'').\2\ The
goal of Rule 613 was to create a modernized audit trail system that
would provide regulators with timely access to a comprehensive set of
trading data, thus enabling regulators to more efficiently and
effectively analyze and reconstruct market events, monitor market
behavior, conduct market analysis to support regulatory decisions, and
perform surveillance, investigation, and enforcement activities. On
November 15, 2016, the Commission approved the national market system
plan required by Rule 613--the CAT NMS Plan.\3\
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\1\ The current Participants to the National Market System Plan
Governing the Consolidated Audit Trail (``CAT NMS Plan'') are 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.
\2\ See Securities Exchange Act Release No. 67457 (July 18,
2012), 77 FR 45722 (Aug. 1, 2012); 17 CFR 242.613.
\3\ See Securities Exchange Act Release No. 79318, 81 FR 84696
(Nov. 23, 2016) (``CAT NMS Plan Approval Order''). Unless otherwise
noted, capitalized terms are used as defined in the CAT NMS Plan.
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On December 16, 2020, the Commission issued an exemptive relief
order regarding the implementation of the CAT NMS Plan (the ``First
Order'').\4\ This order granted temporary conditional exemptive relief
from several requirements set forth in the CAT NMS Plan, including the
requirements set forth in Appendix D, section 3 that the CAT ``must be
able to create the lifecycle between . . . [c]ustomer orders to
`representative' orders created in firm accounts for the purpose of
facilitating a customer order (e.g., linking a customer order handled
on a riskless principal basis to the street-side proprietary order).''
\5\ This relief was initially granted until July 31, 2023.\6\
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\4\ See Securities Exchange Act Release No. 90688, 85 FR 83634
(Dec. 22, 2020).
\5\ See id. at 83636. The Commission stated its understanding
that ``the Participants do not currently have the ability to create
lifecycles in certain representative order scenarios, particularly
because of the difficulty of linking representative orders for
Industry Members with separate order management systems and
execution management systems that do not currently have a systematic
or direct link between them.'' Id.
\6\ Id.
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On July 8, 2022, the Commission issued a new exemptive relief order
(the ``Second Order''),\7\ which superseded the First Order and
modified and/or clarified certain aspects of the First Order. The
Second Order granted temporary conditional exemptive relief until July
31, 2024, from the above-described linkage requirements set forth in
Appendix D, section 3 for ``representative order scenarios in which
Industry Members do not have a systematic or direct link between their
order management systems and execution management systems.'' \8\ The
Commission subsequently issued an order (the ``Third Order''), on May
19, 2023, extending such exemptive relief until January 31, 2025.\9\
This relief was superseded by a new order issued by the Commission on
November 2, 2023 (the ``Fourth Order''),\10\ which was intended to
mirror the temporary conditional exemptive relief granted by the Third
Order (and the Second Order) with respect to the requirements set forth
in Appendix D, section 3 of the CAT NMS Plan regarding lifecycle
linkages between customer orders and representative orders for
scenarios in which Industry Members do not have a systematic or direct
link between their order management systems and execution management
systems.\11\ The Fourth Order maintained the January 31, 2025 deadline
established by the Third Order.\12\ On January 17, 2025, the Commission
extended this temporary conditional exemptive relief until July 31,
2025 (the ``Fifth Order'').\13\ On July 23, 2025, the Commission again
extended this temporary conditional exemptive relief until January 31,
2026 (the ``Sixth Order'').\14\
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\7\ See Securities Exchange Act Release No. 95234, 87 FR 42247
(July 14, 2022).
\8\ Id. at 42256. The term ``Industry Member'' is defined as ``a
member of a national securities exchange or a member of a national
securities association.'' See CAT NMS Plan, at section 1.1.
\9\ See Securities Exchange Act Release No. 97530, 88 FR 33655
(May 24, 2023).
\10\ See Securities Exchange Act Release No. 98848, 88 FR 77128
(Nov. 8, 2023).
\11\ Id. at 77132.
\12\ Id.
\13\ See Securities Exchange Act Release No. 102234, 90 FR 8078
(Jan. 23, 2025).
\14\ See Securities Exchange Act Release No. 103528, 90 FR 35561
(July 28, 2025).
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For the reasons set forth below, the Commission has determined to
grant a two year extension of the temporary conditional exemptive
relief previously provided by the Commission with respect to the above-
described requirements set forth in Appendix D, section 3 of the CAT
NMS Plan for representative order scenarios in which Industry Members
do not have a systematic or direct link between their order management
systems and execution management systems. Specifically, the exemptive
relief applies to the CAT NMS Plan requirement in Appendix D, section 3
of the CAT NMS Plan, requiring that the CAT ``must be able to create
the lifecycle between . . . [c]ustomer orders to `representative'
orders created in firm accounts for the purpose of facilitating a
customer order (e.g., linking a customer order handled on a riskless
principal basis to the street-side proprietary order).'' \15\
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\15\ See CAT NMS Plan, at Appendix D, section 3. A
representative order is an order originated in a firm-owned or -
controlled account, including principal, agency average price and
omnibus accounts, by an industry member for the purpose of working
one or more customer or client orders. See, e.g., Securities
Exchange Act Release No. 88702 (Apr. 20, 2020), 85 FR 23075, 23076
n.26 (Apr. 24, 2020).
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III. Discussion and Exemptive Relief
Section 36(a)(1) of the Exchange Act grants the Commission the
authority to ``conditionally or unconditionally exempt any person,
security, or transaction . . . from any provision or provisions of [the
Exchange Act] 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.'' \16\ Rule 608(e)
of Regulation NMS similarly grants the Commission the authority to
``exempt from [Rule 608], either unconditionally or on specified terms
and conditions, any self-regulatory organization, member
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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.'' \17\
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\16\ 15 U.S.C. 78mm(a)(1).
\17\ 17 CFR 242.608(e).
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Without an extension of the existing exemptive relief, Industry
Members would be required to report linkage between a customer order to
a specific representative order for representative order scenarios in
which Industry Members do not have a systematic or direct link between
their order management systems and execution management systems after
January 31, 2026. However, in its request for a six-month extension
submitted to the Commission on May 29, 2025,\18\ Financial Information
Forum (``FIF'') stated that there are several unresolved issues related
to reporting these orders, including, but not limited to, the absence
of a method to report linkage for some specific types of representative
orders.\19\ FIF cautioned that Industry Members would be faced with
``one of the following choices: (i) submit large numbers of Order
Fulfillment events that the CAT system would reject and that would not
be repairable; (ii) abandon certain common existing trading workflows
that are fundamental to the current equity trading markets; or (iii)
refrain from reporting large numbers of Order Fulfillment events to
CAT.'' \20\
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\18\ See letter from Howard Meyerson, Managing Director,
Financial Information Forum, to Commission, dated May 29, 2025
(``FIF May 2025 Letter''), at 2, available at <a href="https://fif.com/index.php/working-groups/category/271-comment-letters?download=3276:fif-request-for-six-month-extension-of-the-current-exemptive-relief-relating-to-rep-order-linkage&view=category">https://fif.com/index.php/working-groups/category/271-comment-letters?download=3276:fif-request-for-six-month-extension-of-the-current-exemptive-relief-relating-to-rep-order-linkage&view=category</a>.
\19\ See Sixth Order, at 35562.
\20\ See FIF May 2025 Letter, at 2-3.
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The Commission has determined that additional time is needed to
identify and evaluate appropriate long-term solutions for certain
trading scenarios. Granting two additional years of exemptive relief is
appropriate given the difficulty and complexity of representative order
scenarios, and in light of the Commission's comprehensive review of the
CAT.\21\ In developing those solutions, the Commission emphasizes its
willingness to consider alternative solutions that achieve the
regulatory goals of Rule 613 and the CAT NMS Plan. The Commission
therefore determines that extension of the existing temporary
conditional exemptive relief is appropriate in the public interest and
consistent with the protection of investors under section 36(a)(1) of
the Exchange Act, as well as consistent with the public interest, the
protection of investors, the maintenance of fair and orderly markets,
and the perfection of the mechanisms of a national market system under
Rule 608(e) of Regulation NMS.
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\21\ See Securities Exchange Act Release No. 104144 (Sept. 30,
2025), 90 FR 47853, 47854 (Oct. 2, 2025) (stating that ``the
Chairman of the Commission instructed the staff to undertake a
comprehensive review of the CAT'' and citing Prepared Remarks Before
SEC Speaks, Chairman Paul S. Atkins, May 19, 2025, available at
<a href="https://www.sec.gov/newsroom/speeches-statements/atkins-prepared-remarks-sec-speaks-051925">https://www.sec.gov/newsroom/speeches-statements/atkins-prepared-remarks-sec-speaks-051925</a>).
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Specifically, the Commission extends the existing temporary
conditional exemptive relief granted by the Commission from the
requirements set forth in Appendix D, section 3 of the CAT NMS Plan
related to lifecycle linkages between customer orders and
representative orders \22\ for representative order scenarios in which
Industry Members do not have a systematic or direct link between their
order management systems and execution management systems, until
January 31, 2028. Such relief is intended to mirror the exemptive
relief provided by the Second Order, the Third Order, the Fourth Order,
the Fifth Order, and the Sixth Order. As a condition to this relief the
Participants must continue to require Industry Members to report
``representative'' orders as currently described in FAQs F5-F7, and as
described in other exemptive relief issued by the Commission.\23\
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\22\ The requirements related to lifecycle linkages between
customer orders and representative orders set forth in Appendix D,
section 3 of the CAT NMS Plan are described in the Second Order. See
Second Order, at 42255-56.
\23\ To avoid confusion, this exemptive relief is, by its terms,
not limited to any specific type of CAT reportable security, e.g.,
equities.
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IV. Conclusion
Accordingly, it is hereby ordered, pursuant to section 36(a)(1) of
the Exchange Act \24\ and Rule 608(e) under the Exchange Act,\25\ that
the above-described temporary conditional exemptive relief be extended.
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\24\ 15 U.S.C. 78mm(a)(1).
\25\ 17 CFR 242.608(e).
By the Commission.
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2026-01609 Filed 1-26-26; 8:45 am]
BILLING CODE 8011-01-P
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