Notice2026-01611
Order Granting Exemptive Relief, Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 608(e) of Regulation NMS Thereunder, From Certain Requirements of the National Market System Plan Governing the Consolidated Audit Trail Related to Port-Level Settings
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Published
January 27, 2026
Issuing agencies
Securities and Exchange Commission
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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 3557-3560]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-01611]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-104664]
Order Granting Exemptive Relief, Pursuant to Section 36(a)(1) of
the Securities Exchange Act of 1934 (``Exchange Act'') and Rule 608(e)
of Regulation NMS Thereunder, From Certain Requirements of the National
Market System Plan Governing the Consolidated Audit Trail Related to
Port-Level Settings
January 23, 2026.
I. Introduction
By letter dated October 20, 2025, Financial Information Forum
(``FIF'') requested that the Securities and Exchange Commission
(``Commission'' or ``SEC'') grant exemptive relief, pursuant to its
authority under section 36 of the Securities Exchange Act of 1934
(``Exchange Act'') \1\ and Rule 608(e) of Regulation NMS under the
Exchange Act,\2\ related to the reporting of port-level settings
pursuant to the National Market System Plan Governing the Consolidated
Audit Trail (``CAT NMS Plan'').\3\
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\1\ 15 U.S.C. 78mm(a)(1).
\2\ 17 CFR 242.608(e).
\3\ See letter to Vanessa Countryman, Secretary, Commission,
from Howard Meyerson, Managing Director, FIF, dated Oct. 20, 2025
(the ``FIF Request''), available at: <a href="https://fif.com/index.php/working-groups/category/271-comment-letters?download=3412:fif-letter-to-the-sec-requesting-interpretive-guidance-relating-to-the-cat-reporting-of-port-settings-or-in-the-alternative-requesting-exemptive-relief-to-the-same-effect&view=category">https://fif.com/index.php/working-groups/category/271-comment-letters?download=3412:fif-letter-to-the-sec-requesting-interpretive-guidance-relating-to-the-cat-reporting-of-port-settings-or-in-the-alternative-requesting-exemptive-relief-to-the-same-effect&view=category</a>. The FIF Request
requests either ``written clarification'' or exemptive relief. Id.
at 1-2. Unless otherwise noted, capitalized terms are used as
defined in the CAT NMS Plan. The Participants to the 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.
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Section 36(a)(1) of the Exchange Act grants the Commission the
authority, with certain limitations, 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.'' \4\ Under Rule 608(e) of Regulation NMS, the
Commission may ``exempt from [Rule 608], 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
[[Page 3558]]
protection of investors, the maintenance of fair and orderly markets
and the removal of impediments to, and perfection of the mechanism of,
a national market system.'' \5\
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\4\ 15 U.S.C. 78mm(a)(1).
\5\ 17 CFR 242.608(e).
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For the reasons set forth below, the Commission has determined to
provide exemptive relief from relevant provisions in the CAT NMS Plan
requiring the reporting of port-level settings by CAT Reporters that
send an Order to another CAT Reporter.
II. Background
Rule 613 and sections 6.3(d)(i)(F), 6.3(d)(ii)(G), 6.3(d)(iii)(F),
6.3(d)(iv)(E), and 6.4(d)(i) of the CAT NMS Plan require the
Participants to report, and to amend their Compliance Rules to require
Industry Members to report, the ``Material Terms of the Order'' for
certain events in an order's lifecycle, including ``for original
receipt or origination of an order,'' ``for the routing of an order,''
``for the receipt of an order that has been routed,'' and for orders
that are ``modified or cancelled.'' \6\ Rule 613 and the CAT NMS Plan
further define the ``Material Terms of the Order'' to include ``any
special handling instructions.'' \7\ Port-level settings are used by
Industry Members and Participants as one method of communicating
various Material Terms of the Order, including, in some cases, special
handling instructions. When port-level settings are used to communicate
Material Terms of the Order, Rule 613 and the CAT NMS Plan thus require
these port-level settings to be reported for that order by both senders
and receivers.
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\6\ See also 17 CFR 242.613(c)(7).
\7\ See CAT NMS Plan, supra note 3, at section 1.1; 17 CFR
242.613(j)(7).
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On December 16, 2020, the Commission issued an exemptive relief
order regarding the implementation of the CAT NMS Plan (the ``2020
Order'').\8\ The 2020 Order granted temporary conditional exemptive
relief from several requirements set forth in the CAT NMS Plan,
including an exemption to the Participants from requiring that both the
CAT Reporter sending an Order and the CAT Reporter receiving an Order
report port-level settings as part of the Material Terms of an Order
until July 31, 2023.\9\ On July 8, 2022, the Commission issued another
exemptive relief order (the ``2022 Order''), that, among other things,
superseded the 2020 Order, and granted temporary conditional exemptive
relief from the requirements set forth in Rule 613(c)(7) and sections
6.3(d)(i)(F), 6.3(d)(ii)(G), 6.3(d)(iii)(F), 6.3(d)(iv)(E), and
6.4(d)(i) of the CAT NMS Plan that the Participants report, and amend
their Compliance Rules to require Industry Members to report, the
Material Terms of the Order for certain events in an order's lifecycle
that are communicated through a port-level setting, until July 31, 2024
and subject to certain conditions.\10\
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\8\ See Securities Exchange Act Release No. 90688 (Dec. 16,
2020), 85 FR 83634, at 83635 (Dec. 22, 2020) (``2020 Order'').
\9\ This exemptive relief was conditioned on, among other
things, the Participants engaging both the Commission and Industry
Members on a plan to address the reporting of port-level settings on
an exchange-by-exchange basis and the release of updated
specifications and/or scenarios documents relating to the reporting
of port-level settings by both the sender and receiver of an Order
as a special handling instruction. Id. at 83636.
\10\ See Securities Exchange Act Release No. 95234, 87 FR 42247,
42254-55 (July 14, 2022).
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On November 2, 2023, the Commission granted conditional exemptive
relief related to certain requirements of the CAT NMS Plan, including,
among other things, conditional exemptive relief from the requirements
as applied to port-level settings that are set forth in Rule 613(c)(7)
and sections 6.3(d)(i)(F), 6.3(d)(ii)(G), 6.3(d)(iii)(F),
6.3(d)(iv)(E), and 6.4(d)(i) of the CAT NMS Plan for six specific
handling instructions described in the then-current CAT Industry Member
Technical Specifications that may be set by Industry Members at the
various Participant exchanges via exchange ports (the ``Exempted Port-
Level Settings'').\11\ This exemptive relief was limited to the
Exempted Port-Level Settings when set at the port-level at a national
securities exchange and did not extend exemptive relief to port-level
settings on Industry Member alternative trading systems or broker-
dealer port-level settings.\12\
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\11\ See Securities Exchange Act Release No. 98848, 88 FR 77128
(Dec. 8, 2023) (``2023 Order''). In the 2023 Order, the Commission
explained that, notwithstanding the 2023 Order, it understood that
the Participants continued to disagree with its interpretation of
these requirements and challenge the feasibility of strict
compliance with these requirements, other than with respect to the
Exempted Port-Level Settings. Id. at 77131 n.26.
\12\ Id. at 77131-32. The 2023 Order stated that to the extent
Participants and/or Industry Members wish to receive similar
exemptive relief related to other Material Terms of the Order set at
the port-level, they must submit an exemptive relief request to the
Commission for its consideration. Id.
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III. Request for Exemptive Relief
FIF has requested that the SEC provide written clarification that
the CAT NMS Plan does not require a Routing Firm \13\ to report to the
consolidated audit trail (``CAT'') Port Settings \14\ applied by a
Receiving Firm \15\ that are not part of the Routing Firm's books and
records, and, as an alternative, has requested that the SEC grant
Industry Members exemptive relief to the same effect. In support of its
request for exemptive relief, FIF states that ``CAT already has 100% of
the Port Settings data . . .'' because all port-level settings are
currently reported to the CAT, and because firms that receive an order
must report all material terms of that order to CAT, including any
terms that are added due to the receiving firm's port-level
settings.\16\ FIF asserts that there is no regulatory benefit to
routing firms reporting port-level settings because the receiving firm
is already reporting the data and the routing firm does not have the
data in its books and records.\17\ FIF states that requiring two-sided
reporting of port-level settings would create an ``enormous''
implementation cost for the industry without any surveillance or other
tangible benefit.\18\ FIF states that because routing firms do not have
port-level settings in their books and records, requiring the routing
firm to report port-level settings would create a ``misleading,
inaccurate audit trail,'' and require routing firms to report ``in a
manner that is inconsistent with its books and records.'' \19\
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\13\ `` `Routing Firm' refers to any CAT reporter that routes
orders to any Receiving Firm or Exchange and must report such route
events to CAT.'' FIF Request, at 2.
\14\ `` `Port Settings' refer to any CAT-reportable terms of an
order that are not known systematically to the Routing Firm but are
applied to the order by the Receiving Firm.'' Id. at 3.
\15\ `` `Receiving Firm' refers to any CAT reporter (broker-
dealer or exchange) that receives orders from a Routing Firm and
must report such orders to CAT.'' Id.
\16\ See id. at 3.
\17\ See id. at 4.
\18\ See id. at 5.
\19\ Id. at 4-5. Specifically, routing firms would be reporting
data that is not in the firm's books and records or accurately
reflect the actual instructions transmitted to the receiving firm.
Id. at 5, 15-17. FIF states that surveillance personnel will lose
the ability to differentiate between material terms ``known
systematically'' by routing firms and settings that were applied by
the receiving firm. Id. at 16.
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FIF states that, without relief, the obligation for two-sided
reporting of port-level settings would require collaboration between
every routing and receiving firm where a relationship exists, including
developing a way to transmit and translate port-level settings for all
orders submitted by a routing firm to each of their receiving firms on
a daily basis, a collection, processing and validation process that
would essentially duplicate a process that CAT already performs on a
daily basis except repeated thousands of times, all across the
industry.\20\ The FIF Request
[[Page 3559]]
describes potential approaches for implementation of two-sided CAT
reporting,\21\ and cautions that requiring two-sided reporting of port-
level settings would likely result in some firms changing from intraday
to end-of-day reporting, increasing CAT operating costs, impairing the
quality of CAT data, and increasing the risk of firms missing CAT
reporting deadlines.\22\
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\20\ See FIF Request at 8-9.
\21\ See id. at 9-14. FIF states that there is not currently an
industry-wide consensus as to how port-level setting data would be
shared between routing and receiving firms. Id. at 15.
\22\ See id. at 14-15. FIF states that larger firms (with more
CAT data to report) will begin submitting their CAT data early in
the trading day, in order to lessen the work required in the
evening, and in the absence of relief, these firms will likely need
to change some or all of their reporting to end-of-day. Id. at 15.
In addition, FIF states that transmission of billions of additional
order records between routing and receiving firms would create new
cybersecurity risks, and that requiring two-sided reporting would
have a negative impact on industry innovation and future
enhancements and innovations by receiving firms. Id.
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In addition to the FIF Request, the Commission has received comment
letters from other market participants supportive of broader exemptive
relief for port-level settings. One commenter states that the
Commission should ``confirm that port-level settings are not required
CAT records,'' and states that they ``provide little regulatory value,
give rise to significant reconciliation and other operational issues,
and significantly increase the costs of CAT reporting and processing.''
\23\ The commenter states that the 2023 Order ``actually gives no real
relief to broker-dealers,'' and expresses support for FIF's similar
position.\24\ Another commenter states that the Commission should issue
``immediate permanent exemptive relief related to the reporting of so-
called `Port Settings,''' which are settings that the industry does not
believe are required to be reported under the CAT NMS Plan.\25\
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\23\ See letter to Paul S. Atkins, Chairman, Securities and
Exchange Commission, from Joanna Mallers, Secretary, FIA Principal
Traders Group, dated June 26, 2025, at 3-4, available at: <a href="https://www.sec.gov/comments/4-853/4853-618547-1815754.pdf">https://www.sec.gov/comments/4-853/4853-618547-1815754.pdf</a>.
\24\ See id. at 4. See also letter to Sai Rao, Securities and
Exchange Commission, from Howard Meyerson, Managing Director, FIF,
dated Jan. 25, 2024, available at: <a href="https://fif.com/index.php/working-groups/category/271-comment-letters?download=2859:fif-letter-to-the-sec-on-the-requirement-for-a-routing-firm-to-report-to-cat-the-settings-applied-by-a-receiving-firm&start=90&view=category">https://fif.com/index.php/working-groups/category/271-comment-letters?download=2859:fif-letter-to-the-sec-on-the-requirement-for-a-routing-firm-to-report-to-cat-the-settings-applied-by-a-receiving-firm&start=90&view=category</a> (stating that the relief granted by the
Commission in the 2023 Order ``does not address the concerns of FIF
members previously communicated by FIF and our members to Commission
Representatives'').
\25\ See letter to Paul S. Atkins, Chairman, Securities and
Exchange Commission, from Joseph Corcoran, Managing Director and
Associate General Counsel and Gerald O'Hara, Vice President and
Assistant General Counsel, Securities Industry and Financial Markets
Association (``SIFMA''), dated June 6, 2025, at 5, available at:
<a href="https://www.sec.gov/comments/4-698/4698-610487-1785814.pdf">https://www.sec.gov/comments/4-698/4698-610487-1785814.pdf</a>. See also
letter to Vanessa Countryman, Secretary, Securities and Exchange
Commission, from Joseph Corcoran, Managing Director and Associate
General Counsel and Ellen Greene, Managing Director, Equities &
Options Market Structure, SIFMA, and Howard Meyerson, Managing
Director, FIF, dated July 31, 2023 (``FIF/SIFMA 2023 Letter''),
available at: <a href="https://www.sec.gov/comments/4-698/4698-238359-498762.pdf">https://www.sec.gov/comments/4-698/4698-238359-498762.pdf</a> (recommending that the Commission not require the CAT
Plan Participants to extend the Technical Specifications by
requiring an order sender to report port-level settings applied by a
receiving firm).
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IV. Discussion
The Commission has carefully considered the exemption request. The
Commission has determined that granting exemptive relief, pursuant to
section 36(a)(1) of the Exchange Act, is appropriate in the public
interest and is consistent with the protection of investors, and that
pursuant to Rule 608(e), this 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 the perfection
of, the mechanisms of a national market system. Specifically, with this
relief, which supplements the relief granted in the 2023 Order,
Industry Members will be exempt from any obligation to report port-
level settings when an Industry Member routes an order through a port
that is configured to apply port-level settings, regardless of whether
the port is an exchange port or a port maintained by an alternative
trading system or a broker-dealer, and such relief is not limited to
the Exempted Port-Level Settings.
Although the two-sided reporting of port-level settings (those that
are also material terms of the order) \26\ has regulatory benefits,
including allowing regulators to more easily identify potential
inaccuracies in reported CAT Data,\27\ the regulatory benefits are not
sufficient to justify the implementation costs and technical difficulty
of accurate reporting of port-level settings by both the sender and
receiver of an Order. Unlike other material terms of orders, port-level
settings are not managed by a sending firm on an order-by-order basis,
but are instead applied by the receiving firm to all orders sent to a
given port. Thus, port-level settings are not generally part of
standard order messages (e.g., FIX messages) sent by firms, and these
sending firms do not have the relevant data in their books and
records.\28\ To the extent that a sending firm wants to change port-
level settings applied to its orders by the receiving firm, it may
require manual processes such as usage of an online portal, email, or
even a verbal request to the receiving firm.\29\ As discussed by FIF,
ensuring that both the sender and receiver of Orders with port-level
settings have the same understanding with respect to port-level
settings to ensure accurate reporting would likely require ``an
enormous industry-wide data sharing and pre-linkage process,''
incurring substantial costs.\30\ The Commission does not believe that
imposing these costs on Industry Members is appropriate when regulators
will still have information related to port-level settings on CAT
records submitted by receiving firms.
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\26\ As previously stated by the Commission, the CAT NMS Plan
does not require all port-level settings to be reported to the CAT.
See 2023 Order, at 77131 n.27. Rule 613 and the CAT NMS Plan require
Participants and Industry Members to report only port-level settings
that are used by a sender or a receiver of an order to communicate
the Material Terms of the Order, including ``any special handling
instructions.''
\27\ For example, the two-sided reporting of port-level settings
would allow regulators to determine if a receiving firm and routing
firm had the same understanding as to which port-level settings were
attached to orders through that port. A routing firm could report
that its order has a particular port-level setting attached, such as
a price sliding instruction, when in fact that instruction was not
attached by the receiving firm because the port was configured to
not attach such an instruction.
\28\ See FIF Request at 4.
\29\ See FIF/SIFMA Letter, at 19.
\30\ See FIF Request, at 5. FIF states that the ``cost to build
and maintain this, and the security issues created by it, would be
extreme.'' Id. at 9.
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The Commission now grants exemptive relief from the requirements
that are set forth in Rule 613(c)(7) and sections 6.3(d)(i)(F),
6.3(d)(ii)(G), 6.3(d)(iii)(F), 6.3(d)(iv)(E), and Rule 6.4(d)(i) of the
CAT NMS Plan, as applied to port-level settings that are used to
communicate Material Terms. This relief supplements the relief granted
in the 2023 Order, and thus the Participants and Industry Members may
still rely on the exemptive relief granted in the 2023 Order. Pursuant
to the exemptive relief granted here, the Participants will not be
required to obligate Industry Members to report the applicable port-
level settings that are used to communicate Material Terms when an
Industry Member routes an order through a port that is configured to
apply port-level settings, regardless of whether the port is an
exchange port or a port maintained by an alternative trading system or
a broker-dealer. Such relief, however, does not alter the obligation of
the recipient of the order that utilizes a port-level setting to
communicate a Material Term of the Order to report the port-level
setting as part of the same order receipt record.
[[Page 3560]]
IV. Conclusion
Accordingly, it is hereby ordered, pursuant to section 36(a)(1) of
the Exchange Act \31\ and Rule 608(e) under the Exchange Act,\32\ that
the above-described exemptive relief be granted.
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\31\ 15 U.S.C. 78mm(a)(1).
\32\ 17 CFR 242.608(e).
By the Commission.
Stephanie J. Fouse,
Assistant Secretary.
[FR Doc. 2026-01611 Filed 1-26-26; 8:45 am]
BILLING CODE 8011-01-P
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