Notice2026-06255
Joint Industry Plan; Order Approving an Amendment to the National Market System Plan Governing the Consolidated Audit Trail, as Modified by the Commission, To Further Reduce the Costs of the Consolidated Audit Trail
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
April 1, 2026
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 91 Issue 62 (Wednesday, April 1, 2026)</title>
</head>
<body><pre>
[Federal Register Volume 91, Number 62 (Wednesday, April 1, 2026)]
[Notices]
[Pages 16284-16325]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-06255]
[[Page 16283]]
Vol. 91
Wednesday,
No. 62
April 1, 2026
Part II
Securities and Exchange Commission
-----------------------------------------------------------------------
Joint Industry Plan; Order Approving an Amendment to the National
Market System Plan Governing the Consolidated Audit Trail, as Modified
by the Commission, To Further Reduce the Costs of the Consolidated
Audit Trail; Notice
Federal Register / Vol. 91, No. 62 / Wednesday, April 1, 2026 /
Notices
[[Page 16284]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-105107; File No. 4-698]
Joint Industry Plan; Order Approving an Amendment to the National
Market System Plan Governing the Consolidated Audit Trail, as Modified
by the Commission, To Further Reduce the Costs of the Consolidated
Audit Trail
March 27, 2026.
I. Introduction
On December 17, 2025, the Consolidated Audit Trail, LLC (``CAT
LLC''), on behalf of the Participants \1\ to the National Market System
Plan Governing the Consolidated Audit Trail (``CAT NMS Plan'' or
``Plan''),\2\ filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 11A of the Exchange Act \3\ and
Rule 608 of Regulation National Market System (``Regulation NMS'')
thereunder,\4\ a proposed amendment to the CAT NMS Plan to implement
various cost savings measures (the ``Initial Proposed Amendment'') for
the consolidated audit trail (``CAT'').\5\ The Initial Proposed
Amendment was published for comment in the Federal Register on December
31, 2025.\6\ On February 24, 2026, CAT LLC, on behalf of the
Participants of the CAT NMS Plan, filed an amendment to the Initial
Proposed Amendment.\7\
---------------------------------------------------------------------------
\1\ The Participants 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. (``FINRA''), 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 GEMX, LLC,
Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, Nasdaq Texas,
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'').
\2\ The CAT NMS Plan is a national market system plan approved
by the Commission pursuant to Section 11A of the Securities Exchange
Act of 1934 (``Exchange Act'') and the rules and regulations
thereunder. 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, 81 FR at 84943-85034. The
CAT NMS Plan functions as the limited liability company agreement of
the jointly owned limited liability company formed under Delaware
state law through which the Participants conduct the activities of
the CAT (``Company''). Each Participant is a member of the Company
and jointly owns the Company on an equal basis. The Participants
submitted to the Commission a proposed amendment to the CAT NMS Plan
on August 29, 2019, which they designated as effective on filing. On
August 29, 2019, the Participants replaced the CAT NMS Plan in its
entirety with the limited liability company agreement of a new
limited liability company, CAT LLC, which became the Company. See
Securities Exchange Act Release No. 87149 (Sept. 27, 2019), 84 FR
52905 (Oct. 3, 2019). The latest version of the CAT NMS Plan is
available at <a href="https://catnmsplan.com/about-cat/cat-nms-plan">https://catnmsplan.com/about-cat/cat-nms-plan</a>.
\3\ 15 U.S.C. 78k-1.
\4\ 17 CFR 242.608.
\5\ See Letter to Vanessa Countryman, Secretary, Commission,
from Robert Walley, Chair, CAT NMS Plan Operating Committee, dated
Dec. 17, 2025.
\6\ See Securities Exchange Act Release No. 104504 (Dec. 23,
2025), 90 FR 61506 (``Notice''). Comments received in response to
the Notice can be found on the Commission's website at <a href="https://www.sec.gov/rules-regulations/public-comments/4-698">https://www.sec.gov/rules-regulations/public-comments/4-698</a>.
\7\ See Letter to Vanessa Countryman, Secretary, Commission,
from Robert Walley, Chair, CAT NMS Plan Operating Committee, dated
Feb. 24, 2026, available at: <a href="https://www.sec.gov/comments/4-698/4698-715067-2238014.pdf">https://www.sec.gov/comments/4-698/4698-715067-2238014.pdf</a> (``CAT LLC February 2026 Letter''). In the
CAT LLC February 2026 Letter, CAT LLC proposes to update the Initial
Proposed Amendment to reflect the intervening changes to the
language of the CAT NMS Plan following the Commission's approval of
the CAIS Amendment, infra note 20, on January 13, 2026. See CAT LLC
February 2026 Letter, at 1.
---------------------------------------------------------------------------
This order approves the Proposed Amendment, as modified by the
Commission (hereinafter, the ``Proposed Amendment'' unless otherwise
noted). For the reasons discussed below, the Commission finds that the
Proposed Amendment, as modified by the Commission, is appropriate in
the public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanism of, a national market system, or is otherwise in
furtherance of the purposes of the Exchange Act.
II. Background
On July 11, 2012, the Commission adopted Rule 613 of Regulation
NMS, which required the SROs to submit a national market system
(``NMS'') plan to create, implement and maintain a consolidated audit
trail that would capture customer and order event information for
orders in NMS securities.\8\ 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.\9\ On November 15, 2016, the Commission
approved the CAT NMS Plan.\10\
---------------------------------------------------------------------------
\8\ 17 CFR 242.613.
\9\ See Securities Exchange Act Release No. 67457 (July 18,
2012), 77 FR 45722, 45730-33 (Aug. 1, 2012).
\10\ See CAT NMS Plan Approval Order.
---------------------------------------------------------------------------
In the CAT NMS Plan Approval Order issued in 2016, the Commission
estimated that the ongoing annual costs associated with maintaining and
operating the Central Repository \11\ would be approximately $55.8
million.\12\ But CAT operating costs have far exceeded these estimates
\13\ due largely to increases in trading activity, which impacts
various CAT cost drivers like storage, data processing, and message
traffic.\14\ Pursuant to the CAT NMS Plan, the CAT must process and
store extremely large and increasing data volumes, resulting in
millions of dollars of ongoing costs. Recently, the Commission has
issued orders either approving amendments designed in whole or in part
to reduce the operating costs of the CAT, or providing exemptive relief
designed to reduce these costs, as discussed below.\15\
---------------------------------------------------------------------------
\11\ ``Central Repository'' means ``the repository responsible
for the receipt, consolidation, and retention of all information
reported to the CAT pursuant to SEC Rule 613 and [the CAT NMS
Plan].'' See CAT NMS Plan, at Section 1.1.
\12\ See, e.g., CAT NMS Plan Approval Order, at 84918-20.
\13\ The CAT budget initially approved by the Participants for
2025 was approximately $249 million. See Notice, at 61506;
Consolidated Audit Trail, LLC 2025 Financial and Operating Budget
(Nov. 11, 2024) <a href="https://catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf">https://catnmsplan.com/sites/default/files/2024-11/11.20.24-CAT-LLC-2025-Financial_and_Operating-Budget.pdf</a>.
\14\ See, e.g., Securities Exchange Act Release No. 98290 (Sept.
6, 2023), 88 FR 62628, 62641 (Sept. 12, 2023).
\15\ CAT LLC states that it 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. See Notice, at 61506. For
example, CAT LLC states that 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. Id. at 61506 n.7. CAT
LLC states that more comprehensive cost reductions require
Commission approval to permit their implementation. See id. at
61506.
---------------------------------------------------------------------------
On December 12, 2024, the Commission approved a CAT NMS Plan
Amendment that, among other things, permitted more efficient processing
and storage of Options Market Maker Quotes in Listed Options, allowed
for more cost-effective storage of raw, interim, submission and
feedback files older than 15 days, and codified and expanded upon
exemptive relief that permitted the deletion of industry test data
older than 3 months (``2024 Cost Savings Amendment'').\16\ CAT LLC
states that the 2024 Cost Savings Amendment was originally estimated to
[[Page 16285]]
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.\17\
---------------------------------------------------------------------------
\16\ See Securities Exchange Act Release No. 101901 (Dec. 12,
2024), 89 FR 103033 (Dec. 18, 2024).
\17\ 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. See Notice, at 61506;
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>. 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. See Notice, at 61506; 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 $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. See Notice, at 61506.
---------------------------------------------------------------------------
On September 30, 2025, the Commission issued an exemptive relief
order designed to allow the Participants to reduce the operating costs
of CAT (``2025 Cost Savings Exemptive Order'').\18\ Among other things,
the 2025 Cost Savings Exemptive Order granted exemptive relief with
respect to four areas: (A) requirements to create lifecycle linkages by
T+1 (transaction date + one day) at noon Eastern Time; (B) requirements
for reprocessing of late records; (C) requirements to provide an online
targeted query tool (``OTQT''); and (D) requirements related to data
storage and retention.\19\
---------------------------------------------------------------------------
\18\ See Securities Exchange Act Release No. 104144 (Sept. 30,
2025), 90 FR 47853 (Oct. 2, 2025).
\19\ Id. at 47854. CAT LLC states that the most recent 2025
budget does not reflect the potential cost savings related to the
2025 Cost Savings Exemptive Order and that 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. See Notice, at 61506 n.11.
---------------------------------------------------------------------------
And most recently, the Commission approved a proposed amendment,
with modifications, that would, among other things, eliminate all CAT
NMS Plan requirements to report customer names, addresses, and dates of
birth information for all customers, and require the deletion of
previously reported Customer names, addresses, and dates of birth
information from the CAIS, and achieve an estimated $7 to $9 million in
annual cost savings (the ``CAIS Amendment'').\20\
---------------------------------------------------------------------------
\20\ See Securities Exchange Act Release No. 104586 (Jan. 13,
2026), 91 FR 2164 (Jan. 16, 2026) (``CAIS Amendment Approval
Order'').
---------------------------------------------------------------------------
As discussed in the Notice, CAT LLC states that it developed a
proposal, which was not submitted to the Commission (the ``Original CAT
LLC Proposal''), designed to maximize cost savings while preserving the
CAT's core regulatory functionality, and which was estimated to provide
approximately $70 to $90 million in annual cost savings, including an
annual reduction in cloud hosting fees of $55 to $75 million, and
approximately $15 million in total Plan Processor operating fees.\21\
CAT LLC states that the Original CAT LLC Proposal was not submitted as
a proposed amendment because the ``clear consensus'' of discussions
with members of the Advisory Committee, the Securities Industry and
Financial Markets Association (``SIFMA'') and the Financial Information
Forum (``FIF'') was that certain aspects of the Original CAT LLC
Proposal would impose certain compliance costs on Industry Members.\22\
---------------------------------------------------------------------------
\21\ See Notice, at 61507. CAT LLC states that 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. See id. at 61506 n.13. CAT LLC states that 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. Id. CAT LLC states that 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, and
that 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). Id.
\22\ See id. at 61508.
---------------------------------------------------------------------------
CAT LLC then submitted the Proposed Amendment, which would provide
an estimated cost savings of $55 million to $73 million and would
consist of seven items: (i) Interim CAT Order-ID Amendment; (ii) Data
Storage Amendment; (iii) Late Data Re-Processing Amendment; (iv) OTQT
Amendment; (v) Rejected Message Amendment; (vi) Data Availability
Amendment; and (vii) Reference Data Amendment.\23\ Some of these items
are in whole or in part consistent with the 2025 Cost Savings Exemptive
Order, and approval of them would in whole or in part codify previously
granted exemptive relief.\24\ In the Proposed Amendment CAT LLC also
provided additional detail and requested comment on two components of
the Original CAT LLC Proposal, specifically the ``Full Elimination of
CAIS/CCID Component,'' and ``Reduced Linkage Processing Timeline
Component.'' \25\ All of these items are discussed in greater detail
below.
---------------------------------------------------------------------------
\23\ See id. at 61508-09. The Proposed Amendment also provide
for a ``spending cap'' provision, see infra Part III.H.
\24\ See, e.g., id. at 61510 (stating that the Interim CAT-
Order-ID Amendment is ``consistent with and would codify the
exemptive relief related to interim CAT-Order-ID as set forth'' in
the 2025 Cost Savings Exemptive Order); 61521 (stating that 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).
\25\ See id. at 61509.
---------------------------------------------------------------------------
CAT LLC states that all cost and savings projections described in
the Proposed Amendment are estimates only and reflect the current CAT
operations.\26\ CAT LLC states that 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.\27\ CAT LLC states that actual
future savings could be more or less than estimated due to changes in
any of these variables.\28\ In addition, CAT LLC states that savings
projections are primarily based on production environments, which
represent approximately two-thirds of all cloud fees.\29\ CAT LLC
states 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 they described provide an adequate basis for the Commission
to evaluate the costs and benefits of the proposed amendment.\30\ CAT
LLC further notes that the estimated cost savings do not reflect or
incorporate potential cost savings related to the 2025 Cost Savings
Exemptive Order.\31\ 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.\32\
---------------------------------------------------------------------------
\26\ See id. at 61507-08 n.12.
\27\ See id.
\28\ See id.
\29\ See id.
\30\ See id.
\31\ See id.
\32\ See id.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, the Commission, pursuant to Section 11A of
the Exchange Act,\33\ and Rule 608(b)(2) \34\ thereunder, is approving
the Proposed Amendment with certain modifications from the Commission.
Section 11A of the Exchange Act authorizes the
[[Page 16286]]
Commission, by rule or order, to authorize or require the self-
regulatory organizations to act jointly with respect to matters as to
which they share authority under the Exchange Act in planning,
developing, operating, or regulating a facility of the national market
system.\35\ Rule 608 of Regulation NMS authorizes two or more SROs,
acting jointly, to file with the Commission proposed amendments to an
effective NMS plan,\36\ and further provides that the Commission shall
approve an amendment to an effective NMS plan if it finds that the
amendment is necessary or appropriate in the public interest, for the
protection of investors and the maintenance of fair and orderly
markets, to remove impediments to, and perfect the mechanisms of, a
national market system, or otherwise in furtherance of the purposes of
the Exchange Act.\37\
---------------------------------------------------------------------------
\33\ 15 U.S.C. 78k-1.
\34\ 17 CFR 242.608(b)(2).
\35\ See 15 U.S.C. 78k-1(a)(3)(B).
\36\ See 17 CFR 242.608.
\37\ See 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
The Participants have sufficiently demonstrated that the proposed
cost savings measures, as modified by the Commission, are appropriate.
There are a number of potential approaches to reducing the costs of the
CAT, all of which have estimated savings of varying amounts and
potential downsides, such as increased costs for Industry Members or a
reduction in the regulatory utility of the CAT. As modified, the
Proposed Amendment strikes a reasonable and appropriate balance between
reducing costs and preserving the core regulatory functionality and
utility of the CAT. Furthermore, approval of the Proposed Amendment
does not foreclose the implementation of further measures designed to
reduce the costs of the CAT, and as part of the ongoing comprehensive
review of the CAT,\38\ the Commission expects to engage with the
Participants, Industry Members, and the public more broadly on issues
relating to the costs of the CAT and potential cost savings measures,
among other things.
---------------------------------------------------------------------------
\38\ 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>). See also Notice, at 61509 (calling for
comments and quantitative data from Industry Members regarding,
among other things, whether Industry Members support the continued
existence of the CCID (under the Reference Data Amendment, see infra
Part III.G, or otherwise) or would support its full elimination, and
the costs and benefits that could result from either approach.
---------------------------------------------------------------------------
A. Interim CAT-Order-ID Amendment
The Interim CAT-Order-ID Amendment proposes to amend the CAT NMS
Plan to eliminate the daily delivery of an interim CAT-Order-ID and
instead provide for delivery of interim CAT-Order-IDs only on an ``as
requested by the SEC'' basis.\39\ CAT LLC states that the Interim CAT-
Order-ID Amendment is consistent with and would codify the exemptive
relief relating to interim lifecycle requirements granted in the 2025
Cost Savings Exemptive Relief Order.\40\
---------------------------------------------------------------------------
\39\ See Notice, at 61510-12.
\40\ See id. at 61510; 2025 Cost Savings Exemptive Relief Order,
at 47854-56.
---------------------------------------------------------------------------
Appendix D, Section 6.1 of the CAT NMS Plan states that ``Noon
Eastern Time T+1 (transaction date + one day)'' is the deadline for
``[i]nitial data validation, lifecycle linkages and communication of
errors to CAT Reporters.'' \41\ The CAT NMS Plan further states that
the Plan Processor \42\ 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.''
\43\ The Plan Processor provides the lifecycle linkages that are
required on T+1 by assigning an interim CAT-Order-ID.\44\ A final CAT
Order ID is then assigned when corrected and linked data is processed
and made available to regulators on T+5 at 8 a.m. Eastern Time.\45\
---------------------------------------------------------------------------
\41\ See CAT NMS Plan, at Appendix D, Section 6.1; see id. at
Section 1.1 (defining ``CAT Reporter'' as ``each national securities
exchange, national securities association and Industry Member that
is required to record and report information to the Central
Repository pursuant to SEC Rule 613(c)'').
\42\ ``Plan Processor'' is defined as ``the Initial Plan
Processor or any other Person selected by the Operating Committee
pursuant to SEC Rule 613 and Sections 4.3(b)(i) and 6.1, and with
regard to the Initial Plan Processor, the Selection Plan, to perform
the CAT processing functions required by SEC Rule 613 and set forth
in [the CAT NMS Plan].'' See CAT NMS Plan, at Section 1.1.
\43\ See CAT NMS Plan, at Appendix D, Section 3.
\44\ The ``CAT Order ID'' is ``a unique order identifier or
series of unique order identifiers that allows the central
repository to efficiently and accurately link all reportable events
for an order, and all orders that result from the aggregation or
disaggregation of such order.'' See 17 CFR 242.613(j)(1); see also
CAT NMS Plan, at Section 1.1 (```CAT-Order-ID' has the same meaning
provided in SEC Rule 613(j)(1).''). See Securities Exchange Act
Release No. 95234 (July 8, 2022), 87 FR 42247, 42250-51 (July 14,
2022) (``July 2022 Order''), for further discussion of the lifecycle
linkage requirements of the CAT NMS Plan.
\45\ See CAT NMS Plan, at Appendix D, Section 6.1.
---------------------------------------------------------------------------
On November 2, 2023, the Commission issued an order that granted
exemptive relief from these requirements (the ``November 2023 Order''),
subject to certain conditions, including the condition that the Plan
Processor maintain or improve the existing performance of functionality
providing lifecycle linkages for all order events by T+1 at 9 p.m.
Eastern Time, except an interim CAT Order ID was not required for
Options Market Maker quotes in Listed Options (``OMM Quotes'').\46\ In
the 2024 Cost Savings Amendment, the Commission 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.'' \47\
---------------------------------------------------------------------------
\46\ See Securities Exchange Act Release No. 98848 (Nov. 2,
2023), 88 FR 77128, 77130 (Nov. 8, 2023) (``November 2023 Order'').
\47\ See 2024 Cost Savings Amendment, at 103034-38; see also CAT
NMS Plan, at Appendix D, Section 3.4.
---------------------------------------------------------------------------
Accordingly, CAT LLC states that pursuant to the current CAT NMS
Plan and the November 2023 Order, the Plan Processor currently assigns
an interim CAT-Order-ID by T+1 at 9 p.m. Eastern Time, rather than by
T+1 at noon Eastern Time, except with regard to OMM Quotes, and
subsequently provides a final CAT-Order-ID at T+5 at 8 a.m. Eastern
Time.\48\
---------------------------------------------------------------------------
\48\ See Notice, at 61510-11. Pursuant to Section 3.4 of
Appendix D of the CAT NMS Plan, the Plan Processor is not required
to create lifecycle linkages for OMM Quotes. Id. at 61511 n.27.
---------------------------------------------------------------------------
In the 2025 Cost Savings Exemptive Relief Order, the Commission
granted conditional exemptive relief to allow the Participants to
further relax requirements related to the provision of lifecycle
linkages on T+1.\49\ 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: (i) 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; and (ii)
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
[[Page 16287]]
before T+5 at 8 a.m. Eastern Time.\50\ This conditional exemptive
relief was intended to supersede the conditional exemptive relief set
forth in the November 2023 Order with respect to lifecycle linkage
timeframes.\51\
---------------------------------------------------------------------------
\49\ See 2025 Cost Savings Exemptive Relief Order, at 47854-56.
\50\ Id. at 47856.
\51\ See id.; See also November 2023 Order, at 77130 (noting
that the conditional exemptive relief provided by the November 2023
Order continued to be in force for the other areas addressed
therein, except as provided in Parts II.C-D of the November 2023
Order).
---------------------------------------------------------------------------
Pursuant to the Interim CAT-Order-ID Amendment, the phrase
``lifecycle linkages'' would be deleted from a bullet regarding what is
required by Noon Eastern Time T+1, in Section 6.1 of Appendix D of the
CAT NMS Plan.\52\ Similarly, the phrase ``Life Cycle Linkage'' would be
deleted from Figure A in Section 6.1 of Appendix D of the CAT NMS Plan,
which currently states: ``12:00 PM ET T+1 Initial Validation, Life
Cycle Linkage, Communication of Errors.'' \53\ These changes would
eliminate language in Section 6.1 of Appendix D of the CAT NMS Plan
requiring life cycle linkage on T+1 and in advance of the provision of
final CAT-Order-ID processing and linkage. The Interim CAT-Order-ID-
Amendment would also include a revision to Section 6.1 of Appendix D of
the CAT NMS Plan, to state that the data made available to Participant
regulatory staff and the SEC on T+6 must not only be corrected but also
linked.\54\
---------------------------------------------------------------------------
\52\ See Notice, at 61511.
\53\ See id.
\54\ See id. Pursuant to the Data Availability Amendment,
discussed infra Part III.F, final CAT-Order-IDs and the processing
of corrected and linked data would be required on T+6 instead of T+5
as previously required by the Plan. See also Notice, at 61524-26.
---------------------------------------------------------------------------
Pursuant to the Interim CAT-Order-ID Amendment, the Participants
propose to amend the CAT NMS Plan to require the Plan Processor to
create and make available interim CAT-Order-IDs upon the request of
certain Commission staff.\55\ Specifically, a new provision would be
added to Section 6.1 of Appendix D of the CAT NMS Plan stating that,
``[u]pon 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.''
\56\ This provision would also state that 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.\57\
---------------------------------------------------------------------------
\55\ See id. at 61511. CAT LLC states that the Participants rely
on the final CAT-Order-ID and do not require an interim CAT-Order-
ID. See id.
\56\ See id. This provision differs from the condition relating
to interim lifecycle linkages in the 2025 Cost Savings Exemptive
Relief Order, which stated that, ``[u]pon 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.'' See 2025 Cost
Savings Exemptive Relief Order, at 47855.
\57\ See Notice, at 61511. The provision's description of the
timing and cost of creating an interim CAT Order ID ad hoc is
consistent with what the Commission understood would be the timing
and cost when it issued the 2025 Cost Savings Exemptive Relief
Order. See 2025 Cost Savings Exemptive Relief Order, at 47855 n.29
(stating that while the Commission understands that the timing and
cost of creating an interim CAT Order ID ad hoc may vary based on
the number of trade dates and data volumes to be processed in the
request, the Commission understands that interim CAT Order IDs can
generally be created by T+2 at 9 p.m. Eastern Time if the request is
received prior to T+2 at 4 a.m. Eastern Time, or within 14 hours of
receiving the request if such request is received after T+2 at 4
a.m. Eastern Time).
---------------------------------------------------------------------------
CAT LLC states that the removal of the requirement to provide
interim lifecycle linkages is consistent with the exemptive relief set
forth in the 2025 Cost Savings Exemptive Order, and thus the estimated
cost savings for the Interim CAT-Order-ID Amendment are the same as
expected with regard to the implementation of the 2025 Cost Savings
Exemptive Order related to interim linkage, specifically $2 to $3
million in estimated annual cost savings for cloud hosting
services.\58\ CAT LLC states that to implement the proposal, the Plan
Processor has proposed a one-time change request fee of approximately
$225,000, and the Plan Processor estimates that it would take
approximately 6 to 8 weeks to fully implement the changes for the
Interim CAT-Order-ID Amendment.\59\ With respect to requests for
interim CAT-Order-IDs, CAT LLC states that would it add a separate line
item to its budget to reflect costs related to these requests and 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.\60\
---------------------------------------------------------------------------
\58\ See Notice, at 61511.
\59\ See id. at 61512. CAT LLC states that 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. Id.
\60\ See id. at 61511. CAT LLC states that this estimate
includes compute and storage costs for daily ad hoc interim
lifecycle processing and is based on demand rates for a typical day
with average data volumes. CAT LLC states that 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. Id.
---------------------------------------------------------------------------
Two commenters state that they support the Interim CAT-Order-ID
Amendment.\61\ One of these commenters states that it supports the
Interim CAT-Order-ID Amendment, as well as the other amendments, based
on the projected cost savings to the CAT system, and further states
that these amendments would not impact the quality of CAT data, do not
raise security concerns, and would not increase the compliance and
operational costs for Industry Members.\62\
---------------------------------------------------------------------------
\61\ See Letter to Vanessa Countryman, Secretary, Commission,
from Howard Meyerson, Managing Director, Financial Information Forum
(``FIF''), dated Feb. 10, 2026 (``FIF February 2026 Letter''), at 2,
4; Letter to Vanessa Countryman, Secretary, Commission, from Katie
Kolchin, CFA, Managing Director, Head of Equity & Options Market
Structure and Joseph Corcoran, Managing Director & Associate General
Counsel, Securities Industry and Financial Markets Association
(``SIFMA''), dated March 12, 2026 (``SIFMA March 2026 Letter''), at
6-7. Both these commenters also previously submitted a comment
letter stating that the commenter needed additional time to finalize
and submit their comment letter in response to the Notice. See
Letter to Vanessa Countryman, Secretary, Commission, from Howard
Meyerson, Managing Director, FIF, dated January 29, 2026; Letter to
Vanessa Countryman Secretary, Commission, from Joseph Corcoran,
Managing Director & Associate General Counsel, SIFMA, dated January
30, 2026.
\62\ See FIF February 2026 Letter, at 4.
---------------------------------------------------------------------------
Timely access to linked data has been and continues to be one of
the regulatory goals of Rule 613 and the CAT NMS Plan. Even after the
Interim CAT-Order-ID Amendment is implemented, regulators will be able
to access linked and corrected audit trail data by T+6 in the regular
course, which should generally continue to be faster than was possible
before the CAT existed.\63\ CAT LLC represents that the Participants
rely on the final CAT-Order-ID and do not require an interim CAT-Order-
ID, and that the Participants do not believe that elimination of the
interim CAT-Order-ID would impact their regulatory programs.\64\ The
Interim CAT-Order-ID Amendment does not impact the availability of the
final CAT-
[[Page 16288]]
Order-ID which reflects corrections to errors that have been
corrected.\65\
---------------------------------------------------------------------------
\63\ See CAT NMS Plan Approval Order, at 84783 (noting that OATS
Data was not available until T+8). Final CAT-Order-IDs would be
available at T+6, and not T+5, pursuant to changes to the CAT NMS
Plan the Commission is approving in the ``Data Availability
Amendment,'' see infra Part III.F.
\64\ See Notice, at 61511.
\65\ See id. The modification to make clear that final CAT Data
must be both corrected and linked is appropriate and codifies and
clarifies existing practice. Id. In the absence of interim CAT-
Order-IDs, it is important that the Plan Processor continue to both
correct and link final CAT-Order-IDs to ensure that such data is
sufficiently complete and accurate for regulatory use.
---------------------------------------------------------------------------
Moreover, the Participants propose to amend the CAT NMS Plan to
provide that the Commission will be able to request the creation of an
interim CAT-Order-ID from the Plan Processor before T+6, as well as to
access and analyze raw unprocessed data between T+2 at 8 a.m. Eastern
Time and T+5 at 8 a.m. Eastern Time,\66\ which functionality should
continue to enable regulatory users to expeditiously review data as
needed, albeit slightly slower than is currently possible.\67\
---------------------------------------------------------------------------
\66\ See proposed Section 6.1 of Appendix D of the CAT NMS Plan.
\67\ The proposed requirements for requesting ad hoc interim
CAT-Order-ID in the Interim CAT-Order-ID Amendment differ from what
was provided for in the 2025 Cost Savings Exemptive Relief Order.
See supra note 56; 2025 Cost Savings Exemptive Relief Order, at
47855.
---------------------------------------------------------------------------
For the reasons discussed below, the Commission deems it
appropriate to modify the Interim CAT-Order-ID Amendment so that it
does not define which Commission staff are able to request ad hoc
linkage processing.\68\ The Commission is not a party to the Plan. By
statute, the Commission is the regulator of the Participants, and an
NMS Plan should not dictate how the Commission carries out its
regulatory oversight. The Commission is therefore modifying the Interim
CAT-Order-ID Amendment to remove the proposed limitation on which
Commission personnel have authority to initiate ad hoc requests. The
Commission is committed to ensuring that meaningful controls and
safeguards are in place regarding who will have authority to initiate
ad hoc requests and will appropriately limit the Commission personnel
and anticipates that the Participants would do the same for their
regulatory users.
---------------------------------------------------------------------------
\68\ CAT LLC states that 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,'' see Notice, at 61510, but the 2025 Cost Savings Exemptive
Relief Order states that one of the conditions of exemptive relief
states that, [u]pon 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.'' See 2025 Cost Savings Exemptive Relief Order, at
47855.
---------------------------------------------------------------------------
Additionally, the Commission deems it appropriate to modify the CAT
NMS Plan to allow for ad hoc requests for interim CAT-Order-IDs to be
submitted by Participant regulatory users. As discussed above, timely
access was one of the regulatory goals of Rule 613 and the CAT NMS
Plan. While CAT LLC represented that the Participants do not require an
interim CAT-Order-ID, to preserve the Participants' timely access to
linked data in the event it is needed, the CAT NMS Plan should also
allow for ad hoc requests for interim CAT-Order-IDs to be submitted by
Participant regulatory users. The Commission also therefore deems it
appropriate to modify the Interim CAT-Order-ID Amendment to require the
Plan Processor to create and make available interim CAT-Order-IDs upon
request from the Participants or the Commission, in a manner more
consistent with the 2025 Cost Savings Exemptive Relief Order.
The Interim CAT-Order-ID Amendment, as modified and described
below, will preserve the core regulatory benefits of Rule 613 and the
CAT NMS Plan, while enabling the Participants to realize meaningful
cost savings by avoiding the substantial cost of delivering interim
CAT-Order-IDs on a regular basis. Specifically, the Interim CAT-Order-
ID Amendment, as modified by the Commission, will allow regulators to
request linked data from the Plan Processor before T+5, as well as to
access and analyze raw unprocessed data between T+2 at 8 a.m. Eastern
Time and T+5 at 8 a.m. Eastern Time, which functionality should
continue to enable regulatory users to effectively and expeditiously
review data in the case of a major market event, albeit slightly slower
than is currently possible.
Specifically, in the new proposed paragraph to Section 6.1 of
Appendix D of the CAT NMS Plan within the Interim CAT-Order-ID
Amendment, the Commission is removing language limiting the provision
to requests ``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,'' and adding new text so that the first clause
of the paragraph reads: ``Upon requests made by authorized regulatory
users from the Participants or the Commission.'' In comparison to
proposed Section 6.1 of Appendix D of the CAT NMS Plan in the Proposed
Amendment, the following changes would apply, with deletions shown
through [brackets], and additions shown with italics:
* * * * *
Upon requests made by authorized regulatory users from the
Participants or the Commission[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.
* * * * *
B. Data Storage Amendment
The Data Storage Amendment 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 \69\ from the OPRA Plan or any successor SIP
\70\ for Listed Options \71\ (``Options SIP Data'') older than six
months.\72\ CAT LLC states that the Data Storage Amendment expands upon
the exemptive relief in the 2025 Cost Savings Exemptive Relief Order
by: (i) deleting all CAT Data older than three years, rather than older
than five years; (ii) deleting OMM Quotes older than six months, rather
than older than one year; and (iii) deleting Options SIP Data older
than six months, rather than older than five years.\73\
---------------------------------------------------------------------------
\69\ See Section 6.5 of the CAT NMS Plan.
\70\ See Section 1.1 of the CAT NMS Plan.
\71\ See Section 1.1 of the CAT NMS Plan.
\72\ See Notice, at 61512-17.
\73\ See Notice, at 61513.
---------------------------------------------------------------------------
Several data storage and retention requirements govern the
Participants' storage of data and/or data stored within the CAT. First,
the Participants are subject to the storage requirements of Rule 17a-1,
which states, among other things, that ``[e]very national securities
exchange [and] national securities association . . . shall keep and
preserve at least one copy of all documents, including all
correspondence, memoranda, papers, books, notices, accounts, and other
such records as shall be made or received by it in the course of its
business as such and in the conduct of its self-regulatory activity,''
and that ``[e]very national securities exchange [and] national
securities association . . . shall keep such documents for a period of
not less than five years, the first two years in an
[[Page 16289]]
easily accessible place, subject to the destruction and disposition
provisions of Rule 17a-6.'' \74\
---------------------------------------------------------------------------
\74\ See 17 CFR 240.17a-1.
---------------------------------------------------------------------------
Second, Rule 613(e)(8) states that the CAT NMS Plan must require
the Central Repository to ``retain the information collected pursuant
to paragraph (c)(7) and (e)(7) . . . in a convenient and usable
standard electronic data format that is directly available and
searchable electronically without any manual intervention for a period
of not less than five years.'' \75\
---------------------------------------------------------------------------
\75\ See 17 CFR 242.613(e)(8).
---------------------------------------------------------------------------
The CAT NMS Plan itself imposes several storage requirements with
respect to CAT Data, including requirements in Section 6.5(b) that the
Central Repository retain ``the information collected pursuant to
paragraphs (c)(7) and (e)(7) of SEC Rule 613 in a convenient and usable
standard electronic data format that is directly available and
searchable electronically without any manual intervention by the Plan
Processor for a period of not less than six (6) years.'' \76\
Additionally, pursuant to Section 1.4 of Appendix D of the CAT NMS
Plan, ``[t]he Plan Processor must develop a formal record retention
policy and program for the CAT, to be approved by the Operating
Committee, which will, at a minimum . . . [m]ake data directly
available and searchable electronically without manual intervention for
at least six years . . . .'' Section 6.3 of Appendix D of the CAT NMS
Plan provides an exception to these requirements for several kinds of
data, including ``Interim Operational Data older than 15 days,'' \77\
which may be retained in an archive storage tier, meaning such data is
not directly available and searchable without manual intervention.\78\
---------------------------------------------------------------------------
\76\ See CAT NMS Plan, at Section 6.5(d). Section 6.1(d)(i) of
the CAT NMS Plan also requires the Plan Processor to comply with the
recordkeeping requirements of Rule 613(e)(8).
\77\ ``Interim Operational Data'' is defined as ``all processed,
validated and unlinked data made available to regulators by T+1 at
12:00 p.m. ET and all iterations of processed data made available to
regulators between T+1 and T+5, but excludes the final version of
corrected data that is made available at T+5 at 8:00 a.m. ET,'' and
``[f]or the avoidance of doubt, `Interim Operational Data' does not
include processed data relating to Options Market Maker quotes in
Listed Options made available to regulators by T+1 at 12:00 p.m.
ET.'' See CAT NMS Plan, at Appendix D, Section 6.3.
\78\ The CAT NMS Plan states that the Plan Processor will
restore archived data to an accessible storage tier upon request to
the CAT Help Desk by an authorized regulatory user from the
Participants or a senior officer from the SEC. See CAT NMS Plan,
Appendix D, Section 6.3.
---------------------------------------------------------------------------
In the 2025 Cost Savings Exemptive Relief Order, the Commission
granted conditional exemptive relief from the above-described
requirements of Rule 17a-1,\79\ 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:
(i) delete all CAT Data older than five years; (ii) 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; \80\ (iii) delete OMM Quotes data after
one year from the CAT System; and (iv) delete Interim Operational Data
older than 15 days.\81\
---------------------------------------------------------------------------
\79\ Because the CAT is a facility of the Participants, it is
subject to the record-keeping provisions of Rule 17a-1, and so the
Participants required exemptive relief from Rule 17a-1 to delete OMM
Quotes data after one year from the CAT System and to delete Interim
Operational Data older than 15 days. See 2025 Cost Savings Exemptive
Relief Order, at 47858. The Commission stated in the 2025 Cost
Savings Exemptive Relief Order that conditions enabling the
Participants to delete all CAT Data older than five years and/or to
move CAT Data older than three years to a more cost-effective
storage tier are already consistent with or more generous than Rule
17a-1, although they are more lenient than the requirements
otherwise contained in Rule 613 and/or the CAT NMS Plan. See id. at
47858 n.54.
\80\ CAT Data is currently stored in four storage tiers: S3
Frequent Access, S3 Infrequent Access, S3 Instant Archive Access,
and S3 Glacier Deep Archive. The 2025 Cost Savings Exemptive Relief
Order permits the Participants to move all CAT Data older than three
years to a storage tier like S3 Glacier Deep Archive. Id. at 47858
n.55.
\81\ See id. at 47857-58.
---------------------------------------------------------------------------
Pursuant to the Data Storage Amendment, CAT LLC proposes to change
Section 6.1(d)(i) of the CAT NMS Plan to replace the requirement to
comply with the recordkeeping requirements of Rule 613(e)(8) with a
requirement to instead comply with the recordkeeping requirements of
Section 6.5 and Appendix D.\82\ 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, by amending the first sentence of the
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,
subject to the exceptions in Section 3.4, Section 6.3 and Section 6.4
of Appendix D.\83\ Pursuant to this change, CAT LLC proposes to remove
references in that sentence to the information collected pursuant to
paragraphs (c)(7) and (e)(7) of Rule 613 and language requiring CAT
Data be stored by the Plan Processor for a period of not less than six
years.\84\
---------------------------------------------------------------------------
\82\ See Notice, at 61514. Rule 613(e)(8) requires, among other
things, that CAT data be made ``directly available and searchable
electronically without any manual intervention for a period of not
less than five years.'' 17 CFR 242.613(e)(8).
\83\ See id.
\84\ See id.
---------------------------------------------------------------------------
The Data Savings Amendment also includes changes to Sections 1.4,
3.4, and 6.3 of Appendix D of the CAT NMS Plan.\85\ Section 1.4 of
Appendix D's requirement for a formal record retention policy and
program for the CAT would be changed to state that the policy and
program must ``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,'' instead of stating that
the policy and program must make 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.\86\ Section 3.4
of Appendix D would be changed to include a sentence stating,
``[n]otwithstanding 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.'' \87\ Section 6.3 of Appendix D of the CAT NMS Plan,
regarding exceptions to data availability requirements, would be
changed to delete a provision allowing for the archiving of Interim
Operational Data older than 15 days, because Section 6.4 of Appendix D,
discussed below, would instead allow for deletion of such data.\88\
---------------------------------------------------------------------------
\85\ See id. at 61514-15.
\86\ See id.
\87\ See id. at 61515.
\88\ See id.
---------------------------------------------------------------------------
The Data Storage Amendment would also establish a new Proposed
Section 6.4 of Appendix D of the CAT NMS Plan, which would describe the
reduced retention periods for Interim Operational Data and Options SIP
Data.\89\ Specifically, proposed Section 6.4 of Appendix D would state
that, ``[n]otwithstanding 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,'' Interim Operational Data older
than 15 days and Options SIP Data older than six
[[Page 16290]]
months.\90\ Proposed Section 6.4 of Appendix D would further state that
``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.\91\ Proposed Section 6.4 of
Appendix D would also state that ``Options SIP Data'' means quote and
NBBO data included in the SIP Data from the OPRA Plan or any successor
SIP for Listed Options.\92\
---------------------------------------------------------------------------
\89\ See id.
\90\ See id.
\91\ See id. Proposed Section 6.4 of Appendix D of the CAT NMS
Plan would also state that, for the avoidance of doubt, ``Interim
Operational Data'' does not include processed data relating to
Options Market quotes in Listed Options made available to regulators
by T+2 at 8:00 a.m. ET. See id.
\92\ See id.
---------------------------------------------------------------------------
CAT LLC states that the Data Savings Amendment would allow CAT LLC
to achieve an estimated $23.5 to $32 million in annual cost savings for
cloud hosting services.\93\ CAT LLC states that 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 that this expansion increases the
anticipated cost savings related to data storage and retention by
approximately $6.5 to $9 million as compared to the 2025 Cost Savings
Exemptive Order.\94\ CAT LLC states that 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,
and that the Plan Processor estimates that it would take approximately
three to four months to fully implement the changes for the Data
Storage Amendment.\95\
---------------------------------------------------------------------------
\93\ See id. CAT LLC provides a range of estimated reduction in
cloud hosting fees for each individual component of the Data Storage
Amendment in the Notice. See id. at 61514.
\94\ See id. at 61513.
\95\ See Notice, at 61516. CAT LLC states that 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. Id.
---------------------------------------------------------------------------
One commenter states that it supports the Data Storage Amendment,
but with a requested change.\96\ The commenter states that it supports
the Data Storage Amendment, as well as the other amendments, based on
the projected cost savings to the CAT system, and further states that
these amendments would not impact the quality of CAT data, do not raise
security concerns, and would not increase the compliance and
operational costs for Industry Members.\97\ However, the commenter
states that it supports the proposal to delete CAT data older than
three years, provided that this change would not (i) impede the
retirement of Electronic Blue Sheets (``EBS'') or (ii) result in a
material increase in the number of EBS or equivalent informational
requests.\98\ The commenter estimates that the incremental savings from
removing CAT data after three years as compared to removing CAT data
after five years and moving CAT data to lower cost storage after three
years is between $2.0 million and $2.8 million and requesting that CAT
LLC provide its own estimate of the incremental costs savings as well
as any information it can provide as to whether the deletion of CAT
data after three years would (i) impede the retirement of EBS or (ii)
result in a material increase in the number of EBS or equivalent
informational requests.\99\
---------------------------------------------------------------------------
\96\ See FIF February 2026 Letter, at 2, 4.
\97\ See id. at 4.
\98\ See id. In the Notice, CAT LLC states that the Data Storage
Amendment would reduce costs with limited regulatory impact and
without having an adverse impact on Industry Members or their costs.
See Notice, at 61517.
\99\ See Letter to Vanessa Countryman, Secretary, Commission,
from Howard Meyerson, Managing Director, FIF, dated Mar. 2, 2026,
(``FIF March 2026 Letter'') at 2.
---------------------------------------------------------------------------
The commenter also asks that in connection with approving the Data
Storage Amendment, that the Commission provide a safe-harbor exemption
(or direct the SROs to adopt rules providing a safe-harbor exemption)
that Industry Members similarly are not required to retain CAT data
that is older than three years.\100\ This commenter states that CAT LLC
previously provided guidance that, according to each of the
Participant's CAT compliance rules, information required to be reported
to the CAT must be maintained in accordance with Rule 17a-4(b), and
stated that this rule states that these records must be preserved for
at least three years, the first two years in an accessible place.\101\
The commenter states that the guidance appears to apply to the
underlying data being reported, and it is not clear whether this
guidance also applies to the CAT submissions themselves, and requests
that the Commission provide guidance specifically with respect to CAT
submissions, as requested above.\102\
---------------------------------------------------------------------------
\100\ See FIF February 2026 Letter, at 4.
\101\ See id.
\102\ See id. at 4 (citing FINRA CAT, LLC, CAT FAQ A23,
available at: <a href="https://catnmsplan.com/faq">https://catnmsplan.com/faq</a>).
---------------------------------------------------------------------------
Another commenter states that it has concerns related to the Data
Storage Amendment, but states that it is pleased to see that the
Participants sought to further the cost reduction measures from the
2025 Cost Savings Exemptive Order.\103\ The commenter states that it
supports efforts to reduce the costs associated with CAT data older
than three years, but states that any modification to the CAT data
retention framework should be evaluated holistically to ensure that
apparent savings at the Plan level do not result in cost-shifting to
Industry Members or undermine the retirement of legacy systems such as
EBS, and that the Data Storage Amendment would not produce net cost
savings if reducing CAT retention periods leads to increased regulatory
requests directed to Industry Members for historical data or
necessitates the continued maintenance of EBS to fill potential data
gaps.\104\ The commenter asks the Commission to carefully assess all
available cost-reduction alternatives, including whether historical CAT
data could be migrated to a lower-cost storage tier--such as a cold
storage environment--where the data would remain available to
regulators when necessary, subject to a reasonable retrieval
delay.\105\
---------------------------------------------------------------------------
\103\ See SIFMA March 2026 Letter at 5-6. The commenter notes
that the Data Storage Amendment would lead to the highest amount of
annual CAT cost savings of any of the proposed cost saving measures
included in the Proposed Amendment. Id. at 6.
\104\ See id.
\105\ See id. The commenter states that such an approach could
preserve regulatory access and support the retirement of duplicative
systems, while avoiding unintended operational and compliance
burdens on Industry Members. Id.
---------------------------------------------------------------------------
CAT LLC subsequently submitted a comment letter providing a
breakdown of the incremental savings that would be achieved for each
component of the Data Storage Amendment as compared to the 2025 Cost
Savings Exemptive Relief Order.\106\ With respect to the commenter's
request regarding the incremental savings from removing CAT data after
three years as compared to removing CAT data after five years and
moving CAT data to lower cost storage after three years, CAT LLC states
that the proposal to delete CAT Data older than three years would
result in an estimated reduction in cloud hosting fees of $8.8 to $12
million, while the 2025 Cost Savings Exemptive Relief Order allowing
CAT Data older than three years (but no longer than five years) be
moved to a more cost-effective
[[Page 16291]]
storage tier would result in an estimated reduction in cloud hosting
fees of $7.2 to $9.8 million.\107\
---------------------------------------------------------------------------
\106\ See Letter to Vanessa Countryman, Secretary, Commission,
from Robert Walley, CAT NMS Plan Operating Committee Chair, CAT LLC,
dated March 10, 2026 (``CAT LLC March 2026 Response Letter''), at 4-
6.
\107\ See id. at 4. CAT LLC March 2026 Response Letter also
contains differences in the estimated reduction in cloud hosting
fees between the different elements of the Data Storage Amendment
and the 2025 Cost Savings Exemptive Order, showing a total estimated
reduction in cloud hosting fees of $23.5 to $32 million for the
Proposed Amendment as compared to estimated savings of $17.2 to
$23.4 million for the data storage related exemptive relief in the
2025 Cost Savings Exemptive Order. Id.
---------------------------------------------------------------------------
The proposed deletion of CAT Data older than three years will
impact regulatory efficiency to the extent regulators need access to
the deleted data and seek to obtain it elsewhere.\108\ The Commission
previously stated that 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 and this view remains unchanged. This does
not mean that CAT Data older than three years is not needed.\109\
Regulatory staff access trading data older than three years in the
context of examinations, enforcement, and economic analysis. For
example, the statute of limitations for federal securities fraud is
generally five years from the date of the alleged fraud,\110\ and thus
regulators need to access and analyze trading activity that is older
than three years. To acquire the relevant data after implementation of
the Data Storage Amendment, regulators will need to either download and
maintain CAT Data older than three years, whether in whole or in some
abbreviated or summarized form, and/or request information directly
from market participants, such as exchange market data or trade data
from Industry Members through EBS or other processes.\111\
---------------------------------------------------------------------------
\108\ When the Commission issued the 2025 Cost Savings Exemptive
Order, it considered this need when providing exemptive relief
allowing for the deletion of CAT Data older than five years, with
CAT Data older than three years to be stored in a cheaper, slower
archival method, rather than permitting deletion of all CAT Data
after three years as is being approved. See 2025 Cost Savings
Exemptive Order, at 47858.
\109\ See Notice, at 61516 (citing 2025 Cost Savings Exemptive
Order, at 47858). CAT LLC states that 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. See id.
\110\ See 29 U.S.C. 2462.
\111\ CAT LLC states that the Participants do not anticipate
generally needing CAT Data older than three years to support their
regulatory programs. See id.
---------------------------------------------------------------------------
As noted above, one commenter supports the deletion of CAT Data
older than three years provided this change would not (i) impede the
retirement of EBS or (ii) result in a material increase in the number
of EBS or equivalent informational requests.\112\ The deletion of CAT
Data older than three years is not anticipated to result in a
significant increase in the number of EBS or other informational
requests given the more limited regulatory need for this older data. To
the extent there is an increase in these requests, it is justified by
the cost savings from the amendment.\113\
---------------------------------------------------------------------------
\112\ One commenter supports the proposal to delete CAT data
older than three years provided that, among other things, it does
not result in a material increase in the number of EBS or equivalent
informational requests. See FIF February 2026 Letter, at 6. See also
FIF March 2026 Letter, at 2.
\113\ CAT LLC does not specifically state what would be the
estimated savings of deleting CAT Data older than three years versus
storing CAT Data older than three years and up to five years in
lower cost storage. The commenter estimated the difference to be
between $2.0 million and $2.8 million based on the Notice, and asked
CAT LLC to provide its own estimate. See FIF March 2026 Letter, at
2.
---------------------------------------------------------------------------
As discussed above, a commenter requests a ``safe-harbor
exemption'' or that the Commission direct the SROs to adopt rules
providing a safe-harbor exemption that Industry Members are not
required to retain CAT data that is older than three years.\114\
However, such an exemption is not necessary because the Proposed
Amendment does not change the obligations of Industry Members to
maintain records pursuant to Rule 17a-4,\115\ and does not subject any
Industry Member data to more lengthy record retention time periods than
currently required. The Data Storage Amendment only changes the
obligations relating to the storage of CAT Data within the CAT itself.
Rule 17a-4 will continue to require each Industry Member to preserve
certain records for certain time periods.\116\ Information required to
be reported to the CAT must be maintained in accordance with Rule 17a-
4(b)--the Data Storage Amendment does not change any Industry Member
record-keeping obligations.
---------------------------------------------------------------------------
\114\ See FIF February 2026 Letter, at 6. The commenter states
that its members ``request that the Commission provide guidance
specifically with respect to CAT submissions.'' Id.
\115\ See 17 CFR 240.17a-4. See also CAT FAQ A23, available at:
<a href="https://catnmsplan.com/faq">https://catnmsplan.com/faq</a>. As this guidance is from the
Participants and FINRA CAT, LLC, the Commission anticipates CAT LLC
will provide further guidance to Industry Members. To the extent
appropriate or needed, this guidance can be revisited.
\116\ See 17 CFR 240.17a-3; 17 CFR 240.17a-4.
---------------------------------------------------------------------------
The Data Storage Amendment would provide significant cost savings.
Storage costs are a significant component of overall CAT costs, with
the amount of information required to be stored by the Plan Processor
far greater than originally anticipated at the adoption of the CAT NMS
Plan.\117\ The Data Storage Amendment targets two types of data: (1)
CAT Data older than three years and (2) three specific subsets of CAT
Data that collectively drive a substantial portion of CAT costs.\118\
These subsets of CAT Data, specifically OMM Quotes, Options SIP Data,
and Interim Operational Data, incur substantial storage costs. Limiting
the amount of these two types of data stored in the CAT is reasonable
in light of the substantial cost savings and limited regulatory value
of this data in comparison to other types of CAT Data and the fact that
the relevant CAT Data will remain available from other sources,\119\
albeit slightly less efficiently than currently possible.
---------------------------------------------------------------------------
\117\ CAT LLC states that the Plan Processor projects that
cumulative storage will be approximately 820 to 830 petabytes for
2025, more than 28 times the original estimate of 29 petabytes of
raw, uncompressed data in the CAT NMS Plan Approval Order. See
Notice, at 61515.
\118\ CAT LLC states that OMM Quotes are the single largest data
source for the CAT, comprising approximately 98% of all Options
Exchange events and approximately 44% of all transaction volume. See
id. at 61516. In addition, CAT LLC states that Options SIP Data
represents 25% of storage costs. Id.
\119\ For example, the Participants state that they have access
to Options SIP Data through other sources outside of CAT, and
therefore it would not impact Participant regulatory programs if
Options SIP Data older than 6 months was removed from the CAT
because the Participants can access this data through other means.
See CAT LLC March 2026 Response Letter, at 6.
---------------------------------------------------------------------------
Additionally, the proposed replacement of language in Sections
6.1(d)(i) and 6.5(b)(i) of the CAT NMS Plan referencing Rule 613 would
eliminate confusion or perceived inconsistency regarding legacy
language in Rule 613 For proposed Section 6.1, replacing the reference
to Rule 613(e)(8) with a reference to Section 6.5 and Appendix D
directs readers to sections of the CAT NMS Plan which are substantially
more descriptive regarding the recordkeeping requirements relating to
CAT Data, while removing a reference to language in Rule 613(e)(8) that
would otherwise conflict with the Data Storage Amendment, specifically
the requirement of Rule 613(e)(8) to require the central repository to
retain certain information 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.\120\ The deletion of the reference to ``the
information collected pursuant to paragraphs (c)(7) and (e)(7) of SEC
Rule 613'' would also help avoid confusion.\121\
---------------------------------------------------------------------------
\120\ See 17 CFR 242.613(e)(8).
\121\ See 17 CFR 242.613(c)(7) and (e)(7).
---------------------------------------------------------------------------
[[Page 16292]]
CAT LLC requests that, to the extent the Commission deems it
necessary to grant exemptive relief from the recordkeeping and data
retention requirements of Rule 17a-1 or any other provision under the
Exchange Act or the CAT NMS Plan in order to effectuate this proposal,
that the Commission utilize its authority under Section 36(a)(1) of the
Exchange Act \122\ and Rule 608(e) of Regulation NMS \123\ to grant
such exemptive relief. Such relief is necessary in order to effectuate
the Proposed Amendment, as Rule 17a-1 would otherwise require the
customer data and information in CAIS be preserved by the
Participants.\124\ The Commission finds that it is appropriate in the
public interest and consistent with the protection of investors under
Section 36 of the Exchange Act,\125\ as well as consistent with the
public interest, the protection of investors, the maintenance of fair
and orderly markets and the removal of impediments to, and the
perfection of, a national market system under Rule 608(e) under the
Exchange Act,\126\ to grant relief that exempts each Participant from
the recordkeeping and data retention requirements for CAT Data that
would no longer be required to be retained by the Plan Processor under
the Data Storage Amendment and that otherwise would apply as set forth
in Rule 17a-1 under the Exchange Act. This relief applies only to the
Participants' and the Plan Processor's obligations to keep and preserve
specific CAT Data in the CAT, and does not apply to any information or
records that are required to be kept and preserved outside of the CAT.
For example, if information from CAT is used in systems outside the
CAT, such as a Participant's surveillance systems, the relief would not
apply to such information.
---------------------------------------------------------------------------
\122\ 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.''
\123\ 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.''
\124\ Rule 17a-1 requires national securities exchanges and
national securities associations, among others, to keep and preserve
at least one copy of all documents, including all correspondence,
memoranda, papers, books, notices, accounts, and other such records
as shall be made or received by it in the course of its business as
such and in the conduct of its self-regulatory activity. 17 CFR
240.17a-1.
\125\ 17 CFR 242.608(e).
\126\ 17 CFR 240.17a-1.
---------------------------------------------------------------------------
In connection with this exemption, the Commission is modifying,
pursuant to Rule 608(b)(2),\127\ proposed Section 3.4, and Sections 6.3
and 6.4 of Appendix D of the CAT NMS Plan to remove references to
Exchange Act Rule 17a-1. As proposed, each of these Sections would
state ``[n]otwithstanding any other provision of the CAT NMS Plan, this
Appendix D, or Exchange Act Rule 17a-1.'' (emphasis added). However, an
NMS plan cannot void or otherwise modify the requirements of the
Exchange Act. The CAT NMS plan is a contractual agreement among the
Participants created pursuant to the Exchange Act and, absent an
exemption or other relief, the NMS Plan and the Participants themselves
are subject to applicable Exchange Act requirements. In addition,
references to Exchange Act Rule 17a-1 in the CAT NMS Plan are
unnecessary given the exemptive relief granted above and previously by
the Commission. For these reasons, the Commission deems it appropriate
to modify Section 3.4 of the CAT NMS Plan, and Sections 6.3 and 6.4 of
Appendix D of the CAT NMS Plan, to remove the references to Exchange
Act Rule 17a-1.
---------------------------------------------------------------------------
\127\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
Specifically, the Commission is modifying the first sentence of
Section 3.4 of Appendix D of the CAT NMS Plan such that it will state:
``The provisions of this section shall govern the processing and
storage of Options Market Maker quotes in Listed Options and shall
override any conflicting provisions in the CAT NMS Plan or this
Appendix D.'' In addition, the Commission is modifying the sentence
proposed to be added to Section 3.4 of Appendix D of the CAT NMS Plan
in a similar fashion, such that it will read: ``Notwithstanding any
other provision of the CAT NMS Plan or this Appendix D, Options Market
Maker quotes in Listed Options older than six months may be deleted by
the Plan Processor.'' In comparison to proposed Section 3.4 of Appendix
D of the CAT NMS Plan in the Proposed Amendment, the following changes
would apply, with deletions shown through [brackets], and additions
shown with italics:
3.4 Requirements for Options Market Maker Quotes in Listed Options
The provisions of this section shall govern the processing and
storage of Options Market Maker quotes in Listed Options and shall
override any conflicting provisions in the CAT NMS Plan[,] or this
Appendix D[, or Exchange Act Rule 17a-1].
* * * * *
Notwithstanding any other provision of the CAT NMS Plan[,] or 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 Commission is modifying the first sentence of Section 6.3 of
Appendix D of the CAT NMS Plan such that it will state:
``Notwithstanding any other provision of the CAT NMS Plan or this
Appendix D, the following types of data may be retained in an archive
storage tier.'' In comparison to proposed Section 6.3 of Appendix D of
the CAT NMS Plan in the Proposed Amendment, the following changes would
apply, with deletions shown through [brackets], and additions shown
with italics:
6.3 Exceptions to Data Availability Requirements
Notwithstanding any other provision of the CAT NMS Plan[,] or this
Appendix D[, or Exchange Act Rule 17a-1], the following types of data
may be retained in an archive storage tier. 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. The
Plan Processor will restore archived data to an accessible storage tier
upon request to the CAT Help Desk by an authorized regulatory user from
the Participants or a senior officer from the SEC.
* * * * *
The Commission is modifying the first sentence of Section 6.4 of
the Appendix D of the CAT NMS Plan such that it will state:
``Notwithstanding any other provision of the CAT NMS or this Appendix
D, the following may be deleted from the CAT by the Plan Processor:''
In comparison to proposed Section 6.4 of Appendix D of the CAT NMS
Plan in the Proposed Amendment, the following changes would apply, with
deletions shown through [brackets], and additions shown with italics:
6.4 Retention of Interim Operational Data and Options SIP Data
Notwithstanding any other provision of the CAT NMS Plan[,] or this
Appendix D[, or Exchange Act Rule 17a-1], the following may be deleted
from the CAT by the Plan Processor:
* * * * *
[[Page 16293]]
C. Late Data Re-Processing Amendment
The Late Data Re-Processing Amendment proposes to amend the CAT NMS
Plan to discontinue re-processing for all late or corrected data
received after T+4 at 8 a.m. Eastern Time (``Late Reported
Data'').\128\ This would expand upon the substance of exemptive relief
related to late data re-processing granted by the Commission in the
2025 Cost Savings Exemptive Order by eliminating all late-
reprocessing.\129\
---------------------------------------------------------------------------
\128\ See Notice, at 61517.
\129\ See id.
---------------------------------------------------------------------------
Appendix D, Section 3 of the CAT NMS Plan requires that ``[a]ll CAT
Data reported to the Central Repository must be processed and assembled
to create the complete lifecycle of each Reportable Event.'' \130\ The
CAT NMS Plan sets a deadline of T+3 at 8 a.m. Eastern Time for the
``[r]esubmission of corrected data'' and a deadline of T+5 at 8 a.m.
Eastern Time for the Plan Processor to make ``[c]orrected data
available to Participant regulatory staff and the SEC.'' \131\ 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.'' \132\
---------------------------------------------------------------------------
\130\ ``CAT Data'' is defined as ``data derived from Participant
Data, Industry Member Data, SIP Data, and such other data as the
Operating Committee may designate as `CAT Data' from time to time.''
See CAT NMS Plan, at Section 1.1.
\131\ See CAT NMS Plan, at Appendix D, Section 6.1.
\132\ See CAT NMS Plan, at Appendix D, Section 6.2.
---------------------------------------------------------------------------
The processing of Late Reported Data has been the subject of
previous exemptive relief. Pursuant to the November 2023 Order the
Commission, among other things, granted exemptive relief from these
requirements, subject to the following conditions: \133\
---------------------------------------------------------------------------
\133\ See November 2023 Order, at 77130-31.
---------------------------------------------------------------------------
<bullet> The Plan Processor was required to maintain its
implementation of functionality that was approved by the Operating
Committee on January 14, 2022 (the ``Late to the Lifecycle process'')
and on September 20, 2022 (the ``Targeted Replay process'')
(collectively, the ``Enhanced Late to the Lifecycle process''). Prior
to the implementation of this functionality, in the limited
circumstances in which there was a missing link between two disjoined
segments of an order lifecycle, new or corrected data would join only
one of the pre-existing segments and would be assigned to only one of
the relevant lifecycle CAT Order IDs for the disjoined segment and
evaluated for further re-processing. Under the Enhanced Late to the
Lifecycle process, all late records (i.e., records received after T+5)
\134\ include the date of the correction and, if applicable, the record
identifier of the record being corrected as part of normal re-
processing. In addition, the late record became associated with all
relevant lifecycles as part of normal re-processing, such that order
event lifecycles may be associated with more than one CAT Order ID.
---------------------------------------------------------------------------
\134\ For the purposes of the November 2023 Order and this
Order, references to data received after T+5, or to post-T+5 data,
submissions, or reports, are to data received after T+4 at 8 a.m.
Eastern Time. See November 2023 Order, at 77130.
---------------------------------------------------------------------------
<bullet> The Participants were required to approve a change order
to adopt:
[cir] Functionality to create a lifecycle mapping which indicates
all lifecycle associations made during the Enhanced Late to the
Lifecycle process;
[cir] Functionality to present to regulatory users post-T+5 data in
a manner substantially similar to how such data would have been
represented if it had been reported prior to T+5, including by
replicating and replaying records with enrichments impacted by post-T+5
submissions, creating updated enrichments, and persisting the
replicated records within the underlying data (the ``Full Replay
process''); and
[cir] Functionality to enhance the OTQT, including the ability to
include or exclude any records that were created or replaced as a
result of the Full Replay process.
<bullet> The Plan Processor was required to schedule the Enhanced
Late to the Lifecycle process and the Full Replay process to run
weekly, such that late reported data received through Friday of the
prior week are available for regulatory users on the following business
day at 8 a.m. Eastern Time, absent extraordinary circumstances, for
data within the prior 18 months. For data outside of this 18-month
window, the Participants were required to schedule the Enhanced Late to
the Lifecycle process and the Full Replay process to run no less
frequently than quarterly.\135\
---------------------------------------------------------------------------
\135\ See November 2023 Order, at 77130-31.
---------------------------------------------------------------------------
In the 2025 Cost Savings Exemptive Relief Order the Commission
granted further exemptive relief relating to the re-processing of Late
Reported Data that superseded the conditional exemptive relief set
forth in the November 2023 Order with respect to the re-processing of
data received after T+5.\136\ Specifically, the Commission granted
conditional exemptive relief from the re-processing requirements for
late records in Appendix D, sections 3, 6.1, and 6.2 of the CAT NMS
Plan, subject to the following conditions: \137\
---------------------------------------------------------------------------
\136\ See 2025 Cost Savings Exemptive Relief Order, at 47855-56.
The Commission stated that the conditional exemptive relief provided
by the November 2023 Order continued to be in force for the other
areas addressed therein, except as provided in Parts II.A and II.C
of the 2025 Cost Savings Exemptive Relief Order. Id. at 47856 n.39.
\137\ See id. at 47856.
---------------------------------------------------------------------------
<bullet> The Plan Processor must maintain its implementation of the
above-described Enhanced Late to the Lifecycle process for late records
from trade dates within the prior 3 years. For data outside of this 3-
year window, no re-processing is required.
<bullet> For all late records, the Plan Processor must run the
above-described Enhanced Late to the Lifecycle process no less
frequently than quarterly.
<bullet> The Plan Processor must maintain the above-described
functionality that creates a lifecycle mapping which indicates all
lifecycle associations made during the Enhanced Late to the Lifecycle
process.
<bullet> Upon requests made by authorized regulatory users from the
Participants or the Commission, the Plan Processor must perform the
Full Replay process on specified data, such that late records received
through Friday of the prior week are available for regulatory users on
the following business day at 8 a.m. Eastern Time, absent extraordinary
circumstances.\138\
---------------------------------------------------------------------------
\138\ In the 2025 Cost Savings Exemptive Relief Order, the
Commission stated that it expects that the timing and cost of
performing the Full Replay process would likely vary based on the
number of trade dates and data volumes to be processed in the
request, as well as on the availability of compute resources. Id. at
47856 n.38. The Commission stated that although the Commission does
not expect regulatory users to utilize the Full Replay process
frequently, it may be appropriate for the Participants to budget for
its potential use. Id.
---------------------------------------------------------------------------
<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.
In the Late Data Re-Processing Amendment, CAT LLC proposes to amend
Section 6.2 of Appendix D of the CAT NMS Plan to change the re-
processing requirements for Late Reported Data.\139\ Specifically, CAT
LLC proposes to revise 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.'' \140\ CAT LLC also proposes to remove the
requirement that ``[i]f corrections are received after
[[Page 16294]]
T+5, Participants' regulatory staff and the SEC must be notified and
informed as to how re-processing will be completed,'' and 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.'' \141\
---------------------------------------------------------------------------
\139\ See Notice, at 61517-21.
\140\ See id. at 61519.
\141\ See id.
---------------------------------------------------------------------------
CAT LLC states that with this proposed change, the Plan Processor
will continue to provide data regarding late submissions to CAT
Reporters and regulators and continue to make available summary
statistics on late submission through its report card program.\142\
Additionally, CAT LLC states that 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.\143\ CAT LLC states that the distinction between trade date and
submission date continues to be available on a record-by-record basis
within the Central Repository and so 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.\144\
---------------------------------------------------------------------------
\142\ See id.; 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'').
\143\ See Notice, at 61519 n.85 (citing Appendix C of the CAT
NMS Plan at C-12).
\144\ See id. at 61519.
---------------------------------------------------------------------------
CAT LLC states that it has seen substantial compliance with CAT
reporting timelines, and that, 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.\145\ Through the first ten
months of 2025, CAT LLC states that the vast majority of first-time
``late'' data (99.72%) is reported by T+4 8 a.m., and when firms submit
repairs and corrections, most of the corrections and repairs (94.2%)
are submitted beyond T+60, which indicates that changes to feedback
timing would not dramatically impact how regulators perceive CAT Data
when measured in the aggregate.\146\
---------------------------------------------------------------------------
\145\ See id. at 61520.
\146\ See id.
---------------------------------------------------------------------------
In addition, CAT LLC states that it 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.\147\ CAT LLC states that it
further 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).\148\
CAT LLC states that 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.\149\
---------------------------------------------------------------------------
\147\ See id. at 61519 n.83.
\148\ See id.
\149\ See id.
---------------------------------------------------------------------------
CAT LLC states that the Late Data Re-Processing Amendment would
reduce CAT costs for cloud hosting services by approximately $14 to $19
million annually, plus a $300,000 reduction to the Plan Processor
annual operating fee.\150\ CAT LLC states that the estimated annual
cloud hosting cost savings from the exemptive relief granted in the
2025 Cost Savings Exemptive Order relating to late data re-processing
is approximately $12.5 to $17, meaning that the incremental savings of
the Late Data Re-Processing Amendment as compared to the exemptive
relief granted in the 2025 Cost Savings Exemptive Order relating to
late data re-processing is approximately $1.5 to $2 million.\151\ CAT
LLC states that to implement the proposal, the Plan Processor has
proposed a one-time change request setting forth an implementation fee
of approximately $250,000-$500,000, and that the Plan Processor
estimates that it would take approximately two to four months to fully
implement the changes for the Late Date Re-Processing Amendment.\152\
---------------------------------------------------------------------------
\150\ See id. at 61517.
\151\ See id.
\152\ See id. at 61520. 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. Id.
---------------------------------------------------------------------------
Two commenters state that they support the Late Data Re-Processing
Amendment.\153\ One of these commenters states that it supports the
Late Data Re-Processing Amendment, as well as the other amendments,
based on the projected cost savings to the CAT system, and further
states that these amendments would not impact the quality of CAT data,
do not raise security concerns, and would not increase the compliance
and operational costs for Industry Members.\154\
---------------------------------------------------------------------------
\153\ See FIF February 2026 Letter, at 2, 4; SIFMA March 2026
Letter at 6-7.
\154\ See FIF February 2026 Letter, at 4.
---------------------------------------------------------------------------
In response to Commission staff questions, CAT LLC states that the
Late Data Re-Processing Amendment is designed to eliminate all Enhanced
Late to the Lifecycle and Full Replay re-processing in order to realize
significant cost savings, not to preserve it through ad hoc requests or
to codify an ad hoc requirement into the CAT NMS Plan.\155\ CAT LLC
states that the Proposed Amendment would eliminate any requirement,
obligation, or expectation under the CATNMS Plan to conduct such re-
processing in any manner, and that while it would remain theoretically
possible to conduct such re-processing in extraordinary
circumstances,\156\ the objective is to eliminate this process
entirely.\157\ CAT LLC states that introducing an ad hoc requirement
would introduce costs that would undermine the intended savings and
would be inconsistent with the premise of this proposal.\158\ CAT LLC
also states that pursuant to the Late Data Re-Processing Amendment,
records received after T+4 at 8 a.m. Eastern Time would not receive any
standard lifecycle enrichments under the Late Data Re-Processing
Amendment, which includes CAT Lifecycle ID, CAT FDID,\159\ Lifecycle
Sequence, Associated Lifecycles, Link Status Code, Unlinked Flag, CAT
Venue Order ID, Multi-lifecycle Flag, and Top Indicator.\160\
---------------------------------------------------------------------------
\155\ See CAT LLC March 2026 Response Letter, at 3.
\156\ See id. CAT LLC states an example of extraordinary
circumstances were if the Commission were to issue an emergency
order directing CAT LLC to perform re-processing of late reported
data. Id. CAT LLC states that absent a Commission order, all
decisions regarding whether to perform Enhanced Late to the
Lifecycle or Full Replay re-processing on an ad hoc basis will be at
the sole discretion of the Operating Committee, taking into account
any associated costs. Id. at 3 n.9.
\157\ See id. at 3.
\158\ See id.
\159\ See id. CAT LLC states that FDID would still be present on
Late Reported Data if reported within the record itself; for
example, an originating New Equities Order (MENO) or New Options
Order (MONO). Id.
\160\ See id. CAT LLC states that the ``lifecycle map,'' which
indicates all lifecycle associations made during the Enhanced Late
to Lifecycle process, would continue to exist and reflect lifecycle
associations made through prior re-processing of late CAT data, but
new entries to the lifecycle map would be recorded only in the
limited instances where the Plan Processor has been instructed to
perform ad hoc Enhanced Late to Lifecycle or Full Replay re-
processing. Id.
---------------------------------------------------------------------------
Even though the percentage of CAT Data that is Late Reported Data
is small,\161\ not re-processing all Late Reported Data received after
T+4 at 8 a.m. could have a materially negative
[[Page 16295]]
impact on the quality of CAT Data. Therefore, the Commission is
modifying the proposed Late Data Re-Processing Amendment to codify
exemptive relief removing the need to perform ``Full Replay'' re-
processing, require ``Enhanced Late to the Lifecycle'' processing on a
quarterly basis for trade dates within the prior 3 years, require the
Plan Processor to maintain lifecycle mapping that indicates all
lifecycle associations made during the ``Enhanced Late to the
Lifecycle'' process, and provide for ad hoc requests for Full Replay
re-processing. This approach to late data re-processing is consistent
with the approach provided in the 2025 Cost Savings Exemptive Relief
Order.\162\ In the context of a market data analysis, a small
percentage of uncorrected linkages and unlinked CAT Data increases
error rates and could distort results or findings if the errors and
late data of a relevant data set are substantial or particularly
meaningful with respect to the specific market data analysis being
performed. The Commission's modification will result in the Plan
Processor continuing to run the Enhanced Late to the Lifecycle Process
as currently done pursuant to the 2025 Cost Savings Exemptive Relief
Order. As such, pursuant to the Late Data Re-Processing Amendment as
modified by the Commission, regulatory users will maintain the ability
to quickly and reliably identify and link all relevant lifecycles
associated with late-reported data, although more manual intervention
would be required than if Full Replay re-processing were
implemented.\163\ The Late Data Re-Processing Amendment as proposed,
without the Enhanced Late to the Lifecycle Process, would require
regulators to rely on summary statistics and manual review and
sequencing,\164\ such that identifying and linking relevant lifecycles
would be a difficult, time-consuming, and potentially inaccurate
process. These concerns must be balanced against the cost savings
associated with the Late Data Re-Processing Amendment.
---------------------------------------------------------------------------
\161\ See Notice, at 61520 (stating that in the past year, only
0.82% of Reportable Events were reported late, and only 0.07% of
Reportable Events required re-processing).
\162\ CAT LLC states that all Participants believe that the Late
Data Re-Processing Amendment's approach would be sufficient for
their regulatory purposes and is vastly preferable to routinely
incurring the current, significant costs of regular, automated re-
processing. See id. The cessation of all late data re-processing
could have an impact on the regulatory use of CAT by the Commission,
and the Commission does not believe that at this time it would be
appropriate to stop all late data re-processing for an estimated
incremental cost savings of $1.5 to $2 million.
\163\ The Full Replay process is functionality designed to
present regulatory users post-T+5 data in a manner substantially
similar to how such data would have been presented 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. See 2025 Cost Savings Exemptive Relief Order,
at 47856. By contrast, the Enhanced Late to the Lifecycle Process
requires regulatory users to take additional steps to gather
information about all related lifecycles together in instances where
late-reported data requires such re-processing.
\164\ See Notice, at 61519 (stating that the distinction between
trade date and submission date will be available on a record-by-
record basis in the Central Repository and that 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).
---------------------------------------------------------------------------
For the reasons discussed above, the potential cost savings of the
Late Data Re-Processing Amendment do not justify the Participants'
proposal to cease re-processing or lifecycle enrichments to Late
Reported Data at this time. While the Proposed Amendment states that
CAT LLC understands that, with this proposed change, the Plan Processor
would retain the ability to perform Late to the Lifecycle and Full
Replay reprocessing on an ad hoc basis if required for regulatory
purposes,\165\ the Proposed Amendment provides no mechanism for
performing this reprocessing on an ad hoc basis, other than an
``emergency order'' from the Commission directing CAT LLC to do
so.\166\
---------------------------------------------------------------------------
\165\ See Notice, at 61519 n.83.
\166\ See CAT LLC March 2026 Response Letter, at 3.
---------------------------------------------------------------------------
CAT LLC represents that cessation of regular, automated re-
processing of Late Reported Data would result in an estimated $14 to
$19 million in annual cost savings for cloud hosting services, compared
to estimated savings of $12.5 to $17 million from the relief granted by
the 2025 Cost Savings Exemptive Order.\167\ The incremental savings
from the proposed Late Data Re-Processing Amendment compared to the
2025 Cost Savings Exemptive Order is approximately $1.5 to $2 million
in estimated annual cloud hosting cost savings, which and for the
reasons discussed above, does not at this time justify the elimination
of all late data re-processing.
---------------------------------------------------------------------------
\167\ See Notice, at 61517.
---------------------------------------------------------------------------
Thus, pursuant to Rule 608(b)(2),\168\ the Commission deems it
appropriate to modify the Late Data Re-Processing Amendment. These
changes will result in amending the plan to be consistent with the
exemptive relief related to late data re-processing granted in the 2025
Cost Savings Exemptive Order. Specifically, the Commission is modifying
the proposed additional language of Section 6.2 of the CAT NMS Plan to
remove a reference to the Exchange Act, require the usage of Enhanced
Late to the Lifecycle re-processing on Late Reported CAT Data, and to
implement the ability for Participant and Commission staff to request
Full Replay re-processing on an ad hoc basis, in a manner similar to
that which was proposed for requests for interim processing and linkage
in the Interim CAT-Order-ID Amendment, described above in Part III.A.
Specifically, the Commission is reverting the deletion of a paragraph
in Section 6.2 of Appendix D regarding notification of corrections and
modifying the proposed new paragraph in Section 6.2 of Appendix D of
the CAT NMS Plan, as proposed by CAT LLC in the Late Data Re-Processing
Amendment, and adding three additional new paragraphs to Section 6.2 of
Appendix D, as follows, with deletions shown through [brackets], and
additions shown with italics:
---------------------------------------------------------------------------
\168\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
6.2 Data Availability Requirements
* * * * *
If corrections are received after T+4, 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.
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]the
following re-processing: [and will be added to the audit trail without
any lifecycle enrichments.]
The Plan Processor must perform ``Enhanced Late to the Lifecycle''
processing for late records with trade dates within the prior 3 years.
Under the Enhanced Late to the Lifecycle process, all late records
(i.e., records received after T+4) 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
associated with all relevant lifecycles as part of normal re-
processing, such that order event lifecycles may be associated with
more than one CAT Order ID. For all late records, the Plan Processor
must run the above-described Enhanced Late to the Lifecycle process no
less frequently than quarterly.
The Plan Processor must maintain functionality that creates a
lifecycle
[[Page 16296]]
mapping which indicates all lifecycle associations made during the
Enhanced Late to the Lifecycle process.
Upon requests made by authorized regulatory users from the
Participants or the Commission, CAT LLC shall direct the Plan Processor
to perform Full Replay re-processing to specified CAT 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. Full Replay functionality
must present to regulatory users post-T+5 data in a manner
substantially similar to how such data would have been represented if
it had been reported prior to T+5, including by replicating and
replaying records with enrichments impacted by post-T+5 submissions,
creating updated enrichments, and persisting the replicated records
within the underlying data.
* * * * *
As proposed, Section 6.2 of the CAT NMS Plan stated 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
reprocessing and will be added to the audit trail without any lifecycle
enrichments.'' (emphasis added). However, an NMS plan cannot void or
otherwise modify the requirements of the Exchange Act. The CAT NMS Plan
is a contractual agreement among the Participants created pursuant to
the Exchange Act and, absent an exemption or other relief, the NMS Plan
and the Participants themselves are subject to applicable Exchange Act
requirements. This includes the rules and regulations thereunder, and
as such, the CAT NMS Plan should not state that a provision of the Plan
overrides the Exchange Act or the rules and regulations thereunder. The
Commission is modifying the Late Data Re-Processing Amendment to
restore the deleted paragraph regarding notification to Participants'
regulatory staff and the SEC, but is modifying the paragraph to update
a reference to ``corrections received after T+5'' to ``corrections
received after T+4'' to more accurately capture what is considered a
late record under current CAT reporting timelines.\169\
---------------------------------------------------------------------------
\169\ See also Notice, at 61517 (defining ``Late Reported Data''
as late or corrected data received after T+4 at 8 a.m. Eastern
Time); id. at 61517 n.67 (stating that for purposes of the Proposed
Amendment, 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'').
---------------------------------------------------------------------------
The Commission's other modifications to Section 6.2 of Appendix D
of the CAT NMS Plan are largely designed to codify the conditional
exemptive relief granted in the 2025 Cost Savings Exemptive Order
relating to the processing of late CAT data, but modifying the
conditions to recognize that ``late records'' are those that arrive
after T+4 at 8 a.m. ET. By codifying the conditional exemptive relief,
the core lifecycle linkage functionality envisioned by Rule 613 and the
CAT NMS Plan will be preserved.\170\ As discussed above, it is not
appropriate at this time to fully cease the re-processing of all late
data submitted to the CAT. For the less than 1% of late-reported data
that does require additional re-processing to construct an order event
lifecycle,\171\ requiring the Participants to run the Enhanced Late to
the Lifecycle process quarterly for trade dates within the prior 3
years and maintain lifecycle mapping 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, this is
a reasonable trade-off for the estimated $12.5 to $17 million dollars
of cost savings in estimated annual cloud hosting fees that CAT LLC and
the Commission expects will likely flow from limited 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.\172\
---------------------------------------------------------------------------
\170\ See, e.g., Securities Exchange Act Release No. 77724 (Apr.
27, 2016), 81 FR 30614, 30693 (May 17, 2016) (``Currently regulators
can spend days and up to months processing data they receive into a
useful format. Part of this delay is due to the need to combine data
across sources that could have non-uniform formats and to link data
about the same event both within and across data sources. . . .
[T]he Commission preliminarily believes that the Plan would reduce
or eliminate the delays associated with merging and linking order
events within the same lifecycle.'' (footnote omitted)); see also
id. at 30670 (``Regardless of whether order lifecycle reports are
reflected in the same or different data sources, the process of
linking lifecycle events is complex and can create inaccuracies. . .
. The inability to link all records affects the accuracy of the
resulting data and can force an inefficient manual linkage process
that would delay the completion of the data collection and analysis
portion of the examination, investigation, or reconstruction.'').
\171\ See Notice, at 61520.
\172\ See id. at 61517.
---------------------------------------------------------------------------
It is important to maintain the ability to perform Full Replay re-
processing for Late Reported Data on an ad hoc basis because there may
be circumstances in which the most complete re-processing of Late
Reported Data could be important for regulatory purposes, such as if
there are major market events. Under the Late Data Re-Processing
Amendment, Commission and Participant regulatory staff would have no
ability to request ad hoc reprocessing, as absent a Commission order,
all decisions regarding whether to perform Enhanced Late to the
Lifecycle or Full Replay re-processing on an ad hoc basis will be at
the sole discretion of the Operating Committee, taking into account any
associated costs.\173\ There may be circumstances where regulatory
users would need to make such requests to react to major market events
in a more effective and expeditious way. Similar to the ad hoc request
ability for interim CAT-Order-IDs, the Commission is committed to
ensuring that meaningful controls and safeguards are in place and
appropriately limit the Commission personnel that will have authority
to initiate ad hoc requests for Full Replay re-processing, and
anticipates that the Participants will do the same for their regulatory
users.
---------------------------------------------------------------------------
\173\ See CAT LLC March 2026 Response Letter, at 3 n.9.
---------------------------------------------------------------------------
As noted above, CAT LLC represents that retaining the ability to
perform both Late to the Lifecycle and Full Replay re-processing on an
ad hoc basis would have no material impact to FINRA CAT's proposed
operating fees to maintain the functionality, as it is an extension of
other required system elements.\174\ Like the ad hoc ability to request
interim CAT-Order-IDs, the Commission expects that the Participants
would identify the incremental cloud hosting fees associated with any
ad hoc processing requests initiated by the Commission in the CAT
budget.\175\ The Commission expects to utilize this ad hoc ability
infrequently, and recognizes that the Participants believe that the
proposed approach would have been sufficient for their regulatory
purposes,\176\ but believes that maintaining some ability to re-process
Late Reported Data is essential in maintaining the integrity of the CAT
and CAT Data should the need arise.
---------------------------------------------------------------------------
\174\ See id. at 61519 n.83.
\175\ See supra Part III.A. CAT LLC states that introducing an
ad hoc requirement would introduce costs that would undermine the
intended savings and would be inconsistent with the premise of this
proposal. See CAT LLC March 2026 Response Letter, at 3.
\176\ See Notice, at 61520.
---------------------------------------------------------------------------
D. OTQT Amendment
The OTQT Amendment proposes to eliminate the requirement to provide
an
[[Page 16297]]
online targeted query tool (``OTQT'') to regulatory users.\177\ CAT LLC
states that the QTQT Amendment is consistent with and would codify the
exemptive relief related to the OTQT as set forth in the 2025 Cost
Savings Exemptive Order.\178\
---------------------------------------------------------------------------
\177\ See id. at 61521-23.
\178\ See id. at 61521.
---------------------------------------------------------------------------
Section 6.10(c)(i) of the CAT NMS Plan requires the Plan Processor
to provide the Participants and the Commission with access to processed
CAT Data through different methods, including an OTQT and user-defined
direct queries and bulk extracts.\179\ Specifically, the CAT NMS Plan
specifies that the OTQT ``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.'' \180\ Section 8.1, including Sections 8.1.1 through 8.1.3,
of Appendix D of the CAT NMS Plan sets forth certain performance
requirements for the OTQT, subject to certain conditional exemptive
relief granted by the Commission in the November 2023 Order.\181\
---------------------------------------------------------------------------
\179\ The OTQT functionality implemented by the Plan Processor
is implemented through various tools, which are referred to as
``DIVER,'' ``MIRS,'' ``OLA Viewer,'' and ``ARLE.'' The user-defined
query tool is referred to as ``BDSQL,'' and the bulk extract tool as
``Direct Read.''
\180\ See CAT NMS Plan, at Section 6.10(c)(i)(A).
\181\ See 2025 Cost Savings Exemptive Relief Order, at 47857.
---------------------------------------------------------------------------
In the 2025 Cost Savings Exemptive Relief Order, the Commission
granted conditional exemptive relief from the above-described
provisions in the CAT NMS Plan which direct the Participants to
maintain an OTQT and setting forth performance requirements for the
OTQT for DIVER, ARLE, OLA Viewer, and MIRS volume concentration and
market replay tools, subject to the following conditions: (i) to ensure
that the remaining CAT query tools continue to perform at the same
level in the absence of certain OTQT functionality, the Plan Processor
must maintain currently-existing performance requirements, controls,
monitoring, logging, and reporting for the user-defined direct queries
(BDSQL) and bulk extract (Direct Read) tools, as well as for the MIRS
reporting statistics tools that provide regulatory users with access to
compliance information; and (ii) to enable Participants and the
Commission sufficient time to adjust their regulatory programs to use
any necessary replacement tools, OTQT functionality may not be
eliminated earlier than 2 months after the publication of the 2025 Cost
Savings Exemptive Relief Order in the Federal Register.\182\ The
conditional exemptive relief granted in the 2025 Cost Savings Exemptive
Relief Order relating to OTQT was intended to supersede the conditional
exemptive relief set forth in the November 2023 Order with respect to
OTQT performance requirements.\183\
---------------------------------------------------------------------------
\182\ See 2025 Cost Savings Exemptive Relief Order, at 67857.
\183\ See id.; November 2023 Order, at 77130, 77132-34.
---------------------------------------------------------------------------
Pursuant to the OTQT Amendment, Section 6.10(c) of the CAT NMS Plan
would be changed to delete references to: (i) ``two different methods''
of accessing CAT Data; and (ii) a reference to ``an online targeted
query tool.'' \184\ Section 6.10(c)(i)(A) of the CAT NMS Plan, which
currently describes the OTQT, would be replaced with a ``Reserved''
designation.\185\ Similarly, Sections 8.1.1 and 8.1.2 of Appendix D of
the CAT NMS Plan, both relating to the OTQT, would be deleted in their
entirety and replaced with a ``Reserved'' designation.\186\ References
to OTQT would also be removed from the title of Section 8.1.3 of
Appendix D of the CAT NMS Plan, and Sections 3.4., 8.1., and 8.4 of
Appendix D of the CAT NMS Plan.\187\ Section 8.2.2. of Appendix D of
the CAT NMS Plan would be changed to remove a sentence stating that
``[t]he CAT System must contain the same level of control, monitoring,
logging and reporting as the online targeted query tool.'' \188\
---------------------------------------------------------------------------
\184\ See Notice, at 61520.
\185\ See id.
\186\ See id. at 61521-22. One paragraph in Section 8.1.2 of
Appendix D of the CAT NMS Plan was modified by the CAIS Amendment.
See CAIS Amendment Approval Order, at 2170. For purposes of the
Proposed Amendment, the Commission is considering the proposal as
deleting this paragraph in its entirety, as modified by the CAIS
Amendment, consistent with the proposed deletion of the entire
Section 8.1.2 of Appendix D of the CAT NMS Plan.
\187\ See id. at 61522.
\188\ See id.
---------------------------------------------------------------------------
CAT LLC states that, after consultation with the Plan Processor, it
has determined that eliminating the OTQT, as permitted pursuant to the
2025 Cost Savings Exemptive Order and as described in the 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.\189\ CAT LLC states that to implement the proposal, the Plan
Processor has proposed a one-time change request implementation fee of
approximately $135,000, and the Plan Processor estimates that it would
take approximately eight to ten weeks to fully implement the changes
for the OTQT Amendment.\190\
---------------------------------------------------------------------------
\189\ See id. CAT LLC states that 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. Id.
\190\ See id. CAT LLC states that 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. Id.
---------------------------------------------------------------------------
Two commenter state that they support the OTQT Amendment.\191\ One
of these commenters states that it supports the OTQT Amendment, as well
as the other amendments, based on the projected cost savings to the CAT
system, and further states that these amendments would not impact the
quality of CAT data, do not raise security concerns, and would not
increase the compliance and operational costs for Industry
Members.\192\ The other commenter states that the OTQT Amendment is
consistent with and would codify the exemptive relief related to the
OTQT set forth in the 2025 Cost Savings Exemptive Order.\193\
---------------------------------------------------------------------------
\191\ See FIF February 2026 Letter, at 2, 4; SIFMA March 2026
Letter, at 6-7.
\192\ See FIF February 2026 Letter, at 4.
\193\ See SIFMA March 2026 Letter, at 7.
---------------------------------------------------------------------------
The OTQT Amendment would result in significant cost savings with
limited regulatory impact. The OTQT Amendment exemptive relief already
allows the Participants to remove OTQT functionality from the CAT with
respect to DIVER, ARLE, OLA Viewer, and MIRS volume concentration and
market replay tools, in the absence of the Proposed Amendment.\194\
Pursuant to the Proposed Amendment, the portion of MIRS referred to as
market replay would also be removed, as would reject statistics and
CAIS statistics, but regulatory users would continue to have access to
certain transaction reporting compliance statistics.\195\ Removal of
the OTQT functionality will not impact the reporting requirements
applicable to Industry Members or have an adverse impact on Industry
Members or their costs. OTQT is an internal tool within the CAT and is
only available to regulatory users, and has no impact on the reporting
obligations of CAT Reporters, whether Participants or Industry Members.
---------------------------------------------------------------------------
\194\ See 2025 Cost Savings Exemptive Relief Order, at 47857.
\195\ See CAT LLC March 2026 Response Letter, at 6.
---------------------------------------------------------------------------
The elimination of OTQT functionality would not in any way impact
the underlying CAT Data that is made available to regulators, or
otherwise impair the regulatory programs of the Participants or the
Commission. As stated in the 2025 Cost
[[Page 16298]]
Savings Exemptive Order, Commission 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 would no longer be available.\196\ Further, the
Commission understands from its communications with the Participants
that their regulatory groups would be able to conduct their regulatory
programs using only BDSQL and Direct Read or otherwise could adjust by
creating their own internal tools to replicate the same targeted
queries they would otherwise run on DIVER.\197\ CAT LLC states that 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
already done so.\198\
---------------------------------------------------------------------------
\196\ See 2025 Cost Savings Exemptive Relief Order, at 47857.
The Commission understands from the Participants that regulatory
users would continue to have access to certain transaction reporting
compliance statistics in the MIRS reporting statistics tool. See CAT
LLC March 2026 Response Letter, at 6. With respect to the MIRS tools
providing reject statistics and CAIS statistics, the Commission does
not believe such tools will be necessary once the amendments
proposed herein are implemented.
\197\ See 2025 Cost Savings Exemptive Order, at 47857.
\198\ See Notice, at 61523.
---------------------------------------------------------------------------
It is reasonable to change the provisions in the CAT NMS Plan to
remove requirements relating to the OTQT, including the removal of the
sentence stating that ``[t]he CAT System must contain the same level of
control, monitoring, logging and reporting as the online targeted query
tool,'' in Section 8.2 of Appendix D of the CAT NMS Plan. Deletion of
this sentence does not affect the comparable requirements related to
user-defined direct queries or bulk extracts, because 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.\199\
---------------------------------------------------------------------------
\199\ See Notice, at 61522.
---------------------------------------------------------------------------
E. Rejected Message Amendment
The Rejected Message Amendment proposes to change the CAT NMS Plan
such that Participants would not be required to record and
electronically report to the CAT any order rejected by the Participant
nor any Reportable Events related to such rejected order.\200\
---------------------------------------------------------------------------
\200\ See id. at 61523-24.
---------------------------------------------------------------------------
Rule 613(c)(7) and Section 6.3(d)(i) of the CAT NMS Plan require
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.''
\201\ The CAT NMS Plan specifies that ``order'' has ``the meaning set
forth in Rule 613(j)(8),'' \202\ 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.'' \203\ 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.
---------------------------------------------------------------------------
\201\ See 17 CFR 242.613(c)(7); CAT NMS Plan, at Section
6.3(d)(i).
\202\ See CAT NMS Plan, at Section 1.1.
\203\ See 17 CFR 242.613(j)(8).
---------------------------------------------------------------------------
On December 16, 2020, the Commission granted the Participants
temporary exemptive relief, until December 13, 2021, from the
requirement in Section 6.3(d) of the CAT NMS Plan that the Participants
report rejected orders.\204\ At the time, the Commission stated that it
understands that the Participants were currently only reporting a
subset of the rejected orders that are required to be reported by
Section 6.3(d) and were working on implementing functionality that will
permit the Participants to report additional rejected orders.\205\ On
July 8, 2022, to give the Participants and Industry Members sufficient
time either to implement the required functionality or to obtain the
Commission's approval of an alternative solution, the Commission
granted temporary conditional exemptive relief from the requirement set
forth in Rule 613(c)(7) and Section 6.3(d)(i) of the CAT NMS Plan that
Participants ``record and electronically report to the Central
Repository'' certain information for orders that are received and
subsequently rejected, and from the requirement set forth in Appendix
D, Section 3 of the CAT NMS Plan that ``[a]ll CAT Data'' related to
such orders be ``processed and assembled to create the complete
lifecycle of each Reportable Event.'' \206\ This exemptive relief was
set to expire on July 31, 2024.\207\
---------------------------------------------------------------------------
\204\ See Securities Exchange Act Release No. 90688 (Dec. 16,
2020), 85 FR 83634, at 83636 (Dec. 22, 2020). The Commission
conditioned this relief on the Participants including in Quarterly
Progress Reports factual indicators that describe ``any updates to
specifications and/or scenarios documents relating to the capture
and reporting of rejected orders.'' Id. at 83636-37.
\205\ See id.
\206\ See July 2022 Order, supra note 44, at 42256-57. As
conditions to this exemptive relief, the Commission stated that: (i)
the Participants must maintain or improve their existing reporting
of orders that are received and subsequently rejected, including
existing efforts towards implementing functionality that would
permit the Participants to report additional rejected orders; (ii)
the Participants must provide, in Quarterly Progress Reports
submitted pursuant to Section 6.6(c) of the CAT NMS Plan, factual
indicators that describe any improvements to the Participants'
reporting of orders that are received and subsequently rejected, as
well as improvements to the functionality that creates linkages for
such orders; and (iii) to ensure that the Participants remain on
track to either come into compliance with the requirements of the
CAT NMS Plan or obtain the Commission's approval of an alternative
solution by July 31, 2024, the Participants and the Plan Processor
must meet with Commission staff on at least a monthly basis to
provide a detailed status update regarding their current efforts
towards this goal and promptly respond to related requests for
additional information or data. Id. at 42257.
\207\ Id.
---------------------------------------------------------------------------
On November 2, 2023, the Commission granted conditional exemptive
relief from the requirements set forth in Rule 613(c)(7) and Section
6.3(d)(i) and Appendix D, Section 3 of the CAT NMS Plan relating to
Participant reporting of rejected orders and subsequent linkage of such
orders.\208\ This relief was subject to certain conditions:
---------------------------------------------------------------------------
\208\ See November 2023 Order, supra note 46, at 77132. The
Commission stated that it understands that, notwithstanding this
Order, the Participants continue to disagree with its interpretation
of these requirements and challenge the feasibility of strict
compliance with that interpretation, and that the November 2023
Order does not resolve the parties' interpretive disagreement on
this issue, but instead provides exemptive relief that renders
resolution of the issue unnecessary. See id. at 77132 n.33.
---------------------------------------------------------------------------
<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
[[Page 16299]]
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).\209\
---------------------------------------------------------------------------
\209\ Id. at 77132. The Commission stated that ``forward
lifecycle linkage'' processing referred to above is intended to
capture functionality that the Participants believe may be feasible
in light of a study of recent data. Id. at 77132 n.34 (further
clarifying the scope of the conditions imposed on the exemptive
relief).
---------------------------------------------------------------------------
The Commission stated that such functionality must be fully
implemented and made available to regulatory users within twelve months
of the change order's approval by the Participants.\210\ CAT LLC states
that the Participant Technical Specifications reflect the exemptive
relief provided in the November 2023 Exemptive Order.\211\
---------------------------------------------------------------------------
\210\ Id. at 77132.
\211\ See Notice, at 61523.
---------------------------------------------------------------------------
Pursuant to the Rejected Message Amendment, proposed Section 6.3(h)
of the CAT NMS Plan would state that, 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.\212\ The proposed
provision also states that, 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 the
paragraph.\213\
---------------------------------------------------------------------------
\212\ See id.
\213\ See id. CAT LLC states that under the current Participant
Technical Specifications, the Rejected Message Amendment refers to
``Reject Message Events (RME).'' See CAT LLC March 2026 Response
Letter, at 6.
---------------------------------------------------------------------------
CAT LLC states that, after consultation with the Plan Processor, it
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.\214\ CAT LLC states that to implement the Rejected Message
Amendment, the Plan Processor has proposed a one-time change request
setting forth an implementation fee of approximately $75,000 to
$150,000 and estimates an implementation time of approximately two to
four months.\215\
---------------------------------------------------------------------------
\214\ See id. CAT LLC states that 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. Id.
CAT LLC states that the Rejected Message Amendment would provide
material cost savings for the Participants collectively as well. Id.
at 61523-24.
\215\ See id. at 61524. CAT LLC states that the 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. Id.
---------------------------------------------------------------------------
Two commenters state that they support the Rejected Message
Amendment.\216\ One of these commenters states that it supports the
Rejected Message Amendment, as well as the other amendments, based on
the projected cost savings to the CAT system, and further states that
these amendments would not impact the quality of CAT data, do not raise
security concerns, and would not increase the compliance and
operational costs for Industry Members.\217\ However, the commenter
states that, as a general principle, when CAT LLC proposes a change for
Participants, CAT LLC should also consider whether an equivalent change
should also apply for Industry Members, and that similarly, when the
Commission is considering changes to the obligations of Participants,
the Commission should also consider whether equivalent changes should
also apply for Industry Members.\218\ The commenter states that
requiring a Participant to report an order route request that the
Participant receives and rejects is (and always has been) beyond the
scope of Rule 613, and that this applies to Industry Members as
well.\219\
---------------------------------------------------------------------------
\216\ See FIF February 2026 Letter, at 2, 4; SIFMA March 2026
Letter at 6-7 (noting that the Rejected Message Amendment was not
part of the 2025 Cost Savings Exemptive Order).
\217\ See FIF February 2026 Letter, at 4.
\218\ See id. at 5.
\219\ See id. at 5-6.
---------------------------------------------------------------------------
The commenter states that it understands that there is currently no
requirement for Industry Members to report order route requests that
they receive and reject.\220\ The commenter explains that while the
Participant Technical Specifications document includes a Reject Message
Event,\221\ there is no equivalent event in the Technical
Specifications document for Industry Members and thus there currently
is no mechanism in CAT for an Industry Member to report a route request
that it receives and rejects.\222\ The commenter states that it is
concerned the proposed Rejected Message Amendment, by specifically
referencing Participants, could create an inference that Industry
Members are required to report route requests that they receive and
reject.\223\ The commenter requests that the Commission and CAT NMS
Plan clarify in writing through an amendment to the CAT NMS Plan or
updates to the CAT Technical Specifications that Industry Members also
are not required to report route requests that they receive and
reject.\224\ The commenter states that generally, amendments relating
to Participants should not be read to impose new or implied obligations
on Industry Members absent express Commission action, and states that
there is no policy basis for differentiating between Participants and
Industry Members on this issue; if there were such a basis, it would be
necessary to explain this in the rule filing.\225\ The other commenter
also urges the Commission and the Participants to strongly consider
providing Industry Members with the same form of relief.\226\
---------------------------------------------------------------------------
\220\ See id. at 5.
\221\ See id. at 5 (citing CAT Reporting Technical
Specifications for Plan Participants, Version 4.2.0-r1 (Aug. 22,
2025), available at <a href="https://catnmsplan.com/sites/default/files/2025-08/08.22.2025-CAT_Reporting_Technical_Specifications_for_Participants_4.2.0-r1.pdf">https://catnmsplan.com/sites/default/files/2025-08/08.22.2025-CAT_Reporting_Technical_Specifications_for_Participants_4.2.0-r1.pdf</a>, at 47-50).
\222\ See id. at 5. The commenter states that the scenario where
an Industry Member receives and rejects a route request should be
distinguished from the scenario when an Industry Member accepts a
route request (thereby creating a New Order) and subsequently
cancels the order that the Industry Member has created (this could
be a ``reject'' in FIX). Id. at 5 n.19. The commenter states that
under the latter scenario, the Industry Member is required to report
New Order and Order Cancel events to CAT. Id.
\223\ See id. at 5.
\224\ See id. at 5.
\225\ See id. at 5.
\226\ See SIFMA March 2026 Letter, at 5.
---------------------------------------------------------------------------
CAT LLC states in response that the Rejected Message Amendment is
not intended to create an inference that Industry Members are required
to report to the CAT a routed order message that they receive and
reject.\227\ CAT LLC states that the focus on Participant reporting
obligations is because the proposal is intended to clarify a
longstanding interpretive disagreement between the SEC and the
Participants
[[Page 16300]]
regarding Participants' obligations to report rejected order messages
to the CAT.\228\ CAT LLC states that it is considering this issue
separately from this Proposed Amendment and anticipates additional
discussions with the industry and Commission staff on the issue to
determine whether a separate amendment to the CAT NMS Plan is
appropriate.\229\
---------------------------------------------------------------------------
\227\ See CAT LLC March 2026 Response Letter, at 7.
\228\ See id. at 7-8.
\229\ See id. at 8.
---------------------------------------------------------------------------
The Rejected Message Amendment should produce meaningful cost
savings with limited impact on regulatory use of the CAT. For example,
CAT LLC states that it understands that the Participants have not used
rejected message data reported for regulatory purposes to date.\230\
The Rejected Message Amendment only applies to certain rejected
messages received by Participants, and it does not affect the reporting
requirements applicable to Industry Members.\231\ Because the Rejected
Message Amendment only applies to the Participants, no ``inference''
should be read into the provision regarding Industry Member reporting
obligations and it is not necessary to modify the Rejected Message
Amendment to apply to Industry Members. In addition to the annual
savings for CAT, the Participants will also have cost savings
collectively because they would no longer have to collect, process, and
report these rejection events for the CAT.\232\ The cost savings are a
reasonable trade-off for the elimination of the requirement to report
rejected message information.
---------------------------------------------------------------------------
\230\ See Notice, at 61524.
\231\ See also id. (stating that 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).
\232\ See id. at 61523-24.
---------------------------------------------------------------------------
However, pursuant to Rule 608(b)(2),\233\ the Commission deems it
appropriate to modify the amendment to proposed Section 6.3(h) of the
CAT NMS Plan as approved to remove a reference to the Exchange Act. As
proposed, Section 6.3(h) would state that, ``[n]otwithstanding 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.'' (emphasis
added). However, an NMS plan cannot void or otherwise modify the
requirements of the Exchange Act. The CAT NMS plan is a contractual
agreement among the Participants created pursuant to the Exchange Act
and, absent an exemption or other relief, the NMS Plan and the
Participants themselves are subject to applicable Exchange Act
requirements. For these reasons, the Commission deems it appropriate to
modify proposed Section 6.3(h) to remove the words, ``or the Exchange
Act,'' to remove the implication that Section 6.3(h) overrides ``any
provision'' of the Exchange Act. In comparison to proposed Section
6.3(h) of the CAT NMS Plan, the following changes apply, with deletions
shown through [brackets]:
---------------------------------------------------------------------------
\233\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
(h) 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.
In addition, although not requested by the Participants, the
Commission finds that it is appropriate in the public interest and
consistent with the protection of investors under Section 36 of the
Exchange Act,\234\ as well as consistent with the public interest, the
protection of investors, the maintenance of fair and orderly markets
and the removal of impediments to, and the perfection of, a national
market system under Rule 608(e) under the Exchange Act,\235\ to grant
relief that exempts each Participant from the recordkeeping and data
retention requirements for CAT Data subject to the Rejected Message
Amendment and that otherwise would apply as set forth in Rule 17a-1
under the Exchange Act. This relief applies only to the Participants'
obligation to keep and preserve specific CAT Data within the CAT, and
does not apply to any information or records that the Participants are
required to keep and preserve outside of the CAT. This exemptive relief
would ensure that the Rejected Message Amendment is consistent with
Exchange Act requirements.
---------------------------------------------------------------------------
\234\ 17 CFR 242.608(e).
\235\ 17 CFR 240.17a-1.
---------------------------------------------------------------------------
F. Data Availability Amendment
The Data Availability Amendment proposes to: (1) extend the time by
which raw unprocessed data must be made available to Participants'
regulatory staff and SEC from 12 p.m. Eastern Time on T+1 to 8 a.m.
Eastern Time on T+2, and (2) extend the time by which final data must
be ready for regulators from 8 a.m. Eastern Time on T+5 to 8 a.m.
Eastern Time on T+6.\236\
---------------------------------------------------------------------------
\236\ See Notice, at 61524-26.
---------------------------------------------------------------------------
Sections 6.1, 6.2, and 6.3 of Appendix D of the CAT NMS Plan set
forth timelines regarding data availability for regulators. Section 6.1
of Appendix D of the CAT NMS Plan states that the Participants require
the following timeframes for the identification, communication, and
correction of errors from the time an order event is received by the
processor: (1) ``Noon Eastern Time T+1 (transaction date + one day)--
Initial data validation, lifecycle linkages and communication of errors
to CAT Reporters;'' (2) ``8:00 a.m. Eastern Time T+3 (transaction date
+ three days)--Resubmission of corrected data;'' and (3) ``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 states 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.'' \237\ Section 6.3 of
Appendix D of the CAT NMS Plan states that ``Raw Unprocessed Data''
means ``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
states that ``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.''
---------------------------------------------------------------------------
\237\ In addition, Section 3.4 of the CAT NMS Plan states that
Options Market Maker quotes in Listed Options will undergo ingestion
validation only and such unlinked data will be made available to
regulators by T+1 at 12 p.m. Eastern Time.
---------------------------------------------------------------------------
Pursuant to the Data Availability Amendment, Sections 6.1, 6.2 and
6.3 of Appendix D of the CAT NMS Plan would be revised to implement a
proposed revised data availability timeline.\238\ Section 6.1 of
Appendix D of the CAT NMS Plan would be amended to replace references
to 8:00 a.m. Eastern Time T+5 with 8:00 a.m. Eastern Time T+6, and make
corresponding changes to the times in
[[Page 16301]]
Figure A \239\ in Section 6.1 of Appendix D of the CAT NMS Plan.\240\
Proposed Section 6.2 of Appendix D of the CAT NMS Plan would replace
references to 12:00 p.m. Eastern Time on T+1 with references to 8:00
a.m. Eastern Time on T+2 and replace references to T+5 to T+6, as well
as specify that processing is a six-day process instead of a five-day
process.\241\ Proposed Section 6.3 of Appendix D of the CAT NMS Plan
would replace a reference to 12:00 p.m. Eastern Time on T+1 to 8:00
a.m. Eastern Time on T+2 with respect to Raw Unprocessed Data older
than 15 days.\242\
---------------------------------------------------------------------------
\238\ See Notice, at 61524-25.
\239\ Figure A is a chart within Section 6.1 of Appendix D of
the CAT NMS Plan that is labeled CAT Central Repository Data
Processing Timelines.
\240\ See id. at 61525.
\241\ See id.
\242\ See id.
---------------------------------------------------------------------------
CAT LLC states that the Data Availability Amendment would reduce
CAT costs for cloud hosting services by approximately $1.5 to $2
million annually.\243\ CAT LLC states that 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.\244\ CAT LLC states
that 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, and that the Plan Processor estimates
that it would take approximately three to six months to fully implement
the changes for the Data Availability Amendment.\245\
---------------------------------------------------------------------------
\243\ See id.
\244\ See id. at 61525 n.112.
\245\ See id. at 61525. 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. Id.
---------------------------------------------------------------------------
Two commenters state that they support the Data Availability
Amendment.\246\ One of these commenters states that it supports the
Data Availability Amendment, as well as the other amendments, based on
the projected cost savings to the CAT system, and further states that
these amendments would not impact the quality of CAT data, do not raise
security concerns, and would not increase the compliance and
operational costs for Industry Members.\247\
---------------------------------------------------------------------------
\246\ See FIF February 2026 Letter, at 2, 4; SIFMA March 2026
Letter, at 6-7 (noting that this was addressed in the 2025 Cost
Savings Exemptive Order).
\247\ See FIF February 2026 Letter, at 4.
---------------------------------------------------------------------------
The Data Availability Amendment would provide for substantial cost
savings with limited regulatory impact and without having an adverse
impact on Industry Members. The Data Availability Amendment would
provide the Plan Processor with additional time to process the
extremely large data volumes handled by the CAT on an ongoing basis,
while only delaying the availability of processed and linked CAT Data
to regulators by one day.\248\ Importantly, CAT LLC states that
changing the timelines for providing data to the regulators would not
directly affect the reporting and other requirements applicable to
Industry Members.\249\
---------------------------------------------------------------------------
\248\ It is reasonable to only delay the availability of data by
one day because CAT LLC states that 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. See Notice, at 61525
n.112.
\249\ See id. at 61525.
---------------------------------------------------------------------------
CAT LLC states that the Participants ``unanimously agree'' that
obtaining a final lifecycle by T+6, in lieu of T+5, is sufficient to
conduct their regulatory programs.\250\ The Commission agrees that a
delay of one day for the receipt of final lifecycles is sufficient to
conduct regulatory programs, and that it would not unduly impact
regulatory use of CAT Data. In addition, should the Participants or the
Commission want processed and linked data sooner, as discussed in Part
III.A. above, the Interim CAT-Order-ID Amendment provides a mechanism
for Participant and Commission staff to request such interim processing
be done. The cost savings are a reasonable trade-off for the
elimination of the regulatory benefit of maintaining the T+5 timing,
because even if there were a major market event or a regulatory need
for linked data where receiving linked data at T+5 instead of T+6 could
be relevant or important, the Participants and Commission would have
access to interim linked data pursuant to the ad hoc request ability.
---------------------------------------------------------------------------
\250\ See id.
---------------------------------------------------------------------------
It is reasonable to have access to raw unprocessed data ingested by
the Plan Processor prior to T+2 at 8 a.m. Eastern Time. Having access
to raw unprocessed data a day earlier, at T+1 at 8 a.m. Eastern Time,
is generally not critical for regulatory users. Linked data is of
greater regulatory value, and as noted above, the Interim CAT-Order-ID
Amendment would provide a mechanism for requesting that the raw
unprocessed data be quickly processed and linked for regulatory use.
The Commission is modifying the Proposed Amendment, pursuant to
Rule 608(b)(2),\251\ to modify existing CAT NMS Plan language to fix a
technical issue and make the provision consistent with the Data
Availability Amendment, and consistent with a proposed modification in
the CAT LLC February 2026 Letter.\252\ Specifically, Section 3.4 of the
CAT NMS Plan currently states that OMM Quotes will undergo ingestion
validation only and such unlinked data will be made available to
regulators by T+1 at 12:00 p.m. Eastern Time. To be consistent with the
Data Availability Amendment and the timing of the provision of other
unprocessed CAT Data to regulatory users, the Commission is modifying
Section 3.4 of the CAT NMS Plan to replace ``T+1 at 12:00 p.m. Eastern
Time'' with ``T+2 at 8:00 a.m. Eastern Time.'' This modification is
appropriate, because it makes this provision consistent with the Data
Availability Amendment and would help avoid confusion about when data
would be made available to regulators pursuant to the Proposed
Amendment.
---------------------------------------------------------------------------
\251\ See CAT LLC February 2026 Letter, at 3.
\252\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
G. Reference Data Amendment
The Commission recently approved an amendment to the CAT NMS Plan
that eliminated all CAT NMS Plan requirements to report Names,
Addresses, YOBs, SSNs/ITINs, and EINs to the CAT and to remove such
previously reported customer information stored in the CAT,\253\ as
well as codified the Participants' current method of generating
anonymized customer identifiers (``CAT Customer-IDs'' or ``CCIDs'')
without requiring the receipt or storage of individual SSNs/ITINs in
the CAT.\254\
---------------------------------------------------------------------------
\253\ See CAIS Amendment Approval Order. This effectively
codified and expanded upon prior exemptive relief from the
requirement to report Names, Addresses, and YOBs for natural persons
with social security numbers or tax-payer identification numbers.
See Securities Exchange Act Release No. 102386 (Feb. 10, 2025), 90
FR 9642, 9643 (Feb. 14, 2025), <a href="https://www.sec.gov/files/rules/sro/nms/2025/34-102386.pdf">https://www.sec.gov/files/rules/sro/nms/2025/34-102386.pdf</a> (``CAIS Exemption Order'').
\254\ See CAIS Amendment Approval Order, at 2166. Pursuant to
the CCID alternative, the Plan Processor generates a unique CCID,
using a two-phase transformation process that avoids having
individual social security numbers or tax-payer identification
numbers (``SSNs/ITINs'') reported to or stored in the CAT. 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
(``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
the globally unique CCID for each Customer that is unknown to, and
not shared with, the original CAT Reporter. The CCID is then sent to
the customer and account information system (``CAIS'') of the CAT,
where it is linked with the other customer and account information.
The CCID may then be used by the Participants' regulatory staff and
Commission staff in queries and analysis of CAT data. See Securities
Exchange Act Release No. 88393 (Mar. 17, 2020), 85 FR 16152, 16153
(Mar. 20, 2020), <a href="https://www.govinfo.gov/content/pkg/FR-2020-03-20/pdf/2020-05935.pdf">https://www.govinfo.gov/content/pkg/FR-2020-03-20/pdf/2020-05935.pdf</a> (``CCID Exemption Order'').
---------------------------------------------------------------------------
[[Page 16302]]
The Initial Proposed Amendment included proposed amendments to the
CAT NMS Plan to eliminate both the requirement to report Customer
Account Information and Customer Identifying Information to the CAT,
eliminate CAIS from the CAT, and adopt a new approach for the
generations of CCIDs (``Reference Data Amendment''). The CAIS Amendment
was approved after the submission of the Initial Proposed Amendment,
and thus the proposed Reference Data Amendment in the Initial Proposed
Amendment included changes to the CAT NMS Plan based on the text of the
CAT NMS Plan prior to the approval of the CAIS Amendment.\255\ On
February 24, 2026, CAT LLC submitted CAT LLC February 2026 Letter,
which proposed revisions to the Initial Proposed Amendment to reflect
the intervening changes to the language of the CAT NMS Plan following
the Commission's approval of the CAIS Amendment.\256\ On March 10,
2026, CAT LLC submitted CAT LLC March 2026 Response Letter, which
proposes one additional revision to the Proposed Amendment, further
revising the proposed definition of ``Reference Data'' to include
``Customer Type.'' \257\
---------------------------------------------------------------------------
\255\ See Notice, at 61509 n.15 (stating that the SEC has not
yet approved or disapproved the CAIS Amendment).
\256\ See CAT LLC February 2026 Letter, supra note 7.
\257\ See CAT LLC March 2026 Response Letter, at 9.
---------------------------------------------------------------------------
The Reference Data Amendment, as proposed to be changed by the CAT
LLC in its February 2026 Response Letter, differs from the CAIS
Amendment in that it proposes to, as described in greater detail below:
(i) eliminate the requirement to report Account Reference Data and
Customer Reference Data to the CAT; (2) eliminate CAIS from the CAT and
instead establish the Reference Database; \258\ and (3) utilize a
revised approach for the generation of CCIDs that minimizes the data
needed for its creation (the ``Reference Data Approach'').\259\ Under
the Reference Data Approach, certain previously required information
would not be reported to the CAT, such as Large Trader IDs (``LTIDs'')
and Legal Entity Identifiers (``LEIs''), and the Reference Database
would be limited to the storage of CCID Generation Data and CCID
Transaction Enrichment Data, as defined below, as well as account type,
clearing broker, branch office, registered representative, and
individual's role in the account.
---------------------------------------------------------------------------
\258\ The Reference Database would not include the same
information as the CAIS, and regulatory and other features related
to the CAIS and the collection of Customer information (e.g.,
Regulatory Portal, CAIS Report Card, CCID Rotation) would also be
eliminated. See Notice, at 61528.
\259\ CAT LLC further states that the CAIS Amendment involves
targeted changes to the broader CAIS infrastructure, while fully
eliminating CAIS and related functionality would be simpler and more
straightforward, and therefore less time consuming. See CAT LLC
March 2026 Response Letter, at 6-7. CAT LLC states that, if
approved, the Reference Data Amendment would effectively supersede
the CAIS Amendment, and the associated implementation costs would be
lower than those under the CAIS Amendment. Id. at 7.
---------------------------------------------------------------------------
CAT LLC states that pursuant to 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,
collectively ``CCID Generation Data''), and instead of submitting such
information to the CAT, 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.\260\ CAT LLC states
that the process for generating CCIDs from this information would be
materially the same as the current process, using a combination of TID,
TID Type, Foreign TID Type and Foreign TID Country Codes to generate
CCIDs based on a combination of these field values.\261\
---------------------------------------------------------------------------
\260\ See Notice, at 61528. 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. Id.
\261\ See id.
---------------------------------------------------------------------------
CAT LLC states that Industry Members would be required to submit to
the Reference Database that replaces the CAIS database, certain ``CCID
Transaction Enrichment Data'' for each account and Customer, as
applicable: (i) Firm Designated ID; (ii) Date FDID Opened, which means
the date the account was opened (or the Account Effective Date); (iii)
Date FDID Closed, which means the date the account was closed (or
relationship or entity identifier was ended) at the Industry Member;
(iv) Customer Role Start Date, which means the date the Customer became
associated with the account; and (v) Customer Role End Date, which
means the date the Customer is no longer associated with the
account.\262\ Furthermore, CAT LLC states that 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.\263\
---------------------------------------------------------------------------
\262\ See id.
\263\ See id.
---------------------------------------------------------------------------
Pursuant to the Reference Data Approach, 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.\264\ In addition, CAT LLC
states that the Plan Processor would enrich Reportable Events for an
order with the CCID for the relevant Customer using the FDID as the key
and map CCIDs to FDIDs, which would allow regulators to associate a
Customer with transaction data.\265\ CAT LLC states that 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.\266\ CAT LLC states that with the
elimination of CAIS, the CAIS regulatory portal would be eliminated,
but that 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 interface (``API'')) that
would permit regulators to use the social security number to look up a
CCID.\267\
---------------------------------------------------------------------------
\264\ See id. CAT LLC states that with the elimination of the
CAIS database, regulatory and other features related to CAIS and the
collection of Customer information (e.g., Regulatory Portal, CAIS
Report Card, CCID Rotation) also would be eliminated. See id.
\265\ See id. CAT LLC states that under the Reference Data
Approach, the mapping table would be expanded to include the
additional Reference Data elements, and 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. See id.
\266\ See id.
\267\ See id. at 61528-29.
---------------------------------------------------------------------------
CAT LLC states that the Reference Data Amendment, as proposed in
the
[[Page 16303]]
Initial Proposed Amendment, would reduce CAT costs for cloud hosting
services by approximate $4 to $6 million annually, as well as provide
for potential reductions in the operating fees for the Plan
Processor.\268\ In the Initial Proposed Amendment, CAT LLC states that
the potential cost savings related to the operating fees for the Plan
Processor with regard to the 2025 Cost Savings Amendment are $7
million.\269\ CAT LLC states that while the November 2025 CAT 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,\270\ which would be eliminated with the
elimination of CAIS, the elimination of these fees 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, an estimate $7 million reduction from the $54 million in total
Plan Processor fees under the proposed 2025 Cost Savings
Amendment.\271\ CAT LLC states that to implement the Reference Data
Amendment, as proposed in the Initial Proposed Amendment, the Plan
Processor has proposed a one-time change request implementation fee of
approximately $2.5-$3.5 million, and that the Plan Processor estimates
that it would take approximately nine to twelve months, including an
allowance for three to four months for industry testing, to fully
implement the changes for the Reference Data Amendment.\272\
---------------------------------------------------------------------------
\268\ See Notice, at 61526.
\269\ See id.
\270\ See id. at 61526 n.114.
\271\ See id. at 61526.
\272\ See id. CAT LLC states that 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
Reference Data Approach. Id.
---------------------------------------------------------------------------
One commenter states that it supports the Reference Data
Amendment.\273\ The commenter states that it supports the Reference
Data Amendment, as well as the other amendments, based on the projected
cost savings to the CAT system, and further states that these
amendments would not impact the quality of CAT data, do not raise
security concerns, and would not increase the compliance and
operational costs for Industry Members.\274\
---------------------------------------------------------------------------
\273\ See FIF February 2026 Letter, at 2, 4.
\274\ See id. at 4.
---------------------------------------------------------------------------
Another commenter states that it supports the Reference Data
Approach as well as finalizing the elimination of PII from the CAT, but
is concerned that the Reference Data Amendment leaves ``unanswered the
significant question of how regulators plan to identify a person
engaged in problematic trading activity identified in CAT data in
connection with an investigation.'' \275\ The commenter requests that
the Participants, or at least FINRA, develop and execute with industry
collaboration a plan to create a request-response system that would
address this question and enable the retirement of EBS.\276\
---------------------------------------------------------------------------
\275\ See SIFMA March 2026 Letter, at 4. This commenter states
that it strongly supports prior actions to protect investors'
confidential information by the Commission and the Participants. Id.
\276\ See SIFMA March 2026 Letter, at 4-5. The other commenter
also supports creation of a request-response system as a replacement
for EBS, and CAT LLC provided a response in CAT LLC March 2026
Response Letter. See infra notes 317-318 and accompanying text.
---------------------------------------------------------------------------
CAT LLC represents that the process for generating the CCID under
the Reference Data Approach is materially the same as the current
process, which the Commission has previously codified in the CAT NMS
Plan by approving the CAIS Amendment.\277\ As discussed
previously,\278\ the CCID process (or CCID alternative), which allows
the Participants to generate a unique CCID using a two-phase
transformation process that avoids having SSNs/ITINs reported to or
stored in the CAT, preserves a core regulatory purpose of the CAT by
allowing for the tracking of a specific order of a Customer throughout
its entire lifecycle without the reporting or storage of social
security numbers in the CAT. The ability to link information about
order events throughout the national market system to a unique customer
identifier is one of the core regulatory advances of the CAT over the
fragmented regulatory data sources that preceded it, and thus the CCID
process greatly facilitates the regulatory and surveillance efforts of
the Participants and the Commission by, among other things, enabling
regulators to detect potentially unlawful trading activity and to
identify those responsible for or victims of it.\279\ The Commission
continues to believe that the CCID process provides CAT the ability to
provide customer attribution of order and trade activity even if such
trading activity spans multiple broker-dealers, and without this
ability, the value and usefulness of the CAT would be significantly
diminished.\280\
---------------------------------------------------------------------------
\277\ See Notice, at 61528; CAIS Amendment Approval Order, at
2166-69.
\278\ See CAIS Amendment Approval Order, at 2168.
\279\ See CCID Exemption Order, at 16156 n.78.
\280\ See id.
---------------------------------------------------------------------------
The Commission believes that it is reasonable to reduce the amount
of data Industry Members would be required to submit to the CAT,
including the removal of requirements to report LTIDs and LEIs, which
was not proposed in the CAIS Amendment.\281\ As noted above, the Plan
Processor would still have sufficient information to generate CCIDs,
but Industry Members would no longer need to incur costs related to the
submission of information that was previously required to be reported
to the CAT. While the Commission has previously stated that large
trader identifiers and LEIs could assist regulators in identifying the
name of a legal entity associated with a particular FDID,\282\ the
Commission believes that regulators will still be able to effectively
perform cross-market, cross-broker, and cross-market surveillance of
market participants because all customers will have a CCID. In
addition, the Commission believes that removal of this reporting
requirement would reduce the reporting burden on Industry Members.
---------------------------------------------------------------------------
\281\ See Notice, at 61528.
\282\ See CAIS Amendment Approval Order, at 2169.
---------------------------------------------------------------------------
The Commission believes that the retirement of CAIS, and deletion
from CAIS of all Customer information or other data in CAIS, and
maintenance of a FDID-CCID mapping table and historical FDIDs, CCIDs
and Reference Data is reasonable. Regulators would have the ability to
access the Reference Database to information regarding account type,
clearing broker, branch office, registered representative, and
individual's role in the account.\283\ Having access to this data in
CAT could reduce the number of requests regulatory staff make to
Industry Members without access to such information.\284\ With CAT
transactional data and the Reference Database, regulators will have
sufficient information to effectively perform regulatory functions
including investigations, enforcement, and surveillance. In particular,
with the Reference Data Approach and pursuant to proposed Section 9.5
of Appendix D of the CAT NMS Plan, regulators would have access to a
mapping table for the FDIDs, CCIDs and Reference Data, and
[[Page 16304]]
would be able to use a tool to look up a CCID using the input used to
identify unique Customers for the TID, 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.
---------------------------------------------------------------------------
\283\ See Notice, at 61529; proposed Section 1.1 (defining
``Reference Data'' as ``CCID Generation Data, CCID Transaction
Enrichment Data, account type, clearing broker, branch office,
registered representative, and individual's role in the account,''
and the ``Reference Database'' as ``the information system of the
CAT containing Reference Data'').
\284\ See Notice, at 61528 (stating that 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'').
---------------------------------------------------------------------------
In light of the security risks and the increasing sophistication of
cybercriminals and bad actors, it is reasonable to eliminate the CAIS
system. The Commission considered the trade-off between the protection
of investors' personal information and losses to regulatory efficiency
that would result from eliminating this information from the CAT and
has concluded that the regulatory benefit of collecting this
information no longer justifies the associated risks. Pursuant to the
Reference Data Approach, Industry Members would still be required to
transform SSNs/ITINs/government issued ID numbers into interim values
and report those TIDs to the CCID Subsystem for each order, such that
the system of generating CCIDs will not be materially impacted.
The CAT LLC's proposed changes to the CAT NMS Plan are reasonably
designed to implement the Reference Data Amendment and Reference Data
Approach. Thus, subject to further modifications described below,
pursuant to Rule 608(b)(2),\285\ the Commission is modifying the
Proposed Amendment to be consistent with the modifications to the
original Proposed Amendment relating to the Reference Data
Amendment.\286\ The Commission deems this is appropriate because the
modifications to the Initial Proposed Amendment made by CAT LLC
February 2026 Letter reflect the intervening changes to the language of
the CAT NMS Plan following the Commission's approval of the CAIS
Amendment, which occurred on January 13, 2026, after the Initial
Proposed Amendment was submitted to the Commission. The changes in the
CAT LLC February 2026 Letter avoid confusion and help clarify the scope
of changes to the CAT NMS Plan being proposed by the Reference Data
Amendment.
---------------------------------------------------------------------------
\285\ 17 CFR 242.608(b)(2).
\286\ These modifications to the original Proposed Amendment are
described on pages 2 to through 5 in the CAT LLC February 2026
Letter, and the updated revisions described on those pages are set
forth in Exhibit A to CAT LLC February 2026 Letter. See CAT LLC
February 2026 Letter, at 7-28 (Exhibit A reflecting updated
revisions).
---------------------------------------------------------------------------
Accordingly, to implement the intervening changes to the language
of the CAT NMS Plan following the Commission's approval of the CAIS
Amendment as proposed in the CAT LLC February 2026 Letter, the
Commission is making changes to the Proposed Amendment as discussed
below.
The Commission is modifying the Proposed Amendment to amend Section
1.1 of the CAT NMS Plan to add, modify, and delete definitions that
apply to the CAT NMS Plan. The new definitions are being proposed to be
added to Section 1.1 of the CAT NMS Plan are:
<bullet> ``CCID Generation Data'' shall mean the Transformed
Identifier and Transformed Identifier Type.
<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> ``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.
<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> ``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).
For the same reasons, the Commission is modifying two proposed
definitions in Section 1.1 of the CAT NMS Plan: ``Reference Data''
\287\ and ``Transformed Identifier'' or ``TID.'' The modified
definition of Reference Data would no longer refer to ``the data
elements in Account Reference Data and Customer Reference Data,'' but
would instead mean CCID Generation Data, CCID Transaction Enrichment
Data, customer type,\288\ account type, clearing broker, branch office,
registered representative, and individual's role in the account. The
modified definition of ``Transformed Identifier'' or ``TID'' would be
modified to mean 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.\289\
---------------------------------------------------------------------------
\287\ In addition, CAT LLC proposes to modify a reference to
``Customer information,'' in Section 6.2 of Appendix D of the CAT
NMS Plan, to instead state ``Reference Data.'' See CAT LLC February
2026 Letter, at 17.
\288\ CAT LLC states that after subsequent discussion with
Industry Members, it proposes to revise the definition of
``Reference Data'' to ``clarify'' that Customer Type would continue
to be reportable. See CAT LLC March 2026 Response Letter, at 9.
\289\ The definition of ``Transformed Identifier'' or ``TID''
was added to the CAT NMS Plan in the CAIS Amendment. See CAIS
Amendment Approval Order, at 2167. As approved in the CAIS Amendment
Approval Order, Section 1.1 of the CAT NMS Plan states that
``Transformed Identifier'' or ``TID'' means the transformed version
of the input used to identify unique Customers, including, but not
limited to, individual tax payer identification number (``ITIN'') or
social security number (``SSN'') submitted by Industry Members in
place of an ITIN or SSN. See id.
---------------------------------------------------------------------------
The Commission is also modifying the Proposed Amendment to delete
three definitions in Section 1.1 of the CAT NMS Plan that were added to
the CAT
[[Page 16305]]
NMS Plan in the CAIS Amendment and which CAT LLC states would no longer
be needed under the proposed amendment, specifically, ``CCID
Subsystem,'' ``Account Reference Data,'' ``Customer Reference Data.''
\290\ These changes to Section 1.1 of the CAT NMS Plan, specifically
the new, modified, and deleted definitions, are reasonably designed to
implement the Reference Data Approach, by clarifying what data would be
required to reported to CAT by Industry Members under this approach and
what data would be maintained in the CAT System and where it would be
maintained.
---------------------------------------------------------------------------
\290\ See CAT LLC February 2026 Letter, at 2. See also CAIS
Amendment Approval Order, at 2166. CAT LLC February 2026 Letter
outlines other changes to the Reference Data Amendment as compared
to the Initial Proposed Amendment, including no longer proposing to
modify or delete certain definitions that would have been modified
or deleted if the CAIS Amendment were not approved. See CAT LLC
February 2026 Letter, at 2-3.
---------------------------------------------------------------------------
The Commission is also modifying proposed Section 6.4(d)(ii)(C) of
the CAT NMS Plan to replace ``for original receipt or origination of an
order, the Firm Designated ID for the relevant Customer, and in
accordance with Section 6.4(d)(iv), the Reference Data for the relevant
Customer and'' with ``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).'' \291\ This change is reasonably designed to modify
reporting requirements to require CCID Transaction Enrichment Data and
CCID Generation Data be reported to the CAT.
---------------------------------------------------------------------------
\291\ This same subsection, Section 6.4(d)(ii)(C) of the CAT NMS
Plan, was modified by the CAIS Amendment prior to the filing of the
Proposed Amendment. See CAIS Amendment Approval Order, at 2170.
---------------------------------------------------------------------------
The Commission is also modifying proposed Section 6.4(d)(iv) of the
CAT NMS Plan to: (i) replace references to ``Customer information''
with ``Reference Data''; (ii) state that 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), instead of
for just Active Accounts; (iii) delete a requirement that Industry
Member submit to the Central Repository a complete set of all Customer
information; (iv) delete a requirement that the Plan Processor
correlate Customer information across all Industry Members, and (v)
modify the provision to state that the 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. These
changes are consistent with the Reference Data Approach and remove
reporting requirements relating to Customer information that will no
longer be required to be reported to the CAT.
The Commission is also modifying the Proposed Amendment to update
the title of various Sections of Appendix D of the CAT NMS Plan to
reflect the modified approach. Section 9 of Appendix D of the CAT NMS
Plan would be changed from ``CAT Reference Data'' to ``CAT-Customer-
ID.'' \292\ Section 9.1 of Appendix D of the CAT NMS Plan would be re-
titled ``Assignment of CCID'' instead of ``Reference Data Storage.''
\293\ Section 9.2 of Appendix D of the CAT NMS Plan would be renamed to
``CCID Transaction Enrichment Data,'' instead of ``Required Data
Attributes for Customer Information Data Submitted by Industry
Members.'' Section 9.4 of Appendix D of the CAT NMS Plan would be
renamed from ``Error Resolution for Customer Data'' to ``Error
Resolution for Reference Data.'' \294\ These changes to the titles of
Section 9 better reflect the Reference Data Approach and remove
references to concepts that no longer apply to the CAT, such as CAT-
Customer-ID and Customer Information Data.
---------------------------------------------------------------------------
\292\ The CAIS Amendment modified the title of Section 9 of
Appendix D of the CAT NMS Plan to ``CAT Reference Data.'' See CAIS
Amendment Approval Order, at 2170.
\293\ The CAIS Amendment modified the title of Section 9.1 of
Appendix D of the CAT NMS Plan to ``Reference Data Storage.'' See
CAIS Amendment Approval Order, at 2176.
\294\ CAT LLC also proposes to modify Section 9.4 of Appendix D
of the CAT NMS Plan to specify that the Central Repository must have
an audit trail showing the resolution of all errors related to
Reference Data. See Notice, at 2171.
---------------------------------------------------------------------------
The Commission is modifying proposed Section 9.1 of Appendix D of
the CAT NMS Plan so that it states that the CAT must capture and store
in the Reference Database the TID and TID Type for each customer (or,
for foreign customers, the TID, TID Type, Foreign TID Type and Foreign
TID Country Code) submitted by Industry Members to the CAT, and
references to the separate database for Customer and Customer Account
Information, as well as required attributes, would be deleted.
References to Customer and Customer Account Information, as well as
references to previously collected Customer information would be
replaced with references to ``Reference Data.'' Language regarding
validation of previously collected Customer information would also be
removed. The provision would also be updated to state that the Plan
Processor will design and implement a robust data validation process
for submitted Reference Data. These changes are reasonably designed to
implement the Reference Data Approach, including in particular the new
requirements related to the capture and storage of TID and TID Type,
and removal of language regarding Customer and Customer Account
Information which will no longer be applicable.
The Commission is also modifying proposed Section 9.1 of Appendix D
of the CAT NMS Plan. The first paragraph would be modified to state
that the CAT must capture and store in the Reference Database the TID
and TID Type for each customer (or, for foreign customers, the TID, TID
Type, Foreign TID Type and Foreign TID Country Code) submitted by
Industry Members to the CAT. A requirement that for legal entities, the
CAT must capture LEIs would be deleted, as well as a requirement that
the Plan Processor have a process to periodically receive full account
lists to ensure the completeness and accuracy of the account database.
The Reference Data Amendment, as modified by CAT LLC February 2026
Letter, would also update various references in the section to
Reference Data or CCID Generation Data, delete references to the CCID
Subsystem and Customer information, and update references to broker-
dealers to ``Industry Members.'' These changes are reasonably designed
to implement the Reference Data Approach and clarify what information
would be stored in the CAT.
The Commission is also modifying Section 9.2 of Appendix D of the
CAT NMS Plan to delete a reference to Customer information data
attributes and a list of such data attributes, specifically Transformed
Identifier, Market Identifiers (Large Trader ID, LEI), Type of Account,
Firm Designated ID, Primer Broker ID, Bank Depository ID, and Clearing
Broker. Instead, the first paragraph of modified Section 9.2 of
Appendix D of the CAT NMS Plan would state that, ``[t]he following CCID
Transaction Enrichment Data must be accepted by the Central Reposito
[…truncated; see source link]Indexed from Federal Register on April 1, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.