3235-0500 Supporting Statement (May 2020 Reinstatement) (Final Version)

SUPPORTING STATEMENT
Paperwork Reduction Act Information Collection Submission for Rule 608
OMB Control Number 3235-0500
Reinstatement with Change
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

JUSTIFICATION
1.

Necessity of Information Collection

Section 11A(a)(3)(B) of the Securities Exchange Act of 1934 (the “Act”) enables the
Securities and Exchange Commission (the “Commission”) to act, in furtherance of its statutory
directive to facilitate the establishment of a national market system for securities, 1 “by rule or by
order, to authorize or require self-regulatory organizations to act jointly with respect to matters
as to which they share authority under [the Act] in planning, developing, operating, or regulating
a national market system (or a subsystem thereof) or one or more facilities thereof . . . .” 2 This
section, however, does not specify any procedures for filing or amending national market system
plans (“NMS Plans”).
The Commission adopted Rule 11Aa3-2 to establish such procedures. 3 This rule was
later re-numbered as Rule 608 with the adoption of Regulation NMS, but the information
collection requirements of the rule remained the same: 4
a.

New NMS Plans. Self-regulatory organizations (“SROs”) filing a new NMS Plan
must submit the text of the NMS Plan to the Commission, along with a statement
of purpose, 5 and, if applicable, specified supporting materials. Such materials
may include: (1) a copy of all governing or constituent documents; 6 (2) a
description of the manner in which the NMS Plan, and any facility or procedure
contemplated by the NMS Plan, will be implemented; 7 (3) a listing of all
significant phases of development and implementation contemplated by the NMS

1

See 15 U.S.C. 78k-1(a)(2).

2

See 15 U.S.C. 78k-1(a)(3)(B).

3

See Securities Exchange Act Release No. 17580 (Feb. 26, 1981), 46 FR 15866 (Mar. 10,
1981).

4

See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37570
(June 29, 2005).

5

See 17 CFR 242.608(a)(1).

6

See 17 CFR 242.608(a)(4)(i).

7

See 17 CFR 242.608(a)(4)(ii)(A).

Plan, including a projected completion date for each phase; 8 (4) an analysis of the
competitive impact of implementing the NMS Plan and any facility or procedure
contemplated by the NMS Plan; 9 (5) a description of any written agreements or
understandings between or among plan participants or sponsors relating to
interpretations of the NMS Plan or conditions for becoming a plan participant or
sponsor; 10 and (6) a description of the manner in which any facility contemplated
by the NMS Plan shall be operated. 11 Participants or sponsors to the NMS Plan
must ensure that a current and complete version of the NMS Plan is posted on a
designated website or a plan website after being notified by the Commission that
the NMS Plan is effective. Each plan participant or sponsor must also provide a
link on its own website to the current version of the NMS Plan. 12
b.

NMS Plan Amendments. SROs proposing to amend an existing NMS Plan must
submit the text of the amendment to the Commission, along with a statement of
purpose, 13 and, if applicable, the supporting materials described above, 14 as well
as a statement that the amendment has been approved by the plan participants or
sponsors in accordance with the terms of the NMS Plan. 15 Participants or
sponsors to the NMS Plan must ensure that any proposed amendments are posted
to a designated website or a plan website after filing the amendments with the
Commission and that those websites are updated to reflect the current status of the
amendment and the NMS Plan. Each plan participant or sponsor must also
provide a link on its own website to the current version of the NMS Plan. 16

c.

Plan Processor Selections. To the extent that a plan processor is required for any
facility contemplated by a NMS Plan, the plan participants or sponsors must file
with the Commission a statement identifying the plan processor selected,
describing the material terms under which the plan processor is to serve, and
indicating the solicitation efforts, if any, for alternative plan processors, the
alternatives considered, and the reasons for the selection of the plan processor. 17

8

See 17 CFR 242.608(a)(4)(ii)(B).

9

See 17 CFR 242.608(a)(4)(ii)(C).

10

See 17 CFR 242.608(a)(4)(ii)(D).

11

See 17 CFR 242.608(a)(5).

12

See 17 CFR 242.608(a)(8)(i).

13

See 17 CFR 242.608(a)(1).

14

See notes 5-11 and associated text supra for a description of these supporting materials.

15

See 17 CFR 242.608(a)(4)(ii)(E).

16

See 17 CFR 242.608(a)(8)(i)-(ii).

17

See 17 CFR 242.608(a)(6).
2

Although described in more detail in this submission, these information collection requirements
were previously submitted and approved in connection with Rule 11Aa3-2 under OMB Control
Number 3235-0500. Commission staff inadvertently and mistakenly discontinued this OMB
Control Number on December 10, 2007, following the re-numbering of Rule 11Aa3-2 as Rule
608, even though the information collection requirements imposed by Rule 608 remained in
place and unchanged from those imposed by Rule 11Aa3-2. Accordingly, the Commission is
requesting, on an emergency basis, a reinstatement of the previously approved information
collection requirements associated with OMB Control Number 3235-0500.
2.

Purpose and Use of the Information Collection

The information collected pursuant to Rule 608 is necessary to further the abovedescribed statutory directive to facilitate the establishment of a national market system for
securities. 18 The collected information enables the Commission to determine whether to
authorize the creation or amendment of NMS Plans. It also enables the Commission to better
monitor and regulate existing NMS Plans and the SROs that are participants or sponsors to such
NMS Plans. These functions would be much more difficult without the information collected
pursuant to Rule 608.
3.

Consideration Given to Improved Information Technology

Rule 608 uses information technology to lessen the burden on the SROs that are
participants or sponsors to NMS Plans. While NMS Plans and NMS Plan amendments are still
submitted in paper form to the Commission, the SROs generally submit courtesy copies to the
Commission in electronic form, lessening the need for any additional copying or scanning. In
addition, much of the information collected pursuant to Rule 608 is posted electronically on a
website. The Commission further notes that it does not prohibit the SROs from using any kind
of information technology to facilitate the collection and/or preparation of the information
required by Rule 608.
4.

Duplication

Rule 608 will not result in, or require the collection of, duplicate information that is
otherwise available in a similar form.
5.

Effects on Small Entities

Rule 608 does not affect small entities. Rule 608 only imposes requirements on selfregulatory organizations that are national securities exchanges and national securities
associations. With respect to the national securities exchanges, the Commission’s definition of a
small entity is an exchange that has been exempt from the reporting requirements of Rule 601 of
18

See notes 1-2 and associated text supra. The above-described collections of information
also ensure that affected market participants have access, via a public and designated
website or a plan website, to a current and updated version of any effective NMS Plans.
3

Regulation NMS and that is not affiliated with any person (other than a natural person) that is not
a small business or small organization. 19 None of the national securities exchanges subject to the
amendments fall within this definition, and national securities associations similarly do not
qualify as a “small entity.” 20
6.

Consequences of Not Conducting Collection

The information collected pursuant to Rule 608 is necessary to further the abovedescribed statutory directive to facilitate the establishment of a national market system for
securities. 21 If the Commission did not collect this information, it would be more difficult for the
Commission to determine whether to approve the creation or amendment of NMS Plans. It
would also be more difficult for the Commission to monitor and regulate existing NMS Plans
and the SROs that are participants or sponsors to such NMS Plans.
Moreover, the information collected pursuant to Rule 608 cannot be collected less
frequently. The information submitted with each NMS Plan, amendment, or selection of a plan
processor is only submitted once.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

The SROs are required by law to retain the records and information that are collected
pursuant to Rule 608 for a period of not less than 5 years, the first 2 years in an easily accessible
place. 22 Rule 608 does not affect this existing requirement.
There are no other special circumstances, and this collection is otherwise consistent with
the guidelines in 5 CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

The Commission and staff participate in ongoing dialogue with representatives of
various market participants through public conferences, meetings, and informal exchanges.
However, because the Commission is requesting a reinstatement of a previously approved
information collection on an emergency basis, the Commission has not yet specifically solicited
comments on this information collection. If reinstatement is granted, the Commission will
publish a notice soliciting comments in the Federal Register prior to seeking an extension of the
term of the information collection.
19

See 17 CFR 240.0-10(e).

20

See 13 CFR 121.201.

21

See notes 1-2 and associated text supra. The above-described collections of information
also ensure that affected market participants have access, via a public and designated
website or a plan website, to a current and updated version of any effective NMS Plans.

22

See 17 CFR 240.17a-1(b).
4

9.

Payment or Gift

No payment or gift is provided to respondents.
10.

Confidentiality

The text of the NMS Plans and any amendments will not be confidential, but published
on a designated website or a plan website. To the extent that Rule 608 requires the SROs to
submit confidential information to the Commission, that information will be kept confidential
subject to the provisions of applicable law. 23
11.

Sensitive Questions

No information of a sensitive nature, including Personally Identifiable Information (PII),
is required under this collection of information.
12.

Burden of Information Collection

As noted above, Rule 608 establishes the following information collection requirements in
connection with (1) New NMS Plans, (2) NMS Plan Amendments, and (3) Plan Processor
Selections. The Commission estimates that up to 25 SROs24 incur the following reporting and/or
third-party disclosure burdens:

23

See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing the public availability of
information obtained by the Commission).

24

Currently, the following SROs are participants to a NMS Plan: BOX Exchange, LLC,
Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe
EDGA Exchange Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, Inc., Financial
Industry Regulatory Authority, Inc., Investors Exchange LLC, Long Term Stock
Exchange, Inc., Miami International Securities Exchange LLC, MIAX Emerald, LLC,
MIAX PEARL, LLC, NASDAQ BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC,
Nasdaq MRX, LLC, NASDAQ PHLX LLC, The NASDAQ Stock Market LLC, New
York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago,
Inc., and NYSE National, Inc. One additional SRO – MEMX LLC – may become a
participant to NMS Plans in the future and has therefore been included in the estimated
number of respondents.
5

Summary of Hourly Burdens
Name of
Information
Collection

New NMS Plan

NMS Plan
Amendments

Plan Processor
Selections

Number of
Entities
Impacted

25

25

25

Small
Business
Entities
Affected

0

0

0

Type of
Burden

Ongoing
or Initial
Burden

Annual
Responses
per Entity

Burden
per
Entity
per
Response

Annual
Burden
Per
Entity

Annual
Industry
Burden

3rd-Party
Discl.

Ongoing

1

5

5

125

Reporting

Ongoing

1 25

170

34

850

3rd-Party
Discl.

Ongoing

13

0.38

5

125

Reporting

Ongoing

13

34

442

11,050

Reporting

Ongoing

1 26

34

11.33

283.33

TOTAL ANNUAL INDUSTRY BURDEN

12,433.33

These burdens are discussed further below.
a.

New NMS Plans

The Commission further estimates that the SROs would further incur, on average, an
ongoing third-party disclosure burden of approximately 5 hours per year to keep a current and
complete version of the NMS Plan posted on a designated website or a plan website, and to provide
a link to the current version of the NMS Plan on its own website. This would result in an average
aggregated annual burden of approximately 125 hours.27
Although the burdens involved with the creation of a new NMS Plan can and will vary, the
Commission estimates that each SRO would incur, on average, a burden of approximately 170
hours to create and submit to the Commission a new NMS Plan, along with a statement of purpose,
and if, applicable, any of the specified supporting materials. The Commission believes that a new
NMS Plan would only be created approximately once every five years. Accordingly, the
Commission estimates that the creation and submission of a new NMS Plan and any related
25

The Commission estimates that a response would only be required once every five years.
The annual burdens included in this chart and detailed below therefore reflect burdens
that are annualized over five years. See notes 28-29 and associated text infra.

26

The Commission estimates that a response would only be required once every three
years. The annual burdens included in this chart and detailed below therefore reflect
burdens that are annualized over three years. See notes 34-35 and associated text infra.

27

5 burden hours * 25 Participants = 125 burden hours.
6

materials would result, on average, in an annual ongoing burden of approximately 34 hours per
SRO28 and an aggregated annual burden of approximately 850 hours. 29
b.

NMS Plan Amendments

Although the burdens involved with the development of a NMS Plan amendment can and
will vary, the Commission estimates that each SRO would incur, on average, a reporting burden of
approximately 34 hours to create and submit to the Commission a NMS Plan amendment and any
supporting materials. Because the Commission believes that approximately 13 NMS Plan
amendments will be submitted each year, the Commission estimates that the creation and
submission of NMS Plan amendments and any related materials would result, on average, in an
ongoing burden of approximately 442 hours per SRO30 and an aggregate burden of
approximately 11,050 hours.31
The Commission further estimates that the SROs would further incur, on average, an
ongoing third-party disclosure burden of approximately 0.38 hours to post any pending NMS Plan
amendments to a designated website or a plan website and to update such websites to reflect the
current status of the amendment and the NMS Plan. This would result, in average, in an annual
burden of approximately 5 hours per SRO 32 and an aggregated annual burden of
approximately 125 hours. 33
c.

Plan Processor Selections

Although the burdens involved with the selection of a plan processor can and will vary, the
Commission estimates that each SRO would incur, on average, a reporting burden of approximately
34 hours to submit to the Commission a statement identifying the plan processor selected and
supporting materials. The Commission further estimates that one plan processor will be selected
every three years. Accordingly, the Commission estimates that the preparation and submission of
materials related to the selection of a plan processor would result, on average, in an ongoing
annual burden of approximately 11.33 hours per SRO34 and an aggregated annual burden of
approximately 283.33 hours.35
The above estimates result in a total annual industry burden of 12,433.33 hours.
28

170 burden hours / 5 = 34 burden hours per year.

29

34 burden hours * 25 Participants = 850 burden hours.

30

34 burden hours * 13 NMS Plan amendments = 442 burden hours per SRO per year.

31

442 burden hours per SRO per year * 25 SROs = 11,050 burden hours.

32

0.38 burden hours * 13 NMS Plan amendments = 5 burden hours per SRO per year.

33

5 burden hours * 25 Participants = 125 burden hours.

34

34 burden hours / 3 years = 11.33 burden hours per SRO per year.

35

11.33 burden hours per SRO per year * 25 SROs = 283.33 burden hours.
7

13.

Costs to Respondents

The Commission estimates that up to 25 SROs36 will incur the following costs in connection
with the collections of information required by Rule 608:
Summary of Approximate Cost Burdens

Name of Information
Collection

Number of
Entities
Impacted

Small
Business
Entities
Affected

Type of
Cost

Ongoing
or Initial
Cost

Annual
Responses
per Entity

Cost per
Entity
per
Response

Annual Cost
Per Entity

Annual
Industry
Cost

New NMS Plans

25

0

Reporting

Ongoing

1

$30,000 37

$6,000

$150,000

NMS Plan Amendments

25

0

Reporting

Ongoing

13

$1,000

$13,000

$325,000

Plan Processor Selections

25

0

Reporting

Ongoing

1

$1,000 38

$333.33

$8,333.33

TOTAL ANNUAL INDUSTRY COST

$483,333.33

These burdens are described in more detail below.
a.

New NMS Plans

Although the costs involved with the creation of a new NMS Plan can and will vary, the
Commission estimates that each SRO would incur, on average, reporting costs of approximately
$30,000 in external public relations, legal, and consulting costs related to the development of a new
NMS Plan and any related supporting materials. The Commission believes that a new NMS Plan
would only be created approximately once every five years. Accordingly, the Commission
estimates that the creation of a new NMS Plan and any related materials would result, on average, in
ongoing annual costs of approximately $6,000 per SRO39 and aggregated annual costs of
approximately $150,000.40
b.

NMS Plan Amendments

Although the costs involved with the creation of a NMS Plan amendment can and will vary,
the Commission estimates that each SRO would incur, on average, reporting costs of approximately
$1,000 in external public relations, legal, and consulting costs related to the creation and submission
of a new NMS Plan and any related supporting materials. Because the Commission estimates that
36

See note 24 supra.

37

See note 25 supra; see also notes 39-40 and associated text infra.

38

See note 26 supra; see also notes 43-44 and associated text infra.

39

$30,000 / 5 = $6,000 per SRO per year.

40

$6,000 per SRO per year * 25 SROs = $150,000.
8

13 NMS Plan amendments would be filed each year, the Commission estimates that the creation
and submission of a NMS Plan amendment and any related materials would result, on average, in
ongoing annual costs of approximately $13,000 per SRO 41 and aggregated annual costs of
approximately $325,000.42
c.

Plan Processor Selections

The Commission estimates that each SRO would incur, on average, reporting costs of
approximately $1,000 in external legal and consulting costs related to the preparation and
submission of materials related to the selection of a plan processor. The Commission further
estimates that a plan processor would be selected approximately once every three years.
Accordingly, the Commission estimates that the preparation and submission of materials related to
the selection of a plan processor would result, on average, in ongoing annual costs of
approximately $333.33 per SRO 43 and aggregated annual costs of approximately $8,333.33.44
The above estimates result in a total annual industry cost of $483,333.33.
14.

Cost to Federal Government

The federal government will not incur a cost in connection with these collections of
information.
15.

Changes in Burden

Since its last submission of an information collection request for Rule 608, the
Commission has revised its burden and cost estimates, as summarized in this chart:
Type of Burden or Cost

Annual Industry
Burden or Cost

Annual Industry
Burden or Cost
Previously Approved

Change in
Burden or Cost

Reason for
Change

Total Reporting Burdens

12,433.33

433

12,000.33 Hours

Change in Agency
Estimate

Total Third-Party
Disclosure Burdens

250 Hours

120 Hours

130 Hours

Change in Agency
Estimate

Total Reporting Costs

$483,333.33

$0

$483,333.33

Change in Agency
Estimate

41

$1,000 * 13 NMS Plan amendments = $13,000 per SRO per year.

42

$13,000 per year * 25 SROs = $325,000.

43

$1,000 / 3 years = $333.33 per SRO per year.

44

$333.33 per SRO per year * 25 SROs = $8,333.33.
9

These burdens and costs have increased since the last submission of an information collection
request for a number of reasons. First, when the last information collection request was
submitted, there were only 10 SROs. There are now up to 25 SROs that must comply with the
provisions of Rule 608, which has resulted in a significant increase in the estimated annual
industry burdens. Second, when the last information collection request was submitted, only 6
NMS Plans were in force. There are currently 11 NMS Plans in place, 45 so the burdens and costs
related to the preparation and submission of new NMS Plans and NMS Plan amendments have
increased. Finally, in the years since the last submission of an information collection request for
Rule 608, the Commission’s experience with the creation and submission of new NMS Plans and
NMS Plan amendments has suggested that the estimated burdens and costs associated with these
requirements should be revised upwards.
16.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.
date.

OMB Expiration Date Display Approval

The Commission is not seeking approval to not display the OMB approval expiration
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.

45

These NMS Plans are: (1) the NMS Plan Governing the Consolidated Audit Trail; (2) the
NMS Plan to Address Extraordinary Market Volatility; (3) the NMS Plan for the
Selection and Reservation of Securities Symbols; (4) the Consolidated Tape Association
NMS Plan; (5) the Consolidated Quotation NMS Plan; (6) the NMS Plan Governing the
Collection, Consolidation, and Dissemination of Quotation and Transaction Information
for Nasdaq-Listed Securities Traded on Exchanges on an Unlisted Trading Privilege
Basis; (7) the NMS Plan Establishing Procedures Under Rule 605 of Regulation NMS;
(8) the Options Regulatory Surveillance Authority Plan; (9) the Options Listing
Procedure NMS Plan; (10) the Options Order Protection and Locked/Crossed Market
NMS Plan; and (11) the Options Price Reporting Facility NMS Plan. In addition, the
Commission has recently directed the SROs to submit a new NMS Plan. See Securities
Exchange Act Release No. 88827 (May 6, 2020), 85 FR 28702 (May 13, 2020). Once
this new NMS Plan is operational, three of the existing NMS Plans will cease to operate:
(1) the Consolidated Tape Association NMS Plan; (2) the Consolidated Quotation NMS
Plan; and (3) the NMS Plan Governing the Collection, Consolidation, and Dissemination
of Quotation and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis.
10

B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL
METHODS
This collection does not involve statistical methods.

11