DGL REVISED 2020 Rule 608 Supporting Statement_07.14.2020

SUPPORTING STATEMENT
Paperwork Reduction Act Information Collection Submission for Rule 608
OMB Control Number 3235-0500
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

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. Accordingly, the Commission
requested, on an emergency basis, a reinstatement of the previously approved information
collection requirements associated with OMB Control Number 3235-0500. This reinstatement
was granted on May 28, 2020.
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
Regulation NMS and that is not affiliated with any person (other than a natural person) that is not
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

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 required Federal Register notice with a 60-day comment period soliciting comments
on this collection of information was published. No public comments were received.
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
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

submit confidential information to the Commission, that information will be kept confidential
subject to the provisions of applicable law. 23
11.

Sensitive Questions

A Privacy Impact Assessment (PIA) is not required because information is not collected
via an SEC IT system. A system of records contains information that is retrieved by an
individual's name or other unique identifier. Rule 608 does not involve personally identifiable
information (PII) and, therefore, no system of records notice (SORN) is required. If an agency
were to request that an individual furnish personal information (e.g., name, date of birth, Social
Security number, etc.) for a system of records, then a Privacy Act Statement (PAS) would be
required. However, because Rule 608 does not involve a system of records, no accompanying
PAS is required.
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 25 SROs 24 incur the following reporting and/or thirdparty disclosure burdens:
Summary of Hourly Burdens
Name of
Information
Collection

Number
of
Entities
Impacted

Small
Business
Entities
Affected

Type of
Burden

Ongoing
or
Initial
Burden

Annual
Responses
per Entity

Approximate
Burden per
Entity per
Response

Approximate
Annual
Burden Per
Entity

Approximate
Annual
Industry
Burden

New NMS
Plan

25

0

3rd-Party
Discl.

Ongoing

1

5

5

125

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., MEMX LLC, 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.
5

NMS Plan
Amendments

25

Plan
Processor
Selections

25

0

0

Reporting

Ongoing

1 25

170

34

850

3rd-Party
Discl.

Ongoing

13

0.38

5

124

Reporting

Ongoing

13

34

442

11,050

Reporting

Ongoing

1 26

34

11.33

283

TOTAL ANNUAL INDUSTRY BURDEN

12,432

These burdens are discussed further below.
a.

New NMS Plans

The Commission estimates that the SROs would 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 aggregate 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
materials would result, on average, in an annual ongoing burden of approximately 34 hours per
SRO28 and an aggregate 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
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.

28

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

29

34 burden hours * 25 Participants = 850 burden hours.
6

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 a year per SRO30 and an aggregate burden of
approximately 11,050 hours per year.31
The Commission further estimates that the SROs would incur, on average, an ongoing thirdparty 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, on average, in an annual burden of
approximately 5 hours per SRO32 and an aggregate annual burden of approximately 124
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 aggregate annual burden of
approximately 283 hours. 35
hours.

The above estimates result in a total annual industry burden of approximately 12,432
13.

Costs to Respondents

The Commission estimates that 25 SROs36 will incur the following costs in connection with
the collections of information required by Rule 608:
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 = 4.94 burden hours per SRO per year.

33

4.94 burden hours * 25 Participants = 123.5 burden hours rounded up to 124. A previous
submission by the Commission stated the aggregate burden as 125 hours due to rounding
errors.

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 hours rounded down to 233.

36

See note 24 supra.
7

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

TOTAL ANNUAL INDUSTRY COST

$483,333

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 aggregate 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
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 aggregate annual costs of
approximately $325,000.42
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.

41

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

42

$13,000 per year * 25 SROs = $325,000.
8

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 aggregate annual costs of approximately $8,333. 44
The above estimates result in a total annual industry cost of approximately $483,333.
14.

Cost to Federal Government

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

Changes in Burden

Not applicable. The Commission has not revised its burden or cost estimates since its last
submission of an information collection request for Rule 608.
16.

Information Collection Planned for Statistical Purposes

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

OMB Expiration Date Display Approval

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
B.

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

43

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

44

$333.33 per SRO per year * 25 SROs = $8,333.33 rounded down to $8,333.
9