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pdfSUPPORTING STATEMENT for the Paperwork Reduction Act Information Collection
Submission for the Market Data Infrastructure
New Information Collection Request (Adoption of Final Rule)
3235-0778
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
The national market system for the collection, consolidation, and dissemination of
information with respect to quotations for and transactions in national market system (“NMS”)
stocks (“NMS information”) has been an essential element in the success of the U.S. securities
markets. Congress recognized the importance of market information to the U.S. securities
markets with the enactment of Section 11A of the Securities Exchange Act of 1934 (“Exchange
Act”) 1 and the Commission has adopted rules under Regulation NMS that govern the provision
of market information in the national market system. 2
On February 14, 2020, the Commission proposed to update and modernize the national
market system for the collection, consolidation, and dissemination of NMS information by,
among other things, amending Regulation NMS. 3 Pursuant to the statutory authority provided
1
Section 11A(a)(2) of the Exchange Act (15 U.S.C. 78k-1(a)(2)) directs the Commission,
having due regard for the public interest, the protection of investors, and the maintenance
of fair and orderly markets, to use its authority under the Exchange Act to facilitate the
establishment of a national market system for securities in accordance with the
Congressional findings and objectives set forth in Section 11A(a)(1) of the Exchange Act
(15 U.S.C. 78k-1(a)(1)). Among the findings and objectives in Section 11A(a)(1) are that
“[n]ew data processing and communications techniques create the opportunity for more
efficient and effective market operations” and “[i]t is in the public interest and
appropriate for the protection of investors and the maintenance of fair and orderly
markets to assure . . . the availability to brokers, dealers and investors of information with
respect to quotations for and transactions in securities . . . . ” 15 U.S.C. 78k-1(a)(1)(B)
and 15 U.S.C. 78k-1(a)(1)(C), respectively.
2
See 17 CFR 242.600, 601, 602, and 603.
3
See Securities Exchange Act Release No. 34-88216 (February 14, 2020), 85 FR 16726
(Mar. 24, 2020) (File No. S7-03-20) (“Proposing Release”).
1
by the Exchange Act, 4 including Sections 3(b), 5 5, 6 6, 7 11A, 8 and 23(a) 9 thereof, the
Commission adopted the amendments, with certain modifications, on December 9, 2020. 10
The amendments contain two key elements. First, the Commission updated the content
of NMS information that is required to be collected, consolidated and disseminated as part of the
national market system under Regulation NMS. Second, the Commission amended the method
by which “consolidated market data,” as now defined, is collected, consolidated and
disseminated by introducing a decentralized consolidation model with competing consolidators,
which replaces the centralized consolidation model that relies on exclusive securities information
processors (“exclusive SIPs”). 11
Today, NMS information is disseminated via a centralized consolidation model, whereby
the self-regulatory organizations (“SROs”) provide certain NMS information for each NMS
stock to an exclusive SIP. The exclusive SIP then consolidates this NMS information and makes
it available to market participants. 12 Market participants also may independently consolidate
4
See 15 U.S.C. 78a.
5
15 U.S.C. 78c.
6
15 U.S.C. 78e.
7
15 U.S.C. 78f.
8
15 U.S.C. 78k-1.
9
15 U.S.C. 78w(a).
10
See Securities Exchange Act Release No. 34-90610 (December 9, 2020), 86 FR 18596
(April 9, 2020) (File No. S7-03-20) (“Adopting Release”).
11
An “exclusive processor” is defined in Section 3(a)(22)(B) of the Exchange Act as “any
[SIP] or [SRO] which, directly or indirectly, engages on an exclusive basis on behalf of
any national securities exchange or registered securities association, or any national
securities exchange or registered securities association which engages on an exclusive
basis on its own behalf, in collecting, processing, or preparing for distribution or
publication any information with respect to (i) transactions or quotations on or effected or
made by means of any facility of such exchange or (ii) quotations distributed or published
by means of any electronic system operated or controlled by such association.” A
securities information processor is defined in Section 3(a)(22) of the Exchange Act as
“any person engaged in the business of (i) collecting, processing, or assisting,
participating in, or coordinating the distribution or publication of information with
respect to transactions in or quotations for any security (other than an exempted security)
or (ii) distributing or publishing (whether by means of a ticker tape, a communications
network, a terminal display device, or otherwise) on a current and continuing basis,
information with respect to such transactions or quotations.”
12
See Rule 603(b) of Regulation NMS. Rule 603(b) provides that all information for an
individual NMS stock must be disseminated through a single plan processor. 17 CFR
242.603(b). See Rule 600(b)(59), which defines a plan processor as “any self-regulatory
2
NMS information by purchasing individual exchange proprietary market data products and
consolidating that information for their own use, or obtain NMS information that has been
consolidated by a vendor that provides a data aggregation service.
The Commission amended Regulation NMS to better achieve the goal of assuring “the
availability to brokers, dealers and investors of information with respect to quotations for and
transactions in securities” 13 that is prompt, accurate, reliable, and fair. 14 The Commission
believes that the amendments promote fair and efficient markets, facilitate the best execution of
investor orders, and reduce information asymmetries between market participants who currently
rely on market data provided through the exclusive SIPs and those who purchase the proprietary
market data products offered by the national securities exchanges.
The amendments, as adopted, establish seven new collections of information.
1. Registration requirements and Form CC. Rule 614(a)(1)(i) requires each
competing consolidator to register with the Commission by filing Form CC
electronically in accordance with the instructions contained on the form.
Competing consolidators will be required to file amendments to the form in
accordance with the rule and file notice of its cessation of operations.
2. Competing consolidator duties and data collection. Rule 614(d)(1)-(4) requires
competing consolidators to (i) collect from each SRO the information with respect
to quotations for and transactions in NMS stocks as provided in Rule 603(b); (ii)
calculate and generate consolidated market data products; (iii) make consolidated
market data products available to subscribers with the required timestamps on
terms that are not unreasonably discriminatory; and (iv) timestamp the
information collected from the SROs at certain specified times.
3. Competing consolidators’ public posting of Form CC. Rule 614(c) requires
competing consolidators to make public on its website a direct URL hyperlink to
the Commission website that contains each effective initial Form CC, as
amended, order of ineffective initial Form CC, and Form CC amendments to an
effective Form CC.
4. Recordkeeping. Rule 614(d)(7) requires each competing consolidator to keep and
preserve at least one copy of all documents as defined in the rule for a period of
organization or securities information processor acting as an exclusive processor in
connection with the development, implementation and/or operation of any facility
contemplated by an effective national market system plan.” 17 CFR 242.600(b)(59).
13
Section 11A(a)(1)(C)(iii), 15 U.S.C. 78k-1(a)(1)(C)(iii).
14
Section 11A(c)(1)(B), 15 U.S.C. 78k-1(c)(1)(B). Section 11A(c)(1)(B) provides the
Commission with the authority to prescribe rules and regulations as necessary or
appropriate in the public interest, for the protection of investors or otherwise in
furtherance of the purposes of the Exchange Act to “assure the prompt, accurate, reliable,
and fair collection, processing, distribution, and publication of information with respect
to quotations for and transactions in such securities and the fairness and usefulness of the
form and content of such information.”
3
no less than five years, the first two in an easily accessible place. Rule 614(d)(8)
requires each competing consolidator, upon request of any representative of the
Commission, to promptly furnish copies of any documents to such representative.
5. Reports and Reviews. Rule 614(d)(5) requires competing consolidators to publish
on their websites certain monthly performance metrics. Rule 614(d)(6) requires
competing consolidators to publish certain monthly data quality information.
6. Amendment to the effective national market system plan(s) for NMS stocks. Rule
614(e) requires the participants to the effective national market system plan(s) for
NMS stocks to submit an amendment to such plan(s) within 150 days of the
effectiveness of the amendments that contain certain specified provisions.
7. Collection and dissemination of information by national securities exchanges and
national securities associations. The amendment to Rule 603(b) requires every
national securities exchange on which an NMS stock is traded and the national
securities association to make available to all competing consolidators and selfaggregators all information with respect to quotations for and transactions in
NMS stocks, including all data necessary to generate consolidated market data
products, in the same manner and using the same methods, including all methods
of access and using the same format as such exchange or association makes
available any information with respect to quotations for and transactions in NMS
stocks to any person.
These collections of information are necessary to further the national market system
objectives set forth in Section 11A(a)(1) of the Exchange Act. These objectives include the
economically efficient execution of orders; fair competition among broker-dealers, among
exchange markets, and between exchange markets and markets other than exchange markets; the
availability of information with respect to quotations for and transactions in securities; and the
practicability of brokers executing investors’ orders in the best market. Without the
amendments, the national market system for the collection, consolidation, and dissemination of
consolidated market data will not be modernized and updated. As discussed in the Adopting
Release, the current centralized consolidation model does not contain the data elements that
market participants, including investors, need to trade competitively in the markets and is
meaningfully slower than the proprietary data provided by the national securities exchanges.
2.
Purpose and Use of the Information Collection
The purpose of the information collection is to update and modernize the NMS
information that is collected, consolidated, and disseminated under the rules of the national
market system and the method by which such information is made available to market
participants. The registration requirement under Rule 614(a)(1) and (2) and Form CC provide
information to the Commission and market participants. The Commission will gather
information through the Form CC to determine whether to declare ineffective an initial Form
CC. The information will also be used by market participants to evaluate competing
consolidators. Under Rule 614, competing consolidators are required to keep certain records,
which facilitate the Commission’s oversight of competing consolidators, and to publish certain
monthly performance statistics, which provide transparency with respect to the services and
performance of competing consolidators. Competing consolidators and self-aggregators must
4
collect market data information from the SROs to generate consolidated market data products.
The SROs will need to collect market data information that they will then have to provide to
competing consolidators and self-aggregators for the purposes of generating consolidated market
data products. Finally, the SROs must file an amendment to the effective national market system
plan(s) to reflect the new role and functions of the plan(s). The collections of information are
necessary to further the national market system objectives set forth in Exchange Act Section
11A(a)(1) and Regulation NMS. These objectives include the economically efficient execution
of orders; fair competition among broker-dealers, among exchange markets, and between
exchange markets and markets other than exchange markets; the availability of information with
respect to quotations for and transactions in securities; and the practicability of brokers executing
investors’ orders in the best market.
3.
Consideration Given to Improved Information Technology
The amendments use information technology to lessen the burden on the respondents.
Form CC will be electronically filed with the Commission and publicly posted on the
Commission’s and competing consolidators’ websites. The amendments modernize the manner
in which consolidated market data, as now defined, is collected, calculated, and disseminated to
market participants by introducing competing consolidators who may compete for subscribers by
utilizing the latest information technology for the collection, consolidation and dissemination of
consolidated market data products. In addition, self-aggregators will be able to use the
information technology they choose to support their market data requirements. The Commission
believes that the amendments will address the issues raised about the latencies that exist with the
information technology that is currently used to collect, calculate, and disseminate NMS
information.
4.
Duplication
The amendments will not result in, or require the collection of, duplicate information that
is otherwise available in a similar form. While each SRO publishes its own market data via
proprietary data feeds for a fee, the proprietary data feeds do not provide the exact information in
a consolidated manner as required in the amendment.
5.
Effects on Small Entities
The Commission believes that the requirements under the amendments will not affect
small entities. 15 The amendments impose requirements on national securities exchanges and
FINRA, and on entities that act as competing consolidators. 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 a small business or small organization. 16
None of the national securities exchanges subject to the amendments fall within this definition.
15
See Adopting Release, supra note 10, at Part VI.
16
See 17 CFR 240.0-10(e).
5
Similarly, FINRA does not qualify as a small entity. 17 The Commission believes that no
competing consolidators will be small entities.
6.
Consequences of Not Conducting Collection
The information required by the amendments require national securities exchanges and
associations to make available to competing consolidators and self-aggregators the information
with respect to quotations for and transactions in NMS stocks that is necessary to generate
consolidated market data. Further, competing consolidators must collect, calculate and generate
consolidated market data products and make such data available to market participants. The
Commission will receive from competing consolidators information on Form CC, and competing
consolidators are required to maintain records and publish performance data and other
information on their websites on a monthly basis.
The Commission believes that the amendments promote fair and efficient markets,
facilitate the best execution of investor orders, and reduce information asymmetries between
market participants who currently rely on market data provided through the exclusive SIPs and
those who purchase the proprietary market data products offered by the national securities
exchanges. Without the collection of information, the goals of Section 11A of the Exchange Act
and the rule’s intended benefits would not be achieved. The SROs would not be required to
make available to competing consolidators and self-aggregators quotation and transaction
information necessary to generate consolidated market data. Further, this would prevent
competing consolidators and self-aggregators from generating consolidated market data and
would prevent competing consolidators from making such data available to investors and other
market participants. In addition, if the information on Form CC is not collected, market
participants would not be able to compare and evaluate competing consolidator services and the
Commission would not be able to assess whether to declare an initial Form CC as ineffective.
7.
Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)
Competing consolidators are required to keep and preserve at least one copy of all
documents, including all correspondence, memoranda, papers, books, notices, accounts and such
other records as shall be made or received by it in the course of its business as such and in the
conduct of its business. The amendment requires competing consolidators to keep these
documents for a period of no less than five years, the first two years in an easily accessible place.
This requirement is consistent with current SEC rules for SROs. 18
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
17
See 13 CFR 121.201.
18
See, e.g., Rule 17a-1, 17 CFR 240.17a-1.
6
The Commission requested comment on the information collection requirements of the
amendments in the Proposing Release, 19 a copy of which is attached. The burden and costs for
filing ongoing Form CC Amendments were revised upon further Commission consideration and
the evaluation of a comment letter that stated that competing consolidators would amend their
fees more than once a year, which would require an amendment to a competing consolidator’s
Form CC. 20 The ongoing costs to post on its website a direct URL hyperlink to the
Commission’s website changed for the same reason. 21 The estimated burden and costs incurred
by potential competing consolidators to build or upgrade systems to comply with proposed Rules
614(d)(1)-(d)(4) were increased due to further Commission consideration and evaluation of the
view expressed by a commenter that the costs should be increased. 22 In addition, the
Commission and staff participate in ongoing dialogue with representatives of various market
participants through public conferences, meetings, and informal exchanges. Any comments
received on this rulemaking were posted on the Commission’s public website and made available
through www.sec.gov/rules/proposed.shtml. The Commission considered all comments received
prior to publishing the final rule, and explained in the Adopting Release how the final rule
responds to such comments, in accordance with 5 C.F.R. 1320.11(f).
9.
Payment or Gift.
No payment or gift is provided to respondents.
10.
Confidentiality
The Form CC and amendments to the effective national market system plan(s) will not be
confidential; they will be posted on the Commission’s public website. Competing consolidators
will make available to subscribers consolidated market data products, which therefore will not be
confidential. Competing consolidator records will be available to the Commission and other
regulators. The reports and reviews of competing consolidators will be published on competing
consolidator websites and will not be confidential. Finally, the exchanges and associations will
make available to competing consolidators and self-aggregators quotation and transaction
information. Accordingly, no assurances of confidentiality are necessary.
11.
Sensitive Questions
The information collection collects basic personally identifiable information
(PII) that may include name, telephone and fax number, email address, user ID and job
title. In accordance with Section 208 of the E-Government Act of 2002, the agency has
conducted a Privacy Impact Assessment (PIA) of the SRO Rule Tracking
System/Electronic Form Filing System (SRTS/EFFS) PIA, in connection with this
collection of information. The SRTS/EFFS PIA, published on September 30, 2013, is
19
See note 3 supra.
20
See Adopting Release, supra note 10, at 86 FR at 18709.
21
Id.
22
Id. at 18709-10, 18713, 18714.
7
provided as a supplemental document and is also available at
https://www.sec.gov/privacy; this PIA is currently in the process of being updated.
The agency has determined that the information collection constitutes a system
of record for purposes of the Privacy Act and is covered under System of Records
Notice (SORN) # 70, published on February 15, 2018. SORN # 70 is provided as a
supplemental document and is also available at https://www.sec.gov/privacy.
12.
Burden of Information Collection
As noted above, the amendments establish new collections of information. The
Commission anticipates that the respondents will incur the following reporting, recordkeeping,
or third-party disclosure burdens.
Name of
Information
Collection
Form CC
Form CC
Amendment Initial
Form CC
Amendment Ongoing
Form CC
Cessation
CC Duties and
Data
Collection
Public Posting
of Form CC Initial
Type of
Burden
A
Number of
Entities
Impacted
Summary of Approximate Hourly Burdens
B
C
D
E
Annual
Initial
Initial
Ongoing
Responses
Burden
Burden
Burden
per Entity
per
Annualized
per Entity
Entity
per Entity
per
per
per
Response
Response
Response
C/3
F
Annual
Burden per
Entity per
Response
G
Total
Annual
Burden per
Entity
H
Total Industry
Burden
F*B
(except as
noted)
66.77
4
534.16
32
0
0
G*A
(except as noted)
Small
Business
Entities
Affected
Reporting
Reporting
8
8
1
2
200.3
6
66.77
2
0 23
0
D+E
(except as
noted)
66.77
2
Reporting
8
6
0
0
6.15
6.15
36.9 24
295.2 25
0
Reporting
8
1
2
0.67
0
0.67
0.67
5.36
0
2 (market
data
aggregation
firms)
1 (brokerdealer)
2
(exclusive
SIPs)
2 (new
entrants)
1 (SRO)
8
1
2,200
733.33
1,320
2,053.33
2,053.33
4,106.66
0
1
2,200
733.33
1,320
2,053.33
2,053.33
2,053.33
0
1
4,400
1,466.67
1,320
2,786.66
2,786.66
5,573.33
0
1
8,800
2,933.33
1,320
4,253.33
4,253.33
8,506.66
0
1
1
8,800
0.5
2,933.33
0.167
1,320
0
4,253.33
0.167
4,253.33
0.167
4,253.33
1.336
0
0
Third Party
Third Party
23
The ongoing burdens for Form CC are reflected in the following line describing Form CC
amendments.
24
6 (# of responses per entity in each subsequent year) x 6.15 hours (ongoing burden per
entity per response) = 36.9 hours.
25
36.9 hours (the annual burden per entity for each subsequent year) x 8 (# of entities
impacted) = 295.2 hours.
8
Name of
Information
Collection
Public Posting
of Form CC Ongoing
CC
Recordkeeping
CC Monthly
Reports
NMS Plans
Amendment
SRO Market
Data
Type of
Burden
A
Number of
Entities
Impacted
B
Annual
Responses
per Entity
C
Initial
Burden
per
Entity
per
Response
D
Initial
Burden
Annualized
per Entity
per
Response
C/3
E
Ongoing
Burden
per Entity
per
Response
F
Annual
Burden per
Entity per
Response
G
Total
Annual
Burden per
Entity
H
Total Industry
Burden
F*B
(except as
noted)
1.5
12
0
G*A
(except as noted)
Small
Business
Entities
Affected
Third Party
8
6
0
0
0.25
D+E
(except as
noted)
0.25
Recordkeeping
8
1
40
13.33
20
33.33
33.33
266.64
0
Reporting
8
12
20.5
6.833
11
17.833
214
1,712
0
20.263
20.263
384.997
0
469.33
469.33
7,978.61
0
Reporting
19
1
22.105
Third Party
17
1
220
26
7.368
12.895
73.33
396
27
Total Annual Burden
35,715.61
Registration Requirements and Form CC
The respondents to this collection of information will be the 8 entities that the
Commission estimates may register as competing consolidators. Each SIP that wishes to register
as a competing consolidator must file a Form CC to register with the Commission. Thereafter,
each competing consolidator must file an annual report and an amendment, if necessary.
The Commission estimates that each competing consolidator will incur an initial, onetime reporting burden of 200.3 hours to complete the initial Form CC with the information
required, including all exhibits and file the Form CC with the Commission (including 0.3 hours
to access the Commission’s Electronic Form Filing System). This would result in an estimated
annual burden of 66.77 hours per respondent, and 534.16 hours in the aggregate. 28 Competing
consolidators will have to submit amendments to Form CC when necessary, including Annual
Reports correcting information that has become inaccurate or incomplete, and Material
Amendments that must be filed prior to any material change in the pricing, connectivity, or
products offered. The Commission estimates that, during the first year, a competing consolidator
will incur an initial reporting burden per response (annualized) of 6 hours to complete and file
such materials. In each year thereafter, the Commission estimates that a competing consolidator
will incur an ongoing annual burden of approximately 6.15 hours per response. This would
result in estimated annual burdens per respondent of 4 hours 29 during the first year and
26
(420 initial burden hours per response filed jointly by respondents) / (19 respondents) =
22.105 hours per respondent.
27
(245 ongoing burden hours per response filed jointly by respondents) / (19 respondents) =
12.895 hours.
28
66.77 (initial one-time burden, annualized over the three-year approval period) x 8
respondents = 534.16 hours.
29
2 (# of responses per entity during the first year) x 2 hours (initial burden annualized per
entity per response) = 4 hours.
9
36.9 hours each year thereafter. 30 Correspondingly, the aggregate industry burdens would
be 32 hours during the first year 31 and 295.2 hours each year thereafter. 32 When a
competing consolidator ceases operation, it must prepare and file a cessation form on Form CC.
The Commission estimates that each competing consolidator would incur an initial one-time
reporting burden of 2 hours to prepare and file the cessation form. This would result in an
estimated annual burden of 0.67 hours per respondent, and 5.36 hours annually in the
aggregate. 33
Competing Consolidator Duties and Data Collection
The respondents to this collection of information will be the 8 entities that the
Commission estimates may act as competing consolidators. Each entity must collect from the
SROs quotation and transaction information for NMS stocks, calculate and generate consolidated
market data products, and make available to subscribers consolidated market data products.
The Commission expects different entities to act as competing consolidators: two market
data aggregation firms, one broker-dealer that currently aggregates market data for internal uses,
two entities that currently operate as exclusive SIPs, two new entrants, and one SRO. The
Commission has estimated the burdens for different types of entities based on the anticipated
changes to their systems necessary to collect SRO quotation and transaction information,
calculate and generate consolidated market data products, and make available consolidated
market data products to subscribers.
The Commission estimates that each market data aggregation firm will incur an initial,
one-time burden of 2,200 hours to modify its systems in order to operate as a competing
consolidator. The Commission further estimates that each market data aggregation firm will
incur an ongoing burden of 1,320 hours to maintain its systems. This would result in an
estimated annual burden of 2,053.33 hours per respondent and 4,106.66 hours annually in
the aggregate. 34
The Commission estimates that a broker-dealer will incur an initial, one-time burden of
2,200 hours to modify its systems in order to act as a competing consolidator. The Commission
30
6 (# of responses per entity in each subsequent year) x 6.15 hours (ongoing burden per
entity per response) = 36.9 hours.
31
4 hours (the annual burden per entity for the first year) x 8 (# of entities impacted) = 32
hours.
32
36.9 hours (the annual burden per entity for each subsequent year) x 8 (# of entities
impacted) = 295.2 hours.
33
0.67 (initial one-time burden, annualized over the three-year period) + 0 (no ongoing
burden) = 0.67 hours.
34
733.33 (initial one-time burden, annualized over the three-year period) + 1,320 (ongoing
burden) = 2,053.33 hours.
10
further estimates that the broker-dealer will incur an ongoing burden of 1,320 hours to maintain
its systems. This would result in an estimated annual burden of 2,053.33 hours per
respondent 35 and 2,053.33 hours in the aggregate.
The Commission estimates that each exclusive SIP will incur an initial, one-time burden
of 4,400 hours to modify its systems in order to act as a competing consolidator. The
Commission further estimates that each exclusive SIP will incur an ongoing burden of 1,320
hours to maintain its systems. This would result in an estimated annual burden of 2,786.66
hours per respondent 36 and 5,573.33 hours annually in the aggregate.
The Commission estimates that each new entrant will incur an initial, one-time burden of
8,800 hours to build systems in order to act as a competing consolidator. The Commission
further estimates that each new entrant will incur an ongoing burden of 1,320 hours to maintain
its systems. This would result in an estimated annual burden of 4,253.33 hours per
respondent 37 and 8,506.66 hours annually in the aggregate.
The Commission estimates that each SRO will incur an initial, one-time burden of 8,800
hours to build systems in order to act as a competing consolidator. The Commission further
estimates that each SRO will incur an ongoing burden of 1,320 hours to maintain its systems.
This would result in an estimated annual burden of 4,253.33 hours per respondent 38 and
4,253.33 hours annually in the aggregate.
Competing Consolidators Public Posting of Form CC
The respondents to this collection of information will be the 8 entities that the
Commission estimates may register as competing consolidators. Each entity must make public
on its website a direct URL hyperlink to the Commission’s website that contains each effective
initial Form CC, order of ineffective initial Form CC, and amendments to effective Form CCs.
The Commission estimates that each competing consolidator will incur an initial, one-time
burden of 0.5 hours to publicly post the URL hyperlink and ensure the link is correct. The
Commission further estimates that each competing consolidator will incur an ongoing burden of
1.5 hours 39 annually to maintain the link. This would result in an estimated annual burden of
35
733.33 (initial one-time burden, annualized over the three-year period) + 1,320 (ongoing
burden) = 2,053.33 hours.
36
1,466.67 (initial one-time burden, annualized over the three-year period) + 1,320
(ongoing burden) = 2,786.67 hours.
37
2,933.33 (initial one-time burden, annualized over the three-year period) + 1,320
(ongoing burden) = 4,253.33 hours.
38
2,933.33 (initial one-time burden, annualized over the three-year period) + 1,320
(ongoing burden) = 4,253.33 hours.
39
0.25 (ongoing burden per response per year) * 6 (ongoing responses per respondent per
year) = 1.5 hours per respondent per year
11
1.336 hours per respondent for the initial public posting of the Form CC 40 and 12 hours
annually per respondent to maintain the link.41
Competing Consolidators Recordkeeping
The respondents to this collection of information will be the 8 entities that the
Commission estimates may to act as competing consolidators. Each entity must keep and
preserve at least one copy of all documents made or received by it in the course of its business
and in the conduct of its business. These documents must be kept for a period of no less than
five years, the first two years in an easily accessible place. The Commission estimates that each
competing consolidator will incur an initial, one-time burden of 40 hours to comply with the
recordkeeping requirements. The Commission further estimates that each competing
consolidator will incur an ongoing burden of 20 hours to maintain the recordkeeping. This
would result in an estimated annual burden of 33.33 hours per respondent 42 and 266.64
hours annually in the aggregate.
Competing Consolidators Monthly Reports and Reviews
The respondents to this collection of information will be the 8 entities that the
Commission estimates may act as competing consolidators. Each entity must produce monthly
reports. The Commission estimates that each competing consolidator will incur an initial burden
of 246 hours to produce the monthly reports and post them publicly. 43 Accordingly, the
estimated initial burden per respondent, per response is 20.5 hours. 44 The Commission further
estimates that each competing consolidator will incur an ongoing burden of 132 hours to produce
and post the monthly reports. 45 This would result in an estimated annual burdens of
approximately 214 hours per respondent and approximately 1,712 hours for all
respondents. 46
40
0.167 (initial one-time burden, annualized over the three-year period) x 8 (respondents) =
1.336 hours.
41
1.5 (hours per respondent per year) * 8 (respondents) = 12 hours.
42
13.33 (initial one-time burden, annualized over the three-year period) + 20 (ongoing
burden) = 33.33 hours.
43
See Adopting Release, supra note 10, 86 FR at 18718.
44
246 hours (initial burden per respondent per year) / 12 (months per year) = 20.5 hours
(initial burden per respondent, per response).
45
The Commission estimates that each competing consolidator would incur an average
burden of 11 hours to prepare and make publicly available a monthly report in the format
required by Rules 614(d)(5) and (d)(6). See Adopting Release, supra note 10, 86 FR at
18719. 11 hours (ongoing burden per respondent for each monthly report) x 12 months =
132 hours (ongoing burden per respondent, per year).
46
6.833 hours (initial burden annualized over a three-year period per entity, per response) +
11 hours (ongoing burden per entity, per response) = 17.833 hours (annual burden per
12
NMS Plans Amendment
The respondents to this collection of information will be the 18 national securities
exchanges and the single national securities association who are participants in the effective
national market system plan(s) for NMS stocks. The respondents must amend the current
effective national market system plans to reflect the decentralized consolidation model for
disseminating consolidated market data products as well as make technology changes to collect
and provide timestamps. The Commission estimates that the participants collectively will incur
an initial, one-time reporting burden of 420 hours of legal and compliance time to prepare,
amend, and file the NMS plans. The Commission further estimates that the participants
collectively will incur an ongoing burden of 245 hours related to the NMS amendment (for
maintaining the required timestamps, conducting assessments of competing consolidators,
preparing an annual report, maintaining the list of the primary listing exchange for each NMS
stock, and calculating gross revenues). Because the Commission expects the 19 SRO
respondents to collectively file one response, this would result in an estimated annual
burden of 20.263 hours per respondent 47 and 384.997 hours annually in the aggregate.
SRO Market Data Collection and Dissemination
The respondents to this collection of information will be the 16 national securities
exchanges on which NMS stocks are traded and the single national securities association. Each
of these SROs must make available to all competing consolidators and self-aggregators all
information with respect to quotations for and transactions in NMS stocks, including all data
necessary to generate consolidated market data, in the same manner and using the same methods,
including all methods of access and the same format, as such SRO makes available any
information with respect to quotations for and transactions in NMS stocks to any person.
The Commission estimates that each of these SROs will incur an initial, one-time
reporting burden of 220 hours of legal, compliance, information technology, and business
operations personnel time to prepare and modify systems to generate and make available the
market data. The Commission further estimates that each SRO will incur an ongoing reporting
burden of 396 hours to collect the information necessary to generate consolidated market data.
This would result in an estimated annual burden of 469.33 hours per respondent48 and
7,978.61 hours annually in the aggregate.
respondent, per response). 17.833 hours (annual burden per respondent, per response) x
12 (# of responses per year) = 213.996 hours (total annual burden per respondent). 8 (# of
respondents) x 213.966 hours (total annual burden per respondent) = 1,711.968 hours
(total burden of all respondents).
47
7.368 (initial one-time burden, annualized over a three-year period) + 12.895 (ongoing
burden) = 20.263 hours.
48
73.33 hours (initial one-time burden, annualized over the three-year period) + 396 hours
(ongoing burden) = 469.33 hours.
13
13.
Costs to Respondents
The Commission believes that respondents will incur costs in connection with the
amendment. The Commission anticipates that the respondents will incur the following initial
and annual cost burdens.
Name of
Information
Collection
Form CC
Form CC
Amendment Initial
Form CC
Amendment Ongoing
Form CC
Cessation
CC Duties and
Data
Collection
Public Posting
of Form CC Initial
Public Posting
of Form CC Ongoing
CC
Recordkeeping
CC Monthly
Reports
NMS Plans
Amendment
SRO Market
Data
Type of
Burden
A
Number of
Entities
Impacted
B
Annual
Responses
per Entity
Summary of Dollar Costs
C
D
Initial Cost
Initial Cost
per Entity
Annualized
per
per Entity per
Response
Response
C/3
E
Ongoing
Cost per
Entity per
Response
F
Annual Cost
per Entity per
Response
G
Total Annual
Cost per
Entity
F*B (except
as noted)
$31,196.70
$1,868.00
Reporting
Reporting
8
8
1
2
$93,590.10
$2,802
$31,196.70
$934.00
$0 49
0
D+E (except
as noted)
$31,196.70
$934.00
Reporting
8
6
0
0
$2,872.05
$2,872.05
$17,232.30
Reporting
8
1
$934
$311.33
$0
$311.33
1
$826,750
$275,583.33
$5,141,895
1
$826,750
$275,583.33
1
1
$1,445,500
$2,683,000
Third Party
2 (market
data
aggregation
firms)
1 (brokerdealer)
2 (SIPs)
2 (new
entrants)
1 (SRO)
8
1
1
$2,683,000
0
Third Party
8
6
Recordkeeping
8
1
$8,720
Reporting
8
12
Reporting
19
Third Party
17
H
Total Industry
Cost
G*A (except as
noted)
Small
Business
Entities
Affected
$249,573.60
$14,944.00
0
0
0
$311.33
$137,858.40
each year
thereafter
$2,490.64
$5,417,478.33
$5,417,478.33
$10,834,956.66
0
$5,141,895
$5,417,478.33
$5,417,478.33
$5,417,478.33
0
$481,833.33
$894,333.33
$5,141,895
$5,141,895
$5,623,728.33
$6,036,228.33
$5,623,728.33
$6,036,228.33
$11,247,456.66
$12,072,456.66
0
0
$894,333.33
0
$5,141,895
$6,036,228.33
$0
$6,036,228.33
$0
$6,036,228.33
$0 50
0
0
0
$0
$0
$0 51
0
$2,906.67
$4,360
$7,266.67
$7,266.67
$58,133.36
0
$6,775.58
$2,258.53
$3,768.50
$6,027.03
$72,324.36
$578,594.88
0
1
$9.217.89
$3,072.63
$5,377.11
$8,449.74
$8,449.74
$160,545
0
1
$70,865
$23,621.67
$128,064
$151,685.67
$151,685.67
$2,578,656.39
0
Third Party
Total Annual Costs
$49,389,372.91
Registration Requirements and Form CC
The respondents to this collection of information are the 8 entities that the Commission
estimates may register as competing consolidators. Specifically, the Commission estimates an
49
The ongoing burdens for Form CC are reflected in the following line describing Form CC
amendments.
50
See infra text following note 155.
51
See infra text following note 155.
14
initial cost of $93,590.10 52 for internal legal costs related to the registration as competing
consolidators. This would result in an estimated annual cost of $31,196.70 per respondent. 53
This would result in an estimated annual cost for the industry of $249,573.60. When a
competing consolidator is required to amend its Form CC, it will have to file such amendment
with the Commission. This would result in an estimated annual cost for each respondent of
$934 per response during the first year and $2,872.05 per response each year thereafter.
This would result in an estimated annual cost of $1,868 per respondent in the first year and
$17,232 per respondent each year thereafter. 54 This would result in an estimated annual
costs for the industry of $14,944 during the first year and $137,858.40 each year
thereafter. 55 When a competing consolidator ceases operation, it must file a cessation form.
The Commission estimates that each competing consolidator would incur an initial cost of $934
for internal legal costs related to filing the cessation form. This would result in an estimated
annual cost of $311.33 per respondent, and $2,490.64 annually in the aggregate.
Competing Consolidator Duties and Data Collection
As noted above, the respondents to this collection of information will be the 8 entities
that the Commission estimates may act as competing consolidators. Each entity must collect
from the SROs quotation and transaction information for NMS stocks, calculate and generate
consolidated market data products, and make available such products to subscribers.
The Commission expects different entities to register as competing consolidators: two
market data aggregation firms, one broker-dealer, two entities that currently operate as exclusive
SIPs, two new entrants, and one SRO. The Commission has estimated the burdens for different
types of entities based on the anticipated changes to their systems necessary to collect SRO
quotation and transaction information, calculate and generate consolidated market data products,
and make available such products to subscribers.
The Commission estimates an initial cost of $826,750 and an ongoing cost of $5,141,895
per year for market data aggregation firms that act as competing consolidators, for internal
programming, legal, and external fees related to collect, consolidate, and aggregate market data.
52
This number represents each respondent’s initial one-time burden of $93,540.10 + $50 to
access EFFS.
53
$31,196.70 (initial, one-time cost, annualized over the three-year period) + $0 (ongoing
cost) = $31,196.70.
54
2 (# of responses per entity during the first year) x $934 (initial cost annualized per entity
per response) = $1,868; 6 (# of responses per entity each year after the first year) x
$2,872.05 (ongoing cost per entity per response) = $17,232.30.
55
$1,868 (total annual cost per entity in the first year) x 8 (# of entities impacted) = $14,944
(total industry costs during the first year); $17,232.30 (total annual cost per entity in each
year after the first year) x 8 (# of entities impacted) = $137,858.40 (total industry costs in
each year after the first year).
15
This would result in an estimated annual cost of $5,417,478.33 per respondent 56 and an
estimated annual cost for the industry of $10,834,956.66.
The Commission estimates an initial cost of $826,750 and an ongoing cost of $5,141,895
per year for broker-dealer firms that act as competing consolidators, for internal programming,
legal, and external fees related to collect, consolidate, and aggregate market data. This would
result in an estimated annual cost of $5,417,478.33 per respondent 57 and an estimated
annual cost for the industry of $5,417,478.33.
The Commission estimates an initial cost of $1,445,500 and an ongoing cost of
$5,141,895 per year for exclusive SIPs that act as competing consolidators, for internal
programming, legal, and external fees related to collect, consolidate, and aggregate market data.
This would result in an estimated annual cost of $5,623,728.33 per respondent 58 and an
estimated annual cost for the industry of $11,247,456.66.
The Commission estimates an initial cost of $2,683,000 and an ongoing cost of
$5,141,895 per year for new entrants that act as competing consolidators, for internal
programming, legal, and external fees related to collect, consolidate, and aggregate market data.
This would result in an estimated annual cost of $6,036,228.33 per respondent 59 and an
estimated annual cost for the industry of $12,072,456.66.
The Commission estimates an initial cost of $2,683,000 and an ongoing cost of
$5,141,895 per year for the SRO that acts as a competing consolidator, for internal programming,
legal, and external fees related to collect, consolidate, and aggregate market data. This would
result in an estimated annual cost of $6,036,228.33 per respondent 60 and an estimated
annual cost for the industry of $6,036,228.33.
Competing Consolidators Recordkeeping
The respondents to this collection of information will be the 8 entities that the
Commission estimates may act as competing consolidators. Each entity must keep and preserve
at least one copy of all documents made or received by it in the course of its business and in the
56
$275,583.33 (initial, one-time cost, annualized over the three-year period) + $5,141,895
(ongoing cost) = $5,417,478.33.
57
$275,583.33 (initial, one-time cost, annualized over the three-year period) + $5,141,895
(ongoing cost) = $5,417,478.33.
58
$481,833.33 (initial, one-time cost, annualized over the three-year period) + $5,141,895
(ongoing cost) = $5,623,728.33.
59
$894,333.33 (initial, one-time cost, annualized over the three-year period) + $5,141,895
(ongoing cost) = $6,036,228.33.
60
$894,333.33 (initial, one-time cost, annualized over the three-year period) + $5,141,895
(ongoing cost) = $6,036,228.33.
16
conduct of its business. The Commission estimates an initial cost of $8,720 and an ongoing cost
of $4,360 per year, for internal legal costs related to recordkeeping. This would result in an
estimated annual cost of $7,266.67 per respondent. 61 The Commission estimates that there
will be 8 competing consolidator respondents. This would result in an estimated annual cost
for the industry of $58,133.36.
Competing Consolidators Monthly Reports and Reviews
The respondents to this collection of information will be the 8 entities that the
Commission estimates may act as competing consolidators. Each entity must produce monthly
reports. The Commission estimates that the initial annual cost per respondent will be $81,307,
and the total initial annual costs for all respondents will be $650,456. 62 Accordingly, the
Commission estimates that the initial cost per respondent, per response will be approximately
$6,775.58, 63 and that the ongoing annual cost per respondent will be $45,222, and the total
ongoing costs for all respondents will be $361,776. 64 Accordingly, the Commission estimates
that the annual ongoing cost per respondent, per response will be approximately $3,768.50. 65
This would result in an estimated annual cost of $6,027.03 per respondent. 66 The
Commission estimates that there will be 8 competing consolidator respondents. This would
result in an estimated annual total cost per respondent of $72,324.36 and a total cost to the
industry of $578,594.88.67
NMS Plan Amendment
61
$2,906.67 (initial, one-time cost, annualized over a three-year period) + $4,360 (ongoing
cost) = $7,266.67.
62
See Adopting Release, supra note 10, 86 FR at 18718 ($80,507 total initial costs + $800
in external costs = $81,307; $644,056, total cost of all respondents + $6,400 in external
costs = $650,456).
63
$81,307 (total initial annual cost for per respondent) / 12 (# of responses per year) =
$6,775.58 (initial annual cost per respondent, per response). Correspondingly, the
Commission estimates that the initial annual cost per entity, per response, annualized
over a three-year period is $2,258.53.
64
See id. at 18719.
65
$45,222 (ongoing annual cost per respondent) / 12 (# of responses per year) = $3,768.50
(annual ongoing cost per respondent, per response).
66
$2,258.53 (initial cost per respondent, per response, annualized over a three-year period)
+ $3,768.50 (ongoing cost per respondent, per response) = $6,027.03 (annual cost per
entity, per response.
67
$6,027.03 (annual costs per respondent, per response) x 12 (# of responses per year) =
$72,324.36; $72,324.36 (total annual cost per respondent) x 8 (# of respondents) =
$578,594.88 (total costs of all respondents).
17
The respondents to this collection of information will be the 19 SROs who are
participants in the effective national market system plan(s) for NMS stocks. The respondents
must amend the current effective national market system plan(s) to reflect the new decentralized
consolidation model for disseminating consolidated market data as well as make technology
changes to collect and provide timestamps. The Commission estimates an initial cost of
$9,217.89 and an ongoing cost of $5,377.11 per SRO participant, for internal legal costs related
to preparing the NMS plan amendment. This would result in an estimated annual cost of
$8,449.74 per respondent. 68 Because the Commission expects the 19 SRO respondents to
collectively file one response, this would result in an estimated annual cost for the industry
of $160,545.
SRO Market Data Collection and Dissemination
The respondents to this collection of information will be 17 SROs. Each SRO must make
available to all competing consolidators and self-aggregators all information with respect to
quotations for and transactions in NMS stocks, including all data necessary to generate
consolidated market data, in the same manner and using the same methods, including all methods
of access and the same format, as such SRO makes available any information with respect to
quotations for and transactions in NMS stocks to any person. The Commission estimates an
initial cost of $70,865 and ongoing cost of $128,064 per year, for internal legal and programming
costs related to collecting and disseminating market data. This would result in an estimated
annual cost of $151,685.67 per respondent. 69 The Commission estimates that there will be 17
SRO respondents. This would result in an estimated annual cost for the industry of
$2,578,656.
14.
Cost to Federal Government
The Commission estimates it will cost the federal government $630,927 in order to build
out the current Form CC in the EFFS/SRTS system, which is $210,309 per year over three years.
The Commission previously estimated that it would cost $750,000 but is revising this estimate
downward in light of more recent technology budget planning information.
15.
Changes in Burden
The Commission has revised its burden estimate for the collections of information, as
summarized in this chart:
Name of
Information
Collection
Form CC
Amendment
Annual Industry
Burden/Cost
32 initial year; 295.2
thereafter / $14,944 the first
Annual Industry
Burden/Cost
Previously Reviewed
162.4 / $75,840.80
Increase (Decrease) in Burden/Cost
Reason for
Change
164.8 / $76,961.6
Increased
Ongoing
Responses (based
68
$3,072.63 (initial, one-time cost, annualized over the three-year period) + $5,377.11
(ongoing cost) = $8,449.74.
69
($23,621.67 initial, one-time cost, annualized over the three-year period) + ($128,064
ongoing cost) = $151,685.67.
18
year; $137,858.40 each year
thereafter
CC Duties and
Data Collection
on further
Commission
consideration and
comments
received);
corrected initial
burden hours
2 (market data
aggregation
firms)
4,106.66 / $10,834,956.66
1,680 /
$10,065,056.66
2,426.66/769,900
1 (broker-dealer)
2,053.33/ $5,417,478.33
1,680 /
$10,065,056.66
373.33/(4,647,578.33)
2 (SIPS)
5,573.33 / $11,247,456.66
2,280 /
$10,202,556.66
3, 293.33/1,044,900
2 (New Entrants)
8,056.66 / $12,072,456.66
3,480 /
$10,477,556.66
4,576.66/1,594,900
1 (SRO)
4,253.33 / $6,036,228.33
6,960 /
$20,955,113.32
(2,706.67)/($14,958,884.99)
Public Posting of
Form CC (burden
hours)
1.336 initial year; 12
thereafter
8
5.336
Public Posting of
Form CC (cost)
$0
$1,927,92
($1,927,92)
CC Recordkeeping
266.64/$58,133.36
399.96 / $87,200.04
(133.32)/($29,066.68)
CC Monthly
Reports
1,712/$578,594.64
1,116 / $370,449.99
596/$208,144.64
70
Increased Initial
and Ongoing
Burden (based on
further
Commission
consideration and
comments
received
Increased Initial
and Ongoing
Burden; Fewer
Respondents
(based on further
Commission
consideration and
comments
received)
Increased Initial
and Ongoing
Burden (based on
further
Commission
consideration and
comments
received)
Increased Initial
and Ongoing
Burden (based on
further
Commission
consideration and
comments
received)
Increased Initial
and Ongoing
Burden; Fewer
respondents
(based on further
Commission
consideration and
comments
received)
Increased
Ongoing Burden
(based on further
Commission
consideration and
comments
received), Fewer
respondents
Removing
monetized cost
burden
Fewer
respondents
Fewer
respondents,
increased
ongoing burden 70
The Annual Industry Burden/Cost for producing the monthly CC reports increased even
though there were fewer respondents. This is because the Annual Industry Burden/Cost
Previously Reviewed was calculated using an estimate of ongoing burden/cost for one
month (11 hours/$3,768.50). The Annual Industry Burden/Cost in this supporting
19
NMS Plan
Amendment
384.997/$160,545
2,380 / $992,460
(1,995.003)/($831,915)
Decreased Initial
Burden,
Increased
Ongoing Burden,
Fewer
Respondents
The burdens estimated in the Proposing Release were calculated based on the following
assumptions that have changed:
•
•
A decrease in the number of competing consolidators from 12 to 8. In particular,
o the number of SROs decreased from 4 to 1;
o the number of broker-dealers decreased from 2 to 1; and
o the SROs will be required to file the Form CC.
An increase in the number of NMS Plan Participants from 17 to 19.
The effects of those changed assumptions (and others) are discussed below.
a.
Form CC Amendment Burdens and Costs
The Commission initially estimated that each competing consolidator would file one
material amendment per year and one annual report, for a total of two amendments per year. 71
Based on further consideration and the comments received, the Commission maintained its
estimate of two amendments for each competing consolidator in the first year the competing
consolidator files amendments but increased its estimate for each competing consolidator in each
year following the first year to six amendments per year. 72
The Commission also estimated that there would be 12 competing consolidators 73 but
now has decreased this estimate to eight competing consolidators. 74 This had no impact on the
calculation as it was calculated in the Proposing Release using eight competing consolidators.
No other estimated burdens have changed; however, because of the changes described
above, some of the aggregated burdens have changed. Accordingly, the Commission now
estimates that competing consolidators will incur an ongoing burden of approximately 37 hours
per year per respondent and 295 hours per year for the industry. 75
statement includes the ongoing burden/cost for the entire year (12 months) (132
hours/$45,222).
71
See Proposing Release, supra note 3, 85 FR at 16801.
72
See Adopting Release, supra note 10, 86 FR at 18708 (adopting the initial burden hour
per competing consolidator estimate as proposed without any changes).
73
See Proposing Release, supra note 3, 85 FR at 16808.
74
See Adopting Release, supra note 10, 86 FR at 18708.
75
See supra notes 24 and 25.
20
With respect to costs to respondents, the Commission initially estimated that each
competing consolidator would incur an ongoing burden of $5,744.10 per year in connection with
amending the Form CC. 76 The Commission reached this estimate by calculating the ongoing
burden per response as $2,872.05 and multiplying it by its initial estimate that each competing
consolidator would file two amendments per year. While the ongoing burden per response has
not changed, the Commission’s estimated number of amendments filed by each competing
consolidator in each year after the first year has increased from two to six. Therefore, the
Commission’s estimate of the annual ongoing burden to amend the Form CC has increased to
$17,232.30 per year. 77 As noted earlier, the revised estimated number of respondents is eight
competing consolidators. As a result, the Commission now estimates that the total annual cost to
the industry is $137,858.40. 78
With respect to the initial burden, the Commission erroneously stated in the proposing
Supporting Statement that the initial burden per entity per response would be 12 hours. However,
the estimated burden in both the proposing and adopting releases per entity per response was 6
hours. 79 As a result, the Commission estimates that the total annual burden per entity is 4 hours
and the total annual burden to the industry is 32 hours. 80
b.
CC Duties and Data Collection
The Commission is increasing its estimated initial costs and associated burden hours for
competing consolidators (market data aggregators, broker dealers, SIPs, new entrants, and SROs)
to modify their systems to comply with Rules 614(d)(1)-(d)(4). The Commission is increasing
its estimated burden hours for Sr. Programmers and Sr. Systems Analysts employed by
competing consolidators by three times. The Commission initially believed that competing
consolidators would build aggregation systems in a single data center, but the Commission now
believes that competing consolidators may build systems for aggregating data in more than one
data center. 81 The Commission is increasing the hours for these technical job categories by three
times because competing consolidators may potentially build aggregation systems in three data
centers and would have to maintain these systems. 82 The Commission is also increasing its
estimated external costs to be incurred by competing consolidators to purchase new technology
to upgrade their systems to comply with Rules 614(d)(1)-(d)(4) by three times. 83
76
See Proposing Release, supra note 3, 85 FR at 16801.
77
See supra note 54.
78
See supra note 55 and accompanying text.
79
See Proposing Release, supra note 3, 85 FR at 16801 and Adopting Release, supra note
10, 86 FR at 18706.
80
See supra notes 29 and 31.
81
See Adopting Release, supra note 10, 86 FR at 18710.
82
See id.
83
See id.
21
The Commission is also increasing by three times its estimated ongoing burden hours for
Sr. Programmers and Sr. Systems Analysts and external ongoing technology cost estimates for
the same reasons (i.e., competing consolidators may potentially build aggregation systems in
three data centers, and would have to maintain these systems). 84
The Commission is also revising its total initial and ongoing burden hour and external
cost estimates to reflect a reduction in the number of potential broker-dealers that aggregate
market data for internal uses and SRO competing consolidators.
The specific changes in burdens for each category of competing consolidators are further
described below:
i.
Market Data Aggregator Burdens and Costs
The Commission initially estimated that each market data aggregator would incur an
initial burden of 900 hours to modify its systems to comply with Rules 614(d)(1)-(d)(4). 85 The
Commission stated in the Proposing Release that because the systems used by these firms
already collect, consolidate, and disseminate more extensive proprietary market data than the
data that is provided by the exclusive SIPs, the Commission believed that such firms would not
have to extensively modify their systems to comply with Rules 614(d)(1)-(d)(4). 86 For the
reasons discussed in the earlier section (i.e., build and maintain systems in three data centers),
the Commission increased this estimate to an initial burden of 2,200 hours. 87
Also for the reasons discussed earlier, the Commission increased its estimated total
ongoing, annual external burden hours incurred by market data aggregation firms, from 540
hours to 1,320 hours per firm. 88
No other estimated burdens have changed; however, because of the changes described
above, some of the aggregated burdens have changed. Accordingly, the Commission now
estimates that competing consolidators will incur an initial burden of 2,200 hours, or an
annualized burden of 733.33 hours, and 1,320 ongoing burden hours 89 for a total of
approximately 2,053.33 hours per year per market data aggregator and 4,106.66 hours per year
for the industry.
84
See id.
85
See Proposing Release, supra note 3, 85 FR at 16802.
86
See id.
87
See Adopting Release, supra note 10, 86 FR at 18710.
88
See Proposing Release, supra note 3, 85 FR at 16805; Adopting Release, supra note 10,
86 FR at 18717.
89
See Adopting Release, supra note 10, 86 FR at 18710, 18716.
22
With respect to costs to respondents, the Commission initially estimated that each market
data aggregator would incur a total initial external cost of $414,250 per market data aggregator. 90
The Commission estimated that it would cost a market data aggregator $206,250 in external
costs 91 to modify its systems to comply with Rules 614(d)(1)-(d)(4). Additionally, the
Commission estimated that an existing market data aggregator would incur initial external costs
of $14,000 to purchase market data from the SROs, 92 and an additional initial external cost of
$194,000 to co-locate at four exchange data centers.
The Commission increased the estimated costs for a market data aggregator to modify its
systems to $618,750 because it now believes, as noted above, that it would cost more than it
initially estimated to purchase the necessary technology to effect such modifications. 93 The cost
to purchase market data and co-locate at four exchange data centers remained the same. As a
result, the Commission now estimates that the initial cost per market data aggregator will be
$826,750. 94
The Commission initially estimated a total annual ongoing external cost of $4,894,445
per entity, which it based on estimated annual ongoing external costs of $123,725 to operate and
maintain its systems, $168,000 to purchase market data from the SROs, 95 and an additional
annual ongoing external cost of $4,602,720 to co-locate itself at four exchange data centers for
each competing consolidator. As noted above, the Commission now believes that competing
consolidators will have to maintain aggregation systems in three data centers. As a result, it
increased by approximately three times the estimated annual ongoing external costs to operate
and maintain its systems, to $371,175. 96 The Commission now estimates that total ongoing,
annual external costs to each market data aggregator will be $5,141,895 per year 97 and the total
ongoing annual external cost will be $10,283,790. 98 The number of market data aggregation
firms remains at two, the same as in the Proposing Release. As a result of the increase in the
initial and ongoing burden for a market data aggregator to upgrade and maintain its systems, the
90
See Proposing Release, supra note 3, 85 FR at 16802, n.680.
91
This estimate was based on discussions with a market participant and the Commission’s
understanding of hardware costs.
92
The Commission used the monthly market data access and redistribution fees currently
charged by the CTA/CQ SIP and Nasdaq UTP SIP as the basis of this estimate ($14,000).
See id.
93
See Adopting Release, supra note 10, 86 FR at 18710-11.
94
See id. at 18711.
95
See Proposing Release, supra note 3, 85 FR at 16805.
96
See Adopting Release, supra note 10, 86 FR at 18716-17.
97
See id. at 18717.
98
See id.
23
Commission now estimates the total annual cost per market data aggregator to be approximately
$5,417,478.33, and $10,834,956.66 for two market data aggregators. 99
ii.
Broker-Dealer Burdens and Costs
The Commission initially estimated that each broker-dealer would incur an initial burden
of 900 initial burden hours to modify its systems to comply with Rules 614(d)(1)-(d)(4). 100 The
Commission estimated that the initial burden hour and external costs estimates for broker-dealers
to modify their systems to comply with Rules 614(d)(1)-(d)(4) would be similar to market data
aggregation firms because, for both types of respondents, the scope of the systems changes and
costs associated with becoming competing consolidators would be comparable. 101 For the
reasons discussed above (i.e., build and maintain systems in three data centers), the Commission
increased this estimate to an initial burden of 2,200 hours. 102 Also for the reasons discussed
earlier, the Commission is increasing its total ongoing, annual external burden hours incurred by
broker-dealer, from the proposed estimate of 540 hours to 1,320 hours per firm. 103 Additionally,
the Commission reduced its estimate of the number of potential competing consolidators that are
broker-dealers that aggregate market data from two to one. No other estimated burdens changed;
however, as a result of the changes, some of the aggregated burdens have changed. Accordingly,
the Commission now estimates that a broker dealer will incur an initial burden of 2,200 hours, or
an annualized burden of 733.33 hours and 1,320 ongoing burden hours for a total of
approximately 2,053.33 hours per year for a broker dealer. 104
With respect to costs to respondents, the Commission initially estimated that each broker
dealer would incur a total initial external cost of $414,250. 105 The Commission estimated
$206,250 in external costs to modify its systems to comply with Rules 614(d)(1)-(d)(4). 106
Additionally, the Commission estimated that a broker dealer would incur initial external costs of
$14,000 to purchase market data from the SROs, and an additional initial external cost of
$194,000 to co-locate at four exchange data centers. 107 As described earlier, the Commission
increased the estimated costs for a broker dealer to modify its systems to $618,750 as it now
99
See supra note 56 and accompanying text; $5,417,478.33 (total annual cost per
respondent) x 2 (# of respondents) = $10,834,956.66 (total annual cost for all
respondents).
100
See Proposing Release, supra note 3, 85 FR at 16802.
101
See Adopting Release, supra note 10, 86 FR at 18711.
102
See id. at 18710.
103
See Proposing Release, supra note 3, 85 FR at 16805; Adopting Release, supra note 10,
86 FR at 18716.
104
See supra note 35 and accompanying text.
105
See Proposing Release, supra note 3, 85 FR at 16802.
106
See id.
107
See id.
24
believes that it would cost more than it initially estimated to purchase the necessary technology
to effect such modifications. 108 The cost to purchase market data and co-locate at four exchange
data centers remained the same. As a result, the Commission increased its estimate of the initial
cost per broker dealer to $826,750. 109
The Commission initially estimated a total annual ongoing external cost of $4,894,445
per entity, which it based on estimated annual ongoing external costs of $123,725 to operate and
maintain its systems, $168,000 to purchase market data from the SROs, and an additional annual
ongoing external cost of $4,602,720 to co-locate itself at four exchange data centers for each
competing consolidator. 110 As noted above, the Commission now believes that competing
consolidators will have to maintain aggregation systems in three data centers. As a result, it
increased by three times the estimated annual ongoing external costs to operate and maintain its
systems, to $371,175. 111 The Commission now estimates that total ongoing, annual external
costs to a broker dealer would be $5,141,895 per year. 112 The estimated cost to purchase market
data and co-locate at four exchange data centers remained the same. Additionally, the
Commission also reduced its estimate of the number of potential competing consolidators that
are broker-dealers that aggregate market data from two to one. As a result of the increase in the
initial and ongoing burden for a broker dealer to upgrade and maintain its systems, the
Commission now estimates the total annual cost for a broker dealer to be approximately
$5,417,478.33. 113
iii.
SIP Burdens and Costs
The Commission initially estimated that each exclusive SIP would incur an initial burden
of 1,800 hours to modify its systems to comply with Rules 614(d)(1)-(d)(4). 114 For the reasons
discussed above (i.e., build and maintain systems in three data centers), the Commission
increased this estimate to an initial burden of 4,400 hours. 115 Also for the reasons discussed
earlier, the Commission increased its total ongoing, annual external burden hours incurred by
exclusive SIPs from the proposed estimate of 540 hours to 1,320 hours per firm. 116 No other
estimated burdens have changed; however, because of the changes described above, some of the
aggregated burdens have changed. Accordingly, the Commission now estimates that competing
108
See Adopting Release, supra note 10, 86 FR at 18710.
109
See id. at 18711.
110
See Proposing Release, supra note 3, 85 FR at 16805.
111
See Adopting Release, supra note 10, 86 FR at 18717.
112
See id.
113
See supra note 57 and accompanying text.
114
See Proposing Release, supra note 3, 85 FR at 16803.
115
See Adopting Release, supra note 10, 86 FR at 18713.
116
See Proposing Release, supra note 3, 85 FR at 16805; Adopting Release, supra note 10,
86 FR at 18716.
25
consolidators will incur an initial burden of 4,400 hours, 117 or an annualized burden of 1,466,67
hours and 1,320 ongoing burden hours for a total of approximately 2,786.66 hours per year per
exclusive SIP and 5,573.33 hours per year for the industry.
With respect to costs to respondents, the Commission initially estimated that each
exclusive SIP would incur $412,500 in external costs to modify its systems to comply with Rules
614(d)(1)-(d)(4). 118 Additionally, the Commission estimated that an exclusive SIP would incur
initial external costs of $14,000 to purchase market data from the SROs, and an additional initial
external cost of $194,000 to co-locate itself at four exchange data centers, for a total initial
external cost of $620,500 per existing exclusive SIP. 119 The Commission approximately tripled
the estimated costs for an exclusive SIP to modify its systems to $1,237,500 120 because, as
explained earlier, it now believes that it would cost more than it initially estimated to purchase
the necessary technology to effect such modifications. The cost to purchase market data and colocate at four exchange data centers remained the same. As a result, the Commission now
estimates that the initial total external cost per exclusive SIP would be $1,445,500. 121
The Commission initially estimated a total annual ongoing external cost of $4,894,445
per entity, which it based on estimated annual ongoing external costs of $123,725 to operate and
maintain its systems, $168,000 to purchase market data from the SROs, and an additional annual
ongoing external cost of $4,602,720 to co-locate itself at four exchange data centers for each
competing consolidator. 122 As noted above, the Commission now believes that competing
consolidators would have to maintain aggregation systems in three data centers. As a result, it
increased by three times the estimated annual ongoing external costs to operate and maintain its
systems, to $371,175. 123 The Commission now estimates that total ongoing, annual external
costs to each exclusive SIP will be $5,141,895 per year. 124 The cost to purchase market data and
co-locate at four exchange data centers remained the same.
The number of exclusive SIPs remains at two, the same as in the Proposing Release. As
a result of the increase in the initial and ongoing burden for an exclusive SIP to upgrade and
117
See Adopting Release, supra note 10, 86 FR at 18711.
118
See Proposing Release, supra note 3, 85 FR at 16803.
119
See id.
120
See Adopting Release, supra note 10, 86 FR at 18713.
121
See id.
122
See Proposing Release, supra note 3, 85 FR at 16805.
123
See Adopting Release, supra note 10, 86 FR at 18716-17.
124
See id. at 18717.
26
maintain its systems, the Commission now estimates the total annual cost per exclusive SIP to be
approximately $5,623,728.33, and $11,247,456.66 for two exclusive SIPs. 125
iv.
New Entrant Burdens and Costs
The Commission initially estimated that each new entrant would incur an initial burden
of 3,600 hours to build systems to comply with Rules 614(d)(1)-(d)(4). 126 For the reasons
discussed above (i.e., build and maintain systems in three data centers), the Commission
increased this estimate to an initial burden of 8,800 hours. 127 Also for the reasons discussed
earlier, the Commission increased its estimate of the total ongoing, annual external burden hours
incurred by a new entrant from the proposed estimate of 540 hours to 1,320 hours per firm. 128
No other estimated burdens have changed; however, because of the changes described above,
some of the estimated aggregated burdens changed. Now the Commission estimates that each
new entrant consolidators will incur an initial burden of 8,800 hours, 129 or an annualized burden
of 2,933.33 hours and 1,320 ongoing burden hours for a total of approximately 4,253.33 hours
per year per new entrant and 8,506.66 hours per year for the industry. 130
With respect to costs to respondents, the Commission initially estimated that each new
entrant would incur $825,000 in external costs to build systems to comply with Rules 614(d)(1)(d)(4). 131 Additionally, the Commission estimated that a new entrant would incur initial external
costs of $14,000 to purchase market data from the SROs, and an additional initial external cost of
$194,000 to co-locate itself at four exchange data centers, for a total initial external cost of
$1,033,000 per new entrant. 132 For the reasons described earlier, the Commission increased to
$2,475,000 its estimated cost for a new entrant to modify its systems as it now believes that it
would cost more than it initially estimated to purchase the necessary technology to effect such
modifications. 133 The cost to purchase market data and co-locate at four exchange data centers
125
See supra note 58 and accompanying text; $5,623,728.33 (total annual cost per
respondent) x 2 (# of respondents) = $11,247,456.66 (total annual cost for all
respondents).
126
See Proposing Release, supra note 3, 85 FR at 16803.
127
See Adopting Release, supra note 10, 86 FR at 18714.
128
See Proposing Release, supra note 3, 85 FR at 16805; Adopting Release, supra note 10,
86 FR at 18717 (estimating that the total ongoing, annual external burden hours to be
incurred by the estimated two new entrants would be 2,640).
129
See Adopting Release, supra note 10, 86 at 18714.
130
See supra note 37 and accompanying text; 4,253 hours (total annual burden per
respondent) x 2 (# of respondents) = 8,506.66 hours (total burden for all respondents).
131
See Proposing Release, supra note 3, 85 FR at 16803-04.
132
See id. at 16804.
133
See Adopting Release, supra note 10, 86 FR at 18714.
27
remained the same. As a result, the Commission now estimates that the initial cost per new
entrant would be $2,683,000. 134
The Commission initially estimated a total annual ongoing external cost of $4,894,445
per entity, which it based on estimated annual ongoing external costs of $123,725 to operate and
maintain its systems, $168,000 to purchase market data from the SROs, and an additional annual
ongoing external cost of $4,602,720 to co-locate itself at four exchange data centers for each
competing consolidator. 135 As noted above, the Commission now believes that competing
consolidators will have to maintain aggregation systems in three data centers. As a result, it
increased by approximately three times the estimated annual ongoing external costs to operate
and maintain its systems, to $371,175. 136 The Commission now estimates that total ongoing,
annual external costs to each exclusive SIP would be $5,141,895 per year. The cost to purchase
market data and co-locate at four exchange data centers remained the same. The number of new
entrants remains at two, the same as in the Proposing Release. As a result of the increase in the
initial and ongoing burden for a new entrant to upgrade and maintain its systems, the
Commission now estimates the total annual cost per new entrant to be approximately
$6,036,228.33, and $12,072,456.66 for two new entrants. 137
v.
SRO Burdens and Costs
The Commission initially estimated that four SROs may choose to become competing
consolidators. The Commission initially estimated that each SRO would incur an initial burden
of 3,600 initial burden hours to build systems to comply with Rules 614(d)(1)-(d)(4). 138
Accordingly, the Commission estimated that the aggregate burden for four SROs would be
14,400 initial burden hours. 139 For the reasons discussed above (i.e., build and maintain systems
in three data centers), the Commission increased its initial burden estimate for each SRO to
8,800 hours. 140 Also for the reasons discussed earlier, the Commission increased its total
ongoing, annual external burden hours incurred per SRO from 540 hours (as proposed) to 1,320
hours (as adopted). 141 Additionally, the Commission also reduced the number of potential
competing consolidators that are SROs four to one. No other estimated burdens changed;
134
See id.
135
See Proposing Release, supra note 3, 85 FR at 16805.
136
See Adopting Release, supra note 10, 86 FR at 18717, n.1526.
137
See supra note 59, and accompanying text. $6,036,228.33 (total annual cost per
respondent) x 2 (# of respondents) = $12,072,456.66 (total annual cost for all
respondents).
138
See Proposing Release, supra note 3, 85 FR at 16804.
139
See id.
140
See Adopting Release, supra note 10, 86 FR at 18715.
141
See Proposing Release, supra note 3, 85 FR at 16805; Adopting Release, supra note 10,
86 FR at 18717.
28
Because of the changes described above, some of the aggregated burdens changed.
Accordingly, the Commission now estimates that a SRO will incur an initial burden of 8,800
hours, or an annualized burden of 2,933.33 hours and 1,320 ongoing burden hours for a total of
approximately 4,253.33 hours per year for a SRO. 142
With respect to costs to respondents, the Commission initially estimated that each SRO
would incur a total initial external cost of $1,033,000. 143 The Commission estimated $825,000
in external costs to build systems to comply with Rules 614(d)(1)-(d)(4). 144 Additionally, the
Commission estimated that a SRO would incur initial external costs of $14,000 to purchase
market data from the SROs, and an additional initial external cost of $194,000 to co-locate at
four exchange data centers. 145 The Commission estimated that it would cost four SROs
$4,132,000 in initial external costs in the aggregate to comply with Rules 614(d)(1)-(d)(4). 146
As described earlier, the Commission increased the estimated costs for a SRO to build
systems to $2,475,000 because it now believes that it would cost more than it initially estimated
to purchase the necessary technology to effect such modifications. The cost to purchase market
data and co-locate at four exchange data centers remained the same. As a result, the Commission
now estimates that the initial cost per SRO would be $2,683,000. 147
The Commission initially estimated a total annual ongoing external cost of $4,894,445
per entity, which it based on estimated annual ongoing external costs of $123,725 to operate and
maintain its systems, $168,000 to purchase market data from the exchanges, and an additional
annual ongoing external cost of $4,602,720 to co-locate itself at four exchange data centers for
each competing consolidator. 148 As noted above, the Commission now believes that competing
consolidators would have to maintain aggregation systems in three data centers. As a result, it
increased by three times the estimated annual ongoing external costs to operate and maintain its
systems, to $371,175. 149 The Commission now estimates that total ongoing, annual external
costs to a SRO would be $5,141,895 per year. 150 The cost to purchase market data and co-locate
at four exchange data centers remained the same.
142
4,253.33 hours (annual burden per entity, per response) x 1 (# of responses per entity) =
4,253.33 hours (total annual burden per entity).
143
See Proposing Release, supra note 3, 85 FR at 16804.
144
See id.
145
See id.
146
See id.
147
See Adopting Release, supra note 10, 86 FR at 18715
148
See Proposing Release, supra note 3, 85 FR at 16805.
149
See Adopting Release, supra note 10, 86 FR at 18717, n.1526.
150
See id.
29
Additionally, the Commission reduced the number of potential competing consolidators
that are SROs that aggregate market data from four to one. As a result of the increase in the
initial and ongoing burden for a SRO to upgrade and maintain its systems, the Commission now
estimates the total annual cost for a SRO to be approximately $6,036,228.33. 151
c.
Public Posting of Form CC
The Commission initially estimated that each competing consolidator would incur an
ongoing burden of 0.5 hours per year to ensure when it submits a Form CC amendment, it has
posted the correct direct URL hyperlink to the Commission’s website. This estimate was based
on the estimate that each competing consolidator would file two amendments per year and would
incur 0.25 hours per amendment. The Commission adopted the estimated hourly burden per
amendment but increased its estimate of the number of amendments each competing consolidator
would file per year from 2 to 6 amendments. The Commission now believes a competing
consolidator will file five amendments a year, plus the annual report, for a total of six
amendments per year. As a result, the Commission now estimates that each competing
consolidator would incur an ongoing burden of 1.5 hours per year. The Commission also
initially estimated that there would be 12 competing consolidators. The Commission decreased
this estimate to eight competing consolidators. No other estimated burdens changed.
Because of the changes described above, some of the aggregated burdens changed.
Accordingly, the Commission now estimates that competing consolidators will incur a total
ongoing burden of approximately 1.5 hours per year per respondent to amend the Form CC 152
and 12 hours per year for the industry. 153
With respect to costs to respondents, the Commission initially estimated that the total initial cost
for public posting of the Form CC per respondent would be $120.50, which is $40.16 when
annualized over three years. 154 Likewise, the ongoing cost was estimated to be $120.50. 155 The
Commission is reducing this estimate to zero as it is a monetized estimate of burden hours.
d.
CC Recordkeeping Burdens and Costs
The Commission initially estimated that the record keeping requirement would create an
initial burden of 40 hours, for a total initial burden of 480 hours for all respondents. 156 The
151
$6,036,228.33 (annual cost per SRO, per response) x 1 (# of annual responses per SRO)
= $6,036,228.33 (total annual cost per SRO).
152
0.25 (ongoing burden hours per respondent per response) * 6 (amendments per year) =
1.5 hours (ongoing burden per respondent)
153
See supra note 41.
154
See Proposing Release, supra note 3, 85 FR at 16805 n. 721.
155
See id. at 16805-06 n. 723.
156
See Proposing Release, supra note 3, 85 FR at 16806.
30
Commission initially estimated the ongoing burden for recordkeeping to be 240 hours for all
respondents. These estimates were based on the Commission’s estimate of 20 burden hours per
respondent and a total of 12 respondents, i.e., competing consolidators. 157 As noted earlier, the
Commission decreased its estimated number of competing consolidators from 12 to eight. The
Commission now estimates that the competing consolidators will incur a total initial burden of
320 hours and an ongoing burden of 160 hours. 158
No other estimated burdens changed. Because of the changes described above, some of
the aggregated burdens have changed. Accordingly, the Commission now estimates that
competing consolidators will incur an ongoing burden of approximately 266.64 hours per year
for the industry. 159
With respect to costs to respondents, the Commission initially estimated that the total
initial cost for recordkeeping per respondent would be $8,720, which is $2,906,67 when
annualized over three years, and $104,640 for all respondents. 160 The Commission calculated
this estimate using its estimate of 480 hours (for all respondents) using a $218 hourly rate.
Likewise, the ongoing cost was estimated to be $4,360 per competing consolidator and $52,320
for all competing consolidators.
As noted above, the Commission decreased its estimate of competing consolidators to
eight. As a result, the Commission’s estimated initial burden for those competing consolidators
decreased to 320 hours, its estimated initial decreased to $69,760, its estimated ongoing burden
hours decreased to 160 hours, and its total estimated cost decreased to $34,880.
Accordingly, the Commission now estimates the industry will incur a total burden of
$58,133.36. 161
e.
CC Monthly Reports Burdens and Costs
The Commission initially estimated that the average one-time, initial burden to program
systems to produce the monthly reports required by Rules 614(d)(5) and (d)(6) would be 246
hours per competing consolidator and so, based on its estimate of 12 respondents, the
157
See id.
158
40 hours (initial burden) x 8 (# of respondents) = 320 hours (initial burden). 20 hours
(ongoing burden) x 8 (# of respondents) = 160 hours (ongoing burden).
159
[40 hours (initial burden) / 3 (annualized over three years)] + 20 (ongoing burden hours)
= 33.33 hours (total annual burden per respondent) x 8 (# of respondents) = 266.64 hours
for all respondents per year.
160
See Proposing Release, supra note 3, 85 FR at 16806.
161
[$2,906.67 (total initial cost for recordkeeping per respondent, annualized over 3 years) +
$4,360 (ongoing cost)] x 8 (# of competing consolidators) = $58,133.36.
31
Commission estimated a total initial burden of 2,952 hours for all respondents. 162 The
Commission initially estimated the ongoing burden for the monthly reports to be 132 hours for
all respondents, based on 11 burden hours per a respondent and a total of 12 respondents. 163 As
noted earlier, the Commission decreased to eight its estimated number of competing
consolidators. The Commission now estimates that the competing consolidators will incur a total
initial burden of 1,968 hours and an ongoing burden of 88 hours. 164
No other estimated burdens changed; however, because of the changes described above,
some of the aggregated burdens changed. Accordingly, the Commission now estimates that
competing consolidators will incur a total annual burden of 214 hours per respondent and a total
burden of 1,712 hours per year for the industry. 165
With respect to costs to respondents, the Commission initially estimated that the total
initial cost for preparing and making available the monthly reports per respondent would be
$81,307 and $976,404 in external costs for all respondents. The ongoing cost was estimated to
be $3,768.50 per competing consolidator and $542,664 for all competing consolidators.
As noted above, the Commission decreased its estimate of competing consolidators from
12 to 8, and as a result, the initial burden hours for those competing consolidators to 1,968 hours,
for a revised initial estimated cost of $644,056 (and a total initial external cost of $6,400), and
the ongoing burden hours were reduced to 1,056 hours, for a total cost of $361,776.
Accordingly, the Commission now estimates each competing consolidator will incur a
total burden across the industry of $578,594.88. 166
f.
NMS Plan Amendment Burdens and Costs
The Commission initially estimated that it would take each SRO approximately 420
hours to prepare the amendment. 167 The Commission estimated that there would be 16 national
securities exchanges and one national securities association, for a total of 17 respondents. 168
162
See id.
163
See id.
164
246 hours (initial burden per competing consolidator) x 8 (# of respondents) = 1,968
hours (initial burden for all competing consolidators); 11 hours (ongoing burden per
respondent) x 8 (# of respondents) = 88 hours (ongoing burden for all respondents).
165
See supra note 46.
166
See supra note 70. The cost estimate was revised to include the ongoing burden/cost for
the entire year (12 months) (132 hours/$45,222).
167
See id. at 16807.
168
See id.
32
The Commission now believes that the SROs would file the amendment jointly, rather
than each SRO making its own filing. The number of hours it would take to prepare the
amendment and the rate for the attorney have not changed. The number of respondents increased
to 18 national securities exchanges and one national securities associations, for a total of 19
respondents. As a result of these changes, the Commission now estimates that the total initial
burden to the industry to file the NMS Plan Amendment would be 420 hours total for the
industry, which decreases the burden per respondent to 22.105 (7.368 hours when annualized
over three years).
Additionally, the Commission now believes there will be a total of 245 ongoing burden
hours related to the amendment (for maintaining the required timestamps, conducting
assessments of competing consolidators, preparing an annual report, maintaining the list of the
primary listing exchange for each NMS stock, and calculating gross revenues) for the entire
industry, 169 which increases the estimated ongoing burden per respondent by 12.895 hours. 170
Because of the changes described above, some of the aggregated burdens have changed.
Accordingly, the Commission now estimates that the SROs will incur an ongoing burden of
approximately 20.263 hours per year per respondent and 384.997 hours per year for the
industry. 171
With respect to costs to respondents, the Commission initially estimated that the total
initial cost for recordkeeping per respondent would be $175,140 and $2,977,380 for the
industry. 172 The Commission reached this estimate based on the estimate of 420 hours for each
respondent, and estimate of 17 hours, and a rate of $417/hour for an attorney. 173 As noted above,
the Commission now believes that the SROs would file the amendment jointly rather than
individually. The number of hours it would take to prepare the amendment and the rate for the
attorney have not changed. The number of respondents increased to 18 national securities
exchanges and one national securities association, for a total of 19 respondents. As a result, the
Commission now estimates that the total initial cost to the industry to file the NMS Plan
169
See Adopting Release, supra note 10, 86 FR at 18719.
170
245 (ongoing burden for the industry) / 19 (# of respondents) = 12.895 hours (ongoing
burden per respondent).
171
See supra note 47 and accompanying text. 20.263 hours (total annual burden per
respondent) x 19 (# of respondents) = 384.997 hours per year for all respondents.
172
See Proposing Release, supra note 3, 85 FR at 16807.
173
See id.
33
Amendment would be $175,140. 174 This decreases the initial burden per respondent to
$9,217.80 ($3,072.63 when annualized over three years). 175
The Commission now believes there would be a total of 245 ongoing burden hours
related to the amendment for the entire industry, for a total of $102,165 estimated ongoing cost
to the industry. 176 This increases the ongoing cost per respondent by $5,377.11. 177
Correspondingly, the Commission now estimates each SRO will incur a total burden of
$8,449.74, 178 and the industry will incur a total burden of $160,545. 179
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 requesting authorization to omit the expiration date on the electronic
version of the Form CC, although the OMB control number will be displayed. Including the
expiration date on the electronic version of this form will result in increased costs, because the
need to make changes to the form may not follow the application’s scheduled version release
dates.
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.
174
420 hours (initial burden for the industry) x $417 (attorney hourly rate) = $175,140 (total
initial industry cost).
175
$175,140 (total initial industry cost) / 19 (# of respondents) = $9,217.89 initial cost per
respondent). $9,217.89 initial cost per respondent) / 3 (annualized over 3 years) =
$3,072.63 (initial cost per respondent annualized over 3 years).
176
See Adopting Release, supra note 10, 86 FR at 18782.
177
$102,165 (ongoing industry cost) / 19 (# of respondents) = $5,377.11 (ongoing cost per
respondent).
178
See supra note 68, and accompanying text.
179
$8,449.74 (total annual cost per respondent) x 19 (# of respondents) = $160,545 per year
for all respondents.
34
| File Type | application/pdf |
| File Title | Supporting Statement-- Proposed Rule |
| Author | Steve Kuan |
| File Modified | 2021-04-22 |
| File Created | 2021-04-22 |