2023 Supporting Statement _ Rule 613 DGL REVISED

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
the Consolidated Audit Trail NMS Plan (NMS Plan Required to be Filed under
Commission Rule 613)
(OMB Control No. 3235-0671)
A.

Justification

This submission is being made pursuant to the Paperwork Reduction Act of 1995,
44 U.S.C. Section 3501 et. seq. The collection of information is in connection with a
National Market System (NMS) Plan required to be filed with the Commission under
Rule 613.
1.

Necessity of Information Collection

The Commission believes that the regulatory data infrastructure on which FINRA
and the national securities exchanges (the “Participants”) and the Commission have relied
and must in some instances still rely is generally outdated and inadequate to effectively
oversee a complex, dispersed and highly automated national market system. In
performing their oversight responsibilities, prior to the introduction of the Consolidated
Audit Trail (“CAT”) regulators had to attempt to cobble together disparate data from a
variety of existing information systems lacking in completeness, accuracy, accessibility,
and/or timeliness—a model that neither supported the efficient aggregation of data from
multiple trading venues, nor yielded the type of complete and accurate market activity
data needed for robust market oversight.
Prior to the introduction of CAT, FINRA and some of the exchanges maintained
their own separate audit trail systems for certain segments of this trading activity, which
varied in scope, required data elements and format. In performing their market oversight
responsibilities, Participant and Commission staffs, prior to CAT, and even some today
as they wait for full implementation of CAT, had to rely heavily on data from these
various Participant audit trails. However, there were shortcomings in the completeness,
accuracy, accessibility, and timeliness of these existing audit trail systems. Some of these
shortcomings are a result of the disparate natures of the systems, which make it
impractical, for example, to follow orders through their entire lifecycle as they may be
routed, aggregated, re-routed, and disaggregated across multiple markets. The lack of
key information in the audit trails that would be useful for regulatory oversight, such as
the identity of the customers who originate orders, or even the fact that two sets of orders
may have been originated by the same customer, is another shortcoming.
Though Participant and Commission staffs also have access to sources of market
activity data other than Participant audit trails, these systems each had, and have, their
own drawbacks. For example, data obtained from the electronic blue sheet system and
equity cleared reports comprise only trade executions, and not orders or quotes. In
addition, like data from existing audit trails, data from these sources lacks key elements
important to regulators, such as the identity of the customer in the case of equity cleared

reports. Furthermore, recent experience with implementing incremental improvements to
the electronic blue sheet system has illustrated some of the overall limitations of the
current technologies and mechanisms used by the industry to collect, record, and make
available market activity data for regulatory purposes. 1
Recognizing these shortcomings, on July 11, 2012, the Commission adopted
Rule 613 of Regulation NMS under the Act. 2 Rule 613 required the Participants to
submit an NMS plan to create, implement, and maintain the consolidated audit trail
(“CAT”) that would capture customer and order event information for orders in NMS
securities, across all markets, from the time of order inception through routing,
cancellation, modification, or execution in a single, consolidated data source. 3
On February 27, 2015, the Participants submitted the CAT NMS Plan. 4 On April
27, 2016, the Commission published a notice soliciting comments from the public (“CAT
NMS Plan Notice”). 5 On November 15, 2016, the Commission approved the CAT NMS
Plan (“CAT NMS Plan Order”), including the information collections proposed in the
CAT NMS Plan Notice and certain additional information collections that were the

1

See Securities Exchange Act Release No. 64976 (July 27, 2011), 76 FR 46960
(August 3, 2011) (“Large Trader Release”).

2

See Securities Exchange Act Release No. 67457 (July 18, 2012), 77 FR 45722
(August 1, 2012) (“Adopting Release”); see also Securities Exchange Act Release
No. 62174 (May 26, 2010), 75 FR 32556 (June 8, 2010) (“Proposing Release”).

3

See 17 CFR 242.613(a)(1), (c)(1), (c)(7).

4

See Letter from Participants to Brent J. Fields, Secretary, Commission, dated
February 27, 2015. The Participants filed the CAT NMS Plan on September 30,
2014. See Letter from the Participants, to Brent J. Fields, Secretary, Commission,
dated September 30, 2014. The CAT NMS Plan filed on February 27, 2015, was
an amendment to and replacement of the Initial CAT NMS Plan (the “Amended
and Restated CAT NMS Plan”). On December 24, 2015, the Participants
submitted an Amendment to the Amended and Restated CAT NMS Plan. See
Letter from Participants to Brent J. Fields, Secretary, Commission, dated
December 23, 2015 (the “Amendment”). On February 9, 2016, the Participants
filed with the Commission an identical, but unmarked, version of the Amended
and Restated CAT NMS Plan, dated February 27, 2015, as modified by the
Amendment. Unless the context otherwise requires, the “CAT NMS Plan” shall
refer to the Amended and Restated CAT NMS Plan, as modified by the
Amendment.

5

See Securities Exchange Act Release No. 77724 (April 27, 2016), 81 FR 30613
(May 17, 2016). The burdens associated with the CAT NMS Plan Notice were
submitted under OMB number 3235-0671 which relates to the NMS Plan required
to be filed under Rule 613.
2

subject of a supplemental information collections submission.6 The CAT NMS Plan
Order information collections that were first noticed in the CAT NMS Plan Notice were
approved by OMB on March 9, 2017. 7 The supplemental submission information
collections were approved by OMB on July 10, 2017.
This instant information collections submission incorporates both the information
collections that were first noticed in the CAT NMS Plan Notice and approved by OMB
on March 9, 2017 with the supplemental submission information collections that were
approved by OMB on July 10, 2017.
Subsequent to the five prior information collections completed relating to the
CAT NMS Plan Notice and CAT NMS Plan Order as of July 2020, the Commission
believes one additional information collection has been completed—specifically, a onetime independent audit of the fees, costs, and expenses incurred by the Participants on
behalf of CAT NMS, LLC prior to the Effective Date 8 of the Plan. 9 In addition. certain
information collection requirements have completed the implementation stage, although
certain ongoing costs remain, including: (1) development of a Central Repository tasked
with the receipt, consolidation, and retention of reported order and execution information
submitted by Participants and their members; 10 (2) the requirement that each Participant,
and any member of such Participant, record and electronically report to the Central
6

See Securities Exchange Act Release No. 79318 (November 15, 2016), 81 FR
84696 (November 23, 2016). The supplemental information collections burdens
associated with the CAT NMS Plan Order were submitted under OMB number
3235-0671 which relates to the NMS Plan required to be filed under Rule 613.
The Commission further acknowledged that the CAT NMS Plan filed by the
Participants contains provisions in addition to those required by the Commission
in Rule 613. These additional requirements include the inclusion of OTC Equity
Securities, the availability of historical data for not less than six years in a manner
that is directly available and searchable without manual intervention from the
Plan Processor, a complete symbology database to be maintained by the Plan
Processor, including the historical symbology, as well as issue symbol
information and data using the listing exchange symbology format. See CAT
NMS Plan, supra note 4, at Sections 1.1 and 6.5(b)(I); Appendix C, Section
A.1(a); Appendix D, Section 2.

7

The CAT NMS Plan published for comment reflects exemptive relief granted by
the Commission that provided the flexibility for the Participants to propose, in the
CAT NMS Plan, alternative approaches to certain requirements of Rule 613. See
Securities Exchange Act Release No. 77265 (March 1, 2016), 81 FR 11856
(March 7, 2016) (“Exemption Order”).

8

The “Effective Date” is the date the Commission approved the CAT NMS Plan,
which is November 15, 2016. See supra note 6.

9

See CAT NMS Plan Order, supra note 6, at 84940.

10

See 17 CFR 242.613.
3

Repository details for each order and Reportable Event documenting the life of an order
through the process of original receipt or origination, routing, modification, cancellation,
and execution (in whole or in part) for each NMS security; 11 (3) the requirement that the
CAT NMS Plan require the Central Repository to collect and retain on a current and
continuous basis NBBO information for each NMS security, transaction reports reported
pursuant to an effective transaction reporting plan, and Last Sale Reports reported
pursuant to the Options Price Reporting Authority Plan; 12 (4) the requirement that the
CAT NMS Plan must require that every national securities exchange and national
securities association develop and implement a surveillance system, or enhance existing
surveillance systems, reasonably designed to make use of the consolidated information
contained in the consolidated audit trail; 13 (5) an annual requirement that that the CAT
LLC financials be (i) in compliance with GAAP, (ii) be audited by an independent public
accounting firm, and (iii) be made publicly available; 14 and (6) a requirement that each
Participant conduct background checks for its employees and contractors that will use the
CAT System. 15
2.

Purposes and Use of the Information Collection

The Commission believes that the CAT NMS Plan, once fully implemented, will
improve the quality of the data available to regulators in four areas that affect the ultimate
effectiveness of core regulatory efforts—completeness, accuracy, accessibility and
timeliness. 16 The improvements in these data qualities would substantially improve
regulators’ ability to perform analysis and reconstruction of market events, and market
analysis and research to inform policy decisions, as well as perform regulatory activities,
in particular market surveillance, examinations, investigations, and other enforcement
functions.
A. Central Repository
Rule 613 states that the CAT NMS Plan shall provide for the creation and
maintenance of a Central Repository. 17 The Central Repository is required to receive,
consolidate and retain the data required to be submitted by the Participants and their
11

See 17 CFR 242.613(c)(1), (c)(5), (c)(6), (c)(7).

12

See 17 CFR 242.613(e)(7).

13

See 17 CFR 242.613(f).

14

Id.

15

Id. The Commission believes that these background checks are necessary to
ensure that only authorized and qualified persons are using the CAT System.

16

See Adopting Release, supra note 2, at 45727 (discussing four “qualities” of trade
and order data that impact the effectiveness of core Participant and Commission
regulatory efforts: accuracy, completeness, accessibility, and timeliness).

17

See 17 CFR 242.613(e)(1).
4

broker-dealer members. 18 Participant and Commission staffs would have access to the
data for regulatory purposes. 19
B. Data Collection and Reporting
The Commission believes that the data collected and reported to the Central
Repository pursuant to the requirements of the CAT NMS Plan (as required by Rule 613)
would be used by regulators to monitor and surveil the securities markets and detect and
investigate activity, whether on one market or across markets. The data collected and
reported to the Central Repository would also be used by regulators for the evaluation of
tips and complaints and for complex enforcement inquiries or investigations, as well as
inspections and examinations. Further, the Commission believes that regulators would
use the data collected and reported to the Central Repository to conduct timely and
accurate analysis of market activity for reconstruction of broad-based market events in
support of regulatory decisions.
C. Collection and Retention of National Best Bid and National
Best Offer Information, Last Sale Data and Transaction
Reports
The CAT NMS Plan must require the Central Repository to collect and retain
National Best Bid and National Best Offer (“NBBO”) information, transaction reports,
and Last Sale Reports in a format compatible with the order and event information
collected pursuant to Rule 613(c)(7). 20 Participant and Commission staffs could use this
data to easily search across order, NBBO, and transaction databases. The Commission
believes that having the NBBO information in a uniform electronic format compatible
with order and event information would assist Participants in enforcing compliance with
federal securities laws, rules, and regulations, as well as their own rules. 21 The
Commission also believes that a CAT NMS Plan requiring the Central Repository to
collect and retain the transaction reports and Last Sale Reports in a format compatible
with the order execution information would aid regulators in monitoring for certain
market manipulations. 22
18

Id. The Commission notes that the CAT NMS Plan refers to a member of a
national securities exchange or of a national securities association as an “Industry
Member.” See CAT NMS Plan, supra note 4, at Section 1.1.

19

See 17 CFR 242.613(e)(2).

20

See 17 CFR 242.613(e)(7).

21

The Commission and Participants use the NBBO to, among other things, evaluate
members for compliance with numerous regulatory requirements, such as the duty
of best execution or Rule 611 of Regulation NMS. See 17 CFR 242.611; see also,
e.g., ISE Rule Options 5, Section 2 and Phlx Rule 1084.

22

Rules 613(e)(7)(ii) and (iii) require that transaction reports reported pursuant to an
effective transaction reporting plan and Last Sale Reports reported pursuant to the

5

D. Surveillance
The CAT NMS Plan (as required by Rule 613(f)) contains a requirement that the
Participants develop and implement a surveillance system, or enhance existing
surveillance systems, reasonably designed to make use of the consolidated information in
the consolidated audit trail. 23 This requirement is intended to position regulators to make
full use of the consolidated audit trail data in order to carry out their regulatory
obligations. In addition, because trading and potentially manipulative activities could
take place across multiple markets, and the consolidated audit trail data would trace the
entire lifecycle of an order from origination to execution or cancellation, new or
enhanced surveillance systems may also enable regulators to investigate potentially
illegal activity that spans multiple markets more efficiently.
E. Written Assessment of Operation of the Consolidated Audit
Trail
Rule 613(b)(6) requires the CAT NMS Plan to require the Participants to provide
the Commission a written assessment of the CAT’s operation at least every two years,
once the CAT NMS Plan is effective. 24 The CAT NMS Plan states that the Chief
Compliance Officer would oversee the assessment. 25 These assessments would aid
Participant and Commission staffs in understanding and evaluating any deficiencies in
the operation of the consolidated audit trail and to propose potential improvements to the
CAT NMS Plan. The Commission believes the written assessments would allow
OPRA Plan be reported to the Central Repository. This requirement should allow
regulators to evaluate certain trading activity. For example, trading patterns of
reported and unreported trades may cause Participant or Commission staffs to
make further inquiries into the nature of the trading to ensure that the public was
receiving accurate and timely information regarding executions and that market
participants were continuing to comply with trade reporting obligations under
Participant rules. Similarly, patterns in the transactions that are reported and
unreported to the consolidated tape could be indicia of market abuse, including
failure to obtain best execution for customer orders or possible market
manipulation. The Commission and the Participants would be able to review
information on trades not reported to the tape to determine whether they should
have been reported, whether Section 31 fees should have been paid, and/or
whether the trades are part of a manipulative scheme.
23

See CAT NMS Plan, supra note 4, at Section 6.10(a). See also 17 CFR
242.613(f).

24

17 CFR 242.613(b)(6). As discussed in Section 12.A.e., infra, Section 6.6 of the
Plan changed the frequency of the assessment contemplated by Rule 613(b)(6)
from biannual to annual.

25

See CAT NMS Plan, supra note 4, at Section 6.6(a)(ii). See also id. at Section
6.6(a)(i).
6

Participants and Commission staffs to periodically assess whether such potential
improvements would enhance market oversight. Moreover, the Commission believes
these assessments would help inform the Commission regarding the likely feasibility,
costs, and impact of, and the Participants’ approach to, the consolidated audit trail
evolving over time. The Commission believes that the assessments will focus the Plan
Processor and Participants on critical technological and other developments, and should
help ensure that CAT technology is up-to-date, resilient and secure, and provides accurate
CAT Data.
F. Independent Audit of Expenses Incurred Prior to Effective
Date
The Commission understands that the Participants intend to recover, through CAT
fees, the amounts spent on the development of the CAT to date. Section 6.6(a)(i) of the
CAT NMS Plan requires the Participants to provide to the Commission, and make public,
an independent audit of fees, costs and expenses incurred by the Participants on behalf of
the Company, prior to the Effective Date, in connection with the creation and
implementation of the CAT, at least one month prior to submitting any rule filing to
establish initial fees to the Commission. Because the Company made such audited
financial statements available on August 5, 2021, 26 this collection is now complete and
no further burden is expected.
G. Assessment of Industry Member Bulk Access to Reported Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits and risks of allowing an Industry
Member to bulk download the Raw Data it submitted to the Central Repository, within 24
months of effectiveness of the Plan. Commenters expressed a desire for bulk access to
their own data for surveillance and internal compliance purposes, as well as to facilitate
the error correction process. While the Participants did not permit such access in the
Plan, citing security and cost concerns, they did represent that they would consider
allowing bulk access to the audit trail data reported by Industry Members once CAT is
operational. The Commission believes it is important to consider the potential
efficiencies of allowing Industry Members bulk access to their own CAT data, so long as
such access does not impact the security of the CAT Data, and accordingly added this
requirement.
H. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of the nature and extent of errors in the Customer information
submitted to the Central Repository and whether the correction of certain data fields
should be prioritized, within 36 months of effectiveness of the Plan. The Commission
believes that requiring such an assessment, which was intended to coincide with the date
26

See https://www.catnmsplan.com/audited-financial-statements.
7

all Industry Members are reporting to the CAT, could help ensure that the accuracy of
CAT Data is achieved in the most prompt and efficient manner.
I. Report on Impact of Tiered Fees on Market Liquidity
Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report on the impact of tiered-fees on market liquidity, including an analysis of
the impact of the tiered-fee structure on Industry Members provision of liquidity, within
36 months of effectiveness of the Plan. 27 To help determine whether the Plan’s funding
model actually achieves the Participants’ stated objective, the Commission believes it is
appropriate to require them to prepare such an assessment of the impact of tiered fees
once the CAT becomes fully operational.
J. Assessment of Material Systems Change on Error Rate
The CAT NMS Plan requires the Participants to provide the Commission a
written assessment of the projected impact of any Material Systems Change on the
Maximum Error Rate, prior to the implementation of any Material Systems Change. The
Commission believes that Material Systems Changes either could result in new
challenges for CAT Reporters or simplify the means for reporting data. In either case,
the appropriateness of the Maximum Error Rate could be impacted, and thus warrant a
change. Accordingly, the Commission believes it appropriate to require the Participants
to provide the Commission an assessment of the projected impact on the Maximum Error
Rate, including any recommended changes thereto, prior to the implementation of any
Material Systems Change.
K. Financial Statements
Section 9.2 of the CAT NMS Plan requires that the financials of the Consolidated
Audit Trail, LLC (“CAT LLC”) be (i) in compliance with GAAP, (ii) be audited by an
independent public accounting firm, and (iii) be made publicly available. 28 The
27

28

Participants are currently seeking to change the fee structure, including
eliminating the tiered-fee structure. See Securities Exchange Act Release No.
97151 (Mar. 13, 2023) 88 FR 17086 (Mar. 21, 2023). That request remains
pending before the Commission.
The Participants conduct the activities of the CAT through the CAT LLC, a
jointly owned limited liability company formed under Delaware state law. The
CAT LLC is charged with creating, implementing and maintaining the CAT. The
Participants previously formed a Delaware Limited Liability company named
CAT NMS, LLC for the purpose of conducting activities related to the
consolidated audit trail, but formed Consolidated Audit Trail, LLC to replace and
serve as the CAT NMS Plan on August 29, 2019. See Securities Exchange Act
Release No. 87149 (September 27, 2019), 84 FR 52905 (October 3, 2019). The

8

Commission believes that this requirement will promote will promote greater accuracy
and greater transparency with respect to the Company’s financial accounting.
L. Background Checks
Section 6.1(g) of the CAT NMS Plan requires that each Participant conduct
background checks for its employees and contractors that will use the CAT System. The
Commission believes that this is appropriate in order to ensure that only authorized and
qualified persons are using the CAT System.
3.

Consideration Given to Information Technology

Several of the information collections associated with the CAT NMS Plan involve
the use of electronic information collection techniques. Rule 613 states that the CAT
NMS Plan shall provide for the creation and maintenance of the Central Repository, 29
which is required to receive, consolidate and retain the data required to be submitted
electronically by the Participants and their members. 30 The CAT NMS Plan requires
CAT Reporters to report data to the Central Repository either in a uniform electronic
format, or in a manner that would allow the Central Repository to convert the data to a
uniform electronic format. 31 The CAT NMS Plan also requires the Central Repository to
collect and retain on a current and continuing basis, in a format compatible with the
Participant and member data, all data including NBBO information, transaction reports,
and Last Sale Reports. 32 Additionally, the CAT NMS Plan (as required by Rule 613(f))
also requires that the Participants develop and implement a surveillance system, or
enhance existing surveillance systems, reasonably designed to make use of the
consolidated information in the consolidated audit trail. 33
The Commission believes it is important to require the electronic submission of
the information required by Rule 613 to ensure that the CAT can capture in a timely,
accurate and accessible manner all of the information necessary to efficiently and
effectively monitor cross-market trading activity in today’s highly automated and
dispersed markets. The Commission believes that, as part of operating their businesses,
the Participants are already accustomed to handling large volumes of data and may
already have in place electronic trading, routing and reporting systems. Most Participants
maintain audit trails that contain the trade and order data that they obtain from their
LLC through which Participants conduct the activities of CAT is referred to as
“CAT LLC” in this Supporting Statement.
29

See 17 CFR 242.613(e)(1).

30

Id.

31

See CAT NMS Plan, supra note 4, at Appendix C, Section A.1(b).

32

See id. at Section 6.5(a)(ii). See also 17 CFR 242.613(e)(7), (e)(8).

33

See CAT NMS Plan, supra note 4, at Section 6.10(a). See also 17 CFR
242.613(f).
9

members and each equity and options exchange keeps an audit trail of orders and trades
that occur on its market. To improve upon the status quo, the consolidated audit trail
would need to impose electronic information collection and reporting requirements. The
CAT NMS Plan states, “… each equities and options exchange is built on its own unique
platform, utilizes unique entry protocols and requirements and thus creates uniquely
formatted audit trails. The existence of multiple non-integrated audit trails has direct
consequences on the accuracy and efficiency of regulatory oversight.” 34 As trading
venues have become more automated, and trading systems have become computerized,
trading volumes have increased significantly and trading has become more dispersed
across more trading centers and therefore more difficult to monitor and trace. Audit trail
data for securities that are traded on multiple venues is fragmented across multiple data
sources, with each regulator generally having direct access only to data generated on the
trading venues it regulates. The Commission believes that the CAT NMS Plan will bring
audit trail data related to trading on all venues into the Central Repository where it could
be accessed by all regulators.
The Commission believes that the collection of information requirement
“Background Checks” would involve the use of electronic submission and collection
techniques. The Commission believes that these would be background checks using
fingerprints that would be submitted either in hard copy or electronically to the Attorney
General of the United States for identification and processing.
Commission staff does not believe that improvements in information technology
would have any impact on the burdens associated with the CAT NMS Plan (in fact,
improvements in information technology may reduce any burdens associated with the
Plan), nor that any obstacles exist to reducing such burdens.
4.

Duplication

The CAT NMS Plan requires the collection and reporting of certain information
that national securities exchanges and national securities associations, as well as their
members, already collect and report pursuant to both Federal Rules and the rules of those
exchanges and associations. However, as required by Rule 613, the CAT NMS Plan
requires the Participants to collect additional and more detailed information, and to report
the information to the Central Repository in a uniform electronic format, or in a manner
that would allow the Central Repository to convert the data to a uniform electronic format
for consolidation and storage.
In an effort to ensure identification and avoidance of unnecessary duplicative
rules and requirements, Rule 613 requires the CAT NMS Plan to discuss a plan to
eliminate existing rules and systems (or components thereof) that will be rendered
duplicative by the consolidated audit trail, including identification of such rules and
systems (or components thereof). 35 To the extent that any existing rules or systems
34

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(ii)(A).

35

See Rule 613(a)(1)(ix).
10

related to monitoring quotes, orders, and executions provide information that is not
rendered duplicative by the consolidated audit trail, Rule 613 requires an analysis of: (A)
whether the collection of such information remains appropriate; 36 (B) if still appropriate,
whether such information should continue to be separately collected or should instead be
incorporated into the consolidated audit trail; 37 and (C) if no longer appropriate, how the
collection of such information could be efficiently terminated; the steps the plan sponsors
propose to take to seek Commission approval for the elimination of such rules and
systems (or components thereof); and a timetable for such elimination, including a
description of how the plan sponsors propose to phase in the consolidated audit trail and
phase out such existing rules and systems (or components thereof). 38
In accordance with Rule 613, the CAT NMS Plan provides information regarding
when the Participants intend to initiate and conclude identification of: duplicative rules
and systems, partially duplicative rules and systems, non-duplicative rules or systems
related to monitoring quotes, orders and executions, and the timing of Participant rule and
system changes due to any elimination or modification of Commission rules as a result of
the implementation of CAT. 39 Further, the Plan discusses when the Participants will file
proposed rule changes to implement the rule modifications or deletions and elimination
of the relevant rules and systems. 40

36

See Rule 613(a)(1)(ix)(A).

37

See Rule 613(a)(1)(ix)(B).

38

See Rule 613(a)(1)(ix)(C).

39

On August 14, 2020, FINRA filed with the Commission a proposed rule change
to delete the OATS Rules once members were effectively reporting to the CAT.
Securities Exchange Act Release No. 89679 (Aug. 26, 2020) 85 F.R. 54661 (Sept.
1, 2020). On November 30, 2020, the Commission approved the proposed rule
change, as amended by Amendment No. 1. Securities Exchange Act Release No.
90535 (Nov. 30, 2020) 85 F.R. 78395 (Dec. 4, 2020). On June 23, 2021, FINRA
filed with the Commission a proposed rule change and notice of immediate
effectiveness setting forth the basis for its determination that the accuracy and
reliability of the CAT met the standards approved by the Commission for
purposes of eliminating the OATS Rules. Securities Exchange Act Release No.
92239 (June 23, 2021) 86 F.R. 34293 (June 29, 2021). Effective September 1,
2021, FINRA retired the OATS system. References to firms with or without
OATS reporting obligations therefore are the firms’ status as an OATS reporter
prior to September 1, 2021.
See CAT NMS Plan, supra note 4, at Appendix C, Section C.9. These changes
have already begun taking place. In addition to the OATS retirement supra n.27,
FINRA has begun eliminating rules that create duplicative requirements with the
CAT NMS Plan. See. e.g., Securities Exchange Act Release No. 34-97181, (Mar.
21, 2023), 88 F.R. 18199 (Mar. 27, 2023) (amending FINRA rules to address
duplicative requirements).

40

11

With the exception of the “Background Checks” information collection, the
proposed collection of information requirements pertain solely to the CAT LLC or the
operation of the CAT System and, is not required elsewhere. We are not aware of any
collection of information requirements that conflict with or substantially duplicate the
proposed collection of information requirements.
With respect to the “Background Checks” collection of information, Section
6.1(g) of the CAT NMS Plan requires each Participant to conduct background checks of
its employees and contractors that will use the CAT System. While Section 6.1(g) may
result in a duplication of requirement because other rules currently require Participants to
conduct fingerprint-based background checks, 41 the Commission believes that there will
be no duplication of effort because if an employee or contractor of a Participant who will
be a CAT user is already subject to a Participant’s existing background check
requirements, we anticipate that those requirements would satisfy the proposed
background checks requirements of the CAT NMS Plan. Further, if such Participant
believes that its employees and contractors should be subject to a more stringent or
different background check requirement to be a CAT user than currently required by the
Participant, then there will be no duplication of effort because the proposed background
check requirements would be more rigorous or different and thus differ from the
Participant’s existing background check requirements.
5.

Effect on Small Entities

The CAT NMS Plan would have an effect on small entities. The CAT NMS Plan
requires Participants to enforce compliance by their members with the provisions of
Rule 613 and the Plan through self-regulatory organization (“SRO”) rules that require
their members to comply with the requirements of Rule 613 and the CAT NMS Plan. 42
These rules would apply to all broker-dealers—including those that are small entities.
Commission rules generally define a broker-dealer as a small entity for purposes of the
Exchange Act and the Regulatory Flexibility Act if the broker-dealer had a total capital of
less than $500,000 on the date in the prior fiscal year as of which its audited financial
statements were prepared, and it is not affiliated with any person (other than a natural
person that is not a small entity).
Thus, small broker-dealers would be responsible for complying with the CAT
NMS Plan’s requirements for regularly reporting to the Central Repository the required
41

See e.g., 17 CFR 240.17f-2(a) (OMB Control Number 3235-0029); 17 CFR
240.17f-2(c) (OMB Control Number 3235-0034). Additionally, most Participants
currently have rules that permit them to conduct fingerprint-based background
checks of contractors. See e.g., BOX Rule 10080; CBOE Rule 7.10; ISE Rule
Options 6E, Section 8; Nasdaq Rule General 2, Section 13; NYSE Rule 28; and
IEX Rule 1.180.

42

The CAT NMS Plan states that the Participants will endeavor to promulgate
consistent rules requiring compliance by their members with the provisions of
Rule 613 and the Plan. See id. at Section 3.11. See also 17 CFR 242.613(g)(2).
12

order and transaction data, and would need to either modify their existing order handling
and trading systems to comply with the CAT NMS Plan, or rely on outside vendors to
provide a functionality that would provide information to the Central Repository.
The Commission notes that some small firms currently may not have systems in
place to report audit trail data as they may have been exempted from reporting data to
FINRA’s Order Audit Trail System (“OATS”) because they do not engage in activities
that would have incurred OATS reporting obligations, or they may have been excluded or
exempted under FINRA’s OATS reporting rules. Small firms that were excluded from
OATS reporting due to their size would have CAT reporting responsibilities under the
Plan because the Plan makes no provision to exempt or exclude them, as FINRA did with
OATS reporting. 43
The Commission estimates, based on FOCUS filings with the Commission, that
as of the third quarter of 2022, there were approximately 742 Commission-registered
broker-dealers that would be considered small entities for purposes of the statute. Each
of these brokers-dealers, assuming that they would be subject to CAT reporting
obligations, would be required to comply with the CAT NMS Plan required under Rule
613. 44
To minimize the burden of complying with the collecting and reporting
requirements in the CAT NMS Plan, the CAT NMS Plan provides that small brokerdealers must begin reporting data to the Central Repository within three years of approval
of the CAT NMS Plan, while large broker-dealers must begin reporting such data within
two years of approval. 45 Thus, small broker-dealers would be given additional time to
ready themselves for compliance with the collection and reporting requirements in the
CAT NMS Plan. The Commission notes that as of February 2023, large broker dealers
.43

See FINRA Rule 7470 (Exemption to the Order Recording and Data
Transmission Requirements). The Rule provided that, for good cause shown,
FINRA could exempt a member from its recording and reporting requirements if:
(1) the member and current control affiliates and associated persons of the
member had not been subject within the last five years to any final disciplinary
action, and within the last ten years to any disciplinary action involving fraud; (2)
the member had annual revenues of less than $2 million; (3) the member did not
conduct any market making activities in NMS stock or OTC securities; (4) the
member did not execute principal transactions with its customers; and (5) the
member did not conduct clearing or carrying activities for other firms. This
authority sunsetted on July 11, 2020

44

The Commission understands that some registered broker-dealers either trade in
asset classes not currently included in the definition of Eligible Security or do not
trade at all (e.g., broker-dealers for the purposes of underwriting, advising, private
placements).

45

See CAT NMS Plan, supra note 4, at Section 6.4; see also 17 CFR
242.613(a)(3)(v) and (vi).
13

and small broker dealers have begun to report at least some required data to the Central
Repository,
6.

Consequences of Not Conducting Collections

If the Commission were to not require the collections (or were to require the
collections on a less frequent basis), the Commission believes that this could impact its
objective to create a comprehensive consolidated audit trail that allows regulators to
efficiently and accurately track all activity throughout the U.S. markets in National
Market System (NMS) securities. The Commission believes the collections would
improve the completeness, accuracy, accessibility and timeliness of data available to
regulators and therefore improve regulators’ ability to perform regulatory activities, in
particular market surveillance, examinations, investigations, and other enforcement
functions, as well as analysis and reconstruction of market events, and market analysis
and research to inform policy decisions. Regulators depend on data for many of these
activities and the improvements in the data qualities would thus improve the efficiency
and effectiveness of such regulatory activities.
If the Commission were to not require the collections (or were to require the
collections on a less frequent basis), the Commission believes that this could impact the
implementation of the CAT. The Commission believes that the CAT NMS Plan would
improve the completeness, accuracy, accessibility and timeliness of the data available to
regulators. To ensure that the Plan is implemented in accordance with these objectives,
the Commission believes the audit, assessments and reports prepared by the Participants
are necessary.
The Plan imposes certain information collections burdens that were not in the
Plan as originally proposed by the Participants. First, the Plan requires that the
Participants provide the Commission, and make public, at least one month prior to
submitting any rule filing to establish initial fees for CAT Reporters, an independent
audit of the fees, costs, and expenses incurred by the Participants on behalf of the
Company prior to the Effective Date of the Plan. Participants made independent audit
statements for CAT LLC and its predecessor CAT NMS LLC for the period prior to the
Effective Date available on August 5, 2021. 46 Because this collection is now complete,
the Commission assumes no further burden will be associated with the collection.
Second, the Plan requires the Participants to submit to the Commission a written
report, within 24 months of effectiveness of the Plan, discussing the feasibility, benefits,
and risks of allowing an Industry Member to bulk download the Raw Data that it has
submitted to the Central Repository. Commenters on the CAT NMS Plan Notice
expressed a desire to have bulk access to their own data for surveillance and internal
compliance purposes, as well as to facilitate the error correction process. The
Commission believes it is important to consider the potential efficiencies of allowing
Industry Members bulk access to their own CAT data, so long as such access does not
impact the security of the CAT Data. Without this assessment, the Commission and the
46

See https://www.catnmsplan.com/audited-financial-statements.
14

Participants will not have sufficient information to consider the tradeoffs of bulk access,
and therefore not be able to fully consider whether to permit Industry Members bulk
access to their own CAT Data.
Third, the Plan requires the Participants to provide the Commission with a written
assessment, within 36 months of effectiveness of the Plan, of the nature and extent of
errors in the Customer information submitted to the Central Repository and whether the
correction of certain data fields over others should be prioritized. The Commission
believes that requiring such an assessment could help ensure that the accuracy of CAT
Data is achieved in the most prompt and efficient manner. Without this assessment, the
Commission believes that unanticipated issues concerning the accuracy of the customer
information fields may go unidentified and negatively impact the overall accuracy of
CAT Data.
Fourth, the Plan requires the Participants to provide the Commission with a
written report, 36 months after effectiveness of the Plan, on the impact of tiered fees on
market liquidity, including an analysis of the impact of the tiered-fee structure on
Industry Members’ provision of liquidity. One commenter on the CAT NMS Plan Notice
expressed concern that use of a tiered fee structure could discourage displayed quotes
and, in response, the Participants explained that one of the reasons they chose to use a
tiered-fee funding model was to limit disincentives to provide liquidity. To help
determine whether the Plan’s funding model actually achieves the Participants’ stated
objective, the Commission believes it appropriate to require them to prepare such an
assessment of the impact of tiered fees once the CAT becomes fully operational. Without
this assessment, the Participants and the Commission could lack insight into whether the
fee model affects liquidity provision and market quality, which could hamper any
necessary adjustments to the Funding Model 47.
Fifth, the Plan requires the Participants to provide the Commission a written
assessment of the projected impact of any Material Systems Change on the Maximum
Error Rate, prior to the implementation of any Material Systems Change. The
Commission believes that Material Systems Changes either could result in new
challenges for CAT Reporters or simplify the means for reporting data. In either case,
the appropriateness of the Maximum Error Rate could be impacted, and thus warrant a
change. Without this assessment, the Participants and the Commission may lack a
thorough understanding of how a particular Material Systems Change would impact Error
Rates and whether to temporarily adjust the Error Rates around that Material Systems
Change.
Sixth, the Plan requires that the CAT LLC’s financials be (i) in compliance with
GAAP, (ii) be audited by an independent public accounting firm, and (iii) be made
publicly available. The Commission believes that this requirement will promote greater
transparency with respect to the Company’s financial accounting. Without this
requirement, that purpose will not be achieved.
47

This information request may ultimately be unnecessary, should Participants’
proposed changes to the fee structure be approved. See supra n. 27.
15

Finally, the Plan requires that each Participant conduct background checks for its
employees and contractors that will use the CAT System. The Commission believes that
this requirement is appropriate to ensure that only authorized and qualified persons are
using the CAT System. Without this requirement, that purpose would not be achieved.
7.

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

The information collection “Data Collection and Reporting” requires respondents
to record and report information to the Central Repository information more frequently
than quarterly; 48 specifically, certain information must be recorded contemporaneously
with a Reportable Event and reported to the Central Repository by 8:00 a.m. ET on the
trading day following the day such information has been recorded by a Participant or
broker-dealer industry member, 49 and other information must be reported by 8:00 a.m.
ET on the trading day following the day a broker-dealer member receives such
information. 50
In addition, the “Data Collection and Reporting” information collection requires
respondents to submit confidential information to the Central Repository, such as the
terms of an order, 51 customer account information, 52 and information sufficient to
identify a customer. 53 Relatedly, the information collection requirement that the
Participants develop and implement new surveillance systems, or enhance existing
surveillance systems, reasonably designed to make use of consolidated audit trail
information 54 is intended to enable Participants to better monitor trading through use of
this confidential information. As described in Item 10 below, Rule 613 includes

48

The CAT NMS Plan did not provide an estimated frequency of reporting for
Participants and broker-dealers.

49

See 17 CFR 242.613(c)(3); see also CAT NMS Plan, supra note 4, at Section
6.3(b), Section 6.4(b).

50

See 17 CFR 242.613(c)(4); see also CAT NMS Plan, supra note 4, at Section
6.4(b).

51

See 17 CFR 242.613(c)(7); see also CAT NMS Plan, supra note 4, at Section
6.3(d), Section 6.4(d).

52

See 17 CFR 242.613(c)(7)(viii)(B); see also CAT NMS Plan, supra note 4, at
Appendix C, Section A.1(A)(iii).

53

See 17 CFR 242.613(c)(7)(viii)(A); see also CAT NMS Plan, supra note 4, at
Section 6.4(ii)(A)(C).

54

See 17 CFR 242.613(f).
16

requirements that the CAT NMS Plan must contain to protect the confidentiality of this
information 55 and these requirements are detailed in the CAT NMS Plan. 56
The Commission notes that the information collection “Written Assessment of the
Operation of the Consolidated Audit Trail” would likely contain confidential information
concerning any deficiencies of the Consolidated Audit Trail and a plan for improvements.
The CAT NMS Plan requires the Participants to submit to the Commission the written
assessment annually. 57 To the extent that the Commission receives confidential
information pursuant to the CAT NMS Plan, such information will be kept confidential,
subject to the provisions of applicable law.
The information collections “Assessment of Material Systems Changes on Error
Rates” and “Background Checks” could potentially require the Participants to report and
disclose information more frequently than quarterly.
In addition, the information collections: “Bulk Access to Reported Data”; “Errors
in Customer Information”; “Impact of Tiered Fees on Market Liquidity”; and
“Assessment of Material Systems Changes on Error Rates” may require the Participants
to submit confidential information to the Commission. To the extent the Commission
receives confidential information pursuant to the CAT NMS Plan, such information will
be kept confidential, subject to the provisions of applicable law.
8.

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting
comments on this collection of information was published. No public comments were
received.
9.

Payment or Gift

Not applicable. The Commission has not provided any payment or gift to the
respondents.
10.

Confidentiality

The Commission believes that the CAT NMS Plan would require the collection
and reporting of confidential information, including Personally Identifiable Information 58
55

See 17 CFR 242.613(a)(1)(iv), 613(b)(6), 613(e)(4)(i), 613(e)(4)(i)(A).

56

See CAT NMS Plan, supra note 4, at Section 6.1(b), Section 6.2(b), Section
6.5(f)(i), Section 6.5(iv), Section 6.9, Section 6.12, Appendix D, Section 4.

57

See CAT NMS Plan, supra note 4, at Section 6.6(a)(i).

58

The term “Personally Identifiable Information,” as used by OMB, refers to
information which can be used to distinguish or trace an individual’s identity,

17

(“PII”), to identify customers. The Commission previously issued relief that exempts the
national securities exchanges and FINRA from collecting or retaining the most sensitive
PII data for natural persons: (1) individual social security numbers and individual
taxpayer identification numbers; (2) dates of birth; and (3) account numbers. In issuing
relief, the Commission stated that it shared the concerns raised by market participants,
industry representatives, and the participants to the CAT NMS Plan regarding the
collection of PII and agreed that only information necessary to achieve regulatory
objectives should be reported to the CAT, and as a result of the relief, broker-dealers are
required to report only name, address, and birth year for natural persons. 59 The CAT
NMS Plan contains several provisions that provide respondents with assurances that
confidential information would be protected.
Rule 613 requires the CAT NMS Plan to contain several provisions relating to the
security of the information. Specifically, Rule 613(a)(1)(iv) requires the Participants to
discuss the security and confidentiality of the information reported to the Central
Repository in the Plan. 60 Rule 613(b)(6) provides that the Plan must include a provision
requiring the Participants to provide to the Commission, at least every two years after
effectiveness of the national market system plan, a written assessment of the operation of
the consolidated audit trail, which would include an evaluation of the performance of the
consolidated audit trail’s system security. 61 Rule 613(e)(4)(i) also requires that the Plan
include policies and procedures, including standards, to be used by the CAT Plan
Processor to ensure the security and confidentiality of all information reported to the
Central Repository. 62 The plan sponsors, and employees of the plan sponsors and Central
Repository, would be required to agree to use appropriate safeguards to ensure the
confidentiality of such data. 63 Further, Rule 613 requires that the CAT NMS Plan require
that audit trail data may not be used by the Participants other than for surveillance or
other regulatory purposes. 64
The CAT NMS Plan provides that the CAT Plan Processor is responsible for the
security and confidentiality of all CAT Data received and reported to the Central
Repository, including during all communications between CAT Reporters and the Plan
Processor, data extraction, data manipulation and transformation, loading to and from the
such as their name, social security number, biometric records, etc. alone, or when
combined with other personal or identifying information which is linked or
linkable to a specific individual, such as date and place of birth, mother’s maiden
name, etc. See OMB Memorandum M-07-16 (May 22, 2007).
59
60

Exchange Act Release No. 88393 (March 17, 2020), 85 FR 16152 (March 20,
2020).
17 CFR 242.613(a)(1)(iv).

61

17 CFR 242.613(b)(6).

62

17 CFR 242.613(e)(4)(i).

63

17 CFR 242.613(e)(4)(i)(A).

64

Id.
18

Central Repository, and data maintenance by the Central Repository. 65 The Plan
Processor must, among other things, require that individuals with access to the Central
Repository agree to use CAT Data only for appropriate surveillance and regulatory
activities and to employ safeguards to protect the confidentiality of CAT Data. 66
In addition, the Plan Processor must develop a comprehensive information
security program, as well as a training program that addresses the security and
confidentiality of all information accessible from the consolidated audit trail and the
operational risks associated with accessing the Central Repository. 67 The Plan Processor
must also designate one of its employees as the Chief Information Security Officer;
among other things, the Chief Information Security Officer is responsible for creating and
enforcing appropriate policies, procedures, and control structures regarding data
security. 68 The Technical Specifications, which the Plan Processor must publish, must
include a detailed description of the data security standards for the consolidated audit
trail. 69
Appendix D of the CAT NMS Plan sets forth minimum data security
requirements for CAT that the Plan Processor must meet. 70 For example, Appendix D
enumerates various connectivity, data transfer, and encryption requirements, such as that
the CAT System must have encrypted internet connectivity, CAT Reporters must connect
to CAT infrastructure using secure methods such as private lines or virtual private
network connections over public lines, CAT Data must be encrypted at-rest and in-flight
using industry standard best practices. 71 Additional requirements regarding data storage,
data access, breach management, and PII data are also specified in Appendix D. 72
Further, the Participants must establish and enforce policies and procedures that ensure
the confidentiality of the CAT Data obtained from the Central Repository, limit the use of
CAT Data obtained from the Central Repository solely for surveillance and regulatory
purposes, 73 implement effective information barriers between each Participant’s
regulatory and non-regulatory staff with regard to CAT Data, and limit access to CAT
65

See CAT NMS Plan, supra note 4, at Section 6.5(f)(i), (iv).

66

Id. at Section 6.5(f)(i).

67

Id. at Sections 6.1(m), 6.12.

68

Id. at Section 6.2(b).

69

Id. at Section 6.9.

70

Id. at Appendix D, Section 4.

71

Id. at Appendix D, Section 4.1.2.

72

Id. at Appendix D, Section 4.1.3–4.1.6.

73

The Commission notes that regulatory purposes includes, among other things,
market surveillance, examinations, investigations, and other enforcement
functions, analysis and reconstruction of market events, and market analysis and
research to inform policy decisions.
19

Data to designated persons. 74 However, a Participant may use the Raw Data 75 it reports
to the Central Repository for “commercial or other” purposes if not prohibited by
applicable law, rule or regulation. 76
The Participants will not be submitting the Background Check information to the
Commission and the Commission is not collecting this information; however, if the
Commission receives any confidential information pursuant to the CAT NMS Plan, such
information will be kept confidential, subject to the provisions of applicable law.
To the extent that the Commission receives confidential information pursuant to
the CAT NMS Plan, such information will be kept confidential, subject to the provisions
of applicable law.
11.

Sensitive Questions

The SEC does not collect information about individuals, but rather, Rule 613 is
collected by the CAT NMS Plan Processor (FINRA CAT), which is managed by selfregulatory organizations (national securities exchanges and FINRA), therefore, a PIA,
SORN, and PAS are not required.
12.

Burden of Information Collection

The Commission estimates that the information collection requirements of Rule
613 will apply to 1,375 respondents who will incur an average aggregate total of
approximately 4,931,332 burden hours per year to comply with the requirements. The
hour burden is calculated as discussed below.
Rule 613 applies to the 25 Participants (the 24 national securities exchanges and
the one national securities association (FINRA)) currently registered with the
Commission.77 This is an increase of 1 Participant from the previous Paperwork
74

See CAT NMS Plan, supra note 4, at Section 6.5(f)(ii), (g).

75

Raw data is defined as “Participant Data and Industry Member Data that has not
been through any validation or otherwise checked by the CAT System.” Id. at
Section 1.1.

76

Id. at Section 6.5(f)(i).

77

The Participants are: BOX Exchange LLC, Cboe BYX Exchange, Inc., Cboe
BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc.,
Cboe C2 Exchange, Inc, Cboe Exchange, Inc., Financial Industry Regulatory
Authority, Inc., Investors Exchange LLC, Long-Term Stock Exchange, Inc.,
MEMX LLC, Miami International Securities Exchange LLC, MIAX Emerald,
LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE,
LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market
LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc.,

20

Reduction Act Analysis. The Commission also estimates that Rule 613 applies to 1,350
broker-dealers. 78
A. Burden on National Securities Exchanges and National Securities
Associations
Central Repository
Rule 613 requires the Participants to jointly establish a Central Repository tasked
with the receipt, consolidation, and retention of the reported order and execution
information. The Participants previously issued a request for proposal soliciting Bids
from entities to act as the consolidated audit trail’s Plan Processor, and selected Thesys
Technologies, LLC as the Consolidated Audit Trail Plan Processor on January 17,
2017. 79 On February 27, 2019, the Participants announced that FINRA has been selected

NYSE Chicago, Inc. and NYSE National, Inc. The Commission has adjusted its
estimates pertaining to the Participants due to the addition of one new Participants
(from 24 Participants in 2020 Paperwork Reduction Act analysis to 25
Participants in the instant Paperwork Reduction Act analysis).
78

The Commission understands that there are approximately 3,510 broker-dealers,
as of December 2022; however, not all broker-dealers are expected to have CAT
reporting obligations. The Participants previously reported that approximately
1,800 broker-dealers quoted or executed transactions in NMS Securities, Listed
Options or OTC Equity Securities and would likely have CAT reporting
obligations. The Commission previously revised this estimate to 1,500 as of
2020, and now revises that estimate to 1,350 broker-dealers quoting or executing
transactions in NMS Securities, Listed Options or OTC Equity Securities, and
would likely have CAT reporting obligations. The Commission believes that this
is consistent with the reduced number of broker-dealers overall (from 4,138 to
approximately 3,734 in 2020, to now 3,510 broker-dealers). This determination is
based on experience and knowledge gained in discussions with Participants and
the Plan Processor during the development of the consolidated audit trail.- The
Commission further believes that this reduction is a reduction in the number of
Small OATS-Reporting Broker-Dealers, which was previously calculated by
identifying all other categories of CAT reporting broker-dealers and determining
that the remaining number of the estimated 1,350 broker-dealers were Small
OATS-Reporting Broker-Dealers. The Commission understands that the
approximately 2,160 remaining registered broker-dealers either trade in asset
classes not currently included in the definition of Eligible Security or do not trade
at all (e.g., broker-dealers for the purposes of underwriting, advising, private
placements).

79

See “SROs Select Thesys Technologies, LLC as Consolidated Audit Trail Plan
Processor,” https://www.prnewswire.com/news-releases/sros-select-thesystechnologies-llc-as-consolidated-audit-trail-plan-processor-300392226.html.
21

as Plan Processor, replacing Thesys Technologies, LLC. 80 The Plan Processor is
responsible for building, operating, administering and maintaining the Central
Repository.
The Plan’s Operating Committee, which consists of one voting representative of
each Participant, 81 is responsible for the management of CAT LLC, 82 including the
Central Repository, acting by majority or Supermajority Vote, depending on the issue. In
managing the Central Repository, among other things, the Operating Committee has the
responsibility to authorize the following actions of the CAT LLC: (1) interpreting the
Plan; 83 (2) determining appropriate funding-related policies, procedures and practices
consistent with Article XI of the CAT NMS Plan; 84 (3) terminating the Plan Processor;
(4) selecting a successor Plan Processor (including establishing a Plan Processor
Selection Subcommittee to evaluate and review Bids and make a recommendation to the
Operating Committee with respect to the selection of the successor Plan Processor); 85 (5)
entering into, modifying or terminating any Material Contract; 86 (6) making any Material
Systems Change; 87 (7) approving the initial Technical Specifications or any Material
Amendment to the Technical Specifications proposed by the Plan Processor; 88 (8)
amending the Technical Specifications on its own motion; 89 (9) approving the Plan
Processor’s appointment or removal of the CCO, CISO, or any Independent Auditor in
accordance with Section 6.1(b) of the CAT NMS Plan; 90 (10) approving any
recommendation by the CCO pursuant to Section 6.2(a)(v)(A) of the CAT NMS Plan; 91
(11) selecting the members of the Advisory Committee; 92 (12) selecting the Operating

80

See “CAT NMS Selects FINRA as Consolidated Audit Trail Plan Processor”
available at: https://www.catnmsplan.com/wpcontent/uploads/2019/02/CAT_FINRA_Press_Release_FINAL.pdf.

81

See id. at Section 4.2(a).

82

See supra note 28.

83

See CAT NMS Plan, supra note 4, at Section 4.3(a)(iii).

84

See id. at Section 4.3(a)(vi).

85

See id. at Section 4.3(b)(i).

86

See id. at Section 4.3(b)(iv).

87

See id. at Section 4.3(b)(v).

88

See id. at Section 4.3(b)(vi).

89

See id. at Section 4.3(b)(vii).

90

See id. at Section 4.3(b)(iii).

91

See id. at Section 4.3(a)(iv).

92

See id. at Section 4.3(a)(ii).
22

Committee chair; 93 and (13) determining to hold an Executive Session of the Operating
Committee. 94
Additionally, in managing the Central Repository, the Operating Committee has
the responsibility and authority, as appropriate, to: (1) direct the CAT LLC to enter into
one or more agreements with the Plan Processor obligating the Plan Processor to perform
the functions and duties contemplated by the Plan to be performed by the Plan Processor,
as well as such other functions and duties the Operating Committee deems necessary or
appropriate; 95 (2) appoint as an Officer of the Company the individual who has direct
management responsibility for the Plan Processor’s performance of its obligations with
respect to the CAT; 96 (3) approve policies, procedures, and control structures related to
the CAT System that are consistent with Rule 613(e)(4), Appendix C and Appendix D of
the CAT NMS Plan that have been developed and will be implemented by the Plan
Processor; 97 (4) approve any policy, procedure or standard (and any material
modification or amendment thereto) applicable primarily to the performance of the Plan
Processor’s duties as the Plan Processor; 98 (5) for both the CCO and CISO, render their
annual performance reviews and review and approve their compensation; 99 (6) review the
Plan Processor’s performance under the Plan at least once each year, or more often than
once each year upon the request of two Participants that are not Affiliated Participants; 100
(7) in conjunction with the Plan Processor, approve and regularly review (and update as
necessary) SLAs governing the performance of the Central Repository; 101 (8) maintain a
Compliance Subcommittee for the purpose of aiding the CCO as necessary; 102 and (9)
designate by resolution one or more Subcommittees it deems necessary or desirable in
furtherance of the management of the business and affairs of the Company. 103
The Commission previously estimated the initial burden over the 12-month period
after the effectiveness of the CAT NMS Plan within which the Participants would be

93

See id. at Section 4.3(a)(i).

94

See id. at Section 4.3(a)(v).

95

See id. at Section 6.1(a).

96

See id. at Section 4.6(b).

97

See id. at Section 6.1(c).

98

See id. at Section 6.1(e).

99

See id. at Section 6.2(a)(iv) and Section 6.2(b)(iv).

100

See id. at Section 6.1(n).

101

See id. at Section 6.1(h).

102

See id. at Section 4.12(b).

103

See id. at Section 4.12(a).
23

required to select an initial Plan Processor 104 and begin reporting to the Central
Repository. 105 The Participants have subsequently selected a Plan Processor and have
begun reporting to the Central Repository, so the Commission deems the initial burden of
this information collection is completed. 106
For its ongoing time burden and cost estimates associated with the management of
the Central Repository, the Commission is relying on estimates provided in the CAT
NMS Plan for the development of the CAT NMS Plan, which the Participants “have
accrued, and will continue to accrue,” 107 and have described in the CAT NMS Plan as
“reasonably associated with creating, implementing, and maintaining the CAT upon the
Commission’s adoption of the CAT NMS Plan.” 108
The Commission believes that the activities of the Operating Committee overlap
with those undertaken by the Participants to develop the CAT NMS Plan. The CAT
NMS Plan describes the costs incurred by the Participants to develop the CAT NMS Plan
as including “staff time contributed by each Participant to, among other things, determine
the technological requirements for the Central Repository, develop the RFP, evaluate
Bids received, design and collect the data necessary to evaluate costs and other economic
impacts, meet with Industry Members to solicit feedback, and complete the CAT NMS
Plan submitted to the Commission for consideration.” 109 For the management of the
Central Repository, the Operating Committee has comparable responsibilities. As part of
its overall management of the Central Repository, the Operating Committee has
responsibility for decisions associated with the technical requirements of the Central
Repository. 110 Furthermore, the Operating Committee is required to authorize the
104

Rule 613(a)(3)(i) requires the selection of the Plan Processor within 2 months
after effectiveness of the CAT NMS Plan. See 17 CFR 242.613(a)(3)(i).

105

Rule 613(a)(3)(iii) requires the Participants to provide to the Central Repository
the data required by Rule 613(c) within one year after effectiveness of the CAT
NMS Plan. See 17 CFR 242.613(a)(3)(iii).

106

See “CAT NMS Announces Initiation of Reporting to the Consolidated Audit
Trail,” CAT NMS, LLC (November 16, 2018), available at:
https://www.catnmsplan.com/wp-content/uploads/2018/11/Press-Release-CATLaunch-final.pdf.

107

See id. at Appendix C, Section B.7(b)(iii).

108

See id.

109

See id.

110

For example, the Operating Committee would be required to authorize the
following actions of the CAT LLC: entering into, modifying or terminating any
Material Contract (see id. at Section 4.3(b)(iv)); making any Material Systems
Change (see id. at Section 4.3(b)(v)); amending the Technical Specifications on
its own motion (see id. at Section 4.3(b)(vii)); and approving the initial Technical
Specifications or any Material Amendment to the Technical Specifications

24

selection of the members of the Advisory Committee, 111 comprising members of the
Industry, to advise the Participants on the implementation, operation, and administration
of the Central Repository. 112 Because the responsibilities of the Operating Committee are
similar to those described in the CAT NMS Plan for the development of the CAT NMS
Plan itself, the Commission believes that it is reasonable to use the CAT NMS Plan
estimates as the basis for its burden and cost estimates for the ongoing management of
the Central Repository.
Each Participant contributes an employee and a substitute for the employee to
serve on the Operating Committee oversees the Central Repository.
The Operating Committee will continue to be responsible for the management of
the Central Repository. The Commission estimates that each of the Participants would
incur an average ongoing annual time burden of 576 burden hours associated with the
continued management of the Central Repository, for an aggregate annual estimate of
14,400 burden hours across the Participants (576 x 25). 113 The Commission believes it is
proposed by the Plan Processor (see id. at Section 4.3(b)(vi)). Further, the
Operating Committee would be able to approve policies, procedures, and control
structures related to the CAT System that are consistent with Rule 613(e)(4),
Appendix C and Appendix D of the CAT NMS Plan that have been developed
and will be implemented by the Plan Processor (see id. at Section 6.1(c)); and in
conjunction with the Plan Processor, approve and regularly review (and update as
necessary) SLAs governing the performance of the Central Repository (see id. at
Section 6.1(h)).
111

See id. at Section 4.3(a)(ii).

112

See id. at Section 4.13(d).

113

The Commission is basing this estimate on the hour burden estimate provided in
the CAT NMS Plan for the development of the CAT NMS Plan. The
Commission notes that the CAT NMS Plan describes the hour burden estimate for
the development of the CAT NMS Plan as a burden the Participants will continue
to accrue; therefore, the Commission believes that it is reasonable to use this
burden estimate as the basis for its ongoing hour burden estimate for the
maintenance of the Central Repository, particularly as the Commission believes
the reasons for the staff time incurred for the development of the CAT NMS Plan
would be comparable to those of the staff time to be incurred by the Operating
Committee for the continued management of the Central Repository. See id.
(stating “…the Participants have accrued, and will continue to accrue, direct costs
associated with the development of the CAT NMS Plan. These costs include staff
time contributed by each Participant to, among other things, determine the
technological requirements for the Central Repository, develop the RFP, evaluate
Bids received, design and collect the data necessary to evaluate costs and other
economic impacts, meet with Industry Members to solicit feedback, and complete
the CAT NMS Plan submitted to the Commission for consideration. The

25

reasonable to assume that the ongoing aggregate annual internal burden, across all
Participants, associated with the continued management of the Central Repository does
not increase or decrease with changes to the number of Participants.
Data Collection and Reporting
Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
Participant, and further to document the life of the order through the process of routing,
modification, cancellation and execution (in whole or in part) of the order. 114 Rule
613(c) requires the CAT NMS Plan to impose requirements on Participants to record and
report CAT information to the Central Repository in accordance with specified
timelines. 115
Rule 613(c) requires the CAT NMS Plan to require the collection and reporting of
some information that Participants already collect to operate their business and are
required to maintain in compliance with Section 17(a) of the Exchange Act and Rule 17a1 thereunder. 116 For instance, the Commission believes that the national securities
exchanges keep records pursuant to Section 17(a) of the Exchange Act and Rule 17a-1
thereunder in electronic form, of the receipt of all orders entered into their systems, as
well as records of the routing, modification, cancellation, and execution of those orders.
However, Rule 613 requires the CAT NMS Plan to require the Participants to collect and
report additional and more detailed information, and to report the information to the
Central Repository in a uniform electronic format, or in a manner that would allow the
Central Repository to convert the data to a uniform electronic format for consolidation
and storage.
The CAT NMS Plan provides estimated costs for hardware, software, third-party
providers, and Participants’ full-time employees (“FTE’s) to be incurred by the

Participants estimate that they have collectively contributed 20 FTEs in the first
30 months of the CAT NMS Plan development process”). (20 FTEs / 30 months)
= 2/3 FTEs per month for all of the Participants to continue management of the
Central Repository. Converting this into burden hours, (2/3 FTEs) x (12 months)
x (1,800 burden hours per year) = 14,400.72 ongoing annual burden hours for all
of the Participants to continue management of the Central Repository. (14,400
ongoing annual burden hours for all Participants / 25 Participants) = 576 ongoing
annual burden hours for each Participant to continue management of the Central
Repository.
114

17 CFR 242.613(c)(1). See also CAT NMS Plan, supra note 4, at Section 6.3.

115

17 CFR 242.613(c). See also CAT NMS Plan, supra note 4, at Section 6.3.

116

15 U.S.C. 78q(a); 17 CFR 240.17a-1.
26

Participants to report CAT Data. 117 For these estimates, the Commission is relying on the
estimates provided by the Participants because it believes that the Plan’s estimates for
Participants to report CAT Data are reliable since all of the Participants provided
estimates, and most Participants have experience collecting audit trail data, as well as
knowledge of both the requirements of Rule 613 as well as their current business
practices. The Commission notes that the Participants provided these numbers based on a
study (the “Participants Study”) that was distributed to 19 Participants on August 11,
2014. The Commission has divided certain numbers provided by the Participants Study
by 19 in order to calculate estimates of burdens and/or costs per Participant, where
appropriate, and further adjusted calculations to account for the increased number of
Participants (25). 118
The Commission notes that throughout this Paperwork Reduction Act analysis, it
is categorizing the FTE cost estimates for the Participants, as well as the broker-dealer
respondents, that were provided in the CAT NMS Plan as an internal compliance cost not
an actual Item 13 cost. The Commission: (1) divided the FTE cost estimates by a divisor
of $424,350, which is the Commission’s estimated average salary for a full-time
equivalent employee in the securities industry in a job category associated with
regulatory data reporting; 119 and then (2) multiplied the quotient by 1,800 (the number of
117

Third-party provider costs are generally legal and consulting costs, but may
include other outsourcing. The template used by respondents is available at
http://catnmsplan.com/PastEvents/ under the Section titled “6/23/14” at the “Cost
Study Working Template” link.

118

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(i)(A)(1).
Specifically, estimates relating to Data Collection and Reporting (Participants)
and Surveillance, as described below, have been modified based on this approach.

119

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(ii)(C), at n.192.
The Participants represented that the cost per FTE is $401,440. The $401,440
figure used in the CAT NMS plan was based on a Programmer Analyst’s salary
($193 per hour) from SIFMA’s Management & Professional Earnings in the
Securities Industry 2008, multiplied by 40 hours per week, then multiplied by 52
weeks per year. The Commission updated this number to include recent salary
data for other job categories associated with regulatory data reporting in the
securities industry, using the hour and multiple methodology used by the
Commission in its paperwork burden analyses. The Commission has used
$424,350 as its annual cost per FTE for purposes of its hourly burden estimates.
The $424,350 FTE cost = 25% Compliance Manager + 75% Programmer Analyst
(0.25) x ($283 per hour x 1,800 working hours per year) + (0.75) x ($220 per hour
x 1,800 working hours per year). The $283 per hour figure for a Compliance
Manager and the $220 per hour figure for a Programmer Analyst are from
SIFMA’s Management & Professional Earnings in the Securities Industry 2013,
modified by the Commission to account for an 1,800-hour work-year and
multiplied by 5.35 to account for bonuses, firm size, employee benefits and
overhead.
27

hours a full-time equivalent employee is estimated to work per year). The Commission
believes it is appropriate to use the same calculation now because the Commission
continues to rely on estimated costs and figures provided by the Plan Participants in the
CAT NMS Plan.
The Commission previously estimated initial burden hours to develop and
implement the needed systems changes to capture the required information and transmit it
to the Central Repository in compliance with the Rule for each Participant. As noted
above, the Participants have begun reporting to the consolidated audit trail and thus the
Commission believes that this information collections requirement is complete for the
Participants. 120
However, the Commission estimates that Rule 613 would impose on each
Participant ongoing annual burdens associated with, among other things, personnel time
to monitor each Participant’s reporting of the required data and the maintenance of the
systems to report the required data; and implementing changes to trading systems that
might result in additional reports to the Central Repository. The CAT NMS Plan
provided the following average aggregate FTE internal compliance cost that the
Participants were expecting to incur to maintain data reporting systems to be in
compliance with Rule 613: $7,300,000 in anticipated annual FTE costs for operational,
technical/development, and compliance functions related to data reporting. 121 Based on
this estimate provided in the CAT NMS Plan, the Commission believes that it would take
each Participant 1,629 ongoing burden hours per year 122 to continue compliance with
Rule 613. Therefore, the Commission estimates that the estimated aggregate ongoing
burden for all Participants would be approximately 40,725 hours. 123 Based on the
anticipated burden hours and the revised estimated salary per FTE, the aggregate internal
cost of compliance to Participants would be approximately $11,748,167 per year. 124
120

See, supra, note 106.

121

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(B)(2).

122

($7,300,000 in anticipated Participant annual FTE costs) / (19 Participants) =
$384,210.53 in anticipated per Participant annual FTE costs. ($384,210.53 in
anticipated per Participant FTE costs) / ($424,350 FTE cost per Participant) =
0.905 anticipated FTEs per Participant. (0.905 FTEs) x (1,800 working hours per
year) = 1,629 burden hours per Participant to maintain CAT Data reporting. The
Commission is using the approximate salary for a FTE at the time the Participants
provided the estimate to calculate burden hours, because the $7,300,000 estimated
costs were based on that approximate salary. Because the estimated salary has
risen, the aggregate cost per participant has also risen, although the individual
Participant burden hours have remained steady.

123

40,725 annual burden hours = (25 Participants) x (1,629 annual burden hours).

124

The Commission is using $519,256 as its annual cost per FTE for purposes of its
cost estimates. 519,256 FTE cost = 25% Compliance Manager + 75% Programmer
Analyst (0.25) x ($344 per hour x 1,800 working hours per year) + (0.75) x ($267 per

28

The Commission estimates that it would take the Participants approximately
40,725 burden hours per year to maintain systems changes needed to comply with the
data reporting requirements of the consolidated audit trail [(1,629 ongoing burden hours)
x (25 Participants)]. The estimated aggregate cost has risen to $11,748,167 from
$7,300,000, because of the additional Participant and because the Commission has
revised its estimated costs for FTE to reflect inflation. This estimated burden has
changed because the Commission is now applying this estimation to 25 Participants. 125
Collection and Retention of NBBO, Last Sale Data and
Transaction Reports
Rule 613(e)(7) provides that the CAT NMS Plan must require the Central
Repository to collect and retain on a current and continuous basis NBBO information for
each NMS security, transaction reports reported pursuant to an effective transaction
reporting plan, and Last Sale Reports reported pursuant to the Options Price Reporting
Authority (“OPRA”) Plan. 126
Additionally, the CAT NMS Plan must require the Central Repository to maintain
this data in a format compatible with the order and event information consolidated and
stored pursuant to Rule 613(c)(7). 127 Further, the CAT NMS Plan must require the
Central Repository to retain the information collected pursuant to paragraphs (c)(7) and
(e)(7) of Rule 613 for a period of not less than five years in a convenient and usable
uniform electronic format that is directly available and searchable electronically without
any manual intervention. 128 The Commission notes that the CAT NMS Plan includes
these data as “SIP Data” to be collected by the Central Repository. 129 The Commission
believes the burden associated with SIP Data is included in the burden to the Participants
associated with the implementation and maintenance of the Central Repository.

hour x 1,800 working hours per year). The $344 per hour figure for a Compliance
Manager and the $267 per hour figure for a Programmer Analyst are from SIFMA’s
Management & Professional Earnings in the Securities Industry 2013, modified to
account for inflation as of December 2022. These numbers are further modified by the
Commission to account for an 1,800-hour work-year and multiplied by 5.35 to account
for bonuses, firm size, employee benefits and overhead. .905 anticipated FTEs per
Participant x 519,256 per FTE= $469,926.68 per Participant per year. $469,926.68 x 25
Participants = $11,748,167.
125
See supra notes 117 and 118, and accompanying text.
126

See 17 CFR 242.613(e)(7).

127

Id.

128

See 17 CFR 242.613(e)(8).

129

See CAT NMS Plan, supra note 4, at Section 6.5(a)(ii).
29

d.

Surveillance

Rule 613(f) provides that the CAT NMS Plan must require that every national
securities exchange and national securities association develop and implement a
surveillance system, or enhance existing surveillance systems, reasonably designed to
make use of the consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the surveillance
systems be implemented within fourteen months after effectiveness of the CAT NMS
Plan.
The CAT NMS Plan states that the estimated total initial FTE internal compliance
cost to the Participants to implement surveillance programs within the Central Repository
is $17,500,000 for operational, technical/development, and compliance staff to be
engaged in the creation of surveillance programs. 130 Because it has been more than
fourteen months since the CAT NMS Plan became effective, the Commission assumes
that these costs have already been incurred and are no longer applicable for purposes of
future estimates.
The CAT NMS Plan states that the estimated total annual FTE internal
compliance cost associated with the ongoing maintenance of surveillance programs for
the Participants would be $66,700,000 for internal operational, technical/development,
and compliance staff to be engaged in the maintenance of surveillance programs. 131
Based on the estimates provided in the CAT NMS Plan, the Commission estimates that
the ongoing annual internal hour burden to maintain the new or enhanced surveillance
systems reasonably designed to make use of the consolidated audit trail data for each
Participant would be approximately 14,891.4 hours, 132 for an aggregate annual burden of

130

See id. at Appendix C, Section B.7(b)(iii)(B)(2).

131

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(B)(2). This
number is not adjusted for inflation, and is therefore lower than the costs would
be based on costs today. The aggregate annual cost to Participants today would
be approximately $107,395,122, accounting for both inflation and the additional
Participant.

132

($66,700,000 in anticipated ongoing FTE costs) / (19 Participants) =
$3,510,526.31 in anticipated ongoing FTE costs per Participant. ($3,510,526.31
in anticipated ongoing FTE costs per Participant) / ($424,350 FTE cost per
Participant) = 8.273 anticipated FTEs per Participant. (8.273 FTEs) x (1,800
working hours per year) = 14,891.4 ongoing burden hours per Participant to
maintain the new or enhanced surveillance systems. The Commission used the
estimated cost of a FTE without adjustment for inflation because the anticipated
ongoing costs were similarly not adjusted for inflation.
30

372,285 burden hours. 133 This estimated burden has changed because the Commission is
now applying this estimation to 25 Participants, and because the Commission has
adjusted the method in which it estimates the per-Participant burden, by using the
estimation provided in the Participants Study, adjusted by the number of Participants that
contributed to the relevant CAT NMS Plan estimation (19). 134
e. Written Assessment of Operation of the Consolidated Audit
Trail
Rule 613(b)(6) provides that the CAT NMS Plan must require the Participants to
provide the Commission a written assessment of the consolidated audit trail’s operation at
least every two years, once the CAT NMS Plan is effective. 135 The assessment must
address, at a minimum, with respect to the consolidated audit trail: (i) an evaluation of its
performance; (ii) a detailed plan for any potential improvements to its performance;
(iii) an estimate of the costs associated with any such potential improvements; and (iv) an
estimated implementation timeline for any such potential improvements, if applicable. 136
Thus, the Participants must, among other things, undertake an analysis of the
consolidated audit trail’s technological and computer system performance.
Section 6.6 of the CAT NMS Plan, as approved by the Commission, requires the
assessment contemplated by Rule 613(b)(6) to be submitted on an annual basis. Section
6.6 of the Plan also requires the Participants to provide an estimate of the costs associated
with any potential improvements to the performance of the CAT, including an assessment
of the potential impact on competition, efficiency and capital formation. Section 6.6 of
the Plan also requires the annual assessment to consider the benefits of potential
improvements to the CAT, including to investor protection. 137
133

(14,891.4 annual burden hours per Participant to maintain new or enhanced
surveillance systems) x (25 Participants) = 372,285 aggregate annual burden
hours. Using the revised cost per FTE supra note124, the approximate annual
cost per Participant is$ 4.295,804.89 (519,256 x 8.273 FTEs). The aggregate
annual cost to Participants would therefore be $107,395,122.

134

See supra notes 117 and 118 and accompanying text.

135

17 CFR 242.613(b)(6).

136

Id.

137

The Participants’ annual written assessment must also include: (1) an evaluation
of the information security program of the CAT to ensure that the program is
consistent with the highest industry standards for protection of data; (2) an
evaluation of potential technological upgrades based upon a review of
technological developments over the preceding year, drawing on necessary
technological expertise, whether internal or external; (3) an assessment of efforts
to reduce the time to restore and recover CAT Data at a back-up site; (4) an
assessment of how the Plan Processor and SROs are monitoring Error Rates and

31

The CAT NMS Plan also states that the CCO will oversee the assessment required
by Rule 613(b)(6), and would allow the Participants to review and comment on the
assessment before it is submitted to the Commission. 138 The CCO is an employee of the
Plan Processor and would be compensated by the Plan Processor. 139 The Commission
assumes that the overall cost and associated burden on the Participants to implement and
maintain the Central Repository includes both the compensation for the Plan Processor as
well as its employees for the implementation and maintenance of the Central Repository.
The Commission estimates that it would take each Participant approximately 150
annual burden hours of internal legal, compliance, business operations, and information
technology staff time to review and comment on the assessment prepared by the CCO of
the operation of the CAT. Therefore, the Commission estimates that the ongoing annual
burden of submitting a written assessment each year would be 150 ongoing burden hours
per Participant, for an estimated aggregate annual ongoing burden of 3,750 hours. 140
The Commission estimates that it would take the Participants a total of
approximately 3,750 hours per year to review, comment on, and submit the written
assessment to the Commission [(150 ongoing burden hours) x (25 Participants)].
f. Assessment of Industry Member Bulk Access to Reported
Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits, and risks of allowing an Industry
Member to bulk download the Raw Data it submitted to the Central Repository, within 24
months of effectiveness of the Plan.
The Commission estimates that it would take each Participant approximately 15
initial, one-time burden hours of internal legal, compliance, business operations, and

addresses the application of Error Rates based on product, data element or other
criteria; (5) a copy of the evaluation required by Section 6.8(c) of the Plan as to
whether industry standards have evolved such that: (i) the clock synchronization
standard in Section 6.8(a) should be shortened; or (ii) the required timestamp in
Section 6.8(b) should be in finer increments; and (6) an assessment of whether
any data elements should be added, deleted or changed. See CAT NMS Plan
Order, supra note 6, at Section IV.H.
138

See CAT NMS Plan, supra note 4, at Section 6.6.

139

Id. at Section 6.2(a).

140

3,750 ongoing annual burden hours = (150 ongoing annual burden hours) x (25
Participants).
32

information technology staff time to prepare and submit the assessment. 141 Therefore,
the Commission estimates that the initial one-time burden of submitting a written
assessment would be 15 initial burden hours per Participant, for an estimated aggregate
initial burden of approximately 375 hours. 142 Annualized over three years, this would be
an average annual burden of 5 hours per Participant or 125 hours for all Participants.
The Commission estimates that it would take the Participants an aggregate
average of approximately 125 hours per year to submit a written report detailing the
Participants’ consideration of bulk access by Industry Members (15 initial, one-time
burden hours amortized over three years) x (25 Participants). This burden has changed
because of the increased number of Participants (25 Participants instead of 24
Participants).
g. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of errors in the customer information submitted to the Central
Repository and whether to prioritize the correction of certain data fields over others,
within 36 months of effectiveness of the Plan.
The Commission estimates that it would take each Participant approximately 24
initial, one-time burden hours of internal legal, compliance, and information technology
staff time to prepare and submit the assessment of errors. 143 Therefore, the Commission
141

The Commission estimates that 15 internal burden hours = (Computer Operations
Department Manager at 2 hours) + (Senior Database Administrator at 5 hours) +
(Senior Systems Analyst at 2 hours) + (Systems Analyst at 2 hours) + (Attorney at
2 hours) + (Assistant General Counsel at 2 hours).

142

375 initial one-time internal burden hours = (15 initial, one-time burden hours per
Participant) x (25 Participants).

143

The Commission estimates that 24 internal burden hours = (Computer Operations
Department Manager at 3 hours) + (Senior Database Administrator at 4 hours) +
(Senior Systems Analyst at 2 hours) + (Systems Analyst at 2 hours) +
(Compliance Attorney at 5 hours) + (Attorney at 4 hours) + (Assistant General
Counsel at 4 hours). The Commission believes that the assessment of the errors
in the customer information submitted to the Central Repository and the
prioritization of the correction of certain data fields over others would require the
time of certain information technology staff and their managers. A Database
Administrator would be involved in analyzing the errors in the customer
information submitted to the Central Repository and in suggesting any changes to
the Central Repository, and Systems Analysts would assess the impact of any
proposed changes to the Central Repository on other systems. Further, the
Commission believes that the prioritization of the correction of data fields would
require the input of compliance and legal staff, and that legal staff would need to
review the assessment before it is submitted.
33

estimates that the initial, one-time burden of preparing and submitting a written
assessment would be 24 initial, one-time burden hours per Participant (8 hours per
Participant when annualized over three years), for an estimated aggregate initial, onetime burden of approximately 600 hours. 144
When annualized over three years, the average aggregate burden on Participants is
approximately 200 hours per year to submit the written assessment of errors in the
customer information fields (24 initial, one-time burden hours amortized over three
years) x (25 Participants). This burden has changed because of the increased number of
Participants (25 Participants instead of 24 Participants).
h. Report on Impact of Tiered Fees on Market Liquidity
Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report to study the impact of tiered-fees on market liquidity, including an analysis
of the impact of the tiered-fee structure on Industry Members provision of liquidity,
within 36 months of effectiveness of the Plan.
The Commission estimates that it would take each Participant approximately
18.75 initial, one-time burden hours of internal legal and business operations staff time to
prepare and submit the report studying the impact of tiered fees on market liquidity.
Therefore, the Commission estimates that the initial, one-time burden of preparing and
submitting the report studying the impact of tiered fees on market liquidity would be
18.75 initial, one-time burden hours per Participant (6.25 hours per year when annualized
over three years), for an estimated aggregate initial, one-time burden of approximately
468.75 hours (approximately 156 hours per year when annualized over three years). 145
The Commission thus estimates that it would take the Participants an aggregate
average of approximately 156 hours per year to prepare and submit the report studying
the impact of tiered fees on market liquidity (18.75 initial, one-time burden hours
amortized over three years) x (25 Participants). This burden has changed because of the
increased number of Participants (25 Participants instead of 24 Participants).
i. Assessment of Material Systems Change on Error Rate
Section 6.6(a)(vii) of the CAT NMS Plan requires a written assessment of the
projected impact of any Material Systems Change on the Maximum Error Rate, prior to
the implementation of any Material Systems Change.
The Commission estimates that the CAT may have four Material Systems
Changes per year. Based on this estimate, the Commission estimates that each
144

600 initial, one-time burden hours = (24 initial, one-time burden hours per
Participant) x (25 Participants).

145

450 initial, one-time burden hours = (18 initial, one-time burden hours) x (25
Participants).
34

Participant would incur approximately 5.21 burden hours to prepare and submit each
assessment, or approximately 20.84 annual burden hours per year, 146 for an aggregate,
ongoing estimate of approximately 130.25 burden hours per report, 147 or an aggregate
ongoing estimate of approximately 521 burden hours per year. 148
j. Background Checks
Section 6.1(g) of the CAT NMS Plan requires each Participant to conduct
background checks of its employees and contractors that will use the CAT System. The
Commission estimates that this requirement will impact approximately 1,771 users. 149
Because the CAT is operational, the Commission assumes that the initial burden for
background checks has been completed, and the only applicable burden is the ongoing
one as new employees may be onboarded.
The Commission estimates that the ongoing internal burden hours for each
Participant would be approximately 4.23 annual burden hours, 150 for an aggregate annual
burden hour amount of approximately 106 burden hours. 151 This burden has changed due
to the elimination of the one-time initial burden and an increase in the number of
Participants (25 Participants instead of 24).
146

The Commission estimates that there would be four Material System Changes per
year. (521 burden hours per report) x (4 reports per year) = 20.84 annual burden
hours per year.

147

(5.21 burden hours per report) x 25 Participants = 130.25 burden hours per report.

148

(130.25 burden hours) x (4 reports per year) = 521 annual burden hours.

149

Previously, the Commission estimated that approximately 1,700 users would be
impacted, based on conversations with Participants, when there were only 24
Participants in the CAT NMS Plan. The Commission is revising this estimate to
account for 1 additional Participant.

150

The Commission assumes that the finance industry has a rate of 23.87% turnover
per year, based on a monthly rate for both employment separations and hires of
1.8% for the finance and insurance industry in September 2016. See
http://www.bls.gov/news.release/pdf/jolts.pdf (news release from the Bureau of
Labor Statistics, dated November 8, 2016). The Commission estimates that the
Participants will have to annually conduct background checks of 23.87% of the
1,770 users, or 422.5 users per year. (422.5 users) / (25 Participants) = 16.90 users
that will need to be subject to background checks on an annual basis. Based on
this estimate, the Commission estimates that each Participant would incur a
burden of 4.23 ongoing annual burden hours = (Compliance Manager at 15
minutes) x (16.90 users).

151

106 annual ongoing burden hours = (4.23 ongoing annual burden hours per
Participant) x (25 Participants) rounded up.
35

B.

Burden on Broker-Dealer Members
a. Data Collection and Reporting

Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
broker-dealer member of a Participant, and further documenting the life of the order
through the process of routing, modification, cancellation and execution (in whole or in
part) of the order. Rule 613(c) requires the CAT NMS Plan to impose requirements on
broker-dealer members to record and report CAT information to the Central Repository
in accordance with specified timelines.
The Commission’s estimates delineate broker-dealer firms by whether they
insource or outsource, or are likely to insource or outsource, CAT Data reporting
obligations. The Commission believes that firms that reported high numbers of OATS
Reportable Order Events (“ROEs”) 152 strategically would decide to either self-report their
CAT Data or outsource their CAT Data reporting functions, while the firms with the
lowest levels of activity would be unlikely to have the infrastructure and specialized
employees necessary to insource CAT Data reporting and would almost certainly
outsource their CAT Data reporting functions. The Commission recognizes that some
active firms that will likely be CAT Reporters and insource regulatory data reporting
functions may not have current OATS reporting obligations because they either are not
FINRA members, or because they do not trade in NMS equity securities. 153
The Commission estimates that there were, prior to FINRA’s OATS retirement,
126 OATS-reporting Insourcers and 45 non-OATS reporting Insourcers. 154 The
152

The Commission uses for its estimates the number of OATS ROEs reported by
firms that reported to OATS. The Commission believes that because OATS
reportable events, such as order originations, routes, and executions are now CAT
Reportable Events, these two measures are likely to be highly correlated, making
the number of OATS records a proxy for the anticipated level of CAT reporting.
The Commission believes that the higher the number of OATS ROEs reported,
the higher the anticipated number of CAT records to report. As noted below,
however, the Commission anticipates that the number of CAT records would
exceed the number of OATS ROEs.

153

The Commission also recognizes as discussed above that some broker-dealer
firms may strategically choose to outsource despite the Plan’s working
assumption that these broker-dealers would insource their regulatory data
reporting functions.

154

These were 126 OATS reporters that reported more than 350,000 OATS ROEs
per month; 31 Options Market Making firms; and 14 electronic liquidity providers
(“ELPs”).
36

Commission’s estimation categorizes the remaining 1,179 broker-dealers that the Plan
anticipates would have CAT Data reporting obligations as Outsourcers. 155
The Commission notes that the CAT NMS Plan currently implements reporting
deadlines that have already passed, and that, as of September 2021, all reporting to OATS
had switched reporting to the CAT. The Commission believes that it is appropriate to
eliminate consideration of the initial one-time burdens of development required from
broker-dealers. These estimates will, unless otherwise noted, therefore reflect only the
anticipated ongoing costs to comply.
Insourcers
A.

Large Non-OATS-Reporting Broker-Dealers

The Commission relies on the Plan’s large broker-dealer FTE estimates in
estimating burden hours for large broker-dealers that can practicably decide between
insourcing or outsourcing their regulatory data reporting functions. 156 The Commission
estimates that there are 14 large broker-dealers that are not OATS reporters currently in
the business of electronic liquidity provision (“ELP Firms”) that would be classified as
Insourcer firms. 157
Additionally, the Commission estimates that there are 31 Options Market Maker
broker-dealers (“OMM Firms”) that may transact in options but not in equities that can be
classified as Insourcer firms. 158 These firms may have customer orders and other activity
off-exchange that would cause them to incur a CAT reporting obligation. The
Commission assumes the 31 OMM Firms and 14 ELP Firms would be typical of the
Plan’s large non-OATS-reporting firms; for these firms, the Commission relies on the

155

These broker-dealers are assumed to already outsource data reporting services.

156

See CAT NMS Plan, supra note 4, at Appendix C, Section A.6(c).

157

These broker-dealers are not FINRA members and thus have no regular OATS
reporting obligations. The category of Insourcers that do not currently report
OATS data includes firms that have multiple SRO memberships that exclude
FINRA. This category includes Options Market Makers and at least 14 ELPs;
these are firms that carry no customer accounts and directly route proprietary
orders to Alternative Trading Systems.

158

The Commission previously identified 39 CBOE-member broker-dealers that are
not FINRA members, but are members of multiple SROs; eight of these brokerdealers were previously identified as ELPs, leaving 31 firms with multiple SRO
memberships that are unlikely to be CBOE floor brokers. These 31 firms are
likely to include some ELPs. This methodology implicitly assumes that there are
no Options Market Makers that are not members of the CBOE.
37

burden hour estimates provided under Approach 1 159 for large non-OATS-reporting firms
in the CAT NMS Plan.
Because the CAT reporting obligations have been in place for some time now,
the Commission assumes that the initial one-time hour burdens associated with
implementation of the system have already been incurred.
The Commission believes that the Rule would impose ongoing annual burdens
associated with, among other things, personnel time to monitor each large non-OATS
reporting broker-dealer’s reporting of the required data and the maintenance of the
systems to report the required data; and implementing changes to trading systems that
might result in additional reports to the Central Repository. The CAT NMS Plan
provides the following average ongoing internal FTE count figure that a large non-OATS
reporting broker-dealer would expect to incur to maintain data reporting systems to be in
compliance with Rule 613: 7.41 internal FTEs. 160 Based on this information, the
Commission believes that it would take a large non-OATS reporting broker-dealer
approximately 13,338 burden hours per year 161 to continue to comply with the Rule, for
an estimated aggregate ongoing burden of 600,210 hours. 162
.
159

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(i)(A)(2).
Approach 1 assumes CAT Reporters would submit CAT Data using their choice
of industry protocols. Approach 2 assumes CAT Reporters would submit data
using a pre-specified format. Approach 1’s aggregate costs are higher than those
for Approach 2 for all market participants except in one case where service
bureaus have lower Approach 1 costs. For purposes of this Paperwork Reduction
Act analysis, the Commission is not relying on the estimates for Approach 2
because overall the Approach 1 aggregate estimates represent the higher of the
proposed approaches. The Commission believes it would be more comprehensive
to use the higher of the two estimates for its Paperwork Reduction Act analysis
estimates.

160

Approach 1 also provided $3,000,000 in internal FTE costs related to
maintenance. The Commission believes the $3,000,000 in ongoing internal FTE
costs is the Participants’ estimated cost of the 7.41 FTEs. (7.41 FTEs) x
($401,440 Participants’assumed annual cost per FTE provided in the CAT NMS
Plan) = $2,974,670. See CAT NMS Plan, supra note 4, at n.192. See also supra
note 119.

161

13,338 ongoing burden hours = (7.41 ongoing FTEs to maintain CAT data
reporting systems) x (1,800 working hours per year).

162

The Commission estimates that 45 large non-OATS reporting broker-dealers
would be impacted by this information collection. (45 large non-OATS reporting
broker-dealers) x (13,338 burden hours) = 600,210 aggregate ongoing burden
hours.
38

B.

Large OATS-Reporting Broker-Dealers

The Commission estimates that 126 broker-dealers, which reported more than
350,000 OATS ROEs between June 15 and July 10, 2015, would strategically decide to
either self-report CAT Data or outsource their CAT data reporting functions. 163 To
conduct its Paperwork Burden Analysis for the 126 broker-dealers, the Commission
relied on the estimates used by the CAT NMS Plan of the expected FTE count that a
large OATS-reporting broker-dealer would incur as a result of the implementation of the
consolidated audit trail under Approach 1. 164 Because OATS has been retired, the
Commission assumes the initial one-time implementation fees have already been
covered; only the estimated ongoing maintenance costs remain.
The Commission estimates that the Rule would impose on each broker-dealer
ongoing annual burdens associated with, among other things, personnel time to monitor
each broker-dealer’s reporting of the required data and the maintenance of the systems to
report the required data; and implementing changes to trading systems which might result
in additional reports to the Central Repository.
The CAT NMS Plan provides the following average ongoing internal FTE count
figures that a large OATS-reporting broker-dealer would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: 10.03 internal FTEs. 165 Based on
this information the Commission believes that it would take a large OATS-reporting
broker-dealer approximately 18,054 ongoing burden hours per year 166 to continue
163

The Commission believes this decision is strategic and discretionary because
FINRA data reveals that while many broker-dealers at these activity levels selfreport most or all of their regulatory data, other broker-dealers outsource most or
all of their regulatory reporting at these activity levels. At lower activity levels,
most, but not all, broker-dealers outsource most if not all of their regulatory data
reporting. The Commission is cognizant that some broker-dealers reporting fewer
than 350,000 OATS ROEs per month can and do opt to self-report their
regulatory data. However, based on conversations with broker-dealers, the
Commission believes that most broker-dealers at these activity levels do not have
the infrastructure and specialized staff that would be required to report directly to
the Central Repository, and electing to self-report would be cost-prohibitive in
most but not all cases.

164

See supra note 162.

165

Approach 1 also provided $4,000,000 in internal FTE costs related to
maintenance. The Commission believes the $4,000,000 in ongoing internal FTE
costs is the Participants’ estimated cost of the 10.03 FTEs. (10.03 FTEs) x
($401,440 Participants’ assumed annual cost per FTE provided in the CAT NMS
Plan) = $4,026,443. See CAT NMS Plan, supra note 4, at Appendix C, Section
B.7(b)(ii)(C), at n. 192. See also supra note 119.

166

18,054 ongoing burden hours = (10.03 ongoing FTEs for maintenance of CAT
data reporting systems) x (1,800 working hours per year).
39

compliance with the Rule. Therefore, the Commission estimates that the average
ongoing annual burden per large OATS-reporting broker-dealer would be approximately
18,054 burden hours, for an estimated aggregate burden of 2,274,804 hours. 167
Outsourcing Firms
A.

Small OATS-Reporting Broker-Dealers

The Commission estimates that there were 806 broker-dealers that report fewer
than 350,000 OATS ROEs monthly. The Commission believes that these broker-dealers
generally outsourced their regulatory reporting obligations because during the period
June 15 – July 10, 2015, approximately 88.9% of their 350,000 OATS ROEs were
reported through service bureaus, with 730 of these broker-dealers reporting more than
99% of their OATS ROEs through one or more service bureaus. 168
Because OATS was retired in September 2021, the Commission assumes that the
initial one-time implementation requirements have been fulfilled. The Commission
therefore estimates no additional burden hours in relation to the implementation.
Small OATS-reporting broker-dealers that outsource their regulatory data
reporting will likely face internal staffing burdens and external costs associated with
ongoing activity, such as maintaining any systems that transmit data to their service
providers. The Commission estimates these firms would need 0.75 FTEs on an ongoing
basis to maintain CAT reporting.
Based on this information, the Commission believes that it would take a small
OATS-reporting broker-dealer approximately 1,350 ongoing burden hours per year 169 to
continue compliance with the Rule. The Commission believes the burden hours would be
associated with work performed by internal technology, compliance and legal staff in
connection with the ongoing operation of CAT Data reporting. Therefore, the
Commission estimates that the average ongoing annual burden per small OATS-reporting

167

The Commission estimates that 126 large OATS-reporting broker-dealers would
be impacted by this information collection. (126 large OATS-reporting brokerdealers) x (18,054 burden hours) = 2,274,804 aggregate ongoing burden hours.

168

Because of the extensive use of service bureaus in these categories of brokerdealers, the Commission assumes that these broker-dealers are likely to use
service bureaus to accomplish their CAT data reporting. See supra note 166.

169

1,350 ongoing burden hours = (0.75 FTE for maintenance of CAT Data reporting
systems) x (1,800 working hours per year).
40

broker-dealer would be approximately 1,350 hours, for an estimated aggregate ongoing
burden of 1,088,100 hours. 170
B.

Small Non-OATS-Reporting Broker-Dealers

In addition to firms that currently report to OATS, the Commission estimates
there are 373 broker-dealers that were previously exempt from OATS reporting rules due
to firm size, or excluded because all of their order flow is routed to a single OATS
reporter, such as a clearing firm, that would incur CAT reporting obligations. 171 A
further 24 broker-dealers have Participant memberships only with one Participant; 172 the
Commission believes this group is comprised mostly of floor brokers and further believes
these firms would experience CAT implementation and ongoing reporting costs similar in
magnitude to small equity broker-dealers that currently have no OATS reporting
responsibilities.
The Commission assumes these broker-dealers would have very low levels of
CAT reporting, similar to those of the lowest activity firms that currently report to OATS.
Because these firms have more limited data reporting requirements than other firms, the
Commission assumes these firms currently have only 0.1 full-time employees currently
dedicated to regulatory data reporting activities. The Commission assumes these firms
required 2 full-time employees for one year to implement CAT. The Commission
assumes that, since broker-dealers have had more than one year to complete these
implementation requirements since they were required to report to CAT, they have now
been completed.
Because the CAT reporting deadlines have passed, the Commission assumes that
those one-time initial costs have already been incurred.
Small non-OATS-reporting broker-dealers that outsource their regulatory data
reporting would likely face internal staffing burdens associated with ongoing activity,
170

The Commission estimates that 806 small OATS-reporting broker-dealers would
be impacted by this information collection. (806 small OATS-reporting brokerdealers x 1,350 burden hours) = 1,088,100 aggregate ongoing burden hours to
ensure ongoing compliance with Rule 613.

171

The Commission notes that Rule 613 does not exclude from data reporting
obligations Participant members that quote or execute transactions in NMS
Securities and Listed Options that route to a single market participant. See CAT
NMS Plan, supra note 4, at Appendix C, Section B.7(b)(ii)(B)(2).

172

This group comprises 24 broker-dealers that have SRO memberships only with
CBOE; the Commission believes this group is comprised primarily of CBOE
floor brokers and, further, believes these firms would incur CAT implementation
and ongoing reporting costs similar in magnitude to small equity broker-dealers
that currently have no OATS reporting responsibilities because they would face
similar tasks to implement and maintain CAT reporting.
41

such as maintaining any systems that transmit data to their service providers. Based on
conversations with market participants, the Commission estimates these firms would
need 0.75 full-time employees annually to maintain CAT reporting.
Based on this information the Commission believes that it would take a small
non-OATS-reporting broker-dealer 1,350 ongoing burden hours per year 173 to continue
compliance with the Rule. Therefore, the Commission estimates that the average
ongoing annual burden per small non-OATS-reporting broker-dealer would be
approximately1,350 hours, for an estimated aggregate ongoing burden of 535,950
hours. 174 The estimated aggregate ongoing burden has fallen because of the reduced
number of estimated small non-OATS reporting broker-dealers (397 from 523).
C.

Completed Information Collections Requirements

As discussed above, 175 the Commission believes that three information collections
requirements have been satisfied, specifically (1) a document outlining how the
Participants could incorporate into the consolidated audit trail information regarding
certain products that are not NMS securities; 176 (2) a one-time assessment of the clock
synchronization standards in the Plan before reporting begins for Industry Members,
which assessment shall take into account the diversity of CAT Reporters and systems; 177
and (3) a one-time report that discusses the Participants’ assessment of implementing
coordinated surveillance. 178 These one-time information collections have been
completed by the Participants, so the Commission believes that the annual burden for
each of the information collections is 0 hours.

Summary of Hourly Burdens

173

1,350 ongoing burden hours = (0.75 FTEs for maintenance of CAT data reporting
systems) x (1,800 working hours per year).

174

The Commission estimates that 397 small non-OATS-reporting broker-dealers
would be impacted by this information collection. (523 small non-OATSreporting broker-dealers x 1,350 burden hours) = 535,950 aggregate ongoing
burden hours to ensure ongoing compliance with Rule 613.

175

See supra Section I.A.

176

See 17 CFR 242.613(i). See also “One-Time Written Assessments,”
Consolidated Audit Trail, LLC at: https://www.catnmsplan.com/one-time-writtenassessments/index.html.

177

See CAT NMS Plan Order, supra note 6, at 84940.

178

Id. at 84940–84941.
42

Name of Information Collection

Type of Burden

[A.]
Number of
Entities
Impacted

[B.]
Annual
Responses
per Entity

[H.]
Total Industry
Burden
[ = G * A]

Small
Business
Entities
Affected

Central Repository

Recordkeeping

25

576

14,400

0

Data Collection and Reporting
(Participants)

Third Party Disclosure

1,629

1,629

40,725

0

Surveillance

14,891.4

14,891.4

14,891.4

372,285

0

[D.]
Initial Burden
Annualized
per Entity per
Response
[ = C ÷ 3 years]

[E.]
Ongoing
Burden per
Entity per
Response

[F.]
Annual
Burden Per
Entity per
Response
[ = D + E]

[G.]
Total Annual
Burden Per
Entity
[ = (D + E) * B]

[H.]
Total Industry
Burden
[ = G * A]

Small
Business
Entities
Affected

0

0

150

150

150

3,750

0

1

15

5

0

5

5

125

0

25

1

24

8

0

8

8

200

0

Reporting

25

1

18.75

6.25

0

6.25

6.25

156

0

Assessment of Material Systems
Change on Error Rate

Reporting

25

4

0

0

5.21

5.21

20.84

521

0

Background Checks

Disclosure

25

1

0

0

4.23

4.23

4.23

106

0

Data Collection and Reporting
(Large, Non-OATS Reporting
Broker-Dealers) - ELPs

Third Party Disclosure

14

1

0

0

13,338

13.338

13.338

186,732

0

Data Collection and Reporting
(Large, Non-OATS Reporting
Broker-Dealers) – Options Market
Makers

Third Party Disclosure

31

1

0

0

13,338

13338

13338

413,478

0

[C.]
Initial
Burden
per Entity
per
Response

[D.]
Initial Burden
Annualized
per Entity per
Response
[ = C ÷ 3 years]

[E.]
Ongoing
Burden per
Entity per
Response

1

0

0

576

576

25

1

0

0

1,629

Recordkeeping

25

1

0

0

Name of Information Collection

Type of Burden

[A.]
Number of
Entities
Impacted

[B.]
Annual
Responses
per Entity

[C.]
Initial
Burden
per Entity
per
Response

Written Assessment of Operation of
CAT

Reporting

25

1

Assessment of Industry Member Bulk
Access to Reporter Data

Reporting

25

Assessment of Errors in Customer
Information Fields

Reporting

Report on Impact of Tiered Fees on
Market Liquidity

43

[F.]
Annual
Burden Per
Entity per
Response
[ = D + E]

[G.]
Total Annual
Burden Per
Entity
[ = (D + E) * B]

Data Collection and Reporting (Large
OATS Reporting Broker-Dealers)

Third Party Disclosure

126

1

0

0

18,054

18,054

18,054

2,274,804

0

Data Collection and Reporting (Small
OATS Reporting Broker-Dealers)

Third Party Disclosure

806

1

0

0

1,350

1.350

1,350

1,088,100

Estimated
345 179

Name of Information Collection

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 years]

[E.]
Ongoing
Burden per
Entity per
Response

[F.]
Annual
Burden Per
Entity per
Response
[ = D + E]

[G.]
Total Annual
Burden Per
Entity
[ = (D + E) * B]

[H.]
Total Industry
Burden
[ = G * A]

Small
Business
Entities
Affected

Data Collection and Reporting (Small
Non-OATS Reporting BrokerDealers)

Third Party Disclosure

397

1

0

0

1,350

1,350

1,350

535,950

Estimated
397 180

Review of Clock Synchronization
Standards

Reporting

25

0

0

0

0

0

0

0

0

Coordinated Surveillance Report

Reporting

25

0

0

0

0

0

0

0

0

Document on Expansion to Other
Securities

Reporting

25

0

0

0

0

0

0

0

0

179

The Commission believes that the 742 Commission-registered broker-dealers (as
of 2022) that are considered “small entities” could be impacted by two categories
of information collection: “data collection and reporting (small OATS-reporting
broker-dealers)” and “data collection and reporting (non-OATS reporting brokerdealers).” The Commission estimates that the 397 respondents affected by the
“data collection and reporting (non-OATS reporting broker-dealers)” would all be
considered small entities as these firms are currently exempt from OATS
reporting rules due to firm size, or are excluded because all of their order flow is
routed to a single OATS reporter, or are floor brokers with an SRO membership
with a single Participant. The Commission believes these broker-dealers would
have very low levels of CAT reporting and would outsource CAT data collection
and reporting to a third party, such as a service bureau. The Commission
estimates that the remaining 345 broker-dealers (of the estimated 742 small entity
broker-dealers) would be impacted by the information collection “data collection
and reporting (small OATS-reporting broker-dealers).” These firms would not
have been small enough to be exempt from OATS reporting, and the Commission
believes that they would have had low levels of OATS reporting and would likely
outsource CAT data collection and reporting to a service bureau.

180

See, supra note 182.
44

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

13.

Costs to Respondents

The Commission estimates that the information collection requirements of Rule
613 will apply to 1,375 respondents who will incur an average aggregate of
approximately $328,662,911 in costs per year to comply with the requirements. The cost
burden is calculated as discussed below.
A.

Costs to National Securities Exchanges and National Securities
Associations
a.

Central Repository

The Commission previously estimated what the Participants would collectively
spend on external public relations, legal and consulting costs associated with the building
of the Central Repository and the selection of the Plan Processor for the Central
Repository. In addition, the Commission previously estimated the Participants collective
costs over the 12-month period after the effectiveness of the CAT NMS Plan within
which the Participants were required to select an initial Plan Processor and begin
reporting to the Central Repository. However, as noted above, the Participants have
selected a Plan Processor and begun reporting to the consolidated audit trail. The
Commission believes it is appropriate to now only consider the ongoing costs associated
with ongoing costs for operating and maintaining the Central Repository.
The Commission believes that there will be ongoing costs for operating and
maintaining the Central Repository, including the cost of systems and connectivity
upgrades or changes necessary to receive, consolidate, and store the reported order and
execution information from Participants and their members; the costs to store data, and
make it available to regulators, in a uniform electronic format, and in a form in which all
events pertaining to the same originating order are linked together in a manner that
ensures timely and accurate retrieval of the information; the cost, including storage costs,
of collecting and maintaining the NBBO and transaction data in a format compatible with
the order and event information collected pursuant to the Rule; the cost of monitoring the
required validation parameters, which would allow the Central Repository to
automatically check the accuracy and completeness of the data submitted and reject data
not conforming to these parameters consistent with the requirements of the Rule; and the
cost of compensating the CCO. The CAT NMS Plan provides that the Plan Processor
would be responsible for the ongoing operations of the Central Repository. 181 In
addition, the CAT NMS Plan states that the Participants would incur costs for public
relations, legal, and consulting costs associated with maintaining the CAT upon approval
of the CAT NMS Plan. 182 The Commission estimates that the Participants will
collectively spend $800,000 annually on external public relations, legal and consulting
181

See CAT NMS Plan, supra note 4, at Section 6.1.

182

See id. at Appendix C, Section B.7(b)(iii).
45

4,931,332

costs associated with the continued management of the Central Repository, or $32,000
per Participant. 183
While the CAT NMS Plan includes estimates from six bidders for the annual
ongoing costs to the Participants to operate the Central Repository, 184 the Participants
provided updated cost estimates to reflect the estimates of three final shortlisted bidders
which were attempting to be the Plan Processor. 185 Using the revised estimates, the
Commission estimates that the annual ongoing cost to the Participants to compensate the
Plan Processor for building, operating and maintaining the Central Repository would be
an aggregate ongoing external cost of approximately $55 million,186 or $2,200,000 per
Participant. 187 Therefore, the Commission estimates that each Participant would incur
183

The Commission is basing this external cost estimate on the public relations, legal
and consulting external cost estimate provided in the CAT NMS Plan associated
with the preparation of the CAT NMS Plan (which the Participants consider
“reasonably associated with creating, implementing, and maintaining the CAT
upon the Commission’s adoption of the CAT NMS Plan”). See id. (stating “the
Participants have incurred public relations, legal and consulting costs in
preparation of the CAT NMS Plan. The Participants estimate the costs of these
services to be $8,800,000”). $2,400,000 for all Participants over 12 months =
($8,800,000/44 months between the adoption of Rule 613 and the filing of the
CAT NMS Plan) x (12 months). Because the Central Repository will have
already been created, the Commission believes it is reasonable to assume that the
Participants will have a lesser need for public relations, legal and consulting
services. The Commission is estimating that the Participants will incur one-third
of the external cost associated with development and implementation of the
Central Repository to maintain the Central Repository. $800,000 = (0.333) x
($2,400,000). ($800,000 / 25 Participants) = $32,000 per Participant over 12
months.

184

See id. at Appendix C, Section B.7(b)(i)(B).

185

See Letter to Brent J. Fields, Secretary, Commission, from Participants, dated
October 7, 2016, at 14–15.

186

Id.

187

The Participants provided a range of Bidder estimates. See id. For purposes of
this Paperwork Burden Act analysis, the Commission is using the maximum
operation and maintenance cost estimate. $2,200,000 = $55,000,000 / 25
Participants. The Commission previously noted several uncertainties that may
affect the Central Repository cost estimates, including (1) that the Participants had
not yet selected a Plan Processor and the shortlisted bidders have submitted a
wide range of cost estimates for building and operating the Central Repository;
(2) the bids submitted by the shortlisted bidders may not be final because they
may be revised before the final selection of the CAT Processor; and (3) neither
the bidders nor the Commission can anticipate the evolution of technology and
market activity with precision, as improvements in available technology may

46

ongoing annual external costs of approximately $2,232,000 188 to maintain the Central
Repository, or aggregate ongoing annual external costs across all Participants of
$55,800,000. 189
Data Collection and Reporting
The CAT NMS Plan provides estimated costs for hardware and software, FTE
costs, and third-party providers to be incurred by the Participants to report CAT Data. 190
For these estimates, the Commission is relying on the cost data provided by the
Participants because it believes that the Plan’s estimates for Participants to report CAT
Data are reliable since all of the Participants provided cost estimates, and most
Participants have experience collecting audit trail data, as well as knowledge of both the
requirements of Rule 613 as well as their current business practices. As noted above, the
Participants have begun reporting CAT Data and thus the Commission believes it is
appropriate to only consider ongoing costs related to data collection and reporting.
Because the Participants have established the appropriate systems and processes
required for collection and transmission of the required information to the Central
Repository, the Commission estimates that Rule 613 would impose on each Participant
ongoing annual burdens associated with, among other things, personnel time to monitor
each Participant’s reporting of the required data and the maintenance of the systems to
report the required data; and implementing changes to trading systems that might result in
additional reports to the Central Repository. The CAT NMS Plan provides the following
average aggregate costs that the Participants would expect to incur to maintain data

allow the Central Repository to be built and operated at a lower cost than is
currently anticipated, but if levels of anticipated market activity are materially
underestimated, the capacity of the Central Repository may need to be increased,
resulting in an increase in costs.
188

$2,232,000 for each Participant to maintain the Central Repository = ($2,200,000
per Participant in ongoing annual costs to maintain the Central Repository) +
($32,000 per Participant in ongoing annual public relations, legal and consulting
costs associated with the maintenance of the Central Repository).

189

$55,800,000 for all of the Participants to maintain the Central Repository =
($2,232,000 per Participant to compensate the Plan Processor and for external
public relations, legal and consulting costs associated with the maintenance of the
Central Repository) x (25 Participants).

190

Third-party provider costs are generally legal and consulting costs, but may
include other outsourcing. The template used by respondents is available at
http://catnmsplan.com/PastEvents/ under the Section titled “6/23/14” at the “Cost
Study Working Template” link.
47

reporting systems to be in compliance with Rule 613: $720,000 in annual third-party
legal, consulting, and other costs 191 and $14,700,000 total annual costs. 192
Based on estimates provided in the CAT NMS Plan, the Commission estimates
that it would cost, on average, approximately $37,894.74 per Participant in ongoing thirdparty legal and consulting and other costs 193 and $ 476,579.58 per Participant in total
ongoing external costs. 194 Therefore, the Commission estimates that the annual
aggregate ongoing external cost for all Participants would be approximately $
11,914,490 195
The Commission estimates that the Participants would incur an aggregate, annual
external cost of approximately $11,914,490 to adopt and maintain systems changes
needed to comply with the data reporting requirements of the consolidated audit trail [($
476,579.58 in annual, ongoing external costs) x (25 Participants) = $11,914,489.50
rounded up to $11,914.490]. This estimate has increased from the 2020 PRA, because of
the increased number of Participants and the rising costs of inflation
191

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(B)(2). The
CAT NMS Plan did not identify the other costs.

192

Of the $14,700,000 in aggregate total annual costs, $8,020,000 is identified
(subtotal of FTE costs and outsourcing), but the remaining $6,680,000 is not
identified in the CAT NMS Plan. The Commission believes that this amount may
be attributed to hardware costs because the Participants have not provided any
hardware costs associated with data reporting elsewhere and the Commission
believes that the Participants will likely incur costs to upgrade their hardware to
report data to the Central Repository.

193

($720,000 in annual third party costs) / (19 Participants) = $37,894.73 per
Participant in anticipated annual third party costs.

194

To determine the total external annual cost per Participant, the Commission
subtracted the anticipated annual FTE internal compliance cost estimates for the
Participants as provided in the Plan (see notes 117 through 119 and accompanying
text) from the total aggregate annual costs and divided the remainder by 19
Participants, which is the number of Participants included in the initial cost
estimates provided by Participants. ($14,700,000 total aggregate annual cost to
Participants) – ($7,300,000 annual FTE —not updating because it’s an aggregate
from participants cost to Participants) = $7,400,000 (which includes the $720,000
in total anticipated annual third party costs). ($7,400,000) / 19 Participants =
$389,473.68 in annual external costs per Participant. 389,473.68/424,350=.917
FTE. .917 FTE x 519.256 =476,579.58 per Participant. See CAT NMS Plan,
supra note 4, at Appendix C, Section B.7(b)(iii)(B)(1) for the Participants’
anticipated maintenance costs associated with regulatory reporting to the Central
Repository.

195

$11,914,490 = ($476,579.58 in total annual external costs) x (25 Participants
rounded up).196
See 17 CFR 242.613(e)(7).
48

c.

Collection and Retention of NBBO, Last Sale Data and
Transaction Reports

Rule 613(e)(7) provides that the CAT NMS Plan must require the Central
Repository to collect and retain on a current and continuous basis NBBO information for
each NMS security, transaction reports reported pursuant to an effective transaction
reporting plan, and Last Sale Reports reported pursuant to the OPRA Plan. 196
Additionally, the CAT NMS Plan must require the Central Repository to maintain this
data in a format compatible with the order and event information consolidated and stored
pursuant to Rule 613(c)(7). 197 Further, the CAT NMS Plan must require the Central
Repository to retain the information collected pursuant to paragraphs (c)(7) and (e)(7) of
Rule 613 for a period of not less than five years in a convenient and usable uniform
electronic format that is directly available and searchable electronically without any
manual intervention. 198 The Commission notes that the CAT NMS Plan includes these
data as “SIP Data” to be collected by the Central Repository. 199 The Commission
believes the burden associated with SIP Data is included in the burden to the Participants
associated with the implementation and maintenance of the Central Repository.
d.

Surveillance

Rule 613(f) provides that the CAT NMS Plan must require that every national
securities exchange and national securities association develop and implement a
surveillance system, or enhance existing surveillance systems, reasonably designed to
make use of the consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the surveillance
systems be implemented within fourteen months after effectiveness of the CAT NMS
Plan. Because the CAT NMS Plan has been effective for more than fourteen months,
these initial costs should have already been incurred.
The CAT NMS Plan states that the estimated total ongoing annual cost associated
with the maintenance of surveillance programs for the Participants is $87,700,000. 200
This amount includes annual legal, consulting, and other costs of $1,000,000, as well as
$66,700,000 in annual FTE internal compliance costs for internal operational,
technical/development, and compliance staff to be engaged in the maintenance of

196

See 17 CFR 242.613(e)(7).

197

Id.

198

See 17 CFR 242.613(e)(8).

199

See CAT NMS Plan, supra note 4, at Section 6.5(a)(ii).

200

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(B)(2).
49

surveillance programs. 201 Based on the estimates provided in the CAT NMS Plan, 202 the
Commission estimates that each Participant would, on average, incur an annual ongoing
external cost of approximately $52,631.58 203 for outsourced legal, consulting and other
costs in order to maintain the new or enhanced surveillance systems, and a total estimated
ongoing external cost of $1,105,263.16, 204 for an estimated aggregate ongoing external
cost of $27,631,579 across the 25 Participants to maintain the surveillance systems. 205
The Commission estimates that the Participants would, therefore, incur an average
aggregate, annual external cost of approximately $27,631,579 to maintain surveillance
systems reasonably designed to make use of the consolidated information contained in
the consolidated audit trail [ ($1,105,263.16 in annual, ongoing external costs) x (25
Participants) = $27,631,579]. This burden has changed due to the increased number of
Participants (25 Participants instead of 24) and the exclusion of initial development costs,
which should have been concluded.
e.

Written Assessment of Operation of the Consolidated Audit
Trail

Rule 613(b)(6) provides that the CAT NMS Plan must require the Participants to
provide the Commission a written assessment of the CAT’s operation at least every two
years, once the CAT NMS Plan is effective. 206 The assessment must address, at a
minimum, with respect to the consolidated audit trail: (i) an evaluation of its
performance; (ii) a detailed plan for any potential improvements to its performance;
(iii) an estimate of the costs associated with any such potential improvements; and (iv) an
201

Id. For purposes of the Paperwork Reduction Act analysis, the Commission is
treating the FTE cost as an internal burden. See text accompanying notes 131–
133, supra. The Commission also notes that based upon the data provided by the
Participants, the source of the remaining $20,000,000 in ongoing costs to maintain
the new or enhanced surveillance systems is unspecified. The Commission
believes that this amount may be attributed to hardware costs because the
Participants have not provided any hardware costs associated with surveillance
elsewhere and the Commission believes that the Participants would likely incur
costs associated with maintaining the new or enhanced surveillance systems.

202

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(B)(2).

203

$52,631.58 = $1,000,000 for ongoing legal, consulting and other costs associated
with maintenance of surveillance programs / 19 Participants (the number of
Participants in Participants Study).

204

($87,700,000 in total ongoing surveillance costs - $66,700,000 in ongoing FTE
costs) = $21,000,000 in total ongoing external costs (which includes $1,000,000
in total ongoing external third-party costs). $21,000,000 / 19 Participants (the
number of Participants in Participants Study) = $1,105,263.16.

205

$27,631,579 = $1,105,263.16 x 25 Participants.

206

17 CFR 242.613(b)(6).
50

estimated implementation timeline for any such potential improvements, if applicable. 207
Thus, the Participants must, among other things, undertake an analysis of the
consolidated audit trail’s technological and computer system performance.
The CAT NMS Plan states that the CCO would oversee the assessment required
by Rule 613(b)(6), and would allow the Participants to review and comment on the
assessment before it is submitted to the Commission. 208 The CCO would be an employee
of the Plan Processor and would be compensated by the Plan Processor. 209 The
Commission assumes that the overall cost to the Participants to implement and maintain
the Central Repository includes both the compensation for the Plan Processor as well as
its employees for the implementation and maintenance of the Central Repository.
In addition, Section 6.6 of the Plan changes the frequency of the assessment
contemplated by Rule 613(b)(6) from biannual to annual and provides further detail
regarding elements of the written assessment to be conducted by the Participants. 210
Section 6.6 of the Plan as filed also requires the Participants to provide an estimate of the
costs associated with any potential improvements to the performance of the CAT,
including an assessment of the potential impact on competition, efficiency and capital
formation. Section 6.6 of the Plan also requires the annual assessment to consider the
benefits of potential improvements to the CAT, including to investor protection. 211
The Commission estimates that on average, each Participant would outsource 2.5
hours of legal time annually to assist in the review of the assessment, for an ongoing

207

Id.

208

See CAT NMS Plan, supra note 4, at Section 6.6.

209

Id. at Section 6.2(a).

210

Specifically, Section 6.6 of the Plan states that the Participants’ annual written
assessment must also include: (1) an evaluation of the information security
program of the CAT to ensure that the program is consistent with the highest
industry standards for protection of data; (2) an evaluation of potential
technological upgrades based upon a review of technological developments over
the preceding year, drawing on necessary technological expertise, whether
internal or external; (3) an assessment of efforts to reduce the time to restore and
recover CAT Data at a back-up site; (4) an assessment of how the Plan Processor
and SROs are monitoring Error Rates and addresses the application of Error Rates
based on product, data element or other criteria; (5) a copy of the evaluation
required by Section 6.8(c) of the Plan as to whether industry standards have
evolved such that: (i) the clock synchronization standard in Section 6.8(a) should
be shortened; or (ii) the required timestamp in Section 6.8(b) should be in finer
increments; and (6) an assessment of whether any data elements should be added,
deleted or changed. See CAT NMS Plan Order, supra note 6, at Section IV.H.

211

Id.
51

annual external cost of approximately $1,225. 212 Therefore, the Commission estimates
that the ongoing annual external cost for outsourced legal counsel would be $1,225 per
Participant per year, for an estimated aggregate annual external cost of $30,625. 213
The Commission estimates that the Participants would incur an aggregate,
annualized external cost of approximately $30,625 to review the written assessment
[($1,225 in annual, ongoing external costs) x (25 Participants)]. This has increased due
to the increased number of Plan Participants (25 Participants instead of 24 Participants)
and to reflect the increased costs per hour for an attorney due to inflation.
e. Independent Audit of Expenses Incurred Prior to Effective
Date
Section 6.6(a)(i) of the CAT NMS Plan requires the Participants to provide to the
Commission an independent one-time audit of fees, costs and expenses incurred by the
Participants on behalf of the Company, prior to the Effective Date, in connection with the
creation and implementation of the CAT, at least one month prior to submitting any rule
filing to establish initial fees to the Commission. Participants made the audited financial
statements for CAT NMS LLC and CAT LLC for the period prior to the Effective Date
available on August 5, 2021. 214 Because this collection is now complete, there are no
further costs associated with it.
f. Assessment of Industry Member Bulk Access to Reported
Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits, and risks of allowing an Industry
Member to bulk download the Raw Data it submitted to the Central Repository, within 24
months of effectiveness of the Plan.
The Commission estimates that on average, each Participant would outsource five
hours of legal time to assist in the preparation and review of the assessment, for an initial,
one-time external cost of approximately $2,450. 215 Therefore, the Commission estimates
that each Participant would incur an initial one-time external cost of $2,450 for
outsourced legal counsel per Participant (or approximately $816.67 a year per Participant
when annualized over three years), for an estimated aggregate initial external cost of

212

$1,225 = ($490per hour rate for outside legal services) x (2.5 hours).

213

$30,625 = 25 Participants x ($490 per hour rate for outside legal services) x (2.5
hours).

214

See https://www.catnmsplan.com/audited-financial-statements.
$2,450 = ($490 per hour rate for outside legal services) x (5 hours).

215

52

$61,250 for all Participants (or approximately $20,417 per year for all Participants when
annualized over three years). 216
The Commission estimates that the Participants would incur an aggregate,
annualized external cost of approximately $20,417 to submit the written report [($2,450
in initial external costs amortized over three years) x (25 Participants) = $20,416.67
rounded up to $20,416.67]. This estimated cost has increased due to the increased
number of Participants (25 Participants instead of 24 Participants) and the increased costs
of legal counsel due to inflation.
g. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of errors in the customer information submitted to the Central
Repository and whether to prioritize the correction of certain data fields over others,
within 36 months of effectiveness of the Plan.
The Commission estimates that on average, each Participant would outsource 1.25
hours of legal time to assist in the review of the assessment, for an initial, one-time
external cost of approximately $612.50. 217 Therefore, the Commission estimates that
each Participant would incur $612.50 of initial, one-time external costs for outsourced
legal counsel per Participant (approximately $204.17 a year per Participant when
annualized over three years), for an estimated aggregate initial, one-time external cost of
approximately $15,312.50 a year for all Participants (or approximately $5,104 per year
when annualized over three years). 218
The Commission estimates that the Participants would incur an aggregate, annual
external cost of approximately $5,104 to submit the written assessment of errors in the
customer information provide to the Commission [($612.50 in initial external costs
216

$61,250 = (25 Participants) x ($490 per hour rate for outside legal services) x (5
hours). $61,250 ÷ 3 = $20,416.67 rounded up to $20,417.

217

The Commission calculated the total estimated external cost based on the revised
burden hour estimate for the written assessment of the operation of the CAT. See
CAT NMS Plan Order, supra note 6, at 84925. The Commission assumes that the
preparation and submission of the error assessment would cost approximately half
as much as the revised written assessment. The revised written assessment
estimate provides that each Participant would outsource 2.5 hours of legal time to
assist in the review of the assessment, for an external cost of approximately
$1,000 pre-inflation. The Commission estimates that each Participant would
outsource approximately 1.25 hours of legal time, for an initial, one-time external
cost of $612.50 (1.25 hours x $490 per hour rate for outside legal services) to
assist in drafting the error assessment.

218

$15,312.50 = (25 Participants) x ($490 per hour rate for outside legal services) x
(1.25 hours).
53

amortized over three years) x (25 Participants)]. This estimated cost has increased due to
the increased number of Participants (25 Participants instead of 24 Participants) and due
to inflation.
h. Report on Impact of Tiered Fees on Market Liquidity
Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report to study the impact of tiered-fees on market liquidity, including an analysis
of the impact of the tiered-fee structure on Industry Members provision of liquidity,
within 36 months of effectiveness of the Plan.
The Commission estimates that on average, each Participant would outsource 0.5
hours of legal time to assist in drafting the report, for an initial, one-time external cost of
approximately $245. 219 Therefore, the Commission estimates that each Participant would
incur $245 of initial, one-time external costs for outsourced legal counsel per Participant,
for an estimated aggregate initial, one-time external cost of $6,125. 220
When this one-time cost is annualized over three years, the Participants would
incur an average aggregate external cost of approximately $2,042 per year to provide to
the Commission the written report to study the impact of tiered-fees on market liquidity
($245 in initial external costs amortized over three years [or $81.67] x 25 Participants =
$2,041.75 rounded up to $2,042). This estimated cost has increased due to the increased
number of Participants (25 Participants instead of 24 Participants) and inflation.
i. Financial Statements
Section 9.2 of the CAT NMS Plan requires that the CAT LLC financials be (i) in
compliance with GAAP, (ii) be audited by an independent public accounting firm, and
(iii) be made publicly available. The Commission estimates that each Participant would

219

$245 = ($490 per hour rate for outside legal services) x (0.5 hours).

220

$6,125 = (25 Participants) x ($490 per hour rate for outside legal services) x (0.5
hours).
54

incur an annual external cost of $2,600 221 associated with this requirement, for an
aggregate annual, ongoing external cost of $65,000 to the Participants. 222
The Commission estimates that the Participants would incur an aggregate,
external cost of approximately $65,000 to have the CAT LLC financials be (i) in
compliance with GAAP, (ii) be audited by an independent public accounting firm, and
(iii) be made publicly available [($2,600 in annual, ongoing external costs) x (25
Participants)]. The cost per individual Participant has decreased because the number of
Participants has increased (from 24 to 25 Participants) while the estimated aggregate
external cost has remained the same ($65,000).
j. Background Checks
Section 6.1(g) of the CAT NMS Plan requires each Participant to conduct
background checks of its employees and contractors that will use the CAT System. The
Commission estimates that this requirement will impact approximately 1,771 users. 223
The Commission estimates that each Participant would need to have background checks
of approximately 71 users. 224 Because the Participants have been using the CAT System
221

In the CAT NMS Plan Order, the Commission estimated that the aggregate cost of
this requirement for the Participants is $65,000. To estimate this number, the
Commission drew from a Commission adopting release and an industry report.
Specifically, the Commission’s Crowdfunding Adopting Release estimated that
the audit costs for affected issuers would be $2,500 to $30,000. See Securities
Act Release No. 9974 (October 30, 2015), 80 FR 71499 (November 16, 2015).
The Commission believes this estimate could be reasonable if the Company’s
financials are of the same level of complexity as the larger issuers affected by the
Crowdfunding rule, which is realistic because the Company is not publicly traded,
is organized as a “business league”, and has a limited and predictable revenue
stream. As an alternative estimate, the Commission estimated an audit cost of
approximately $65,000 using an industry estimate of $479 in audit costs per $1
million in revenue, using the assumption that Company revenue will just offset
expected costs of $139 million. See Audit Analytics report “Audit Fees and NonAudit Fees: A Twelve -Year Trend,” October 9, 2014, available at
http://www.auditanalytics.com/blog/audit-fees-and-non-audit-fees-a-twelve-yeartrend/. $479 x $139 = $64,665 ~ $65,000. The Commission incorporates the
higher estimate from the two methodologies ($65,000) into its cost estimates. See
CAT NMS Plan Order, supra note 6, at 84856, n.2503. ($65,000 annual, external
cost) / (25 Participants) = $2,600 per Participant.

222

Id.

223

Previously, the Commission estimated that approximately 1,700 users would be
impacted, based on conversations with Participants, when there were only 24
Participants in the CAT NMS Plan. The Commission is revising this estimate to
account for 1 additional Participant.

224

70.84 users per Participant = (1,771 users) / (25 Participants).
55

for more than one year now, the Commission assumes that the initial costs for
fingerprinting have already been covered. The Commission therefore estimates $0 for
the remaining initial external cost.
The Commission estimates that the ongoing external cost to be incurred by each
Participant would be approximately $619.98, 225 for an aggregate annual external cost of
approximately $15,500. 226
The Commission thus estimates that the Participants would incur an aggregate,
average annual external cost of approximately $15,499.50 to conduct background checks
of its employees and contractors that will use the CAT System [($0 in initial external
costs amortized over three years) + ($619.98 in annual, ongoing external costs) x (25
Participants) = $15.499.50]. This estimated cost has increased due to the increased
number of estimated users (1,775 instead of 1,700) to account for the increased number
of Participants (25 Participants instead of 24 Participants) for the ongoing external cost.
The aggregate annual external cost has decreased due to the completion of the initial
background checks.
B.

Costs to Broker-Dealer Members
a.

Data Collection and Reporting

Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
broker-dealer member of a Participant, and further documenting the life of the order
through the process of routing, modification, cancellation and execution (in whole or in
part) of the order. Rule 613(c) requires the CAT NMS Plan to impose requirements on
broker-dealer members to record and report CAT information to the Central Repository
in accordance with specified timelines.

225

See supra note 153. Based on the Commission’s estimate that 16.90 users will
need to be subject to background checks annually, the Commission estimates that
45% of the 16.90 users would submit hard copy fingerprints and 55% of the 16.90
users would submit electronic fingerprints to conduct their background checks.
45% of 16.90 = 7.61 users that would submit hard copy fingerprints. 55% of
16.90 = 9.30 users that would submit electronic fingerprints. (7.61 hard copy
fingerprinting users) x ($44.50 per hard copy fingerprint) = $338.65 for hard copy
fingerprinting users per Participant. (9.30 electronic fingerprinting users) x
($30.25 per electronic fingerprint) = $281.33 for electronic fingerprint users per
Participant. $338.65 + $281.33 = $619.98 per Participant in ongoing external
costs for fingerprinting.

226

($619.98 per Participant in annual, ongoing external costs) x (25 Participants) =
$15,499.50 rounded up to $15,500 to conduct a fingerprint-based background
check of the users.
56

The Commission’s estimates delineate broker-dealer firms by whether they
insource or outsource, or are likely to insource or outsource, CAT Data reporting
obligations. The Commission believes that firms that previously reported high numbers
of OATS ROEs 227 strategically would decide to either self-report their CAT Data or
outsource their CAT Data reporting functions, while the firms with the lowest levels of
activity would be unlikely to have the infrastructure and specialized employees necessary
to insource CAT Data reporting and would almost certainly outsource their CAT Data
reporting functions. The Commission recognizes that more active firms that will likely
be CAT Reporters and insource regulatory data reporting functions may not have had
OATS reporting obligations because they either are not FINRA members, or because
they do not trade in NMS equity securities. 228
As noted above, the Commission estimates that as of the time that OATS was
retired, there were 126 OATS-reporting Insourcers and 45 non-OATS reporting
Insourcers. 229 The Commission’s estimation categorizes the remaining 1,179 brokerdealers that the Plan anticipates would have CAT Data reporting obligations as
Outsourcers. 230
(1)

Insourcers
A.

Large Non-OATS Reporting Broker-Dealers

The Commission relies on the Plan’s large broker-dealer cost estimates in
estimating costs for large broker-dealers that can practicably decide between insourcing
or outsourcing their regulatory data reporting functions. 231 The Commission estimates
that there are 14 large broker-dealers that were not OATS reporters currently in the
business of electronic liquidity provision (“ELP Firms”) that would be classified as
Insourcer firms. 232
Additionally, the Commission estimates that there are 31 broker-dealers that may
transact in options but not in equities that can be classified as Insource firms (“OMM
Firms”). 233 These firms may have customer orders and other activity off-exchange that
would cause them to incur a CAT reporting obligation.
227

See supra note 155.

228

The Commission also recognizes as discussed above that some broker-dealer
firms may strategically choose to outsource despite the Plan’s working
assumption that these broker-dealers would insource their regulatory data
reporting functions.

229

See supra note 157.

230

See supra note 158.

231

See CAT NMS Plan, supra note 4, at Appendix C, Section A.6(c).

232
233

See supra note 160.
See supra note 161.
57

The Commission assumes the 31 OMM Firms and 14 ELP Firms would be typical
of the Plan’s large, non-OATS reporting firms; for these firms, the Commission relies on
the cost estimates provided under Approach 1 234 for large, non-OATS reporting firms in
the CAT NMS Plan.
Because CAT reporting obligations have been in place for some time now, the
Commission assumes that the initial one-time implementation costs have already been
incurred.
The Commission believes that the Rule would impose ongoing annual burdens
associated with, among other things, personnel time to monitor each large non-OATS
reporting broker-dealer’s reporting of the required data and the maintenance of the
systems to report the required data; and implementing changes to trading systems that
might result in additional reports to the Central Repository. The CAT NMS Plan
provides the following average ongoing external costs that a large non-OATS reporting
broker-dealer would expect to incur to maintain data reporting systems to be in
compliance with Rule 613: $80,000 in external hardware and software costs, and $1,300
in external third party/outsourcing costs. 235 Based on this information, the Commission
estimates that it would cost, on average, approximately $80,000 per year per large nonOATS reporting broker-dealer to maintain systems connectivity to the Central Repository
and purchase any necessary hardware, software, and other materials, and an additional
$1,300 in third party/outsourcing costs. 236
Additionally, the Commission estimates that the ongoing cost to an ELP Firm and
an OMM Firm to maintain the modified allocation timestamp requirement would be
$29,166.67 per year. 237
234

See supra note 162.

235

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(C)(2)(b).
The CAT NMS Plan did not break down these third-party costs into categories.

236

Id.

237

See Letter to Brent J. Fields, Secretary, Commission, from Mary Lou Von
Kaenel, Managing Director, Financial Information Forum, dated July 18, 2016, at
88, Table 6 (“FIF Letter”). The commenter based its implementation and ongoing
estimates on a survey it conducted of broker-dealers to estimate the costs
associated with the allocation report timestamp requirement. The commenter
noted that the estimates do not account for all Insourcers (the cost estimates cover
the 126 large OATS-reporting broker-dealer Insourcers, but not the 14 ELPs or 31
Options Market Makers), nor do they cover Outsourcing broker-dealers. The
Commission believes those categories may not have been included in the
estimates due to a lack of participation by such broker-dealers in the survey. The
Commission is assuming, for its Paperwork Reduction Act cost estimates, that the
portion of the estimates attributed by the commenter to service bureaus will be

58

The Commission estimates that the total average ongoing external cost per ELP
Firm would be $110,466.67 238 per year to maintain the systems necessary to collect and
transmit information to the Central Repository, for an estimated aggregate ongoing
external cost for the ELP Firms of approximately $1,546,533. per year. 239
The Commission also believes there is an ongoing external cost for the
requirement that an OMM Firm submit a Quote Sent Time to an exchange. The
Commission estimates that this requirement will impose an additional ongoing hardware
and software cost per OMM Firm of $383,225.81 per year. 240
passed-through to their Outsourcing broker-dealer clients that rely on service
bureaus to perform their regulatory data reporting. The Commission is thus
applying the portion of the commenter’s cost estimates attributed to the 126
Insourcers to all 171 Insourcers, as well as the portion of the cost estimates
attributed to the 13 service bureaus across the 1,329 broker-dealers that are
categorized as Outsourcing broker-dealers. The commenter stated that this
requirement would cost the industry $5,035,833 in ongoing costs. The
commenter attributed $4,987,500 of the ongoing cost estimate to 126 Insourcers.
For purposes of this Paperwork Reduction Act analysis, the Commission is
applying the portion of the cost estimates attributed to the 126 Insourcers to all
171 Insourcers. $4,987,500/171 Insourcers = $29,166.67 in ongoing costs to
maintain the modified allocation timestamp requirement per Insourcer. The
Commission believes that this cost would be an external hardware and software
cost related to maintenance of the modified allocation timestamp.
238

($80,000 in external hardware and software costs) + ($29,166.67 to maintain the
modified allocation timestamp requirement) + ($1,300 ongoing external third
party/outsourcing costs) = $110,466.67 in ongoing external costs per ELP.

239

($110,466.67 in ongoing external costs per ELP) x (14 ELPs) = $1,546,533.38
rounded down to $1,556,533 in aggregate ongoing external costs.

240

The Commission estimates that the ongoing cost of the Quote Sent Time
requirement is approximately $11,880,000. The Commission notes that the Quote
Sent Time cost estimate was not included in the cost estimates of the CAT NMS
Plan Notice, because the Commission concluded that this requirement did not
represent a significant source of costs. However, the Commission received a
comment stating that the estimated 5-year cost to Options Market Makers for
adding a timestamp to the quote times was between the range of $39.9 million and
$76.8 million, and the commenter further stated that this is “not a trivial cost for
providing one data element to the consolidated audit trail.” See FIF Letter at 65.
In response to the comment, the Commission agrees that the costs of quote sent
time are significant and adds this cost to its estimates for Options Market data
collection and reporting. See also CAT NMS Plan Order, supra note 6, at Section
V.F.3.a(6). The Commission is using the maximum 5-year cost estimate to
Options Market Makers provided by the commenter ($76.8 million) and has

59

Based on this information, the Commission estimates that the total ongoing
external cost per OMM Firm would be $493,692.48 per year. 241 to maintain the systems
necessary to collect and transmit information to the Central Repository, for an estimated
aggregate ongoing external cost to OMM Firms of approximately $15,304,467 per
year. 242

B.

Large OATS-Reporting Broker-Dealers

The Commission estimates that 126 broker-dealers, which reported more than
350,000 OATS ROEs between June 15 and July 10, 2015, would strategically decide to
either self-report CAT Data or outsource their CAT data reporting functions. 243 To
conduct its Paperwork Burden Analysis for the 126 broker-dealers, the Commission
relied on the estimates used by the CAT NMS Plan of expected costs that a large OATSreporting broker-dealer would incur as a result of the implementation of the consolidated
audit trail under Approach 1. 244 Because the OATS system was retired and CAT
reporting obligations are in place, the Commission assumes that the initial one-time
implementation costs have already been incurred.
Once a large former OATS-reporting broker-dealer has established the
appropriate systems and processes required for collection and transmission of the
required information to the Central Repository, such broker-dealers would be subject to
ongoing external costs associated with, among other things, personnel time to monitor
each broker-dealer’s reporting of the required data and the maintenance of the systems to
divided it into $17,400,000 in aggregate implementation external costs, and
$11,880,000 in aggregate ongoing external costs. ($11,880,000 in ongoing costs) /
(31 Options Market Maker) = $383,225.81 in ongoing external costs to maintain
the Quote Sent Time requirement per Options Market Maker. This figure has
changed slightly since the prior submission due to the correction of a minor
computational error.
241

($80,000 in external hardware and software costs) + ($1,300 in external third
party/outsourcing costs) + ($29,166.67 in ongoing costs to maintain the modified
allocation timestamp requirement) + ($383,225.81 in ongoing external costs to
maintain the Quote Sent Time requirement) = $493,692.48 in ongoing external
costs per Options Market Maker.

242

($493,692.48 in ongoing external costs per Options Market Maker) x (31 options
firms) = $15,304,466.88 rounded up to $15,304,467 in aggregate ongoing external
costs.

243

See supra note 166.

244

See supra note 162.
60

report the required data; and implementing changes to trading systems which might result
in additional reports to the Central Repository. The CAT NMS Plan provides the
following average ongoing external cost figures that a large OATS-reporting brokerdealer would expect to incur to maintain data reporting systems to be in compliance with
Rule 613: $380,000 in ongoing external hardware and software costs, and $120,000 in
ongoing external third party/outsourcing costs. 245 Based on this information the
Commission believes that it would cost, on average, approximately $380,000 per year per
large OATS-reporting broker-dealer to maintain systems connectivity to the Central
Repository and purchase any necessary hardware, software, and other materials, and an
additional $120,000 in external ongoing third party/outsourcing costs. 246 Therefore, the
Commission estimates that the average ongoing annual external cost per large OATSreporting broker-dealer would be approximately $500,000 247 to maintain the systems
necessary to collect and transmit information to the Central Repository.
Additionally, the Commission estimates that the ongoing cost to a large OATSreporting broker-dealer to maintain the modified allocation timestamp requirement would
be $29,166.67. 248
Based on this information, the Commission believes that the average ongoing
annual external cost per large OATS-reporting broker-dealer would be approximately
$529,166.67 249 to maintain the systems necessary to collect and transmit information to
the Central Repository, for an estimated aggregate ongoing external cost of
approximately $66,675,000. 250
245

See CAT NMS Plan, supra note 4, at Appendix C, Section B.7(b)(iii)(C)(2)(b).
The CAT NMS Plan did not categorize these third party costs. The Commission
believes that these costs may be attributed to the use of service bureaus,
technology consulting, and legal services.

246

See id.

247

($380,000 in ongoing external hardware and software costs + $120,000 in
ongoing external third party/outsourcing costs) = $500,000 in ongoing external
costs per large OATS-reporting broker-dealer.

248

See supra note 240. $4,987,500 / 171 Insourcers = $29,166.67 in ongoing costs to
maintain the modified allocation timestamp requirement per Insourcer.

249

($380,000 in ongoing external hardware and software costs) + ($29,166.67 to
maintain the modified allocation timestamp requirement) + ($120,000 in ongoing
external third party/outsourcing costs) = $529,166.67 in ongoing external costs
per large OATS-reporting broker-dealer.

250

($380,000 in ongoing external hardware and software costs) + ($29,166.67 to
maintain the modified allocation timestamp requirement) + ($120,000 in ongoing
external third party/outsourcing costs) x (126 large OATS-reporting brokerdealers) = $66,675,000.42 rounded down to $66,675,000 in aggregate ongoing
external costs.
61

(2)

Outsourcing Firms
A.

Small OATS-Reporting Broker-Dealers

The Commission estimates that there are 806 broker-dealers that reported fewer
than 350,000 OATS ROEs monthly prior to OATS retirement. The Commission believes
that these broker-dealers generally outsourced their regulatory reporting obligations
because during the period June 15 – July 10, 2015, approximately 88.9% of their 350,000
OATS ROEs were reported through service bureaus, with 730 of these broker-dealers
reporting more than 99% of their OATS ROEs through one or more service bureaus. 251
The Commission estimates that these firms spent, prior to OATS retirement an aggregate
of $100.2 million on annual outsourcing costs. 252 The Commission estimates these 806
broker-dealers spend $100.2 million in the aggregate to outsource their regulatory data
reporting to service bureaus to report in accordance with Rule 613, 253 or $124,317.62 per
broker-dealer. 254 Because OATS was retired in September 2021, the Commission
assumes that all initial one-time external costs have already been incurred.
The Commission estimates that it would cost small OATS-reporting brokerdealers, on average, approximately $124,317.62 in ongoing external outsourcing costs 255
to ensure ongoing compliance with Rule 613. Additionally, the Commission estimates
that the ongoing cost to a small OATS-reporting broker-dealer to maintain the modified
allocation timestamp requirement would be $81.51. 256
251

See supra note 166.

252

The average broker-dealer in this category reported 15,185 OATS ROEs from
June 15-July 10, 2015; the median reported 1,251 OATS ROEs. Of these brokerdealers, 39 reported more than 100,000 OATS ROEs during the sample period.

253

See CAT NMS Plan Order, supra note 6, at Section V.F.1.c.(2)(B).

254

$124,317.62 = $100,200,000/806 broker-dealers. This amount is the average
estimated annual outsourcing cost to firms that currently report fewer than
350,000 OATS ROEs per month. Id.

255

See supra note 257.

256

See supra note 240. The commenter attributed $108,333 of the ongoing cost
estimate to 13 service bureaus. For purposes of this Paperwork Reduction Act
analysis, the Commission is assuming that the portion of the estimates attributed
by the commenter to service bureaus will be passed-through to their Outsourcing
broker-dealer clients that rely on service bureaus to perform their regulatory data
reporting. The Commission is thus applying the portion of the commenter’s cost
estimates attributed to the 13 service bureaus across the 1,329 broker-dealers that
are categorized as Outsourcing broker-dealers. $108,333 / 1,329 Outsourcing
broker-dealers = $81.51 in ongoing costs to maintain the modified allocation
timestamp requirement per Outsourcing broker-dealer.
62

Therefore, the Commission estimates that the average ongoing external cost per
small OATS-reporting broker-dealer would be approximately $124,399.13 per year, 257
for an estimated aggregate ongoing external cost of approximately $100,265,699 per year
for all such broker-dealers. 258
B.

Small Non-OATS-Reporting Broker-Dealers

In addition to firms that previously reported to OATS, the Commission estimates
there are 373 broker-dealers that were exempt from OATS reporting rules due to firm
size, or excluded because all of their order flow was routed to a single OATS reporter,
such as a clearing firm, that would incur CAT reporting obligations. 259 A further 24
broker-dealers have Participant memberships only with one Participant; 260 the
Commission believes this group is comprised mostly of floor brokers and further believes
these firms would experience CAT implementation and ongoing reporting costs similar in
magnitude to small equity broker-dealers that currently have no OATS reporting
responsibilities. 261
The Commission assumes these broker-dealers would have very low levels of
CAT reporting, similar to those of the lowest activity firms that formerly reported to
OATS. Because CAT reporting obligations have already gone into effect, the
Commission assumes all costs of initial implementation have already been incurred.
The Commission estimates that it would cost, on average, approximately
$124,317.62 in ongoing external outsourcing costs 262 to ensure ongoing compliance with
Rule 613. Additionally, the Commission estimates that the ongoing cost to a small nonOATS-reporting broker-dealer to maintain the modified allocation timestamp
requirement would be $81.51. 263 Therefore, the Commission estimates that the average
ongoing external cost per small non-OATS-reporting broker-dealer would be
257

$124,399.13 = ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain
the allocation timestamp)

258

$100,265,699 = ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain
the allocation timestamp) x (806 broker-dealers) = $100,265,698.78 rounded up to
$100,265,699.

259

See supra note 174.

260

See supra note 175.

261

Id.

262

The Commission assumes these firms have very low levels of CAT reporting,
similar to those of the lowest activity firms that formerly report to OATS. For
these firms, the Commission assumes that under CAT they would incur the
average estimated service bureau cost of firms that formerly OATS reported
fewer than 350,000 OATS ROEs per month of $124,373 annually.

263

See supra note 259.
63

approximately $124,399.13, 264 for an estimated aggregate ongoing external cost of
approximately $49,386,455 per year. 265
C.

Completed Information Collections Requirements

As discussed above, 266 the Commission believes that three information collections
requirements have been satisfied, specifically (1) a document outlining how the
Participants could incorporate into the consolidated audit trail information regarding
certain products that are not NMS securities; 267 (2) a one-time assessment of the clock
synchronization standards in the Plan before reporting begins for Industry Members,
which assessment shall take into account the diversity of CAT Reporters and systems; 268
and (3) a one-time report that discusses the Participants’ assessment of implementing
coordinated surveillance. 269 These one-time information collections have been
completed by the Participants, so the Commission believes that the annual dollar cost for
each of the information collections is $0.
Summary of Dollar Costs
Name of
Information
Collection

Type of
Burden

[A.]
Number
of Entities
Impacted

[B.]
Annual
Responses
per Entity

[C.]
Initial Cost
per Entity
per
Response

[D.]
Initial Cost
Annualized
per Entity per
Response
[=C÷3
years]

[E.]
Ongoing Cost
per Entity per
Response

[F.]
Annual Cost
Per Entity per
Response
[ = D + E]

[G.]
Total Annual
Cost Per
Entity
[ = (D + E) *
B]

Central
Repository

Recordkeeping

25

1

$0

$0

$2,232,000

$2,232,000

$2,232,000

$55,800,000

0

Data Collection
and Reporting
(Participants)

Third Party
Disclosure

25

1

0

0

$ 476,579.58

$ 476,579.58

$ 476,579.58

$11,914,490

0

Surveillance

Recordkeeping

25

1

$0

$0

$1,105,263.16

$1,105,263.16

$1,105,263.16

$27,631,579

0

[H.]

Industry Cost
[ = G * A]

264

$124,399.13= ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain
the allocation timestamp)

265

($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain the allocation
timestamp) x (397 small non-OATS reporting broker-dealers) = $49,386,454.60
rounded up to $49,386,455 in aggregate ongoing external costs to ensure ongoing
compliance with Rule 613.

266

See supra Section I.A.

267

See 17 CFR 242.613(i). See also “One-Time Written Assessments,”
Consolidated Audit Trail, LLC at: https://www.catnmsplan.com/one-time-writtenassessments/index.html.

268

See CAT NMS Plan Order, supra note 6, at 84940.

269

Id. at 84940–84941.
64

Total

Small
Business
Entities
Affected

Written
Assessment of
Operation of
CAT

Reporting

25

1

$0

$0

$1,225

$1225

$1,225

$30,625

0

Independent
Audit of
Expenses
Incurred Prior
to the Effective
Date

Disclosure

25

1

$0

$0

$0

$0

$0

0

0

Assessment of
Industry
Member Bulk
Access to
Reporter Data

Reporting

25

1

$2,450

$816.67

$0

$816.67.67

$816.67.67

$20,417

0

Assessment of
Errors in
Customer
Information
Fields

Reporting

25

1

$612.50

$204.17

$0

$204.17

$204.17

$5,104

0

Report on
Impact of
Tiered Fees on
Market
Liquidity

Reporting

25

1

$245

$81.67

$0

$81.67

$81.67

$2,042

0

Type of
Burden

[A.]
Number
of Entities
Impacted

[B.]
Annual
Responses
per Entity

[C.]
Initial Cost
per Entity
per
Response

[D.]
Initial Cost
Annualized
per Entity per
Response
[=C÷3
years]

[E.]
Ongoing Cost
per Entity per
Response

[F.]
Annual Cost
Per Entity per
Response
[ = D + E]

[G.]
Total Annual
Cost Per
Entity
[ = (D + E) *
B]

Financial
Statements

Disclosure

25

1

0

0

$2,600

$2,600

$2,2,600

$65,000

0

Background
Checks

Disclosure

25

1

$0

$0

$619.98

$619.98

$619.98

$15,500

0

Data Collection
and Reporting
(Large, NonOATS
Reporting
Broker-Dealers
- ELPs)

Third Party
Disclosure

14

1

$0

$0

$110,466.67

$110,466.67

$110,466.67

$1,546,533

0

Data Collection
and Reporting
(Large, NonOATS
Reporting
Broker-dealers
– Options
Market Makers)

Third Party
Disclosure

31

1

$0

$0

$493,692.48

$493,692.48

$493,692.48

$15,304,467

0

Data Collection
and Reporting
(Large OATS
Reporting
Broker-Dealers)

Third Party
Disclosure

126

1

$0

$0

$529,166.67

$529,166.67

$529,166.67

$66,675,000

0

Name of
Information
Collection

65

[H.]

Industry Cost
[ = G * A]

Total

Small
Business
Entities
Affected

Data Collection
and Reporting
(Small OATS
Reporting
Broker-Dealers)

Third Party Disclosure

806

1

$0

$0

$124,399.13

$124,399.13

$124,399.13

$100,265,699

Estimated
345 270

Data Collection
and Reporting
(Small NonOATS
Reporting
Broker-Dealers)

Third Party Disclosure

397

1

$0

$0

$124,399.13

$124,399.13

$124,399.13

$49,386,455

Estimated
397 271

Review of
Clock
Synchronization
Standards

Reporting

24

0

$0

$0

$0

$0

$0

$0

0

Coordinated
Surveillance
Report

Reporting

24

0

$0

$0

$0

$0

$0

$0

0

Document on
Expansion to
Other Securities

Reporting

24

0

$0

$0

$0

$0

$0

$0

0

TOTAL COST FOR ALL RESPONDENTS

14.

$ 328,662,911

Costs to Federal Government
There will be no additional costs to the Federal Government.

15.

Changes in Burden

The aggregate time burden decreased by 2,641,278 hours (from 7,572,610 hours
to 4,931,332 hours) and the aggregate cost burden decreased by $134,659,682 (from
$463,322,593 to $328,662,911).
The changes in burden have occurred because, as discussed above, while the
number of Participants subject to the Plan has increased (from 24 Participants to 25
Participants), certain information collection requirements have been completed, and
certain initial burdens and costs associated with implementation of certain information
collection requirements have been completed, although certain ongoing costs will
continue to accrue.
The Commission believes that certain information collection requirements have
been satisfied, as described above, including the initial burdens and costs associated with
certain information collection requirements.
The Commission notes that the number of Participants has increased from 24
Participants to 25 Participants. The estimated burdens and costs for Participants have
also been impacted by a change in calculation relating to the Participants Study.
Specifically, some burden and cost calculations relating to Participants have been
270

See supra note 182.

271

Id.
66

adjusted to more accurately represent the information presented by Participants in the
CAT NMS Plan in the Participants Study. The Commission is relying on aggregate
estimates provided by Participants in the CAT NMS Plan, based on a survey of 19
Participants, but previously assumed that all of these aggregate estimates applied equally
to 24 Participants. The Commission is now adjusting certain aggregate estimates
provided by Participants to account for the fact that those numbers are based on 19
Participants, where appropriate. For collectively shared burdens and costs the
Commission did not adjust the Participants Study numbers in a similar fashion.
In addition, the Commission has further reduced the estimated number of brokerdealers subject to CAT reporting from 1,500 to 1,350, resulting in a reduction in the
estimated number of small non-OATS-reporting broker-dealers from 523 to 397. This
has resulted in a number of changed estimated burdens and costs, including a substantial
decrease in the overall burdens and costs estimated for small non-OATS-reporting
broker-dealers in the aggregate, as well as slight changes to the estimated costs for small
non-OATS-reporting broker-dealers because of the way the cost of implementing and
maintaining the modified timestamp is estimated to be shared between small OATS
Reporting Broker-Dealers and small non-OATS-reporting broker-dealers. The chart
below identifies the Information Collections whose burdens have changed and
summarizes the amount of the changes and the primary reason(s) for the changes.
Summary of Annual Burden Changes (rounded to the nearest hour or dollar):
Name of
Information
Collection
Data Collection
and Reporting
(Participants)
Surveillance
Written
Assessment of
Operation of CAT
Independent Audit
of Expenses
Incurred Prior to
the Effective Date
Assessment of
Industry Member
Bulk Access to
Reporter Data

Change in
Hours

Change in Cost

Reason for Change
Increase in number of respondents from 24
to 25, and increased costs of FTE due to
inflation.
Elimination of one-time initial burdens and
costs, increase in number of respondents
(Participants) from 24 to 25
Increase in number of respondents
(Participants) from 24 to 25 and increased
costs due to inflation.

1,629 2,567,122
(16,357) (1,294,737)
150 $6,625

n/a ($1,667)

Elimination of burden due to completion of
collection.

5 $4,417

Increase in number of respondents
(Participants) from 24 to 25 and increased
costs due to inflation

67

Assessment of
Errors in Customer
Information Fields
Name of
Information
Collection
Report on Impact
of Tiered Fees on
Market Liquidity
Assessment of
Material Systems
Change on Error
Rate
Background
Checks
Data Collection
and Reporting
(Large, NonOATS Reporting
Broker-Dealers) ELPs
Data Collection
and Reporting
(Large, NonOATS Reporting
Broker-Dealers) –
Options Market
Makers
Data Collection
and Reporting
(Large OATS
Reporting BrokerDealers)
Data Collection
and Reporting
(Small OATS
Reporting BrokerDealers)
Data Collection
and Reporting
(Small Non-OATS
Reporting BrokerDealers)

Increase in in number of respondents
(Participants) from 24 to 25 and increased
costs due to inflation.

8 $1104
Change in
Hours

Change in Cost

Reason for Change
Increase in number of respondents
(Participants) from 24 to 25 and increased
costs due to inflation.

6 $442

21 n/a

Increase in number of participants (24 to 25)

(138) ($20,154)

Elimination of one-time initial burdens and
costs, increase in number of respondents
(Participants) from 24 to 25.

(67,620) ($3,311,001)

Elimination of one-time initial burdens and
costs.

(149,730) ($13,131,500)

Elimination of one-time initial burdens and
costs.

(1,127,952) ($48,300,000)

Elimination of one-time initial burdens and
costs.

(483,600) ($33,662,807)

Elimination of one-time initial burdens and
costs.

(797,700) ($37,517,526)

Reduction in number of estimated smallnon-OATS Reporting Broker-Dealers, from
523 to 397, and elimination of one-time
initial burden and costs.

68

Total Change

16.

(2,641,278) ($134,659,682)

Information Collection Planned for Statistical Purposes
Not applicable. The information collection is not used for statistical purposes.

17.

Approval to Omit the OMB Expiration Date
The Commission is not seeking approval to omit the OMB expiration date.

18.

Exceptions to Certification
This collection complies with the requirements in 5 CFR 1320.9.

B.

Collections of Information Employing Statistical Methods
This information collection does not involve statistical methods.

69