[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28119-28130]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-10038]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88824; File No. S7-24-89]


Joint Industry Plan; Order Approving the Forty-Fourth Amendment 
to the Joint Self-Regulatory Organization Plan Governing the 
Collection, Consolidation and Dissemination of Quotation and 
Transaction Information for Nasdaq-Listed Securities Traded on 
Exchanges on an Unlisted Trading Privileges Basis, as Modified by the 
Commission, Concerning Conflicts of Interest

May 6, 2020.

I. Introduction

    On July 5, 2019,\1\ the Joint Self-Regulatory Organization Plan 
Governing the Collection, Consolidation and Dissemination of Quotation 
and Transaction Information for Nasdaq-Listed Securities Traded on 
Exchanges on an Unlisted Trading Privileges Basis (``Nasdaq/UTP Plan'' 
or ``Plan'') \2\ participants (``Participants'') \3\ filed with the 
Securities and Exchange Commission (``SEC'' or ``Commission'') pursuant 
to Section 11A of the Securities Exchange Act of 1934 (``Act''),\4\ and 
Rule 608 of Regulation National Market System (``NMS'') thereunder,\5\ 
a proposal to amend the Nasdaq/UTP Plan. The amendment represents the 
44th amendment to the Nasdaq/UTP Plan (``Amendment''). As described in 
the Amendment, the Participants proposed to make mandatory a conflicts 
of interest disclosure regime that currently is voluntary. The 
Amendment was published for comment in the Federal Register on January 
14, 2020.\6\ This order approves the Amendment to the Plan, as modified 
by the Commission. The Commission concludes that the Amendment, as 
modified, is appropriate in the public interest, for the protection of 
investors and the maintenance of fair and orderly markets, to remove 
impediments to, and perfect the mechanism of a national market system, 
or is otherwise in furtherance of the purposes of the Act.\7\ A copy of 
the Amendment, as modified by the Commission, is attached as Exhibit A 
hereto.
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    \1\ See Letter from Robert Books, Chair, Nasdaq/UTP Plan 
Operating Committee to Vanessa Countryman, Secretary, Commission, 
dated July 3, 2019 (``Transmittal Letter'').
    \2\ The Plan governs the collection, processing, and 
dissemination on a consolidated basis of quotation information and 
transaction reports in Eligible Securities for its Participants. 
This consolidated information informs investors of the current 
quotation and recent trade prices of Nasdaq securities. It enables 
investors to ascertain from one data source the current prices in 
all the markets trading Nasdaq securities. The Plan serves as the 
required transaction reporting plan for its Participants, which is a 
prerequisite for their trading Eligible Securities. See Securities 
Exchange Act Release No. 55647 (April 19, 2007), 72 FR 20891 (April 
26, 2007).
    \3\ The Participants are the national securities association and 
national securities exchanges that submit trades and quotes to the 
Plan and include: Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., 
Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, 
Inc., NYSE Chicago, Inc., Financial Industry Regulatory Authority, 
Inc., The Investors' Exchange LLC, Long-Term Stock Exchange, Inc., 
Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq PHLX, Inc., The Nasdaq 
Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, 
NYSE Arca, Inc., and NYSE National, Inc. (each a ``Participant'' and 
collectively, the ``Participants''). Participants are also members 
of the Plan's Operating Committee.
    \4\ 15 U.S.C. 78k-1.
    \5\ 17 CFR 242.608.
    \6\ See Securities Exchange Act Release No. 87908 (January 8, 
2020), 85 FR 2202 (January 14, 2020) (``Notice''). Comments received 
in response to the Notice are available at https://www.sec.gov/comments/s7-24-89/s72489.shtml.
    \7\ 17 CFR 242.608(b)(2).
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II. Description of the Proposal

    Under the current practice, which the Amendment proposed to make 
mandatory, the Participants,\8\ the Processor,\9\ the 
Administrator,\10\ and the members of the Advisory Committee \11\ 
(collectively, the ``Disclosing Parties'')\12\ voluntarily respond to a 
set of questions designed to provide transparency regarding potential 
conflicts of interest of such parties. Each of the Disclosing Parties' 
responses is made publicly available on the Plan's website and is 
updated at least annually.\13\ The Amendment would make this practice 
mandatory. The Participants stated that they believe that publicly 
providing these responses increases transparency and confidence in the 
governance of the Plan.\14\
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    \8\ See supra note 3 (listing the Participants).
    \9\ The ``Processor'' is charged with collecting, processing and 
preparing for distribution or publication all Plan information. The 
Processor for the Nasdaq/UTP Plan is Nasdaq Stock Market LLC 
(``Nasdaq'').
    \10\ The ``Administrator'' is charged with administering the 
Plan to include data feed approval, customer communications, 
contract management, and related functions. The Administrator of the 
Plan is Nasdaq.
    \11\ The ``Advisory Committee members'' are natural persons who 
represent particular types of financial services firms or actors in 
the securities market, and who were selected by Plan participants to 
be on the Advisory Committee.
    \12\ A list of the Processor, Administrator, and Advisory 
Committee members, along with their conflict of interest 
disclosures, is available at https://www.utpplan.com/governance.
    \13\ See id.
    \14\ See Notice, supra note 6, 85 FR at 2203.
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    According to the Participants, with exchanges permitted to offer 
both proprietary market data products and also acting as Participants 
in running the public market data stream, potential conflicts of 
interest are inherent.\15\ There may be instances in which 
representatives from the Participants and Advisory Committee members 
have responsibilities with respect to both proprietary data and 
Securities Information Processor (``SIP'') data.\16\ Drawing on the 
expertise of persons with such overlapping responsibilities may give 
rise to potential conflicts of interest, and to address such potential 
conflicts of interest, the Participants adopted a voluntary conflicts 
disclosure regime with questions that are tailored to elicit responses 
that disclose potential conflicts of interest.
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    \15\ See id.
    \16\ See id.
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    Under their current approach to disclosure, each self-regulatory 
organization (``SRO'') discloses details about its ownership; whether 
it offers and charges for proprietary market data; the names of all 
representatives authorized to vote; and a narrative description of the 
representatives' role within the organization, including any direct 
responsibilities related to the development, dissemination, sale, or

[[Page 28120]]

marketing of the exchange's proprietary market data and the nature of 
those responsibilities. The Administrator and Processor disclose any 
employment or affiliation with an SRO and a narrative description of 
functions performed; whether it provides any services to, or has any 
responsibilities for the profitability of that SROs' proprietary market 
data products; and any policies and procedures in place to safeguard 
confidential Plan information. Finally, non-SRO Advisory Committee 
members disclose a description of their role at the firm with which 
they are associated, including whether they have responsibilities 
related to the use or procurement of market data or the firm's trading 
or brokerage services, whether they use the SIP or exchange proprietary 
data, whether they hold ownership in an SRO, and whether they are 
actively participating in any litigation against the Plan. The 
disclosures are made annually, updated in response to material changes, 
and are publicly posted on the Plan's website.

III. Discussion and Modifications by the Commission

    Pursuant to Rule 608, the Commission shall approve the amendment, 
``with such changes or subject to such conditions as the Commission may 
deem necessary or appropriate,'' if it finds that they are ``necessary 
or appropriate in the public interest, for the protection of investors 
and the maintenance of fair and orderly markets, to remove impediments 
to, and perfect the mechanisms of, a national market system, or 
otherwise in furtherance of the purposes of the Act.'' \17\
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    \17\ 17 CFR 608(b)(2).
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    The Commission agrees with the Participants that potential 
conflicts of interest are inherent in the current market data 
governance structure where exchanges can offer proprietary market data 
products while they also act as Participants in running the public 
market data stream. Indeed, as we recognized in the Notice, the 
Commission has separately raised broader concerns about the impact of 
these conflicts on the governance of the Plan.\18\ And the Commission 
solicited comment as to ``whether the Amendment to the current Plan 
addresses the concerns outlined in the Governance Notice or whether it 
should be further enhanced regarding conflicts of interest in national 
market system plan governance.''
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    \18\ See Notice, supra note 6, 85 FR at 2203. See also 
Securities Exchange Act Release No. 87906 (January 8, 2020), 85 FR 
2164 (January 14, 2020) (File No. 4-757) (``Governance Notice'').
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    After carefully considering the comments received on the Notice, 
the Commission is modifying the Amendment pursuant to Section 11A of 
the Act \19\ and Rule 608 thereunder,\20\ as discussed in detail below. 
The Commission agrees that the current voluntary conflicts of interest 
disclosure regime should be made mandatory, but believes that the 
modifications set forth below, including enhanced disclosure 
requirements and a requirement that an SRO be recused from voting when 
it or an affiliate is competing for a contract with the Plan, are 
appropriate in order to provide fuller transparency and further address 
conflicts of interest. Specifically, the Commission believes that the 
Plan should require additional public disclosures of any personal, 
business, or financial interests, and any employment relationships that 
would affect the ability of a party to the Plan, or its representative, 
to be impartial regarding the objectives and actions of the Plan. 
Further, the Commission believes that the Plan should impose additional 
disclosure requirements on Participants and their representatives, the 
Processor, the Administrator, Advisory Committee members, and service 
providers and subcontractors to the Plan.
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    \19\ 15 U.S.C. 78k-1.
    \20\ 17 CFR 608.
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    The Commission believes that full disclosure of all material facts 
necessary for market participants and the public to understand the 
potential conflicts of interest inherent in the current market data 
structure is an important approach to dealing with those potential 
conflicts. Detailed, clear, and meaningful disclosures that provide 
insight into otherwise non-transparent structures and operations can 
raise awareness by bringing these important issues into the light. In 
turn, increased access to information can facilitate public confidence 
in Plan operations as well as promote self-awareness on the part of 
Disclosing Parties that can support their efforts to identify and 
address those potential conflicts. The Commission believes that by 
requiring full disclosure of all material facts necessary to identify 
the nature of a potential conflict of interest and the effect it may 
have on Plan action, all parties, including the Commission and the 
public, will be better positioned to evaluate competing interests among 
any of the parties involved in governing, operating, and overseeing the 
Plan, as those competing interests could materially affect their 
ability to carry out the purposes of the Plan.
    Specifically, the Commission is modifying the Amendment as 
described below:

A. Enhanced Disclosures

1. Service Providers and Subcontractors
    In the Notice, the Commission solicited comment on whether enhanced 
conflicts disclosures should be required. Among other questions, the 
Commission asked whether commenters ``think any other types of persons 
should be required to provide disclosures, such as service providers to 
the Administrator that provide audit, accounting, or other professional 
services.'' \21\ Further, the Commission asked whether disclosures and 
conflicts policies should be applicable to subcontractors, for example 
where ``the Administrator enlists assistance from an auditor or any 
other professional services subcontractor for any of the Plan(s)'' 
including most prominently when ``the subcontractor is affiliated with 
an entity that is involved in the development, pricing, or sale of 
proprietary data products offered to SIP customers, or is subject to 
any other conflict.'' \22\
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    \21\ Notice, supra note 6, 85 FR at 2205.
    \22\ Id. at 2206.
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    In response to the Notice, the Advisory Committee recommended that 
the Amendment ``should apply to service providers engaged in audit or 
other professional service functions.'' \23\ Another commenter stated 
that ``service providers (e.g., audit, accounting, legal, and other 
professional providers) should be required to provide disclosures to 
ensure such individuals remain independent of conflicts in both 
appearance and fact'' and asserted that ``[s]uch service providers are 
operating for the benefit of the Plan(s), and must be sufficiently 
independent of other functions to ensure they provide qualified, 
accurate and unbiased services.'' \24\
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    \23\ Letter from CTA/UTP Advisory Committee to Vanessa 
Countryman, Secretary, Commission, dated January 24, 2020 
(``Advisory Committee Letter''), at 2. The Advisory Committee 
further recommended that the audit function be managed directly by 
the Plan and performed by an entity different from the entity 
engaged to audit the exchange's proprietary data products. See id. 
The Commission is not incorporating that suggestion at this time but 
believes it warrants further consideration.
    \24\ Letter from Joseph Kinahan, Managing Director, Client 
Advocacy and Market Structure, TD Ameritrade to Vanessa A. 
Countryman, Secretary, Commission, dated February 4, 2020 (``TD 
Ameritrade Letter''), at 5.
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    The Commission is modifying the Amendment to require the 
Participants, Administrator, Processor, or Operating Committee to only 
use service providers and subcontractors that make the

[[Page 28121]]

required disclosures in certain circumstances.\25\ Specifically, the 
Commission is adding the words ``and each service provider or 
subcontractor engaged in Plan business (including the audit of 
subscribers' data usage) that has access to Restricted or Highly 
Confidential Plan information'' and defining those, together with the 
existing parties, within the term ``Disclosing Parties'' as used in 
Section F.1 of the Plan. Further, the Commission is specifying that 
``The Operating Committee, a Participant, Processor, or Administrator 
may not use a service provider or subcontractor on Plan business unless 
that service provider or subcontractor has agreed in writing to provide 
the disclosures required by this section and has submitted completed 
disclosures to the Administrator prior to starting work.'' As is the 
case for all other Disclosing Parties, disclosures provided by service 
providers and subcontractors would be made public.
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    \25\ The Commission is using the term ``service providers and 
subcontractors'' to capture any natural person or entity engaged in 
Plan business, including those that may be affiliated with a 
Disclosing Party.
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    The Commission believes that the proposed disclosures contained in 
the Amendment are insufficient in that they do not apply at all to 
service providers to the Plan. For example, service providers can be 
affiliated with a Participant or the Administrator. In that case, the 
potential conflicts of interest that apply to the Participant or 
Administrator could equally apply to the service provider. These 
conflicts, as discussed above, exist because some exchange Participants 
have a dual role as both an SRO responsible for the operation of the 
SIP, on one hand, and, on the other hand, as part of a publicly held 
company that offers proprietary data products and connectivity 
services.\26\ The exchanges generate revenue from these proprietary 
data products in addition to the revenue the exchanges receive from the 
Plan. Given service providers' and subcontractors' access to 
competitively sensitive and commercially valuable Plan-related 
information, and the potential for competitive harm if they share such 
information with the Participants or their affiliates, the Commission 
believes that conflicts of interest can also arise with respect to 
service providers and subcontractors that may be under the direction 
of, or affiliated with, an exchange Participant, Administrator, or 
Processor, or those that may be under the direction of the Operating 
Committee. The Commission believes it is appropriate to include within 
the scope of the Amendments non-affiliates, including legal counsel, 
because they would be under the direction of one or more Participants, 
engaged in Plan business, and have access to Restricted or Highly 
Confidential Information. Accordingly, the inherent conflicts of 
interest faced by Participants, discussed above, could be perceived by 
a reasonable objective observer to also affect the ability of such non-
affiliated persons to be impartial. Obtaining disclosures from such 
service providers and subcontractors would therefore serve the purposes 
of the Amendments to the same extent they do for any other Disclosing 
Party.
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    \26\ For example, Participants may offer proprietary data 
products with content in excess of the core data offered by the 
SIPs, as well as other top-of-book proprietary data products with 
less content that can be marketed as a cheaper alternative to the 
SIP. Examples of such proprietary top-of-book products are NASDAQ 
Basic (https://business.nasdaq.com/intel/GIS/nasdaq-basic.html), 
Cboe One Feed (https://markets.cboe.com/us/equities/market_data_services/cboe_one/), and NYSE BBO (https://www.nyse.com/market-data/real-time/bbo).
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    The Commission therefore believes it is appropriate to include 
service providers and subcontractors within the scope of the conflicts 
of interest disclosures by prohibiting the Operating Committee, a 
Participant, the Processor, or the Administrator from using a service 
provider or subcontractor on Plan business unless that service provider 
or subcontractor has agreed to submit and keep current the required 
disclosures.\27\
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    \27\ To the extent the Operating Committee, a Participant, the 
Processor, or the Administrator seeks to use the services of a 
service provider or subcontractor for Plan business, it would first 
need to secure a written commitment from the service provider or 
subcontractor to agree to submit a required disclosure and be 
treated as a Disclosing Party, and the service provider or 
subcontractor must in fact adhere to the provisions applicable to 
all Disclosing Parties, including the process for updating the 
disclosures and submitting them to the Administrator for public 
dissemination in Section F.1.b. and c. of the Plan as well as the 
recusal provisions in Section F.2 of the Plan.
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    To implement the expansion of the required disclosures to service 
providers and subcontractors engaged in Plan business that have access 
to any level of confidential information, the Commission believes it is 
appropriate to add the following new section under Required Disclosures 
to apply to service providers and subcontractors:
    Pursuant to Section IV.F.1. of the Plan, each service provider or 
subcontractor that has agreed in writing to provide required 
disclosures and be treated as a Disclosing Party pursuant to Section 
IV.F. of the Plan shall respond to the following questions and 
instructions:
     Is the service provider or subcontractor affiliated with a 
Participant, Processor, Administrator, or member of the Advisory 
Committee? If yes, disclose with whom the person is affiliated and 
describe the nature of the affiliation.
     If the service provider's or subcontractor's compensation 
is on a commission basis or is tied to specific metrics, provide a 
detailed narrative summary of how compensation is determined for 
performing work on behalf of the Plan.
     Is the service provider or subcontractor subject to 
policies and procedures (including information barriers) concerning the 
protection of confidential information that includes affiliates? If so, 
describe. If not, explain their absence.
     Does the service provider or subcontractor, or its 
representative, have any other relationships or material economic 
interests that could be perceived by a reasonable objective observer to 
present a potential conflict of interest with its responsibilities to 
the Plan? If so, provide a detailed narrative discussion of all 
material facts necessary to identify the potential conflicts of 
interest and the effects they may have on the Plan.
    These disclosures require information that details the nature of 
any affiliation with other Disclosing Parties, provides information on 
the service provider's compensation arrangement, and asks about 
information barriers given the sensitive information to which such 
persons have access, all of which are consistent with the disclosures 
required of other Disclosing Parties. Finally, these disclosures 
include the new ``catch-all'' question that the Commission is adding to 
all Disclosing Parties' disclosures, which is discussed further 
below.\28\ Together, the Commission believes that these provisions 
will, as with their applicability to all other Disclosing Parties, 
provide important transparency into potential conflicts of interest 
that parties that provide important services to the Plan may encounter. 
The Commission believes that this transparency is important for service 
providers and subcontractors engaged in Plan business that have access 
to confidential Plan information because those service providers and 
subcontractors act at the direction of a Disclosing Party (e.g., the 
Administrator or Processor) and may be affiliated with them, or may be 
acting at the direction of the Operating Committee and may be 
affiliated with one of the Participants that compose the Operating 
Committee.

[[Page 28122]]

As such, those service providers and subcontractors likely are subject 
to the same or similar potential conflicts of interest and thus should 
be treated like any other Disclosing Party in making public disclosures 
about those potential conflicts.
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    \28\ See infra Section III(A)(3)(d) (discussing the catch-all 
question).
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    Further, the Commission believes it is appropriate to modify 
Section F.1. of the Plan to specify that the Disclosing Parties shall 
complete the applicable questionnaire \29\ ``to provide the required 
disclosures set forth below to disclose all material facts necessary to 
identify potential conflicts of interest.'' The Commission believes it 
is appropriate to add this detail to Section F.1 of the Plan to 
emphasize that a Disclosing Party's responses to the required 
disclosures must be sufficiently detailed to disclose all material 
facts to identify applicable potential conflicts of interest. 
Disclosures that fail to disclose all material facts will be 
insufficient to identify potential conflicts of interest and to provide 
sufficient context for the public to understand how those potential 
conflicts of interest are relevant to the Plan's governance and 
operations. An example of a ``material fact necessary to identify 
potential conflicts of interest'' could include whether a situation 
giving rise to a potential conflict of interest could have a potential 
adverse effect on the Plan.\30\
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    \29\ In the reference to the applicable questionnaire, the 
Commission is deleting the phrase ``attached to this UTP Plan as 
Exhibit 3.'' The Amendment, as modified, will require the 
Administrator to update the questionnaires. The Commission is not 
now attaching updated questionnaires as Exhibit 3.
    \30\ For example, a Participant that offers its own top-of-book 
data product to SIP customers for substantially lower fees than the 
SIP could be conflicted when considering a Plan proposal to have the 
SIP offer similar top-of-book products, and this conflict could 
influence a decision by the Plan not to offer such a product. 
Similarly, a Participant that offers an enhanced depth-of-book data 
product to SIP customers could be conflicted when considering a Plan 
proposal to expand the SIP to include enhanced depth-of-book data, 
and this conflict also could influence a decision by the Plan not to 
offer such a product. See also new Section F.1.a. of the Plan 
(specifying that a ``potential conflict of interest may exist when 
personal, business, financial, or employment relationships could be 
perceived by a reasonable objective observer to affect the ability 
of a person to be impartial''), which provides guidance as to the 
scope of the disclosures.
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    Finally, the Commission is modifying Section F.1 of the Plan to 
provide that ``[i]f state laws, rules, or regulations, or applicable 
professional ethics rules or standards of conduct, would act to 
restrict or prohibit a Disclosing Party from making any particular 
required disclosure, a Disclosing Party shall refer to such law, rule, 
regulation, or professional ethics rule or standard and include in 
response to that disclosure the basis for its inability to provide a 
complete response. This does not relieve the Disclosing Party from 
disclosing any information it is not restricted from providing.'' The 
Commission believes this modification is appropriate to accommodate the 
potential that a small number of Disclosing Parties, for example 
service providers that are licensed attorneys, may be unable to 
complete one or more of the disclosures due to their obligations under 
potentially conflicting laws, rules, or professional standards. This 
modification will allow such a Disclosing Party to provide responses to 
the required disclosures by identifying the particular conflicting laws 
or professional standards and discussing the basis for its inability to 
provide a complete response while providing information it is not 
restricted from disclosing.
2. Scope of the Amendments
    In the Notice, the Commission solicited comment on whether the 
Amendment is sufficient to elicit information necessary to provide 
insight into all potential conflicts. Among other questions, the 
Commission asked whether commenters ``believe that the Plan should 
require additional public disclosures of any personal, business, or 
financial interests, and any employment or other commercial 
relationships that could materially affect the ability of a party to be 
impartial regarding actions of the Plan'' as well as whether commenters 
``believe that the proposed disclosure questions for each party are 
sufficient to identify the specific relationships that may give rise to 
a conflict under the Plan and related information.''\31\ The Commission 
further asked whether commenters ``believe that the proposed questions 
effectively require all material facts necessary to not only identify 
the nature of the conflict, but also the effect it may have on the 
Plan'' and whether the Amendment should require ``additional public 
disclosures of any personal, business, or financial interests, and any 
employment or other commercial relationships that could materially 
affect the ability of a party to be impartial regarding actions of the 
Plan.'' \32\
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    \31\ Notice, supra note 6, 85 FR at 2205.
    \32\ Id. at 2205.
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    The Commission also asked questions about the nature of the 
potential conflicts faced by parties involved with the operation and 
oversight of the Plan and whether commenters believe the Amendment 
would require adequate disclosure in sufficient detail about and/or 
address those conflicts. For example, the Commission stated: ``[w]ith 
Exchanges permitted to offer both proprietary market data products and 
also acting as Participants in running the public market data stream, 
potential conflicts of interest are inherent . . . .'' \33\ The 
Amendment itself similarly provides that ``[t]here may be instances in 
which representatives from the Participants and Advisory Committee 
members have responsibilities with respect to both proprietary data and 
[SIP] data'' and that ``such overlapping responsibilities may give rise 
to potential conflicts of interest.'' \34\
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    \33\ Id. at 2204-05.
    \34\ Id. at 2205.
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    In response to the Notice, the Advisory Committee said it believes 
the disclosure of conflicts of interest is important for Participants, 
Advisors, the Administrator, and the Processor but believes publishing 
the conflicts of interest, as proposed by the Participants, ``does not 
adequately address the conflicts of interest.'' \35\ For example, the 
Advisory Committee believes that the disclosures ``do not address 
situations where Participants sell competing products and may vote [on 
Plan matters] in ways that protect the commercial interest of the 
Participant, rather than furthering the goals of the Plans.'' \36\ To 
address this, the Advisory Committee recommended changes to expand the 
scope of the Amendment beyond disclosure and affirmatively require that 
individuals participating in the activities of the Plan's Operating 
Committee act in furtherance of the goals of the Plan, that individuals 
recuse themselves when there is a material conflict between the goals 
of the Plan and their interests or their employer's interest, and that 
service providers engaged in audit or other professional service 
functions also be subject to the conflicts of interest policy.\37\
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    \35\ Advisory Committee Letter, supra note 23, at 1-2.
    \36\ Id. at 2.
    \37\ Id.
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    Another commenter agreed with this viewpoint stating ``market 
developments have heightened the potential for and perception of 
conflicts of interest between the exchanges' commercial interests and 
their regulatory obligations under the Act and [Plan] to produce and 
provide core data.'' \38\ The commenter stated that it ``does not 
believe the proposed amendments completely address the potential 
conflicts'' noting that ``the lower cost of exchange top of book 
products, coupled with the costs

[[Page 28123]]

associated with processes imposed by the Plans, including associated 
audit burdens, favors retail broker-dealer use of exchange proprietary 
top of book products, which puts the interests of the exchanges in 
producing such products above that of the Securities Information 
Processor and may create direct conflict with their roles as 
Administrators.'' \39\ The commenter recommended that the ``Plan(s) 
should require that all individuals providing disclosures include any 
additional relationships, whether personal, employment, or commercially 
related, which may present a perceived or actual conflict of interest 
with their assigned role(s) for the Plan(s).'' \40\
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    \38\ TD Ameritrade Letter, supra note 24, at 2.
    \39\ Id. at 2-3.
    \40\ Id. at 6.
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    A third commenter similarly stated that ``the structure of the 
Plans and their governance model is inherently conflicted'' and only 
fundamental reform can address the conflicts, which the commenter said 
could involve ``true independence'' of the Participants from the 
Administrator and the Processor.\41\ One commenter broadly asserted 
that the ``required disclosures fail to identify many of the potential 
conflicts of interest inherent in the system, and utterly fail to 
quantify the magnitude of firms' conflicts of interest, financial 
incentives, and other relationships'' and ``perhaps at the most basic 
level, they generally don't provide the public with any information we 
didn't already know.'' \42\
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    \41\ See Letter from Jeff Brown, Senior Vice President--
Legislative and Regulatory Affairs, Charles Schwab, to Vanessa 
Countryman, Secretary, Commission, dated February 4, 2020 (``Charles 
Schwab Letter''), at 3-4. See also infra note 72.
    \42\ Letter from Tyler Gellasch, Executive Director, The Healthy 
Markets Association, to Vanessa Countryman, Secretary, Commission, 
dated February 20, 2020 (``Healthy Markets Letter''), at 18.
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    The Commission agrees that the proposed amendments do not 
adequately address potential conflicts, and believes that a Disclosing 
Party's access to confidential information it obtains as a result of 
its involvement with the Plan can create potential conflicts of 
interest that could influence the decisions it makes with respect to 
the Plan's operation. The Commission believes that the Amendments 
should be modified to provide more transparency into those potential 
conflicts. These conflicts can impede the ``prompt, accurate, reliable 
and fair collection, processing, distribution, and publication of 
information with respect to quotations for and transactions in such 
securities and the fairness and usefulness of the form and content of 
such information.'' \43\ For example, the exchanges' commercial 
interests in their proprietary data businesses, as well as the 
exchange-affiliated Administrator's access to confidential subscriber 
and audit information that is commercially and competitively valuable 
to that proprietary data business, have created conflicts of interest 
that could influence decisions as to the Plan's operation. As the 
Participants acknowledged in the Notice, disclosure of these conflicts 
and other potential conflicts of interest is an important step in 
addressing potential conflicts of interest.\44\
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    \43\ 15 U.S.C. 78k-1(c)(1)(B).
    \44\ See Notice, supra note 6, 85 FR at 2205.
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    Given the importance of disclosing these potential conflicts of 
interest, the Commission is modifying the proposed Amendment to help 
ensure that the Amendment is clear and that the objectives of the 
disclosure requirements are uniformly applied. Specifically, as 
discussed above, the Commission is adding to Section F.1. of the Plan 
further detail to specify that the disclosures are eliciting 
information on ``all material facts necessary to identify potential 
conflicts of interest.'' Further, the Commission is including language 
to specify in new Section F.1.a. of the Plan that a ``potential 
conflict of interest may exist when personal, business, financial, or 
employment relationships could be perceived by a reasonable objective 
observer to affect the ability of a person to be impartial.'' This new 
text establishes an objective standard for the disclosures by requiring 
that the potential conflicts of interest to be disclosed are to be 
viewed through the lens of a reasonable objective observer considering 
impartiality. This standard is needed so that the requirement to 
disclose potential conflicts of interest is not triggered solely based 
on the subjective views of the Disclosing Party. Impartial third 
parties, including members of the public, will be among those reviewing 
the disclosures and they should be assured that, across all Disclosing 
Parties, the disclosures are comprehensive, consistent, and do not 
display the potentially biased perspective of the Disclosing Party. The 
disclosures must be meaningful and sufficiently detailed to provide any 
reasonable objective observer that reads the disclosures with adequate 
transparency into matters such that she is able to determine whether 
the Disclosing Party would be able to be impartial in its role with the 
operation and oversight of the Plan.
3. Enhanced Party-Specific Disclosures
    In addition to asking questions about the overall scope and 
sufficiency of the Amendment and the general disclosure-based approach 
it contains, the Commission also solicited comment on a number of 
detailed questions in the Notice about the potential conflicts faced by 
various entities, including individual Disclosing Parties, service 
providers, and subcontractors.
a. Participants
    In addition to those questions mentioned above, the Commission 
asked whether commenters ``believe that any individual representing a 
Participant that is directly involved in the management, development, 
pricing, or sale of proprietary data products offered to SIP customers 
should participate in discussions and related Plan votes regarding the 
pricing of SIP data products'' and how commenters ``believe 
Participants should address the conflicts their representatives may 
face in their dual role of pricing and developing SIP data products as 
well as their own proprietary data products.'' \45\
---------------------------------------------------------------------------

    \45\ Notice, supra note 6, 85 FR at 2205.
---------------------------------------------------------------------------

    In response to the Notice, one commenter suggested that ``in 
addition to disclosing whether a participant's firm charges a fee for 
the provision of data, the participant should reveal the percentage of 
revenues derived from the sale of proprietary data, and separately core 
SIP data, as a percentage of total revenue.'' \46\ Another commenter 
urged the Commission to either deny the Amendment or to expand it 
dramatically to include information that ``might actually help the 
Commission and third parties quantify and assess the Disclosing 
Parties' conflicts of interest'' such as ``a disclosure by each 
exchange of its costs in producing SIP data, the revenues from the SIP 
data, costs in producing competing proprietary data products, revenues 
from the competing data products, analyses of the extent of the 
customer overlap of those products, details regarding the projected 
impact of improving the content and timeliness of the SIPs on those 
competing data products, and more.'' \47\
---------------------------------------------------------------------------

    \46\ Letter from Rich Steiner; Head of Client Advocacy and 
Market Information, RBC Capital Markets, to Vanessa Countryman, 
Secretary, Commission, dated February 4, 2020 (``RBC Letter''), at 
2.
    \47\ Healthy Markets Letter, supra note 42, at 18.
---------------------------------------------------------------------------

    On this issue, another commenter expressed concern about the 
``potential for and perception of conflicts of interest between the 
exchanges' commercial interests and their regulatory obligations . . . 
to provide core data.'' \48\ One commenter recommended broadly that 
questions eliciting disclosures for Participants, the

[[Page 28124]]

Processor, the Administrator, and Advisory Committee members should 
``provide detailed and specific information regarding a potential 
conflict of an individual (and not specifically their employer)'' and 
the information should include not only the individual's general role 
``but also specific information about that individual's contractual 
requirements, compensation structures, resource allocations, and 
information access that may cause a perceived conflict.'' \49\ The 
commenter stated that enhanced disclosure ``would ensure sufficient, 
transparent information is available for the public to effectively 
analyze the potential conflicts being disclosed.'' \50\
---------------------------------------------------------------------------

    \48\ TD Ameritrade Letter, supra note 24, at 2. See supra text 
accompanying note 39.
    \49\ Id. at 4. The commenter stated that ``the questions for 
Participants, Processors, Administrators and members of the Advisory 
Committee are not completely sufficient to elicit the necessary 
information to provide insight into all potential conflicts for an 
individual.'' Id. at 3-4.
    \50\ Id.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice, 
the Commission believes it is appropriate to enhance the required 
disclosures of Participants in two ways. First, the Commission is 
adding requested disclosures to a question regarding whether 
Participants offer proprietary data. Currently, the question asks 
whether the Participant firm offers real-time proprietary equity data 
and, if so, whether the Participant charges a fee. The Commission is 
modifying the question to require a Participant also to ``list each 
product, describe its content, and provide a link to the fee schedules 
where fees for each product are disclosed.'' \51\ As suggested by a 
commenter, this additional disclosure follows logically from, and 
provides more information in relation to, the existing question of 
whether a Participant offers proprietary data and whether it charges 
for it. The Commission believes it is insufficient merely to ask a 
``yes or no'' question on an issue that is at the core of the potential 
conflicts of interest inherent to the Plan's current governance 
structure. There are various types of proprietary data offered and fees 
charged for it, and these offerings and fees serve as the principal 
sources of the potential conflict. Without more information on the 
material underlying facts related to specific proprietary data 
offerings and fees, a simple disclosure that such offerings and fees 
exist is not sufficient to elucidate the nature and extent of the 
potential conflict. The Commission believes Participants should 
identify and describe the specific proprietary data products they 
offer. Doing so will allow anyone who reads the disclosure to evaluate 
the proprietary data products and assess whether and how they overlap 
with the SIP.
---------------------------------------------------------------------------

    \51\ In requiring Participants to provide a link to the fee 
schedules where fees for each product are disclosed, the Commission 
is not requiring additional information to be disclosed concerning 
such fees, but rather, to promote accessibility of that information 
to readers of the conflicts disclosures, is requiring Participants 
to provide a specific location indicating where Participants 
currently disclose those fees.
---------------------------------------------------------------------------

    For example, as stated above, a Participant may offer more 
expensive proprietary data products with content in excess of the core 
data offered by the SIPs, as well as other top-of-book proprietary data 
products with less content that can be marketed as a less expensive 
alternative to the SIP. Both types of proprietary data products contain 
information that overlaps to some extent with what the SIP provides, 
but one is offered as a more expensive and enhanced data product while 
the other is offered as a less expansive and less expensive alternative 
to the SIP. In doing so, the Participant offers its own data product 
because the SIP does not offer something similar. The Participant, 
however, is not just offering a different product (potentially expanded 
in content or lower in price) compared to the SIP in this respect; it, 
together with other Participants, governs (and possibly operates) the 
SIP. Disclosure of certain information about these proprietary data 
products offered by a Participant, and a link to fee schedules for such 
products, can reveal material facts (i.e., the Participant's pricing of 
its proprietary data products that it offers to SIP customers). These 
material facts are relevant to whether a Participant may, for example, 
be disincentivized to support expanding the content of SIP core data or 
to support the SIP offering an optional and less expensive data feed, 
as well as material facts relevant to a Participant's pricing strategy 
for the SIP as compared to its own proprietary data product offerings. 
Either of those cases would involve the SIP offering a similar product 
to that already offered as a proprietary data product by the 
Participant. With full disclosure of these material facts, a reasonable 
objective observer would better understand the potential conflict of 
interest the Participant faces in its governance of the Plan, including 
what conflicts of interest the Participant would face when it discusses 
and votes on SIP proposals to provide data products similar to those 
provided by the Participants at prices that match or undercut the 
Participant's own fees for proprietary products. As revised, the 
disclosures will provide valuable additional insight into the nature 
and extent of a principal source of the potential conflict of interest 
an exchange has in its dual role of overseeing the Plan while offering 
its own proprietary data products.
    Second, the Commission is modifying the disclosures for the 
Participant's representative to require greater disclosure of the 
individual's connection with the Participant's proprietary market data 
business. Specifically, the Commission is adding the phrase 
``sufficient for the public to identify the nature of any potential 
conflict of interest that could be perceived by a reasonable objective 
observer as having an effect on the Plan.'' Further, the Commission is 
adding to the question the following: ``If the representative works in 
or with the Participant's Proprietary Market Data business, describe 
the representative's roles and describe how that business and the 
representative's Plan responsibilities impact his or her compensation. 
In addition, describe how a representative's responsibilities with the 
Proprietary Market Data business may present a conflict of interest 
with his or her responsibilities to the Plan.''
    This modification, which conforms to the modification of the scope 
of the Amendment discussed above, requires that Participants provide 
sufficient detail in their responses to this particular item because it 
is central to the potential conflicts of interest at issue. Without 
sufficiently detailed disclosure of the underlying facts, the 
disclosure would not provide effective insight into the potential 
conflicts of interest the Participant's representative personally has 
in his or her role with the Plan. For example, if the representative's 
compensation is tied directly and substantially to the profitability of 
the Participant's proprietary market data business, then the 
representative might face a conflict of interest when working on Plan 
matters, most notably when considering whether to enhance or more 
competitively price Plan data products in ways that would compete with 
the Participant's proprietary data products. While the Commission would 
expect this information to be disclosed in response to the existing 
question, the Commission seeks to avoid any doubt and ensure 
sufficiently detailed responses to the question on this important 
disclosure.
b. Processor
    In the Notice, the Commission asked whether commenters ``have 
concerns about affiliations between a Plan's Processor and a 
Participant'' and, if so, whether commenters ``believe the

[[Page 28125]]

conflicts of interest disclosure is sufficient to address those 
concerns'' or whether ``the Amendment [should] require a description of 
the nature of the affiliation.'' \52\ In addition, the Commission asked 
whether commenters ``have concerns about affiliations between a Plan's 
Processor and a Participant'' and, if so, whether they ``believe the 
conflicts of interest disclosure is sufficient to address those 
concerns'' or whether ``the Amendment [should] require a description of 
the nature of the affiliation.'' \53\ Further, the Commission asked 
whether commenters ``believe that the proposed Processor questions 
effectively require all material facts necessary to not only identify 
the nature of the potential conflict, but also the effect it may have 
on the Plan'' and whether commenters believe the Amendment should 
``elaborate on what `profit or loss responsibility for a Participant's 
Proprietary Market Data products' means in the context of the required 
disclosures.'' \54\
---------------------------------------------------------------------------

    \52\ Notice, supra note 6, 85 FR at 2206.
    \53\ Id.
    \54\ Id.
---------------------------------------------------------------------------

    The Commission did not receive any comments that specifically 
addressed the questions raised or alternatives suggested by the 
Commission, though the commenters discussed above supported enhanced 
disclosures for all Disclosing Parties.\55\
---------------------------------------------------------------------------

    \55\ See, e.g., TD Ameritrade Letter, supra note 24, at 3-4.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate to modify the 
required disclosures of the Processor to require more detailed 
disclosures relevant to potential conflicts of interest in a manner 
similar to the modifications it is making for the Administrator. As 
proposed, the disclosures for the Administrator and the Processor were 
substantively identical, and the Commission believes that modifying the 
Processor's disclosures to remain consistent with the Administrator's 
disclosures keeps with the intent of the proposed Amendments. Like the 
Administrator, the Processor also is responsible for Plan operations; 
as a result the proposed conflict of interest disclosures are similar. 
To keep those disclosures comparable, the Commission is making 
modifications to the required disclosures for the Processor similar to 
the modifications it made for the Administrator. First, the Commission 
is adding to the question requiring the Processor to disclose whether 
it is affiliated with any Participant additional language to require 
that the Processor must also ``describe the nature of the 
affiliation,'' identify the name of the affiliate, and ``[i]nclude an 
entity-level organizational chart depicting the Processor and its 
affiliates.'' The Commission believes that merely providing a name of 
an affiliate without disclosing how the two parties are related to each 
other is not sufficient. Many different levels of affiliation are 
possible, and the relationship between the Processor and a Participant 
is meaningful information that should be disclosed in order to allow 
the public to assess the impact of the affiliation on the potential 
conflicts the Processor may face when acting on behalf of the Plan.
    In addition, the Commission is modifying the question that requires 
a narrative description of the functions performed by the manager to 
also require a similar description for ``senior staff'' that may be 
senior to the manager but that also provide services in the Processor 
capacity. By adding senior staff to that question, the disclosures will 
be able to provide more insight into the parties involved with the 
Processor function of the Plan including by those persons senior to, 
and with authority over, the manager.
    Second, the Commission is adding to the question on whether the 
Processor provides any services to the Participant's proprietary market 
data products, and whether the Processor has profit or loss 
responsibility for that business, a further requirement for the 
Processor to disclose ``any other professional involvement with persons 
the Processor knows are engaged in'' the Participant's proprietary data 
business and to describe it. The information that a Processor obtains 
by virtue of its service to the Plan as the Processor can be sensitive 
non-public information of considerable commercial value. Even if the 
Processor does not have ``profit or loss responsibility'' for the 
Participant's proprietary data business, the Processor may have 
significant professional involvement with other people that do.\56\ Any 
affiliated people in the Participant's proprietary data business with 
whom the Processor may interact may be incentivized to use information 
provided by the Processor to the competitive advantage of the 
Participant and to benefit the Participant's proprietary data business. 
The Commission therefore is modifying the question to elicit material 
information that is directly relevant to the potential conflicts of 
interest faced by the Processor if the Processor has involvement or 
contact with persons engaged in a Participant's proprietary market data 
business.
---------------------------------------------------------------------------

    \56\ With respect to protecting the confidentiality of Plan-
related information, the Commission separately is approving modified 
amendments to address the Plan's confidentiality policy. See 
Securities Exchange Act Release No. 88826 (May 6, 2020). The 
Commission does not believe that the separate confidentiality 
amendments obviate the need for these Amendments dealing with 
conflicts of interest. Rather, the Commission believes that both 
sets of amendments complement each other and take an important first 
step towards strengthening the Plan's ability to protect against the 
potential misuse of confidential Plan information while addressing 
the potential conflicts of interest inherent in Plan governance.
---------------------------------------------------------------------------

c. Administrator
    In the Notice, the Commission asked whether commenters believe the 
proposed disclosure questions for the Administrator ``are sufficient to 
identify the specific interests and employment, commercial or other 
relationships that may give rise to a conflict'' or whether more 
disclosures and more detailed items should be required.\57\
---------------------------------------------------------------------------

    \57\ Notice, supra note 6, 85 FR at 2206.
---------------------------------------------------------------------------

    In response to the Notice, one commenter stated that the proposed 
disclosures for all Disclosing Parties, including the Administrator, 
were ``not completely sufficient to elicit the necessary information to 
provide insight into all potential conflicts for an individual'' and 
recommended that the disclosures be ``enhanced to elicit responses that 
provide detailed information about the nature of the conflict, 
including not only the general role of an individual, but also specific 
information about that individual's contractual requirements, 
compensation structures, resource allocations, and information access 
that may cause a perceived conflict.'' \58\
---------------------------------------------------------------------------

    \58\ TD Ameritrade Letter, supra note 24, at 3-4.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice, 
the Commission believes it is appropriate to enhance the required 
disclosures of the Administrator. The Commission is modifying the 
question about whether the Administrator is affiliated with a 
Participant in the same way that it modified the parallel question 
about the Processor and is making that modification for the same 
reasons. Specifically, the Commission is requiring an Administrator 
that is affiliated with a Participant also (i) to ``describe the nature 
of the affiliation'' in addition to identifying the name of the 
affiliate, and (ii) to include ``an entity-level organizational chart 
depicting the Administrator and its affiliates.'' As is true for the 
disclosure applicable to the Processor, the Commission believes that 
merely providing the name of an affiliate without disclosing how the 
two parties are related to each other is not sufficient

[[Page 28126]]

to identify what might give rise to a potential conflict of interest.
    In addition, the Commission is modifying the question that requires 
a narrative description of the functions performed by the 
administrative services manager to also require a similar description 
for ``senior staff'' that may be senior to the administrative services 
manager but that also provide services in the Administrator capacity. 
By adding senior staff to that question, the disclosures will be able 
to provide more insight into the parties involved with the 
administration of the Plan including by those persons senior to, and 
with authority over, the manager. Further, the Commission is modifying 
the question that requires disclosure of whether the Plan Administrator 
has profit or loss responsibility for a Participant's proprietary 
market data products to also encompass ``licensing responsibility'' for 
the same to require disclosure of whether the Administrator performs 
the central task of licensing for the Participant's proprietary market 
data products, which would overlap substantially with the 
Administrator's licensing responsibility to a similar customer base. 
Finally, for the same reasons discussed above for the Processor, the 
Commission is adding to that same question a further requirement for 
the Administrator to disclose ``any other professional involvement with 
persons the Administrator knows are engaged in'' the Participant's 
proprietary data business and to describe it. This change harmonizes 
the same question asked of both the Processor and the Administrator, 
who are similarly situated in when it comes to involvement or contact 
with persons engaged in a Participant's proprietary market data 
business.
    Administrators have access to highly sensitive and commercially 
valuable non-public information that would be of substantial value to a 
Participant's proprietary data business. For example, access to the SIP 
customer lists that an Administrator has through its responsibilities 
to the Plan would be very valuable to a Participant. If the staff 
associated with the Administrator has access to that information and 
also bears responsibility for the Participant's proprietary market data 
products, the potential conflict of interest is considerable and should 
be disclosed. The Commission believes that these modifications to the 
disclosures applicable to the Administrator are appropriate to provide 
insight into some of the key potential conflicts of interest faced by 
the Administrator.\59\
---------------------------------------------------------------------------

    \59\ The Commission believes it is appropriate for the 
Administrator to make the required disclosures even if it is 
independent and not owned or controlled by a corporate entity that 
offers for sale its own proprietary market data product, either 
directly or via another subsidiary, for the same reasons that other 
independent parties (e.g., Advisors and service providers) are 
required to make the disclosures. Among other things, the 
Administrator's disclosures contain important information about any 
services provided to Participants' proprietary market data products, 
policies and procedures to safeguard confidential information, and 
the catch-all question about additional relationships or material 
economic interests. See Securities Exchange Act Release No. 88827 
(May 6, 2020) (ordering the Participants to act jointly in 
developing and filing with the Commission a proposed new single 
national market system plan that would, among other things, require 
an independent Administrator).
---------------------------------------------------------------------------

d. Catch-all Question
    In the Notice, the Commission solicited comment on whether the 
Amendment would elicit the information necessary to provide sufficient 
transparency of the potential conflicts of interest faced by parties 
involved with operating and overseeing the Plan. Among other things, 
the Commission asked whether commenters ``believe that the Plan should 
require additional public disclosures of any personal, business, or 
financial interests, and any employment or other commercial 
relationships that could materially affect the ability of a party to be 
impartial regarding actions of the Plan.'' \60\
---------------------------------------------------------------------------

    \60\ Notice, supra note 6, 85 FR at 2205.
---------------------------------------------------------------------------

    In response to the Notice, one commenter suggested that all parties 
disclose ``any additional relationships, whether personal, employment, 
or commercially related, which may present a perceived or actual 
conflict of interest with their assigned role(s) for the Plan(s).'' 
\61\
---------------------------------------------------------------------------

    \61\ TD Ameritrade Letter, supra note 24, at 6. See also supra 
text accompanying note 40 (discussing TD Ameritrade Letter); and 
Healthy Markets Letter, supra note 42, at 18 (stating that the 
disclosures should be expanded to ``disclose any personal, 
organizational, or financial relationships'').
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice, 
the Commission believes it is appropriate to modify the Amendment to 
include a ``catch-all'' question for each Disclosing Party. The catch-
all question asks whether the Disclosing Party or its representative 
``have any additional relationships or material economic interests that 
could be perceived by a reasonable objective observer to present a 
potential conflict of interest with their responsibilities to the 
Plan'' and, if so, ``provide a detailed narrative discussion of all 
material facts necessary to identify the potential conflicts of 
interest and the effects they may have on the Plan.'' \62\ This catch-
all question would require disclosure of any other relationships or 
material economic interests, such as employment, financial, or 
commercial arrangements, not otherwise discussed in the disclosures, 
but which a reasonable objective observer could perceive as presenting 
a potential conflict.
---------------------------------------------------------------------------

    \62\ For Disclosing Parties that are Participants, the catch-all 
question extends to an ``alternative representative'' and ``any 
affiliate'' of the Participant. For Disclosing Parties that are 
Advisors, the catch-all question extends to the ``Advisor's firm.'' 
These additions capture specific parties that are unique and 
relevant to the Participants and Advisors for purposes of the 
Amendment.
---------------------------------------------------------------------------

    The Commission believes that the catch-all question is appropriate 
as it elicits information broadly on Disclosing Parties and their 
representatives, which is designed to ensure that no relevant 
connections are omitted in the disclosures. Further, by covering 
additional relationships or material economic interests, the catch-all 
question is designed to ensure that the disclosures have not omitted 
any other sources of potential conflicts that could affect the Plan. 
Disclosure of this information may provide valuable insight into 
potential conflicts that would not otherwise be disclosed and the 
circumstances behind a potential conflict.

B. Review of the Disclosures

    In the Notice, the Commission solicited comment on whether a 
disclosure-based regime is sufficient to address the potential 
conflicts that Participants, the Processor, the Administrator, and 
members of the Advisory Committee may face in their roles within the 
Plan and whether additional steps are necessary. One additional step 
the Commission highlighted is the role of the Operating Committee in 
the disclosure regime. Among other questions, the Commission asked 
whether commenters believe ``that Operating Committee members should be 
permitted to raise the issue of a potential conflict of interest of 
another Participant for discussion before the Operating Committee, even 
if the Participant did not itself disclose the potential conflict'' and 
whether the Operating Committee ``should have the ability to take 
action in response to disclosed or undisclosed conflicts . . . .''
    In response to the Notice, one commenter suggested that the Plan 
should alleviate potential conflicts of interest by ``implementing a 
formal procedure for evaluating disclosures and making an explicit 
determination

[[Page 28127]]

regarding whether the potential conflicts disclosed will, in perception 
or fact, impede that individual's ability to fulfill their role for the 
Plan(s).'' \63\
---------------------------------------------------------------------------

    \63\ TD Ameritrade Letter, supra note 24, at 4.
---------------------------------------------------------------------------

    After considering the comments received, the Commission is not 
modifying the Amendment to institute a formal review process for the 
disclosures. The disclosures will continue to be publicly posted, and 
the Participants, Advisors, and others will be able to continue to 
review the disclosures and amendments thereto. To the extent a party 
believes that a Disclosing Party has not adequately responded to a 
particular disclosure item or has not clearly explained the necessary 
information to disclose a potential conflict, the Commission would 
encourage Disclosing Parties and other individuals to bring such 
concerns to the attention of the Operating Committee for its 
consideration, as Participants would have an interest in promoting a 
high standard for the disclosures that is consistently applied across 
all Disclosing Parties. The Commission encourages the Participants to 
consider further whether to propose a formal review process with 
appropriate consequences for violations.

C. Recusal

    In the Notice, the Commission solicited comment on whether 
additional steps, including recusal, are necessary to address the 
potential conflicts that arise in connection with the operation and 
oversight of the Plan. Among other questions, the Commission asked 
whether commenters ``believe that a Participant should be recused from 
voting when it or an affiliate is competing for a contract to serve as 
a Processor for the Plan.'' \64\ The Commission asked whether recusal 
is ``an appropriate mechanism to address conflicts'' and, if so, 
whether it should be mandatory or voluntary.\65\ The Commission also 
asked whether ``the Operating Committee should have the ability to take 
action in response to disclosed or undisclosed conflicts, such as 
requiring the Participant to recuse itself from a certain discussion or 
vote on a particular matter.'' \66\
---------------------------------------------------------------------------

    \64\ Notice, supra note 6, 85 FR at 2205.
    \65\ Id.
    \66\ Id.
---------------------------------------------------------------------------

    In response to the Notice, the Advisory Committee supports a 
``requirement for individuals to recuse themselves from discussions 
and/or voting when there is a material conflict between the requirement 
to further the goals of the plan and the specific interest of the 
individual or their employer.'' \67\ In particular, the Advisory 
Committee recommended mandatory recusal in situations ``regarding 
processor bids or voting to choose a processor, when the individual's 
firm is bidding for the processor role.'' \68\ The Advisory Committee 
further suggested that recusal be required when ``either (i) the 
individual, acting in good faith, or (ii) the Operating Committee, by 
majority vote, determines that such individual has a material 
conflict.'' \69\
---------------------------------------------------------------------------

    \67\ Advisory Committee Letter, supra note 23, at 2.
    \68\ Id. See also Healthy Markets Letter, supra note 42, at 14 
(recommending detailed recusal provisions that preclude a person 
``from voting on any matter that directly impacts its costs or 
revenues, or those of its affiliates''); and Letter from John 
Ramsay, Chief Market Policy Officer, Investors Exchange LLC, to 
Vanessa Countryman, Secretary, Commission, dated March 4, 2020 
(submitted in response to Release No. 34-87906; File No. 4-757).
    \69\ Advisory Committee Letter, supra note 23, at 2.
---------------------------------------------------------------------------

    Another commenter similarly stated that there should be a mechanism 
for recusal when a ``conflict becomes material,'' such as when the 
``Operating Committee is considering selection of a service provider 
for a SIP, and the participant's firm has a relationship with a 
bidder.'' \70\ The commenter recommended that there should be a 
``mechanism for responding to a participant's failure to comply with 
the disclosure requirement including, if appropriate, dismissal from 
the Operating Committee.'' \71\
---------------------------------------------------------------------------

    \70\ RBC Letter, supra note 46, at 3. See also Letter from Rich 
Steiner Head of Client Advocacy and Market Information, RBC Capital 
Markets, to Vanessa Countryman, Secretary, Commission, dated 
February 28, 2020 (submitted in response to Release No. 34-87906; 
File No. 4-757), at 4 (discussing the need for disclosure of 
material information, and citing as an example when a Participant 
has a relationship with a person bidding for a contract with the 
Plan). As discussed above, the Commission is modifying the Amendment 
to require a Participant's recusal from voting on matters in which 
it or its affiliate (i) is seeking a position or contract with the 
Plan or (ii) has a position or contract with the Plan and whose 
performance is being evaluated by the Plan. The commenter also 
believed that the Advisory Committee members should only provide the 
disclosures on a voluntary basis as they do not currently have 
voting rights, such that the disclosures should only be mandatory 
for voting members of the Operating Committee. See id. at 2. The 
Commission, however, believes that Advisors, because they are 
engaged in Plan business, just like other Disclosing Parties engaged 
in Plan business, should be required to make the mandatory conflicts 
of interest disclosures. With such disclosures, other Disclosing 
Parties and the public can assess whether the Advisors are subject 
to any conflicts as they carry out their responsibilities with the 
Plan.
    \71\ RBC Letter, supra note 46, at 3.
---------------------------------------------------------------------------

    A third commenter suggested that ``there should be a mechanism or 
process whereby recusal is required from discussion and voting in case 
of a material conflict of interest.'' \72\ The commenter recommended 
requiring recusal when ``a Participant exchange, or Advisory Committee 
member's employer could be competing to be a service provider to the 
Plans such as processor, or auditor.'' \73\
---------------------------------------------------------------------------

    \72\ Charles Schwab Letter, supra note 41, at 4. The commenter 
stated that ``only a complete separation of functions--true 
independence--of the Participants from the Administrators and 
Processors can mitigate the conflict.'' Id. The Commission believes 
that the modifications made are appropriate for this Amendment and 
is not including this requirement in the Amendment.
    \73\ Id.
---------------------------------------------------------------------------

    One commenter asserted that ``[d]isclosure of potential conflicts 
in and of itself does not necessarily mitigate any such conflict or the 
perception of such conflict.'' \74\ The commenter suggested that 
``[e]ffectively addressing an individual's conflict of interest, 
whether perceived or in fact, includes mitigating and/or removing such 
conflict.'' \75\ This commenter advocated for a recusal policy with 
review of disclosures by a committee composed of both SRO and non-SRO 
members, guidance from Plan legal counsel, and a vote by the 
committee.\76\ The commenter suggested that individuals may be required 
to recuse themselves for certain topics or for the tenure of their term 
depending on the severity of the conflict.\77\
---------------------------------------------------------------------------

    \74\ TD Ameritrade Letter, supra note 24, at 3.
    \75\ Id.
    \76\ See id. at 4.
    \77\ See id.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice, 
the Commission believes it is appropriate to require mandatory recusal 
in certain situations. To promote transparency when recusals occur, new 
Section F.2.d. of the Plan requires that all recusals, including a 
person's determination of whether to voluntarily recuse himself or 
herself, be reflected in the applicable meeting minutes. Increased 
transparency of recusals will allow the public to assess whether Plan 
decisions have, or have not, been informed by persons subject to 
potential conflicts of interest.
    With respect to specific recusals, the Commission is adding new 
Section F.2.a. of the Plan to specify that a Disclosing Party ``may not 
appoint as its representative a person that is responsible for or 
involved with the development, modeling, pricing, licensing, or sale of 
proprietary data products offered to customers of a securities 
information processor if the person has a financial interest (including 
compensation) that is tied directly to the exchange's proprietary data 
business and if that compensation would cause a reasonable objective 
observer to expect the compensation to

[[Page 28128]]

affect the impartiality of the representative.'' To the extent an 
exchange that offers proprietary market data products appoints as its 
representative to the Plans such an individual, that person has an 
inherent conflict of interest arising from his or her financial 
interest in the exchange's proprietary data business.
    The effect of this requirement is that a Participant will not be 
able to appoint as its representative a person that has a financial 
interest (including compensation) that is tied directly to the 
Participant's proprietary data business if that compensation would 
cause a reasonable objective observer to expect the compensation to 
affect the impartiality of the representative. For example, if a 
person's primary job function is tied directly to the success or growth 
of proprietary data products, and/or some percentage of a person's 
compensation is tied directly to the revenues or profits specifically 
of the exchange's proprietary data business (as opposed to being tied 
more generally to the Participant's overall revenue), that person could 
not serve as the Participant's representative if that compensation 
would cause a reasonable objective observer to expect the compensation 
to affect the impartiality of the representative. If such person 
currently serves as the Participant's representative, that person could 
either no longer serve as the Participant's representative or no longer 
have such a financial interest that is tied directly to the exchange's 
proprietary data business.\78\
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    \78\ This requirement is not designed to impact or reduce the 
amount of any person's overall compensation, but rather to ensure 
that the Participants do not choose as their representatives 
individuals who receive compensation that is directly linked to 
proprietary market data products.
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    The Commission believes that the exchanges' commercial interests in 
their proprietary data businesses, as well as the exchange 
Administrator's access to confidential subscriber information, create a 
potential conflict of interest that could influence decisions as to the 
Plan's operation. In the case where a Participant chooses as its 
representative a person who has a financial interest (including 
compensation) that is tied directly to the exchange's proprietary data 
business, then a reasonable objective observer could question whether 
the representative is able to act in a manner consistent with the 
interests of the Plan.\79\ In light of this conflict, even if such 
individuals have the requisite expertise, the Commission believes that 
it is appropriate to prohibit a Disclosing Party from appointing such 
individuals as its representative to the Plan.\80\
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    \79\ For example, a Participant's representative whose 
compensation is tied directly to the Participant's proprietary 
market data business could face a conflict of interest that is not 
possible to sufficiently mitigate when working on Plan initiatives 
that could potentially result in lower revenues for the 
Participant's proprietary data business, such as SIP fee reductions 
or expansions in SIP core data content that match what the 
Participant provides in some of its proprietary market data 
products. Those Plan initiatives could result in lower revenues for 
the Participant's proprietary data business, which would 
correspondingly reduce the representative's compensation that is 
tied directly to that business.
    \80\ While a Participant could not appoint such person as its 
representative to the Plan, it could utilize such person in other 
capacities involving Plan business, such as the Processor role.
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    The Commission is further modifying Section F.2. of the Plan by 
setting forth the following scenarios in which recusal will be 
required. First, a Disclosing Party will be ``recused from 
participating in Plan activities if it has not submitted a required 
disclosure form or the Operating Committee votes that its disclosure 
form is materially deficient.''\81\ Such recusal will be in effect 
until the Disclosing Party submits a sufficiently complete disclosure 
form to the Administrator. Consistent with the comments discussed 
above, this provision imposes a mechanism to recuse a representative 
due to a Disclosing Party's complete failure to comply with the 
disclosure requirements. For other cases where the disclosures are made 
but found to be materially deficient by vote of the Operating 
Committee, recusal also would be appropriate as an incentive for 
Disclosing Parties to carefully prepare their disclosures and ensure 
that they are not materially deficient.
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    \81\ While the Operating Committee does not have an affirmative 
responsibility to review each disclosure document and updates 
thereto in the ordinary course, it may elect to do so, including, 
for example, in instances where it has reason to suspect a 
disclosure may be materially deficient, and the Operating Committee 
may determine the best procedure for undertaking or completing such 
a review. The ability of the Operating Committee to undertake this 
review and vote on the matter is appropriate as a mechanism to 
ensure that Disclosing Parties submit clear and complete 
disclosures.
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    In either case, these bases for recusal could be readily cured by 
the recused party submitting a new or updated disclosure that is 
complete in providing responses to all required items. Thus, the 
recusal could be lifted by the party's submission of an updated 
disclosure, though the Operating Committee could potentially again vote 
that the disclosure form is materially deficient if it decides the 
Disclosing Party did not rectify the material deficiency. The 
Commission believes that these requirements provide a consequence for 
failure to file a required disclosure or for filing a disclosure that 
the Operating Committee votes to be materially deficient, and therefore 
should promote both timely filings and consistency in the quality of 
disclosures across Disclosing Parties.
    Second, the Commission is adopting a requirement for a Disclosing 
Party to be recused from voting on matters, in which it or its 
affiliate (i) is seeking a position or contract with the Plan or (ii) 
has a position or contract with the Plan and whose performance is being 
evaluated by the Plan. In both cases, the Commission believes recusal 
is appropriate because the conflict of interest, real or perceived, 
between the Disclosing Party's interests and the interest of the Plan 
would be so material and potentially irreconcilable that a reasonable 
objective observer would question the party's ability to be impartial 
and not favor its own interests. Exchanges face considerable potential 
conflicts as a result of their dual role of serving, or competing to 
serve, as operators of the SIPs while simultaneously serving as a 
Participant that participates in the discussion of, and ultimately 
votes on, the selection and performance of such parties. The Commission 
believes that recusal in those situations is appropriate because the 
conflict of interest in those scenarios is so pronounced, and the 
Disclosing Party and its affiliates are so materially conflicted, that 
their participation and vote on the matter cannot be impartial and 
additional measures are needed in those scenarios.

IV. Commission Findings

    For the reasons discussed throughout, the Commission finds that the 
proposed Amendment to the Plan, as modified by the Commission, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder, and in particular, Section 11A of the Act \82\ 
and Rule 608 \83\ thereunder in that it is necessary or appropriate in 
the public interest, for the protection of investors and the 
maintenance of fair and order markets, to remove impediments to, and 
perfect the mechanisms of, a national market system.
---------------------------------------------------------------------------

    \82\ 15 U.S.C. 78k-1.
    \83\ 17 CFR 240.608.
---------------------------------------------------------------------------

    Section 11A of the Act \84\ sets forth Congress' finding that it is 
in the public interest and appropriate for the protection of investors 
and the maintenance of fair and orderly markets to ensure the prompt, 
accurate, reliable and fair collection, processing, distribution, and 
publication of information with respect to quotations

[[Page 28129]]

for and transactions in such securities and the fairness and usefulness 
of the form and content of such information. The conflicts of interest 
Amendment, as modified by the Commission, furthers these goals set 
forth by Congress.
---------------------------------------------------------------------------

    \84\ 15 U.S.C. 78k-1(c)(1)(B).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to Section 11A of the Act,\85\ 
and the rules thereunder, that the proposed Amendment to the Nasdaq/UTP 
Plan (File No. S7-24-89), as modified by the Commission, is approved.
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    \85\ 15 U.S.C. 78k-1.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.
EXHIBIT A
MARKED TO SHOW CHANGES FROM THE PROPOSAL
The Commission's additions are italicized; deletions are [bracketed].

UTP PLAN

IV. Administration of Plan

    A.-E. No change.
    F. [Disclosure of ]Potential Conflicts of Interests
    [(a)]1. Disclosure Requirements. The Participants, the Processor, 
the Plan Administrator, [and ]members of the Advisory Committee, and 
each service provider or subcontractor engaged in Plan business 
(including the audit of subscribers' data usage) that has access to 
Restricted or Highly Confidential Plan information (for purposes of 
this section, ``Disclosing Parties'') shall complete the applicable 
questionnaire [attached to this UTP Plan as Exhibit 3 ]to provide the 
required disclosures set forth below to disclose all material facts 
necessary to identify potential conflicts of interest. The Operating 
Committee, a Participant, Processor, or Administrator may not use a 
service provider or subcontractor on Plan business unless that service 
provider or subcontractor has agreed in writing to provide the 
disclosures required by this section and has submitted completed 
disclosures to the Administrator prior to starting work. If state laws, 
rules, or regulations, or applicable professional ethics rules or 
standards of conduct, would act to restrict or prohibit a Disclosing 
Party from making any particular required disclosure, a Disclosing 
Party shall refer to such law, rule, regulation, or professional ethics 
rule or standard and include in response to that disclosure the basis 
for its inability to provide a complete response. This does not relieve 
the Disclosing Party from disclosing any information it is not 
restricted from providing.
    a. A potential conflict of interest may exist when personal, 
business, financial, or employment relationships could be perceived by 
a reasonable objective observer to affect the ability of a person to be 
impartial.
    [(b)]b. Updates to Disclosures. Following a material change in the 
information disclosed pursuant to subparagraph (a), a Disclosing Party 
shall promptly update its disclosures. Additionally, a Disclosing Party 
shall update annually any inaccurate information prior to the Operating 
Committee's first quarterly meeting of a calendar year.
    [(c)]c. Public Dissemination of Disclosures. The Disclosing Parties 
shall provide the Administrator with its disclosures and any required 
updates. The Administrator shall ensure that the disclosures are 
promptly posted to the Plan's website.

2. Recusal

    a. A Disclosing Party may not appoint as its representative a 
person that is responsible for or involved with the development, 
modeling, pricing, licensing, or sale of proprietary data products 
offered to customers of a securities information processor if the 
person has a financial interest (including compensation) that is tied 
directly to the exchange's proprietary data business and if that 
compensation would cause a reasonable objective observer to expect the 
compensation to affect the impartiality of the representative.
    b. A Disclosing Party (including its representative(s), employees, 
and agents) will be recused from participating in Plan activities if it 
has not submitted a required disclosure form or the Operating Committee 
votes that its disclosure form is materially deficient. The recusal 
will be in effect until the Disclosing Party submits a sufficiently 
complete disclosure form to the Administrator.
    c. A Disclosing Party, including its representative(s), and its 
affiliates and their representative(s), are recused from voting on 
matters in which it or its affiliate (i) are seeking a position or 
contract with the Plan or (ii) have a position or contract with the 
Plan and whose performance is being evaluated by the Plan.
    d. All recusals, including a person's determination of whether to 
voluntarily recuse himself or herself, shall be reflected in the 
meeting minutes.
* * * * *

Required Disclosures for the UTP Plan

As part of the disclosure regime, [the Participants propose that ]the 
Participants, the Processors, the Administrators, [and ]members of the 
Advisory Committee, and service providers and subcontractors must 
respond to questions that are tailored to elicit responses that 
disclose the potential conflicts of interest.

The [Participants propose that the ]Participants must respond to the 
following questions and instructions:

     Is the Participant's firm for profit or not-for-profit? If 
the Participant's firm is for profit, is it publicly or privately 
owned? If privately owned, list any owner with an interest of 5% or 
more of the Participant, where to the Participant's knowledge, such 
owner, or any affiliate controlling, controlled by, or under common 
control with the owner, subscribes, directly or through a third-party 
vendor, to SIP and/or exchange Proprietary Market Data products.
     Does the Participant firm offer real-time proprietary 
equity market data that is filed with the SEC (``Proprietary Market 
Data'')? If yes, list each product, describe its content, and provide a 
link to where fees for each product are disclosed.[does the firm charge 
a fee for such offerings?]
     Provide the names of the representative and any 
alternative representatives designated by the Participant who are 
authorized under the Plans to vote on behalf of the Participant. Also 
provide a narrative description of the representatives' roles within 
the Participant organization, including the title of each individual as 
well as any direct responsibilities related to the development, 
dissemination, sales, or marketing of the Participant's Proprietary 
Market Data, and the nature of those responsibilities sufficient for 
the public to identify the nature of any potential conflict of interest 
that could be perceived by a reasonable objective observer as having an 
effect on the Plan. If the representative works in or with the 
Participant's Proprietary Market Data business, describe the 
representative's roles and describe how that business and the 
representative's Plan responsibilities impacts his or her compensation. 
In addition, describe how a representative's responsibilities with the 
Proprietary Market Data business may present a conflict of interest 
with his or her responsibilities to the Plan.
     Does the Participant, its representative, or its 
alternative representative, or any affiliate have

[[Page 28130]]

additional relationships or material economic interests that could be 
perceived by a reasonable objective observer to present a potential 
conflict of interest with their responsibilities to the Plan? If so, 
provide a detailed narrative discussion of all material facts necessary 
to identify the potential conflicts of interest and the effects they 
may have on the Plan.

The [Participants propose that the ]Processors must respond to the 
following questions and instructions:

     Is the Processor an affiliate of or affiliated with any 
Participant? If yes, disclose the Participant(s) and describe the 
nature of the affiliation. Include an entity-level organizational chart 
depicting the Processor and its affiliates.[?]
     Provide a narrative description of the functions directly 
performed by senior staff, the manager employed by the Processor to 
provide Processor services to the Plans, and the staff that reports to 
that manager (collectively, the ``Plan Processor'').
     Does the Plan Processor provide any services for any 
Participant's Proprietary Market Data products or other Plans? If Yes, 
disclose the services the Plan Processor performs and identify which 
Plans. Does the Plan Processor have any profit or loss responsibility 
for a Participant's Proprietary Market Data products or any other 
professional involvement with persons the Processor knows are engaged 
in the Participant's Proprietary Market Data business? If so, describe.
     List the policies and procedures established to safeguard 
confidential Plan information that is applicable to the Plan Processor.
     Does the Processor, or its representatives, have 
additional relationships or material economic interests that could be 
perceived by a reasonable objective observer to present a potential 
conflict of interest with the representatives' responsibilities to the 
Plan? If so, provide a detailed narrative discussion of all material 
facts necessary to identify the potential conflicts of interest and the 
effects they may have on the Plan.
The [Participants propose that the ]Administrators must respond to the 
following questions and instructions:

     Is the Administrator an affiliate of or affiliated with 
any Participant? If yes, disclose the[which] Participant(s) and 
describe the nature of the affiliation. Include an entity-level 
organizational chart depicting the Administrator and its affiliates.[?]
     Provide a narrative description of the functions directly 
performed by senior staff, the administrative services manager, and the 
staff that reports to that manager (collectively, the ``Plan 
Administrator'').
     Does the Plan Administrator provide any services for any 
Participant's Proprietary Market Data products? If yes, what services? 
Does the Plan Administrator have any profit or loss responsibility, or 
licensing responsibility, for a Participant's Proprietary Market Data 
products or any other professional involvement with persons the 
Administrator knows are engaged in the Participant's Proprietary Market 
Data business? If so, describe.
     List the policies and procedures established to safeguard 
confidential Plan information that is applicable to the Plan 
Administrator.
     Does the Administrator, or its representatives, have 
additional relationships or material economic interests that could be 
perceived by a reasonable objective observer to present a potential 
conflict of interest with the representatives' responsibilities to the 
Plan? If so, provide a detailed narrative discussion of all material 
facts necessary to identify the potential conflicts of interest and the 
effects they may have on the Plan.

The [Participants propose that the ]Members of the Advisory Committee 
must respond to the following questions and instructions:

     Provide the Advisor's title and a brief description of the 
Advisor's role within the firm.
     Does the Advisor have responsibilities related to the 
firm's use or procurement of market data?
     Does the Advisor have responsibilities related to the 
firm's trading or brokerage services?
     Does the Advisor's firm use the SIP? Does the Advisor's 
firm use exchange Proprietary Market Data products?
     Does the Advisor's firm have an ownership interest of 5% 
or more in one or more Participants? If yes, list the Participant(s).
     Does the Advisor actively participate in any litigation 
against the Plans?
     Does the Advisor or the Advisor's firm have additional 
relationships or material economic interests that could be perceived by 
a reasonable objective observer to present a potential conflict of 
interest with their responsibilities to the Plan? If so, provide a 
detailed narrative discussion of all material facts necessary to 
identify the potential conflicts of interest and the effects they may 
have on the Plan.

Pursuant to Section IV.F.1. of the Plan, each service provider or 
subcontractor that has agreed in writing to provide required 
disclosures and be treated as a Disclosing Party pursuant to Section 
IV.F of the Plan shall respond to the following questions and 
instructions:

     Is the service provider or subcontractor affiliated with a 
Participant, Processor, Administrator, or member of the Advisory 
Committee? If yes, disclose with whom the person is affiliated and 
describe the nature of the affiliation.
     If the service provider's or subcontractor's compensation 
is on a commission basis or is tied to specific metrics, provide a 
detailed narrative summary of how compensation is determined for 
performing work on behalf of the Plan.
     Is the service provider or subcontractor subject to 
policies and procedures (including information barriers) concerning the 
protection of confidential information that includes affiliates? If so, 
describe. If not, explain their absence.
     Does the service provider or subcontractor, or its 
representative, have additional relationships or material economic 
interests that could be perceived by a reasonable objective observer to 
present a potential conflict of interest with its responsibilities to 
the Plan? If so, provide a detailed narrative discussion of all 
material facts necessary to identify the potential conflicts of 
interest and the effects they may have on the Plan.

The [Participants will post the ]responses to these questions will be 
posted on the Plan's website. If a Disclosing Party has any material 
changes in its responses, the Disclosing Party must promptly update its 
disclosures. Additionally, the Disclosing Parties must[will] update the 
disclosures on an annual basis to reflect any changes. This annual 
update must be made before the first quarterly session meeting of each 
calendar year, which is generally held in mid-February.

[FR Doc. 2020-10038 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P