[Federal Register Volume 87, Number 41 (Wednesday, March 2, 2022)]
[Notices]
[Pages 11755-11761]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04333]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94308; File No. S7-24-89]


Joint Industry Plan; Order Instituting Proceedings To Determine 
Whether To Approve or Disapprove the Fifty-First 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

February 24, 2022.

I. Introduction

    On November 5, 2021,\1\ the Participants \2\ in 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 (``UTP Plan'' or ``Plan'') \3\ filed with the Securities and 
Exchange Commission (``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 
(the ``Proposed Amendment'') to amend the UTP Plan to implement the 
non-fee-related aspects of the Commission's Market Data Infrastructure 
Rules (``MDI Rules'').\6\ The Proposed Amendment was published for 
comment in the Federal Register on November 26, 2021.\7\
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    \1\ See Letter from Robert Books, Chair, UTP Operating 
Committee, to Vanessa Countryman, Secretary, Commission (Nov. 5, 
2021).
    \2\ The Participants are: Cboe BYX Exchange, Inc., Cboe BZX 
Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., 
Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc., 
The Investors' Exchange LLC, Long-Term Stock Exchange, Inc., MEMX 
LLC, MIAX PEARL, LLC, 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., NYSE Chicago, Inc., and NYSE 
National, Inc. (collectively, the ``Participants'').
    \3\ The Plan governs the collection, processing, and 
dissemination on a consolidated basis of quotation information and 
transaction reports in Eligible Securities for its Participants. 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 (Apr. 19, 
2007), 72 FR 20891 (Apr. 26, 2007).
    \4\ 15 U.S.C 78k-1.
    \5\ 17 CFR 242.608.
    \6\ See Securities Exchange Act Release No. 90610, 86 FR 18596 
(Apr. 9, 2021) (File No. S7-03-20) (``MDI Rules Release'').
    \7\ See Securities Exchange Act Release No. 93620 (Nov. 19, 
2021), 86 FR 67541 (Nov. 26, 2021) (``Notice''). Comments received 
in response to the Notice can be found on the Commission's website 
at https://www.sec.gov/comments/s7-24-89/s72489.htm.

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[[Page 11756]]

    This order institutes proceedings, under Rule 608(b)(2)(i) of 
Regulation NMS,\8\ to determine whether to approve or disapprove the 
Proposed Amendment or to approve the Proposed Amendment with any 
changes or subject to any conditions the Commission deems necessary or 
appropriate after considering public comment.
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    \8\ 17 CFR 242.608(b)(2)(i).
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II. Summary of the Proposed Amendment \9\
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    \9\ The full text of the Proposed Amendment appears as 
Attachment A to the Notice. See Notice, supra note 7, 86 FR at 
67543-55.
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    The Participants propose to amend the Plan to comply with Rule 614 
of the MDI Rules. Rule 614(e) requires participants to the effective 
national market system plan(s) for NMS stocks to file by November 5, 
2021, an amendment with the Commission that includes each of the 
requirements of Rule 614(e)(1)-(5).\10\
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    \10\ 17 CFR 242.614(e). The Participants have submitted a 
separate amendment to implement the fee-related aspects of the MDI 
Rules. See Securities Exchange Act Release No. 93618 (Nov. 19, 
2021), 86 FR 67562 (Nov. 26, 2021) (File No. S7-24-89).
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    Specifically, Rule 614(e)(1) requires the amendment to conform the 
effective national market system plan(s) for NMS stocks to reflect the 
provision of information with respect to quotations for and 
transactions in NMS stocks that is necessary to generate consolidated 
market data by the national securities exchange and national securities 
association participants to competing consolidators and self-
aggregators.
    Rule 614(e)(2) requires the amendment to include the application of 
timestamps by the national securities exchange and national securities 
association participants on all information with respect to quotations 
for and transactions in NMS stocks that is necessary to generate 
consolidated market data, including the time that such information was 
generated as applicable by the national securities exchange or national 
securities association and the time the national securities exchange or 
national securities association made such information available to 
competing consolidators and self-aggregators.
    Rule 614(e)(3) requires the amendment to include assessments of 
competing consolidator performance, including speed, reliability, and 
cost of data provision and the provision of an annual report of such 
assessment to the Commission.
    Rule 614(e)(4) requires the amendment to include the development, 
maintenance and publication of a list that identifies the primary 
listing exchange for each NMS stock.
    Rule 614(e)(5) requires the amendment to include the calculation 
and publication on a monthly basis of consolidated market data gross 
revenues for NMS stocks as specified by (i) listed on the NYSE; (ii) 
listed on Nasdaq; and (iii) listed on exchanges other than NYSE or 
Nasdaq.
    The following is a summary of the changes proposed to be made to 
the Plan by the Proposed Amendment.

Section III. Definitions

    Under the Proposed Amendment, the Plan would include the following 
new provision: ``Terms used in this plan have the same meaning as the 
terms are defined in Rule 600(b) under the Act.''
    The Proposed Amendment amends the definitions of ``News Service,'' 
``Subscriber,'' and ``Vendor'' to add competing consolidators as a 
source of Transaction Reports and Quotation Information.
    The Proposed Amendment adds a definition of ``Primary Listing 
Exchange,'' which means ``the national securities exchange on which an 
Eligible Security is listed.'' The proposed definition further states, 
``[i]f an Eligible Security is listed on more than one national 
securities exchange, Primary Listing Exchange means the exchange on 
which the security has been listed the longest.'' The Participants 
explain that this definition is being added to comply with the 
requirements of the MDI Rules and to replace the definition of 
``Listing Market.'' \11\
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    \11\ See Notice, supra note 7, 86 FR at 67541. The Commission 
notes that the Proposed Amendment deletes a definition of ``Primary 
Listing Market'' from former Section X. (Section XI., as proposed), 
Regulatory and Operational Halts.
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    The Proposed Amendment amends the definition of ``Quotation 
Information'' to define it as ``all information with respect to 
quotations for Eligible Securities required to be collected and made 
available to the Processor, Competing Consolidators, and Self-
Aggregators pursuant to this Plan, including all data necessary to 
generate consolidated market data.'' Similarly, the Proposed Amendment 
amends the definition of ``Transaction Reports'' to mean ``all 
information with respect to transactions in Eligible Securities 
required to be collected and made available to the Processor, Competing 
Consolidators, and Self-Aggregators pursuant to this Plan, including 
all data necessary to generate consolidated market data.'' The 
Participants explain that these amendments are intended to track the 
MDI Rules more closely.\12\
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    \12\ See Notice, supra note 7, 86 FR at 67541.
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Section IV. Administration of Plan

    The Proposed Amendment amends Section IV.B., Operating Committee: 
Authority, to add references to competing consolidators and self-
aggregators. Specifically, the Proposed Amendment states that the 
Operating Committee shall be responsible for overseeing the 
consolidation \13\ of Quotation Information and Transaction Reports in 
Eligible Securities from the Participants for dissemination to 
competing consolidators and self-aggregators, among other entities; 
that the Operating Committee shall be responsible for periodically 
evaluating the Processor and competing consolidators; and that the 
Operating Committee shall be responsible for setting the level of fees 
to be paid by competing consolidators and self-aggregators, among other 
entities, for services relating to Quotation Information or Transaction 
Reports in Eligible Securities, and for taking action in respect 
thereto in accordance with the Plan.
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    \13\ The Commission notes that under the decentralized 
consolidation model, the Operating Committee would no longer oversee 
the consolidation of data by the Processor, but rather the provision 
of data underlying consolidated market data to competing 
consolidators and self-aggregators. See Rule 603(b), 17 CFR 
242.603(b); Rule 614(e)(1), 17 CFR 242.614(e)(1). See also MDI Rules 
Release, supra note 6, 86 FR at 18682.
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    The Proposed Amendment also amends Section IV.B. to require the 
Operating Committee to publish on the Plan's website the Primary 
Listing Exchange for each Eligible Security, and to calculate and 
publish, on a monthly basis, consolidated market data gross revenues 
for Eligible Securities. The Participants explain that these amendments 
are intended to comply with Rule 614(e)(4) and Rule 614(e)(5)(ii).\14\
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    \14\ See Notice, supra note 7, 86 FR at 67541.
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Section VII. Administrative Functions

    The Proposed Amendment amends this section by deleting references 
to the Processor. Additionally, under the Proposed Amendment, the 
Administrator, not the Processor, shall be responsible for carrying out 
all administrative functions necessary to the operation and maintenance 
of the consolidated information collection and dissemination system 
provided for in the Plan. The Participants explain that the 
Administrative Functions described

[[Page 11757]]

in the section are more appropriately ascribed to the 
Administrator.\15\
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    \15\ See Notice, supra note 7, 86 FR at 67541.
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Section VIII. Evaluation of Competing Consolidators

    The Proposed Amendment adds new Section VIII to require the 
Operating Committee to assess the performance of competing 
consolidators and to submit an annual report to the Commission 
containing the assessment.\16\ The Proposed Amendment requires this 
annual report to include an analysis with respect to competing 
consolidators' speed, reliability, and cost of data provision. The 
Participants explain that these changes are intended to comply with the 
requirements of Rule 614(e)(3).\17\
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    \16\ As a result of this addition, the Proposed Amendment 
renumbers the remaining sections of the Plan.
    \17\ See Notice, supra note 7, 86 FR at 67541.
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    In addition, the Proposed Amendment requires the Operating 
Committee, in conducting the analysis, to review the monthly 
performance metrics to be published by competing consolidators pursuant 
to Rule 614(d)(5).\18\ Rule 614(d)(5) requires competing consolidators 
to publish on their websites monthly performance metrics as defined by 
the effective national market system plan(s) for NMS stocks.\19\ The 
Proposed Amendment adds the following monthly performance metrics to 
this section:
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    \18\ 17 CFR 242.614(d)(5).
    \19\ Id.
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    A. Capacity statistics, including system tested capacity, system 
output capacity, total transaction capacity, and total transaction peak 
capacity;
    B. Message rate and total statistics, including peak output rates 
on the following bases: 1-millisecond, 10-millisecond, 100-millisecond, 
500-millisecond, 1-second, and 5-second;
    C. System availability statistics, including system up-time 
percentage and cumulative amount of outage time;
    D. Network delay statistics, including quote and trade zero window 
size events, quote and trade retransmit events, and quote and trade 
message total; and
    E. Latency statistics, including distribution statistics up to the 
99.99th percentile, for the following:
    1. When a Participant sends an inbound message to a competing 
consolidator and when the competing consolidator receives the inbound 
message;
    2. When the competing consolidator receives the inbound message and 
when the competing consolidator sends the corresponding consolidated 
message to a customer of the competing consolidator; and
    3. When a Participant sends an inbound message to a competing 
consolidator and when the competing consolidator sends the 
corresponding consolidated message to a customer of the competing 
consolidator.
    The Participants explain that they have proposed to amend Section 
VIII to define the monthly performance metrics in accordance with Rule 
614(d)(5).\20\
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    \20\ See Notice, supra note 7, 86 FR at 67541-42.
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Section IX. (Previously Section VIII.) Transmission of Information to 
Processor, Competing Consolidators, and Self-Aggregators by 
Participants

    The Proposed Amendment amends Section IX.A., Quotation Information, 
to add the requirement that each Participant collect and transmit to 
competing consolidators and self-aggregators all quotation information 
required to be made available by such Participant by Rule 603(b) of 
Regulation NMS,\21\ including all data necessary to generate 
consolidated market data. Additionally, the Proposed Amendment requires 
each Participant to make available quotation information, and changes 
in any such information, to competing consolidators and self-
aggregators in the same manner and using the same methods, including 
all methods of access and the same format, as such Participant makes 
available any information with respect to quotations for and 
transactions in NMS stocks to any person.
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    \21\ 17 CFR 242.603(b).
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    In addition, under the Proposed Amendment, each bid and offer with 
respect to an Eligible Security furnished to competing consolidators 
and self-aggregators by any Participant pursuant to the Plan would be 
accompanied by the time (reported in microseconds) the Participant made 
such bid and offer available to Competing Consolidators and Self 
Aggregators. With respect to FINRA, the Proposed Amendment states that 
if FINRA's quotation facility provides a proprietary feed of its 
quotation information, then the quotation facility shall also furnish 
the Processor, competing consolidators, and self-aggregators with the 
time of the quotation as published on the quotation facility's 
proprietary feed, and that FINRA shall convert any quotation times 
reported to it in seconds or milliseconds to microseconds and shall 
furnish such times to the Processor, competing consolidators, and self-
aggregators in microseconds.
    Similarly, the Proposed Amendment amends Section IX.B., Transaction 
Reports, to require each Participant to make available Transaction 
Reports to competing consolidators and self-aggregators in the same 
manner and using the same methods, including all methods of access and 
the same format, as such Participant makes available any information 
with respect to quotations for and transactions in NMS stocks to any 
person.
    The Proposed Amendment also amends Section IX.B. to require 
Transaction Reports to competing consolidators and self-aggregators to 
include the time (in microseconds) that the Participant made such 
information available to competing consolidators and self-aggregators. 
With respect to FINRA, the Proposed Amendment states that if FINRA's 
trade reporting facility provides a proprietary feed of trades reported 
by the trade reporting facility to the Processor, competing 
consolidators and self-aggregators, then the FINRA trade reporting 
facility shall also furnish the Processor with the time of the 
transmission as published on the facility's proprietary feed. 
Additionally, the Proposed Amendment requires FINRA to convert times 
that its members report to it in seconds or milliseconds to 
microseconds and to furnish such times to the Processor, Competing 
Consolidators, and Self-Aggregators in microseconds. The Participants 
state that the amendments to Sections IX.A. and IX.B. are designed to 
comply with the requirements of Rule 614(e)(1) and (2).\22\
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    \22\ See Notice, supra note 7, 86 FR at 67542. The Commission 
notes that the Participants state that the Proposed Amendment amends 
Section IX.B., Transaction Reports, to add the requirement that each 
Participant agrees to collect and transmit to competing 
consolidators and self-aggregators all transaction reports required 
to be made available pursuant to Rule 603(b) of Regulation NMS; 
however, the Proposed Amendment does not actually propose to make 
this change to the text of the Plan. See Notice, supra note 7, 86 FR 
at 67550. See also infra Section V, Commission's Solicitation of 
Comments, Request for Comment #8.
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    The Proposed Amendment also deletes the following statement from 
Section IX.B.: ``The Participants shall seek to reduce the time period 
for reporting last sale prices to the Processor as conditions 
warrant.''
    In addition, Section IX.B. currently includes a list of types of 
transactions that are not required to be reported to the Processor 
pursuant to the Plan. The Proposed Amendment adds competing 
consolidators and self-aggregators as entities to which these types of 
transactions are not required to be reported.
    Finally, the Proposed Amendment amends Section IX.D. to include 
references to competing consolidators

[[Page 11758]]

and self-aggregators. Section IX.D., as amended would read: ``Whenever 
a Participant determines that a level of trading activity or other 
unusual market conditions prevent it from collecting and transmitting 
Quotation Information or Transaction Reports to the Processor, 
Competing Consolidators, and Self-Aggregators, or where a trading halt 
or suspension in an Eligible Security is in effect in its Market, the 
Participant shall promptly notify the Processor, Competing 
Consolidators, and Self-Aggregators of such condition or event and 
shall resume collecting and transmitting Quotation Information and 
Transaction Reports to it as soon as the condition or event is 
terminated. In the event of a system malfunction resulting in the 
inability of a Participant or its members to transmit Quotation 
Information or Transaction Reports to the Processor, Competing 
Consolidators, and Self-Aggregators, the Participant shall promptly 
notify the Processor, Competing Consolidators, and Self-Aggregators of 
such event or condition. Upon receiving such notification, the 
Processor shall take appropriate action, including either closing the 
quotation or purging the system of the affected quotations.''

Section XI. (Previously Section X.) Regulatory and Operational Halts

    The Proposed Amendment revises this section to delete the 
definition of ``Primary Listing Market'' from Section XI.A., 
Definitions for Purposes of Section XI. The Proposed Amendment also 
replaces references to ``Primary Listing Market'' with ``Primary 
Listing Exchange'' throughout Section XI.\23\ The Participants state 
that this change would align the text of the Plan with terminology in 
the MDI Rules.\24\
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    \23\ The Commission notes that the Proposed Amendment does not 
replace a reference to Primary Listing Market in the definition of 
``Regulatory Halt'' in this section.
    \24\ See Notice, supra note 7, 86 FR at 67542.
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    The Proposed Amendment amends Section XI.B., Operational Halts, to 
state that competing consolidators and self-aggregators shall be 
notified by a Participant if that Participant has concerns about its 
ability to collect and transmit Quotation Information or Transaction 
Reports, or where it has declared an Operational Halt or suspension of 
trading in one or more Eligible Securities, pursuant to the procedures 
adopted by the Operating Committee. Similarly, the Proposed Amendment 
amends Section XI.H., Communications, to state that if a Primary 
Listing Exchange for an Eligible Security determines it appropriate to 
initiate a Regulatory Halt, it will notify competing consolidators and 
self-aggregators of such Regulatory Halt as well as provide notice that 
a Regulatory Halt has been lifted using such protocols and other 
emergency procedures as may be mutually agreed to between the Operating 
Committee and the Primary Listing Exchange. The Participants state that 
these changes are consistent with Rule 614(e)(1) and would ensure that 
competing consolidators and self-aggregators are notified of 
information related to Regulatory and Operational Halts and that 
competing consolidators can disseminate this information to their 
customers.\25\
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    \25\ See id.
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Section XII. (Previously Section XI.) Hours of Operation

    The Proposed Amendment amends Section XII.B.(ii) and (iii) to add 
references to competing consolidators and self-aggregators. 
Specifically, with respect to the reporting obligations of 
Participants, proposed Section XII.B.(ii) provides that transactions in 
Eligible Securities executed after 8:00 p.m. and before 12:00 a.m. 
(midnight) shall be reported to the Processor, competing consolidators, 
and self-aggregators between the hours of 4:00 a.m. and 8:00 p.m. ET on 
the next business day (T+1), and shall be designated ``as/of'' trades 
to denote their execution on a prior day, and be accompanied by the 
time of execution. And proposed Section XII.B.(iii) provides that 
transactions in Eligible Securities executed between 12:00 a.m. 
(midnight) and 4:00 a.m. ET shall be transmitted to the Processor, 
competing consolidators, and self-aggregators between 4:00 a.m. and 
9:30 a.m. ET, on trade date, shall be designated as ``.T'' trades to 
denote their execution outside normal market hours, and shall be 
accompanied by the time of execution.
    The Proposed Amendment also amends Section XII.D. to require 
Participants that enter Quotation Information or submit Transaction 
Reports to competing consolidators and self-aggregators between 4:00 
a.m. and 9:30 a.m. ET, and after 4:00 p.m. ET until 8:00 p.m. ET, to do 
so for all Eligible Securities in which they enter quotations.

Section XIV. (Previously Section XIII.) Financial Matters

    The Proposed Amendment amends Section XIV.C., Maintenance of 
Financial Records, by replacing references to the Processor with 
references to the Administrator. The Participants explain that the 
responsibilities described in that section are more appropriately 
ascribed to the Administrator.\26\
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    \26\ See Notice, supra note 7, 86 FR at 67542.
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Section XV. (Previously Section XIV.) Indemnification

    The Proposed Amendment amends this section to add references to 
Competing Consolidators and Self-Aggregators and to remove a reference 
to Vendors as a recipient of Transaction Reports, Quotation 
Information, or other information disseminated by the Processor. 
Specifically, the first paragraph in this section now states: ``Each 
Participant agrees, severally and not jointly, to indemnify and hold 
harmless each other Participant, Nasdaq, and each of its directors, 
officers, employees and agents (including the Operating Committee and 
its employees and agents) from and against any and all loss, liability, 
claim, damage and expense whatsoever incurred or threatened against 
such persons as a result of any Transaction Reports, Quotation 
Information or other information reported to the Processor, Competing 
Consolidators, and Self-Aggregators by such Participant and 
disseminated by the Processor, Competing Consolidators, and Self-
Aggregators. This indemnity agreement shall be in addition to any 
liability that the indemnifying Participant may otherwise have.''

Section XVIII. (Previously Section XVII.) Applicability of Securities 
Exchange Act of 1934

    The Proposed Amendment amends this section to include Competing 
Consolidators and Self-Aggregators as subject to any applicable 
provisions of the Act, as amended, and any rules and regulations 
promulgated thereunder.

Section XIX. (Previously Section XVIII.) Operational Issues

    The Proposed Amendment amends Section XIX.A. to include references 
to Competing Consolidators and Self-Aggregators to require each 
Participant to collect and validate quotes and last sale reports within 
its own system prior to transmitting this data to Competing 
Consolidators and Self-Aggregators.

Section XXI. Depth of Book Display

    The Proposed Amendment deletes this section. The Participants 
explain that this provision is obsolete given the MDI Rules.\27\
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    \27\ See Notice, supra note 7, 86 FR at 67542.

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[[Page 11759]]

III. Summary of Comments

    In response to the Notice, the Commission received two comments on 
the Proposed Amendment.\28\ Generally, both commenters oppose the 
Proposed Amendment and recommend that the Commission disapprove it.\29\
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    \28\ See Letters to Vanessa Countryman, Secretary, Commission, 
from Ellen Greene, Managing Director, Equity and Options Market 
Structure, and William C. Thum, Managing Director and Associate 
General Counsel, Asset Management Group, Securities Industry and 
Financial Markets Association (Dec. 17, 2021) (``SIFMA Letter''); 
from Patrick Flannery, Chief Executive Officer, MayStreet, to 
Vanessa Countryman, Secretary, Commission (Dec. 17, 2021) 
(``MayStreet Letter'').
    \29\ SIFMA Letter, supra note 28, at 1, 8; MayStreet Letter, 
supra note 28, at 1. The Commission notes that the comment letters 
submitted by these commenters address both the Proposed Amendment 
and similar proposed amendments to the Second Restatement of the 
Consolidated Tape Association (``CTA'') Plan and Restated 
Consolidated Quotation (``CQ'') Plan (collectively ``CTA/CQ Plan''). 
See Securities Exchange Act Release No. 93615 (Nov. 19, 2021), 86 FR 
67800 (Nov. 29, 2021).
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    Both commenters argue that the Proposed Amendment contains 
provisions that would be irrelevant under the decentralized 
consolidation model. Specifically, one commenter states that the 
Proposed Amendment appears to continue to contain the concept of a 
single processor in contravention of the MDI Rules Release.\30\ The 
other commenter argues that under the MDI Rule, only competing 
consolidators would sell consolidated market data to vendors and 
subscribers. Therefore, this commenter does not believe the sections of 
the Proposed Amendment that discuss vendors' and subscribers' 
contractual relationships with the Plan are relevant.\31\ The commenter 
recommends that these provisions be removed or altered to reflect that 
the Plan no longer has agreements with vendors and end users and 
instead will have agreements with competing consolidators and self-
aggregators related specifically to the cost of content underlying the 
market data.\32\
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    \30\ SIFMA Letter, supra note 28, at 8.
    \31\ MayStreet Letter, supra note 28, at 3.
    \32\ See id.
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    Separately, one commenter argues that validation procedures between 
competing consolidators and Participants should be similar to those 
between the current Processor and the Participants.\33\ While this 
commenter acknowledges that the validation process for competing 
consolidators and Participants may differ from the current Processor 
validation process, the commenter believes that establishing validation 
procedures with the new competing consolidators that would be 
consistent across SROs is a prudent measure for ensuring data 
quality.\34\ Finally, the commenter also believes that the 
Participants' description of services offered by the current plans for 
equity market data have confused the underlying content of consolidated 
market data and the consolidated market data itself.\35\
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    \33\ See id. at 4.
    \34\ See id.
    \35\ See id. at 3.
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IV. Proceedings To Determine Whether To Approve or Disapprove the 
Proposed Amendment

    The Commission is instituting proceedings pursuant to Rule 
608(b)(2)(i) of Regulation NMS,\36\ and Rule 700 of the Commission's 
Rules of Practice,\37\ to determine whether to approve or disapprove 
the Proposed Amendment or to approve the Proposed Amendment with any 
changes or subject to any conditions the Commission deems necessary or 
appropriate after considering public comment. Institution of 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, the 
Commission seeks and encourages interested persons to provide 
additional comment on the Proposed Amendment to inform the Commission's 
analysis.
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    \36\ 17 CFR 242.608.
    \37\ 17 CFR 201.700.
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    Rule 608(b)(2) of Regulation NMS provides that the Commission 
``shall approve a . . . proposed amendment to a national market system 
plan, with such changes or subject to such conditions as the Commission 
may deem necessary or appropriate, if it finds that such . . . 
amendment is 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.'' \38\ Rule 608(b)(2) further provides that the Commission 
shall disapprove a proposed amendment if it does not make such a 
finding.\39\ Pursuant to Rule 608(b)(2)(i) of Regulation NMS,\40\ the 
Commission is providing notice of the grounds for disapproval under 
consideration:
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    \38\ See 17 CFR 242.608(b)(2).
    \39\ See id.
    \40\ 17 CFR 242.608(b)(2)(i). See also Commission Rule of 
Practice 700(b)(2), 17 CFR 201.700(b)(2).
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     Whether the Proposed Amendment is consistent with the 
Commission's MDI Rules as outlined in Rule 614(e); \41\
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    \41\ See MDI Rules Release, supra note 10.
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     Whether, consistent with Rule 608 of Regulation NMS, the 
Proposed Amendment is 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; \42\
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    \42\ See 17 CFR 242.608(b)(2).
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     Whether consistent with Rule 603(a) of Regulation NMS, the 
Proposed Amendment provides for the distribution of information with 
respect to quotations for and transactions in NMS stocks on terms that 
are fair and reasonable and not unreasonably discriminatory;
     Whether modifications to the Proposed Amendment, or 
conditions to its approval, would be required to make the Proposed 
Amendment 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; \43\
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    \43\ See id.
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     Whether the Proposed Amendment is consistent with 
Congress's finding, in Section 11A(1)(C)(iii) of the Act, 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 
availability to brokers, dealers, and investors of information with 
respect to quotations for and transactions in securities;'' \44\ and
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    \44\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
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     Whether, consistent with the purposes of Section 
11A(c)(1)(B) of the Act,\45\ the Proposed Amendment's provisions are 
drafted to support the prompt, accurate, reliable, and fair collection, 
processing, distribution, and publication of information with respect 
to quotations for and transactions in NMS securities, and the fairness 
and usefulness of the form and content of such information.
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    \45\ See 15 U.S.C. 78k-1(c)(1)(B).
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    Under the Commission's Rules of Practice, the ``burden to 
demonstrate that a NMS plan filing is consistent with the Exchange Act 
and the rules and regulations issued thereunder . . . is on the plan 
participants that filed the NMS plan filing.'' \46\ The description of 
the NMS plan filing, its purpose and operation, its effect, and a legal 
analysis of its consistency with applicable requirements must all be 
sufficiently detailed and specific to support an

[[Page 11760]]

affirmative Commission finding.\47\ Any failure of the plan 
participants that filed the NMS plan filing to provide such detail and 
specificity may result in the Commission not having a sufficient basis 
to make an affirmative finding that the NMS plan filing is consistent 
with the Act and the applicable rules and regulations thereunder.\48\
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    \46\ 17 CFR 201.700(b)(3)(ii).
    \47\ See id.
    \48\ Id.
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V. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written 
submissions of their views, data, and arguments with respect to the 
issues identified above, as well as any other concerns they may have 
with the proposal. In particular, the Commission invites the written 
views of interested persons concerning whether the proposal is 
consistent with Section 11A or any other provision of the Act, or the 
rules and regulations thereunder. Although there do not appear to be 
any issues relevant to approval or disapproval that would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 608(b)(2)(i) of Regulation 
NMS,\49\ any request for an opportunity to make an oral 
presentation.\50\ The Commission asks that commenters address the 
sufficiency and merit of the Participants' statements in support of the 
Proposed Amendment,\51\ in addition to any other comments they may wish 
to submit about the Proposed Amendment. In particular, the Commission 
seeks comment on the following:
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    \49\ 17 CFR 242.608(b)(2)(i).
    \50\ Rule 700(c)(ii) of the Commission's Rules of Practice 
provides that ``[t]he Commission, in its sole discretion, may 
determine whether any issues relevant to approval or disapproval 
would be facilitated by the opportunity for an oral presentation of 
views.'' 17 CFR 201.700(c)(ii).
    \51\ See Notice, supra note 7.
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    1. What are commenters' views on whether the text of the Proposed 
Amendment reflects the provision of information with respect to 
quotations for and transactions in NMS stocks that is necessary to 
generate consolidated market data by the national securities exchange 
and national securities association participants to competing 
consolidators and self-aggregators. For example, do commenters believe 
that Section III of the Plan (titled Definitions) appropriately defines 
terms to accurately reflect the decentralized consolidation model 
consistent with the MDI Rules Release? If not, what, if any, 
modifications should be made to these definitions in the Proposed 
Amendment? Additionally, do commenters believe that the Proposed 
Amendment should be modified to explicitly incorporate certain terms 
such as Consolidated Market Data, as defined in Rule 600(b)(19) into 
the Plan? Similarly, Sections V and VI describe the selection and 
evaluation and functions of the Processor, respectively. Do commenters 
believe that modifying the Proposed Amendment to remove the role of the 
Processor is necessary for the decentralized consolidation model 
consistent with the MDI Rules Release?
    2. What are commenters' views on whether the proposed revisions to 
the definitions of Quotation Information and Transaction Reports in 
Section III of the Proposed Amendment are appropriate?
    3. What are commenters' views on whether the Proposed Amendment 
includes the application of timestamps by the national securities 
exchange and national securities association participants on all 
information with respect to quotations for and transactions in NMS 
stocks that is necessary to generate consolidated market data, 
including the time that such information was generated as applicable by 
the national securities exchange or national securities association and 
the time the national securities exchange or national securities 
association made such information available to competing consolidators 
and self-aggregators. Specifically, do commenters believe that the 
Proposed Amendment requires the Participants to timestamp all of the 
data underlying Consolidated Market Data, as defined in Rule 
600(b)(19), upon generation and upon provision to competing 
consolidators and self-aggregators? If not, should the Proposed 
Amendment be modified to include a requirement for such timestamping?
    4. What are commenters' views on the proposed deletion of language 
in Section IX of the Proposed Amendment stating, ``The Participants 
shall seek to reduce the time period for reporting last sale prices to 
the Processor as conditions warrant.'' Specifically, do commenters 
believe that the Proposed Amendment should be modified to retain that 
language, but replace the term ``Processor'' with ``Competing 
Consolidators and Self-Aggregators''?
    5. What are commenters' views on the revisions to the 
indemnification provisions in Section XV of the Proposed Amendment? 
Specifically, do commenters believe that the deletion of Vendors as a 
recipient of Transaction Reports, Quotation Information, ``or other 
information'' reported to and disseminated by the Processor, competing 
consolidators and self-aggregators is appropriate?
    6. What are commenters' views on whether the Proposed Amendment 
sufficiently describes how the Plan will operate under the Initial 
Parallel Operation Period when ``the decentralized consolidation model 
will run in parallel to the existing exclusive SIP model.'' \52\ 
Specifically, Section D of the Proposed Amendment states that it will 
be implemented to coincide with the phased implementation of the MDI 
Rules as required by the Commission. Do commenters believe that the 
Proposed Amendment should specify how the Participants will transition 
from the current Plan to the initial parallel operation period and the 
process after the initial parallel operation period?
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    \52\ See MDI Rules Release, supra note 6, at Section III.H.2., 
86 FR at 18698-701.
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    7. What are commenters' views on the proposed revisions to Section 
IX.B. of the Proposed Amendment that state that if FINRA's trade 
reporting facility provides a proprietary feed of trades reported by 
the trade reporting facility to the Processor, competing consolidators 
and self-aggregators, then the FINRA trade reporting facility shall 
also furnish the Processor with the time of the transmission as 
published on the facility's proprietary feed? Specifically, what are 
commenters' views about these proposed revisions? Do commenters believe 
that the Proposed Amendment should be modified to make competing 
consolidators and self-aggregator recipients of the time of the 
transmission from the FINRA trade reporting facility?
    8. The description of the Proposed Amendment states that the 
Proposed Amendment amends Section IX.B. to add the requirement that 
each Participant agrees to collect and transmit to competing 
consolidators and self-aggregators all transaction reports required to 
be made available pursuant to Rule 603(b) of Regulation NMS. However, 
the Proposed Amendment does not make this change to the text of the 
Plan. Do commenters believe that the Proposed Amendment should be 
modified to incorporate this revision into Section IX.B.?
    9. What are commenters' views on the proposed revisions to Section 
IX.D. of the Proposed Amendment? Do commenters believe that the 
statement in the section that ``the Participant shall promptly notify 
the Processor, Competing Consolidators, and Self-Aggregators of such 
condition or event and shall resume collecting and transmitting 
Quotation Information and

[[Page 11761]]

Transaction Reports to it as soon as the condition or event is 
terminated'' should be modified to require the Participant to resume 
collecting and transmitting Quotation Information and Transaction 
Reports to competing consolidators and self-aggregators as soon as the 
condition or event is terminated? Do commenters believe that the 
statement in the section that ``[u]pon receiving such notification, the 
Processor shall take appropriate action, including either closing the 
quotation or purging the system of the affected quotations'' should be 
modified to reference competing consolidators and self-aggregators?
    10. Do commenters believe that the Proposed Amendment should be 
modified to replace a reference to ``Primary Listing Market'' with 
``Primary Listing Exchange'' in the definition of ``Regulatory Halt'' 
in Section XI.A.?
    11. What are commenters' views on the Proposed Amendment in light 
of the decentralized consolidation model with respect to (i) references 
to the Processor and Subscribers; (ii) the dissemination of Regulatory 
Halts; (iii) the authority of the Operating Committee under Section 
IV.B. of the Plan with respect to competing consolidators, self-
aggregators, Vendors, Subscribers, News Services, and others; and (iv) 
references to contracts with Vendors, Subscribers, News Services and 
others. Do commenters believe that the Proposed Amendment should be 
modified with respect to any of these provisions to conform to the 
decentralized consolidation model required by the MDI Rules?
    12. What are commenters' views on the following sections of the 
Proposed Amendment in light of the decentralized consolidation model: 
Administration of the Plan, Potential Conflicts of Interest, Selection 
and Evaluation of the Processor, Functions of the Processor, Market 
Access, Regulatory and Operational Halts, Hours of Operation, Financial 
Matters, Indemnification, Applicability of Securities Exchange Act of 
1934, and Operational Issues. Do commenters believe that the Proposed 
Amendment should be modified with respect to any of these provisions to 
conform to the decentralized consolidation model required by the MDI 
Rules? If so, please describe how the Proposed Amendment should be 
modified to conform the Plan to the decentralized consolidation model 
required by the MDI Rules.
    13. Do commenters have views about any other aspect of the Proposed 
Amendment? Do commenters believe that the Proposed Amendment should be 
modified in any other way to be consistent with the MDI Rules or the 
MDI Rules Release?
    Interested persons are invited to submit written data, views, and 
arguments regarding whether the proposal should be approved or 
disapproved by March 23, 2022. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by April 6, 
2022. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File No. S7-24-89 on the subject line.

Paper Comments

     Send paper comments in triplicate to: Secretary, 
Securities and Exchange Commission, 100 F Street NE, Washington, DC 
20549-1090.

All submissions should refer to File No. S7-24-89. This file number 
should be included on the subject line if email is used. To help the 
Commission process and review your comments more efficiently, please 
use only one method. The Commission will post all comments on the 
Commission's internet website (http://www.sec.gov/rules/sro.shtml). 
Copies of the submission, all subsequent amendments, all written 
statements with respect to the proposed rule change that are filed with 
the Commission, and all written communications relating to the proposed 
rule change between the Commission and any person, other than those 
that may be withheld from the public in accordance with the provisions 
of 5 U.S.C. 552, will be available for website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of the filing also will be available for inspection 
and copying at the Participants' principal offices. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number File No. S7-24-89 and should be submitted 
on or before March 23, 2022.
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    \53\ 17 CFR 200.30-3(a)(85).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\53\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-04333 Filed 3-1-22; 8:45 am]
BILLING CODE 8011-01-P