Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, To Amend the Rule 6.6800 Series, the Exchange's Compliance Rule Regarding the National Market System Plan Governing the Consolidated Audit Trail, 4028-4040 [2020-01032]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 85, Number 15 (Thursday, January 23, 2020)]
[Notices]
[Pages 4028-4040]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-01032]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87988; File No. SR-NYSECHX-2020-01]


Self-Regulatory Organizations; NYSE Chicago, Inc.; Notice of 
Filing of Proposed Rule Change, as Modified by Amendment No. 1 Thereto, 
To Amend the Rule 6.6800 Series, the Exchange's Compliance Rule 
Regarding the National Market System Plan Governing the Consolidated 
Audit Trail

January 16, 2020.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on January 3, 2020, the NYSE Chicago, Inc. (``NYSE Chicago'' or 
``Exchange'') filed with the

[[Page 4029]]

Securities and Exchange Commission (``Commission'') the proposed rule 
change as described in Items I, II, and III below, which Items have 
been prepared by the self-regulatory organization. On January 14, 2020, 
the Exchange filed Amendment No. 1 to the proposal. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as modified by Amendment No. 1, from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend the Rule 6.6800 Series, the 
Exchange's compliance rule (``Compliance Rule'') regarding the National 
Market System Plan Governing the Consolidated Audit Trail (the ``CAT 
NMS Plan'' or ``Plan'') \3\ to be consistent with certain proposed 
amendments to and exemptions from the CAT NMS Plan as well as to 
facilitate the retirement of certain existing regulatory systems. The 
proposed change is available on the Exchange's website at www.nyse.com, 
at the principal office of the Exchange, and at the Commission's Public 
Reference Room.
---------------------------------------------------------------------------

    \3\ Unless otherwise specified, capitalized terms used in this 
rule filing are defined as set forth in the Compliance Rule.
---------------------------------------------------------------------------

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The purpose of this proposed rule change is to amend the Rule 
6.6800 Series, the Compliance Rule regarding the CAT NMS Plan to be 
consistent with certain proposed amendments to and exemptions from the 
CAT NMS Plan as well as to facilitate the retirement of certain 
existing regulatory systems.
    This Amendment No. 1 amends and replaces in its entirety the 
original proposal filed by the Exchange on January 3, 2020. The 
Exchange submits this Amendment No. 1 in order to make a technical 
correction to the text of the proposed rule change by deleting the word 
``Plan'' from current Rules 6.6810(dd) and (kk) to maintain consistency 
with the definitions in the Compliance Rule of the Exchange's 
affiliates, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, 
Inc. and NYSE National, Inc.
    As described more fully below, the proposed rule change would make 
the following changes to the Compliance Rule:
     Revise data reporting requirements for the Firm Designated 
ID;
     Add additional data elements to the CAT reporting 
requirements for Industry Members to facilitate the retirement of the 
Financial Industry Regulatory Authority, Inc.'s (``FINRA'') Order Audit 
Trail System (``OATS'');
     Add additional data elements related to OTC Equity 
Securities that FINRA currently receives from ATSs that trade OTC 
Equity Securities for regulatory oversight purposes to the CAT 
reporting requirements for Industry Members;
     Implement a phased approach for Industry Member reporting 
to the CAT (``Phased Reporting'');
     Revise the CAT reporting requirements regarding cancelled 
trades and SRO-Assigned Market Participant Identifiers of clearing 
brokers, if applicable, in connection with order executions, as such 
information will be available from FINRA's trade reports submitted to 
the CAT;
     To the extent that any Industry Member's order handling or 
execution systems utilize time stamps in increments finer than 
milliseconds, revise the timestamp granularity requirement to require 
such Industry Member to record and report Industry Member Data to the 
Central Repository with time stamps in such finer increment up to 
nanoseconds;
     Revise the reporting requirements to address circumstances 
in which an Industry Member uses an established trading relationship 
for an individual Customer (rather than an account) on the order 
reported to the CAT; and
     Revise the CAT reporting requirements so Industry Members 
would not be required to report to the Central Repository dates of 
birth, SSNs or account numbers for individuals.
i. Firm Designated ID
    The Participants filed with the Commission a proposed amendment to 
the CAT NMS Plan to amend the requirements for Firm Designated IDs in 
two ways: (1) To prohibit the use of account numbers as Firm Designated 
IDs for trading accounts that are not proprietary accounts; and (2) to 
require that the Firm Designated ID for a trading account be persistent 
over time for each Industry Member so that a single account may be 
tracked across time within a single Industry Member.\4\ As a result, 
the Exchange proposes to amend the definition of ``Firm Designated ID'' 
in Rule 6.6810 to reflect the changes to the CAT NMS Plan regarding the 
requirements for Firm Designated IDs.
---------------------------------------------------------------------------

    \4\ See Letter to Vanessa Countryman, Secretary, SEC, from 
Michael Simon, CAT NMS Plan Operating Committee Chair re: Notice of 
Filing of Amendment to the National Market System Plan Governing the 
Consolidated Audit Trail (Nov. 20, 2019).
---------------------------------------------------------------------------

    Rule 6.6810(r) (previously Rule 6.6810(q)) defines the term ``Firm 
Designated ID'' to mean ``a unique identifier for each trading account 
designated by Industry Members for purposes of providing data to the 
Central Repository, where each such identifier is unique among all 
identifiers from any given Industry Member for each business date.''
    The Exchange proposes to amend the definition of a ``Firm 
Designated ID'' in proposed Rule 6.6810(r) to provide that Industry 
Members may not use account numbers as the Firm Designated ID for 
trading accounts that are not proprietary accounts. Specifically, the 
Participants propose to add the following to the definition of a Firm 
Designated ID: ``provided, however, such identifier may not be the 
account number for such trading account if the trading account is not a 
proprietary account.''
    In addition, the Exchange proposes to amend the definition a ``Firm 
Designated ID'' in proposed Rule 6.6810(r) to require a Firm Designated 
ID assigned by an Industry Member to a trading account to be persistent 
over time, not for each business day.\5\ To effect this change, the 
Exchange proposes to amend the definition of ``Firm Designated ID'' in 
proposed Rule 6.6810(r) to add ``and persistent'' after ``unique'' and 
delete ``for each business date'' so that the definition of ``Firm 
Designated ID'' would read, in relevant part, as follows:
---------------------------------------------------------------------------

    \5\ If an Industry Member assigns a new account number or entity 
identifier to a client or customer due to a merger, acquisition or 
some other corporate action, then the Industry Member should create 
a new Firm Designated ID to identify the new account identifier/
entity identifier in use at the Industry Member for the entity.

a unique and persistent identifier for each trading account 
designated by Industry Members for purposes of providing data to the 
Central Repository, where each such

[[Page 4030]]

identifier is unique among all identifiers from any given Industry 
Member.
ii. CAT-OATS Data Gaps
    The Participants have worked to identify gaps between data reported 
to existing systems and data to be reported to the CAT to ``ensure that 
by the time Industry Members are required to report to the CAT, the CAT 
will include all data elements necessary to facilitate the rapid 
retirement of duplicative systems.'' \6\ As a result of this process, 
the Participants identified several data elements that must be included 
in the CAT reporting requirements before existing systems can be 
retired. In particular, the Participants identified certain data 
elements that are required by OATS, but not currently enumerated in the 
CAT NMS Plan. Accordingly, the Exchange proposes to amend its 
Compliance Rule to include these OATS data elements in the CAT. Each of 
such OATS data elements are discussed below. The addition of these OATS 
data elements to the CAT will facilitate the retirement of OATS.
---------------------------------------------------------------------------

    \6\ Letter from Participants to Brent J. Fields, Secretary, SEC, 
re: File Number 4-698; Notice of Filing of the National Market 
System Plan Governing the Consolidated Audit Trail (September 23, 
2016) at 21 (``Participants' Response to Comments'') (available at 
https://www.sec.gov/comments/4-698/4698-32.pdf).
---------------------------------------------------------------------------

A. Information Barrier Identification
    The FINRA OATS rules require OATS Reporting Members \7\ to record 
the identification of information barriers for certain order events, 
including when an order is received or originated, transmitted to a 
department within the OATS Reporting Member, and when it is modified. 
The Participants propose to amend the CAT NMS Plan to incorporate these 
requirements into the CAT.
---------------------------------------------------------------------------

    \7\ An OATS ``Reporting Member'' is defined in FINRA Rule 
7410(o).
---------------------------------------------------------------------------

    Specifically, FINRA Rule 7440(b)(20) requires a FINRA OATS 
Reporting Member to record the following when an order is received or 
originated: ``if the member is relying on the exception provided in 
Rule 5320.02 with respect to the order, the unique identification of 
any appropriate information barriers in place at the department within 
the member where the order was received or originated.'' \8\ The 
Compliance Rule does not require Industry Members to report such 
information barrier information. To address this OATS-CAT data gap, the 
Exchange proposes to add new paragraph (a)(1)(A)(vii) to Rule 6.6830, 
which would require Industry Members to record and report to the 
Central Repository, for original receipt or origination of an order, 
``the unique identification of any appropriate information barriers in 
place at the department within the Industry Member where the order was 
received or originated.''
---------------------------------------------------------------------------

    \8\ FINRA Rule 5320 prohibits trading ahead of customer orders.
---------------------------------------------------------------------------

    In addition, FINRA Rule 7440(c)(1) states that ``[w]hen a Reporting 
Member transmits an order to a department within the member, the 
Reporting Member shall record: . . . (H) if the member is relying on 
the exception provided in Rule 5320.02 with respect to the order, the 
unique identification of any appropriate information barriers in place 
at the department within the member to which the order was 
transmitted.'' The Compliance Rule does not require Industry Members to 
report such information barrier information. To address this OATS-CAT 
data gap, the Exchange proposes to revise paragraph (a)(1)(B)(vi) of 
Rule 6.6830 to require, for the routing of an order, if routed 
internally at the Industry Member, ``the unique identification of any 
appropriate information barriers in place at the department within the 
Industry Member to which the order was transmitted.''
    FINRA Rule 7440(c)(2)(B) and 7440(c)(4)(B) require an OATS 
Reporting Member that receives an order transmitted from another member 
to report the unique identification of any appropriate information 
barriers in place at the department within the member to which the 
order was transmitted. The Compliance Rule not require Industry Members 
to report such information barrier information. To address this OATS-
CAT data gap, the Exchange proposes to add new paragraph (a)(1)(C)(vii) 
to Rule 6.6830, which would require Industry Members to record and 
report to the Central Repository, for the receipt of an order that has 
been routed, ``the unique identification of any appropriate information 
barriers in place at the department within the Industry Member which 
received the order.''
    FINRA Rule 7440(d)(1) requires an OATS Reporting Member that 
modifies or receives a modification to the terms of an order to report 
the unique identification of any appropriate information barriers in 
place at the department within the member to which the modification was 
originated or received. The Compliance Rule does not require Industry 
Members to report such information barrier information. To address this 
OATS-CAT data gap, the Exchange proposes to add new paragraph 
(a)(1)(D)(vii) to Rule 6.6830, which would require Industry Members to 
record and report to the Central Repository, if the order is modified 
or cancelled, ``the unique identification of any appropriate 
information barriers in place at the department within the Industry 
Member which received or originated the modification.''
B. Reporting Requirements for ATSs
    Under FINRA Rule 4554, ATSs that receive orders in NMS stocks are 
required to report certain order information to OATS, which FINRA uses 
to reconstruct ATS order books and perform order-based surveillance, 
including layering, spoofing, and mid-point pricing manipulation 
surveillance.\9\ The Participants believe that Industry Members 
operating ATSs--whether such ATS trades NMS stocks or OTC Equity 
Securities--should likewise be required to report this information to 
the CAT. Because ATSs that trade NMS stocks are already recording this 
information and reporting it to OATS, the Participants believe that 
reporting the same information to the CAT should impose little burden 
on these ATSs. Moreover, including this information in the CAT is also 
necessary for FINRA to be able to retire the OATS system. The 
Participants similarly believe that obtaining the same information from 
ATSs that trade OTC Equity Securities will be important for purposes of 
reconstructing ATS order books and surveillance. Accordingly, the 
Exchange proposes to add to the data reporting requirements in the 
Compliance Rule the reporting requirements for alternative trading 
systems (``ATSs'') in FINRA Rule 4554,\10\ but to expand such 
requirements so that they are applicable to all ATSs rather than solely 
to ATSs that trade NMS stocks.
---------------------------------------------------------------------------

    \9\ See FINRA Regulatory Notice 16-28 (Nov. 2016).
    \10\ FINRA Rule 4554 was approved by the SEC on May 10, 2016, 
while the CAT NMS Plan was pending with the Commission. See 
Securities Exchange Act Release No. 77798 (May 10, 2016), 81 FR 
30395 (May 16, 2016) (Order Approving SR-FINRA-2016-010). As noted 
in the Participants' Response to Comments, throughout the process of 
developing the Plan, the Participants worked to keep the gap 
analyses for OATS, electronic blue sheets, and the CAT up-to-date, 
which included adding data fields related to the tick size pilot and 
ATS order book amendments to the OATS rules. See Participants' 
Response to Comments at 21. However, due to the timing of the 
expiration of the tick size pilot, the Participants decided not to 
include those data elements into the CAT NMS Plan.
---------------------------------------------------------------------------

(i) New Definition
    The Exchange proposes to add a definition of ``ATS'' to new 
paragraph (d) in Rule 6.6810 to facilitate the addition to the Plan of 
the reporting requirements for ATSs set forth in

[[Page 4031]]

FINRA Rule 4554. The Exchange proposes to define an ``ATS'' to mean 
``an alternative trading system, as defined in Rule 300(a)(1) of 
Regulation ATS under the Exchange Act.''
(ii) ATS Order Type
    FINRA Rule 4554(b)(5) requires the following information to be 
recorded and reported to FINRA by ATSs when reporting receipt of an 
order to OATS:

    A unique identifier for each order type offered by the ATS. An 
ATS must provide FINRA with (i) a list of all of its order types 20 
days before such order types become effective and (ii) any changes 
to its order types 20 days before such changes become effective. An 
identifier shall not be required for market and limit orders that 
have no other special handling instructions.

    The Compliance Rule does not require Industry Members to report 
such order type information to the Central Repository. To address this 
OATS-CAT data gap, the Exchange proposes to incorporate these 
requirements into four new provisions to the Compliance Rule: 
Paragraphs (a)(1)(A)(xi)(1), (a)(1)(C)(x)(1), (a)(1)(D)(ix)(1) and 
(a)(2)(D) of Rule 6.6830.
    Proposed paragraph (a)(1)(A)(xi)(1) of Rule 6.6830 would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository for the original receipt or origination of an order 
``the ATS's unique identifier for the order type of the order.'' 
Proposed paragraph (a)(1)(C)(x)(1) of Rule 6.6830 would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository for the receipt of an order that has been routed 
``the ATS's unique identifier for the order type of the order.'' 
Proposed paragraph (a)(1)(D)(ix)(1) of Rule 6.6830 would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository if the order is modified or cancelled ``the ATS's 
unique identifier for the order type of the order.'' Furthermore, 
proposed paragraph (a)(2)(D) of Rule 6.6830 would state that:
    An Industry Member that operates an ATS must provide to the Central 
Repository:
    (1) A list of all of its order types twenty (20) days before such 
order types become effective; and (ii) any changes to its order types 
twenty (20) days before such changes become effective. An identifier 
shall not be required for market and limit orders that have no other 
special handling instructions.
(iii) National Best Bid and Offer
    FINRA Rules 4554(b)(6) and (7) require the following information to 
be recorded and reported to FINRA by ATSs when reporting receipt of an 
order to OATS:
    (6) The NBBO (or relevant reference price) in effect at the time of 
order receipt and the timestamp of when the ATS recorded the effective 
NBBO (or relevant reference price); and
    (7) Identification of the market data feed used by the ATS to 
record the NBBO (or other reference price) for purposes of subparagraph 
(6). If for any reason, the ATS uses an alternative feed than what was 
reported on its ATS data submission, the ATS must notify FINRA of the 
fact that an alternative source was used, identify the alternative 
source, and specify the date(s), time(s) and securities for which the 
alternative source was used.
    Similarly, FINRA Rule 4554(c) requires the following information to 
be recorded and reported to FINRA by ATSs when reporting the execution 
of an order to OATS:
    (1) The NBBO (or relevant reference price) in effect at the time of 
order execution;
    (2) The timestamp of when the ATS recorded the effective NBBO (or 
relevant reference price); and
    (3) Identification of the market data feed used by the ATS to 
record the NBBO (or other reference price) for purposes of subparagraph 
(1). If for any reason, the ATS uses an alternative feed than what was 
reported on its ATS data submission, the ATS must notify FINRA of the 
fact that an alternative source was used, identify the alternative 
source, and specify the date(s), time(s) and securities for which the 
alternative source was used.
    The Compliance Rule does not require Industry Members to report 
such NBBO information to the Central Repository. To address this OATS-
CAT data gap, the Exchange proposes to incorporate these requirements 
into four new provisions to the Compliance Rule: (a)(1)(A)(xi)(2)-(3), 
(a)(1)(C)(x)(2)-(3), (a)(1)(D)(ix)(2)-(3) and (a)(1)(E)(viii)(1)-(2) of 
Rule 6.6830.
    Specifically, proposed paragraph (a)(1)(A)(xi)(2)-(3) of Rule 
6.6830 would require an Industry Member that operates an ATS to record 
and report to the Central Repository the following information when 
reporting the original receipt or origination of order:
    (2) The National Best Bid and National Best Offer (or relevant 
reference price) at the time of order receipt or origination, and the 
date and time at which the ATS recorded such National Best Bid and 
National Best Offer (or relevant reference price);
    (3) the identification of the market data feed used by the ATS to 
record the National Best Bid and National Best Offer (or relevant 
reference price) for purposes of subparagraph (xi)(2). If for any 
reason the ATS uses an alternative market data feed than what was 
reported on its ATS data submission, the ATS must provide notice to the 
Central Repository of the fact that an alternative source was used, 
identify the alternative source, and specify the date(s), time(s) and 
securities for which the alternative source was used.
    Similarly, proposed paragraphs (a)(1)(C)(x)(2)-(3), 
(a)(1)(D)(ix)(2)-(3) and (a)(1)(E)(viii)(1)-(2) of Rule 6.6830 would 
require an Industry Member that operates an ATS to record and report to 
the Central Repository the same information when reporting receipt of 
an order that has been routed, when reporting if the order is modified 
or cancelled, and when an order has been executed, respectively.
(iv) Sequence Numbers
    FINRA Rule 4554(d) states that ``[f]or all OATS-reportable event 
types, all ATSs must record and report to FINRA the sequence number 
assigned to the order event by the ATS's matching engine.'' The 
Compliance Rule does not require Industry Members to report ATS 
sequence numbers to the Central Repository. To address this OATS-CAT 
data gap, the Exchange proposes to incorporate this requirement 
regarding ATS sequence numbers into each of the Reportable Events for 
the CAT. Specifically, the Exchange proposes to add new paragraph 
(a)(1)(A)(xi)(4) to Rule 6.6830, which would require an Industry Member 
that operates an ATS to record and report to the Central Repository 
``the sequence number assigned to the receipt or origination of the 
order by the ATS's matching engine.'' The Exchange proposes to add new 
paragraph (a)(1)(B)(viii) to Rule 6.6830, which would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository ``the sequence number assigned to the routing of the 
order by the ATS's matching engine.'' The Exchange also proposes to add 
new paragraph (a)(1)(C)(x)(4) to Rule 6.6830, which would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository ``the sequence number assigned to the receipt of the 
order by the ATS's matching engine.'' In addition, the Exchange 
proposes to add new paragraph (a)(1)(D)(x)(4) to Rule 6.6830, which 
would require an Industry Member that operates an ATS to record and 
report to the Central Repository ``the sequence number assigned to the 
modification or cancellation of the order by the ATS's matching 
engine.'' Finally,

[[Page 4032]]

the Exchange proposes to add new paragraph (a)(1)(E)(viii)(3) to Rule 
6.6830, which would require an Industry Member that operates an ATS to 
record and report to the Central Repository ``the sequence number 
assigned to the execution of the order by the ATS's matching engine.''
(v) Modification or Cancellation of Orders by ATSs
    FINRA Rule 4554(f) states that ``[f]or an ATS that displays 
subscriber orders, each time the ATS's matching engine re-prices a 
displayed order or changes the display quantity of a displayed order, 
the ATS must report to OATS the time of such modification,'' and ``the 
applicable new display price or size.'' The Exchange proposes adding a 
comparable requirement into new paragraph (a)(1)(D)(ix)(5) to Rule 
6.6830. Specifically, proposed new paragraph (a)(1)(D)(ix)(5) of Rule 
6.6830 would require an Industry Member that operates an ATS to report 
to the Central Repository, if the order is modified or cancelled, 
``each time the ATS's matching engine re-prices an order or changes the 
quantity of an order,'' the ATS must report to the Central Repository 
``the time of such modification, and the applicable new price or 
size.'' Proposed new paragraph (a)(1)(D)(ix)(5) of Rule 6.6830 would 
apply to all ATSs, not just ATSs that display orders.
(vi) Display of Subscriber Orders
    FINRA Rule 4554(b)(1) requires the following information to be 
recorded and reported to FINRA by ATSs when reporting receipt of an 
order to OATS:

    Whether the ATS displays subscriber orders outside the ATS 
(other than to alternative trading system employees). If an ATS does 
display subscriber orders outside the ATS (other than to alternative 
trading system employees), indicate whether the order is displayed 
to subscribers only or through publicly disseminated quotation 
data);

    The Compliance Rule does not require Industry Members to report to 
the CAT such information about the displaying of subscriber orders. The 
Exchange proposes to add comparable requirements into new paragraphs 
(a)(1)(A)(xi)(5) and (a)(1)(C)(x)(5) of Rule 6.6830. Specifically, 
proposed new paragraph (a)(1)(A)(xi)(5) would require an Industry 
Member that operates an ATS to report to the Central Repository, for 
the original receipt or origination of an order,

    whether the ATS displays subscriber orders outside the ATS 
(other than to alternative trading system employees). If an ATS does 
display subscriber orders outside the ATS (other than to alternative 
trading system employees), indicate whether the order is displayed 
to subscribers only or through publicly disseminated quotation data.

    Similarly, proposed new paragraph (a)(1)(C)(x)(5) would require an 
Industry Member that operates an ATS to record and report to the 
Central Repository the same information when reporting receipt of an 
order that has been routed.
C. Customer Instruction Flag
    FINRA Rule 7440(b)(14) requires a FINRA OATS Reporting Member to 
record the following when an order is received or originated: ``any 
request by a customer that a limit order not be displayed, or that a 
block size limit order be displayed, pursuant to applicable rules.'' 
The Compliance Rule does not require Industry Members to report to the 
CAT such a customer instruction flag. To address this OATS-CAT data 
gap, the Exchange proposes to add new paragraph (a)(1)(A)(viii) to Rule 
6.6830, which would require Industry Members to record and report to 
the Central Repository, for original receipt or origination of an 
order, ``any request by a Customer that a limit order not be displayed, 
or that a block size limit order be displayed, pursuant to applicable 
rules.'' The Exchange also proposes to add new paragraph (a)(1)(C)(ix) 
to Rule 6.6830, which would require Industry Members to record and 
report to the Central Repository, for the receipt of an order that has 
been routed, ``any request by a Customer that a limit order not be 
displayed, or that a block size limit order be displayed, pursuant to 
applicable rules.''
    FINRA Rule 7440(d)(1) requires an OATS Reporting Member that 
modifies or receives a modification of an order to report the customer 
instruction flag. The Compliance Rule does not require Industry Members 
to report such a customer instruction flag. To address this OATS-CAT 
data gap, the Exchange proposes to add new paragraph (a)(1)(D)(viii) to 
Rule 6.6830, which would require Industry Members to record and report 
to the Central Repository, if the order is modified or cancelled, ``any 
request by a Customer that a limit order not be displayed, or that a 
block size limit order be displayed, pursuant to applicable rules.''
D. Department Type
    FINRA Rules 7440(b)(4) and (5) require an OATS Reporting Member 
that receives or originates an order to record the following 
information: ``the identification of any department or the 
identification number of any terminal where an order is received 
directly from a customer'' and ``where the order is originated by a 
Reporting Member, the identification of the department of the member 
that originates the order.'' The Compliance Rule does not require 
Industry Members to report to the CAT information regarding the 
department or terminal where the order is received or originated. To 
address this OATS-CAT data gap, the Exchange proposes to add new 
paragraph (a)(1)(A)(ix) to Rule 6.6830, which would require Industry 
Members to record and report to the Central Repository upon the 
original receipt or origination of an order ``the nature of the 
department or desk that originated the order, or received the order 
from a Customer.''
    Similarly, per FINRA Rules 7440(c)(2)(B) and (4)(B), when an OATS 
Reporting Member receives an order that has been transmitted by another 
Member, the receiving OATS Reporting Member is required to record the 
information required in 7440(b)(4) and (5) described above as 
applicable. The Compliance Rule does not require Industry Members to 
report to the CAT information regarding the department that received an 
order. To address this OATS-CAT data gap, the Exchange propose to add 
new paragraph (a)(1)(C)(viii) to Rule 6.6830, which would require 
Industry Members to record and report to the Central Repository upon 
the receipt of an order that has been routed ``the nature of the 
department or desk that received the order.''
E. Account Holder Type
    FINRA Rule 7440(b)(18) requires an OATS Reporting Member that 
receives or originates an order to record the following information: 
``the type of account, i.e., retail, wholesale, employee, proprietary, 
or any other type of account designated by FINRA, for which the order 
is submitted.'' The Compliance Rule does not require Industry Members 
to report to the CAT information regarding the type of account holder 
for which the order is submitted. To address this OATS-CAT data gap, 
the Exchange proposes to add new paragraph (a)(1)(A)(x) to Rule 6.6830, 
which would require Industry Members to record and report to the 
Central Repository upon the original receipt or origination of an order 
``the type of account holder for which the order is submitted.''
iii. OTC Equity Securities
    The Participants have identified several data elements related to 
OTC Equity Securities that FINRA currently

[[Page 4033]]

receive from ATSs that trade OTC Equity Securities for regulatory 
oversight purposes, but are not currently included in CAT Data. In 
particular, the Participants identified three data elements that need 
to be added to the CAT: (1) Bids and offers for OTC Equity Securities; 
(2) a flag indicating whether a quote in OTC Equity Securities is 
solicited or unsolicited; and (3) unpriced bids and offers in OTC 
Equity Securities. The Participants believe that such data will 
continue to be important for regulators to oversee the OTC Equity 
Securities market when using the CAT. Moreover, the Participants do not 
believe that the proposed requirement would burden ATSs because they 
currently report this information to FINRA and thus the reporting 
requirement would merely shift from FINRA to the CAT. Accordingly, as 
discussed below, the Exchange proposes to amend its Compliance Rule to 
include these data elements.
A. Bids and Offers for OTC Equity Securities
    In performing its current regulatory oversight, FINRA receives a 
data feed of the best bids and offers in OTC Equity Securities from 
ATSs that trade OTC Equity Securities. These best bid and offer data 
feeds for OTC Equity Securities are similar to the best bid and offer 
SIP Data required to be collected by the Central Repository with regard 
to NMS Securities.\11\ Accordingly, the Exchange proposes to add new 
paragraph (f)(1) to Rule 6.6830 to require the reporting of the best 
bid and offer data feeds for OTC Equity Securities to the CAT. 
Specifically, proposed new paragraph (f)(1) of Rule 6.6830 would 
require each Industry Member that operates an ATS that trades OTC 
Equity Securities to provide to the Central Repository ``the best bid 
and best offer for each OTC Equity Security traded on such ATS.''
---------------------------------------------------------------------------

    \11\ Section 6.5(a)(ii) of the CAT NMS Plan.
---------------------------------------------------------------------------

B. Unsolicited Bid or Offer Flag
    FINRA also receives from ATSs that trade OTC Equity Securities an 
indication whether each bid or offer in OTC Equity Securities on such 
ATS was solicited or unsolicited. Therefore, the Exchange proposes to 
add new paragraph (f)(2) to Rule 6.6830 to require the reporting to the 
CAT of an indication as to whether a bid or offer was solicited or 
unsolicited. Specifically, proposed new paragraph (f)(2) of Rule 6.6830 
would require each Industry Member that operates an ATS that trades OTC 
Equity Securities to provide to the Central Repository ``an indication 
of whether each bid and offer for OTC Equity Securities was solicited 
or unsolicited.''
C. Unpriced Bids and Offers
    FINRA receives from ATSs that trade OTC Equity Securities certain 
unpriced bids and offers for each OTC Equity Security traded on the 
ATS. Therefore, the Exchange proposes to add new paragraph (f)(3) to 
Rule 6.6830, which would require each Industry Member that operates an 
ATS that trades OTC Equity Securities to provide to the Central 
Repository ``the unpriced bids and offers for each OTC Equity Security 
traded on such ATS.''
iv. Revised Industry Member Reporting Timeline
    The Participants intend to file with the Commission a request for 
exemptive relief from certain provisions of the CAT NMS Plan to allow 
for the implementation of phased reporting to the CAT by Industry 
Members (``Phased Reporting''). Specifically, in their exemptive 
request, the Participants request that the SEC exempt each Participant 
from the requirement in Section 6.7(a)(v) for each Participant, through 
its Compliance Rule, to require its Large Industry Members to report to 
the Central Repository Industry Member Data within two years of the 
Effective Date (that is, by November 15, 2018). In addition, the 
Participants request that the SEC exempt each Participant from the 
requirement in Section 6.7(a)(vi) for each Participant, through its 
Compliance Rule, to require its Small Industry Members to report to the 
Central Repository Industry Member Data within three years of the 
Effective Date (that is, by November 15, 2019). Correspondingly, the 
Participants request that the SEC provide an exemption from the 
requirement in Section 6.4 that ``[t]he requirements for Industry 
Members under this Section 6.4 shall become effective on the second 
anniversary of the Effective Date in the case of Industry Members other 
than Small Industry Members, or the third anniversary of the Effective 
Date in the case of Small Industry Members.''
    As a condition to these proposed exemptions, each Participant would 
implement Phased Reporting through its Compliance Rule by requiring:
    (1) Its Large Industry Members and its Small Industry OATS 
Reporters to commence reporting to the Central Repository Phase 2a 
Industry Member Data by April 20, 2020, and its Small Industry Non-OATS 
Reporters to commence reporting to the Central Repository Phase 2a 
Industry Member Data by December 13, 2021;
    (2) its Large Industry Members to commence reporting to the Central 
Repository Phase 2b Industry Member Data by May 18, 2020, and its Small 
Industry Members to commence reporting to the Central Repository Phase 
2b Industry Member Data by December 13, 2021;
    (3) its Large Industry Members to commence reporting to the Central 
Repository Phase 2c Industry Member Data by April 26, 2021, and its 
Small Industry Members to commence reporting to the Central Repository 
Phase 2c Industry Member Data by December 13, 2021;
    (4) its Large Industry Members and Small Industry Members to 
commence reporting to the Central Repository Phase 2d Industry Member 
Data by December 13, 2021; and
    (5) its Large Industry Members and Small Industry Members to 
commence reporting to the Central Repository Phase 2e Industry Member 
Data by July 11, 2022.
    The full scope of CAT Data will be required to be reported when all 
five phases of the Phased Reporting have been implemented.
    As a further condition to these exemptions, each Participant 
proposes to implement the testing timelines, described in Section F 
below, through its Compliance Rule by requiring the following:
    (1) Industry Member file submission and data integrity testing for 
Phases 2a and 2b begins in December 2019.
    (2) Industry Member testing of the Reporter Portal, including data 
integrity error correction tools and data submissions, begins in 
February 2020.
    (3) The Industry Member test environment will be open with intra-
firm linkage validations to Industry Members for both Phases 2a and 2b 
in April 2020.
    (4) The Industry Member test environment will be open to Industry 
Members with inter-firm linkage validations for both Phases 2a and 2b 
in July 2020.
    (5) The Industry Member test environment will be open to Industry 
Members with Phase 2c functionality (full representative order 
linkages) in January 2021.
    (6) The Industry Member test environment will be open to Industry 
Members with Phase 2d functionality (manual options orders, complex 
options orders, and options allocations) in June 2021.
    (7) Participant exchanges that support options market making 
quoting will begin accepting Quote Sent Time on quotes from Industry 
Members no later than April 2020.

[[Page 4034]]

    (8) The Industry Member test environment (customer and account 
information) will be open to Industry Members in January 2022.
    As a result, the Exchange proposes to amend its Compliance Rule to 
be consistent with the proposed exemptive relief to implement Phased 
Reporting as described below.
A. Phase 2a
    In the first phase of Phased Reporting, referred to as Phase 2a, 
Large Industry Members and Small Industry OATS Reporters would be 
required to report to the Central Repository ``Phase 2a Industry Member 
Data'' by April 20, 2020.\12\ To implement the Phased Reporting for 
Phase 2a, the Exchange proposes to amend paragraph (t) of Rule 6.6810 
(previously paragraph (s)) and amend paragraphs (c)(1) and (2) of Rule 
6.6895.
---------------------------------------------------------------------------

    \12\ Small Industry Members that are not required to record and 
report information to FINRA's OATS pursuant to applicable SRO rules 
(``Small Industry Non-OATS Reporters'') would be required to report 
to the Central Repository ``Phase 2a Industry Member Data'' by 
December 13, 2021, which is twenty months after Large Industry 
Members and Small Industry OATS Reporters begin reporting.
---------------------------------------------------------------------------

(i) Scope of Reporting in Phase 2a
    To implement the Phased Reporting with respect to Phase 2a, the 
Exchange proposes to add a definition of ``Phase 2a Industry Member 
Data'' as new paragraph (t)(1) of Rule 6.6830. Specifically, the 
Exchange proposes to define the term ``Phase 2a Industry Member Data'' 
as ``Industry Member Data required to be reported to the Central 
Repository commencing in Phase 2a as set forth in the Technical 
Specifications.'' Phase 2a Industry Member Data would include Industry 
Member Data solely related to Eligible Securities that are equities. 
The following summarizes categories of Industry Member Data required 
for Phase 2a; the full requirements are set forth in the Industry 
Member Technical Specifications.\13\
---------------------------------------------------------------------------

    \13\ The items required to be reported commencing in Phase 2a do 
not include the items required to be reported in Phase 2c, as 
discussed below.
---------------------------------------------------------------------------

    Phase 2a Industry Member Data would include all events and 
scenarios covered by OATS. FINRA Rule 7440 describes the OATS 
requirements for recording information, which includes information 
related to the receipt or origination of orders, order transmittal, and 
order modifications, cancellations and executions. Large Industry 
Members and Small Industry OATS Reporters would be required to submit 
data to the CAT for these same events and scenarios during Phase 2a. 
The inclusion of all OATS events and scenarios in the CAT is intended 
to facilitate the retirement of OATS.
    Phase 2a Industry Member Data also would include Reportable Events 
for:
     Proprietary orders, including market maker orders, for 
Eligible Securities that are equities; electronic quotes in listed 
equity Eligible Securities (i.e., NMS stocks) sent to a national 
securities exchange or FINRA's Alternative Display Facility (``ADF'');
     electronic quotes in unlisted Eligible Securities (i.e., 
OTC Equity Securities) received by an Industry Member operating an 
interdealer quotation system (``IDQS''); and
     electronic quotes in unlisted Eligible Securities sent to 
an IDQS or other quotation system not operated by a Participant or 
Industry Member.
    Phase 2a Industry Member Data would include Firm Designated IDs. 
During Phase 2a, Industry Members would be required to report Firm 
Designated IDs to the CAT, as required by paragraphs (a)(1)(A)(i), and 
(a)(2)(C) of Rule 6.6830. Paragraph (a)(1)(A)(i) of Rule 6.6830 
requires Industry Members to submit the Firm Designated ID for the 
original receipt or origination of an order. Paragraph (a)(2)(C) of 
Rule 6.6830 requires Industry Members to record and report to the 
Central Repository, for original receipt and origination of an order, 
the Firm Designated ID if the order is executed, in whole or in part.
    In Phase 2a, Industry Members would be required to report all 
street side representative orders, including both agency and 
proprietary orders and mark such orders as representative orders, 
except in certain limited exceptions as described in the Industry 
Member Technical Specifications. A representative order is an order 
originated in a firm owned or controlled account, including principal, 
agency average price and omnibus accounts, by an Industry Member for 
the purpose of working one or more customer or client orders.
    In Phase 2a, Industry Members would be required to report the link 
between the street side representative order and the order being 
represented when: (1) The representative order was originated 
specifically to represent a single order received either from a 
customer or another broker-dealer; and (2) there is (a) an existing 
direct electronic link in the Industry Member's system between the 
order being represented and the representative order and (b) any 
resulting executions are immediately and automatically applied to the 
represented order in the Industry Member's system.
    Phase 2a Industry Member Data also would include the manual and 
Electronic Capture Time for Manual Order Events. Specifically, for each 
Reportable Event in Rule 6.6830, Industry Members would be required to 
provide a timestamp pursuant to Rule 6.6860. Rule 6.6860(b)(i) states 
that

    Each Industry Member may record and report: Manual Order Events 
to the Central Repository in increments up to and including one 
second, provided that each Industry Members shall record and report 
the time when a Manual Order Event has been captured electronically 
in an order handling and execution system of such Industry Member 
(``Electronic Capture Time'') in milliseconds.

    Accordingly, for Phase 2a, Industry Members would be required to 
provide both the manual and Electronic Capture Time for Manual Order 
Events.\14\
---------------------------------------------------------------------------

    \14\ Industry Members would be required to provide an Electronic 
Capture Time following the manual capture time only for new orders 
that are Manual Order Events and, in certain instances, routes that 
are Manual Order Events. The Electronic Capture Time would not be 
required for other Manual Order Events.
---------------------------------------------------------------------------

    Industry Members would be required to report special handling 
instructions for the original receipt or origination of an order during 
Phase 2a. In addition, during Phase 2a, Industry Members will be 
required to report, when routing an order, whether the order was routed 
as an intermarket sweep order (``ISO''). Industry Members would be 
required to report special handling instructions on routes other than 
ISOs in Phase 2c, rather than in Phase 2a.
    In Phase 2a, Industry Members would not be required to report 
modifications of a previously routed order in certain limited 
instances. Specifically, if a trader or trading software modifies a 
previously routed order, the routing firm is not required to report the 
modification of an order route if the destination to which the order 
was routed is a CAT Reporter that is required to report the 
corresponding order activity. If, however, the order was modified by a 
Customer or other non-CAT Reporter, and subsequently the routing 
Industry Members sends a modification to the destination to which the 
order was originally routed, then the routing Industry Member must 
report the modification of the order route.\15\ In addition, in Phase 
2a, Industry Members would not be required to report a cancellation of 
an order received from a Customer after the order has been executed.
---------------------------------------------------------------------------

    \15\ This approach is comparable to the approach set forth in 
OATS Compliance FAQ 35.
---------------------------------------------------------------------------

(ii) Timing of Phase 2a Reporting
    Pursuant to paragraph (c)(1) of Rule 6.6895, Large Industry Members 
are required to begin reporting to the CAT

[[Page 4035]]

by November 15, 2018. To implement the Phased Reporting for Phase 2b 
for Large Industry Members, the Exchange proposes to replace paragraph 
(c)(1) of Rule 6.6895 with new paragraph (c)(1)(A) of Rule 6.6895, 
which would state, in relevant part, that ``Each Industry Member (other 
than a Small Industry Member) shall record and report the Industry 
Member Data to the Central Repository, as follows: (A) Phase 2a 
Industry Member Data by April 20, 2020.''
    Pursuant to paragraph (c)(2) of Rule 6.6895, Small Industry Members 
are required to begin reporting to the CAT by November 15, 2019. To 
implement the Phased Reporting for Phase 2a for Small Industry Members, 
the Exchange proposes to replace paragraph (c)(2) of Rule 6.6895 with 
new paragraphs (c)(2)(A) and (B) of Rule 6.6895. Proposed new paragraph 
(c)(2)(A) of Rule 6.6895 would state that

    Each Industry Member that is a Small Industry Member shall 
record and report the Industry Member Data to the Central 
Repository, as follows: (A) Small Industry Members that are required 
to record or report information to FINRA's Order Audit Trail System 
pursuant to applicable SRO rules (``Small Industry OATS Reporter'') 
to report to the Central Repository Phase 2a Industry Member data by 
April 20, 2020.

    Proposed new paragraph (c)(2)(B) of Rule 6.6895 would state that 
``Small Industry Members that are not required to record or report 
information to FINRA's Order Audit Trail System pursuant to applicable 
SRO rules (``Small Industry Non-OATS Reporter'') to report to the 
Central Repository Phase 2a Industry Member Data by December 13, 
2021.''
B. Phase 2b
    In the second phase of the Phased Reporting, referred to as Phase 
2b, Large Industry Members would be required to report to the Central 
Repository ``Phase 2b Industry Member Data'' by May 18, 2020. Small 
Industry Members would be required to report to the Central Repository 
``Phase 2b Industry Member Data'' by December 13, 2021, which is 
nineteen months after Large Industry Members begin reporting such data 
to the Central Repository. To implement the Phased Reporting for Phase 
2b, the Exchange proposes to add new paragraph (t)(2) to Rule 6.6810 
and amend paragraphs (c)(1) and (2) of Rule 6.6895.
(i) Scope of Phase 2b Reporting
    To implement the Phased Reporting with respect to Phase 2b, the 
Exchange proposes to add a definition of ``Phase 2b Industry Member 
Data'' as new paragraph (t)(2) of Rule 6.6830. Specifically, the 
Exchange proposes to define the term ``Phase 2b Industry Member Data'' 
as ``Industry Member Data required to be reported to the Central 
Repository commencing in Phase 2b as set forth in the Technical 
Specifications.'' Phase 2b Industry Member Data is described in detail 
in the Industry Member Technical Specifications for Phase 2b. The 
following summarizes the categories of Industry Member Data required 
for Phase 2b; the full requirements are set forth in the Industry 
Member Technical Specifications.
    Phase 2b Industry Member Data would include Industry Member Data 
related to Eligible Securities that are options and related to simple 
electronic option orders, excluding electronic paired option 
orders.\16\ A simple electronic option order is an order to buy or sell 
a single option that is not related to or dependent on any other 
transaction for pricing and timing of execution that is either received 
or routed electronically by an Industry Member. Electronic receipt of 
an order is defined as the initial receipt of an order by an Industry 
Member in electronic form in standard format directly into an order 
handling or execution system. Electronic routing of an order is the 
routing of an order via electronic medium in standard format from one 
Industry Member's order handling or execution system to an exchange or 
another Industry Member. An electronic paired option order is an 
electronic option order that contains both the buy and sell side that 
is routed to another Industry Member or exchange for crossing and/or 
price improvement as a single transaction on an exchange. Responses to 
auctions of simple orders and paired simple orders are also reportable 
in Phase 2b.
---------------------------------------------------------------------------

    \16\ The items required to be reported in Phase 2b do not 
include the items required to be reported in Phase 2d, as discussed 
below in Section A.4.
---------------------------------------------------------------------------

    Furthermore, combined orders in options would be treated in Phase 
2b in the same way as equity representative orders are treated in Phase 
2a. A combined order would mean, as permitted by Exchange rules, a 
single, simple order in Listed Options created by combining individual, 
simple orders in Listed Options from a customer with the same exchange 
origin code before routing to an exchange. During Phase 2b, the single 
combined order sent to an exchange must be reported and marked as a 
combined order, but the linkage to the underlying orders is not 
required to be reported until Phase 2d.
(ii) Timing of Phase 2b Reporting
    Pursuant to paragraph (c)(1) of Rule 6.6895, Large Industry Members 
are required to begin reporting to the CAT by November 15, 2018. To 
implement the Phased Reporting for Phase 2b for Large Industry Members, 
the Exchange proposes to replace paragraph (c)(1) of Rule 6.6895 with 
new paragraph (c)(1)(B) of Rule 6.6895, which would state, in relevant 
part, that ``Each Industry Member (other than a Small Industry Member) 
shall record and report the Industry Member Data to the Central 
Repository, as follows: . . . (B) Phase 2b Industry Member Data by May 
18, 2020.''
    Pursuant to paragraph (c)(2) of Rule 6.6895, Small Industry Members 
are required to begin reporting to the CAT by November 15, 2019. To 
implement the Phased Reporting for Phase 2b for Small Industry Members, 
the Exchange proposes to replace paragraph (c)(2) of Rule 6.6895 with 
new paragraph (c)(2)(C) of Rule 6.6895, which would state, in relevant 
part, that ``Each Industry Member that is a Small Industry Member shall 
record and report the Industry Member Data to the Central Repository, 
as follows: . . . (C) Small Industry Members to report to the Central 
Repository Phase 2b Industry Member Data . . . by December 13, 2021.''
C. Phase 2c
    In the third phase of the Phased Reporting, referred to as Phase 
2c, Large Industry Members would be required to report to the Central 
Repository ``Phase 2c Industry Member Data'' by April 26, 2021. Small 
Industry Members would be required to report to the Central Repository 
``Phase 2c Industry Member Data'' by December 13, 2021, which is seven 
months after Large Industry Members begin reporting such data to the 
Central Repository. To implement the Phased Reporting for Phase 2c, the 
Exchange proposes to add new paragraph (t)(3) of Rule 6.6810 and amend 
paragraphs (c)(1) and (2) of Rule 6.6895.
(i) Scope of Phase 2c Reporting
    To implement the Phased Reporting with respect to Phase 2c, the 
Exchange proposes to add a definition of ``Phase 2c Industry Member 
Data'' as new paragraph (t)(3) of Rule 6.6810. Specifically, the 
Exchange proposes to define the term ``Phase 2c Industry Member Data'' 
as ``Industry Member Data related to Eligible Securities that are 
equities other than Phase 2a Industry Member Data or Phase 2e Industry 
Member Data.'' Phase 2c

[[Page 4036]]

Industry Member Data is described in detail in the Industry Member 
Technical Specifications for Phase 2c. The following summarizes the 
categories of Industry Member Data required for Phase 2c; the full 
requirements are set forth in the Industry Member Technical 
Specifications.
    Phase 2c Industry Member Data would include Industry Member Data 
that is related to Eligible Securities that are equities and that is 
related to: (1) Allocation Reports as required to be recorded and 
reported to the Central Repository pursuant to Section 6.4(d)(ii)(A)(1) 
of the CAT NMS Plan; (2) quotes in unlisted Eligible Securities sent to 
an interdealer quotation system operated by a CAT Reporter; (3) 
electronic quotes in listed equity Eligible Securities (i.e., NMS 
stocks) that are not sent to a national securities exchange or FINRA's 
Alternative Display Facility; (4) reporting changes to client 
instructions regarding modifications to algorithms; (5) marking as a 
representative order any order originated to work a customer order in 
price guarantee scenarios, such as a guaranteed VWAP; (6) flagging 
rejected external routes to indicate a route was not accepted by the 
receiving destination; (7) linkage of duplicate electronic messages 
related to a Manual Order Event between the electronic event and the 
original manual route; (8) special handling instructions on order route 
reports (other than the ISO or short sale exempt, which are required to 
be reported in Phase 2a); (9) a cancellation of an order received from 
a Customer after the order has been executed; (10) reporting of large 
trader identifiers \17\ (``LTID'') (if applicable) for accounts with 
Reportable Events that are reportable to CAT as of and including Phase 
2c; (11) reporting of date account opened or Account Effective Date 
\18\ (as applicable) for accounts and flag indicating the Firm 
Designated ID type as account or relationship; and (12) linkages for 
representative order scenarios involving agency average price trades, 
net trades, and aggregated orders. In Phase 2c, for any scenarios that 
involve orders originated in different systems that are not directly 
linked, such as a customer order originated in an Order Management 
System (``OMS'') and represented by a principal order originated in an 
Execution Management System (``EMS'') that is not linked to the OMS, 
marking and linkages must be reported as required in the Industry 
Member Technical Specifications.
---------------------------------------------------------------------------

    \17\ See definition of ``Customer Account Information'' in 
Section 1.1 of the CAT NMS Plan. See also Rule 13h-1 under the 
Exchange Act.
    \18\ See definition of ``Customer Account Information'' and 
``Account Effective Date'' in Section 1.1 of the CAT NMS Plan. The 
Exchange also proposes to amend the dates in the definitions of 
``Account Effective Date'' and ``Customer Account Information'' to 
reflect the Phased Reporting. Specifically, the Exchange proposes to 
amend paragraph (m)(2) of Rule 6.6810 to replace the references to 
November 15, 2018 and 2019, the prior implementation dates, with 
references to the Phase 2c and Phase 2d. The Exchange also proposes 
to amend paragraphs (a)(1)(A), (a)(1)(B) and (a)(2)-(5) of Rule 
6.6810 regarding the definition of ``Account Effective Date'' with 
similar changes to the dates set forth therein.
---------------------------------------------------------------------------

(ii) Timing of Phase 2c Reporting
    Pursuant to paragraph (c)(1) of Rule 6.6895, Large Industry Members 
are required to begin reporting to the CAT by November 15, 2018. To 
implement the Phased Reporting for Phase 2c for Large Industry Members, 
the Exchange proposes to replace paragraph (c)(1) of Rule 6.6895 with 
new paragraph (c)(1)(C) of Rule 6.6895, which would state, in relevant 
part, that ``Each Industry Member (other than a Small Industry Member) 
shall record and report the Industry Member Data to the Central 
Repository, as follows: . . . (C) Phase 2c Industry Member Data by 
April 26, 2021.''
    Pursuant to paragraph (c)(2) of Rule 6.6895, Small Industry Members 
are required to begin reporting to the CAT by November 15, 2019. To 
implement the Phased Reporting for Phase 2d for Small Industry Members, 
the Exchange proposes to replace paragraph (c)(2) of Rule 6.6895 with 
new paragraph (c)(2)(C) of Rule 6.6895, which would state, in relevant 
part, that ``Each Industry Member that is a Small Industry Member shall 
record and report the Industry Member Data to the Central Repository, 
as follows: . . . (C) Small Industry Members to report to the Central 
Repository . . . Phase 2c Industry Member Data . . . by December 13, 
2021.''
D. Phase 2d
    In the fourth phase of the Phased Reporting, referred to as Phase 
2d, Large Industry Members and Small Industry Members would be required 
to report to the Central Repository ``Phase 2d Industry Member Data'' 
by December 13, 2021. To implement the Phased Reporting for Phase 2d, 
the Exchange proposes to add new paragraph (t)(4) to Rule 6.6810 and 
amend paragraphs (c)(1) and (2) of Rule 6.6895.
(i) Scope of Phase 2d Reporting
    To implement the Phased Reporting with respect to Phase 2d, the 
Exchange proposes to add a definition of ``Phase 2d Industry Member 
Data'' as new paragraph (t)(4) of Rule 6.6810. Specifically, the 
Exchange proposes to define the term ``Phase 2d Industry Member Data'' 
as ``Industry Member Data that is related to Eligible Securities that 
are options other than Phase 2b Industry Member Data or Phase 2e 
Industry Member Data, and Industry Member Data related to all Eligible 
Securities for the modification or cancellation of an internal route of 
an order'' \19\
---------------------------------------------------------------------------

    \19\ The Participants have determined that reporting information 
regarding the modification or cancellation of a route is necessary 
to create the full lifecycle of an order. Accordingly, the 
Participants require the reporting of information related to the 
modification or cancellation of a route similar to the data required 
for the routing of an order and modification and cancellation of an 
order pursuant to Sections 6.3(d)(ii) and (iv) of the CAT NMS Plan.
---------------------------------------------------------------------------

    Phase 2d Industry Member Data is described in detail in the 
Industry Member Technical Specifications for Phase 2d and includes with 
respect to the Eligible Securities that are options: (1) Simple manual 
orders; (2) electronic and paired manual orders; (3) all complex orders 
with linkages to all CAT-reportable legs; (4) LTIDs (if applicable) for 
accounts with Reportable Events for Phase 2d; (5) date account opened 
or Account Effective Date (as applicable) for accounts and flag 
indicating the Firm Designated ID type as account or relationship; \20\ 
and (5) Allocation Reports as required to be recorded and reported to 
the Central Repository pursuant to Section 6.4(d)(ii)(A)(1) of the CAT 
NMS Plan. In addition, it includes Industry Member Data related to all 
Eligible Securities for the modification or cancellation of an internal 
route of an order.
---------------------------------------------------------------------------

    \20\ As noted above, the Exchange also proposes to amend the 
dates in the definitions of ``Account Effective Date'' and 
``Customer Account Information'' to reflect the Phased Reporting. 
Specifically, the Exchange proposes to amend paragraph (m)(2) of 
Rule 6.6810 to replace the references to November 15, 2018 and 2019, 
the prior implementation dates, with references to the Phase 2c and 
Phase 2d. The Exchange also proposes to amend paragraphs (a)(1)(A), 
(a)(1)(B) and (a)(2)-(5) of Rule 6.6810 regarding the definition of 
``Account Effective Date'' with similar changes to the dates set 
forth therein.
---------------------------------------------------------------------------

(ii) Timing of Phase 2d Reporting
    Pursuant to paragraph (c)(1) of Rule 6.6895, Large Industry Members 
are required to begin reporting to the CAT by November 15, 2018. To 
implement the Phased Reporting for Phase 2d for Large Industry Members, 
the Exchange proposes to replace paragraph (c)(1) of Rule 6.6895 with 
new paragraph (c)(1)(D) of Rule 6.6895, which would state, in relevant 
part, that ``[e]ach Industry Member (other than a Small Industry 
Member) shall record and report the Industry Member Data to the Central 
Repository, as follows: . . . (D)

[[Page 4037]]

Phase 2d Industry Member Data by December 13, 2021.''
    Pursuant to paragraph (c)(2) of Rule 6.6895, Small Industry Members 
are required to begin reporting to the CAT by November 15, 2019. To 
implement the Phased Reporting for Phase 2d for Small Industry Members, 
the Exchange proposes to replace paragraph (c)(2) of Rule 6.6895 with 
new paragraph (c)(2)(C) of Rule 6.6895, which would state, in relevant 
part, that ``Each Industry Member that is a Small Industry Member shall 
record and report the Industry Member Data to the Central Repository, 
as follows: . . . (C) Small Industry Members to report to the Central 
Repository . . . Phase 2d Industry Member Data by December 13, 2021.''
E. Phase 2e
    In the fifth phase of Phased Reporting, referred to as Phase 2e, 
both Large Industry Members and Small Industry Members would be 
required to report to the Central Repository ``Phase 2e Industry Member 
Data'' by July 11, 2022. To implement the Phased Reporting for Phase 
2e, the Exchange proposes to add new paragraph (t)(5) to Rule 6.6810 
and amend paragraphs (c)(1) and (2) of Rule 6.6895.
(i) Scope of Phase 2e Reporting
    To implement the Phased Reporting with respect to Phase 2e, the 
Exchange proposes to add a definition of ``Phase 2e Industry Member 
Data'' as new paragraph (t)(5) of Rule 6.6810. Specifically, the 
Exchange proposes to define the term ``Phase 2e Industry Member Data'' 
as ``Customer Account Information and Customer Identifying Information, 
other than LTIDs, date account opened/Account Effective Date and Firm 
Designated ID type flag previously reported to the CAT.'' LTIDs and 
Account Effective Date are both required to be reported in Phases 2c 
and 2d in certain circumstances, as discussed above. The terms 
``Customer Account Information'' and ``Customer Identifying 
Information'' are defined in Rule 6.6810 of the Compliance Rule.\21\
---------------------------------------------------------------------------

    \21\ The term ``Customer Account Information'' includes account 
numbers, and the term ``Customer Identifying Information'' includes, 
with respect to individuals, individual tax payer identification 
numbers and Social Security Numbers (collectively, ``SSNs''). See 
Rule 6.6810. The Participants have requested exemptive relief from 
the requirements for the Participants to require their members to 
provide dates of birth, account numbers and Social Security Numbers 
for individuals to the CAT. See Letter from Michael Simon, CAT NMS 
Plan Operating Committee Chair, to Vanessa Countryman, SEC, Request 
for Exemptive Relief from Certain Provisions of the CAT NMS Plan 
related to Social Security Numbers, Dates of Birth and Account 
Numbers (Oct. 16, 2019), available at https://www.catnmsplan.com/wpcontent/uploads/2019/10/CCID-and-PII-Exemptive-Request-Oct-16-2019.pdf. If this requested relief is granted, Phase 2e Industry 
Member Data will not include account numbers, dates of birth and 
SSNs for individuals.
---------------------------------------------------------------------------

(ii) Timing of Phase 2e Reporting
    Pursuant to paragraph (c)(1) of Rule 6.6895, Large Industry Members 
are required to begin reporting to the CAT by November 15, 2018. To 
implement the Phased Reporting for Phase 2e for Large Industry Members, 
the Exchange proposes to replace paragraph (c)(1) of Rule 6.6895 with 
new paragraph (c)(1)(E) of Rule 6.6895, which would state, in relevant 
part, that ``[e]ach Industry Member (other than a Small Industry 
Member) shall record and report the Industry Member Data to the Central 
Repository, as follows: . . . (E) Phase 2e Industry Member Data by July 
11, 2022.''
    Pursuant to paragraph (c)(2) of Rule 6.6895, Small Industry Members 
are required to begin reporting to the CAT by November 15, 2019. To 
implement the Phased Reporting for Phase 2e for Small Industry Members, 
the Exchange proposes to replace paragraph (c)(2) of Rule 6.6895 with 
new paragraph (c)(2)(D) of Rule 6.6895, which would state, in relevant 
part, that ``[e]ach Industry Member that is a Small Industry Member 
shall record and report the Industry Member Data to the Central 
Repository, as follows: . . . (E) Small Industry Members to report to 
the Central Repository Phase 2e Industry Member Data by July 11, 
2022.''
F. Industry Member Testing Requirements
    Rule 6.6880(a) sets forth various compliance dates for the testing 
and development for connectivity, acceptance and the submission order 
data. In light of the intent to shift to Phased Reporting in place of 
the two specified dates for the commencement of reporting for Large and 
Small Industry Members, the Exchange correspondingly proposes to 
replace the Industry Member development testing milestones in Rule 
6.6880(a) with the testing milestones set forth in the proposed request 
for exemptive relief. Specifically, the Exchange proposes to replace 
Rules 6.6880(a)(1)-(4) with proposed new Rule 6.6880(a)(1) through (8).
    Proposed new Rule 6.6880(a)(1) would provide that ``Industry Member 
file submission and data integrity testing for Phases 2a and 2b shall 
begin in December 2019.'' Proposed new Rule 6.6880(a)(2) would provide 
that ``Industry Member testing of the Reporter Portal, including data 
integrity error correction tools and data submissions, shall begin in 
February 2020.'' Proposed new Rule 6.6880(a)(3) would provide that 
``The Industry Member test environment shall open with intra-firm 
linkage validations to Industry Members for both Phases 2a and 2b in 
April 2020.'' Proposed new Rule 6.6880(a)(4) would provide that ``The 
Industry Member test environment shall open to Industry Members with 
inter-firm linkage validations for both Phases 2a and 2b in July 
2020.'' Proposed new Rule 6.6880(a)(5) would provide that ``The 
Industry Member test environment shall open to Industry Members with 
Phase 2c functionality (full representative order linkages) in January 
2021.'' Proposed new Rule 6.6880(a)(6) would provide that ``The 
Industry Member test environment shall open to Industry Members with 
Phase 2d functionality (manual options orders, complex options orders, 
and options allocations) in June 2021.'' Proposed new Rule 6.6880(a)(7) 
would provide that ``Participant exchanges that support options market 
making quoting shall begin accepting Quote Sent Time on quotes from 
Industry Members no later than April 2020.'' Finally, proposed new Rule 
6.6880(a)(8) would provide that ``The Industry Member test environment 
(customer and account information) will be open to Industry Members in 
January 2022.''
v. FINRA Facility Data Linkage
    The Participants intend to file with the Commission a request for 
exemptive relief from certain provisions of the CAT NMS Plan to allow 
for an alternative approach to the reporting of clearing numbers and 
cancelled trade indicators. Under this alternative approach, FINRA 
would report to the Central Repository data collected by FINRA's Trade 
Reporting Facilities, FINRA's OTC Reporting Facility or FINRA's 
Alternative Display Facility (collectively, ``FINRA Facility'') 
pursuant to applicable SRO rules (``FINRA Facility Data''). Included in 
this FINRA Facility Data would be the clearing number of the clearing 
broker in place of the SRO-Assigned Market Participant Identifier of 
the clearing broker required to be reported to the Central Repository 
pursuant to Section 6.4(d)(ii)(A)(2) of the CAT NMS Plan as well as the 
cancelled trade indicator required to be reported to the Central 
Repository pursuant to Section 6.4(d)(ii)(B) of the CAT NMS Plan. The 
process would link the FINRA Facility Data to the related execution 
reports reported by Industry Members. To implement this approach, the 
Participants request exemptive relief

[[Page 4038]]

from the requirement in Sections 6.4(d)(ii)(A)(2) and (B) of the CAT 
NMS Plan to require, through their Compliance Rules, that Industry 
Members record and report to the Central Repository: (1) If the order 
is executed, in whole or in part, the SRO-Assigned Market Participant 
Identifier of the clearing broker, if applicable; and (2) if the trade 
is cancelled, a cancelled trade indicator. As conditions to this 
exemption, the Participants would require Industry Members to submit a 
trade report for a trade and, if the trade is cancelled, a cancellation 
to a FINRA Facility pursuant to applicable SRO rules, and to report the 
corresponding execution to the Central Repository. In addition, the 
Participants' Compliance Rules would provide that if an Industry Member 
does not submit a cancellation to a FINRA Facility, then the Industry 
Member would be required to record and report to the Central Repository 
a cancelled trade indicator if the trade is cancelled. As a result, the 
Exchange proposes to amend its Compliance Rule to reflect the request 
for exemptive relief to implement this alternative approach.
    Specifically, the Exchange proposes to require Industry Members to 
report to the CAT with an execution report the unique trade identifier 
reported to a FINRA facility with the corresponding trade report. For 
example, the unique trade identifier for the OTC Reporting Facility and 
the Alternative Display Facility would be the Compliance ID, for the 
FINRA/Nasdaq Trade Reporting Facility, it would be the Branch Sequence 
Number, and for the FINRA/NYSE Trade Reporting Facility, it would be 
the FINRA Compliance Number. This unique trade identifier would be used 
to link the FINRA Facility Data with the execution report in the CAT. 
Specifically, the Exchange proposes to add a new paragraph to (a)(2)(E) 
to Rule 6.6830, which states that:
    (F) If an Industry Member is required to submit and submits a trade 
report for a trade to one of FINRA's Trade Reporting Facilities, OTC 
Reporting Facility or Alternative Display Facility pursuant to 
applicable SRO rules, and the Industry Member is required to report the 
corresponding execution to the Central Repository:
    (1) The Industry Member is required to report to the Central 
Repository the unique trade identifier reported by the Industry Member 
to such FINRA facility for the trade when the Industry Member reports 
the execution of an order pursuant to Rule 6.6830(a)(1)(E);
    The Exchange also proposes to relieve Industry Members of the 
obligation to report to the CAT data related to clearing brokers and 
trade cancellations pursuant to Rules 6.6830(a)(2)(A)(ii) and (B), 
respectively, as this data will be reported by FINRA to the CAT. 
Accordingly, the Exchange proposes new paragraphs (a)(1)(E)(2) and (3) 
of Rule 6.6830, which states that, ``if an Industry Member is required 
to submit and submits a trade report for a trade to one of FINRA's 
Trade Reporting Facilities, OTC Reporting Facility or Alternative 
Display Facility pursuant to applicable SRO rules, and the Industry 
Member is required to report the corresponding execution to the Central 
Repository:'' ``the Industry Member is not required to submit the SRO-
Assigned Market Participant Identifier of the clearing broker pursuant 
to Rule 6.6830(a)(2)(A)(ii)'' and ``if the trade is cancelled and the 
Industry Member submits the cancellation to one of FINRA's Trade 
Reporting Facilities, OTC Reporting Facility or Alternative Display 
Facility pursuant to applicable SRO rules, the Industry Member is not 
required to submit the cancelled trade indicator pursuant to Rule 
6.6830(a)(2)(B), but is required to submit the time of cancellation to 
the Central Repository.''
vi. Granularity of Timestamps
    The Participants intend to file with the Commission a request for 
exemptive relief from the requirement in Section 6.8(b) of the CAT NMS 
Plan for each Participant, through its Compliance Rule, to require 
that, to the extent that its Industry Members utilize timestamps in 
increments finer than nanoseconds in their order handling or execution 
systems, such Industry Members utilize such finer increment when 
reporting CAT Data to the Central Repository. As a condition to this 
exemption, the Participants, through their Compliance Rules, will 
require Industry Members that capture timestamps in increments more 
granular than nanoseconds to truncate the timestamps, after the 
nanosecond level for submission to CAT, not round up or down in such 
circumstances. As a result, the Exchange proposes to amend its 
Compliance Rule to reflect the proposed exemptive relief.
    Specifically, the Exchange proposes to amend paragraph (a)(2) of 
Rule 6.6860. Rule 6.6860(a)(2) states that

    Subject to paragraph (b), to the extent that any Industry 
Member's order handling or execution systems utilize time stamps in 
increments finer than milliseconds, such Industry Member shall 
record and report Industry Member Data to the Central Repository 
with time stamps in such finer increment.

    The Exchange proposes to amend this provision by adding the phrase 
``up to nanoseconds'' to the end of the provision.
vii. Relationship IDs
    The Participants intend to file with the Commission a request for 
exemptive relief from certain provisions of the CAT NMS Plan to address 
circumstances in which an Industry Member uses an established trading 
relationship for an individual Customer (rather than an account) on the 
order reported to the CAT. Specifically, in this exemptive relief, the 
Participants request an exemption from the requirement in Section 
6.4(d)(ii)(C) of the CAT NMS Plan for each Participant to require, 
through its Compliance Rules, its Industry Members to record and report 
to the Central Repository the account number, the date account opened 
and account type for the relevant individual Customer. As conditions to 
this exemption, each Participant would require, through its Compliance 
Rules, its Industry Members to record and report to the Central 
Repository for the original receipt or origination of an order: (i) The 
relationship identifier in lieu of the ``account number;'' (ii) the 
``account type'' as a ``relationship;'' and (iii) the Account Effective 
Date in lieu of the ``date account opened.''
    With regard to the third condition, an Account Effective Date would 
depend upon when the trading relationship was established. When the 
trading relationship was established prior to the implementation date 
of the CAT NMS Plan applicable to the relevant Industry Member, the 
Account Effective Date would be either the date the relationship 
identifier was established within the Industry Member, or the date when 
trading began (i.e., the date the first order was received) using the 
relevant relationship identifier. If both dates are available, the 
earlier date will be used to the extent that the dates differ. When the 
trading relationship was established on or after the implementation 
date of the CAT NMS Plan applicable to the relevant Industry Member, 
the Account Effective Date would be the date the Industry Member 
established the relationship identifier, which would be no later than 
the date the first order was received. This definition of the Account 
Effective Date is the same as the definition of the ``Account Effective 
Date'' in paragraph (a) of the definition of ``Account Effective Date'' 
in Section 1.1 of the CAT NMS Plan except it would apply with regard to 
those circumstances in which an Industry Member has established a 
trading relationship with an individual, instead of an institution. 
Such exemptive relief would be the

[[Page 4039]]

same as the SEC provided with regard to institutions in its 2016 
Exemptive Order granting exemptions from certain provisions of Rule 613 
under the Exchange Act.\22\
---------------------------------------------------------------------------

    \22\ 2016 Exemptive Order at 11861-11862.
---------------------------------------------------------------------------

    As a result, the Exchange proposes to amend its Compliance Rule to 
reflect the exemptive relief request. Specifically, the Exchange 
proposes to amend paragraphs (a)(1) and paragraph (m) (previously (l)) 
of Rule 6.6810.
    The definition of Customer Account Information in Rule 6.6810(m) 
states that in those circumstances in which an Industry Member has 
established a trading relationship with an institution but has not 
established an account with that institution, the Industry Member will 
provide the Account Effective Date in lieu of the ``date account 
opened'', provide the relationship identifier in lieu of the ``account 
number''; and identify the ``account type'' as ``relationship.'' The 
Exchange proposes to extend this provision to apply to trading 
relationships with individuals as well as institutions. Specifically, 
the Exchange proposes to revise paragraph (m)(1) of Rule 6.6810 to 
state the following:

    (1) In those circumstances in which an Industry Member has 
established a trading relationship with an institution or an 
individual but has not established an account with that institution 
or individual, the Industry Member will: (A) Provide the Account 
Effective Date in lieu of the ``date account opened''; (B) provide 
the relationship identifier in lieu of the ``account number''; and 
(C) identify the ``account type'' as a ``relationship''.

    Similarly, the Exchange proposes to amend the definition of 
``Account Effective Date'' as set forth in Rule 6.6810(a) to apply to 
circumstances in which an Industry Member has established a trading 
relationship with an individual in addition to institutions. 
Specifically, the Exchange proposes to revise paragraph(a)(1) of Rule 
6.6810 to state ``with regard to those circumstances in which an 
Industry Member has established a trading relationship with an 
institution or an individual but has not established an account with 
that institution or individual.''
viii. CCID/PII
    On October 16, 2019, the Participants filed with the Commission a 
request for exemptive relief from certain requirements related to SSNs, 
dates of birth and account numbers for individuals in the CAT NMS 
Plan.\23\ Specifically, to implement the CCID Alternative and the 
Modified PII Approach, the Participants requested exemptive relief from 
the requirement in Section 6.4(d)(ii)(C) of the CAT NMS Plan to 
require, through their Compliance Rules, Industry Members to record and 
report to the Central Repository for the original receipt of an order 
SSNs, dates of birth and account numbers for individuals. As a result, 
the Exchange proposes to amend its Compliance Rule to reflect the 
exemptive relief request. NYSE Chicago Rule 6.6830(a)(2)(C) states that
---------------------------------------------------------------------------

    \23\ See Letter to Vanessa Countryman, Secretary, SEC, from 
Michael Simon, CAT NMS Plan Operating Committee Chair, re: Request 
for Exemptive Relief from Certain Provisions of the CAT NMS Plan 
related to Social Security Numbers, Dates of Birth and Account 
Numbers (Oct. 16, 2019).

    [s]ubject to paragraph (3) below, each Industry Member shall 
record and report to the Central Repository the following, as 
applicable (``Received Industry Member Data'' and collectively with 
the information referred to in Rule 6.6830(a)(1) ``Industry Member 
Data'')) in the manner prescribed by the Operating Committee 
pursuant to the CAT NMS Plan: . . . (C) for original receipt or 
origination of an order, . . . and in accordance with Rule 6.6840, 
Customer Account Information and Customer Identifying Information 
---------------------------------------------------------------------------
for the relevant Customer.

    Rule 6.6810(n) (previously Rule 6.6810(m)), in turn, defines 
``Customer Identifying Information'' to include, with respect to 
individuals, ``date of birth, individual tax payer identification 
number (``ITIN'')/social security number (``SSN'').'' In addition, Rule 
6.6810(m) (previously Rule 6.6810(l)) defines ``Customer Account 
Information'' to include account numbers for individuals. Accordingly, 
the Exchange proposes to delete ``date of birth, individual tax payer 
identification number (``ITIN'')/social security number (``SSN'')'' 
from the definition of ``Customer Identifying Information'' in Rule 
6.6830(a)(2)(C) and to delete account numbers for individuals from the 
definition of ``Customer Account Information.'' The Exchange proposes 
to amend the definition of ``Customer Account Information'' to include 
only account numbers other than for individuals. With these changes, 
Industry Members would not be required to report to the Central 
Repository dates of birth, SSNs or account numbers for individuals 
pursuant to Rule 6.6830(a)(2)(C).
2. Statutory Basis
    NYSE Chicago believes that the proposed rule change is consistent 
with the provisions of Section 6(b)(5) of the Act,\24\ which require, 
among other things, that the Exchange's rules must be designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, and, in general, to protect 
investors and the public interest, and Section 6(b)(8) of the Act,\25\ 
which requires that the Exchange's rules not impose any burden on 
competition that is not necessary or appropriate.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b)(6).
    \25\ 15 U.S.C. 78f(b)(8)
---------------------------------------------------------------------------

    NYSE Chicago believes that this proposal is consistent with the Act 
because it is consistent with certain proposed amendments to and 
exemptions from the CAT NMS Plan, because it facilitates the retirement 
of certain existing regulatory systems, and is designed to assist the 
Exchange and its Industry Members in meeting regulatory obligations 
pursuant to the Plan. In approving the Plan, the SEC noted that the 
Plan ``is necessary and 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.'' \26\ To the extent that this proposal implements the 
Plan, including the proposed amendments and exemptive relief, and 
applies specific requirements to Industry Members, the Exchange 
believes that this proposal furthers the objectives of the Plan, as 
identified by the SEC, and is therefore consistent with the Act.
---------------------------------------------------------------------------

    \26\ Approval Order at 84697.
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NYSE Chicago does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. NYSE Chicago 
notes that the proposed rule changes are consistent with certain 
proposed amendment to and exemptions from the CAT NMS Plan, facilitate 
the retirement of certain existing regulatory systems, and are designed 
to assist the Exchange in meeting its regulatory obligations pursuant 
to the Plan. NYSE Chicago also notes that the amendments to the 
Compliance Rules will apply equally to all Industry Members that trade 
NMS Securities and OTC Equity Securities. In addition, all national 
securities exchanges and FINRA are proposing these amendments to their 
Compliance Rules. Therefore, this is not a competitive rule filing, 
and, therefore, it

[[Page 4040]]

does not impose a burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as modified by Amendment No. 1, is consistent with the Act. 
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSECHX-2020-01 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 Number SR-NYSECHX-2020-01. 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 (https://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 principal office of the Exchange. 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 SR-NYSECHX-2020-01 and should be submitted 
on or before February 13, 2020.
---------------------------------------------------------------------------

    \27\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\27\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-01032 Filed 1-22-20; 8:45 am]
BILLING CODE 8011-01-P