Consolidated Tape Association; Order Instituting Proceedings To Determine Whether To Approve or Disapprove the Thirty-Seventh Substantive Amendment to the Second Restatement of the CTA Plan and Twenty-Eighth Substantive Amendment to the Restated CQ Plan, 11748-11755 [2022-04335]
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Federal Register / Vol. 87, No. 41 / Wednesday, March 2, 2022 / Notices
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.57
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2022–04211 Filed 3–1–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94310; File No. SR–CTA/
CQ–2021–02]
Consolidated Tape Association; Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove the
Thirty-Seventh Substantive
Amendment to the Second
Restatement of the CTA Plan and
Twenty-Eighth Substantive
Amendment to the Restated CQ Plan
February 24, 2022.
I. Introduction
On November 5, 2021,1 the
Participants 2 in the Second Restatement
of the Consolidated Tape Association
(‘‘CTA’’) Plan and Restated
Consolidated Quotation (‘‘CQ’’) Plan
(collectively ‘‘CTA/CQ Plans’’ or
17 CFR 200.30–3(a)(12).
Letter from Robert Books, Chair, CTA/CQ
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’’).
57
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1 See
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‘‘Plans’’) 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
Amendments’’) to amend the Plans to
implement the non-fee-related aspects
of the Commission’s Market Data
Infrastructure Rules (‘‘MDI Rules’’).6
The Proposed Amendments were
published for comment in the Federal
Register on November 29, 2021.7
This order institutes proceedings,
under Rule 608(b)(2)(i) of Regulation
NMS,8 to determine whether to
disapprove the Proposed Amendments
or to approve the Proposed
Amendments with any changes or
subject to any conditions the
Commission deems necessary or
appropriate after considering public
comment.
II. Summary of the Proposed
Amendments 9
The Participants propose to amend
the Plans to comply with Rule 614(e) 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
3 The CTA Plan, pursuant to which markets
collect and disseminate last-sale price information
for non-Nasdaq-listed securities, is a ‘‘transaction
reporting plan’’ under Rule 601 of Regulation NMS,
17 CFR 242.601, and a ‘‘national market system
plan’’ under Rule 608 of Regulation NMS, 17 CFR
242.608. The CQ Plan, pursuant to which markets
collect and disseminate bid/ask quotation
information for non-Nasdaq-listed securities, is a
‘‘national market system plan’’ under Rule 608
under the Act, 17 CFR 242.608. See Securities
Exchange Act Release Nos. 10787 (May 10, 1974),
39 FR at 17799 (May 20, 1974) (declaring the CTA
Plan effective); 15009 (July 28, 1978), 43 FR at
34851 (Aug. 7, 1978) (temporarily authorizing the
CQ Plan); and 16518 (Jan. 22, 1980), 45 FR at 6521
(Jan. 28, 1980) (permanently authorizing the CQ
Plan). The most recent restatement of both Plans
was in 1995.
4 15 U.S.C 78k–1(a)(3).
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. 93615
(Nov. 19, 2021), 86 FR 67800 (Nov. 29, 2021)
(‘‘Notice’’). Comments received in response to the
Notice are available at https://www.sec.gov/
comments/sr-ctacq-2021-02/srctacq202102.htm.
8 17 CFR 242.608(b)(2)(i).
9 The full text of the Proposed Amendments
appear as Attachments A and B to the Notice. See
Notice, supra note 7, 86 FR at 67802–29.
10 17 CFR 242.614(e). The Participants have
submitted separate amendments to implement the
fee-related aspects of the MDI Rules. See Securities
Exchange Act Release No. 93625 (Nov. 19, 2021),
86 FR 67517 (Nov. 26, 2021) (File No. SR–CTA/CQ–
2021–03).
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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
Plans by the Proposed Amendments.
CTA Plan Proposed Amendments
Preface
Under the Proposed Amendments, the
CTA 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.’’
Section I.—Definitions
The Proposed Amendments add a
definition of ‘‘Primary Listing
Exchange,’’ as new Section I.(x), 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
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more than one national securities
exchange, Primary Listing Exchange
means the exchange on which the
security has been listed the longest.’’
Section IV.—Administration of the CTA
Plan
The Proposed Amendments add new
Section IV.(e), Plan website Disclosures,
requiring CTA to publish on the CTA
Plan’s website the Primary Listing
Exchange for each Eligible Security,
and, on a monthly basis, the
consolidated market data gross revenues
for Eligible Securities as specified by
Tape A and Tape B securities. The
Participants explain that this addition is
intended to comply with Rule 614(e)(4)
and Rule 614(e)(5)(i) and (iii).11
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Section V.—The Processor and
Competing Consolidators
The Proposed Amendments amend
the title of Section V. to include
competing consolidators, such that it is
now titled ‘‘The Processor and
Competing Consolidators’’ and add new
Section V.(f), Evaluation of Competing
Consolidators, to require the Operating
Committee to assess the performance of
competing consolidators on an annual
basis and to submit an annual report to
the Commission containing the
assessment. The Proposed Amendments
require this annual report to include an
analysis with respect to competing
consolidators’ speed, reliability, and
cost of data provision. The Participants
explain that these additions are
intended to comply with the
requirements of Rule 614(e)(3).12
In addition, the Proposed
Amendments require 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).13 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.14 The Proposed Amendments
add the following monthly performance
metrics to this section:
(i) Capacity statistics, including
system tested capacity, system output
capacity, total transaction capacity, and
total transaction peak capacity;
(ii) Message rate and total statistics,
including peak output rates on the
following bases: 1-millisecond, 10millisecond, 100-millisecond, 500millisecond, 1-second, and 5-second;
11 See
Notice, supra note 7, 86 FR at 67800.
id.
13 17 CFR 242.614(d)(5).
14 Id.
12 See
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(iii) System availability statistics,
including system up-time percentage
and cumulative amount of outage time;
(iv) Network delay statistics,
including quote and trade zero window
size events, quote and trade retransmit
events, and quote and trade message
total; and
(v) Latency statistics, including
distribution statistics up to the 99.99th
percentile, for the following:
(A) When a Participant sends an
inbound message to a competing
consolidator and when the competing
consolidator receives the inbound
message;
(B) 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
(C) 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 V. to
define the monthly performance metrics
in accordance with Rule 614(d)(5).15
Section VI.—Consolidated Tape
The Proposed Amendments amend
Section VI.(c), Reporting Format and
Technical Specifications, to include a
reference to competing consolidators
and self-aggregators such that last sale
price information relating to a
completed transaction in an Eligible
Security reported to competing
consolidators and self-aggregators by
any Participant or other reporting party
shall be in the format required in
Section VI.(c).
In addition, the Proposed
Amendments amend Section VI.(c) to
delete from the required format the time
of the transaction (reported in
microseconds) as identified in the
Participant’s matching engine
publication timestamp, and replace it
with the time the last sale price
information was generated by the
Participant (reported in microseconds).
Furthermore, the Proposed
Amendments amend Section VI.(c) to
add to the required format, with respect
to reports to competing consolidators
and self-aggregators, the time the
Participant made the last sale price
information available to competing
consolidators and self-aggregators
(reported in microseconds). The
Participants explain that the proposed
references to competing consolidators
and self-aggregators and the proposed
requirement to report in microseconds
the time that a Participant made the last
sale price information available to
competing consolidators and selfaggregators are intended to comply with
Rule 614(e)(1) and (2).16
With respect to FINRA, the Proposed
Amendments amend a statement in
Section VI.(c) that the time of the
transaction shall be the time of
execution that a FINRA member reports
to a FINRA trade reporting facility in
accordance with FINRA rules. The
Proposed Amendments change this
statement to state that the time the last
sale price information was generated by
a Participant shall be the time that a
FINRA member reports to a FINRA trade
reporting facility in accordance with
FINRA rules. The Proposed
Amendments also add references to
competing consolidators and selfaggregators such 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 selfaggregators, then the FINRA trade
reporting facility shall also furnish the
Processor, competing consolidators, and
self-aggregators with the time of the
transmission as published on the
facility’s proprietary feed.
The Proposed Amendments also
delete Section VI.(g), ITS Transactions,
which concerns last sale prices
reflecting ITS transactions. The
Participants explain that they are
proposing to remove this provision
because the ITS is obsolete.17
Section VIII. Collection and Reporting of
Last Sale Data
The Proposed Amendments amend
Section VIII.(a), Responsibility of
Exchange Participants, to remove a list
of exchange participants and the
requirement that each collects and
reports to the Processor all last sale
price information to be reported to it
relating to transactions in Eligible
Securities taking place on its floor. The
Proposed Amendments amend this
statement to state that each Participant
agrees to collect and report to the
Processor all last sale price information
to be reported by it relating to
transactions in Eligible Securities.
The Proposed Amendments also add
a statement that each Participant further
agrees to collect and report to competing
consolidators and self-aggregators all
last sale price information to be reported
to it related to transactions in Eligible
Securities in the same manner and using
16 See
15 See
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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 Eligible
Securities to any person.18 In addition,
the Proposed Amendments amend
Section VIII.(b), FINRA Responsibility,
to add references to competing
consolidators and self-aggregators such
that the provision states: ‘‘The FINRA
shall develop and adopt rules governing
the reporting of last sale price
information to be reported by its
members to both the Processor for
inclusion on the consolidated tape and
to Competing Consolidators and SelfAggregators. Such rules shall . . . (ii) be
designed to avoid duplicate reporting of
transactions on the consolidated tape or
to Competing Consolidators and Self
Aggregator . . .’’ The Participants
explain that these additions are
designed to comply with Rule
614(e)(1).19
Finally, the Proposed Amendments
delete Section VIII.(c), Description of
Reporting Procedures, which states that
each Participant and each other
reporting party has prepared and
submitted to CTA and the Commission
a description of the procedures by
which it collects and reports to the
Processor last sale price information
reported by it pursuant to the CTA Plan.
The Participants explain that this
provision is no longer relevant under
the MDI Rules.20
Section IX.—Receipt and Use of CTA
Information
In Sections IX.(a), Requirements for
Receipt and Use of Information, (b),
Approvals of Redisseminators and
Terminations of Approvals, and (c),
Subscriber Terminations, the Proposed
Amendments replace several references
to ‘‘each CTA network’s information,’’
‘‘a CTA network’s information,’’ ‘‘that
CTA network’s information,’’ and ‘‘that
CTA network’s last sale price
information’’ with the term
‘‘consolidated market data’’.
The Proposed Amendments also
amend Section IX.(a) to include
references to competing consolidators
and self-aggregators. Proposed Section
IX.(a) states that, ‘‘[p]ursuant to fair and
reasonable terms and conditions, each
CTA network’s administrator shall
provide for: (i) The dissemination of
consolidated market data on terms that
18 The Proposed Amendments also delete the
following statement from Section VIII.(a): ‘‘CTA
shall seek to reduce the time period for reporting
last sale prices to the Processor as conditions
warrant.’’
19 See Notice, supra note 7, 86 FR at 67801.
20 See id.
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are not unreasonably discriminatory to
Competing Consolidators, SelfAggregators, vendors, newspapers,
Participants, Participant members and
member organizations, and other
persons over that network’s ticker and
over the high speed line; and (ii) the use
of consolidated market data by
Competing Consolidators, SelfAggregators, vendors, subscribers,
newspapers, Participants, Participant
members and member organizations and
other persons.’’ Additionally, the
section now states that each CTA
network’s Participants will determine
the terms and conditions applying in
respect of a particular manner of receipt
or use of consolidated market data
including whether the manner of receipt
or use will require recipients or users to
enter into agreements with the CTA
network’s administrator, and that these
determinations will be made in a
reasonably uniform manner to subject
all parties that receive or use
consolidated market data in a particular
manner to terms and conditions that are
substantially similar.
In addition, the Proposed
Amendments amend Section IX.(a) to
state that the Participants expect their
CTA network’s administrator to require
the following parties to enter into
agreements with the CTA network
administrator: (i) Any party that
receives a CTA network’s information
by means of a direct computer-tocomputer interface with the Processor or
competing consolidator; (ii) any
competing consolidator or selfaggregator that receives last sale
transaction information directly from a
Participant for the purpose of creating
consolidated market data; (iii) vendors
and other parties that redisseminate
consolidated market data to others; and
(iv) persons that use consolidated
market data for such purposes as that
CTA network’s administrator may from
time to time identify.
The Participants explain that the
proposed revisions to Section IX.(a)
intend to make clear that the current
market data contracts regarding the
receipt of market data will be applicable
to competing consolidators and selfaggregators.21 They believe that the
change is consistent with Rule 614(e)(1)
and is necessary, stating that competing
consolidators and self-aggregators
would be receiving and using
consolidated market data and should be
subject to the same contracts applicable
to vendors and subscribers.22
The Proposed Amendments amend
Section XI.(b), Approvals of
21 See
22 See
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id.
id.
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Redisseminators and Terminations of
Approvals, to state that all vendors and
other parties that redisseminate
consolidated market data (‘‘data
redisseminators’’) shall be required to be
approved by a CTA network’s
administrator. Additionally, the
Proposed Amendments amend Section
XI.(c), Subscriber Terminations, to state
that a CTA network’s administrator may
determine that circumstances warrant
directing a data redisseminator to cease
providing consolidated market data to a
subscriber, and that the CTA network’s
Participants may direct the data
redisseminator to cease providing
consolidated market data to the
subscriber if a majority of those
Participants determine that (i) such
action is necessary or appropriate in the
public interest or for the protection of
investors, or (ii) the subscriber has
breached any agreement required by the
CTA network’s administrator pursuant
to Section IX.
Section XI.—Operational Matters
The Proposed Amendments delete
from Section XI.(a), Regulatory and
Operational Halts, the definition of
‘‘Primary Listing Market’’ in Section
XI.(a)(i)(H) and the definition of
‘‘Trading Center’’ in Section XI.(a)(i)(N).
The Proposed Amendments add a
reference to competing consolidators
and self-aggregators to Section XI.(a)(ii),
Operational Halts, to state that a
Participant shall notify competing
consolidators and self-aggregators if it
has concerns about its ability to collect
and transmit quotes, orders or last sale
prices, or where the Participant has
declared an Operational Halt or
suspension of trading in one or more
Eligible Securities, pursuant to the
procedures adopted by the Operating
Committee. In addition, the Proposed
Amendments add a reference to
competing consolidators and selfaggregators to Section XI.(a)(viii),
Communications, to require a Primary
Listing Exchange for an Eligible Security
to notify competing consolidators and
self-aggregators if it determines to
initiate a Regulatory Halt.
The Proposed Amendments also
replace references to ‘‘Primary Listing
Market’’ with ‘‘Primary Listing
Exchange’’ throughout Section XI.
The Participants state that their
revisions to Section XI to include
references to notifying competing
consolidators and self-aggregators in
connection with Regulatory and
Operational Halts are consistent with
Rule 614(e)(1) and would ensure that
competing consolidators and selfaggregators are notified of information
related to Regulatory and Operational
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Halts and that competing consolidators
can disseminate this information to
their customers.23
CQ Plan Proposed Amendments
Preface
Under the Proposed Amendments, the
CQ 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.’’
Section I.—Definitions
The Proposed Amendments add a
definition of ‘‘Primary Listing
Exchange’’ as new Section I.(v), 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 Proposed Amendments amend
the definition of ‘‘Quotation
Information’’ in Section I.(x) (formerly,
Section I.(w)) to change a reference to
‘‘consolidated BBO’’ to ‘‘NBBO,’’ such
that Quotation Information now means,
among other things, ‘‘(iii) each NBBO
contained in the foregoing information
and any identifier associated therewith
. . . .’’
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Section IV.—Administration of This CQ
Plan
The Proposed Amendments add new
Section IV.(d), Plan website Disclosures,
requiring the Operating Committee to
publish on the CQ Plan’s website the
Primary Listing Exchange for each
Eligible Security, and, on a monthly
basis, the consolidated market data
gross revenues for Eligible Securities as
specified by Tape A and Tape B
securities. The Participants explain that
this addition is intended to comply with
Rule 614(e)(4) and Rule 614(e)(5)(i) and
(iii).24
Section V.—The Processor and
Competing Consolidators
The Proposed Amendments amend
the title of Section V. to include
competing consolidators, such that it is
now titled ‘‘The Processor and
Competing Consolidators,’’ and add new
Section V.(f), Evaluation of Competing
Consolidators, to require the Operating
Committee to assess the performance of
competing consolidators on an annual
basis and to submit an annual report to
the Commission containing the
assessment. The Proposed Amendments
require this annual report to include an
analysis with respect to competing
consolidators’ speed, reliability, and
cost of data provision. The Participants
explain that these additions are
intended to comply with the
requirements of Rule 614(e)(3).25
In addition, the Proposed
Amendments require 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).26 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.27 The Proposed Amendments
add the following monthly performance
metrics to this section:
(i) Capacity statistics, including
system tested capacity, system output
capacity, total transaction capacity, and
total transaction peak capacity;
(ii) Message rate and total statistics,
including peak output rates on the
following bases: 1-millisecond, 10millisecond, 100-millisecond, 500millisecond, 1-second, and 5-second;
(iii) System availability statistics,
including system up-time percentage
and cumulative amount of outage time;
(iv) Network delay statistics,
including quote and trade zero window
size events, quote and trade retransmit
events, and quote and trade message
total; and
(v) Latency statistics, including
distribution statistics up to the 99.99th
percentile, for the following:
(A) When a Participant sends an
inbound message to a competing
consolidator and when the competing
consolidator receives the inbound
message;
(B) 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
(C) 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.
Section VI.—Collection and Reporting
of Quotation Information
The Proposed Amendments amend
Section VI.(a), Responsibilities of
Participants, to state that ‘‘[e]ach
Participant agrees to collect, and furnish
to the Processor in a format acceptable
25 See
23 See
id.
24 See id.
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26 17
Notice, supra note 7, 86 FR at 67801.
CFR 242.614(d)(5).
27 Id.
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11751
to the Operating Committee, all
quotation information required to be
made available by such Participant by
Rules 602(b)(1) of Regulation NMS.
Each Participant further agrees to collect
and report to Competing Consolidators
and Self Aggregators all quotation
information required to be made
available by such Participant by Rule
603(b) of Regulation NMS, including all
data necessary to generated
consolidated market data.’’
In addition, under the Proposed
Amendments, Section VI.(a) states that
each bid and offer with respect to an
Eligible Security furnished to the
Processor, competing consolidators and
self-aggregators by any Participant
pursuant to Plan would be accompanied
by (i) the information required by Rules
602(b)(1) or 603(b) of Regulation NMS,
as applicable, and (ii) the time of the bid
or offer as identified by: (A) In the case
of a national securities exchange, the
reporting Participant’s matching engine
publication timestamp (reported in
microseconds); or (B) in the case of a
national securities association, the
quotation publication timestamp that
the association’s bidding or offering
member reports to the association’s
quotation facility in accordance with
FINRA rules. Each bid and offer with
respect to an Eligible Security furnished
to competing consolidators and selfaggregators by any Participant must be
accompanied by the time (reported in
microseconds) the Participant made the
bid and offer available to competing
consolidators and self-aggregators.
With respect to national securities
associations, under the Proposed
Amendments, if a national securities
association quotation facility provides a
proprietary feed of its quotation
information, then the quotation facility
shall also furnish the Processor,
competing consolidators, and selfaggregators with the time of the
quotation as published on the quotation
facility’s proprietary feed, and the
national securities association 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. Additionally, Section
VI.(a), as proposed to be amended,
states, ‘‘Each bid and offer with respect
to an Eligible Security made by a broker
or dealer otherwise than on the floor of
an exchange and furnished to the
Processor, Competing Consolidators,
and Self-Aggregators by any Participant
which is a national securities
association shall, at the time furnished,
be accompanied by an appropriate
symbol designated by the Operating
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Committee identifying such broker or
dealer as required by paragraph (b)(i) of
the Rule.’’
The Proposed Amendments also
amend Section VI.(b), Timeliness of
Reporting, to add the following
requirement: ‘‘Each Participant further
agrees to furnish quotation information,
and changes in any such information, to
the Competing Consolidator[s] and SelfAggregators 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 Participants explain
that this addition is designed to comply
with the requirements of Rule
614(e)(1).28
In addition, the Proposed
Amendments amend Section VI.(c),
High Speed Line and Market Identifiers,
to remove a reference to an ‘‘ITS/CAES
BBO’’ as excepted from the requirement
that each bid or offer with respect to an
Eligible Security furnished to the
processor by a Participant that is a
national securities association shall be
accompanied by the symbol identifying
the broker or dealer who was reported
to the Processor as having made such
bid or offer otherwise than on the floor
of an exchange. The Participants explain
that they propose to remove this
reference because references to ITS/
CAES are outdated.29
The Proposed Amendments also
amend Section VI.(e), Unusual Market
Conditions, to include references to
competing consolidators and selfaggregators and to remove a reference to
Rule 602(b)(1) 30 and replace it with a
reference to Rules 601(b)(1) and 603(b)
of Regulation NMS. The Proposed
Amendments also remove a reference to
vendors in Section VI.(e).
Finally, the Proposed Amendments
delete Section VI.(f), Description of
Reporting Procedures, which requires
each Participant and each other
reporting party to prepare and submit to
the Operating Committee and the
Processor a description of the
28 See Notice, supra note 7, 86 FR at 67801. The
Participants state that they amended Sections
VIII.(a) and (b) of the CQ Plan to add the
requirement that each Participant agrees to collect
and report to competing consolidators and selfaggregators all quotation data 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 Eligible
Securities to any person. However, Commission
staff believes they meant Section VI. instead of
Section VIII. and such amendment is only present
in proposed Section VI.(b) of the CQ Plan.
29 See Notice, supra note 7, 86 FR at 67801.
30 Specifically, ‘‘paragraph (b)(1) of the Rule.’’ See
id., 86 FR at 67824.
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procedures by which it intends to
comply with its obligations under the
CQ Plan. The Participants explain that
the provisions of Section VI.(f) are no
longer relevant.31
Section VII.—Receipt and Use of
Quotation Information
In Sections VII.(a), Requirements for
Receipt and Use of Information, (b),
Approvals of Redisseminators and
Terminations of Approvals, and (c)
Subscriber Terminations, the Proposed
Amendments replace several references
to a ‘‘CQ network’s quotation
information’’ with the term
‘‘consolidated market data.’’
The Proposed Amendments also
amend Section VII.(a) to include
references to competing consolidators
and self-aggregators, such that, pursuant
to fair and reasonable terms and
conditions, each network’s
administrator shall provide for: (i) The
dissemination of each CQ network’s
quotation information on terms that are
not unreasonably discriminatory to
competing consolidators and selfaggregators, and (ii) the use of that CQ
network’s quotation information by
competing consolidators and selfaggregators.
In addition, the Proposed
Amendments amend Section VII.(a) to
state that the Participants in both CQ
networks expect that their network’s
administrator will require the following
parties to enter into agreements with the
network’s administrator: (i) Any party
that receives consolidated market data
by means of a direct computer-tocomputer interface with the Processor or
competing consolidators; (ii) any
competing consolidator or selfaggregator that receives quotation
information directly from a Participant
for the purpose of creating consolidated
market data; (iii) vendors and other
parties that redisseminate consolidated
market data; and (iv) persons that use
consolidated market data for such
purposes as the CQ network’s
administrator may from time to time
identify.
The Participants explain that the
proposed revisions intend to make clear
that the current market data contracts
regarding the receipt of market data will
be applicable to competing
consolidators and self-aggregators.32
They believe that the change is
consistent with Rule 614(e)(1) and is
necessary, stating that competing
consolidators and self-aggregators
would be receiving and using
consolidated market data and should be
31 See
32 See
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id.
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subject to the same contracts applicable
to vendors and subscribers.33
The Proposed Amendments also
amend Section VII.(b), Approvals of
Redisseminators and Terminations of
Approvals, to state that all vendors of
and other parties that redisseminate
consolidated market data (‘‘data
redisseminators’’) shall be required to be
approved by a CTA network’s
administrator. Additionally, the
Proposed Amendments amend Section
XI.(c), Subscriber Terminations, to state
that a network’s administrator may
determine that circumstances warrant
directing a data redisseminator to cease
providing consolidated market data to a
subscriber, and that the CQ network’s
Participants may direct the data
redisseminator to cease providing
consolidated market data to the
subscriber if a majority of those
Participants determine that (i) such
action is necessary or appropriate in the
public interest or for the protection of
investors, or (ii) the subscriber has
breached any agreement required by the
CTA network’s administrator pursuant
to Section VII.
III. Summary of Comments
In response to the Notice, the
Commission received two comments on
the Proposed Amendments.34 Generally,
both commenters oppose the Proposed
Amendments and recommend that the
Commission disapprove them.35
Both commenters argue that the
Proposed Amendments contain
provisions that would be irrelevant
under the decentralized consolidation
model. Specifically, one commenter
states that the Proposed Amendments
appear to continue to contain the
concept of a single processor in
contravention of the MDI Rules
Release.36 The other commenter argues
33 See
id.
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’’); Patrick Flannery, Chief
Executive Officer, MayStreet, to Vanessa
Countryman, Secretary, Commission (Dec. 17, 2021)
(‘‘MayStreet Letter’’).
35 SIFMA Letter, supra note 34, at 1, 8; MayStreet
Letter, supra note 34, at 1. The Commission notes
that the comment letters submitted by these
commenters address both the Proposed
Amendments and similar proposed amendments to
the Fifty-First Amendment to the Joint SelfRegulatory Organization Plan Governing the
Collection, Consolidation and Dissemination of
Quotation and Transaction Information for NasdaqListed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis. See Securities
Exchange Act Release No. 93620 (Nov. 19, 2021),
86 FR 67541 (Nov. 26, 2021).
36 SIFMA Letter, supra note 34, at 8.
34 See
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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.37 The commenter recommends
that these provisions be removed or
altered to reflect that the Plans no longer
have agreements with vendors and end
users and instead will have agreements
with competing consolidators and selfaggregators related specifically to the
cost of content underlying the market
data.38
Both commenters also argue that the
Proposed Amendments incorrectly treat
competing consolidators in the same
manner as market data vendors, despite
Commission instruction to the
contrary.39 One of the commenters
believes that subjecting competing
consolidators to the same contractual
requirements as data vendors and
subscribers that receive consolidated
market data from the exclusive SIP fails
to recognize that competing
consolidators are SIPs and not similarly
situated to today’s data vendors.40 The
commenter does not believe the
contracts applicable to current data
vendors will suffice for competing
consolidators because the data that
competing consolidators would receive
from the Participants is content
underlying consolidated data and
different from the SIP data that data
vendors receive.41 Additionally, the
commenter states that not recognizing
competing consolidators as SIPs would
put competing consolidators at a
competitive disadvantage to market data
vendors given that they take on
expenses and risks that data vendors do
not—such as the costs to generate
consolidated market data, disclosing
operational and performance metrics,
registering with the Commission, and
complying with Rule 614 of Regulation
NMS.42
Separately, one commenter argues
that validation procedures between
competing consolidators and
Participants should be similar to those
between the current Processor and the
Participants.43 While this commenter
37 MayStreet
Letter, supra note 34, at 3.
id.
39 SIFMA Letter, supra note 34, at 4–5, 8;
MayStreet Letter, supra note 34, at 3–5.
40 MayStreet Letter, supra note 34, at 3–4. This
commenter states that the Act requires competing
consolidators to receive the data under terms that
are not ‘‘unreasonably’’ discriminatory. Id. at 4.
41 See id. at 5.
42 See id.
43 See id. at 4.
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38 See
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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.44
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.45
IV. Proceedings To Determine Whether
To Approve or Disapprove the
Proposed Amendments
The Commission is instituting
proceedings pursuant to Rule
608(b)(2)(i) of Regulation NMS,46 and
Rule 700 of the Commission’s Rules of
Practice,47 to determine whether to
approve or disapprove the Proposed
Amendments or to approve the
Proposed Amendments 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 Amendments to inform the
Commission’s analysis.
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.’’ 48 Rule 608(b)(2) further provides
that the Commission shall disapprove a
proposed amendment if it does not
make such a finding.49 Pursuant to Rule
608(b)(2)(i) of Regulation NMS,50 the
Commission is providing notice of the
44 See
id.
45 MayStreet
Letter, supra note 34, at 3.
CFR 242.608.
47 17 CFR 201.700.
48 See 17 CFR 242.608(b)(2).
49 See 17 CFR 242.608(b)(2).
50 17 CFR 242.608(b)(2)(i). See also Commission
Rule of Practice 700(b)(2), 17 CFR 201.700(b)(2).
grounds for disapproval under
consideration:
• Whether the Proposed Amendments
are consistent with the Commission’s
MDI Rules as outlined in Rule 614(e); 51
• Whether, consistent with Rule 608
of Regulation NMS, the Proposed
Amendments are necessary or
appropriate in the public interest, for
the protection of investors and the
maintenance of fair and orderly markets,
to remove impediments to, and perfect
the mechanisms of, a national market
system, or otherwise in furtherance of
the purposes of the Act; 52
• Whether consistent with Rule
603(a) of Regulation NMS, the Proposed
Amendments provide 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 Amendments, or conditions to
their approval, would be required to
make the Proposed Amendments
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; 53
• Whether the Proposed Amendments
are 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’’; 54 and
• Whether, consistent with the
purposes of Section 11A(c)(1)(B) of the
Act,55 the Proposed Amendments’
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.
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
46 17
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11753
51 See
MDI Rules Release, supra note 6.
17 CFR 242.608(b)(2).
53 See id.
54 15 U.S.C. 78k–1(a)(1)(C)(iii).
55 See 15 U.S.C. 78k–1(c)(1)(B).
52 See
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plan filing.’’ 56 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
affirmative Commission finding.57 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.58
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,59 any request for an
opportunity to make an oral
presentation.60 The Commission asks
that commenters address the sufficiency
and merit of the Participants’ statements
in support of the Proposed
Amendments,61 in addition to any other
comments they may wish to submit
about the Proposed Amendments. In
particular, the Commission seeks
comment on the following:
1. What are commenters’ views on
whether the Proposed Amendments
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. For
example, do commenters believe that
56 17
CFR 201.700(b)(3)(ii).
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57 Id.
58 Id.
59 17
CFR 242.608(b)(2)(i).
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).
61 See Notice, supra note 7.
60 Rule
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Section I of the CTA Plan and Section
I of the CQ Plan (both titled Definitions)
appropriately define 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
Amendments? Additionally, do
commenters believe that the Proposed
Amendments should be modified to
explicitly incorporate certain terms such
as Consolidated Market Data, as defined
in Rule 600(b)(19) into the Plan?
Similarly, Section V of the CTA Plan
and Section V of the CQ Plan (both
titled The Processor and Competing
Consolidators) describe the evaluation
and functions of the Processor,
respectively. Do commenters believe
that modifying the Proposed
Amendments 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 Amendments
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.
Specifically, do commenters believe that
the Proposed Amendments require 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 selfaggregators? If not, should the Proposed
Amendments be modified to include a
requirement for such timestamping?
3. What are commenters’ views on the
absence of a microsecond timestamp
requirement applicable to FINRA in
Section VI.(c) (Consolidated Tape,
Reporting Format and Technical
Specifications) of the CTA Plan?
4. What are commenters’ views on the
proposed deletion of language in
Section VIII.(a) (Collection and
Reporting of Last Sale Data,
Responsibility of Exchange Participants)
of the CTA Plan stating, ‘‘CTA shall seek
to reduce the time period for reporting
last sale prices to the Processor as
conditions warrant.’’ Specifically, do
commenters believe that this Proposed
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Amendment should be modified to
retain the language but replace the term
‘‘Processor’’ with ‘‘Competing
Consolidators and Self-Aggregators’’?
5. What are commenters’ views on the
following sections of the Proposed
Amendments in light of the
decentralized consolidation model
under the MDI Rules: Section IX.
(Receipt and Use of CTA Information) of
the CTA Plan and Section VII. (Receipt
and Use of Quotation Information) of
the CQ Plan. Do commenters believe
that the Proposed Amendments should
be modified with respect to any of these
sections to implement the decentralized
consolidation model? If so, how? What
are commenters’ views on the use of the
term ‘‘consolidated market data’’ in
Section IX. of the CTA Plan? Do
commenters agree with the statement by
the Participants that the current market
data contracts regarding the receipt of
market data applicable to vendors and
subscribers should be applicable to
competing consolidators and selfaggregators? 62 Do commenters interpret
these provisions to mean that a
network’s administrator must approve a
competing consolidator or selfaggregator before the competing
consolidator or self-aggregator can
receive data and can terminate such
approval of a competing consolidator or
self-aggregator?
6. What are commenters’ views on
whether the Proposed Amendments
sufficiently describe how the Plans will
operate under the Initial Parallel
Operation Period when ‘‘the
decentralized consolidation model will
run in parallel to the existing exclusive
SIP model.’’ 63 Specifically, Section D of
the Proposed Amendments states that
Proposed Amendments will be
implemented to coincide with the
phased implementation of the MDI
Rules as required by the Commission.
Do commenters believe that the
Proposed Amendments 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?
7. What are commenters’ views on the
Proposed Amendments in light of the
decentralized consolidation model with
respect to (i) references to the Processor,
High speed line, and Subscribers; (ii)
the dissemination of Regulatory Halts;
(iii) the authority of the Operating
Committee under Section IV.(d) of the
CTA Plan and Section IV.(b) of the CQ
Plan, respectively, with respect to
62 See
id., 86 FR at 67801.
MDI Rules Release, supra note 6, at Section
III.H.2., 86 FR at 18698–701.
63 See
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operation of the Consolidated Tape
System and Consolidated Quotation
System; and (iv) references to contracts
with Vendors and Subscribers. Do
commenters believe that the Proposed
Amendments should be modified with
respect to any of these provisions in
light of the decentralized consolidation
model required by the MDI Rules?
8. What are commenters’ views on the
following sections of the Proposed
Amendments in light of the
decentralized consolidation model: (i)
CTA Plan: Parties, Administration of the
CTA Plan, Potential Conflicts of Interest,
The Processor and Competing
Consolidators, Consolidated Tape,
Collection and Reporting of Last Sale
Data, Receipt and Use of CTA
Information, Operational Matters,
Financial Matters, Concurrent Use of
Facilities, (ii) CQ Plan: Administration
of this CQ Plan, The Processor and
Competing Consolidators, Collection
and Reporting of Quotation Information,
Receipt and Use of Quotation
Information, Operational Matters,
Financial Matters, Concurrent Use of
Facilities. Do commenters believe that
the Proposed Amendments should be
modified with respect to any of these
sections, or any other section, in light of
the decentralized consolidation model
required by the MDI Rules? If so, please
describe how the Proposed
Amendments should be modified in
light of the decentralized consolidation
model required by the MDI Rules.
9. Do commenters have views about
any other aspect of the Proposed
Amendments? Do commenters believe
that the Proposed Amendments 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:
All submissions should refer to File No.
SR–CTA/CQ–2021–02. 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
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. SR–CTA/CQ–
2021–02 and should be submitted on or
before March 23, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.64
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022–04335 Filed 3–1–22; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File No. SR–
CTA/CQ–2021–02 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.
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64 17
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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 SelfRegulatory 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 SelfRegulatory Organization Plan Governing
the Collection, Consolidation and
Dissemination of Quotation and
Transaction Information for NasdaqListed 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-feerelated 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
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)
CFR 200.30–3(a)(85).
Frm 00070
Fmt 4703
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Continued
E:\FR\FM\02MRN1.SGM
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]]>Agencies
[Federal Register Volume 87, Number 41 (Wednesday, March 2, 2022)]
[Notices]
[Pages 11748-11755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-04335]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94310; File No. SR-CTA/CQ-2021-02]
Consolidated Tape Association; Order Instituting Proceedings To
Determine Whether To Approve or Disapprove the Thirty-Seventh
Substantive Amendment to the Second Restatement of the CTA Plan and
Twenty-Eighth Substantive Amendment to the Restated CQ Plan
February 24, 2022.
I. Introduction
On November 5, 2021,\1\ the Participants \2\ in the Second
Restatement of the Consolidated Tape Association (``CTA'') Plan and
Restated Consolidated Quotation (``CQ'') Plan (collectively ``CTA/CQ
Plans'' or ``Plans'') \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
Amendments'') to amend the Plans to implement the non-fee-related
aspects of the Commission's Market Data Infrastructure Rules (``MDI
Rules'').\6\ The Proposed Amendments were published for comment in the
Federal Register on November 29, 2021.\7\
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\1\ See Letter from Robert Books, Chair, CTA/CQ 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 CTA Plan, pursuant to which markets collect and
disseminate last-sale price information for non-Nasdaq-listed
securities, is a ``transaction reporting plan'' under Rule 601 of
Regulation NMS, 17 CFR 242.601, and a ``national market system
plan'' under Rule 608 of Regulation NMS, 17 CFR 242.608. The CQ
Plan, pursuant to which markets collect and disseminate bid/ask
quotation information for non-Nasdaq-listed securities, is a
``national market system plan'' under Rule 608 under the Act, 17 CFR
242.608. See Securities Exchange Act Release Nos. 10787 (May 10,
1974), 39 FR at 17799 (May 20, 1974) (declaring the CTA Plan
effective); 15009 (July 28, 1978), 43 FR at 34851 (Aug. 7, 1978)
(temporarily authorizing the CQ Plan); and 16518 (Jan. 22, 1980), 45
FR at 6521 (Jan. 28, 1980) (permanently authorizing the CQ Plan).
The most recent restatement of both Plans was in 1995.
\4\ 15 U.S.C 78k-1(a)(3).
\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. 93615 (Nov. 19,
2021), 86 FR 67800 (Nov. 29, 2021) (``Notice''). Comments received
in response to the Notice are available at https://www.sec.gov/comments/sr-ctacq-2021-02/srctacq202102.htm.
---------------------------------------------------------------------------
This order institutes proceedings, under Rule 608(b)(2)(i) of
Regulation NMS,\8\ to determine whether to disapprove the Proposed
Amendments or to approve the Proposed Amendments with any changes or
subject to any conditions the Commission deems necessary or appropriate
after considering public comment.
---------------------------------------------------------------------------
\8\ 17 CFR 242.608(b)(2)(i).
---------------------------------------------------------------------------
II. Summary of the Proposed Amendments 9
---------------------------------------------------------------------------
\9\ The full text of the Proposed Amendments appear as
Attachments A and B to the Notice. See Notice, supra note 7, 86 FR
at 67802-29.
---------------------------------------------------------------------------
The Participants propose to amend the Plans to comply with Rule
614(e) 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\
---------------------------------------------------------------------------
\10\ 17 CFR 242.614(e). The Participants have submitted separate
amendments to implement the fee-related aspects of the MDI Rules.
See Securities Exchange Act Release No. 93625 (Nov. 19, 2021), 86 FR
67517 (Nov. 26, 2021) (File No. SR-CTA/CQ-2021-03).
---------------------------------------------------------------------------
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 Plans by the Proposed Amendments.
CTA Plan Proposed Amendments
Preface
Under the Proposed Amendments, the CTA 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.''
Section I.--Definitions
The Proposed Amendments add a definition of ``Primary Listing
Exchange,'' as new Section I.(x), 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
[[Page 11749]]
more than one national securities exchange, Primary Listing Exchange
means the exchange on which the security has been listed the longest.''
Section IV.--Administration of the CTA Plan
The Proposed Amendments add new Section IV.(e), Plan website
Disclosures, requiring CTA to publish on the CTA Plan's website the
Primary Listing Exchange for each Eligible Security, and, on a monthly
basis, the consolidated market data gross revenues for Eligible
Securities as specified by Tape A and Tape B securities. The
Participants explain that this addition is intended to comply with Rule
614(e)(4) and Rule 614(e)(5)(i) and (iii).\11\
---------------------------------------------------------------------------
\11\ See Notice, supra note 7, 86 FR at 67800.
---------------------------------------------------------------------------
Section V.--The Processor and Competing Consolidators
The Proposed Amendments amend the title of Section V. to include
competing consolidators, such that it is now titled ``The Processor and
Competing Consolidators'' and add new Section V.(f), Evaluation of
Competing Consolidators, to require the Operating Committee to assess
the performance of competing consolidators on an annual basis and to
submit an annual report to the Commission containing the assessment.
The Proposed Amendments require this annual report to include an
analysis with respect to competing consolidators' speed, reliability,
and cost of data provision. The Participants explain that these
additions are intended to comply with the requirements of Rule
614(e)(3).\12\
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\12\ See id.
---------------------------------------------------------------------------
In addition, the Proposed Amendments require 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).\13\ 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.\14\ The
Proposed Amendments add the following monthly performance metrics to
this section:
---------------------------------------------------------------------------
\13\ 17 CFR 242.614(d)(5).
\14\ Id.
---------------------------------------------------------------------------
(i) Capacity statistics, including system tested capacity, system
output capacity, total transaction capacity, and total transaction peak
capacity;
(ii) 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;
(iii) System availability statistics, including system up-time
percentage and cumulative amount of outage time;
(iv) Network delay statistics, including quote and trade zero
window size events, quote and trade retransmit events, and quote and
trade message total; and
(v) Latency statistics, including distribution statistics up to the
99.99th percentile, for the following:
(A) When a Participant sends an inbound message to a competing
consolidator and when the competing consolidator receives the inbound
message;
(B) 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
(C) 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
V. to define the monthly performance metrics in accordance with Rule
614(d)(5).\15\
---------------------------------------------------------------------------
\15\ See Notice, supra note 7, 86 FR at 67800.
---------------------------------------------------------------------------
Section VI.--Consolidated Tape
The Proposed Amendments amend Section VI.(c), Reporting Format and
Technical Specifications, to include a reference to competing
consolidators and self-aggregators such that last sale price
information relating to a completed transaction in an Eligible Security
reported to competing consolidators and self-aggregators by any
Participant or other reporting party shall be in the format required in
Section VI.(c).
In addition, the Proposed Amendments amend Section VI.(c) to delete
from the required format the time of the transaction (reported in
microseconds) as identified in the Participant's matching engine
publication timestamp, and replace it with the time the last sale price
information was generated by the Participant (reported in
microseconds). Furthermore, the Proposed Amendments amend Section
VI.(c) to add to the required format, with respect to reports to
competing consolidators and self-aggregators, the time the Participant
made the last sale price information available to competing
consolidators and self-aggregators (reported in microseconds). The
Participants explain that the proposed references to competing
consolidators and self-aggregators and the proposed requirement to
report in microseconds the time that a Participant made the last sale
price information available to competing consolidators and self-
aggregators are intended to comply with Rule 614(e)(1) and (2).\16\
---------------------------------------------------------------------------
\16\ See id.
---------------------------------------------------------------------------
With respect to FINRA, the Proposed Amendments amend a statement in
Section VI.(c) that the time of the transaction shall be the time of
execution that a FINRA member reports to a FINRA trade reporting
facility in accordance with FINRA rules. The Proposed Amendments change
this statement to state that the time the last sale price information
was generated by a Participant shall be the time that a FINRA member
reports to a FINRA trade reporting facility in accordance with FINRA
rules. The Proposed Amendments also add references to competing
consolidators and self-aggregators such 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, competing consolidators, and self-aggregators with the
time of the transmission as published on the facility's proprietary
feed.
The Proposed Amendments also delete Section VI.(g), ITS
Transactions, which concerns last sale prices reflecting ITS
transactions. The Participants explain that they are proposing to
remove this provision because the ITS is obsolete.\17\
---------------------------------------------------------------------------
\17\ See id.
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Section VIII. Collection and Reporting of Last Sale Data
The Proposed Amendments amend Section VIII.(a), Responsibility of
Exchange Participants, to remove a list of exchange participants and
the requirement that each collects and reports to the Processor all
last sale price information to be reported to it relating to
transactions in Eligible Securities taking place on its floor. The
Proposed Amendments amend this statement to state that each Participant
agrees to collect and report to the Processor all last sale price
information to be reported by it relating to transactions in Eligible
Securities.
The Proposed Amendments also add a statement that each Participant
further agrees to collect and report to competing consolidators and
self-aggregators all last sale price information to be reported to it
related to transactions in Eligible Securities in the same manner and
using
[[Page 11750]]
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 Eligible Securities to any
person.\18\ In addition, the Proposed Amendments amend Section
VIII.(b), FINRA Responsibility, to add references to competing
consolidators and self-aggregators such that the provision states:
``The FINRA shall develop and adopt rules governing the reporting of
last sale price information to be reported by its members to both the
Processor for inclusion on the consolidated tape and to Competing
Consolidators and Self-Aggregators. Such rules shall . . . (ii) be
designed to avoid duplicate reporting of transactions on the
consolidated tape or to Competing Consolidators and Self Aggregator . .
.'' The Participants explain that these additions are designed to
comply with Rule 614(e)(1).\19\
---------------------------------------------------------------------------
\18\ The Proposed Amendments also delete the following statement
from Section VIII.(a): ``CTA shall seek to reduce the time period
for reporting last sale prices to the Processor as conditions
warrant.''
\19\ See Notice, supra note 7, 86 FR at 67801.
---------------------------------------------------------------------------
Finally, the Proposed Amendments delete Section VIII.(c),
Description of Reporting Procedures, which states that each Participant
and each other reporting party has prepared and submitted to CTA and
the Commission a description of the procedures by which it collects and
reports to the Processor last sale price information reported by it
pursuant to the CTA Plan. The Participants explain that this provision
is no longer relevant under the MDI Rules.\20\
---------------------------------------------------------------------------
\20\ See id.
---------------------------------------------------------------------------
Section IX.--Receipt and Use of CTA Information
In Sections IX.(a), Requirements for Receipt and Use of
Information, (b), Approvals of Redisseminators and Terminations of
Approvals, and (c), Subscriber Terminations, the Proposed Amendments
replace several references to ``each CTA network's information,'' ``a
CTA network's information,'' ``that CTA network's information,'' and
``that CTA network's last sale price information'' with the term
``consolidated market data''.
The Proposed Amendments also amend Section IX.(a) to include
references to competing consolidators and self-aggregators. Proposed
Section IX.(a) states that, ``[p]ursuant to fair and reasonable terms
and conditions, each CTA network's administrator shall provide for: (i)
The dissemination of consolidated market data on terms that are not
unreasonably discriminatory to Competing Consolidators, Self-
Aggregators, vendors, newspapers, Participants, Participant members and
member organizations, and other persons over that network's ticker and
over the high speed line; and (ii) the use of consolidated market data
by Competing Consolidators, Self-Aggregators, vendors, subscribers,
newspapers, Participants, Participant members and member organizations
and other persons.'' Additionally, the section now states that each CTA
network's Participants will determine the terms and conditions applying
in respect of a particular manner of receipt or use of consolidated
market data including whether the manner of receipt or use will require
recipients or users to enter into agreements with the CTA network's
administrator, and that these determinations will be made in a
reasonably uniform manner to subject all parties that receive or use
consolidated market data in a particular manner to terms and conditions
that are substantially similar.
In addition, the Proposed Amendments amend Section IX.(a) to state
that the Participants expect their CTA network's administrator to
require the following parties to enter into agreements with the CTA
network administrator: (i) Any party that receives a CTA network's
information by means of a direct computer-to-computer interface with
the Processor or competing consolidator; (ii) any competing
consolidator or self-aggregator that receives last sale transaction
information directly from a Participant for the purpose of creating
consolidated market data; (iii) vendors and other parties that
redisseminate consolidated market data to others; and (iv) persons that
use consolidated market data for such purposes as that CTA network's
administrator may from time to time identify.
The Participants explain that the proposed revisions to Section
IX.(a) intend to make clear that the current market data contracts
regarding the receipt of market data will be applicable to competing
consolidators and self-aggregators.\21\ They believe that the change is
consistent with Rule 614(e)(1) and is necessary, stating that competing
consolidators and self-aggregators would be receiving and using
consolidated market data and should be subject to the same contracts
applicable to vendors and subscribers.\22\
---------------------------------------------------------------------------
\21\ See id.
\22\ See id.
---------------------------------------------------------------------------
The Proposed Amendments amend Section XI.(b), Approvals of
Redisseminators and Terminations of Approvals, to state that all
vendors and other parties that redisseminate consolidated market data
(``data redisseminators'') shall be required to be approved by a CTA
network's administrator. Additionally, the Proposed Amendments amend
Section XI.(c), Subscriber Terminations, to state that a CTA network's
administrator may determine that circumstances warrant directing a data
redisseminator to cease providing consolidated market data to a
subscriber, and that the CTA network's Participants may direct the data
redisseminator to cease providing consolidated market data to the
subscriber if a majority of those Participants determine that (i) such
action is necessary or appropriate in the public interest or for the
protection of investors, or (ii) the subscriber has breached any
agreement required by the CTA network's administrator pursuant to
Section IX.
Section XI.--Operational Matters
The Proposed Amendments delete from Section XI.(a), Regulatory and
Operational Halts, the definition of ``Primary Listing Market'' in
Section XI.(a)(i)(H) and the definition of ``Trading Center'' in
Section XI.(a)(i)(N).
The Proposed Amendments add a reference to competing consolidators
and self-aggregators to Section XI.(a)(ii), Operational Halts, to state
that a Participant shall notify competing consolidators and self-
aggregators if it has concerns about its ability to collect and
transmit quotes, orders or last sale prices, or where the Participant
has declared an Operational Halt or suspension of trading in one or
more Eligible Securities, pursuant to the procedures adopted by the
Operating Committee. In addition, the Proposed Amendments add a
reference to competing consolidators and self-aggregators to Section
XI.(a)(viii), Communications, to require a Primary Listing Exchange for
an Eligible Security to notify competing consolidators and self-
aggregators if it determines to initiate a Regulatory Halt.
The Proposed Amendments also replace references to ``Primary
Listing Market'' with ``Primary Listing Exchange'' throughout Section
XI.
The Participants state that their revisions to Section XI to
include references to notifying competing consolidators and self-
aggregators in connection with Regulatory and Operational Halts 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
[[Page 11751]]
Halts and that competing consolidators can disseminate this information
to their customers.\23\
---------------------------------------------------------------------------
\23\ See id.
---------------------------------------------------------------------------
CQ Plan Proposed Amendments
Preface
Under the Proposed Amendments, the CQ 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.''
Section I.--Definitions
The Proposed Amendments add a definition of ``Primary Listing
Exchange'' as new Section I.(v), 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 Proposed Amendments amend the definition of ``Quotation
Information'' in Section I.(x) (formerly, Section I.(w)) to change a
reference to ``consolidated BBO'' to ``NBBO,'' such that Quotation
Information now means, among other things, ``(iii) each NBBO contained
in the foregoing information and any identifier associated therewith .
. . .''
Section IV.--Administration of This CQ Plan
The Proposed Amendments add new Section IV.(d), Plan website
Disclosures, requiring the Operating Committee to publish on the CQ
Plan's website the Primary Listing Exchange for each Eligible Security,
and, on a monthly basis, the consolidated market data gross revenues
for Eligible Securities as specified by Tape A and Tape B securities.
The Participants explain that this addition is intended to comply with
Rule 614(e)(4) and Rule 614(e)(5)(i) and (iii).\24\
---------------------------------------------------------------------------
\24\ See id.
---------------------------------------------------------------------------
Section V.--The Processor and Competing Consolidators
The Proposed Amendments amend the title of Section V. to include
competing consolidators, such that it is now titled ``The Processor and
Competing Consolidators,'' and add new Section V.(f), Evaluation of
Competing Consolidators, to require the Operating Committee to assess
the performance of competing consolidators on an annual basis and to
submit an annual report to the Commission containing the assessment.
The Proposed Amendments require this annual report to include an
analysis with respect to competing consolidators' speed, reliability,
and cost of data provision. The Participants explain that these
additions are intended to comply with the requirements of Rule
614(e)(3).\25\
---------------------------------------------------------------------------
\25\ See Notice, supra note 7, 86 FR at 67801.
---------------------------------------------------------------------------
In addition, the Proposed Amendments require 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).\26\ 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.\27\ The
Proposed Amendments add the following monthly performance metrics to
this section:
---------------------------------------------------------------------------
\26\ 17 CFR 242.614(d)(5).
\27\ Id.
---------------------------------------------------------------------------
(i) Capacity statistics, including system tested capacity, system
output capacity, total transaction capacity, and total transaction peak
capacity;
(ii) 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;
(iii) System availability statistics, including system up-time
percentage and cumulative amount of outage time;
(iv) Network delay statistics, including quote and trade zero
window size events, quote and trade retransmit events, and quote and
trade message total; and
(v) Latency statistics, including distribution statistics up to the
99.99th percentile, for the following:
(A) When a Participant sends an inbound message to a competing
consolidator and when the competing consolidator receives the inbound
message;
(B) 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
(C) 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.
Section VI.--Collection and Reporting of Quotation Information
The Proposed Amendments amend Section VI.(a), Responsibilities of
Participants, to state that ``[e]ach Participant agrees to collect, and
furnish to the Processor in a format acceptable to the Operating
Committee, all quotation information required to be made available by
such Participant by Rules 602(b)(1) of Regulation NMS. Each Participant
further agrees to collect and report to Competing Consolidators and
Self Aggregators all quotation information required to be made
available by such Participant by Rule 603(b) of Regulation NMS,
including all data necessary to generated consolidated market data.''
In addition, under the Proposed Amendments, Section VI.(a) states
that each bid and offer with respect to an Eligible Security furnished
to the Processor, competing consolidators and self-aggregators by any
Participant pursuant to Plan would be accompanied by (i) the
information required by Rules 602(b)(1) or 603(b) of Regulation NMS, as
applicable, and (ii) the time of the bid or offer as identified by: (A)
In the case of a national securities exchange, the reporting
Participant's matching engine publication timestamp (reported in
microseconds); or (B) in the case of a national securities association,
the quotation publication timestamp that the association's bidding or
offering member reports to the association's quotation facility in
accordance with FINRA rules. Each bid and offer with respect to an
Eligible Security furnished to competing consolidators and self-
aggregators by any Participant must be accompanied by the time
(reported in microseconds) the Participant made the bid and offer
available to competing consolidators and self-aggregators.
With respect to national securities associations, under the
Proposed Amendments, if a national securities association 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 the
national securities association 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. Additionally, Section VI.(a), as proposed
to be amended, states, ``Each bid and offer with respect to an Eligible
Security made by a broker or dealer otherwise than on the floor of an
exchange and furnished to the Processor, Competing Consolidators, and
Self-Aggregators by any Participant which is a national securities
association shall, at the time furnished, be accompanied by an
appropriate symbol designated by the Operating
[[Page 11752]]
Committee identifying such broker or dealer as required by paragraph
(b)(i) of the Rule.''
The Proposed Amendments also amend Section VI.(b), Timeliness of
Reporting, to add the following requirement: ``Each Participant further
agrees to furnish quotation information, and changes in any such
information, to the Competing Consolidator[s] 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 Participants explain that this addition is
designed to comply with the requirements of Rule 614(e)(1).\28\
---------------------------------------------------------------------------
\28\ See Notice, supra note 7, 86 FR at 67801. The Participants
state that they amended Sections VIII.(a) and (b) of the CQ Plan to
add the requirement that each Participant agrees to collect and
report to competing consolidators and self-aggregators all quotation
data 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 Eligible Securities to any person. However,
Commission staff believes they meant Section VI. instead of Section
VIII. and such amendment is only present in proposed Section VI.(b)
of the CQ Plan.
---------------------------------------------------------------------------
In addition, the Proposed Amendments amend Section VI.(c), High
Speed Line and Market Identifiers, to remove a reference to an ``ITS/
CAES BBO'' as excepted from the requirement that each bid or offer with
respect to an Eligible Security furnished to the processor by a
Participant that is a national securities association shall be
accompanied by the symbol identifying the broker or dealer who was
reported to the Processor as having made such bid or offer otherwise
than on the floor of an exchange. The Participants explain that they
propose to remove this reference because references to ITS/CAES are
outdated.\29\
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\29\ See Notice, supra note 7, 86 FR at 67801.
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The Proposed Amendments also amend Section VI.(e), Unusual Market
Conditions, to include references to competing consolidators and self-
aggregators and to remove a reference to Rule 602(b)(1) \30\ and
replace it with a reference to Rules 601(b)(1) and 603(b) of Regulation
NMS. The Proposed Amendments also remove a reference to vendors in
Section VI.(e).
---------------------------------------------------------------------------
\30\ Specifically, ``paragraph (b)(1) of the Rule.'' See id., 86
FR at 67824.
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Finally, the Proposed Amendments delete Section VI.(f), Description
of Reporting Procedures, which requires each Participant and each other
reporting party to prepare and submit to the Operating Committee and
the Processor a description of the procedures by which it intends to
comply with its obligations under the CQ Plan. The Participants explain
that the provisions of Section VI.(f) are no longer relevant.\31\
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\31\ See id., 86 FR at 67801.
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Section VII.--Receipt and Use of Quotation Information
In Sections VII.(a), Requirements for Receipt and Use of
Information, (b), Approvals of Redisseminators and Terminations of
Approvals, and (c) Subscriber Terminations, the Proposed Amendments
replace several references to a ``CQ network's quotation information''
with the term ``consolidated market data.''
The Proposed Amendments also amend Section VII.(a) to include
references to competing consolidators and self-aggregators, such that,
pursuant to fair and reasonable terms and conditions, each network's
administrator shall provide for: (i) The dissemination of each CQ
network's quotation information on terms that are not unreasonably
discriminatory to competing consolidators and self-aggregators, and
(ii) the use of that CQ network's quotation information by competing
consolidators and self-aggregators.
In addition, the Proposed Amendments amend Section VII.(a) to state
that the Participants in both CQ networks expect that their network's
administrator will require the following parties to enter into
agreements with the network's administrator: (i) Any party that
receives consolidated market data by means of a direct computer-to-
computer interface with the Processor or competing consolidators; (ii)
any competing consolidator or self-aggregator that receives quotation
information directly from a Participant for the purpose of creating
consolidated market data; (iii) vendors and other parties that
redisseminate consolidated market data; and (iv) persons that use
consolidated market data for such purposes as the CQ network's
administrator may from time to time identify.
The Participants explain that the proposed revisions intend to make
clear that the current market data contracts regarding the receipt of
market data will be applicable to competing consolidators and self-
aggregators.\32\ They believe that the change is consistent with Rule
614(e)(1) and is necessary, stating that competing consolidators and
self-aggregators would be receiving and using consolidated market data
and should be subject to the same contracts applicable to vendors and
subscribers.\33\
---------------------------------------------------------------------------
\32\ See id.
\33\ See id.
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The Proposed Amendments also amend Section VII.(b), Approvals of
Redisseminators and Terminations of Approvals, to state that all
vendors of and other parties that redisseminate consolidated market
data (``data redisseminators'') shall be required to be approved by a
CTA network's administrator. Additionally, the Proposed Amendments
amend Section XI.(c), Subscriber Terminations, to state that a
network's administrator may determine that circumstances warrant
directing a data redisseminator to cease providing consolidated market
data to a subscriber, and that the CQ network's Participants may direct
the data redisseminator to cease providing consolidated market data to
the subscriber if a majority of those Participants determine that (i)
such action is necessary or appropriate in the public interest or for
the protection of investors, or (ii) the subscriber has breached any
agreement required by the CTA network's administrator pursuant to
Section VII.
III. Summary of Comments
In response to the Notice, the Commission received two comments on
the Proposed Amendments.\34\ Generally, both commenters oppose the
Proposed Amendments and recommend that the Commission disapprove
them.\35\
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\34\ 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'');
Patrick Flannery, Chief Executive Officer, MayStreet, to Vanessa
Countryman, Secretary, Commission (Dec. 17, 2021) (``MayStreet
Letter'').
\35\ SIFMA Letter, supra note 34, at 1, 8; MayStreet Letter,
supra note 34, at 1. The Commission notes that the comment letters
submitted by these commenters address both the Proposed Amendments
and similar proposed amendments to 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. See Securities Exchange Act
Release No. 93620 (Nov. 19, 2021), 86 FR 67541 (Nov. 26, 2021).
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Both commenters argue that the Proposed Amendments contain
provisions that would be irrelevant under the decentralized
consolidation model. Specifically, one commenter states that the
Proposed Amendments appear to continue to contain the concept of a
single processor in contravention of the MDI Rules Release.\36\ The
other commenter argues
[[Page 11753]]
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.\37\ The commenter recommends that these provisions
be removed or altered to reflect that the Plans no longer have
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.\38\
---------------------------------------------------------------------------
\36\ SIFMA Letter, supra note 34, at 8.
\37\ MayStreet Letter, supra note 34, at 3.
\38\ See id.
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Both commenters also argue that the Proposed Amendments incorrectly
treat competing consolidators in the same manner as market data
vendors, despite Commission instruction to the contrary.\39\ One of the
commenters believes that subjecting competing consolidators to the same
contractual requirements as data vendors and subscribers that receive
consolidated market data from the exclusive SIP fails to recognize that
competing consolidators are SIPs and not similarly situated to today's
data vendors.\40\ The commenter does not believe the contracts
applicable to current data vendors will suffice for competing
consolidators because the data that competing consolidators would
receive from the Participants is content underlying consolidated data
and different from the SIP data that data vendors receive.\41\
Additionally, the commenter states that not recognizing competing
consolidators as SIPs would put competing consolidators at a
competitive disadvantage to market data vendors given that they take on
expenses and risks that data vendors do not--such as the costs to
generate consolidated market data, disclosing operational and
performance metrics, registering with the Commission, and complying
with Rule 614 of Regulation NMS.\42\
---------------------------------------------------------------------------
\39\ SIFMA Letter, supra note 34, at 4-5, 8; MayStreet Letter,
supra note 34, at 3-5.
\40\ MayStreet Letter, supra note 34, at 3-4. This commenter
states that the Act requires competing consolidators to receive the
data under terms that are not ``unreasonably'' discriminatory. Id.
at 4.
\41\ See id. at 5.
\42\ 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.\43\ 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.\44\ 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.\45\
---------------------------------------------------------------------------
\43\ See id. at 4.
\44\ See id.
\45\ MayStreet Letter, supra note 34, at 3.
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IV. Proceedings To Determine Whether To Approve or Disapprove the
Proposed Amendments
The Commission is instituting proceedings pursuant to Rule
608(b)(2)(i) of Regulation NMS,\46\ and Rule 700 of the Commission's
Rules of Practice,\47\ to determine whether to approve or disapprove
the Proposed Amendments or to approve the Proposed Amendments 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 Amendments to inform the
Commission's analysis.
---------------------------------------------------------------------------
\46\ 17 CFR 242.608.
\47\ 17 CFR 201.700.
---------------------------------------------------------------------------
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.'' \48\ Rule 608(b)(2) further provides that the Commission
shall disapprove a proposed amendment if it does not make such a
finding.\49\ Pursuant to Rule 608(b)(2)(i) of Regulation NMS,\50\ the
Commission is providing notice of the grounds for disapproval under
consideration:
---------------------------------------------------------------------------
\48\ See 17 CFR 242.608(b)(2).
\49\ See 17 CFR 242.608(b)(2).
\50\ 17 CFR 242.608(b)(2)(i). See also Commission Rule of
Practice 700(b)(2), 17 CFR 201.700(b)(2).
---------------------------------------------------------------------------
Whether the Proposed Amendments are consistent with the
Commission's MDI Rules as outlined in Rule 614(e); \51\
---------------------------------------------------------------------------
\51\ See MDI Rules Release, supra note 6.
---------------------------------------------------------------------------
Whether, consistent with Rule 608 of Regulation NMS, the
Proposed Amendments are necessary or appropriate in the public
interest, for the protection of investors and the maintenance of fair
and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system, or otherwise in furtherance of
the purposes of the Act; \52\
---------------------------------------------------------------------------
\52\ See 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------
Whether consistent with Rule 603(a) of Regulation NMS, the
Proposed Amendments provide 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 Amendments, or
conditions to their approval, would be required to make the Proposed
Amendments 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; \53\
---------------------------------------------------------------------------
\53\ See id.
---------------------------------------------------------------------------
Whether the Proposed Amendments are 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''; \54\ and
---------------------------------------------------------------------------
\54\ 15 U.S.C. 78k-1(a)(1)(C)(iii).
---------------------------------------------------------------------------
Whether, consistent with the purposes of Section
11A(c)(1)(B) of the Act,\55\ the Proposed Amendments' 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.
---------------------------------------------------------------------------
\55\ See 15 U.S.C. 78k-1(c)(1)(B).
---------------------------------------------------------------------------
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
[[Page 11754]]
plan filing.'' \56\ 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 affirmative Commission finding.\57\ 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.\58\
---------------------------------------------------------------------------
\56\ 17 CFR 201.700(b)(3)(ii).
\57\ Id.
\58\ 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,\59\ any request for an opportunity to make an oral
presentation.\60\ The Commission asks that commenters address the
sufficiency and merit of the Participants' statements in support of the
Proposed Amendments,\61\ in addition to any other comments they may
wish to submit about the Proposed Amendments. In particular, the
Commission seeks comment on the following:
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\59\ 17 CFR 242.608(b)(2)(i).
\60\ 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).
\61\ See Notice, supra note 7.
---------------------------------------------------------------------------
1. What are commenters' views on whether the Proposed Amendments
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. For example, do commenters believe that Section I of the
CTA Plan and Section I of the CQ Plan (both titled Definitions)
appropriately define 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 Amendments? Additionally, do commenters believe that the
Proposed Amendments should be modified to explicitly incorporate
certain terms such as Consolidated Market Data, as defined in Rule
600(b)(19) into the Plan? Similarly, Section V of the CTA Plan and
Section V of the CQ Plan (both titled The Processor and Competing
Consolidators) describe the evaluation and functions of the Processor,
respectively. Do commenters believe that modifying the Proposed
Amendments 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 Amendments
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. Specifically, do commenters believe that the
Proposed Amendments require 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
Amendments be modified to include a requirement for such timestamping?
3. What are commenters' views on the absence of a microsecond
timestamp requirement applicable to FINRA in Section VI.(c)
(Consolidated Tape, Reporting Format and Technical Specifications) of
the CTA Plan?
4. What are commenters' views on the proposed deletion of language
in Section VIII.(a) (Collection and Reporting of Last Sale Data,
Responsibility of Exchange Participants) of the CTA Plan stating, ``CTA
shall seek to reduce the time period for reporting last sale prices to
the Processor as conditions warrant.'' Specifically, do commenters
believe that this Proposed Amendment should be modified to retain the
language but replace the term ``Processor'' with ``Competing
Consolidators and Self-Aggregators''?
5. What are commenters' views on the following sections of the
Proposed Amendments in light of the decentralized consolidation model
under the MDI Rules: Section IX. (Receipt and Use of CTA Information)
of the CTA Plan and Section VII. (Receipt and Use of Quotation
Information) of the CQ Plan. Do commenters believe that the Proposed
Amendments should be modified with respect to any of these sections to
implement the decentralized consolidation model? If so, how? What are
commenters' views on the use of the term ``consolidated market data''
in Section IX. of the CTA Plan? Do commenters agree with the statement
by the Participants that the current market data contracts regarding
the receipt of market data applicable to vendors and subscribers should
be applicable to competing consolidators and self-aggregators? \62\ Do
commenters interpret these provisions to mean that a network's
administrator must approve a competing consolidator or self-aggregator
before the competing consolidator or self-aggregator can receive data
and can terminate such approval of a competing consolidator or self-
aggregator?
---------------------------------------------------------------------------
\62\ See id., 86 FR at 67801.
---------------------------------------------------------------------------
6. What are commenters' views on whether the Proposed Amendments
sufficiently describe how the Plans will operate under the Initial
Parallel Operation Period when ``the decentralized consolidation model
will run in parallel to the existing exclusive SIP model.'' \63\
Specifically, Section D of the Proposed Amendments states that Proposed
Amendments will be implemented to coincide with the phased
implementation of the MDI Rules as required by the Commission. Do
commenters believe that the Proposed Amendments 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?
---------------------------------------------------------------------------
\63\ See MDI Rules Release, supra note 6, at Section III.H.2.,
86 FR at 18698-701.
---------------------------------------------------------------------------
7. What are commenters' views on the Proposed Amendments in light
of the decentralized consolidation model with respect to (i) references
to the Processor, High speed line, and Subscribers; (ii) the
dissemination of Regulatory Halts; (iii) the authority of the Operating
Committee under Section IV.(d) of the CTA Plan and Section IV.(b) of
the CQ Plan, respectively, with respect to
[[Page 11755]]
operation of the Consolidated Tape System and Consolidated Quotation
System; and (iv) references to contracts with Vendors and Subscribers.
Do commenters believe that the Proposed Amendments should be modified
with respect to any of these provisions in light of the decentralized
consolidation model required by the MDI Rules?
8. What are commenters' views on the following sections of the
Proposed Amendments in light of the decentralized consolidation model:
(i) CTA Plan: Parties, Administration of the CTA Plan, Potential
Conflicts of Interest, The Processor and Competing Consolidators,
Consolidated Tape, Collection and Reporting of Last Sale Data, Receipt
and Use of CTA Information, Operational Matters, Financial Matters,
Concurrent Use of Facilities, (ii) CQ Plan: Administration of this CQ
Plan, The Processor and Competing Consolidators, Collection and
Reporting of Quotation Information, Receipt and Use of Quotation
Information, Operational Matters, Financial Matters, Concurrent Use of
Facilities. Do commenters believe that the Proposed Amendments should
be modified with respect to any of these sections, or any other
section, in light of the decentralized consolidation model required by
the MDI Rules? If so, please describe how the Proposed Amendments
should be modified in light of the decentralized consolidation model
required by the MDI Rules.
9. Do commenters have views about any other aspect of the Proposed
Amendments? Do commenters believe that the Proposed Amendments 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File No. SR-CTA/CQ-2021-02 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. SR-CTA/CQ-2021-02. 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 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. SR-CTA/CQ-2021-02 and should be
submitted on or before March 23, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\64\
---------------------------------------------------------------------------
\64\ 17 CFR 200.30-3(a)(85).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2022-04335 Filed 3-1-22; 8:45 am]
BILLING CODE 8011-01-P
