
[Federal Register Volume 78, Number 239 (Thursday, December 12, 2013)]
[Notices]
[Pages 75669-75670]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29620]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71018]


Order Granting a Temporary Exemption Pursuant to Section 36(a)(1) 
of the Securities Exchange Act of 1934 From the Filing Deadline 
Specified in Rule 613(a)(1) of the Exchange Act

December 6, 2013.
    Rule 613(a)(1) of the Securities Exchange Act of 1934 (``Exchange 
Act'') \1\ requires the Financial Industry Regulatory Authority, Inc. 
(``FINRA'') and the eighteen registered national securities exchanges 
(collectively, the ``SROs'') to ``jointly file on or before 270 days 
from the date of publication of the Adopting Release [for Rule 613 of 
the Exchange Act \2\] in the Federal Register a national market system 
plan to govern the creation, implementation, and maintenance of a 
consolidated audit trail and central repository as required by [the 
rule].'' The Adopting Release for Rule 613 was published in the Federal 
Register on August 1, 2012,\3\ thus requiring the national market 
system plan (``NMS plan'') to be filed on or before April 28, 2013.\4\ 
On March 7, 2013, the Securities and Exchange Commission 
(``Commission'') granted a request from the SROs for a temporary 
exemption from this deadline until December 6, 2013.\5\ On November 8, 
2013, the SROs filed an application, pursuant to Rule 0-12 under the 
Exchange Act,\6\ to request the Commission to grant a temporary 
exemption under Section 36 of the Exchange Act,\7\ from the deadline 
specified in Rule 613(a)(1) of the Exchange Act \8\ for submitting the 
NMS plan to the Commission until September 30, 2014.\9\
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    \1\ 17 CFR 242.613(a)(1).
    \2\ 17 CFR 242.613.
    \3\ Securities Exchange Act Release No. 67457 (July 18, 2012), 
77 FR 45722 (August 1, 2012) (``Adopting Release'').
    \4\ April 28, 2013, was a Sunday. Therefore, in accordance with 
Rule 160(a) of the Commission Rules of Practice, the deadline for 
filing the NMS plan was Monday, April 29, 2013.
    \5\ See Securities Exchange Act Release No. 69060, 78 FR 15771 
(March 12, 2013); and letter from Robert L.D. Colby, Executive Vice 
President and Chief Legal Officer, FINRA, to Elizabeth M. Murphy, 
Secretary, Commission, dated February 7, 2013 (``February 7, 2013 
Letter'').
    \6\ 17 CFR 240.0-12.
    \7\ 15 U.S.C. 78mm.
    \8\ 17 CFR 242.613(a)(1).
    \9\ See Letter from Robert L.D. Colby, Executive Vice President 
and Chief Legal Officer, FINRA, to Elizabeth M. Murphy, Secretary, 
Commission, dated November 7, 2013 (the ``Current Request Letter'').
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    In their Current Request Letter, the SROs explain that on February 
26, 2013, they published a Request for Proposal (``RFP'') to solicit 
bids from which they will select an entity to serve as the consolidated 
audit trail (``CAT'') plan processor to build, operate, administer, and 
maintain the CAT.\10\ Thirty-one firms, including four distinct SRO 
groups, initially indicated that they planned to submit bids on the 
RFP.\11\ The SROs further state in the Current Request Letter that 
following the publication of the RFP, potential bidders and members of 
the public, including broker-dealer members of the SROs, expressed 
interest in the process by which the SROs will review and evaluate 
bids, narrow down the list of bids, use those bids in formulating the 
CAT NMS Plan, and, ultimately, select the CAT plan processor.
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    \10\ In the February 7, 2013 Letter, the SROs stated that an RFP 
process was necessary prior to filing an NMS plan pursuant to Rule 
613 (``CAT NMS Plan''). The SROs explained their belief that such a 
process would ensure that potential alternative solutions for 
creating the consolidated audit trail could be presented to the SROs 
for their consideration, and would provide the SROs with information 
necessary to prepare a detailed cost/benefit analysis as required by 
Rule 613. See February 7, 2013 Letter, supra note 5.
    \11\ According to the SROs, since that time, seven firms have 
formally notified the SROs of their intent to withdraw as primary 
bidders. See Current Request Letter, supra note 9. Of the seven 
firms that formally notified the SROs of their intent to withdraw as 
primary bidders, two are SRO groups. See http://catnmsplan.com/web/groups/catnms/@catnms/documents/appsupportdocs/p217583.pdf (last 
visited November 19, 2013).
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    The SROs state in the Current Request Letter that they solicited 
views from potential bidders regarding whether they preferred to know 
the process the SROs will follow to review, evaluate, and select a 
bidder in advance of submitting their bids and whether that process 
could influence either a decision regarding whether to submit a bid or 
the contents of a bid. The SROs represent that many potential bidders 
indicated that knowing the process by which the SROs will choose the 
plan processor is important to finalizing their bids. According to the 
SROs, the potential bidders also generally expressed the view that 
providing bidders with four weeks between approval of a selection 
process and the submission deadline for the bids would be an 
appropriate timeframe to allow bidders to make any changes to their 
bids in light of the approved evaluation and selection process. Based 
on this

[[Page 75670]]

feedback, the SROs filed with the Commission an NMS plan to govern the 
SROs' process for the selection of a CAT plan processor, and for 
mitigating conflicts of interest that might arise in the process (the 
``Selection NMS Plan'').\12\
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    \12\ The Commission published the Selection NMS Plan for notice 
and comment. See Securities Exchange Act Release No. 70892 (November 
15, 2013), 78 FR 66910 (November 21, 2013).
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    In the Current Request Letter, the SROs state that a temporary 
exemption is necessary and appropriate regardless of whether the 
Commission approves the Selection NMS Plan. Specifically, the SROs note 
that if the Selection NMS Plan is approved, they believe it will take 
``approximately seven months from the receipt of the bids to review and 
evaluate the bids, perform the in-depth and thorough analysis . . . 
required by Rule 613, and draft the CAT NMS plan for submission to the 
SEC.'' \13\ The SROs further state that ``[b]ecause the content of the 
bids is critical to the analysis needed to draft the CAT NMS Plan, the 
SROs estimate that seven months following the receipt of bids is 
necessary to ensure that they can fully address the considerations 
enumerated in Rule 613, including a discussion of the costs and 
benefits of not only the proposed solution(s) but also of the 
alternative solutions considered but not proposed as the solution in 
the CAT NMS Plan, so that the Commission and the public have 
sufficiently detailed information to carefully consider all aspects of 
the CAT NMS Plan ultimately submitted by the SROs.'' \14\ If the 
Selection NMS Plan is not approved, the SROs explain that they will 
need the temporary exemption to allow bidders additional time to 
finalize their bids, and allow the SROs additional time to develop an 
alternative process for evaluating the bids, developing the CAT NMS 
Plan, and selecting the CAT plan processor.\15\
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    \13\ See Current Request Letter, supra note 9.
    \14\ Id.
    \15\ Id.
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    Section 36 of the Exchange Act \16\ authorizes the Commission, by 
rule, regulation, or order, to exempt, either conditionally or 
unconditionally, any person, security, or transaction, or any class or 
classes of persons, securities, or transactions, from any provision or 
provisions of the Exchange Act or any rule or regulation thereunder, to 
the extent that such exemption is necessary or appropriate in the 
public interest, and is consistent with the protection of investors.
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    \16\ 15 U.S.C. 78mm.
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    The Commission finds that it is appropriate in the public interest, 
and is consistent with the protection of investors, to grant the SROs a 
temporary exemption from the deadline for filing the CAT NMS Plan 
contained in Rule 613(a)(1) until September 30, 2014. The Commission 
believes that granting the exemption is appropriate in light of the 
need for the SROs to establish a deadline for finalizing and submitting 
bids in response to the RFP; to evaluate the bids submitted and select 
the CAT Plan Processor under the Selection NMS Plan, if the Selection 
NMS Plan is approved by the Commission, or an alternative process if 
the Selection NMS Plan is not approved by the Commission; and to draft 
the CAT NMS Plan.
    Accordingly, it is hereby ordered, pursuant to Section 36 of the 
Exchange Act,\17\ that the SROs are temporarily exempted from the 
deadline for submitting the NMS plan to govern the creation, 
implementation, and maintenance of a consolidated audit trail and 
central repository contained in Rule 613(a)(1) \18\ until September 30, 
2014.
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    \17\ 15 U.S.C. 78mm.
    \18\ 17 CFR 242.613(a)(1).

    By the Commission.
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2013-29620 Filed 12-11-13; 8:45 am]
BILLING CODE 8011-01-P


