[Federal Register Volume 87, Number 186 (Tuesday, September 27, 2022)]
[Notices]
[Pages 58560-58571]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-20830]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95850; File No. SR-CTA/CQ-2021-02]


Consolidated Tape Association; Order Disapproving the Thirty-
Seventh Substantive Amendment to the Second Restatement of the CTA Plan 
and the Twenty-Eighth Substantive Amendment to the Restated CQ Plan

September 21, 2022.

I. Introduction

    On November 5, 2021,\1\ the Participants \2\ in the Second 
Restatement of the Consolidated Tape Association (``CTA'') Plan and the 
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 Plans 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.; 
Investors Exchange LLC; Long-Term Stock Exchange, Inc.; MEMX LLC; 
MIAX PEARL, LLC; Nasdaq BX, Inc.; Nasdaq ISE, LLC; Nasdaq PHLX LLC; 
The Nasdaq Stock Market LLC; New York Stock Exchange LLC; NYSE 
American LLC; NYSE Arca, Inc.; NYSE Chicago, Inc.; and NYSE 
National, Inc.
    \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 of Regulation NMS, 17 
CFR 242.608. See Securities Exchange Act Release Nos. 10787 (May 10, 
1974), 39 FR 17799 (May 20, 1974) (declaring the CTA Plan 
effective); 15009 (July 28, 1978), 43 FR 34851 (Aug. 7, 1978) 
(temporarily authorizing the CQ Plan); and 16518 (Jan. 22, 1980), 45 
FR 6521 (Jan. 28, 1980) (permanently authorizing the CQ Plan).
    \4\ 15 U.S.C. 78k-1.
    \5\ 17 CFR 242.608.
    \6\ The ``MDI Rules'' as used in this Order, and as relevant to 
the Proposed Amendments, are Rules 600, 603, and 614 of Regulation 
NMS. 17 CFR 242.600, 603, 614. See also Securities Exchange Act 
Release No. 90610 (Dec. 9, 2020), 86 FR 18596 (Apr. 9, 2021) (File 
No. S7-03-20) (``MDI Rules Release''); Securities Exchange Act 
Release No. 90610A (May 24, 2021), 86 FR 29195 (June 1, 2021) (File 
No. S7-03-20) (technical correction to MDI Rules Release). Several 
exchanges filed petitions for review challenging the MDI Rules 
Release in the U.S. Court of Appeals for the District of Columbia 
Circuit, which were denied on May 24, 2022. See The Nasdaq Stock 
Market LLC, et al. v. SEC, No. 21-1100 (D.C. Cir. May 24, 2022).
    \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.
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    On February 24, 2022, the Commission instituted proceedings 
pursuant to Rule 608(b)(2)(i) of Regulation NMS,\8\ 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.\9\ On May 19, 2022, pursuant to Rule 608(b)(2)(i) of 
Regulation NMS,\10\ the Commission extended the period within which to 
conclude proceedings regarding the Proposed Amendments to July 27, 
2022,\11\ and on July 21, 2022, the Commission further extended the 
period within which to conclude proceedings regarding the Proposed 
Amendments to September 25, 2022.\12\
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    \8\ 17 CFR 242.608(b)(2)(i).
    \9\ See Securities Exchange Act Release No. 94310 (Feb. 24, 
2022), 87 FR 11748 (Mar. 2, 2022) (``OIP''). Comments received in 
response to the OIP are available at https://www.sec.gov/comments/sr-ctacq-2021-02/srctacq202102.htm.
    \10\ See 17 CFR 242.608(b)(2)(i).
    \11\ See Securities Exchange Act Release No. 94951 (May 19, 
2022), 87 FR 31920 (May 25, 2022).
    \12\ See Securities Exchange Act Release No. 95345 (July 21, 
2022), 87 FR 45136 (July 27, 2022).
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    This order disapproves the Proposed Amendments.\13\
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    \13\ The Participants have filed a similar 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 (``UTP Plan''), which the 
Commission is also disapproving. See Securities Exchange Act Release 
No. 95848 (Sept. 21, 2022). Separately, certain Participants have 
also filed amendments to implement the fee-related aspects of the 
MDI Rules. See Securities Exchange Act Release Nos. 93625 (Nov. 19, 
2021), 86 FR 67517 (Nov. 26, 2021) (File No. SR-CTA/CQ-2021-03), and 
93618 (Nov. 19, 2021), 86 FR 67562 (Nov. 26, 2021) (File No. S7-24-
89) (together, the ``Proposed Fee Amendments''). The Commission is, 
by separate orders, also disapproving the Proposed Fee Amendments. 
See Securities Exchange Act Release Nos. 95849 (Sept. 21, 2022) 
(File No. S7-24-89); 95851 (Sept. 21, 2022) (File No. SR-CTA/CQ-
2021-03).
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II. Overview

    Pursuant to Regulation NMS and the Equity Data Plans,\14\ the 
national securities exchange and national securities associations 
(``self-regulatory organizations'' or ``SROs'') must provide certain 
information with respect to quotations for and transactions in NMS 
stocks (``NMS information'') to an exclusive plan securities 
information processor (``exclusive SIP''), which consolidates the NMS 
information and makes it available to market participants on the 
consolidated tapes. The purpose of the Equity Data Plans is to 
facilitate the collection and dissemination of SIP data so that the 
public has ready access to a ``comprehensive, accurate, and reliable 
source of information for the prices and volume of any NMS stock at any 
time during the trading day.'' \15\ Because the infrastructure for the 
collection, consolidation, and dissemination of this data had not been 
significantly updated since its initial implementation in the 1970s, 
the Commission adopted amendments to Regulation NMS that increase the 
content of NMS information and amend the manner in which such NMS 
information is collected, consolidated, and disseminated by the Equity 
Data Plans.\16\ In the MDI Rules Release, the Commission stated, 
``[t]he widespread availability of timely market information promotes 
fair and efficient markets and facilitates the ability of brokers and 
dealers to provide best execution to their customers.'' \17\
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    \14\ The three effective national market system plans that 
govern the collection, consolidation, processing, and dissemination 
of certain NMS information are: (1) the CTA Plan; (2) the CQ Plan; 
and (3) the UTP Plan (collectively, the ``Equity Data Plans''). Each 
of the Equity Data Plans is an effective national market system plan 
under 17 CFR 242.608 (Rule 608) of Regulation NMS. See also 
Securities Exchange Act Release No. 28146 (June 26, 1990), 55 FR 
27917 (July 6, 1990) (order approving UTP Plan).
    \15\ Concept Release on Equity Market Structure, Securities 
Exchange Act Release No. 61358 (Jan. 14, 2010), 75 FR 3593 (Jan. 21, 
2010).
    \16\ See MDI Rules Release, supra note 6.
    \17\ Id. at 18599.
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    The MDI Rules increase the content of NMS information and modify 
the manner in which NMS information is collected, consolidated, and 
disseminated. Significantly, under the MDI Rules, the Commission 
required the introduction of a competitive decentralized consolidation 
model under which competing consolidators and self-aggregators will 
replace the

[[Page 58561]]

exclusive SIPs that collect, consolidate, and disseminate equity market 
data under the Equity Data Plans.\18\ Although the exclusive SIPs will 
no longer disseminate consolidated information for an individual NMS 
stock, the Equity Data Plans will continue to play an important role--
they will develop and propose fees for the data content underlying 
consolidated market data, collect and allocate revenues collected for 
this data, develop the monthly performance metrics for competing 
consolidators, and provide an annual assessment of competing 
consolidator performance.
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    \18\ See id. at 18637 (``The Commission is adopting a 
decentralized consolidation model in which competing consolidators, 
rather than the exclusive SIPs, will collect, consolidate, and 
disseminate consolidated market data.'').
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    Rule 614(e) of Regulation NMS requires the participants of the 
effective national market system plan(s) for NMS stocks to file an 
amendment pursuant to Rule 608 of Regulation NMS to conform the plan(s) 
to the decentralized consolidation model.\19\ Specifically, Rule 
614(e)(1) directs the participants to file an amendment to conform the 
plan(s) 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 SROs to competing 
consolidators and self-aggregators. The Proposed Amendments were filed 
by the Participants pursuant to this requirement.\20\
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    \19\ 17 CFR 242.614(e). See also MDI Rules Release, supra note 
6, 86 FR at 18680-81.
    \20\ The Participants have filed the Proposed Amendments under 
the Equity Data Plans. See supra note 14. While the Commission 
issued an order on August 6, 2020, approving, as modified, a new 
national market system plan regarding equity market data--the CT 
Plan--to replace the existing Equity Data Plans, that order was 
stayed on October 13, 2021, see The Nasdaq Stock Market, et al. LLC 
v. Securities and Exchange Commission, No. 21-1167 (D.C. Cir. Oct. 
13, 2021), which was before the Participants filed the Proposed 
Amendments. The Commission's order approving the CT Plan was 
subsequently vacated. See The Nasdaq Stock Market LLC, et al. v. 
Securities and Exchange Commission, Nos. 21-1167, 21-1168, 21-1169 
(D.C. Cir., July 5, 2022) (vacating Securities Exchange Act Release 
No. 92586 (Aug. 6, 2021), 86 FR 44142 (Aug. 11, 2021) (Order 
Approving, as Modified, a National Market System Plan Regarding 
Consolidated Market Data)).
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    As explained below, however, the Proposed Amendments do not comply 
with Rule 614(e)(1) because they do not conform the Plans 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 SROs to competing consolidators and self-
aggregators. For example, inconsistent with the decentralized 
consolidation model and with the requirements of Rule 614(e), the 
Proposed Amendments: (1) amend the Plans to reflect that they will 
disseminate consolidated market data to competing consolidators and 
self-aggregators, even though the Plans will not be disseminating any 
consolidated market data; \21\ (2) fail to amend the CTA Plan to 
require the individual Participants to disseminate data necessary to 
generate consolidated market data to competing consolidators and self-
aggregators; \22\ (3) fail to distinguish competing consolidators from 
vendors and subscribers; \23\ (4) fail to amend the Plans to reflect 
that the Processors will no longer have the responsibility to 
disseminate regulatory halt notices once the decentralized 
consolidation model has been implemented; \24\ (5) fail to include 
requirements for the Participants to timestamp every element of data 
necessary to generate consolidated market data; \25\ and (6) fail to 
amend the Plans to remove references to a single processor.\26\
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    \21\ 17 CFR 242.603(b). See also MDI Rules Release, supra note 
6, 86 FR at 18653 (``[T]hese changes to Rule 603(b) are appropriate 
to establish the decentralized consolidation model.'').
    \22\ 17 CFR 242.603(b). See also MDI Rules Release, supra note 
6, 86 FR at 18653.
    \23\ 17 CFR 242.600(b)(16) (defining ``competing 
consolidators''). See, e.g., MDI Rules Release, supra note 6, 86 FR 
at 18664-65 (discussing why market data vendors would not be 
required to register as competing consolidators under the 
decentralized consolidation model).
    \24\ See, e.g., MDI Rules Release, supra note 6, 86 FR at 18633-
35 (discussing the provision of ``regulatory data'' by the primary 
listing exchange for an NMS stock to competing consolidators and 
self-aggregators under the decentralized consolidation model).
    \25\ 17 CFR 242.614(e)(2).
    \26\ The MDI Rules Release amended Rule 603(b) to remove the 
requirement that ``all consolidated information for an individual 
NMS stock [be disseminated] through a single plan processor.'' See 
MDI Rules Release, supra note 6, 86 FR at 18652-53. See also supra 
note 21; MDI Rules Release, supra note 6, 86 FR at 18701 (discussing 
the retirement of the exclusive SIPs).
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    Because the Proposed Amendments are inconsistent with the MDI 
Rules, specifically Rule 614(e), the Commission must disapprove the 
Proposed Amendments under Rule 608(b)(2) of Regulation NMS because it 
cannot find that they are necessary or appropriate in the public 
interest, for the protection of investors and the maintenance of fair 
and orderly markets, to remove impediments to, and perfect the 
mechanisms of, a national market system, or otherwise in furtherance of 
the purposes of the Act.\27\
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    \27\ 17 CFR 242.608(b)(2).
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III. Summary of the Proposed Amendments

    The Participants propose to amend the Plans to comply with Rule 
614(e) of the MDI Rules. Under Rule 614(e), participants to the 
effective national market system plan(s) for NMS stocks were required 
to file by November 5, 2021, an amendment with the Commission that 
includes each of the requirements of Rule 614(e)(1)-(5).\28\
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    \28\ 17 CFR 242.614(e).
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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 
that, under the decentralized consolidation model, the national 
securities exchange and national securities association participants 
will provide to competing consolidators and self-aggregators the 
information, with respect to quotations for and transactions in NMS 
stocks, that is necessary to generate consolidated market data.
    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.\29\
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    \29\ The full text of the Proposed Amendments appears as 
Attachments A and B to the Notice. See Notice, supra note 7, 86 FR 
at 67802-29.

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[[Page 58562]]

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, as Section I.(x), a definition of 
``Primary Listing Exchange,'' which means ``the national securities 
exchange on which an Eligible Security is listed.'' The proposed 
definition further states, ``[i]f an Eligible Security is listed on 
more than one national securities exchange, Primary Listing Exchange 
means the exchange on which the security has been listed the longest.''
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).\30\
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    \30\ See id. at 67800.
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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 to 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 that 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 changes 
are intended to comply with the requirements of Rule 614(e)(3).\31\
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    \31\ See id.
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    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).\32\ 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.\33\ The 
Proposed Amendments add the following monthly performance metrics to 
this section:
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    \32\ 17 CFR 242.614(d)(5).
    \33\ See 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).\34\
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    \34\ See Notice, supra note 7, 86 FR at 67800.
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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 to 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).\35\
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    \35\ See id.
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    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 amend 
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--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.\36\
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    \36\ 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 collect and report 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

[[Page 58563]]

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 to the CTA Plan a statement that 
``[e]ach 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 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.'' \37\ 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).\38\
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    \37\ 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.''
    \38\ See Notice, supra note 7, 86 FR at 67801.
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    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.\39\
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    \39\ See id.
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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) are intended to make clear that the current market data 
contracts regarding the receipt of market data will be applicable to 
competing consolidators and self-aggregators.\40\ The Participants 
state that the change is consistent with Rule 614(e)(1) and is 
necessary because 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.\41\
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    \40\ See id.
    \41\ See id.
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    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.

[[Page 58564]]

    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 Halts and that competing consolidators 
can disseminate this information to their customers.\42\
---------------------------------------------------------------------------

    \42\ 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 define ``Primary Listing Exchange'' in 
Section I.(v) to mean ``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).\43\
---------------------------------------------------------------------------

    \43\ 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 to 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 changes 
are intended to comply with the requirements of Rule 614(e)(3).\44\
---------------------------------------------------------------------------

    \44\ 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).\45\ 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.\46\ The 
Proposed Amendments add the following monthly performance metrics to 
this section:
---------------------------------------------------------------------------

    \45\ 17 CFR 242.614(d)(5).
    \46\ See 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, ``Each 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 [sic] 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.'' \47\
---------------------------------------------------------------------------

    \47\ Notice, supra note 7, 86 FR at 67801. The Participants 
state that they propose to amend 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 information 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. While the Participants refer to Sections VIII.(a) and (b) of 
the CQ Plan here, this section reference seems to be an error, and 
the Participants likely intended to refer instead to Section VI.(a) 
and (b), as the requirement being discussed is only present in 
Section VI.(b) of the CQ Plan as it is proposed to be amended. 
Separately, the amendment to Section VI.(a) lacks the requirement 
that Participants report quotation information to competing 
consolidators and self-aggregators in the same manner and using the 
same methods, including all methods of access and the same format, 
as such Participant makes available any information with respect to 
quotations for and transactions in Eligible Securities to any 
person. See id. at 67823.
---------------------------------------------------------------------------

    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 the 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

[[Page 58565]]

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 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).
    In addition, the Proposed Amendments would 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.\48\
---------------------------------------------------------------------------

    \48\ See Notice, supra note 7, 86 FR at 67801.
---------------------------------------------------------------------------

    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) \49\ 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).
---------------------------------------------------------------------------

    \49\ See id. at 67824.
---------------------------------------------------------------------------

    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.\50\
---------------------------------------------------------------------------

    \50\ See id. at 67801.
---------------------------------------------------------------------------

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 would 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 would 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.\51\ The Participants state 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.\52\
---------------------------------------------------------------------------

    \51\ See id.
    \52\ See id.
---------------------------------------------------------------------------

    The Proposed Amendments would 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.

IV. Discussion

A. The Applicable Standard of Review

    Under Rule 608(b)(2) of Regulation NMS, the Commission shall 
approve a national market system plan or proposed amendment to an 
effective national market system plan, with such changes or subject to 
such conditions as the Commission may deem necessary or appropriate, if 
it finds that the plan or 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

[[Page 58566]]

mechanisms of, a national market system, or otherwise in furtherance of 
the purposes of the Act.\53\ The Commission shall disapprove a national 
market system plan or proposed amendment if it does not make such a 
finding.\54\ Furthermore, Rule 700(b)(3)(ii) of the Commission's Rules 
of Practice states:
---------------------------------------------------------------------------

    \53\ 17 CFR 242.608(b)(2).
    \54\ Id.

    The burden to demonstrate that a NMS plan filing is consistent 
with the Exchange Act and the rules and regulations issued 
thereunder that are applicable to NMS plans is on the plan 
participants that filed the NMS plan filing. 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 an NMS plan filing is 
consistent with the Exchange Act and the rules and regulations 
issued thereunder that are applicable to NMS plans.\55\
---------------------------------------------------------------------------

    \55\ 17 CFR 201.700(b)(3)(ii).

    For the reasons discussed below, the Commission does not find that 
the Participants have met their burden to demonstrate that the Proposed 
Amendments are consistent with the Act.\56\ Specifically, the 
Commission does not find that the Participants have demonstrated that 
the Proposed Amendments are consistent with either Rule 614(e) of 
Regulation NMS or Rule 608 of Regulation NMS. The Proposed Amendments 
clearly do not comply with the requirements of the MDI Rules.\57\ 
Accordingly, the Commission cannot make a finding that 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.\58\
---------------------------------------------------------------------------

    \56\ 17 CFR 201.700(b)(3).
    \57\ As discussed below, the Proposed Amendments do not comply 
with MDI Rules 603(b), 614(e)(1), and 614(e)(2). 17 CFR 242.603(b), 
17 CFR 242.614(e)(1), 17 CFR 242.614(e)(2).
    \58\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------

B. The Requirements of the MDI Rules Regarding the Proposed Amendments

    As adopted by the Commission, the MDI Rules implement a 
decentralized consolidation model in which competing consolidators 
would replace the exclusive plan processors of the Equity Data Plans as 
the entities responsible for disseminating consolidated market 
data.\59\ The MDI Rules Release provides for an ``initial parallel 
operation period'' of 180 days during which the existing exclusive SIPs 
for the Equity Data Plans would operate in parallel with the competing 
consolidators,\60\ and further provides for the transition from the 
initial parallel operation period to the retirement of the exclusive 
SIPs for equity market data:
---------------------------------------------------------------------------

    \59\ See MDI Rules Release, supra note 6, 86 FR at 18637.
    \60\ See id. at 18700.

    Within 90 days of the end of the initial parallel operation 
period, the Operating Committee will make a recommendation to the 
Commission as to whether the exclusive SIPs should be 
decommissioned. The Commission will consider an effective national 
market system plan amendment to effectuate a cessation of the 
operations of the exclusive SIPs and, if consistent with the 
requirements of Rule 608 and the Exchange Act, approve such an 
amendment.\61\
---------------------------------------------------------------------------

    \61\ Id. at 18701.

    Pursuant to Rule 614(e)(1) of Regulation NMS, and as discussed in 
the MDI Rules Release, the Participants to the Plans were required to 
file an amendment to conform the Plans 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.\62\
---------------------------------------------------------------------------

    \62\ See id. at 18700-01.
---------------------------------------------------------------------------

C. Whether the Proposed Amendments Are Consistent With Rule 614(e)(1) 
of Regulation NMS

1. Consistency With the Decentralized Consolidation Model

    Two commenters recommend disapproval of the Proposed Amendments 
because the amendments do not properly conform the Plans to the MDI 
Rules in that the amendments fail to accurately reflect the 
decentralized consolidation model.\63\ One commenter states, ``[t]he 
MDI rule represents a fundamental shift to a decentralized 
consolidation model. The Plan amendments need to reflect that 
throughout the body and exhibits of the Plans.'' \64\ The commenter 
also states that the Proposed Amendments did not include any revisions 
to the exhibits, stating that Exhibit A to the current version of the 
CTA Plan (``Restated Articles of Association of Consolidated Tape 
Association'') ``does not reflect the shifting purpose of the Plan to 
provide underlying content for the creation of consolidated market 
data,'' \65\ and argues that the Proposed Amendments must 
``[a]cknowledge that the Plan is no longer responsible for the 
creation, distribution and pricing of consolidated market data.'' \66\
---------------------------------------------------------------------------

    \63\ See Letter from Patrick Flannery, Chief Executive Officer, 
MayStreet, Inc., to Vanessa Countryman, Secretary, Commission (Dec. 
17, 2021) (``MayStreet Letter I''); Letter from Manisha Kimmel, 
Chief Policy Officer, MayStreet, Inc., to Vanessa Countryman, 
Secretary, Commission (Mar. 23, 2022) (``MayStreet Letter II''); 
Letter 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, to Vanessa Countryman, 
Secretary, Commission (Dec. 17, 2021) (``SIFMA Letter I'').
    \64\ MayStreet Letter II, supra note 63, at 2.
    \65\ Id. at 8.
    \66\ Id. at 4-5.
---------------------------------------------------------------------------

    This commenter further argues that ``[t]he language of the Plan 
Amendments that states that competing consolidators and self-
aggregators will be receiving and using consolidated market data is 
inconsistent with their role in actually generating consolidated market 
data based on the receipt of NMS information,'' \67\ and reiterates 
that only competing consolidators would externally distribute and 
charge for consolidated market data and that the Plans would only be 
selling underlying content.\68\ This commenter also disagrees with what 
it describes as the Proposed Amendments' treatment of competing 
consolidators as vendors.\69\ The commenter states that ``[s]ubjecting 
competing consolidators to the same fees and 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.'' \70\ The 
commenter further states that competing consolidators will take on 
added risk and expense, ``including the costs associated with 
generating consolidated market data, disclosing operational and 
performance metrics, registering with the SEC, and ongoing compliance 
with Rule 614.'' \71\
---------------------------------------------------------------------------

    \67\ MayStreet Letter I, supra note 63, at 5.
    \68\ See MayStreet Letter II, supra note 63, at 4-5.
    \69\ See MayStreet Letter I, supra note 63, at 2, 4-5 
(explaining that competing consolidators are generating and 
distributing consolidated market data for the first time, unlike 
vendors who redistribute consolidated market data).
    \70\ MayStreet Letter I, supra note 63, at 3-4; see id. at 1 
(stating that competing consolidators should be treated as the 
replacements to the exclusive SIPs to meet the requirements of the 
MDI Rules).
    \71\ Id. at 5.
---------------------------------------------------------------------------

    Another commenter also argues that the Proposed Amendments' 
treatment of competing consolidators as market data vendors contravenes 
the MDI Rules.\72\ This commenter argues that the

[[Page 58567]]

Commission's MDI Rules replace the exclusive SIPs with competing 
consolidators and that competing consolidators should therefore be 
``treated in the same manner as the exclusive SIPs are today.'' \73\ 
This commenter states that the Participants are, through the Proposed 
Amendments, ``acting in an unreasonably discriminatory manner, 
effectively disregarding these Exchange Act mandates in addition to the 
Commission's directive in the Infrastructure Rule.'' \74\
---------------------------------------------------------------------------

    \72\ See SIFMA Letter I, supra note 63, at 8. See also id. at 4-
5; Letter 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, to Vanessa Countryman, 
Secretary, Commission, at 2-3 (Apr. 27, 2022) (``SIFMA Letter II'').
    \73\ SIFMA Letter I, supra note 63, at 8.
    \74\ Id. at 8.
---------------------------------------------------------------------------

    One commenter argues that the sections of the Plans that discuss 
vendors' and subscribers' contractual relationships with the Plans 
should be ``removed or significantly altered to reflect that the Plans 
no longer have agreements with vendors and end users and instead have 
agreements with the competing consolidators and self-aggregators 
related specifically to the cost of content underlying core market 
data.'' \75\ This commenter states that ``the relationship between 
competing consolidators and their customers should not include a 
contractual relationship with the plan'' because vendors would be 
receiving consolidated market data from competing consolidators rather 
than from the Plans.\76\ The commenter also states that contracts 
applicable to vendors would be inappropriate for competing 
consolidators because, unlike vendors, competing consolidators would be 
receiving data underlying consolidated market data from the exchanges, 
not consolidated market data from the exclusive SIPs.\77\ This 
commenter also objects to the continued references to subscribers and 
vendors in the Plans as recipients of data from the Processor, arguing 
that under the decentralized consolidation model, ``only competing 
consolidators would sell consolidated market data to vendors and 
subscribers.'' \78\
---------------------------------------------------------------------------

    \75\ MayStreet Letter I, supra note 63, at 3.
    \76\ Id. at 3. See also MayStreet Letter II, supra note 63 at 9 
(arguing that, since the Plans would only be selling underlying 
content to competing consolidators and self-aggregators, vendor and 
subscriber agreements should not be required).
    \77\ See MayStreet Letter I, supra note 63, at 5.
    \78\ Id. at 3.
---------------------------------------------------------------------------

    One commenter objects to the retention of the concept of a single 
processor in the Proposed Amendments.\79\ Another commenter also states 
that ``it is worth noting that the Plans do not reflect the 
decentralized consolidation model nor do they acknowledge the parallel 
period.'' \80\ This commenter requests clarification of how the CTA and 
CQ Plans will operate during the parallel operation period, such as the 
inclusion in the Plans of objective criteria for ending the parallel 
period and the addition of a section devoted to competing consolidators 
and self-aggregators to help distinguish between their obligations and 
the obligations of the exclusive SIPs during the parallel period.\81\ 
The commenter recommends that the Proposed Amendments clarify that all 
content underlying consolidated market data will be provided to 
competing consolidators and self-aggregators and provide validation 
procedures to be followed by competing consolidators. The commenter 
also suggests specific modifications to CTA Plan Sections V. and VI. to 
make clear that the functions of the Processor apply only during the 
parallel operation period and to embed in the body of the Plans the 
contractual terms regarding the provision of capacity forecasts to 
competing consolidators, data correction requirements, and 
indemnification (of competing consolidators from Participants) from CQ 
Plan Exhibit A and CTA Plan Exhibit B.\82\
---------------------------------------------------------------------------

    \79\ See SIFMA Letter I, supra note 63, at 8.
    \80\ MayStreet Letter II, supra note 63, at 8.
    \81\ See id. at 7-8.
    \82\ See id.
---------------------------------------------------------------------------

    The Participants submitted a comment letter in which they argue 
that maintaining the exclusive SIPs through the parallel operation 
period is consistent with the MDI Rules Release, stating:

    [P]ursuant to the phased transition period set forth in the MDI 
Rules Release, the Plans must operate a parallel operation period 
during which the decentralized consolidation model introduced by the 
MDI Rules will run in parallel to the existing exclusive SIP model. 
. . . After completion of the parallel operation period, the Plans 
are required to submit an amendment to effectuate a cessation of the 
operations of the exclusive SIPs, which would include removing 
references of the exclusive SIPs from the text of the Plans.\83\
---------------------------------------------------------------------------

    \83\ Letter from James P. Dombach, Counsel for CTA, CQ, and UTP 
Plans, McGonigle, P.C., to Vanessa Countryman, Secretary, 
Commission, at 2 (Mar. 25, 2022) (``McGonigle Letter'').

    The Participants also maintain that the exclusive SIPs will 
continue to provide market data under the current Equity Data Plans 
during the parallel operation period and that the inclusion of the 
exclusive SIPs in the Equity Data Plans (as provided for in the 
Proposed Amendments) until the submission of a further amendment after 
the parallel operation period is consistent with the MDI Rules 
Release.\84\
---------------------------------------------------------------------------

    \84\ See id. at 1-2.
---------------------------------------------------------------------------

    The Commission agrees with the commenters who argue that the 
Proposed Amendments do not properly conform the Plans to the 
decentralized consolidation model. First, under the MDI Rules, the SROs 
are required to make available to competing consolidators and self-
aggregators the data necessary to generate consolidated market 
data,\85\ and competing consolidators and self-aggregators will then 
generate consolidated market data, rather than receive consolidated 
market data from the Plans.\86\ The Participants, however, propose to 
amend the Plans to provide for the dissemination of consolidated data 
to competing consolidators and self-aggregators.\87\ This is not 
consistent with the decentralized consolidation model.
---------------------------------------------------------------------------

    \85\ See Rule 603(b), 17 CFR 242.603(b). See also Rule 
600(b)(19), which defines ``consolidated market data'' as the 
following data, consolidated across all national securities 
exchanges and national securities associations: (i) Core data; (ii) 
Regulatory data; (iii) Administrative data; (iv) Self-regulatory 
organization-specific program data; and (v) Additional regulatory, 
administrative, or self-regulatory organization-specific program 
data elements defined as such pursuant to the effective national 
market system plan or plans required under Sec.  242.603(b). See 17 
CFR 242.600(b)(19).
    \86\ See Rule 614(d)(1)-(3). 17 CFR 242.614(d)(1)-(3).
    \87\ The Participants propose to amend the CTA Plan to require 
the CTA network administrator to provide for the dissemination of 
consolidated market data to competing consolidators and self-
aggregators and to provide for the use of that consolidated market 
data by competing consolidators and self-aggregators. See Notice, 
supra note 7, 86 FR at 67811 (CTA Plan Proposed Amendment at Section 
IX.(a)). The Participants also propose to amend the CQ Plan to 
require each network's administrator to provide for the 
dissemination of each CQ network's consolidated quotation 
information on terms that are not unreasonably discriminatory to 
competing consolidators and self-aggregators, and to provide for the 
use of that CQ network's consolidated quotation information by 
competing consolidators and self-aggregators. See id. at 67824 (CQ 
Plan Proposed Amendment at Section VII.(a)). See also Consolidated 
Quotation System, Multicast Output Binary Specification, 8 (Jan. 26. 
2021), available at https://www.ctaplan.com/publicdocs/ctaplan/CQS_Pillar_Output_Specification.pdf. The Participants also state 
that, for both the CTA Plan and the CQ Plan, competing consolidators 
and self-aggregators will be receiving and using consolidated market 
data. See Notice, supra note 7, 86 FR at 67801 (describing the 
Proposed Amendments).
---------------------------------------------------------------------------

    Specifically, Rule 614(d) provides that competing consolidators 
shall collect any information with respect to quotations for and 
transactions in NMS stocks as provided in Rule 603(b) that is necessary 
to create a consolidated market data product from each national 
securities exchange and national securities association,\88\ calculate 
and

[[Page 58568]]

generate a consolidated market data product,\89\ and make the 
consolidated market data product available to subscribers.\90\ Self-
aggregators will receive information with respect to quotations for and 
transactions in NMS stocks, including all data necessary to generate 
consolidated market data, and generate consolidated market data solely 
for their internal use.\91\ Additionally, pursuant to Rule 603(b), the 
Participants shall make available to all competing consolidators and 
self-aggregators ``all data necessary to generate consolidated market 
data.'' \92\ Accordingly, the Plans' modified role under the 
decentralized consolidation model will be to develop and file with the 
Commission the fees associated with the underlying data, to collect and 
allocate revenues for that data, to develop monthly performance metrics 
for competing consolidators, and to provide an annual assessment of 
competing consolidator performance.\93\ Therefore, the Proposed 
Amendments impermissibly provide for the dissemination by the Plans of 
consolidated market data to competing consolidators and self-
aggregators, which is inconsistent with Rule 603(b), which requires the 
Participants to make available the data necessary to generate 
consolidated market data to competing consolidators and self-
aggregators so that, pursuant to Rule 614(d), those entities can 
generate consolidated market data themselves.
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    \88\ See Rule 614(d)(1), 17 CFR 242.614(d)(1).
    \89\ See Rule 614(d)(2), 17 CFR 242.614(d)(2).
    \90\ See Rule 614(d)(3), 17 CFR 242.614(d)(3). The MDI Rules 
also define ``competing consolidator'' as a securities information 
processor required to be registered pursuant to Sec.  242.614 (Rule 
614) or a national securities exchange or national securities 
association that receives information with respect to quotations for 
and transactions in NMS stocks and generates a consolidated market 
data product for dissemination to any person. See 17 CFR 
242.600(b)(16).
    \91\ The definition of ``self-aggregator'' was added by the MDI 
Rules. See 17 CFR 242.600(b)(83). A self-aggregator may make 
consolidated market data available to its affiliates that are 
registered with the Commission for their internal use. Id.
    \92\ 17 CFR 242.603(b).
    \93\ See MDI Rules Release, supra note 6, 86 FR at 18604, 18681.
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    Second, while Rule 603(b) requires national securities exchanges 
and associations on which an NMS stock is traded to make available to 
all competing consolidators and self-aggregators their information with 
respect to quotations for and transactions in NMS stocks, including all 
data necessary to generate consolidated market data,\94\ the Proposed 
Amendments do not add this requirement to the CTA Plan. Instead, the 
Proposed Amendments add to the CTA Plan a requirement that each 
Participant agrees to collect and report to competing consolidators and 
self-aggregators all ``last sale price information''--not all data 
necessary to generate consolidated market data.\95\ Last sale price 
information is but one component of ``core data'' adopted by the MDI 
Rules, and core data is itself only one component of consolidated 
market data.\96\ Rule 603(b) requires the Participants to make 
available all data necessary to generate consolidated market data to 
competing consolidators and self-aggregators,\97\ not just last sale 
price information.
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    \94\ 17 CFR 242.603(b).
    \95\ See Notice, supra note 7, 86 FR at 67810 (CTA Plan Proposed 
Amendment at Section VIII.(a)). As discussed above, Rule 600(b)(19) 
defines ``consolidated market data'' as the following data, 
consolidated across all national securities exchanges and national 
securities associations: (i) Core data; (ii) Regulatory data; (iii) 
Administrative data; (iv) Self-regulatory organization-specific 
program data; and (v) Additional regulatory, administrative, or 
self-regulatory organization-specific program data elements defined 
as such pursuant to the effective national market system plan or 
plans required under Sec.  242.603(b). See 17 CFR 242.600(b)(19). 
Rule 600(b)(21) defines ``core data'' as (i) The following 
information with respect to quotations for, and transactions in, NMS 
stocks: (A) Quotation sizes; (B) Aggregate quotation sizes; (C) Best 
bid and best offer; (D) National best bid and national best offer; 
(E) Protected bid and protected offer; (F) Transaction reports; (G) 
Last sale data; (H) Odd-lot information; (I) Depth of book data; and 
(J) Auction information.'' See 17 CFR 242.600(b)(21).
    \96\ See id.
    \97\ 17 CFR 242.603(b).
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    Third, under the Proposed Amendments, the Plans would treat 
competing consolidators in the same manner as vendors and subscribers 
with respect to market data contracts.\98\ Under Rule 600(b)(16), a 
competing consolidator is, by definition, either a SIP required to 
register under Rule 614 or an SRO.\99\ The Participants, however, would 
apply current market data contracts for vendors and subscribers to 
competing consolidators and self-aggregators,\100\ arguing that this 
``is necessary since the Competing Consolidators and Self-Aggregators 
will [sic] receiving and using consolidated market data, and any such 
party should be subject to the same contracts applicable to vendors and 
subscribers.'' \101\
---------------------------------------------------------------------------

    \98\ See SIFMA Letter I, supra note 63, at 4-5, 8; SIFMA Letter 
II, supra note 72, at 2-3; MayStreet Letter I, supra note 63, at 2, 
4-5.
    \99\ 17 CFR 242.600(b)(16).
    \100\ See Notice, supra note 7, 86 FR at 67811-12 (CTA Plan 
Proposed Amendment at Section IX.; id. at 67824-25 (CQ Plan Proposed 
Amendment at Section VII.).
    \101\ Notice, supra note 7, 86 FR at 67801.
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    The Commission agrees with the commenters who argue that applying 
contract provisions for vendors and subscribers to competing 
consolidators is inconsistent with the MDI Rules,\102\ because unlike 
vendors and subscribers, competing consolidators will not receive 
consolidated market data from the Plans. Instead, as replacements for 
the exclusive SIPs, competing consolidators will generate consolidated 
market data themselves and disseminate it to subscribers. In the MDI 
Rules Release, the Commission clearly distinguished competing 
consolidators from vendors. For example, the Commission explained that 
only entities that receive information with respect to quotations for 
and transactions in NMS stocks directly from an SRO pursuant to an 
effective national market systems plan and that generate consolidated 
market data products for dissemination must register as competing 
consolidators.\103\ By comparison, the Commission stated, ``[a] market 
data vendor that purchases proprietary data feeds from an SRO or SROs, 
or that purchases data from a competing consolidator, and aggregates 
and disseminates such data to its customers, will not be required to 
register as a competing consolidator,'' \104\ but ``vendors that do not 
register as competing consolidators would not be permitted to purchase 
the NMS information necessary to generate consolidated market data from 
the SROs at prices established by an effective national market system 
plan.'' \105\
---------------------------------------------------------------------------

    \102\ See SIFMA Letter I, supra note 63, at 4-5, 8; MayStreet 
Letter I, supra note 63, at 2, 4-5. See also SIFMA Letter II, supra 
note 72, at 2-3 (objecting to the Proposed Fee Amendments because 
they propose to charge redistribution fees to competing 
consolidators like market data vendors).
    \103\ See MDI Rules Release, supra note 6, 86 FR at 18665.
    \104\ Id.
    \105\ Id.
---------------------------------------------------------------------------

    Fourth, the Proposed Amendments are inconsistent in certain other 
ways with the decentralized consolidation model provided for in the MDI 
Rules. Under the decentralized consolidation model, the primary listing 
exchanges will be required to collect, calculate, and make available 
regulatory data, which includes information relating to regulatory 
halts, to competing consolidators and self-aggregators in accordance 
with the definition of ``regulatory data'' in Rule 600(b)(78).\106\

[[Page 58569]]

The Proposed Amendments, however, do not reflect this requirement with 
respect to regulatory data. For example, the Proposed Amendments fail 
to amend the CTA and CQ Plans to reflect that the Processors will no 
longer have the responsibility to disseminate regulatory halt notices 
once the decentralized consolidation model has been implemented.
---------------------------------------------------------------------------

    \106\ 17 CFR 242.600(b)(78) defines ``Regulatory Data'' as, 
among other things: (A) Information regarding Short Sale Circuit 
Breakers pursuant to Sec.  242.201; (B) Information regarding Price 
Bands required pursuant to the Plan to Address Extraordinary Market 
Volatility . . . (C) Information relating to regulatory halts or 
trading pauses (news dissemination/pending, LULD, Market-Wide 
Circuit Breakers) and reopenings or resumptions; (D) The official 
opening and closing prices of the primary listing exchange; and (E) 
An indicator of the applicable round lot size. See 17 CFR 
242.600(b)(78)(i). Regulatory data is one element of ``consolidated 
market data,'' as defined in Rule 600(b)(19). See supra note 85.
---------------------------------------------------------------------------

    The Proposed Amendments also do not include requirements for the 
Participants to timestamp every element of data necessary to generate 
consolidated market data. Rule 614(e)(2) requires the application of 
timestamps by the 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 by the Participant and the time the 
Participant made such information available to competing consolidators 
and self-aggregators.\107\ While the Proposed Amendment to the CTA Plan 
requires that a Participant that reports last sale price information to 
competing consolidators and self-aggregators timestamp in microseconds 
the time the Participant generated the last sale price information and 
made the last sale price information available to those entities,\108\ 
this proposed timestamp provision does not satisfy the requirements of 
Rule 614(e)(2), because it applies only to last sale price information, 
not to ``all information with respect to quotations for and 
transactions in NMS stocks that is necessary to generate consolidated 
market data'' as required under the rule. And while the Proposed 
Amendment to the CQ Plan amends the section governing the collection 
and reporting of Quotation Information to require any Participant that 
furnishes bids and offers to competing consolidators and self-
aggregators to timestamp the time the Participant made such bid and 
offer available to competing consolidators and self-aggregators,\109\ 
this proposed timestamp provision does not apply to ``all information 
with respect to quotations for and transactions in NMS stocks that is 
necessary to generate consolidated market data.'' \110\ Additionally, 
the Proposed Amendment to the CQ Plan states that each bid and offer 
furnished to competing consolidators and self-aggregators shall be 
accompanied by the information required by Rule 602(b)(1) or Rule 
603(b),\111\ but it does not specifically require that each Participant 
timestamp the data necessary to generate consolidated market data upon 
generation and upon the time it is made available to competing 
consolidators and self-aggregators, as required by Rule 614(e)(2).
---------------------------------------------------------------------------

    \107\ 17 CFR 242.614(e)(2).
    \108\ See Notice, supra note 7, 86 FR at 67808 (CTA Plan 
Proposed Amendment at Section VI.(c)).
    \109\ See id. at 67823 (CQ Plan Proposed Amendment at Section 
VI.(a)).
    \110\ In the MDI Rules Release, the Commission stated, 
``[s]pecifically, the timestamps applied by the SROs must be to the 
individual components of data content underlying consolidated market 
data, i.e., all of the individual components of data content 
underlying core data, regulatory data, administrative data, self-
regulatory organization-specific program data, and additional 
elements defined as `consolidated market data.' '' MDI Rules 
Release, supra note 6, 86 FR at 18688.
    \111\ See Notice, supra note 7, 86 FR at 67823 (CQ Plan Proposed 
Amendment at Section VI.(a)).
---------------------------------------------------------------------------

    And finally, the Commission disagrees with the Participants' 
statement that the continued references to the role of the Processor in 
the Plans, as amended by the Proposed Amendments, comply with the MDI 
Rules Release's implementation schedule for parallel operation of the 
exclusive SIPs and the competing consolidators.\112\ Rule 614(e)(1) 
requires the Participants to amend the Plans 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 
SROs to competing consolidators and self-aggregators, i.e., to conform 
the Plans to reflect the decentralized consolidation model.\113\ 
However, the Proposed Amendments are not consistent with the 
decentralized consolidation model and do not conform to the fact that a 
single processor will no longer be in operation once the decentralized 
consolidation model has been fully implemented.
---------------------------------------------------------------------------

    \112\ See McGonigle Letter, supra note 83, at 1-2. See also MDI 
Rules Release, supra note 6, 86 FR at 18700-01 (discussing the 
parallel operation implementation schedule).
    \113\ 17 CFR 242.614(e)(1).
---------------------------------------------------------------------------

    And while the MDI Rules Release contemplates the filing of a second 
amendment by the Plans ``to effectuate a cessation of the operations of 
the exclusive SIPs,'' \114\ the current Proposed Amendments were 
required to conform the Plans 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 SROs to competing 
consolidators and self-aggregators, which, as discussed above, they 
have failed to do. Moreover, the failure of the Participants to explain 
in the Proposed Amendments how the Plans will function under the fully 
implemented decentralized consolidation model upon cessation of the 
exclusive SIPs not only denies market participants the opportunity to 
comment on those proposed provisions now, but it increases the 
uncertainty that firms face in determining whether to become competing 
consolidators or self-aggregators during the initial parallel operation 
period, thus hampering the implementation of the decentralized 
consolidation model required by the MDI Rules.\115\
---------------------------------------------------------------------------

    \114\ MDI Rules Release, supra note 6, 86 FR at 18701.
    \115\ See id. at 18699-700 (discussing the ``first wave'' 
registration period for competing consolidators, to begin on the 
date the Commission approves the amendments to the effective 
national market system plan(s) required under Rule 614(e) including 
the fees for the SRO data content necessary to generate consolidated 
market data).
---------------------------------------------------------------------------

    Because the Proposed Amendments clearly do not comply with the 
plain terms of the MDI Rules \116\ and are thus inconsistent with the 
requirements of Rule 614(e)(1), the Commission also does not find that 
the Participants have met their burden to demonstrate that the Proposed 
Amendments are consistent with Rule 608 as 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.\117\
---------------------------------------------------------------------------

    \116\ Specifically, Rules 603(b), 614(e)(1) and (e)(2). 17 CFR 
242.603(b), 17 CFR 242.614(e)(1), 17 CFR 242.614(e)(2).
    \117\ See 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------

2. Technical Comments

    One commenter criticizes the failure of the Proposed Amendments to 
incorporate the definitions of the MDI Rules.\118\ This commenter 
states, ``[t]he definitions in each of the Plans should be updated to 
reflect the decentralized consolidation model. It is insufficient to 
simply refer to Rule 600(b), in large part because there seems to be 
confusion within the Plans as to the role of competing consolidators, 
self-aggregators, the exclusive SIPs and vendors.'' \119\ Specifically, 
this commenter suggests that the Proposed Amendments add definitions of 
the following terms: competing consolidator, self-aggregator, 
consolidated market data, content

[[Page 58570]]

underlying consolidated market data, initial parallel period, and 
parallel period, as well as a definition of the content that would be 
disseminated by the exclusive SIP to the Plans.\120\ This commenter 
also suggests updating the existing definitions of Processor, System, 
and Consolidated Quotation System, and clarifying the existing 
definitions of Subscriber, Vendor, and the CQ Network's Quotation 
Information to reflect the decentralized consolidation model.\121\
---------------------------------------------------------------------------

    \118\ See MayStreet Letter II, supra note 63, at 5. This 
commenter also recommends that the Commission issue guidance to the 
Participants to aid in revising the Proposed Amendments. See id. at 
4. The discussion and findings in this Order, in addition to the MDI 
Rules Release and the MDI Rules themselves, provide sufficient 
guidance to the Participants in amending the Plans.
    \119\ Id. at 5.
    \120\ See id. at 5-6.
    \121\ See id. at 6.
---------------------------------------------------------------------------

    This commenter also describes several other technical criticisms of 
the Proposed Amendments. The commenter states that the Proposed 
Amendments should have removed the addition of a new SRO participant 
from the Plans' ministerial amendment list,\122\ arguing that competing 
consolidators and self-aggregators would need more time to update their 
systems to handle the new Participant's data.\123\ The commenter also 
states that the Proposed Amendments need to support the timestamps 
required by the MDI Rules to the microsecond,\124\ and that validation 
procedures to be used by competing consolidators need to be added to 
the Plans to describe the Participants' and the competing 
consolidator's obligations.\125\ The commenter further suggests that 
the Plans' capacity planning process needs to apply to competing 
consolidators and self-aggregators so that these entities can meet SRO-
expected capacity requirements.\126\ Finally, the commenter states that 
the Plans' conflict of interest and confidentiality provisions need to 
apply to competing consolidators since they will be replacing the 
exclusive SIPs.\127\
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    \122\ A ``ministerial amendment'' permits an amendment to the 
Plans that is submitted by the Chairman of the CTA Plan and the 
Chairman of the CQ Operating Committee with less than 48 hours' 
advance notice to the Participants. See Notice, supra note 7, 86 FR 
at 67805 (CTA Plan Proposed Amendment at Section IV.(b)); id. at 
67820 (CQ Plan Proposed Amendment at Section IV.(c)).
    \123\ See MayStreet Letter II, supra note 63, at 6-7.
    \124\ See id. at 5.
    \125\ See MayStreet Letter I, supra note 63, at 4; MayStreet 
Letter II, supra note 63, at 8.
    \126\ See MayStreet Letter II, supra note 63, at 10.
    \127\ See id. at 7.
---------------------------------------------------------------------------

    The Commission agrees with the commenter that the failure to 
include the definitions established by the MDI Rules contributes to 
ambiguity within the Plans. In lieu of incorporating the MDI Rules' 
definitions, the Proposed Amendments add a statement to each Plan that 
``[t]erms used in this plan have the same meaning as the terms defined 
in Rule 600(b) under the Act.'' \128\ This creates ambiguity because 
the Proposed Amendments use the terms adopted by the MDI Rules but do 
not include definitions of those terms, so their applicability and the 
obligations they create are unclear or are not reflected in the 
Proposed Amendments. For example, the Proposed Amendment to the CQ Plan 
adds a requirement for the collection and reporting of Quotation 
Information, stating that each Participant agrees to collect and 
transmit to competing consolidators and self-aggregators ``all data 
necessary to generated [sic] consolidated market data.'' \129\ However, 
the Proposed Amendments do not define ``consolidated market data'' or 
even the data necessary to generate it. The Plans thus fail to include 
an express requirement for the Participants to disseminate to competing 
consolidators and self-aggregators all of the elements of consolidated 
market data (e.g., core data,\130\ regulatory data, and administrative 
data) in accordance with the definition of ``consolidated market data'' 
in Rule 600(b)(19) \131\ and Rule 603(b).\132\ The absence of that 
definition in the Plans, especially in light of the instances described 
above in which the Proposed Amendments have failed to reflect the full 
scope of data required to be made available to competing consolidators 
and self-aggregators,\133\ would lead to ambiguity about the 
Participants' obligations with respect to consolidated market data.
---------------------------------------------------------------------------

    \128\ Notice, supra note 7, 86 FR at 67802 (CTA Plan Proposed 
Amendment at Preface); id. at 67818 (CQ Plan Proposed Amendment at 
Preface).
    \129\ Notice, supra note 7, 86 FR at 67823 (CQ Plan Proposed 
Amendment at Section VI.(a)).
    \130\ See supra note 95 (defining ``core data'').
    \131\ See id. (defining ``consolidated market data'').
    \132\ 17 CFR 242.603(b). As noted above, the CTA Plan Proposed 
Amendment does not add a requirement for the Participants to collect 
and report to competing consolidators and self-aggregators all data 
necessary to generate consolidated market data. See supra notes 94-
97 and accompanying text.
    \133\ See supra notes 94-97 and accompanying text.
---------------------------------------------------------------------------

    Relatedly, Rule 614(e)(2) requires the Participants to amend the 
Plans to apply timestamps to all information with respect to quotations 
for and transactions in NMS stocks that is necessary to generate 
consolidated market data. However, because there is no definition of 
``consolidated market data'' in the Plans, there is thus no requirement 
in the language of the Plans for the Participants to timestamp the data 
components that constitute consolidated market data,\134\ such as the 
elements of core data \135\ (another definition established by the MDI 
Rules that the Proposed Amendments failed to include in the Plans), 
which include auction information, odd-lot information, and depth of 
book data. This is another instance in which the absence of definitions 
in the Plans would lead to ambiguity about the Participants' 
obligations with respect to consolidated market data.
---------------------------------------------------------------------------

    \134\ See supra note 95 (defining ``consolidated market data'').
    \135\ See id. (defining ``core data'').
---------------------------------------------------------------------------

    In addition, as discussed above, under the MDI Rules, the primary 
listing exchanges are required to collect, calculate, and make 
available regulatory data to competing consolidators and self-
aggregators in accordance with the definition of ``regulatory data'' in 
Rule 600(b)(78)(i).\136\ The Proposed Amendments, however, do not add 
the definition of ``regulatory data'' to the Plans. Therefore, there is 
no unambiguous requirement in the Plans that the primary listing 
exchanges perform these functions.
---------------------------------------------------------------------------

    \136\ See supra note 106 (defining ``regulatory data''). 
Regulatory data is one element of ``consolidated market data,'' as 
defined in Rule 600(b)(19). See supra note 95.
---------------------------------------------------------------------------

    Further, the CTA Plan Proposed Amendment would require that the CTA 
network enter into agreements with vendors and other parties that 
redisseminate consolidated market data to others,\137\ without 
including the definition of ``consolidated market data.'' Also, as 
stated by a commenter,\138\ the MDI Rules define a competing 
consolidator as a securities information processor, but the Proposed 
Amendments fail to add the definition of ``competing consolidator'' the 
Plans. The Proposed Amendments also fail to treat competing 
consolidators as securities information processors, instead treating 
them, incorrectly, as vendors and subscribers.\139\ The failure to 
incorporate into the Plans the full text of the definitions established 
by the MDI Rules thus increases the likelihood of ambiguity.
---------------------------------------------------------------------------

    \137\ See Notice, supra note 7, 86 FR at 67811 (CTA Plan 
Proposed Amendment at Section IX.(a)).
    \138\ See supra note 119.
    \139\ See supra notes 98-105 and accompanying text. See also 
supra note 23.
---------------------------------------------------------------------------

V. Conclusion

    For the reasons set forth above, the Commission finds, pursuant to 
Section 11A of the Act, and Rule 608(b)(2) thereunder, that the 
Proposed Amendments are inconsistent with the requirements of the Act 
and the rules and regulations thereunder applicable to an NMS plan 
amendment.
    It is therefore ordered, pursuant to Section 11A of the Act, and 
Rule

[[Page 58571]]

608(b)(2) thereunder, that the Proposed Amendments (File No. SR-CTA/CQ-
2021-02) be, and hereby are, disapproved.

    By the Commission.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-20830 Filed 9-26-22; 8:45 am]
BILLING CODE 8011-01-P


