process of software development with dedicated phases for
Conception, Initiation, Analysis, Design, Construction, Testing,
Production/Implementation and Maintenance. Id.
    \1354\ Id.
    \1355\ Id.
---------------------------------------------------------------------------

    445. Industry Testing. The CAT NMS Plan requires a dedicated test
environment that is functionally equivalent to the production
environment and available 24 hours a day, six days a week.\1356\ The
CAT NMS Plan discusses alternative approaches for industry
testing.\1357\ Using the production environment for scheduled testing
events on weekends or on specific dates would allow for realistic
testing because multiple users are likely to test at the same time.
However, CAT Reporters would not be able to test when it might be more
convenient or less costly for them to test. The Commission requests
comment on whether the Plan should mandate particular industry testing
processes and the benefits and costs of these alternatives compared to
the requirements of the CAT NMS Plan. How would either of these
alternatives lead to more accurate data than the Plan? Would the
alternatives otherwise affect the benefits of the CAT NMS Plan? How
would either of these alternatives affect the costs of the CAT NMS Plan
for CAT Reporters, Participants, and the Central Repository? Please
provide estimates, if available.
---------------------------------------------------------------------------

    \1356\ See CAT NMS Plan, supra note 3, at Appendix D, Section
1.2.
    \1357\ See id, at Appendix C, Section D.12(h).
---------------------------------------------------------------------------

    446. Quality Assurance (QA). The CAT NMS Plan mentions several
alternative approaches to quality assurance, but does not select a
particular approach.\1358\ In particular, the CAT NMS Plan states that
the Participants considered many approaches, including continuous
integration, test automation, and industry standards such as ISO 20000/
ITIL. Although the Plan does not mandate a particular approach, certain
requirements were detailed in the RFP.\1359\ In addition, the CAT NMS
Plan discusses the trade-offs associated with the QA staffing
level.\1360\ The Commission requests comment on whether the CAT NMS
Plan should mandate a particular QA approach. Why or why not? If so,
which approach should the Plan mandate? How can the QA approach affect
the costs and benefits of the CAT NMS Plan? For example, how does the
QA approach affect the accuracy and accessibility of the CAT Data? What
are the relative strengths and weaknesses of the different quality
assurance approaches?
---------------------------------------------------------------------------

    \1358\ See id., at Appendix C, Section D.12(i).
    \1359\ See RFP, supra note 29, at 31. Specifically, the RFP
requires that Bidders' responses include both the functional and
non-functional testing that includes the following: System testing,
integration testing, regression testing, software performance
testing, system performance testing, application programming
interface (API) testing, user acceptance testing, industry testing,
interoperability, security, load and performance testing, and CAT
Reporter testing.
    \1360\ See CAT NMS Plan, supra note 3, at Appendix C, Section
D.12(i). Bidder QA staffing levels range from 2 to 90. Id.
---------------------------------------------------------------------------

    447. User Support and Help Desk. The CAT NMS Plan discusses several
alternatives related to how the Plan Processor provides a CAT Help Desk
that would be available 24 hours a day, 7 days a week and be able to
manage 2,500 calls per month.\1361\ Specifically, alternatives relate
to the number of user support staff members, the degree to which the
support team is dedicated to CAT, and whether the help desk is located
in the US or offshore. The CAT NMS Plan discusses the benefit and cost
trade-offs,\1362\ but does not mandate any of the particular
alternatives. Instead, the CAT NMS Plan commits to considering each
bidder's user support proposals in the context of the overall bid. The
Commission requests comment on whether the CAT NMS Plan should specify
the standards for user support. How would the various alternatives
affect the benefits of CAT? How would the various alternatives affect
the implementation costs of CAT? How would the various alternatives
affect the ongoing costs of CAT for CAT Reporters, Participants, and
the Central Repository? Please explain and provide estimates, if
available.
---------------------------------------------------------------------------

    \1361\ See CAT NMS Plan, supra note 3, at Appendix C, Section
D.12(j). The RFP specified these standards. Id.
    \1362\ See id. The Plan states that a larger support staff could
be more effective, but would be more costly. Further, a dedicated
CAT support team would have a deeper knowledge of CAT but would be
more costly. Finally, a U.S.-based help desk could facilitate
greater security and higher quality service, but would be more
costly. Id.
---------------------------------------------------------------------------

    448. CAT User Management. The CAT NMS Plan discusses several
alternatives to manage users, but does not require a specific approach
or standards.\1363\ Specifically, the CAT NMS Plan discusses help desk
creation of accounts, user creation (by broker-dealers or regulators),
and multi-role solutions. Generally, there are trade-offs in terms of
convenience and security in the approaches.\1364\ The Commission
requests comments on whether the CAT NMS Plan should specify an
approach for user management. How would the various alternatives affect
the benefits of CAT, such as accessibility? How would the various
alternatives affect the implementation costs of CAT? How would the
various alternatives affect the ongoing costs of CAT for CAT Reporters,
Participants, and the Central Repository? How would the various
alternatives affect the risk of a security breach or misuse of the CAT
Data? Please explain and provide estimates, if available.
---------------------------------------------------------------------------

    \1363\ See CAT NMS Plan, supra note 3, at Appendix C, Section
D.12(k). User management is a business function that grants,
controls, and maintains user access to a system. Id. at n.253.
    \1364\ See id. for more specific information on the relative
strengths and weaknesses of each approach.
---------------------------------------------------------------------------

    449. Required Reportable Events. The CAT NMS Plan states that the
Participants considered requiring the reporting of multiple additional
order event types, such as the ``results order event'' and the ``CAT
feedback order

event.'' \1365\ According to the CAT NMS Plan, a ``results order
event'' type would not provide additional value over a ``daisy chain''
linkage method and a ``CAT feedback order event'' can be generated by
the Plan Processor, making reporting by others unnecessary.\1366\ The
Commission requests comments on these additional order event types and
any other order event types that the Plan might require. Should the CAT
NMS Plan require additional order event types? What are these order
event types and what distinguishes them from the required order event
types? What would be the purpose of these order event types? Would they
make the CAT Data more complete or more accurate? How would regulators
use these event types? How much would these additional order event
types cost to report, to validate, and/or to store? Are there any other
costs associated with these additional order event types? Please
provide estimates, if available.
---------------------------------------------------------------------------

    \1365\ See CAT NMS Plan, supra note 3, at Appendix C, Section
D.12(l).
    \1366\ Id.
---------------------------------------------------------------------------

    450. Data Feed Connectivity. The Plan discusses requiring the
collection of SIP data in real-time as opposed to through an end-of-day
batch process.\1367\ According to the Plan, real-time data would
provide for more rapid access to SIP Data, but may require additional
processing support to deal with out-of- sequence or missing
records.\1368\ Because CAT Reporters are only required to report order
information on a next-day basis, the Plan does not require the Plan
Processor to have real-time SIP connectivity. The Commission requests
comments on whether the Plan should require a particular SIP
connectivity. The Commission requests comment on the costs and benefits
of requiring real-time SIP connectivity, or conversely, the costs and
benefits of requiring end-of-day batch SIP connectivity (and not allow
real-time). What would the Plan Processor do with real-time SIP data?
Would the real-time SIP data be available to regulators, and if so,
what would regulators do with that data? Do all regulators currently
receive real-time SIP data? How much would the various SIP connectivity
alternatives cost? How much processing would each alternative require
to be of use to the Plan Processor or regulators?
---------------------------------------------------------------------------

    \1367\ See CAT NMS Plan, supra note 3, at Appendix C, Section
D.12(n).
    \1368\ See id.
---------------------------------------------------------------------------

I. Request for Comment on the Economic Analysis

    The Commission has identified above the economic effects associated
with the proposed CAT NMS Plan and requests comment on all aspects of
its preliminary economic analysis. The Commission encourages Commenters
to identify, discuss, analyze, and supply relevant data, information,
or statistics regarding any such economic effects. Commenters should,
when possible, provide the Commission with data to support their views.
Commenters suggesting alternative approaches should provide
comprehensive proposals, including any conditions or limitations that
they believe should apply, the reasons for the suggested approaches,
their analysis of the cost-benefit trade-offs of suggested approaches
compared to the Plan, and their analysis regarding why their suggested
approaches would satisfy the objectives of Rule 613. In particular, the
Commission seeks comment on the following:
    451. Do Commenters agree with the Commission's analysis of the
potential economic effects of the Plan? Why or why not?
    452. Has the Commission considered all relevant economic effects?
If not, what other economic effects should the Commission consider?
    453. Do Commenters have information that could help the Commission
fill in gaps in the economic analysis related to a lack of information
on details in the plan that could significantly affect the economic
analysis? If so, please provide this information and explain how it
could affect the economic analysis.
    454. Do Commenters have data that could help the Commission fill in
gaps in the economic analysis related to a lack of available data? If
so, please provide this information and explain how it could affect the
economic analysis.
    455. Do Commenters believe that there are additional categories of
benefits or costs that could be quantified or otherwise monetized? If
so, please identify these categories and, if possible, provide specific
estimates or data.
    456. Do Commenters believe that the CAT NMS Plan would change the
behavior of any market participant in such a way as to create
unintended effects? For example, would requirements to report certain
data elements or events change the activities of market participants in
ways other than deterrence but that create second-order economic
effects? If so, please explain. Would such effects be economic benefits
or economic costs? Please explain.

V. Paperwork Reduction Act

    Certain provisions of Rule 613 contain ``collection of information
requirements'' within the meaning of the Paperwork Reduction Act of
1995 (``PRA'') \1369\ and the Commission has submitted them to the
Office of Management and Budget (``OMB'') for review in accordance with
44 U.S.C. 3507 and 5 CFR 1320.11. An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number. The title of
the collection of information is ``Creation of a Consolidated Audit
Trail Pursuant to Section 11A of the Securities Exchange Act of 1934
and Rules Thereunder.''
---------------------------------------------------------------------------

    \1369\ 44 U.S.C. 3501 et. seq.
---------------------------------------------------------------------------

    As noted above, Rule 613 of Regulation NMS (17 CFR part 242)
requires the Participants to jointly submit to the Commission the CAT
NMS Plan to govern the creation, implementation, and maintenance of the
consolidated audit trail and Central Repository for the collection of
information for NMS securities. The CAT NMS Plan must require each
Participant and its respective members to provide certain data to the
Central Repository in compliance with Rule 613. When it adopted Rule
613, the Commission discussed the burden hours associated with the
development and submission of the CAT NMS Plan.\1370\ In doing so, the
Commission noted that the

development and submission of the CAT NMS Plan that would govern the
creation, implementation and maintenance of a consolidated audit trail
is a multi-step process and accordingly that the Commission was
deferring its discussion of the burden hours associated with the other
paperwork requirements required by Rule 613 and ongoing burdens since
they would only be incurred if the Commission approves the CAT NMS
Plan.\1371\
---------------------------------------------------------------------------

    \1370\ See Adopting Release, supra note 9, at 45804. On
September 25, 2015, the Commission submitted to OMB a request for
approval of an extension of the collection of information related to
the development and submission of the CAT NMS Plan. The Commission
stated that, although that collection of information pertained to
the development and submission of an NMS plan, and that such NMS
plan had already been developed and submitted, the Commission
believed it was prudent to extend the collection of information
during the pendency of the Commission's review of the NMS plan. The
Commission provided estimates for 19 SROs, stating that they would
spend a total of 2,760 burden hours of internal legal, compliance,
information technology, and business operations time to comply with
the existing collection of information, calculated as follows: (880
programmer analyst hours) + (880 business analyst hours) + (700
attorney hours) + (300 compliance manager hours) = 2,760 burden
hours to prepare and file an NMS plan, or approximately 52,440
burden hours in the aggregate, calculated as follows: (2,760 burden
hours per SRO) x (19 SROs) = 52,440 burden hours. Amortized over
three years, the annualized burden hours would be 920 hours per SRO,
or a total of 17,480 for all 19 SROs. The Commission further
estimated that the aggregate one-time reporting burden for preparing
and filing an NMS plan would be approximately $20,000 in external
legal costs per SRO, calculated as follows: 50 legal hours x $400
per hour = $20,000, for an aggregate burden of $380,000, calculated
as follows: ($20,000 in external legal costs per SRO) x (19 SROs) =
$380,000. Amortized over three years, the annualized capital
external cost would be $6,667 per SRO, or a total of $126,667 for
the 19 SROs. See Submission for OMB Review; Comment Request for
Extension of Rule 613; SEC File No. 270-616, OMB Control No. 3235-
0671 (September 25, 2015), 80 FR 59209 (October 1, 2015).
    \1371\ Id.
---------------------------------------------------------------------------

    The Commission is now publishing its preliminary estimates of the
paperwork burdens of the CAT NMS Plan. These estimates are based on the
requirements of Rule 613 and take into account the Exemption Order
discussed above.\1372\ Information and estimates contained in the CAT
NMS Plan that was submitted by the Participants also informed these
estimates because they provide a useful, quantified point of reference
regarding potential burdens and costs. The Commission acknowledges that
the CAT NMS Plan as filed contains provisions in addition to those
required by Rule 613 (e.g., requiring the inclusion of OTC Equity
Securities; \1373\ the availability of historical data for not less
than six years in a manner that is directly available and searchable
without manual intervention from the Plan Processor; \1374\ a complete
symbology database to be maintained by the Plan Processor, including
the historical symbology; as well as issue symbol information and data
using the listing exchange symbology format \1375\).
---------------------------------------------------------------------------

    \1372\ See Exemption Order, supra note 18.
    \1373\ See CAT NMS Plan, supra note 3, at Section 1.1 (defining
``Eligible Security'' as all NMS securities and all OTC Equity
Securities); Appendix C, Section A.1(a).
    \1374\ See id. at Section 6.5(b)(i).
    \1375\ See CAT NMS Plan, supra note 3 at Appendix C, Section
A.1(a); Appendix D, Section 2.
---------------------------------------------------------------------------

A. Summary of Collection of Information Under Rule 613

    Rule 613 requires that the CAT NMS Plan must provide for an
accurate, time-sequenced record of an order's life, from receipt or
origination, through the process of routing, modification, cancellation
and execution.\1376\ The Central Repository, created by the
Participants, would be required to receive, consolidate and retain the
data required under the Rule.\1377\ Such data must be accessible to
each Participant, as well as the Commission, for purposes of performing
regulatory and oversight responsibilities.\1378\
---------------------------------------------------------------------------

    \1376\ See 17 CFR 242.613(c)(1).
    \1377\ See 17 CFR 242.613(e)(1).
    \1378\ See 17 CFR 242.613(e)(1), (e)(2).
---------------------------------------------------------------------------

    Rule 613 provides that the CAT NMS Plan must require that all
Participants that are exchanges, and their members, record and report
to the Central Repository certain data for each NMS security registered
or listed on a national securities exchange, or admitted to unlisted
trading privileges on such exchange, and each Participant that is a
national securities association, and its members, record and report for
each NMS security for which transaction reports are required to be
submitted to the national securities association in a uniform
electronic format or in a manner that would allow the Central
Repository to convert the data to a uniform electronic format for
consolidation and storage. This data must be recorded contemporaneously
with the Reportable Event and reported to the Central Repository in no
event later than 8:00 a.m. Eastern Time on the trading day following
the day such information has been recorded by the national securities
exchange, national securities association, or member.\1379\
---------------------------------------------------------------------------

    \1379\ See 17 CFR 242.613(c)(3).
---------------------------------------------------------------------------

    Rule 613 also provides that the CAT NMS Plan must require each
member of a Participant to record and report to the Central Repository
other information which may not be available until later in the
clearing process no later than 8:00 a.m. Eastern Time on the trading
day following the day the member receives such information.\1380\ The
CAT NMS Plan also requires the Participants to provide to the
Commission, at least every two years after the effectiveness of the CAT
NMS Plan, a written assessment of the operation of the consolidated
audit trail.\1381\
---------------------------------------------------------------------------

    \1380\ See 17 CFR 242.613(c)(4).
    \1381\ See 17 CFR 242.613(b).
---------------------------------------------------------------------------

    Rule 613 requires all Participants to make use of the consolidated
information, either by each developing and implementing new
surveillance systems, or by enhancing existing surveillance
systems.\1382\ The Rule also requires the CAT NMS Plan to require
Participants to submit to the Commission a document outlining the
manner in which non-NMS securities and primary market transactions in
NMS and non-NMS securities can be incorporated into the consolidated
audit trail.\1383\
---------------------------------------------------------------------------

    \1382\ See 17 CFR 242.613(a)(3)(iv).
    \1383\ See 17 CFR 242.613(i).
---------------------------------------------------------------------------

1. Central Repository
    Rule 613 provides that the CAT NMS Plan must require the creation
and maintenance of a Central Repository that would be responsible for
the receipt, consolidation, and retention of all data submitted by the
Participants and their members.\1384\ The Rule also requires that the
CAT NMS Plan require the Central Repository to retain the information
reported pursuant to subparagraphs (c)(7) and (e)(7) of the Rule for a
period of not less than five years in a convenient and usable standard
electronic data format that is directly available and searchable
electronically without any manual intervention.\1385\ The Plan
Processor is responsible for operating the Central Repository in
compliance with the Rule and the CAT NMS Plan. In addition, the Rule
provides that the CAT NMS Plan must include: Policies and procedures to
ensure the security and confidentiality of all information submitted to
the Central Repository,\1386\ including safeguards to ensure the
confidentiality of data; \1387\ information barriers between regulatory
and non-regulatory staff with regard to access and use of data; \1388\
a mechanism to confirm the identity of all persons permitted to use the
data; \1389\ a comprehensive information security program for the
Central Repository that is subject to regular reviews by the CCO;\1390\
and penalties for non-compliance with policies and procedures of the
Participants or the Central Repository with respect to information
security.\1391\ Further, the Rule provides that the CAT NMS Plan must
include policies and procedures to be used by the Plan Processor to
ensure the timeliness, accuracy, integrity, and completeness of the
data submitted to the Central Repository,\1392\ as well as policies and
procedures to ensure the accuracy of the consolidation by the Plan
Processor of the data.\1393\
---------------------------------------------------------------------------

    \1384\ See 17 CFR 242.613(e)(1).
    \1385\ See 17 CFR 242.613(e)(8). The Commission notes that the
CAT NMS Plan proposes to require that the Central Repository retain
data reported in a convenient and usable standard electronic data
format that is directly available and searchable electronically
without any manual intervention for six years. See CAT NMS Plan,
supra note 3, at Section 6.5(b)(i).
    \1386\ See 17 CFR 242.613(e)(4)(i).
    \1387\ See 17 CFR 242.613(e)(4)(i)(A).
    \1388\ See 17 CFR 242.613(e)(4)(i)(B).
    \1389\ See 17 CFR 242.613(e)(4)(i)(C).
    \1390\ Id.
    \1391\ See 17 CFR 242.613(e)(4)(i)(D).
    \1392\ See 17 CFR 242.613(e)(4)(ii).
    \1393\ See 17 CFR 242.613(e)(4)(iii).
---------------------------------------------------------------------------

2. Data Collection and Reporting
    Rule 613 provides that the CAT NMS Plan must require each
Participant, and any member of such Participant, to record and
electronically report to the

Central Repository details for each order and Reportable Event
documenting the life of an order through the process of original
receipt or origination, routing, modification, cancellation, and
execution (in whole or part) for each NMS security.\1394\ For national
securities exchanges, Rule 613 requires the CAT NMS Plan to require
each national securities exchange and its members to record and report
to the Central Repository the information required by Rule 613(c)(7)
for each NMS security registered or listed for trading on an exchange,
or admitted to unlisted trading privileges on such exchange.\1395\ Rule
613 provides that the CAT NMS Plan must require each Participant that
is a national securities association, and its members, to record and
report to the Central Repository the information required by Rule
613(c)(7) for each NMS security for which transaction reports are
required to be submitted to the Participant.\1396\ The Rule requires
each Participant and any member of a Participant to record the
information required by Rule 613(c)(7)(i) through (v) contemporaneously
with the Reportable Event, and to report this information to the
Central Repository by 8:00 a.m. Eastern Time on the trading day
following the day such information has been recorded by the Participant
or member of the Participant.\1397\ The Rule requires each Participant
and any member of a Participant to record and report the information
required by Rule 613(c)(7)(vi) through (viii) to the Central Repository
by 8:00 a.m. Eastern Time on the trading day following the day the
Participant or member receives such information.\1398\ The Rule
requires each Participant and any member of such Participant to report
information required by Rule 613(c)(7) in a uniform electronic format
or in a manner that would allow the Central Repository to convert the
data to a uniform electronic format for consolidation and
storage.\1399\
---------------------------------------------------------------------------

    \1394\ See 17 CFR 242.613(c)(1), (c)(5), (c)(6), (c)(7).
    \1395\ See 17 CFR 242.613(c)(1), (c)(5).
    \1396\ See 17 CFR 242.613(c)(1), (c)(6).
    \1397\ See 17 CFR 242.613(c)(3).
    \1398\ See 17 CFR 242.613(c)(4).
    \1399\ See 17 CFR 242.613(c)(2).
---------------------------------------------------------------------------

    Such information must also be reported to the Central Repository
with a time stamp of a granularity that is at least to the millisecond
or less to the extent that the order handling and execution systems of
a Participant or a member utilize time stamps in finer
increments.\1400\ The Commission understands that any changes to
broker-dealer recording and reporting systems to comply with Rule 613
may also include changes to comply with the millisecond time stamp
requirement.
---------------------------------------------------------------------------

    \1400\ See 17 CFR 242.613(d)(3).
---------------------------------------------------------------------------

3. Collection and Retention of NBBO, Last Sale Data and Transaction
Reports
    Rule 613(e)(7) provides that the CAT NMS Plan must require the
Central Repository to collect and retain on a current and continuing
basis: (i) Information on the NBBO for each NMS Security; (ii)
transaction reports reported pursuant to a transaction reporting plan
filed with the Commission pursuant to, and meeting the requirements of,
Rule 601 of Regulation NMS; and (iii) Last Sale Reports reported
pursuant to the OPRA Plan.\1401\ The Central Repository must retain
this information for no less than five years.\1402\
---------------------------------------------------------------------------

    \1401\ See 17 CFR 242.613(e)(7); 17 CFR 242.601.
    \1402\ See 17 CFR 242.613(e)(8).
---------------------------------------------------------------------------

4. Surveillance
    Rule 613(f) provides that the CAT NMS Plan must require that every
Participant develop and implement a surveillance system, or enhance
existing surveillance systems, reasonably designed to make use of the
consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the
surveillance systems be implemented within fourteen months after
effectiveness of the CAT NMS Plan.
5. Participant Rule Filings
    Rule 613(g)(1) requires each Participant to file with the
Commission, pursuant to Section 19(b)(2) of the Exchange Act and Rule
19b-4 thereunder,\1403\ a proposed rule change to require its members
to comply with the requirements of Rule 613 and the CAT NMS Plan
approved by the Commission.\1404\ The burden of filing such a proposed
rule change is already included under the collection of information
requirements contained in Rule 19b-4 under the Exchange Act.\1405\
---------------------------------------------------------------------------

    \1403\ 15 U.S.C. 78s(b)(2) and 17 CFR 240.19b-4.
    \1404\ See 17 CFR 242.613(g)(1).
    \1405\ See Securities Exchange Act Release No. 50486 (October 5,
2004), 69 FR 60287, 60293 (October 8, 2004) (File No. S7-18-04)
(describing the collection of information requirements contained in
Rule 19b-4 under the Exchange Act). The Commission has submitted
revisions to the current collection of information titled ``Rule
19b-4 Filings with Respect to Proposed Rule Changes by Self-
Regulatory Organizations'' (OMB Control No. 3235-0045). According to
the last submitted revision, for Fiscal Year 2012 SROs submitted
1,688 Rule 19b-4 proposed rule changes.
---------------------------------------------------------------------------

6. Written Assessment of Operation of the Consolidated Audit Trail
    Rule 613(b)(6) provides that the CAT NMS Plan must require the
Participants to provide the Commission a written assessment of the
consolidated audit trail's operation at least every two years, once the
CAT NMS Plan is effective.\1406\ Such written assessment shall include,
at a minimum, with respect to the CAT: (i) An evaluation of its
performance; (ii) a detailed plan for any potential improvements to its
performance; (iii) an estimate of the costs associated with any such
potential improvements; and (iv) an estimated implementation timeline
for any such potential improvements, if applicable.\1407\
---------------------------------------------------------------------------

    \1406\ See 17 CFR 242.613(b)(6).
    \1407\ See id.
---------------------------------------------------------------------------

7. Document on Expansion to Other Securities
    Rule 613(i) provides that the CAT NMS Plan must require the
Participants to jointly provide to the Commission, within six months
after the CAT NMS Plan is effective, a document outlining how the
Participants could incorporate into the CAT information regarding: (1)
Equity securities that are not NMS securities; \1408\ (2) debt
securities; and market transactions in equity securities that are not
NMS securities and debt securities.\1409\
---------------------------------------------------------------------------

    \1408\ As noted above, the CAT NMS Plan would require the
inclusion of OTC Equity Securities, while Rule 613 does not include
such a requirement. See supra note 1373.
    \1409\ See 17 CFR 242.613(i).
---------------------------------------------------------------------------

B. Proposed Use of Information

1. Central Repository
    Rule 613 states that the Central Repository is required to receive,
consolidate and retain the data required to be submitted by the
Participants and their members.\1410\ Participant and Commission Staff
would have access to the data for regulatory purposes.\1411\
---------------------------------------------------------------------------

    \1410\ See 17 CFR 242.613(e)(1).
    \1411\ See 17 CFR 242.613(e)(2).
---------------------------------------------------------------------------

2. Data Collection and Reporting
    The Commission believes that the data collected and reported
pursuant to the requirements of Rule 613 would be used by regulators to
monitor and surveil the securities markets and detect and investigate
activity, whether on one market or across markets.\1412\ The data
collected and reported pursuant to Rule 613 would also be used by
regulators for the evaluation of tips and complaints and for complex
enforcement inquiries or investigations, as well as inspections and
examinations. Further, the Commission believes that regulators would
use the data collected and reported to conduct timely and accurate
analysis of market activity for reconstruction of broad-based market

events in support of regulatory decisions.
---------------------------------------------------------------------------

    \1412\ See Section IV.E.2, supra.
---------------------------------------------------------------------------

3. Collection and Retention of NBBO, Last Sale Data and Transaction
Reports
    The CAT NMS Plan must require the Central Repository to collect and
retain NBBO information, transaction reports, and Last Sale Reports in
a format compatible with the order and event information collected
pursuant to Rule 613(c)(7).\1413\ Participant and Commission Staff
could use this data to easily search across order, NBBO, and
transaction databases. The Commission believes that having the NBBO
information in a uniform electronic format compatible with order and
event information would assist Participants in enforcing compliance
with federal securities laws, rules, and regulations, as well as their
own rules.\1414\ The Commission also believes that a CAT NMS Plan
requiring the Central Repository to collect and retain the transaction
reports and Last Sale Reports in a format compatible with the order
execution information would aid regulators in monitoring for certain
market manipulations.\1415\
---------------------------------------------------------------------------

    \1413\ See 17 CFR 242.613(e)(7).
    \1414\ The Commission and Participants use the NBBO to, among
other things, evaluate members for compliance with numerous
regulatory requirements, such as the duty of best execution or Rule
611 of Regulation NMS. See 17 CFR 242.611; see also, e.g., ISE Rule
1901 and Phlx Rule 1084.
    \1415\ Rules 613(e)(7)(ii) and (iii) require that transaction
reports reported pursuant to an effective transaction reporting plan
and Last Sale Reports reported pursuant to the OPRA Plan be reported
to the Central Repository. This requirement should allow regulators
to evaluate certain trading activity. For example, trading patterns
of reported and unreported trades may cause Participant or
Commission staff to make further inquiries into the nature of the
trading to ensure that the public was receiving accurate and timely
information regarding executions and that market participants were
continuing to comply with trade reporting obligations under
Participant rules. Similarly, patterns in the transactions that are
reported and unreported to the consolidated tape could be indicia of
market abuse, including failure to obtain best execution for
customer orders or possible market manipulation. The Commission and
the Participants would be able to review information on trades not
reported to the tape to determine whether they should have been
reported, whether Section 31 fees should have been paid, and/or
whether the trades are part of a manipulative scheme.
---------------------------------------------------------------------------

4. Surveillance
    The requirement in Rule 613(f) that the Participants develop and
implement a surveillance system, or enhance existing surveillance
systems, reasonably designed to make use of the consolidated
information in the consolidated audit trail,\1416\ is intended to
position regulators to make full use of the consolidated audit trail
data in order to carry out their regulatory obligations. In addition,
because trading and potentially manipulative activities could take
place across multiple markets, and the consolidated audit trail data
would trace the entire lifecycle of an order from origination to
execution or cancellation, new or enhanced surveillance systems may
also enable regulators to investigate potentially illegal activity that
spans multiple markets more efficiently.
---------------------------------------------------------------------------

    \1416\ 17 CFR 242.613(f).
---------------------------------------------------------------------------

5. Written Assessment of Operation of the Consolidated Audit Trail
    Rule 613(b)(6) requires the CAT NMS Plan to require the
Participants to provide the Commission a written assessment of the
CAT's operation at least every two years, once the CAT NMS Plan is
effective.\1417\ These assessments would aid Participant and Commission
Staff in understanding and evaluating any deficiencies in the operation
of the consolidated audit trail and to propose potential improvements
to the CAT NMS Plan. The Commission believes the written assessments
would allow Participants and Commission Staff to periodically assess
whether such potential improvements would enhance market oversight.
Moreover, the Commission believes these assessments would help inform
the Commission regarding the likely feasibility, costs, and impact of,
and the Participants' approach to, the consolidated audit trail
evolving over time.
---------------------------------------------------------------------------

    \1417\ 17 CFR 242.613(b)(6).
---------------------------------------------------------------------------

6. Document on Expansion to Other Securities
    Rule 613(i) requires the CAT NMS Plan to require the Participants
to jointly provide to the Commission, within six months after the CAT
NMS Plan is effective, a document outlining how the SROs could
incorporate into the CAT information regarding certain products that
are not NMS securities.\1418\ A document outlining a possible expansion
of the consolidated audit trail could help inform the Commission about
the SROs' strategy for potentially accomplishing such an expansion over
a reasonable period of time. Moreover, such document would aid the
Commission in assessing the feasibility and impact of possible future
proposals by the SROs to include such additional securities and
transactions in the consolidated audit trail.
---------------------------------------------------------------------------

    \1418\ See 17 CFR 242.613(i). See also supra note 1408.
---------------------------------------------------------------------------

C. Respondents

1. National Securities Exchanges and National Securities Associations
    Rule 613 applies to the 20 Participants (the 19 national securities
exchanges and the one national securities association (FINRA))
currently registered with the Commission.\1419\
---------------------------------------------------------------------------

    \1419\ The Participants are: BATS Exchange, Inc., BATS-Y
Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange,
Incorporated, Chicago Board Options Exchange, Incorporated, Chicago
Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc.,
Financial Industry Regulatory Authority, Inc., International
Securities Exchange, LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami
International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ
OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange,
Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.
The Commission understands that ISE Mercury, LLC will become a
Participant in the CAT NMS Plan and thus is accounted for as a
Participant for purposes of this Section. See supra note 3.
---------------------------------------------------------------------------

2. Members of National Securities Exchanges and National Securities
Association
    Rule 613 also applies to the Participants' members, that is,
broker-dealers. The Commission believes that Rule 613 applies to 1,800
broker-dealers. The Commission understands that there are currently
4,138 broker-dealers; however, not all broker-dealers are expected to
have CAT reporting obligations. The Participants report that
approximately 1,800 broker-dealers currently quote or execute
transactions in NMS Securities, Listed Options or OTC Equity Securities
and would likely have CAT reporting obligations.\1420\
---------------------------------------------------------------------------

    \1420\ The Commission understands that the remaining 2,338
registered broker-dealers either trade in asset classes not
currently included in the definition of Eligible Security or do not
trade at all (e.g., broker-dealers for the purposes of underwriting,
advising, private placements). See supra note 864.
---------------------------------------------------------------------------

D. Total Initial and Annual Reporting and Recordkeeping Burden

1. Burden on National Securities Exchanges and National Securities
Associations
a. Central Repository
    Rule 613 requires the Participants to jointly establish a Central
Repository tasked with the receipt, consolidation, and retention of the
reported order and execution information. The Participants issued an
RFP soliciting Bids from entities to act as the consolidated audit
trail's Plan Processor.\1421\ Bidders were asked to provide total one-
year and annual recurring cost estimates to estimate the costs to the
Participants for implementing and maintaining the

Central Repository.\1422\ There are currently three remaining Bidders,
any of which could be selected to be the Plan Processor. The Plan
Processor would be responsible for building, operating, administering
and maintaining the Central Repository.
---------------------------------------------------------------------------

    \1421\ See Section III.A.1, supra.
    \1422\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B). The CAT NMS Plan listed the following as primary
drivers of Bid costs: (1) Reportable volumes of data ingested into
the Central Repository; (2) number of technical environments that
would be have to be built to report to the Central Repository; (3)
likely future rate of increase of reportable volumes; (4) data
archival requirements; and (5) user support and/or help desk
resource requirements. See id. at Section B.7(b)(i)(B).
---------------------------------------------------------------------------

    The Plan's Operating Committee, which consists of one voting
representative of each Participant,\1423\ would be responsible for the
management of the LLC, including the Central Repository, acting by
Majority or Supermajority Vote, depending on the issue.\1424\ In
managing the Central Repository, among other things, the Operating
Committee would have the responsibility to authorize the following
actions of the LLC: (1) Interpreting the Plan; \1425\ (2) determining
appropriate funding-related policies, procedures and practices
consistent with Article XI of the CAT NMS Plan; \1426\ (3) terminating
the Plan Processor; (4) selecting a successor Plan Processor (including
establishing a Plan Processor Selection Subcommittee to evaluate and
review Bids and make a recommendation to the Operating Committee with
respect to the selection of the successor Plan Processor); \1427\ (5)
entering into, modifying or terminating any Material Contract; \1428\
(6) making any Material Systems Change; \1429\ (7) approving the
initial Technical Specifications or any Material Amendment to the
Technical Specifications proposed by the Plan Processor; \1430\ (8)
amending the Technical Specifications on its own motion; \1431\ (9)
approving the Plan Processor's appointment or removal of the CCO, CISO,
or any Independent Auditor in accordance with Section 6.1(b) of the CAT
NMS Plan; \1432\ (10) approving any recommendation by the CCO pursuant
to Section 6.2(a)(v)(A); \1433\ (11) selecting the members of the
Advisory Committee; \1434\ (12) selecting the Operating Committee
chair; \1435\ and (13) determining to hold an Executive Session of the
Operating Committee.\1436\
---------------------------------------------------------------------------

    \1423\ See id. at Section 4.2(a).
    \1424\ See Section IV.E.3.d(1), supra.
    \1425\ See CAT NMS Plan, supra note 3, at Section 4.3(a)(iii).
    \1426\ See id. at Section 4.3(a)(vi).
    \1427\ See id. at Section 4.3(b)(i).
    \1428\ See id. at Section 4.3(b)(iv).
    \1429\ See id. at Section 4.3(b)(v).
    \1430\ See id. at Section 4.3(b)(vi).
    \1431\ See id. at Section 4.3(b)(vii).
    \1432\ See id. at Section 4.3(b)(iii).
    \1433\ See id. at Section 4.3(a)(iv).
    \1434\ See id. at Section 4.3(a)(ii).
    \1435\ See id. at Section 4.3(a)(i).
    \1436\ See id. at Section 4.3(a)(v).
---------------------------------------------------------------------------

    Additionally, in managing the Central Repository, the Operating
Committee would have the responsibility and authority, as appropriate,
to: (1) Direct the LLC to enter into one or more agreements with the
Plan Processor obligating the Plan Processor to perform the functions
and duties contemplated by the Plan to be performed by the Plan
Processor, as well as such other functions and duties the Operating
Committee deems necessary or appropriate; \1437\ (2) appoint as an
Officer of the Company the individual who has direct management
responsibility for the Plan Processor's performance of its obligations
with respect to the CAT; \1438\ (3) approve policies, procedures, and
control structures related to the CAT System that are consistent with
Rule 613(e)(4), Appendix C and Appendix D of the CAT NMS Plan that have
been developed and will be implemented by the Plan Processor; \1439\
(4) approve any policy, procedure or standard (and any material
modification or amendment thereto) applicable primarily to the
performance of the Plan Processor's duties as the Plan Processor;
\1440\ (5) for both the CCO and CISO, render their annual performance
reviews and review and approve their compensation; \1441\ (6) review
the Plan Processor's performance under the Plan at least once each
year, or more often than once each year upon the request of two
Participants that are not Affiliated Participants; \1442\ (7) in
conjunction with the Plan Processor, approve and regularly review (and
update as necessary) SLAs governing the performance of the Central
Repository; \1443\ (8) maintain a Compliance Subcommittee for the
purpose of aiding the CCO as necessary; \1444\ and (9) designate by
resolution one or more Subcommittees it deems necessary or desirable in
furtherance of the management of the business and affairs of the
Company.\1445\
---------------------------------------------------------------------------

    \1437\ See id. at Section 6.1(a).
    \1438\ See id. at Section 4.6(b).
    \1439\ See id. at Section 6.1(c).
    \1440\ See id. at Section 6.1(e).
    \1441\ See id. at Section 6.2(a)(iv) and Section 6.2(b)(iv).
    \1442\ See id. at Section 6.1(n).
    \1443\ See id. at Section 6.1(h).
    \1444\ See id. at Section 4.12(b).
    \1445\ See id. at Section 4.12(a).
---------------------------------------------------------------------------

    The CAT NMS Plan also proposes to establish a Selection Committee
comprised of one Voting Senior Officer from each Participant,\1446\
which is tasked with the review and evaluation of Bids and the
selection of the initial Plan Processor.\1447\ The Selection Committee
would determine, by Majority Vote, whether Shortlisted Bidders will
have the opportunity to revise their Bids.\1448\ The Selection
Committee would review and evaluate all Shortlisted Bids, including any
permitted revisions submitted by Shortlisted Bidders, and in doing so,
may consult with the Advisory Committee (or the DAG until the Advisory
Committee is formed) and such other Persons as the Selection Committee
deems appropriate.\1449\ After receipt of any permitted revisions, the
Selection Committee would select the Initial Plan Processor from the
Shortlisted Bids in two rounds of voting where each Participant has one
vote via its Voting Senior Officer in each round.\1450\ Following the
selection of the Initial Plan Processor, the Participants would file
with the Commission a statement identifying the Initial Plan Processor
and including the information required by Rule 608.\1451\
---------------------------------------------------------------------------

    \1446\ See id. at Section 5.1(a).
    \1447\ See id. at Section 5.1.
    \1448\ See id. at Section 5.1(d)(i).
    \1449\ See id. at Section 5.1(d)(ii).
    \1450\ See id. at Section 5.1(e).
    \1451\ See id. at Section 6.7(a)(i).
---------------------------------------------------------------------------

    For its initial and ongoing internal burden and cost estimates
associated with the management of the Central Repository, the
Commission is relying on estimates provided in the CAT NMS Plan for the
development of the CAT NMS Plan, which the Participants ``have accrued,
and will continue to accrue,'' \1452\ and have described in the CAT NMS
Plan as ``reasonably associated with creating, implementing, and
maintaining the CAT upon the Commission's adoption of the CAT NMS
Plan.'' \1453\
---------------------------------------------------------------------------

    \1452\ See id. at Appendix C, Section B.7(b)(iii).
    \1453\ See id.
---------------------------------------------------------------------------

    The Commission believes that the activities of the Operating
Committee and the Selection Committee overlap with those undertaken by
the Participants to develop the CAT NMS Plan. The CAT NMS Plan
describes the costs incurred by the Participants to develop the CAT NMS
Plan as including ``staff time contributed by each Participant to,
among other things, determine the technological requirements for the
Central Repository, develop the RFP, evaluate Bids received, design and
collect the data necessary to evaluate costs and other economic
impacts, meet with Industry

Members to solicit feedback, and complete the CAT NMS Plan submitted to
the Commission for consideration.'' \1454\ For the building and
management of the Central Repository, the Selection Committee and the
Operating Committee would have comparable responsibilities. The
Selection Committee would be required to review and evaluate all
Shortlisted Bids, including any permitted revisions submitted by
Shortlisted Bidders, and then to select the initial Plan Processor from
those Bids. As part of its overall management of the Central
Repository, the Operating Committee would have responsibility for
decisions associated with the technical requirements of the Central
Repository.\1455\ Furthermore, the Operating Committee would be
required to establish a Selection Subcommittee to evaluate Bids
received to select a successor Plan Processor,\1456\ and would also be
required to authorize the selection of the members of the Advisory
Committee,\1457\ comprising members of the Industry, to advise the
Participants on the implementation, operation, and administration of
the Central Repository.\1458\ Because the responsibilities of the
Operating Committee and the Selection Committee are similar to those
described in the CAT NMS Plan for the development of the CAT NMS Plan
itself, the Commission believes that it is reasonable to use the CAT
NMS Plan estimates as the basis for its burden and cost estimates for
the initial and ongoing management of the Central Repository.
---------------------------------------------------------------------------

    \1454\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii).
    \1455\ For example, the Operating Committee would be required to
authorize the following actions of the LLC: Entering into, modifying
or terminating any Material Contract (see id. at Section
4.3(b)(iv)); making any Material Systems Change (see id. at Section
4.3(b)(v)); amending the Technical Specifications on its own motion
(see id. at Section 4.3(b)(vii)); and approving the initial
Technical Specifications or any Material Amendment to the Technical
Specifications proposed by the Plan Processor (see id. at Section
4.3(b)(vi)). Further, the Operating Committee would be able to
approve policies, procedures, and control structures related to the
CAT System that are consistent with Rule 613(e)(4), Appendix C and
Appendix D of the CAT NMS Plan that have been developed and will be
implemented by the Plan Processor (see id. at Section 6.1(c)); and
in conjunction with the Plan Processor, approve and regularly review
(and update as necessary) SLAs governing the performance of the
Central Repository (see id. at Section 6.1(h)).
    \1456\ See id. at Section 4.3(b)(i).
    \1457\ See id. at Section 4.3(a)(ii).
    \1458\ See id. at Section 4.13(d).
---------------------------------------------------------------------------

(1) Initial Burden and Costs To Build the Central Repository
    As proposed, each Participant would contribute an employee and a
substitute for the employee to serve on the Operating Committee that
would oversee the Central Repository.\1459\ Additionally, each
Participant would select a Voting Senior Officer to represent the
Participant as a member of the Selection Committee responsible for the
selection of the Plan Processor of the Central Repository.\1460\
---------------------------------------------------------------------------

    \1459\ In the case of Affiliated Participants, one individual
may be the primary representative for all or some of the Affiliated
Participants, and another individual may be the substitute for all
or some of the Affiliated Participants. See id. at Section 4.2(a).
    \1460\ In the case of Affiliated Participants, one individual
may be (but is not required to be) the Voting Senior Officer for
more than one or all of the Affiliated Participants. Where one
individual serves as the Voting Senior Officer for more than one
Affiliated Participant, such individual will have the right to vote
on behalf of each such Affiliated Participant. See id. at Section
5.1(a).
---------------------------------------------------------------------------

    The Commission preliminarily estimates that, over the 12-month
period after the effectiveness of the CAT NMS Plan within which the
Participants would be required to select an initial Plan Processor
\1461\ and begin reporting to the Central Repository,\1462\ each
Participant would incur an initial internal burden of 720 burden hours
associated with the management of the creation of the Central
Repository and the selection of the Plan Processor (including filing
with the Commission the statement identifying the Initial Plan
Processor and including the information required by Rule 608), for an
aggregate initial estimate of 14,407 burden hours.\1463\
---------------------------------------------------------------------------

    \1461\ Rule 613(a)(3)(i) requires the selection of the Plan
Processor within 2 months after effectiveness of the CAT NMS Plan.
See 17 CFR 242.613(a)(3)(i).
    \1462\ Rule 613(a)(3)(iii) requires the Participants to provide
to the Central Repository the data required by Rule 613(c) within
one year after effectiveness of the CAT NMS Plan. See 17 CFR
242.613(a)(3)(iii).
    \1463\ The Commission is basing this estimate on the internal
burden estimate provided in the CAT NMS Plan related to the
development of the CAT NMS Plan. See CAT NMS Plan, supra note 3, at
Appendix C, Section B.7(b)(iii) (stating ``. . . the Participants
have accrued, and will continue to accrue, direct costs associated
with the development of the CAT NMS Plan. These costs include staff
time contributed by each Participant to, among other things,
determine the technological requirements for the Central Repository,
develop the RFP, evaluate Bids received, design and collect the data
necessary to evaluate costs and other economic impacts, meet with
Industry Members to solicit feedback, and complete the CAT NMS Plan
submitted to the Commission for consideration. The Participants
estimate that they have collectively contributed 20 FTEs in the
first 30 months of the CAT NMS Plan development process''). The
Commission believes the staff time incurred for the development of
the CAT NMS Plan would be comparable to the staff time incurred for
the activities required of the Operating Committee and the Selection
Committee for the creation and management of the Central Repository
once the Plan is effective). (20 FTEs/30 months) = 0.667 FTEs per
month for all of the Participants to develop the CAT NMS Plan.
Converting this into burden hours, (0.667 FTEs) x (12 months) x
(1,800 burden hours per year) =14,407 initial burden hours for all
of the Participants to develop the CAT NMS Plan. (14,407 burden
hours for all Participants/20 Participants) = 720 initial burden
hours for each Participant to develop the CAT NMS Plan.
---------------------------------------------------------------------------

    Additionally, the Commission preliminarily estimates that the
Participants will collectively spend $2,400,000 on external public
relations, legal and consulting costs associated with the building of
the Central Repository and the selection of the Plan Processor for the
Central Repository, or $120,000 per Participant.\1464\ The Commission
is basing this estimate on the estimate provided in the CAT NMS Plan
for public relations, legal and consulting costs incurred in
preparation of the CAT NMS Plan. Because the Participants described
such costs as ``reasonably associated with creating, implementing and
maintaining the CAT,'' \1465\ the Commission preliminarily believes
these external cost estimates should also be applied to the creation
and implementation of the Central Repository.
---------------------------------------------------------------------------

    \1464\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii) (stating ``the Participants have incurred public
relations, legal and consulting costs in preparation of the CAT NMS
Plan. The Participants estimate the costs of these services to be
$8,800,000''). $2,400,000 for all Participants over 12 months =
($8,800,000/44 months between the adoption of Rule 613 and the
filing of the CAT NMS Plan) x (12 months). ($2,400,000/20
Participants) = $120,000 per Participant over 12 months.
    \1465\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii).
---------------------------------------------------------------------------

    The CAT NMS Plan provides the estimates given by the Shortlisted
Bidders \1466\ for the one-time total cost associated with the Plan
Processor that would build the Central Repository.\1467\

The CAT NMS Plan states that this includes internal technological,
operational, administrative and ``any other material costs.'' \1468\
Using the estimates in the CAT NMS Plan, which are based on the Bids of
the six Shortlisted Bidders, the Commission preliminarily estimates
that the initial one-time cost to develop the Central Repository would
be an aggregate initial external cost to the Participants of $91.6
million,\1469\ or $4.6 million per Participant.\1470\ Therefore, the
Commission preliminarily estimates that each Participant would incur
initial one-time external costs of $7 million \1471\ to build the
Central Repository, or an aggregate initial one-time external cost
across all Participants of $140 million.\1472\
---------------------------------------------------------------------------

    \1466\ The Selection Committee narrowed the list of Shortlisted
Bidders from six to three Shortlisted Bidders. See ``Participants,
SROs Reduce Short List Bids from Six to Three for Consolidated Audit
Trail'' (November 16, 2015), available at http://www.catnmsplan.com/pastevents/catnms_release_downselect_111615.pdf. However, the costs
provided by the SROs in the CAT NMS Plan are based on the Bids of
the six Shortlisted Bidders.
    \1467\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B). See also id. at Appendix C, Section B.7(b)(iv)(A)(1).
The Commission notes that the cost associated with the build and
maintenance of the Central Repository includes compliance with the
requirement in Rule 613(e)(8) that the Central Repository retain
information collected pursuant to Rule 613(c)(7) and (e)(7) in a
convenient and usable standard electronic data format that is
directly available and searchable electronically without any manual
intervention for a period of not less than five years. See id. at
Section 6.1(d)(i) (requiring the Plan Processor to comply with the
recordkeeping requirements of Rule 613(e)(8)). See also id. at
Appendix C, Section D.12(l) (stating that Rule 613(e)(8) requires
data to be available and searchable for a period of not less than
five years, that broker-dealers are currently required to retain
data for six years under Rule 17a-4(a), and that the Participants
are requiring CAT Data to be kept online in an easily accessible
format for regulators for six years, though this may increase the
cost to run the CAT). The Commission notes that a Shortlisted Bidder
may be permitted to revise its Bid prior to approval of the CAT NMS
Plan if the CAT Selection Committee determines by Majority Vote that
such revisions are necessary or appropriate, so the estimates
provided in the CAT NMS Plan may be subject to change. See id. at
Section 5.2(c)(ii). In addition, changes in technology between the
time the Bids were submitted and the time the Central Repository is
built could result in changes to the costs to build and operate the
Central Repository.
    \1468\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B).
    \1469\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B) (describing the minimum, median, mean and maximum
Bidder estimates for the build and maintenance costs of the Central
Repository).
    \1470\ Id. The Bidders provided a range of estimates. For
purposes of this Paperwork Burden Act analysis, the Commission is
using the build cost of the maximum Bidder estimate. $4,580,000 =
$91,600,000/20 SROs.
    \1471\ $7 million for each Participant to build the Central
Repository = ($4.6 million per Participant in initial one-time costs
to compensate the Plan Processor to build the Central Repository) +
($2.4 million per Participant in initial one-time public relations,
legal and consulting costs associated with the building of the
Central Repository and the selection of the initial Plan Processor).
    \1472\ $140 million for all of the Participants to build the
Central Repository = $7 million per Participant to build the Central
Repository) x (20 Participants). Id.
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and Costs for the Central Repository
    After the Central Repository has been developed and implemented,
there would be ongoing costs for operating and maintaining the Central
Repository, including the cost of systems and connectivity upgrades or
changes necessary to receive, consolidate, and store the reported order
and execution information from Participants and their members; the
costs to store data, and make it available to regulators, in a uniform
electronic format, and in a form in which all events pertaining to the
same originating order are linked together in a manner that ensures
timely and accurate retrieval of the information; \1473\ the cost,
including storage costs, of collecting and maintaining the NBBO and
transaction data in a format compatible with the order and event
information collected pursuant to the Rule; the cost of monitoring the
required validation parameters, which would allow the Central
Repository to automatically check the accuracy and completeness of the
data submitted and reject data not conforming to these parameters
consistent with the requirements of the proposed Rule; and the cost of
paying the CCO. The CAT NMS Plan provides that the Plan Processor would
be responsible for the ongoing operations of the Central
Repository.\1474\ The Operating Committee would continue to be
responsible for the management of the Central Repository. In addition,
the CAT NMS Plan states that the Participants would incur costs for
public relations, legal, and consulting costs associated with
maintaining the CAT upon approval of the CAT NMS Plan.\1475\
---------------------------------------------------------------------------

    \1473\ See supra note 1469.
    \1474\ See CAT NMS Plan, supra note 3, at Section 6.1.
    \1475\ See id. at Appendix C, Section B.7(b)(iii).
---------------------------------------------------------------------------

    The Commission preliminarily estimates that the Participants would
incur an ongoing annual internal burden of 720 burden hours associated
with the continued management of the Central Repository, for an
aggregate annual estimate of 14,407 burden hours across the
Participants.\1476\
---------------------------------------------------------------------------

    \1476\ The Commission is basing this estimate on the internal
burden estimate provided in the CAT NMS Plan for the development of
the CAT NMS Plan. The Commission notes that the CAT NMS Plan
describes the internal burden estimate for the development of the
CAT NMS Plan as a cost the Participants will continue to accrue;
therefore, the Commission preliminarily believes that it is
reasonable to use this burden estimate as the basis for its ongoing
internal burden estimate for the maintenance of the Central
Repository, particularly as the Commission believes the reasons for
the staff time incurred for the development of the CAT NMS Plan
would be comparable to those of the staff time to be incurred by the
Operating Committee and the Selection Committee for the continued
management of the Central Repository. See CAT NMS Plan, supra note
3, at Appendix C, Section B.7(b)(iii) (stating `` . . . the
Participants have accrued, and will continue to accrue, direct costs
associated with the development of the CAT NMS Plan. These costs
include staff time contributed by each Participant to, among other
things, determine the technological requirements for the Central
Repository, develop the RFP, evaluate Bids received, design and
collect the data necessary to evaluate costs and other economic
impacts, meet with Industry Members to solicit feedback, and
complete the CAT NMS Plan submitted to the Commission for
consideration. The Participants estimate that they have collectively
contributed 20 FTEs in the first 30 months of the CAT NMS Plan
development process''). (20 FTEs/30 Participants) = 0.667 FTEs per
month for all of the Participants to continue management of the
Central Repository. Converting this into burden hours, (0.667 FTEs)
x (12 months) x (1,800 burden hours per year) = 14,407 ongoing
annual burden hours for all of the Participants to continue
management of the Central Repository. (14,407 ongoing annual burden
hours for all Participants/20 Participants) = 720 ongoing annual
burden hours for each Participant to continue management of the
Central Repository.
---------------------------------------------------------------------------

    Additionally, the Commission estimates that the Participants will
collectively spend $800,000 annually on external public relations,
legal and consulting costs associated with the continued management of
the Central Repository, or $40,000 per Participant.\1477\
---------------------------------------------------------------------------

    \1477\ The Commission is basing this external cost estimate on
the public relations, legal and consulting external cost estimate
provided in the CAT NMS Plan associated with the preparation of the
CAT NMS Plan (which the Participants consider ``reasonably
associated with creating, implementing, and maintaining the CAT upon
the Commission's adoption of the CAT NMS Plan''). See CAT NMS Plan,
supra note 3, at Appendix C, Section B.7(b)(iii) (stating ``the
Participants have incurred public relations, legal and consulting
costs in preparation of the CAT NMS Plan. The Participants estimate
the costs of these services to be $8,800,000''). $2,400,000 for all
Participants over 12 months = ($8,800,000/44 months between the
adoption of Rule 613 and the filing of the CAT NMS Plan) x (12
months). Because the Central Repository will have already been
created, the Commission believes it is reasonable to assume that the
Participants will have a lesser need for public relations, legal and
consulting services. The Commission is estimating that the
Participants will incur one-third of the external cost associated
with development and implementation of the Central Repository to
maintain the Central Repository. $800,000 = (0.333) x ($2,400,000).
($800,000/20 Participants) = $40,000 per Participant over 12 months.
---------------------------------------------------------------------------

    The CAT NMS Plan includes the estimates the six Shortlisted Bidders
provided for the annual ongoing costs to the Participants to operate
the Central Repository.\1478\ The CAT NMS Plan did not categorize the
costs included in the ongoing costs, but the Commission believes they
would comprise external technological, operational and administrative
costs, as the Participants described the costs included in the initial
one-time external cost to build the Central Repository.\1479\ Using
these estimates, the Commission preliminarily estimates that the annual
ongoing cost to the Participants \1480\ to compensate the Plan
Processor for building, operating and maintaining the Central
Repository would be an aggregate ongoing external cost of $93
million,\1481\ or approximately $4.7 million per

Participant.\1482\ Therefore, the Commission preliminarily estimates
that each Participant would incur ongoing annual external costs of
$4,740,000 \1483\ to maintain the Central Repository, or aggregate
ongoing annual external costs across all Participants of
$94,800,000.\1484\
---------------------------------------------------------------------------

    \1478\ See Section IV.F.1.a, supra, for a discussion of the
total five-year operating costs for the Central Repository presented
in the CAT NMS Plan. See also CAT NMS Plan, supra note 3, at
Appendix C, Section B.7(b)(i)(B); supra note 840; supra note 1467.
    \1479\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B).
    \1480\ See supra note 1469.
    \1481\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(B).
    \1482\ The Bidders provided a range of estimates. For purposes
of this Paperwork Burden Act analysis, the Commission is using the
maximum operation and maintenance cost estimate. $4,650,000 =
$93,000,000/20 Participants. See also Section IV.F.1.a, supra. The
Commission noted several uncertainties that may affect the Central
Repository cost estimates, including (1) that the Participants have
not yet selected a Plan Processor and the Shortlisted Bidders have
submitted a wide range of cost estimates for building and operating
the Central Repository; (2) the Bids submitted by the Shortlisted
Bidders may not be final because they may be revised before the
final selection of the CAT Processor; and (3) neither the Bidders
nor the Commission can anticipate the evolution of technology and
market activity with precision, as improvements in available
technology may allow the Central Repository to be built and operated
at a lower cost than is currently anticipated, but if levels of
anticipated market activity are materially underestimated, the
capacity of the Central Repository may need to be increased,
resulting in an increase in costs.
    \1483\ $4,740,000 for each Participant to build the Central
Repository = ($4.7 million per Participant in ongoing annual costs
to build the Central Repository) + ($40,000 per Participant in
ongoing annual public relations, legal and consulting costs
associated with the maintenance of the Central Repository).
    \1484\ $94,800,000 for all of the Participants to maintain the
Central Repository = ($4,740,000 per Participant to compensate the
Plan Processor and for external public relations, legal and
consulting costs associated with the maintenance of the Central
Repository) x (20 Participants). Id.
---------------------------------------------------------------------------

b. Data Collection and Reporting
    Rule 613(c)(1) requires the CAT NMS Plan to provide for an
accurate, time-sequenced record of orders beginning with the receipt or
origination of an order by a Participant, and further to document the
life of the order through the process of routing, modification,
cancellation and execution (in whole or in part) of the order. Rule
613(c) requires the CAT NMS Plan to impose requirements on Participants
to record and report CAT information to the Central Repository in
accordance with specified timelines.
    Rule 613(c) would require the collection and reporting of some
information that Participants already collect to operate their business
and are required to maintain in compliance with Section 17(a) of the
Exchange Act and Rule 17a-1 thereunder.\1485\ For instance, the
Commission believes that the national securities exchanges keep records
pursuant to Section 17(a) of the Exchange Act and Rule 17a-1 thereunder
in electronic form, of the receipt of all orders entered into their
systems, as well as records of the routing, modification, cancellation,
and execution of those orders. However, Rule 613 requires the
Participants to collect and report additional and more detailed
information, and to report the information to the Central Repository in
a uniform electronic format, or in a manner that would allow the
Central Repository to convert the data to a uniform electronic format
for consolidation and storage.
---------------------------------------------------------------------------

    \1485\ 15 U.S.C. 78q(a); 17 CFR 240.17a-1.
---------------------------------------------------------------------------

    The CAT NMS Plan provides estimated costs for the Participants to
report CAT Data. These estimates are based on Participant responses to
the Participants Study that the Participants collected to estimate CAT-
related costs for hardware and software, FTE costs, and third-party
providers, if the Commission approves the CAT NMS Plan.\1486\ For these
estimates, the Commission is relying on the cost data provided by the
Participants because it believes that the Plan's estimates for
Participants to report CAT Data are reliable since all of the
Participants provided cost estimates, and most Participants have
experience collecting audit trail data, as well as knowledge of both
the requirements of Rule 613 as well as their current business
practices. The Commission is providing below its paperwork burden
estimates for the initial burden hours and external costs, and ongoing,
annual burden hours and external costs to be incurred by the
Participants to comply with the data reporting requirements of Rule
613.
---------------------------------------------------------------------------

    \1486\ Third-party provider costs are generally legal and
consulting costs, but may include other outsourcing. The template
used by respondents is available at http://catnmsplan.com/PastEvents/ under the Section titled ``6/23/14'' at the ``Cost Study
Working Template'' link.
---------------------------------------------------------------------------

    The Commission notes that throughout this Paperwork Reduction Act
analysis, it is categorizing the FTE cost estimates for the
Participants, as well as the broker-dealer respondents, that were
provided in the CAT NMS Plan as an internal burden. To convert the FTE
cost estimates into internal burden hours, the Commission: (1) Divided
the FTE cost estimates by a divisor of $424,350, which is the
Commission's estimated average salary for a full-time equivalent
employee in the securities industry in a job category associated with
regulatory data reporting; \1487\ and then (2) multiplied the quotient
by 1,800 (the number of hours a full-time equivalent employee is
estimated to work per year).
---------------------------------------------------------------------------

    \1487\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(ii)(C) at n.192. The Participants represented that the cost
per FTE is $401,440. The $401,440 figure used in the CAT NMS plan
was based on a Programmer Analyst's salary ($193 per hour) from
SIFMA's Management & Professional Earnings in the Securities
Industry 2008, multiplied by 40 hours per week, then multiplied by
52 weeks per year. The Commission has updated this number to include
recent salary data for other job categories associated with
regulatory data reporting in the securities industry, using the hour
and multiple methodology used by the Commission in its paperwork
burden analyses. The Commission is using $424,350 as its annual cost
per FTE for purposes of its cost estimates. The $424,350 FTE cost =
25% Compliance Manager + 75% Programmer Analyst (0.25) x ($283 per
hour x 1,800 working hours per year) + (0.75) x ($220 per hour x
1,800 working hours per year). The $282 per hour figure for a
Compliance Manager and the $220 per hour figure for a Programmer
Analyst are from SIFMA's Management & Professional Earnings in the
Securities Industry 2013, modified by the Commission to account for
an 1800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead.
---------------------------------------------------------------------------

(1) Initial Burden Hours and External Cost
    The CAT NMS Plan provides the following average costs that the
Participants would expect to incur to adopt the systems changes needed
to comply with the data reporting requirements of the consolidated
audit trail: $10,300,000 in aggregate FTE costs for internal
operational, technical/development, and compliance functions; $770,000
in aggregate third party legal and consulting costs; and $17,900,000 in
aggregate total costs.\1488\
---------------------------------------------------------------------------

    \1488\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(B)(2). Of the $17,900,000 in aggregate total costs,
$11,070,000 is identified (subtotal of FTE costs and outsourcing),
but the remaining $6,830,000 is not identified in the CAT NMS Plan.
The Commission believes that the $6,830,000 may be attributed to
hardware costs because the Participants have not provided any
hardware costs associated with data reporting elsewhere and the
Commission believes that the Participants will likely incur external
costs to purchase upgraded hardware to report data to the Central
Repository.
---------------------------------------------------------------------------

    Based on estimates provided in the CAT NMS Plan, the Commission
preliminarily estimates that the initial internal burden hours to
develop and implement the needed systems changes to capture the
required information and transmit it to the Central Repository in
compliance with the Rule for each Participant would be approximately
2,185 burden hours.\1489\ The Commission also estimates that each
Participant would, on average, incur approximately $38,500 in initial
third party legal and consulting costs \1490\ for

a total of $380,000 in initial external costs.\1491\ Therefore, the
Commission preliminarily estimates that, for all Participants, the
estimated aggregate one-time burden would be 43,690 hours \1492\ and
the estimated aggregate initial external cost would be
$7,600,000.\1493\
---------------------------------------------------------------------------

    \1489\ ($10,300,000 anticipated initial FTE costs)/(20 SROs) =
$515,000 in anticipated initial FTE costs per Participant. ($515,000
in anticipated initial FTE costs per Participant)/($424,350 FTE
costs per Participant) = 1.214 anticipated FTEs per Participant for
the implementation of data reporting. (1.214 FTEs) x (1,800 working
hours per year) = 2,184.5 initial burden hours per Participant to
implement CAT Data reporting.
    \1490\ ($770,000 anticipated initial third party costs)/(20
Participants) = $38,500 in initial anticipated third party costs per
Participant.
    \1491\ To determine the total initial external cost per
Participant, the Commission subtracted the anticipated initial FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate initial costs to the Participants and divided the
remainder by 20 Participants. ($17,900,000 total aggregate initial
cost to Participants) - ($10,300,000 initial FTE cost to
Participants) = $7,600,000. ($7,600,000)/20 Participants = $380,000
in initial external costs per Participant. See CAT NMS Plan, supra
note 3, at Appendix C, Section B.7(b)(iii)(B)(1) for the
Participants' anticipated costs associated with the implementation
of regulatory reporting to the Central Repository.
    \1492\ 43,690 initial burden hours = (20 Participants) x
(2,184.5 initial burden hours).
    \1493\ $7,600,000 = ($380,000 in initial external costs) x (20
Participants).
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and External Cost
    Once a Participant has established the appropriate systems and
processes required for collection and transmission of the required
information to the Central Repository, the Commission preliminarily
estimates that Rule 613 would impose on each Participant ongoing annual
burdens associated with, among other things, personnel time to monitor
each Participant's reporting of the required data and the maintenance
of the systems to report the required data; and implementing changes to
trading systems that might result in additional reports to the Central
Repository. The CAT NMS Plan provides the following average aggregate
costs that the Participants would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $7,300,000 in
anticipated annual FTE costs for operational, technical/development,
and compliance functions related to data reporting; $720,000 in annual
third party legal, consulting, and other costs; \1494\ and $14,700,000
total annual costs.\1495\
---------------------------------------------------------------------------

    \1494\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(B)(2). The CAT NMS Plan did not identify the other
costs.
    \1495\ Of the $14,700,000 in aggregate total annual costs,
$8,020,000 is identified (subtotal of FTE costs and outsourcing),
but the remaining $6,680,000 is not identified in the CAT NMS Plan.
The Commission believes that this amount may be attributed to
hardware costs because the Participants have not provided any
hardware costs associated with data reporting elsewhere and the
Commission believes that the Participants will likely incur costs to
upgrade their hardware to report data to the Central Repository.
---------------------------------------------------------------------------

    Based on estimates provided in the CAT NMS Plan, the Commission
believes that it would take each Participant 1,548 ongoing burden hours
per year \1496\ to continue compliance with Rule 613. The Commission
preliminarily estimates that it would cost, on average, approximately
$36,000 in ongoing third party legal and consulting and other costs
\1497\ and $370,000 in total ongoing external costs per
Participant.\1498\ Therefore, the Commission preliminarily estimates
that the estimated aggregate ongoing burden for all Participants would
be approximately 30,966 hours \1499\ and an estimated aggregate ongoing
external cost of $7,400,000.\1500\
---------------------------------------------------------------------------

    \1496\ ($7,300,000 in anticipated Participant annual FTE costs)/
(20 Participants) = $365,000 in anticipated per Participant annual
FTE costs. ($365,000 in anticipated per Participant FTE costs)/
($424,350 FTE cost per Participant) = 0.86 anticipated FTEs per
Participant. (0.86 FTEs) x (1,800 working hours per year) = 1,548.3
burden hours per Participant to maintain CAT Data reporting.
    \1497\ ($720,000 in annual third party costs)/(20 Participants)
= $36,000 per Participant in anticipated annual third party costs.
    \1498\ To determine the total external annual cost per
Participant, the Commission subtracted the anticipated annual FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate annual costs to the Participants and divided the
remainder by 20 Participants. ($14,700,000 total aggregate annual
cost to Participants) - ($7,300,000 annual FTE cost to Participants)
= $7,400,000. ($7,400,000)/20 Participants = $370,000 in annual
external costs per Participant. See CAT NMS Plan, supra note 3, at
Appendix C, Section B.7(b)(iii)(B)(1) for the Participants'
anticipated maintenance costs associated with regulatory reporting
to the Central Repository.
    \1499\ 30,966 annual burden hours = (20 Participants) x (1,548.3
annual burden hours).
    \1500\ $7,400,000 = ($370,000 in total annual external costs) x
(20 Participants).
---------------------------------------------------------------------------

c. Collection and Retention of NBBO, Last Sale Data and Transaction
Reports
    Rule 613(e)(7) provides that the CAT NMS Plan must require the
Central Repository to collect and retain on a current and continuous
basis NBBO information for each NMS security, transaction reports
reported pursuant to an effective transaction reporting plan, and Last
Sale Reports reported pursuant to the OPRA Plan.\1501\ Additionally,
the CAT NMS Plan must require the Central Repository to maintain this
data in a format compatible with the order and event information
consolidated and stored pursuant to Rule 613(c)(7).\1502\ Further, the
CAT NMS Plan must require the Central Repository to retain the
information collected pursuant to paragraphs (c)(7) and (e)(7) of Rule
613 for a period of not less than five years in a convenient and usable
uniform electronic format that is directly available and searchable
electronically without any manual intervention.\1503\ The Commission
notes that the CAT NMS Plan includes these data as ``SIP Data'' to be
collected by the Central Repository.\1504\ The Commission believes the
burden associated with SIP Data is included in the burden to the
Participants associated with the implementation and maintenance of the
Central Repository.
---------------------------------------------------------------------------

    \1501\ See 17 CFR 242.613(e)(7).
    \1502\ Id.
    \1503\ See 17 CFR 242.613(e)(8).
    \1504\ See CAT NMS Plan, supra note 3, at Section 6.5(a)(ii).
---------------------------------------------------------------------------

d. Surveillance
    Rule 613(f) provides that the CAT NMS Plan must require that every
national securities exchange and national securities association
develop and implement a surveillance system, or enhance existing
surveillance systems, reasonably designed to make use of the
consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the
surveillance systems be implemented within fourteen months after
effectiveness of the CAT NMS Plan.
(1) Initial Burden Hours and External Cost
    The CAT NMS Plan states that the estimated total cost to the
Participants to implement surveillance programs within the Central
Repository is $23,200,000.\1505\ This amount includes legal,
consulting, and other costs of $560,000, as well as $17,500,000 in FTE
costs for operational, technical/development, and compliance Staff to
be engaged in the creation of surveillance programs.\1506\
---------------------------------------------------------------------------

    \1505\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \1506\ Id. The Commission also notes that based upon the data
provided by the Participants, the source of the remaining $5,140,000
in initial costs to implement new or enhanced surveillance systems
is unspecified. The Commission believes that this amount may be
attributed to hardware costs because the Participants have not
provided any hardware costs associated with surveillance elsewhere
and the Commission believes that the Participants will likely incur
costs to implement new or enhanced surveillance systems reasonably
designed to make use of the consolidated audit trail data.
---------------------------------------------------------------------------

    Based on the estimates provided in the CAT NMS Plan, the Commission
preliminarily estimates that the initial internal burden hours to
implement new or enhanced surveillance systems reasonably designed to
make use of the consolidated audit trail data for each Participant
would be approximately 3,711.6 burden hours,\1507\ for an

aggregate initial burden hour amount of 74,232 burden hours.\1508\ The
Commission also estimates that each Participant would, on average,
incur an initial external cost of approximately $28,000 \1509\ for
outsourced legal, consulting and other costs in order to implement new
or enhanced surveillance systems, for a total of $285,000 in initial
external costs,\1510\ for an aggregate one-time initial external cost
of $5,700,000 across the 20 Participants to implement new or enhanced
surveillance systems.\1511\
---------------------------------------------------------------------------

    \1507\ ($17,500,000 in anticipated initial FTE costs)/(20
Participants) = $875,000 in anticipated FTE costs per Participant.
($875,000 in anticipated initial FTE costs per Participant)/
($424,350 FTE cost per Participant) = 2.06 anticipated initial FTEs
per Participant. (2.06 FTEs) x (1,800 working hours per year) =
3,711.6 initial burden hours per Participant to implement new or
enhanced surveillance systems.
    \1508\ (3,711.6 initial burden hours per Participant to
implement new or enhanced surveillance systems) x (20 Participants)
= 74,232 aggregate initial burden hours.
    \1509\ $28,000 = $560,000/20 Participants.
    \1510\ $285,000 = ($23,200,000 in total initial surveillance
costs--$17,500,000 in FTE costs)/(20 Participants).
    \1511\ $5,700,000 = $285,000 x 20 Participants.
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and External Cost
    The CAT NMS Plan states that the estimated total annual cost
associated with the maintenance of surveillance programs for the
Participants is $87,700,000.\1512\ This amount includes annual legal,
consulting, and other costs of $1,000,000, as well as $66,700,000 in
annual FTE costs for internal operational, technical/development, and
compliance Staff to be engaged in the maintenance of surveillance
programs.\1513\ Based on the estimates provided in the CAT NMS
Plan,\1514\ the Commission preliminarily estimates that the ongoing
internal burden hours to maintain the new or enhanced surveillance
systems reasonably designed to make use of the consolidated audit trail
data for each Participant would be approximately 14,146 annual burden
hours,\1515\ for an aggregate annual burden hour amount of 282,920
burden hours.\1516\ The Commission also estimates that each Participant
would, on average, incur an annual external cost of approximately
$50,000 \1517\ for outsourced legal, consulting and other costs in
order to maintain the new or enhanced surveillance systems, for a total
estimated ongoing external cost of $1,050,000,\1518\ for an estimated
aggregate ongoing external cost of $21,000,000 across the 20
Participants to maintain the surveillance systems.\1519\
---------------------------------------------------------------------------

    \1512\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \1513\ Id. The Commission also notes that based upon the data
provided by the Participants, the source of the remaining
$21,000,000 in ongoing costs to maintain the new or enhanced
surveillance systems is unspecified. The Commission believes that
this amount may be attributed to hardware costs because the
Participants have not provided any hardware costs associated with
surveillance elsewhere and the Commission believes that the
Participants would likely incur costs associated with maintaining
the new or enhanced surveillance systems.
    \1514\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \1515\ ($66,700,000 in anticipated ongoing FTE costs)/(20
Participants) = $3,335,000 in anticipated ongoing FTE costs per
Participant. ($3,335,000 in anticipated ongoing FTE costs per
Participant)/($424,350 FTE cost per Participant) = 7.86 anticipated
FTEs per Participant. (7.86 FTEs) x (1,800 working hours per year) =
14,146 ongoing burden hours per Participant to maintain the new or
enhanced surveillance systems.
    \1516\ (14,146 annual burden hours per Participant to maintain
new or enhanced surveillance systems) x (20 Participants) = 282,920
aggregate annual burden hours.
    \1517\ $50,000 = $1,000,000 for ongoing legal, consulting and
other costs associated with maintenance of surveillance programs/20
Participants.
    \1518\ $1,050,000 = ($87,700,000 in total ongoing surveillance
costs-$66,700,000 in ongoing FTE costs)/20 Participants
    \1519\ $21,000,000 = $1,050,000 x 20 Participants.
---------------------------------------------------------------------------

e. Written Assessment of Operation of the Consolidated Audit Trail
    Rule 613(b)(6) provides that the CAT NMS Plan must require the
Participants to provide the Commission a written assessment of the
CAT's operation at least every two years, once the CAT NMS Plan is
effective.\1520\ The assessment must address, at a minimum, with
respect to the consolidated audit trail: (i) An evaluation of its
performance; (ii) a detailed plan for any potential improvements to its
performance; (iii) an estimate of the costs associated with any such
potential improvements; and (iv) an estimated implementation timeline
for any such potential improvements, if applicable.\1521\ Thus, the
Participants must, among other things, undertake an analysis of the
consolidated audit trail's technological and computer system
performance.
---------------------------------------------------------------------------

    \1520\ 17 CFR 242.613(b)(6). See also Section IV.E.3.a, supra.
    \1521\ See 17 CFR 242.613(b)(6).
---------------------------------------------------------------------------

    The CAT NMS Plan states that the CCO would oversee the assessment
required by Rule 613(b)(6), and would allow the Participants to review
and comment on the assessment before it is submitted to the
Commission.\1522\ The CCO would be an employee of the Plan Processor
and would be compensated by the Plan Processor.\1523\ The Commission
assumes that the overall cost and associated burden on the Participants
to implement and maintain the Central Repository includes both the
compensation for the Plan Processor as well as its employees for the
implementation and maintenance of the Central Repository.
---------------------------------------------------------------------------

    \1522\ See CAT NMS Plan, supra note 3, at Section 6.6.
    \1523\ Id. at Section 6.2(a).
---------------------------------------------------------------------------

    The Commission preliminarily estimates that it would take each
Participant approximately 45 annual burden hours of internal legal,
compliance, business operations, and information technology staff time
to review and comment on the assessment prepared by the CCO of the
operation of the consolidated audit trail as required by Rule
613(b)(6).\1524\ The Commission preliminarily estimates that on
average, each Participant would outsource 1.25 hours of legal time
annually to assist in the review of the assessment, for an ongoing
annual external cost of approximately $500.\1525\ Therefore, the

Commission preliminarily estimates that the ongoing annual burden of
submitting a written assessment at least every two years, as required
by Rule 613(b)(6), would be 45 ongoing burden hours per SRO plus $500
of external costs for outsourced legal counsel per Participant per
year, for an estimated aggregate annual ongoing burden of 900 hours
\1526\ and an estimated aggregate ongoing external cost of
$10,000.\1527\
---------------------------------------------------------------------------

    \1524\ The Commission calculated the total estimated burden
hours based on a similar formulation used for calculating the total
estimated burden hours of Rule 613(i)'s requirement for a document
addressing expansion of the CAT to other securities. See Section
V.D.1.f., infra. The Commission assumes that the review and
potential revision of the written assessment required by Rule
613(b)(6) would be approximately one-half as burdensome as the
document required by Rule 613(i) as the Participants are delegating
the responsibility to prepare the written assessment required by
Rule 613(b)(6) to the CCO and the Participants would only need to
review the written assessment and revise it as necessary. As noted
in note 1530, infra, to estimate the Rule 613(i) burden, the
Commission is applying the internal burden estimate provided in the
CAT NMS Plan for Plan development over a 6-month period, and
dividing the result in half. See CAT NMS Plan, supra note 3, at
Appendix C, Section B.7(b)(iii). To estimate the Rule 613(b)(6)
written assessment burden, the Commission is dividing the result
further by half. 0.667 FTEs required for all Participants per month
to develop the CAT NMS Plan = (20 FTEs/30 months). 0.667 FTEs x 6
months = 4 FTEs. 4 FTEs/2 = 2 FTEs needed for all of the
Participants to create and submit the Rule 613(i) document. 2 FTEs/2
= 1 FTE needed for all of the Participants to review and comment on
the written assessment. (1 FTE x 1,800 working hours per year) =
1,800 ongoing annual burden hours per year for all of the
Participants to review and comment on the written assessment. (1,800
burden hours/20 Participants) = 90 ongoing annual burden hours per
Participant to review and comment on the written assessment prepared
by the CCO. The Commission notes that this assessment must be filed
with the Commission every two years and is providing an annualized
estimate of the burden associated with the assessment as required
for its Paperwork Reduction Act analysis. To provide an estimate of
the annual burden associated with the assessment as required for its
Paperwork Reduction Act analysis, Commission is dividing the 90
ongoing burden hours in half (over two years) = 45 ongoing annual
burden hours per Participant to review and comment on the written
assessment prepared by the CCO.
    \1525\ $500 = ($400 per hour rate for outside legal services) x
(1.25 hours). The Commission based this estimate on the assumption
that the written assessment required by Rule 613(b)(6) would require
approximately one-half the effort of drafting and submitting the
document required by Rule 613(i) regarding the expansion of the CAT
to other securities because the Participants have delegated the
responsibility to draft the written assessment on the CCO, rather
than having to draft it themselves (as with the expansion report),
but would also have to review the written assessment and revise it
as necessary. See Section V.D.1.f., infra. Because the written
assessment is a biennial requirement, the Commission is further
dividing the cost of the written assessment in half (over two years)
to estimate the annual ongoing external cost per Participant for
outside legal services to review and comment on the written
assessment prepared by the CCO.
    \1526\ 900 ongoing annual burden hours = (45 ongoing annual
burden hours) x (20 Participants).
    \1527\ $10,000 = 20 Participants x ($400 per hour rate for
outside legal services) x (1.25 hours).
---------------------------------------------------------------------------

f. Document on Expansion to Other Securities
    Rule 613(i) provides that the CAT NMS Plan must require the
Participants to jointly provide to the Commission, within six months
after the CAT NMS Plan is effective, a document outlining how the
Participants could incorporate into the consolidated audit trail
information regarding: (1) Equity securities that are not NMS
securities; \1528\ (2) debt securities; and (3) primary market
transactions in equity securities that are not NMS securities and debt
securities.\1529\ The document must also detail the order and
Reportable Event data that each market participant may be required to
provide, which market participants may be required to provide such
data, an implementation timeline, and a cost estimate. Thus, the
Participants must, among other things, undertake an analysis of
technological and computer system acquisitions and upgrades that would
be required to incorporate such an expansion.
---------------------------------------------------------------------------

    \1528\ As noted above, the CAT NMS Plan would require the
inclusion of OTC Equity Securities, while Rule 613 does not include
such a requirement. See supra note 1408.
    \1529\ See 17 CFR 242.613(i).
---------------------------------------------------------------------------

    The Commission preliminarily estimates that it would take each
Participant approximately 180 burden hours of internal legal,
compliance, business operations and information technology staff time
to create a document addressing expansion of the consolidated audit
trail to additional securities as required by Rule 613(i).\1530\ The
Commission preliminarily estimates that on average, each Participant
would outsource 25 hours of external legal time to create the document,
for an aggregate one-time external cost of approximately $10,000.\1531\
Therefore, the Commission preliminarily estimates that the one-time
initial burden of drafting the document required by Rule 613 would be
180 initial burden hours plus $10,000 in initial external costs for
outsourced legal counsel per Participant, for an estimated aggregate
initial burden of 3,600 hours and an estimated aggregate initial
external cost of $200,000.\1532\
---------------------------------------------------------------------------

    \1530\ The Commission is basing this estimate on the internal
burden provided in the CAT NMS Plan related to the development of
the CAT NMS Plan. See CAT NMS Plan, supra note 3, at Appendix C,
Section B.7(b)(iii) (stating ``[t]he Participants estimate that they
have collectively contributed 20 FTEs in the first 30 months of the
CAT NMS Plan development process''). Because this document is much
more limited in scope than the CAT NMS Plan, and because the
Commission assumes that in drafting the CAT NMS Plan, the
Participants have already contributed time toward considering how
the CAT can be expected to be expanded in accordance with Rule
613(i), the Commission is applying the CAT NMS Plan development
internal burden over a 6-month period (Rule 613(i) requires this
document to be submitted to the Commission within six months after
effectiveness of the CAT NMS Plan), divided by half. 0.667 FTEs
required for all Participants per month to develop the CAT NMS Plan
= (20 FTEs/30 months). 0.667 FTEs x 6 months = 4 FTEs. 4 FTEs/2 = 2
FTEs needed for all of the Participants to create and submit the
document. 2 FTEs x 1,800 working hours per year = 3,600 burden
hours. 3,600 burden hours/20 Participants = 180 burden hours per
Participant to create and file the document.
    \1531\ $10,000 = (25 hours of outsourced legal time per
Participant) x ($400 per hour rate for outside legal services). The
Commission derived the total estimated cost for outsourced legal
counsel based on the assumption that the report required by Rule 613
would require approximately fifteen percent of the Commission's
approximated burden of drafting and filing the CAT NMS Plan. This
assumption is based on the Participants leveraging their knowledge
gained from their drafting and filing of the CAT NMS Plan and
applying it to efficiently preparing the report required by Rule 613
with respect to other securities' order and Reportable Events,
implementation timeline and cost estimates.
    \1532\ The initial burden hour estimate is based on: (20
Participants) x (180 initial burden hours to draft the report). The
initial external cost estimate is based on: (20 Participants) x
($10,000 for outsourced legal counsel).
---------------------------------------------------------------------------

2. Burden on Members of National Securities Exchanges and National
Securities Associations
a. Data Collection and Reporting
    Rule 613(c)(1) requires the CAT NMS Plan to provide for an
accurate, time-sequenced record of orders beginning with the receipt or
origination of an order by a broker-dealer member of a Participant, and
further documenting the life of the order through the process of
routing, modification, cancellation and execution (in whole or in part)
of the order. Rule 613(c) requires the CAT NMS Plan to impose
requirements on broker-dealer members to record and report CAT
information to the Central Repository in accordance with specified
timelines.
    The Commission acknowledges the inherent difficulty in establishing
precise burden estimates because the Commission does not know the exact
method of data reporting the Participants would decide for broker-
dealers. For these estimates, the Commission is relying, in part, on
the cost data provided by the Participants in the CAT NMS Plan,\1533\
and, as noted earlier, on its own estimates of the costs that broker-
dealers are likely to face for CAT implementation and ongoing reporting
in compliance with Rule 613.\1534\
---------------------------------------------------------------------------

    \1533\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b).
    \1534\ See Sections IV.F.1.c(1) and IV.F.1.c(2), supra.
---------------------------------------------------------------------------

    The Commission's estimates delineate broker-dealer firms by whether
they insource or outsource, or are likely to insource or outsource, CAT
Data reporting obligations.\1535\ The Commission preliminarily believes
that firms that currently report high numbers of OATS ROEs
strategically would decide to either self-report their CAT Data or
outsource their CAT Data reporting functions, while the firms with the
lowest levels of activity would be unlikely to have the infrastructure
and specialized employees necessary to insource CAT Data reporting and
would almost certainly outsource their CAT Data reporting
functions.\1536\ The Commission recognizes that more active firms that
will likely be CAT Reporters and insource regulatory data reporting
functions may not have current OATS reporting obligations because they
either are not FINRA members, or because they do not trade in NMS
equity securities.\1537\
---------------------------------------------------------------------------

    \1535\ See Section IV.F.1.c(2)B, supra.
    \1536\ Id.
    \1537\ The Commission also preliminarily recognizes as discussed
above that some broker-dealer firms may strategically choose to
outsource despite the Plan's working assumption that these broker-
dealers would insource their regulatory data reporting functions.
---------------------------------------------------------------------------

    The Commission preliminarily estimates that there are 126 OATS-
reporting Insourcers and 45 non-OATS reporting Insourcers.\1538\ The
Commission's estimation categorizes the remaining 1,629 broker-dealers
that the Plan anticipates would have CAT Data reporting obligations as
Outsourcers.\1539\
---------------------------------------------------------------------------

    \1538\ See Section IV.F.1.c(2)B, infra.
    \1539\ Id.

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

(1) Insourcers
A. Large Non-OATS Reporting Broker-Dealers
i. Initial Burden Hours and External Cost
    The Commission relies on the Reporters Study's large broker-dealer
cost estimates in estimating costs for large broker-dealers that can
practicably decide between insourcing or outsourcing their regulatory
data reporting functions. The Commission estimates that there are 14
large broker-dealers that are not OATS reporters currently in the
business of electronic liquidity provision that would be classified as
Insourcer firms.\1540\
---------------------------------------------------------------------------

    \1540\ These broker-dealers are not FINRA members and thus have
no regular OATS reporting obligations. See supra note 937.
---------------------------------------------------------------------------

    Additionally, the Commission estimates that there are 31 broker-
dealers that may transact in options but not in equities that can be
classified as Insourcer firms.\1541\ Although the Exemptive Relief may
relieve these firms of the obligation to report their option quoting
activity to the Central Repository, these firms may have customer
orders and other activity off-exchange that would cause them to incur a
CAT reporting obligation.
---------------------------------------------------------------------------

    \1541\ See supra note 939.
---------------------------------------------------------------------------

    The Commission assumes the 31 options firms and 14 ELPs would be
typical of the Reporters Study's large, non-OATS reporting firms; for
these firms, the Commission relies on the cost estimates provided under
Approach 1 \1542\ for large, non-OATS reporting firms in the CAT NMS
Plan.
---------------------------------------------------------------------------

    \1542\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(i)(A)(2). The Reporters Study requested broker-dealer
respondents to provide estimates to report to the Central Repository
under two approaches. Approach 1 assumes CAT Reporters would submit
CAT Data using their choice of industry protocols. Approach 2
assumes CAT Reporters would submit data using a pre-specified
format. Approach 1's aggregate costs are higher than those for
Approach 2 for all market participants except in one case where
service bureaus have lower Approach 1 costs. See supra note 946. For
purposes of this Paperwork Reduction Act analysis, the Commission is
not relying on the cost estimates for Approach 2 because overall the
Approach 1 aggregate estimates represent the higher of the proposed
approaches. The Commission believes it would be more comprehensive
to use the higher of the two estimates for its Paperwork Reduction
Act analysis estimates.
---------------------------------------------------------------------------

    The CAT NMS Plan provides the following average initial external
cost and FTE count figures that a large non-OATS reporting broker-
dealer would expect to incur to adopt the systems changes needed to
comply with the data reporting requirements of Rule 613 under Approach
1: $450,000 in external hardware and software costs; 8.05 internal
FTEs; \1543\ and $9,500 in external third party/outsourcing
costs.\1544\ Based on this information, the Commission preliminarily
estimates that the average initial burden associated with implementing
regulatory data reporting to capture the required information and
transmit it to the Central Repository in compliance with the Rule for
each large, non-OATS reporting broker-dealer would be approximately
14,490 initial burden hours.\1545\
---------------------------------------------------------------------------

    \1543\ Approach 1 also provided $3,200,000 in initial internal
FTE costs. The Commission believes the $3,200,000 in internal FTE
costs is the Participants' estimated cost of the 8.05 FTEs. (8.05
FTEs) x ($401,440 Participants' assumed annual cost per FTE provided
in the CAT NMS Plan) = $3,231,592. See CAT NMS Plan, supra note 3,
at n. 192. See also supra note 1487.
    \1544\ See CAT NMS Plan, supra note 3, at Section
B.7(b)(iii)(c)(2)(a). The Commission believes that the third party/
outsourcing costs may be attributed to the use of service bureaus
(potentially), technology consulting, and legal services.
    \1545\ 14,490 initial burden hours = (8.05 FTEs for implementing
CAT Data reporting systems) x (1,800 working hours per year).
---------------------------------------------------------------------------

    The Commission also preliminarily estimates that these broker-
dealers would, on average, incur approximately $450,000 in initial
costs for hardware and software to implement the systems changes needed
to capture the required information and transmit it to the Central
Repository, and an additional $9,500 in initial third party/outsourcing
costs.\1546\ Therefore, the Commission preliminarily estimates that the
average one-time initial burden per ELP and options market-making firm
would be 14,490 internal burden hours and external costs of
$459,500,\1547\ for an estimated aggregate initial burden of 652,050
hours \1548\ and an estimated aggregate initial external cost of
$20,677,500.\1549\
---------------------------------------------------------------------------

    \1546\ See supra note 1544.
    \1547\ ($450,000 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) = $459,500 in initial
external costs to implement data reporting systems.
    \1548\ The Commission preliminarily estimates that 45 large non-
OATS reporting broker-dealers would be impacted by this information
collection. (45 large non-OATS reporting broker-dealers) x (14,490
burden hours) = 652,050 initial burden hours to implement data
reporting systems.
    \1549\ ($450,000 in hardware and software costs) + ($9,500 third
party/outsourcing costs) x 45 large, non-OATS reporting broker-
dealers = $20,677,500 in initial external costs to implement data
reporting systems.
---------------------------------------------------------------------------

ii. Ongoing, Annual Burden Hours in External Cost
    Once a large non-OATS reporting broker-dealer has established the
appropriate systems and processes required for collection and
transmission of the required information to the Central Repository, the
Commission preliminarily estimates that the Rule would impose ongoing
annual burdens associated with, among other things, personnel time to
monitor each large non-OATS reporting broker-dealer's reporting of the
required data and the maintenance of the systems to report the required
data; and implementing changes to trading systems that might result in
additional reports to the Central Repository. The CAT NMS Plan provides
the following average ongoing external cost and internal FTE count
figures that a large non-OATS reporting broker-dealer would expect to
incur to maintain data reporting systems to be in compliance with Rule
613: $80,000 in external hardware and software costs; 7.41 internal
FTEs; \1550\ and $1,300 in external third party/outsourcing
costs.\1551\ Based on this information, the Commission preliminarily
believes that it would take a large non-OATS reporting broker-dealer
13,338 burden hours per year \1552\ to continue to comply with the
Rule. The Commission also preliminarily estimates that it would cost,
on average, approximately $80,000 per year per large non-OATS reporting
broker-dealer to maintain systems connectivity to the Central
Repository and purchase any necessary hardware, software, and other
materials, and an additional $1,300 in third party/outsourcing
costs.\1553\
---------------------------------------------------------------------------

    \1550\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 3, at n.192. See also supra note 1487.
    \1551\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
    \1552\ 13,338 ongoing burden hours = (7.41 ongoing FTEs to
maintain CAT data reporting systems) x (1,800 working hours per
year).
    \1553\ See supra note 1544; CAT NMS Plan, supra note 3, at
Appendix C, Section B.7(b)(iii)(C)(2)(b).
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimates that the average
ongoing annual burden per large non-OATS reporting broker-dealer would
be approximately 13,338 hours, plus $81,300 in external costs \1554\ to
maintain the systems necessary to collect and transmit information to
the Central Repository, for an estimated aggregate ongoing burden of
600,210

hours \1555\ and an estimated aggregate ongoing external cost of
$3,658,500.\1556\
---------------------------------------------------------------------------

    \1554\ ($80,000 in ongoing external hardware and software costs)
+ ($1,300 ongoing external third party/outsourcing costs) = $81,300
in ongoing external costs per large non-OATS reporting broker-
dealer.
    \1555\ The Commission estimates that 45 large non-OATS reporting
broker-dealers would be impacted by this information collection. (45
large non-OATS reporting broker-dealers) x (13,338 burden hours) =
600,210 aggregate ongoing burden hours.
    \1556\ ($80,000 in ongoing external hardware and software costs)
+ ($1,300 ongoing external third party/outsourcing costs) x (45
large non-OATS reporting broker-dealers) = $3,658,500 in aggregate
ongoing external costs.
---------------------------------------------------------------------------

B. Large OATS-Reporting Broker-Dealers
i. Initial Burden Hours and External Cost
    Based on the Commission's analysis of data provided by FINRA and
discussions with market participants, the Commission estimates that 126
broker-dealers, which reported more than 350,000 OATS ROEs between June
15 and July 10, 2015, would strategically decide to either self-report
CAT Data or outsource their CAT data reporting functions.\1557\ To
conduct its Paperwork Burden Analysis for the 126 broker-dealers, the
Commission is relying on the Reporters Study estimates used by the CAT
NMS Plan of expected costs that a large OATS-reporting broker-dealer
would incur as a result of the implementation of the consolidated audit
trail under Approach 1.\1558\
---------------------------------------------------------------------------

    \1557\ See Section IV.F.1.c.2.B and Section IV.F.1.c(2)B.i,
supra. See also supra note 901, stating that the Commission believes
that broker-dealers that report fewer than 350,000 OATS ROEs per
month are unlikely to be large enough to support the infrastructure
required for insourcing data reporting activities.
    \1558\ See supra note 1544.
---------------------------------------------------------------------------

    The CAT NMS Plan provides the following average initial external
cost and internal FTE count figures that a large OATS-reporting broker-
dealer would expect to incur as a result of the implementation of the
consolidated audit trail under Approach 1: $750,000 in hardware and
software costs; 14.92 internal FTEs; \1559\ and $150,000 in external
third party/outsourcing costs.\1560\ Based on this information the
Commission preliminarily estimates that the average initial burden to
develop and implement the needed systems changes to capture the
required information and transmit it to the Central Repository in
compliance with the Rule for large OATS-reporting broker-dealers would
be approximately 26,856 internal burden hours.\1561\ The Commission
also preliminarily estimates that these large OATS-reporting broker-
dealers would, on average, incur approximately $750,000 in initial
external costs for hardware and software to implement the systems
changes needed to capture the required information and transmit it to
the Central Repository, and an additional $150,000 in initial external
third party/outsourcing costs.\1562\
---------------------------------------------------------------------------

    \1559\ Approach 1 also provided $6,000,000 in initial internal
FTE costs. The Commission preliminarily believes the $6,000,000 in
initial internal FTE costs is the Participants' estimated cost of
the 14.92 FTEs. (14.92 FTEs) x ($401,440 Participants' assumed
annual cost per FTE provided in the CAT NMS Plan) = $5,989,485. See
CAT NMS Plan, supra note 3, at n. 192. See also supra note 1487.
    \1560\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(C)(2)(a). The CAT NMS Plan did not break down these
third party costs into categories. The Commission preliminarily
believes that these costs may be attributed to the use of service
bureaus, technology consulting, and legal services.
    \1561\ 26,856 initial burden hours per large OATS-reporting
broker-dealer = (14.92 FTEs for implementation of CAT data reporting
systems) x (1,800 working hours per year).
    \1562\ See CAT NMS Plan, supra note 3, at Section
B.7(b)(iii)(C)(2)(a).
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimates that the average
one-time initial burden per large OATS-reporting broker-dealer would be
26,856 burden hours and external costs of $900,000,\1563\ for an
estimated aggregate initial burden of 3,383,856 hours \1564\ and an
estimated aggregate initial external cost of $113,400,000.\1565\
---------------------------------------------------------------------------

    \1563\ ($750,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) =
$900,000 in initial external costs per large OATS-reporting broker-
dealer to implement CAT data reporting systems.
    \1564\ The Commission preliminarily estimates that 126 large
OATS-reporting broker-dealers would be impacted by this information
collection. 126 large OATS-reporting broker-dealers x 26,856 burden
hours = 3,383,856 initial burden hours to implement data reporting
systems.
    \1565\ ($750,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) x
126 large OATS-reporting broker-dealers = $113,400,000 in initial
external costs to implement data reporting systems.
---------------------------------------------------------------------------

ii. Ongoing, Annual Burden Hours and External Cost
    Once a large OATS-reporting broker-dealer has established the
appropriate systems and processes required for collection and
transmission of the required information to the Central Repository, the
Commission preliminarily estimates that the Rule would impose on each
broker-dealer ongoing annual burdens and costs associated with, among
other things, personnel time to monitor each broker-dealer's reporting
of the required data and the maintenance of the systems to report the
required data; and implementing changes to trading systems which might
result in additional reports to the Central Repository.
    The CAT NMS Plan provides the following average ongoing external
cost and FTE count figures that a large OATS-reporting broker-dealer
would expect to incur to maintain data reporting systems to be in
compliance with Rule 613: $380,000 in ongoing external hardware and
software costs; 10.03 internal FTEs; \1566\ and $120,000 in ongoing
external third party/outsourcing costs.\1567\ Based on this information
the Commission preliminarily believes that it would take a large OATS-
reporting broker-dealer 18,054 ongoing burden hours per year \1568\ to
continue compliance with the Rule. The Commission preliminarily
estimates that it would cost, on average, approximately $380,000 per
year per large OATS-reporting broker-dealer to maintain systems
connectivity to the Central Repository and purchase any necessary
hardware, software, and other materials, and an additional $120,000 in
external ongoing third party/outsourcing costs.\1569\
---------------------------------------------------------------------------

    \1566\ Approach 1 also provided $4,000,000 in internal FTE costs
related to maintenance. The Commission believes the $4,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 10.03 FTEs. (10.03 FTEs) x ($401,440 Participants' assumed
annual cost per FTE provided in the CAT NMS Plan) = $4,026,443. See
CAT NMS Plan, supra note 3, at n. 192. See also supra note 1487.
    \1567\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not categorize these
third party costs. The Commission preliminarily believes that these
costs may be attributed to the use of service bureaus, technology
consulting, and legal services.
    \1568\ 18,054 ongoing burden hours = (10.03 ongoing FTEs for
maintenance of CAT data reporting systems) x (1,800 working hours
per year).
    \1569\ See CAT NMS Plan, supra note 3, at Appendix C, Section
B.7(b)(iii)(C)(2)(b).
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimates that the average
ongoing annual burden per large OATS-reporting broker-dealer would be
approximately 18,054 burden hours, plus $500,000 in external costs
\1570\ to maintain the systems necessary to collect and transmit
information to the Central Repository, for an estimated aggregate
burden of 2,274,804 hours \1571\ and an estimated aggregate ongoing
external cost of $63,000,000.\1572\
---------------------------------------------------------------------------

    \1570\ ($380,000 in ongoing external hardware and software costs
+ $120,000 in ongoing external third party/outsourcing costs) =
$500,000 in ongoing external costs per large OATS-reporting broker-
dealer.
    \1571\ The Commission preliminarily estimates that 126 large
OATS-reporting broker-dealers would be impacted by this information
collection. (126 large OATS-reporting broker-dealers) x (18,054