[Federal Register Volume 85, Number 92 (Tuesday, May 12, 2020)]
[Notices]
[Pages 28046-28059]
[FR Doc No: 2020-10037]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88823; File No. SR-CTA/CQ-2019-01]

Consolidated Tape Association; Order Approving the Thirtieth
Substantive Amendment to the Second Restatement of the CTA Plan and
Twenty-Second Substantive Amendment to the Restated CQ Plan, as
Modified by the Commission, Concerning Conflicts of Interest

May 6, 2020.

I. Introduction

    On July 5, 2019,\1\ the Consolidated Tape Association Plan (``CTA
Plan'') participants (``Participants'') \2\ filed with the Securities
and Exchange Commission (``SEC'' or ``Commission'') pursuant to Section
11A of the Securities Exchange Act of 1934 (``Act''),\3\ and Rule 608
of Regulation National Market System (``NMS'') thereunder,\4\ a
proposal to amend the Second Restatement of the CTA Plan and the
Restated Consolidated Quotation Plan (``CQ Plan'') (each a ``Plan'' and
together with the CTA Plan, the ``Plans'').\5\ These amendments
represent the Thirtieth Substantive Amendment to the CTA Plan and the
Twenty-Second Substantive Amendment to the CQ Plan (``Amendments''). As
described in the Amendments, the Participants proposed to make
mandatory a conflicts of interest disclosure regime that currently is
voluntary. The Amendments were published for comment in the Federal
Register on January 14, 2020.\6\ This order approves the Amendments to
the Plans, as modified by the Commission. The Commission concludes that
the Amendments, as modified, are appropriate in the public interest,
for the protection of investors and the maintenance of fair and orderly
markets, to remove impediments to, and perfect the mechanism of a
national market system, or is otherwise in furtherance of the purposes
of the Act.\7\ A copy of the Amendments, as modified by the Commission,
is attached as Exhibit A hereto.
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    \1\ See Letter from Robert Books, Chair, CTA/CQ Plans Operating
Committee to Vanessa Countryman, Secretary, Commission, dated July
3, 2019 (``Transmittal Letter'').
    \2\ The Participants are the national securities association and
national securities exchanges that submit trades and quotes to the
Plans and include: Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc.,
Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange,
Inc., NYSE Chicago, Inc., Financial Industry Regulatory Authority,
Inc., The Investors Exchange LLC, Long-Term Stock Exchange, Inc.,
Nasdaq BX, Inc., Nasdaq ISE, LLC, Nasdaq PHLX, Inc., The Nasdaq
Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC,
NYSE Arca, Inc., and NYSE National, Inc. (each a ``Participant'' and
collectively, the ``Participants''). Participants are also members
of the Plans' Operating Committees.
    \3\ 15 U.S.C. 78k-1.
    \4\ 17 CFR 242.608.
    \5\ See Securities Exchange Act Release Nos. 10787 (May 10,
1974), 39 FR at 17799 (May 20, 1974) (declaring the CTA Plan
effective); 15009 (July 28, 1978), 43 FR at 34851 (August 7, 1978)
(temporarily authorizing the CQ Plan); and 16518 (January 22, 1980),
45 FR at 6521 (January 28, 1980) (permanently authorizing the CQ
Plan). The most recent restatement of both Plans was in 1995. The
CTA Plan, pursuant to which markets collect and disseminate last
sale price information for non-NASDAQ listed securities, is a
``transaction reporting plan'' under Rule 601 under the Act, 17 CFR
242.601, and a ``national market system plan'' under Rule 608 under
the Act, 17 CFR 242.608. The CQ Plan, pursuant to which markets
collect and disseminate bid/ask quotation information for listed
securities, is a ``national market system plan'' under Rule 608
under the Act, 17 CFR 242.608.
    \6\ See Securities Exchange Act Release No. 87907 (January 8,
2020), 85 FR 2193 (January 14, 2020) (``Notice''). Comments received
in response to the Notice are available at https://www.sec.gov/comments/sr-ctacq-2019-01/srctacq201901.htm.
    \7\ 17 CFR 242.608(b)(2).
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II. Description of the Proposal

    Under the current practice, which the Amendments proposed to make
mandatory, the Participants,\8\ the Processor,\9\ the
Administrator,\10\ and the members of the Advisory Committee \11\
(collectively, the ``Disclosing Parties'') \12\ voluntarily respond to
a set of questions designed to provide transparency regarding potential
conflicts of interest of such parties. Each of the Disclosing Parties'
responses is made publicly available on the Plans' website and is
updated at least annually.\13\ The Amendments would make this practice
mandatory. The Participants stated that they believe that publicly
providing these responses increases transparency and confidence in the
governance of the Plans.\14\
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    \8\ See supra note 2 (listing the Participants).
    \9\ The ``Processor'' is charged with collecting, processing and
preparing for distribution or publication all Plan information. The
Processor of the Plans is the Securities Industry Automation
Corporation.
    \10\ The ``Administrator'' is charged with administering the
Plans to include data feed approval, customer communications,
contract management, and related functions. The Administrator of the
Plans is the New York Stock Exchange LLC.
    \11\ The ``Advisory Committee members'' are natural persons who
represent particular types of financial services firms or actors in
the securities market, and who were selected by Plan participants to
be on the Advisory Committee.
    \12\ A list of the Processor, Administrator, and Advisory
Committee members, along with their conflict of interest
disclosures, is available at https://www.ctaplan.com/governance.
    \13\ See id.
    \14\ See Notice, supra note 6, 85 FR at 2193.
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    According to the Participants, with exchanges permitted to offer
both proprietary market data products and also acting as Participants
in running the public market data stream, potential conflicts of
interest are inherent.\15\ There may be instances in which
representatives from the Participants and Advisory Committee members
have responsibilities with respect to both proprietary data and
Securities Information Processor (``SIP'') data.\16\ Drawing on the
expertise of persons with such overlapping responsibilities may give
rise to potential conflicts of interest, and to address such potential
conflicts of interest, the Participants adopted a voluntary conflicts
disclosure regime with questions that are tailored to elicit responses
that disclose potential conflicts of interest.
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    \15\ See id.
    \16\ See id.
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    Under their current approach to disclosure, each self-regulatory
organization (``SRO'') discloses details about its ownership; whether
it offers and charges for proprietary market data; the names of all
representatives authorized to vote; and a narrative description of the
representatives' role within the organization, including any direct
responsibilities related to the development, dissemination, sale, or
marketing of the exchange's proprietary market data and the nature of
those responsibilities. The Administrator and Processor disclose any
employment or affiliation with an SRO and a narrative description of
functions performed; whether it provides any services to, or has any
responsibilities for the profitability of that SROs' proprietary market
data products; and any policies and procedures in place to safeguard
confidential Plan information. Finally, non-SRO Advisory Committee
members disclose a description of their role at the firm with which
they are associated, including whether they have responsibilities
related to the use or procurement of market data or the firm's trading
or brokerage services, whether they use the SIP or exchange proprietary
data, whether they hold ownership in an SRO, and whether they are
actively participating in any litigation against the Plans. The
disclosures are made annually, updated in response to material changes,
and are publicly posted on the Plans' website.

III. Discussion and Modifications by the Commission

    Pursuant to Rule 608, the Commission shall approve the amendments,
``with such changes or subject to such conditions as the Commission may
deem necessary or appropriate,'' if it finds that they are ``necessary
or

appropriate in the public interest, for the protection of investors and
the maintenance of fair and orderly markets, to remove impediments to,
and perfect the mechanisms of, a national market system, or otherwise
in furtherance of the purposes of the Act.'' \17\
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    \17\ 17 CFR 608(b)(2).
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    The Commission agrees with the Participants that potential
conflicts of interest are inherent in the current market data
governance structure where exchanges can offer proprietary market data
products while they also act as Participants in running the public
market data stream. Indeed, as we recognized in the Notice, the
Commission has separately raised broader concerns about the impact of
these conflicts on the governance of the Plans.\18\ And the Commission
solicited comment as to ``whether the Amendments to the current Plans
address the concerns outlined in the Governance Notice or whether they
should be further enhanced regarding conflicts of interest in national
market system plan governance.''
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    \18\ See Notice, supra note 6, 85 FR at 2193. See also
Securities Exchange Act Release No. 87906 (January 8, 2020), 85 FR
2164 (January 14, 2020) (File No. 4-757) (``Governance Notice'').
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    After carefully considering the comments received on the Notice,
the Commission is modifying the Amendments pursuant to Section 11A of
the Act \19\ and Rule 608 thereunder,\20\ as discussed in detail below.
The Commission agrees that the current voluntary conflicts of interest
disclosure regime should be made mandatory, but believes that the
modifications set forth below, including enhanced disclosure
requirements and a requirement that an SRO be recused from voting when
it or an affiliate is competing for a contract with the Plans, are
appropriate in order to provide fuller transparency and further address
conflicts of interest. Specifically, the Commission believes that the
Plans should require additional public disclosures of any personal,
business, or financial interests, and any employment relationships that
would affect the ability of a party to the Plans, or its
representative, to be impartial regarding the objectives and actions of
the Plans. Further, the Commission believes that the Plans should
impose additional disclosure requirements on Participants and their
representatives, Processors, Administrators, Advisory Committee
members, and service providers and subcontractors to the Plans.
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    \19\ 15 U.S.C. 78k-1.
    \20\ 17 CFR 608.
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    The Commission believes that full disclosure of all material facts
necessary for market participants and the public to understand the
potential conflicts of interest inherent in the current market data
structure is an important approach to dealing with those potential
conflicts. Detailed, clear, and meaningful disclosures that provide
insight into otherwise non-transparent structures and operations can
raise awareness by bringing these important issues into the light. In
turn, increased access to information can facilitate public confidence
in Plan operations as well as promote self-awareness on the part of
Disclosing Parties that can support their efforts to identify and
address those potential conflicts. The Commission believes that by
requiring full disclosure of all material facts necessary to identify
the nature of a potential conflict of interest and the effect it may
have on Plan action, all parties, including the Commission and the
public, will be better positioned to evaluate competing interests among
any of the parties involved in governing, operating, and overseeing the
Plans, as those competing interests could materially affect their
ability to carry out the purposes of the Plans.
    Specifically, the Commission is modifying the Amendments as
described below:

A. Enhanced Disclosures

1. Service Providers and Subcontractors
    In the Notice, the Commission solicited comment on whether enhanced
conflicts disclosures should be required. Among other questions, the
Commission asked whether commenters ``think any other types of persons
should be required to provide disclosures, such as service providers to
the Administrator that provide audit, accounting, or other professional
services.'' \21\ Further, the Commission asked whether disclosures and
conflicts policies should be applicable to subcontractors, for example
where ``the Administrator enlists assistance from an auditor or any
other professional services subcontractor for any of the Plan(s)''
including most prominently when ``the subcontractor is affiliated with
an entity that is involved in the development, pricing, or sale of
proprietary data products offered to SIP customers, or is subject to
any other conflict.'' \22\
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    \21\ Notice, supra note 6, 85 FR at 2195.
    \22\ Id. at 2196.
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    In response to the Notice, the Advisory Committee recommended that
the Amendments ``should apply to service providers engaged in audit or
other professional service functions.'' \23\ Another commenter stated
that ``service providers (e.g., audit, accounting, legal, and other
professional providers) should be required to provide disclosures to
ensure such individuals remain independent of conflicts in both
appearance and fact'' and asserted that ``[s]uch service providers are
operating for the benefit of the Plan(s), and must be sufficiently
independent of other functions to ensure they provide qualified,
accurate and unbiased services.'' \24\
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    \23\ Letter from CTA/UTP Advisory Committee to Vanessa
Countryman, Secretary, Commission, dated January 24, 2020
(``Advisory Committee Letter''), at 2. The Advisory Committee
further recommended that the audit function be managed directly by
the Plans and performed by an entity different from the entity
engaged to audit the exchange's proprietary data products. See id.
The Commission is not incorporating that suggestion at this time but
believes it warrants further consideration.
    \24\ Letter from Joseph Kinahan, Managing Director, Client
Advocacy and Market Structure, TD Ameritrade to Vanessa A.
Countryman, Secretary, Commission, dated February 4, 2020 (``TD
Ameritrade Letter''), at 5.
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    The Commission is modifying the Amendments to require the
Participants, Administrator, Processor, or Operating Committee to only
use service providers and subcontractors that make the required
disclosures in certain circumstances.\25\ Specifically, the Commission
is adding the words ``and each service provider or subcontractor
engaged in Plan business (including the audit of subscribers' data
usage) that has access to Restricted or Highly Confidential Plan
information'' and defining those, together with the existing parties,
within the term ``Disclosing Parties'' as used in Section (f)(1) of the
CTA Plan (Section (e)(1) of the CQ Plan). Further, the Commission is
specifying that ``The Operating Committee, a Participant, Processor, or
Administrator may not use a service provider or subcontractor on Plan
business unless that service provider or subcontractor has agreed in
writing to provide the disclosures required by this section and has
submitted completed disclosures to the Administrator prior to starting
work.'' As is the case for all other Disclosing Parties, disclosures
provided by service providers and subcontractors would be made public.
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    \25\ The Commission is using the term ``service providers and
subcontractors'' to capture any natural person or entity engaged in
Plan business, including those that may be affiliated with a
Disclosing Party.
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    The Commission believes that the proposed disclosures contained in
the Amendments are insufficient in that they do not apply at all to
service providers to the Plans. For example, service providers can be
affiliated with

a Participant or the Administrator. In that case, the potential
conflicts of interest that apply to the Participant or Administrator
could equally apply to the service provider. These conflicts, as
discussed above, exist because some exchange Participants have a dual
role as both an SRO responsible for the operation of the SIP, on one
hand, and, on the other hand, as part of a publicly held company that
offers proprietary data products and connectivity services.\26\ The
exchanges generate revenue from these proprietary data products in
addition to the revenue the exchanges receive from the Plans. Given
service providers' and subcontractors' access to competitively
sensitive and commercially valuable Plan-related information, and the
potential for competitive harm if they share such information with the
Participants or their affiliates, the Commission believes that
conflicts of interest can also arise with respect to service providers
and subcontractors that may be under the direction of, or affiliated
with, an exchange Participant, Administrator, or Processor, or those
that may be under the direction of the Operating Committee. The
Commission believes it is appropriate to include within the scope of
the Amendments non-affiliates, including legal counsel, because they
would be under the direction of one or more Participants, engaged in
Plan business, and have access to Restricted or Highly Confidential
Information. Accordingly, the inherent conflicts of interest faced by
Participants, discussed above, could be perceived by a reasonable
objective observer to also affect the ability of such non-affiliated
persons to be impartial. Obtaining disclosures from such service
providers and subcontractors would therefore serve the purposes of the
Amendments to the same extent they do for any other Disclosing Party.
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    \26\ For example, Participants may offer proprietary data
products with content in excess of the core data offered by the
SIPs, as well as other top-of-book proprietary data products with
less content that can be marketed as a cheaper alternative to the
SIP. Examples of such proprietary top-of-book products are NASDAQ
Basic (https://business.nasdaq.com/intel/GIS/nasdaq-basic.html),
Cboe One Feed (https://markets.cboe.com/us/equities/market_data_services/cboe_one/), and NYSE BBO (https://www.nyse.com/market-data/real-time/bbo).
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    The Commission therefore believes it is appropriate to include
service providers and subcontractors within the scope of the conflicts
of interest disclosures by prohibiting the Operating Committee, a
Participant, the Processor, or the Administrator from using a service
provider or subcontractor on Plan business unless that service provider
or subcontractor has agreed to submit and keep current the required
disclosures.\27\
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    \27\ To the extent the Operating Committee, a Participant, the
Processor, or the Administrator seeks to use the services of a
service provider or subcontractor for Plan business, it would first
need to secure a written commitment from the service provider or
subcontractor to agree to submit a required disclosure and be
treated as a Disclosing Party, and the service provider or
subcontractor must in fact adhere to the provisions applicable to
all Disclosing Parties, including the process for updating the
disclosures and submitting them to the Administrator for public
dissemination in Section (f)(1)(ii) and (iii) of the CTA Plan
(Section (e)(ii) and (iii) of the CQ Plan) as well as the recusal
provisions in Section (f)(2) of the CTA Plan (Section (e)(2) of the
CQ Plan).
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    To implement the expansion of the required disclosures to service
providers and subcontractors engaged in Plan business that have access
to any level of confidential information, the Commission believes it is
appropriate to add the following new section under Required Disclosures
to apply to service providers and subcontractors:
    Pursuant to Section IV(f)(1) of the CTA Plan (Section IV(e)(1) of
the CQ Plan), each service provider or subcontractor that has agreed in
writing to provide required disclosures and be treated as a Disclosing
Party pursuant to Section IV(f) of the CTA Plan (Section IV(e) of the
CQ Plan) shall respond to the following questions and instructions:
     Is the service provider or subcontractor affiliated with a
Participant, Processor, Administrator, or member of the Advisory
Committee? If yes, disclose with whom the person is affiliated and
describe the nature of the affiliation.
     If the service provider's or subcontractor's compensation
is on a commission basis or is tied to specific metrics, provide a
detailed narrative summary of how compensation is determined for
performing work on behalf of the Plan.
     Is the service provider or subcontractor subject to
policies and procedures (including information barriers) concerning the
protection of confidential information that includes affiliates? If so,
describe. If not, explain their absence.
     Does the service provider or subcontractor, or its
representative, have any other relationships or material economic
interests that could be perceived by a reasonable objective observer to
present a potential conflict of interest with its responsibilities to
the Plan? If so, provide a detailed narrative discussion of all
material facts necessary to identify the potential conflicts of
interest and the effects they may have on the Plan.
    These disclosures require information that details the nature of
any affiliation with other Disclosing Parties, provides information on
the service provider's compensation arrangement, and asks about
information barriers given the sensitive information to which such
persons have access, all of which are consistent with the disclosures
required of other Disclosing Parties. Finally, these disclosures
include the new ``catch-all'' question that the Commission is adding to
all Disclosing Parties' disclosures, which is discussed further
below.\28\ Together, the Commission believes that these provisions
will, as with their applicability to all other Disclosing Parties,
provide important transparency into potential conflicts of interest
that parties that provide important services to the Plans may
encounter. The Commission believes that this transparency is important
for service providers and subcontractors engaged in Plan business that
have access to confidential Plan information because those service
providers and subcontractors act at the direction of a Disclosing Party
(e.g., the Administrator or Processor) and may be affiliated with them,
or may be acting at the direction of the Operating Committee and may be
affiliated with one of the Participants that compose the Operating
Committee. As such, those service providers and subcontractors likely
are subject to the same or similar potential conflicts of interest and
thus should be treated like any other Disclosing Party in making public
disclosures about those potential conflicts.
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    \28\ See infra Section III(A)(3)(d) (discussing the catch-all
question).
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    Further, the Commission believes it is appropriate to modify
Section (f)(1) of the CTA Plan (Section (e)(1) of the CQ Plan) to
specify that the Disclosing Parties shall complete the applicable
questionnaire \29\ ``to provide the required disclosures set forth
below to disclose all material facts necessary to identify potential
conflicts of interest.'' The Commission believes it is appropriate to
add this detail to Section (f)(1) of the CTA Plan (Section (e)(1) of
the CQ Plan) to emphasize that a Disclosing Party's responses to the
required disclosures must be sufficiently detailed to disclose all
material facts to identify applicable potential conflicts of interest.
Disclosures that fail to disclose all

material facts will be insufficient to identify potential conflicts of
interest and to provide sufficient context for the public to understand
how those potential conflicts of interest are relevant to the Plans'
governance and operations. An example of a ``material fact necessary to
identify potential conflicts of interest'' could include whether a
situation giving rise to a potential conflict of interest could have a
potential adverse effect on the Plans.\30\
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    \29\ In the reference to the applicable questionnaire, the
Commission is deleting the phrase ``attached to this UTP Plan as
Exhibit 3.'' The Amendments, as modified, will require the
Administrator to update the questionnaires. The Commission is not
now attaching updated questionnaires as Exhibit 3.
    \30\ For example, a Participant that offers its own top-of-book
data product to SIP customers for substantially lower fees than the
SIP could be conflicted when considering a Plan proposal to have the
SIP offer similar top-of-book products, and this conflict could
influence a decision by the Plans not to offer such a product.
Similarly, a Participant that offers an enhanced depth-of-book data
product to SIP customers could be conflicted when considering a Plan
proposal to expand the SIP to include enhanced depth-of-book data,
and this conflict also could influence a decision by the Plans not
to offer such a product. See also new Section (f)(1)(i) of the CTA
Plan (Section (e)(1)(i) of the CQ Plan) (specifying that a
``potential conflict of interest may exist when personal, business,
financial, or employment relationships could be perceived by a
reasonable objective observer to affect the ability of a person to
be impartial''), which provides guidance as to the scope of the
disclosures.
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    Finally, the Commission is modifying Section (f)(1) of the CTA Plan
(Section (e)(1) of the CQ Plan) to provide that ``[i]f state laws,
rules, or regulations, or applicable professional ethics rules or
standards of conduct, would act to restrict or prohibit a Disclosing
Party from making any particular required disclosure, a Disclosing
Party shall refer to such law, rule, regulation, or professional ethics
rule or standard and include in response to that disclosure the basis
for its inability to provide a complete response. This does not relieve
the Disclosing Party from disclosing any information it is not
restricted from providing.'' The Commission believes this modification
is appropriate to accommodate the potential that a small number of
Disclosing Parties, for example service providers that are licensed
attorneys, may be unable to complete one or more of the disclosures due
to their obligations under potentially conflicting laws, rules, or
professional standards. This modification will allow such a Disclosing
Party to provide responses to the required disclosures by identifying
the particular conflicting laws or professional standards and
discussing the basis for its inability to provide a complete response
while providing information it is not restricted from disclosing.
2. Scope of the Amendments
    In the Notice, the Commission solicited comment on whether the
Amendments are sufficient to elicit information necessary to provide
insight into all potential conflicts. Among other questions, the
Commission asked whether commenters ``believe that the Plans should
require additional public disclosures of any personal, business, or
financial interests, and any employment or other commercial
relationships that could materially affect the ability of a party to be
impartial regarding actions of the Plans'' as well as whether
commenters ``believe that the proposed disclosure questions for each
party are sufficient to identify the specific relationships that may
give rise to a conflict under the Plan and related information.'' \31\
The Commission further asked whether commenters ``believe that the
proposed questions effectively require all material facts necessary to
not only identify the nature of the conflict, but also the effect it
may have on the Plans'' and whether the Amendments should require
``additional public disclosures of any personal, business, or financial
interests, and any employment or other commercial relationships that
could materially affect the ability of a party to be impartial
regarding actions of the Plans.'' \32\
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    \31\ Notice, supra note 6, 85 FR at 2195.
    \32\ Id. at 2195-96.
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    The Commission also asked questions about the nature of the
potential conflicts faced by parties involved with the operation and
oversight of the Plans and whether commenters believe the Amendments
would require adequate disclosure in sufficient detail about and/or
address those conflicts. For example, the Commission stated: ``[w]ith
Exchanges permitted to offer both proprietary market data products and
also acting as Participants in running the public market data stream,
potential conflicts of interest are inherent . . . .'' \33\ The
Amendments themselves similarly provide that ``[t]here may be instances
in which representatives from the Participants and Advisory Committee
members have responsibilities with respect to both proprietary data and
[SIP] data'' and that ``such overlapping responsibilities may give rise
to potential conflicts of interest.'' \34\
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    \33\ Id. at 2195.
    \34\ Id. at 2193.
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    In response to the Notice, the Advisory Committee said it believes
the disclosure of conflicts of interest is important for Participants,
Advisors, Administrators, and Processors but believes publishing the
conflicts of interest, as proposed by the Participants, ``does not
adequately address the conflicts of interest.'' \35\ For example, the
Advisory Committee believes that the disclosures ``do not address
situations where Participants sell competing products and may vote [on
Plan matters] in ways that protect the commercial interest of the
Participant, rather than furthering the goals of the Plans.'' \36\ To
address this, the Advisory Committee recommended changes to expand the
scope of the Amendments beyond disclosure and affirmatively require
that individuals participating in the activities of the Plans'
Operating Committee act in furtherance of the goals of the Plans, that
individuals recuse themselves when there is a material conflict between
the goals of the Plan and their interests or their employer's interest,
and that service providers engaged in audit or other professional
service functions also be subject to the conflicts of interest
policy.\37\
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    \35\ Advisory Committee Letter, supra note 23, at 1-2.
    \36\ Id. at 2.
    \37\ Id.
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    Another commenter agreed with this viewpoint stating ``market
developments have heightened the potential for and perception of
conflicts of interest between the exchanges' commercial interests and
their regulatory obligations under the Act and [Plans] to produce and
provide core data.'' \38\ The commenter stated that it ``does not
believe the proposed amendments completely address the potential
conflicts'' noting that ``the lower cost of exchange top of book
products, coupled with the costs associated with processes imposed by
the Plans, including associated audit burdens, favors retail broker-
dealer use of exchange proprietary top of book products, which puts the
interests of the exchanges in producing such products above that of the
Securities Information Processor and may create direct conflict with
their roles as Administrators.'' \39\ The commenter recommended that
the ``Plan(s) should require that all individuals providing disclosures
include any additional relationships, whether personal, employment, or
commercially related, which may present a perceived or actual conflict
of interest with their assigned role(s) for the Plan(s).'' \40\
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    \38\ TD Ameritrade Letter, supra note 24, at 2.
    \39\ Id. at 2-3.
    \40\ Id. at 6.

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    A third commenter similarly stated that ``the structure of the
Plans and their governance model is inherently conflicted'' and only
fundamental reform can address the conflicts, which the commenter said
could involve ``true independence'' of the Participants from the
Administrators and Processors.\41\ One commenter broadly asserted that
the ``required disclosures fail to identify many of the potential
conflicts of interest inherent in the system, and utterly fail to
quantify the magnitude of firms' conflicts of interest, financial
incentives, and other relationships'' and ``perhaps at the most basic
level, they generally don't provide the public with any information we
didn't already know.'' \42\
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    \41\ See Letter from Jeff Brown, Senior Vice President--
Legislative and Regulatory Affairs, Charles Schwab, to Vanessa
Countryman, Secretary, Commission, dated February 4, 2020 (``Charles
Schwab Letter''), at 3-4. See also infra note 72.
    \42\ Letter from Tyler Gellasch, Executive Director, The Healthy
Markets Association, to Vanessa Countryman, Secretary, Commission,
dated February 20, 2020 (``Healthy Markets Letter''), at 18.
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    The Commission agrees that the proposed amendments do not
adequately address potential conflicts, and believes that a Disclosing
Party's access to confidential information it obtains as a result of
its involvement with the Plans can create potential conflicts of
interest that could influence the decisions it makes with respect to
the Plans' operation. The Commission believes that the Amendments
should be modified to provide more transparency into those potential
conflicts. These conflicts can impede the ``prompt, accurate, reliable
and fair collection, processing, distribution, and publication of
information with respect to quotations for and transactions in such
securities and the fairness and usefulness of the form and content of
such information.'' \43\ For example, the exchanges' commercial
interests in their proprietary data businesses, as well as the
exchange-affiliated Administrators' access to confidential subscriber
and audit information that is commercially and competitively valuable
to that proprietary data business, have created conflicts of interest
that could influence decisions as to the Plans' operation. As the
Participants acknowledged in the Notice, disclosure of these conflicts
and other potential conflicts of interest is an important step in
addressing potential conflicts of interest.\44\
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    \43\ 15 U.S.C. 78k-1(c)(1)(B).
    \44\ See Notice, supra note 6, 85 FR at 2194.
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    Given the importance of disclosing these potential conflicts of
interest, the Commission is modifying the proposed Amendments to help
ensure that the Amendments are clear and that the objectives of the
disclosure requirements are uniformly applied. Specifically, as
discussed above, the Commission is adding to Section (f)(1) of the CTA
Plan (Section (e)(1) of the CQ Plan) further detail to specify that the
disclosures are eliciting information on ``all material facts necessary
to identify potential conflicts of interest.'' Further, the Commission
is including language to specify in new Section (f)(1)(i) of the CTA
Plan (Section (e)(1)(i) of the CQ Plan) that a ``potential conflict of
interest may exist when personal, business, financial, or employment
relationships could be perceived by a reasonable objective observer to
affect the ability of a person to be impartial.'' This new text
establishes an objective standard for the disclosures by requiring that
the potential conflicts of interest to be disclosed are to be viewed
through the lens of a reasonable objective observer considering
impartiality. This standard is needed so that the requirement to
disclose potential conflicts of interest is not triggered solely based
on the subjective views of the Disclosing Party. Impartial third
parties, including members of the public, will be among those reviewing
the disclosures and they should be assured that, across all Disclosing
Parties, the disclosures are comprehensive, consistent, and do not
display the potentially biased perspective of the Disclosing Party. The
disclosures must be meaningful and sufficiently detailed to provide any
reasonable objective observer that reads the disclosures with adequate
transparency into matters such that she is able to determine whether
the Disclosing Party would be able to be impartial in its role with the
operation and oversight of the Plans.
3. Enhanced Party-Specific Disclosures
    In addition to asking questions about the overall scope and
sufficiency of the Amendments and the general disclosure-based approach
they contain, the Commission also solicited comment on a number of
detailed questions in the Notice about the potential conflicts faced by
various entities, including individual Disclosing Parties, service
providers, and subcontractors.
a. Participants
    In addition to those questions mentioned above, the Commission
asked whether commenters ``believe that any individual representing a
Participant that is directly involved in the management, development,
pricing, or sale of proprietary data products offered to SIP customers
should participate in discussions and related Plan votes regarding the
pricing of SIP data products'' and how commenters ``believe
Participants should address the conflicts their representatives may
face in their dual role of pricing and developing SIP data products as
well as their own proprietary data products.'' \45\
---------------------------------------------------------------------------

    \45\ Notice, supra note 6, 85 FR at 2196.
---------------------------------------------------------------------------

    In response to the Notice, one commenter suggested that ``in
addition to disclosing whether a participant's firm charges a fee for
the provision of data, the participant should reveal the percentage of
revenues derived from the sale of proprietary data, and separately core
SIP data, as a percentage of total revenue.'' \46\ Another commenter
urged the Commission to either deny the Amendments or to expand them
dramatically to include information that ``might actually help the
Commission and third parties quantify and assess the Disclosing
Parties' conflicts of interest'' such as ``a disclosure by each
exchange of its costs in producing SIP data, the revenues from the SIP
data, costs in producing competing proprietary data products, revenues
from the competing data products, analyses of the extent of the
customer overlap of those products, details regarding the projected
impact of improving the content and timeliness of the SIPs on those
competing data products, and more.'' \47\
---------------------------------------------------------------------------

    \46\ Letter from Rich Steiner; Head of Client Advocacy and
Market Information, RBC Capital Markets, to Vanessa Countryman,
Secretary, Commission, dated February 4, 2020 (``RBC Letter''), at
2.
    \47\ Healthy Markets Letter, supra note 42, at 18.
---------------------------------------------------------------------------

    On this issue, another commenter expressed concern about the
``potential for and perception of conflicts of interest between the
exchanges' commercial interests and their regulatory obligations . . .
to provide core data.'' \48\ One commenter recommended broadly that
questions eliciting disclosures for Participants, Processors,
Administrators, and Advisory Committee members should ``provide
detailed and specific information regarding a potential conflict of an
individual (and not specifically their employer)'' and the information
should include not only the individual's general role ``but also
specific information about that individual's contractual requirements,
compensation structures, resource allocations, and information access
that may cause a perceived conflict.'' \49\ The

commenter stated that enhanced disclosure ``would ensure sufficient,
transparent information is available for the public to effectively
analyze the potential conflicts being disclosed.'' \50\
---------------------------------------------------------------------------

    \48\ TD Ameritrade Letter, supra note 24, at 2. See supra text
accompanying note 39.
    \49\ Id. at 4. The commenter stated that ``the questions for
Participants, Processors, Administrators and members of the Advisory
Committee are not completely sufficient to elicit the necessary
information to provide insight into all potential conflicts for an
individual.'' Id. at 3-4.
    \50\ Id.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice,
the Commission believes it is appropriate to enhance the required
disclosures of Participants in two ways. First, the Commission is
adding requested disclosures to a question regarding whether
Participants offer proprietary data. Currently, the question asks
whether the Participant firm offers real-time proprietary equity data
and, if so, whether the Participant charges a fee. The Commission is
modifying the question to require a Participant also to ``list each
product, describe its content, and provide a link to the fee schedules
where fees for each product are disclosed.'' \51\ As suggested by a
commenter, this additional disclosure follows logically from, and
provides more information in relation to, the existing question of
whether a Participant offers proprietary data and whether it charges
for it. The Commission believes it is insufficient merely to ask a
``yes or no'' question on an issue that is at the core of the potential
conflicts of interest inherent to the Plans' current governance
structure. There are various types of proprietary data offered and fees
charged for it, and these offerings and fees serve as the principal
sources of the potential conflict. Without more information on the
material underlying facts related to specific proprietary data
offerings and fees, a simple disclosure that such offerings and fees
exist is not sufficient to elucidate the nature and extent of the
potential conflict. The Commission believes Participants should
identify and describe the specific proprietary data products they
offer. Doing so will allow anyone who reads the disclosure to evaluate
the proprietary data products and assess whether and how they overlap
with the SIP.
---------------------------------------------------------------------------

    \51\ In requiring Participants to provide a link to the fee
schedules where fees for each product are disclosed, the Commission
is not requiring additional information to be disclosed concerning
such fees, but rather, to promote accessibility of that information
to readers of the conflicts disclosures, is requiring Participants
to provide a specific location indicating where Participants
currently disclose those fees.
---------------------------------------------------------------------------

    For example, as stated above, a Participant may offer more
expensive proprietary data products with content in excess of the core
data offered by the SIPs, as well as other top-of-book proprietary data
products with less content that can be marketed as a less expensive
alternative to the SIP. Both types of proprietary data products contain
information that overlaps to some extent with what the SIP provides,
but one is offered as a more expensive and enhanced data product while
the other is offered as a less expansive and less expensive alternative
to the SIP. In doing so, the Participant offers its own data product
because the SIP does not offer something similar. The Participant,
however, is not just offering a different product (potentially expanded
in content or lower in price) compared to the SIP in this respect; it,
together with other Participants, governs (and possibly operates) the
SIP. Disclosure of certain information about these proprietary data
products offered by a Participant, and a link to fee schedules for such
products, can reveal material facts (i.e., the Participant's pricing of
its proprietary data products that it offers to SIP customers). These
material facts are relevant to whether a Participant may, for example,
be disincentivized to support expanding the content of SIP core data or
to support the SIP offering an optional and less expensive data feed,
as well as material facts relevant to a Participant's pricing strategy
for the SIP as compared to its own proprietary data product offerings.
Either of those cases would involve the SIP offering a similar product
to that already offered as a proprietary data product by the
Participant. With full disclosure of these material facts, a reasonable
objective observer would better understand the potential conflict of
interest the Participant faces in its governance of the Plans,
including what conflicts of interest the Participant would face when it
discusses and votes on SIP proposals to provide data products similar
to those provided by the Participants at prices that match or undercut
the Participant's own fees for proprietary products. As revised, the
disclosures will provide valuable additional insight into the nature
and extent of a principal source of the potential conflict of interest
an exchange has in its dual role of overseeing the Plans while offering
its own proprietary data products.
    Second, the Commission is modifying the disclosures for the
Participant's representative to require greater disclosure of the
individual's connection with the Participant's proprietary market data
business. Specifically, the Commission is adding the phrase
``sufficient for the public to identify the nature of any potential
conflict of interest that could be perceived by a reasonable objective
observer as having an effect on the Plan.'' Further, the Commission is
adding to the question the following: ``If the representative works in
or with the Participant's Proprietary Market Data business, describe
the representative's roles and describe how that business and the
representative's Plan responsibilities impact his or her compensation.
In addition, describe how a representative's responsibilities with the
Proprietary Market Data business may present a conflict of interest
with his or her responsibilities to the Plan.''
    This modification, which conforms to the modification of the scope
of the Amendments discussed above, requires that Participants provide
sufficient detail in their responses to this particular item because it
is central to the potential conflicts of interest at issue. Without
sufficiently detailed disclosure of the underlying facts, the
disclosure would not provide effective insight into the potential
conflicts of interest the Participant's representative personally has
in his or her role with the Plans. For example, if the representative's
compensation is tied directly and substantially to the profitability of
the Participant's proprietary market data business, then the
representative might face a conflict of interest when working on Plan
matters, most notably when considering whether to enhance or more
competitively price Plan data products in ways that would compete with
the Participant's proprietary data products. While the Commission would
expect this information to be disclosed in response to the existing
question, the Commission seeks to avoid any doubt and ensure
sufficiently detailed responses to the question on this important
disclosure.
b. Processors
    In the Notice, the Commission asked whether commenters ``have
concerns about affiliations between a Plan's Processor and a
Participant'' and, if so, whether commenters ``believe the conflicts of
interest disclosure is sufficient to address those concerns'' or
whether ``the Amendments [should] require a description of the nature
of the affiliation.'' \52\ In addition, the Commission asked whether
commenters ``have concerns about affiliations between a Plan's
Processor and a Participant'' and, if so, whether they ``believe the
conflicts of interest disclosure is sufficient to address those
concerns'' or whether ``the Amendments [should] require a description
of the

nature of the affiliation.'' \53\ Further, the Commission asked whether
commenters ``believe that the proposed Processor questions effectively
require all material facts necessary to not only identify the nature of
the potential conflict, but also the effect it may have on the Plans''
and whether commenters believe the Amendments should ``elaborate on
what `profit or loss responsibility for a Participant's Proprietary
Market Data products' means in the context of the required
disclosures.'' \54\
---------------------------------------------------------------------------

    \52\ Notice, supra note 6, 85 FR at 2196.
    \53\ Id.
    \54\ Id.
---------------------------------------------------------------------------

    The Commission did not receive any comments that specifically
addressed the questions raised or alternatives suggested by the
Commission, though the commenters discussed above supported enhanced
disclosures for all Disclosing Parties.\55\
---------------------------------------------------------------------------

    \55\ See, e.g., TD Ameritrade Letter, supra note 24, at 3-4.
---------------------------------------------------------------------------

    The Commission believes that it is appropriate to modify the
required disclosures of the Processors to require more detailed
disclosures relevant to potential conflicts of interest in a manner
similar to the modifications it is making for the Administrator. As
proposed, the disclosures for the Administrator and the Processor were
substantively identical, and the Commission believes that modifying the
Processor's disclosures to remain consistent with the Administrator's
disclosures keeps with the intent of the proposed Amendments. Like the
Administrator, the Processor also is responsible for Plan operations;
as a result the proposed conflict of interest disclosures are similar.
To keep those disclosures comparable, the Commission is making
modifications to the required disclosures for Processors similar to the
modifications it made for Administrators. First, the Commission is
adding to the question requiring Processors to disclose whether they
are is affiliated with any Participant additional language to require
that the Processor must also ``describe the nature of the
affiliation,'' identify the name of the affiliate, and ``[i]nclude an
entity-level organizational chart depicting the Processor and its
affiliates.'' The Commission believes that merely providing a name of
an affiliate without disclosing how the two parties are related to each
other is not sufficient. Many different levels of affiliation are
possible, and the relationship between the Processor and a Participant
is meaningful information that should be disclosed in order to allow
the public to assess the impact of the affiliation on the potential
conflicts the Processor may face when acting on behalf of the Plans.
    In addition, the Commission is modifying the question that requires
a narrative description of the functions performed by the manager to
also require a similar description for ``senior staff'' that may be
senior to the manager but that also provide services in the Processor
capacity. By adding senior staff to that question, the disclosures will
be able to provide more insight into the parties involved with the
Processor function of the Plans including by those persons senior to,
and with authority over, the manager.
    Second, the Commission is adding to the question on whether the
Processor provides any services to the Participant's proprietary market
data products, and whether the Processor has profit or loss
responsibility for that business, a further requirement for the
Processor to disclose ``any other professional involvement with persons
the Processor knows are engaged in'' the Participant's proprietary data
business and to describe it. The information that a Processor obtains
by virtue of its service to the Plan as the Processor can be sensitive
non-public information of considerable commercial value. Even if the
Processor does not have ``profit or loss responsibility'' for the
Participant's proprietary data business, the Processor may have
significant professional involvement with other people that do.\56\ Any
affiliated people in the Participant's proprietary data business with
whom the Processor may interact may be incentivized to use information
provided by the Processor to the competitive advantage of the
Participant and to benefit the Participant's proprietary data business.
The Commission therefore is modifying the question to elicit material
information that is directly relevant to the potential conflicts of
interest faced by the Processor if the Processor has involvement or
contact with persons engaged in a Participant's proprietary market data
business.
---------------------------------------------------------------------------

    \56\ With respect to protecting the confidentiality of Plan-
related information, the Commission separately is approving modified
amendments to address the Plans' confidentiality policies. See
Securities Exchange Act Release No. 88825 (May 6, 2020). The
Commission does not believe that the separate confidentiality
amendments obviate the need for these Amendments dealing with
conflicts of interest. Rather, the Commission believes that both
sets of amendments complement each other and take an important first
step towards strengthening the Plans' ability to protect against the
potential misuse of confidential Plan information while addressing
the potential conflicts of interest inherent in Plan governance.
---------------------------------------------------------------------------

c. Administrators
    In the Notice, the Commission asked whether commenters believe the
proposed disclosure questions for Administrators ``are sufficient to
identify the specific interests and employment, commercial or other
relationships that may give rise to a conflict'' or whether more
disclosures and more detailed items should be required.\57\
---------------------------------------------------------------------------

    \57\ Notice, supra note 6, 85 FR at 2195.
---------------------------------------------------------------------------

    In response to the Notice, one commenter stated that the proposed
disclosures for all Disclosing Parties, including the Administrators,
were ``not completely sufficient to elicit the necessary information to
provide insight into all potential conflicts for an individual'' and
recommended that the disclosures be ``enhanced to elicit responses that
provide detailed information about the nature of the conflict,
including not only the general role of an individual, but also specific
information about that individual's contractual requirements,
compensation structures, resource allocations, and information access
that may cause a perceived conflict.'' \58\
---------------------------------------------------------------------------

    \58\ TD Ameritrade Letter, supra note 24, at 3-4.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice,
the Commission believes it is appropriate to enhance the required
disclosures of Administrators. The Commission is modifying the question
about whether the Administrator is affiliated with a Participant in the
same way that it modified the parallel question about the Processor and
is making that modification for the same reasons. Specifically, the
Commission is requiring Administrators that are affiliated with a
Participant also (i) to ``describe the nature of the affiliation'' in
addition to identifying the name of the affiliate, and (ii) to include
``an entity-level organizational chart depicting the Administrator and
its affiliates.'' As is true for the disclosure applicable to the
Processor, the Commission believes that merely providing the name of an
affiliate without disclosing how the two parties are related to each
other is not sufficient to identify what might give rise to a potential
conflict of interest.
    In addition, the Commission is modifying the question that requires
a narrative description of the functions performed by the
administrative services manager to also require a similar description
for ``senior staff'' that may be senior to the administrative services
manager but that also provide services in the Administrator capacity.

By adding senior staff to that question, the disclosures will be able
to provide more insight into the parties involved with the
administration of the Plans including by those persons senior to, and
with authority over, the manager. Further, the Commission is modifying
the question that requires disclosure of whether the Plan Administrator
has profit or loss responsibility for a Participant's proprietary
market data products to also encompass ``licensing responsibility'' for
the same to require disclosure of whether the Administrator performs
the central task of licensing for the Participant's proprietary market
data products, which would overlap substantially with the
Administrator's licensing responsibility to a similar customer base.
Finally, for the same reasons discussed above for Processors, the
Commission is adding to that same question a further requirement for
the Administrator to disclose ``any other professional involvement with
persons the Administrator knows are engaged in'' the Participant's
proprietary data business and to describe it. This change harmonizes
the same question asked of both the Processors and Administrators, who
are similarly situated in when it comes to involvement or contact with
persons engaged in a Participant's proprietary market data business.
    Administrators have access to highly sensitive and commercially
valuable non-public information that would be of substantial value to a
Participant's proprietary data business. For example, access to the SIP
customer lists that an Administrator has through its responsibilities
to the Plans would be very valuable to a Participant. If the staff
associated with the Administrator has access to that information and
also bears responsibility for the Participant's proprietary market data
products, the potential conflict of interest is considerable and should
be disclosed. The Commission believes that these modifications to the
disclosures applicable to the Administrator are appropriate to provide
insight into some of the key potential conflicts of interest faced by
the Administrator.\59\
---------------------------------------------------------------------------

    \59\ The Commission believes it is appropriate for the
Administrator to make the required disclosures even if it is
independent and not owned or controlled by a corporate entity that
offers for sale its own proprietary market data product, either
directly or via another subsidiary, for the same reasons that other
independent parties (e.g., Advisors and service providers) are
required to make the disclosures. Among other things, the
Administrator's disclosures contain important information about any
services provided to Participants' proprietary market data products,
policies and procedures to safeguard confidential information, and
the catch-all question about additional relationships or material
economic interests. See Securities Exchange Act Release No. 88827
(May 6, 2020) (ordering the Participants to act jointly in
developing and filing with the Commission a proposed new single
national market system plan that would, among other things, require
an independent Administrator).
---------------------------------------------------------------------------

d. Catch-All Question
    In the Notice, the Commission solicited comment on whether the
Amendments would elicit the information necessary to provide sufficient
transparency of the potential conflicts of interest faced by parties
involved with operating and overseeing the Plans. Among other things,
the Commission asked whether commenters ``believe that the Plans should
require additional public disclosures of any personal, business, or
financial interests, and any employment or other commercial
relationships that could materially affect the ability of a party to be
impartial regarding actions of the Plans.'' \60\
---------------------------------------------------------------------------

    \60\ Notice, supra note 6, 85 FR at 2195-96.
---------------------------------------------------------------------------

    In response to the Notice, one commenter suggested that all parties
disclose ``any additional relationships, whether personal, employment,
or commercially related, which may present a perceived or actual
conflict of interest with their assigned role(s) for the Plan(s).''
\61\
---------------------------------------------------------------------------

    \61\ TD Ameritrade Letter, supra note 24, at 6. See also supra
text accompanying note 40 (discussing TD Ameritrade Letter); and
Healthy Markets Letter, supra note 42, at 18 (stating that the
disclosures should be expanded to ``disclose any personal,
organizational, or financial relationships'').
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice,
the Commission believes it is appropriate to modify the Amendments to
include a ``catch-all'' question for each Disclosing Party. The catch-
all question asks whether the Disclosing Party or its representative
``have any additional relationships or material economic interests that
could be perceived by a reasonable objective observer to present a
potential conflict of interest with their responsibilities to the
Plan'' and, if so, ``provide a detailed narrative discussion of all
material facts necessary to identify the potential conflicts of
interest and the effects they may have on the Plan.'' \62\ This catch-
all question would require disclosure of any other relationships or
material economic interests, such as employment, financial, or
commercial arrangements, not otherwise discussed in the disclosures,
but which a reasonable objective observer could perceive as presenting
a potential conflict.
---------------------------------------------------------------------------

    \62\ For Disclosing Parties that are Participants, the catch-all
question extends to an ``alternative representative'' and ``any
affiliate'' of the Participant. For Disclosing Parties that are
Advisors, the catch-all question extends to the ``Advisor's firm.''
These additions capture specific parties that are unique and
relevant to the Participants and Advisors for purposes of the
Amendments.
---------------------------------------------------------------------------

    The Commission believes that the catch-all question is appropriate
as it elicits information broadly on Disclosing Parties and their
representatives, which is designed to ensure that no relevant
connections are omitted in the disclosures. Further, by covering
additional relationships or material economic interests, the catch-all
question is designed to ensure that the disclosures have not omitted
any other sources of potential conflicts that could affect the Plans.
Disclosure of this information may provide valuable insight into
potential conflicts that would not otherwise be disclosed and the
circumstances behind a potential conflict.

B. Review of the Disclosures

    In the Notice, the Commission solicited comment on whether a
disclosure-based regime is sufficient to address the potential
conflicts that Participants, Processors, Administrators, and members of
the Advisory Committee may face in their roles within the Plan and
whether additional steps are necessary. One additional step the
Commission highlighted is the role of the Operating Committee in the
disclosure regime. Among other questions, the Commission asked whether
commenters believe ``that Operating Committee members should be
permitted to raise the issue of a potential conflict of interest of
another Participant for discussion before the Operating Committee, even
if the Participant did not itself disclose the potential conflict'' and
whether the Operating Committee ``should have the ability to take
action in response to disclosed or undisclosed conflicts . . . .''
    In response to the Notice, one commenter suggested that the Plans
should alleviate potential conflicts of interest by ``implementing a
formal procedure for evaluating disclosures and making an explicit
determination regarding whether the potential conflicts disclosed will,
in perception or fact, impede that individual's ability to fulfill
their role for the Plan(s).'' \63\
---------------------------------------------------------------------------

    \63\ TD Ameritrade Letter, supra note 24, at 4.
---------------------------------------------------------------------------

    After considering the comments received, the Commission is not
modifying the Amendments to institute a formal review process for the
disclosures. The disclosures will continue to be publicly posted, and
the Participants, Advisors, and others will be able to continue to
review the disclosures and amendments thereto. To the extent a party
believes that a

Disclosing Party has not adequately responded to a particular
disclosure item or has not clearly explained the necessary information
to disclose a potential conflict, the Commission would encourage
Disclosing Parties and other individuals to bring such concerns to the
attention of the Operating Committee for its consideration, as
Participants would have an interest in promoting a high standard for
the disclosures that is consistently applied across all Disclosing
Parties. The Commission encourages the Participants to consider further
whether to propose a formal review process with appropriate
consequences for violations.

C. Recusal

    In the Notice, the Commission solicited comment on whether
additional steps, including recusal, are necessary to address the
potential conflicts that arise in connection with the operation and
oversight of the Plans. Among other questions, the Commission asked
whether commenters ``believe that a Participant should be recused from
voting when it or an affiliate is competing for a contract to serve as
a Processor for the Plans.'' \64\ The Commission asked whether recusal
is ``an appropriate mechanism to address conflicts'' and, if so,
whether it should be mandatory or voluntary.\65\ The Commission also
asked whether ``the Operating Committee should have the ability to take
action in response to disclosed or undisclosed conflicts, such as
requiring the Participant to recuse itself from a certain discussion or
vote on a particular matter.'' \66\
---------------------------------------------------------------------------

    \64\ Notice, supra note 6, 85 FR at 2196.
    \65\ Id.
    \66\ Id.
---------------------------------------------------------------------------

    In response to the Notice, the Advisory Committee supports a
``requirement for individuals to recuse themselves from discussions
and/or voting when there is a material conflict between the requirement
to further the goals of the plan and the specific interest of the
individual or their employer.'' \67\ In particular, the Advisory
Committee recommended mandatory recusal in situations ``regarding
processor bids or voting to choose a processor, when the individual's
firm is bidding for the processor role.'' \68\ The Advisory Committee
further suggested that recusal be required when ``either (i) the
individual, acting in good faith, or (ii) the Operating Committee, by
majority vote, determines that such individual has a material
conflict.'' \69\
---------------------------------------------------------------------------

    \67\ Advisory Committee Letter, supra note 23, at 2.
    \68\ Id. See also Healthy Markets Letter, supra note 42, at 14
(recommending detailed recusal provisions that preclude a person
``from voting on any matter that directly impacts its costs or
revenues, or those of its affiliates''); and Letter from John
Ramsay, Chief Market Policy Officer, Investors Exchange LLC, to
Vanessa Countryman, Secretary, Commission, dated March 4, 2020
(submitted in response to Release No. 34-87906; File No. 4-757).
    \69\ Advisory Committee Letter, supra note 23, at 2.
---------------------------------------------------------------------------

    Another commenter similarly stated that there should be a mechanism
for recusal when a ``conflict becomes material,'' such as when the
``Operating Committee is considering selection of a service provider
for a SIP, and the participant's firm has a relationship with a
bidder.'' \70\ The commenter recommended that there should be a
``mechanism for responding to a participant's failure to comply with
the disclosure requirement including, if appropriate, dismissal from
the Operating Committee.'' \71\
---------------------------------------------------------------------------

    \70\ RBC Letter, supra note 46, at 3. See also Letter from Rich
Steiner Head of Client Advocacy and Market Information, RBC Capital
Markets, to Vanessa Countryman, Secretary, Commission, dated
February 28, 2020 (submitted in response to Release No. 34-87906;
File No. 4-757), at 4 (discussing the need for disclosure of
material information, and citing as an example when a Participant
has a relationship with a person bidding for a contract with the
Plans). As discussed above, the Commission is modifying the
Amendments to require a Participant's recusal from voting on matters
in which it or its affiliate (i) is seeking a position or contract
with the Plan or (ii) has a position or contract with the Plan and
whose performance is being evaluated by the Plan. The commenter also
believed that the Advisory Committee members should only provide the
disclosures on a voluntary basis as they do not currently have
voting rights, such that the disclosures should only be mandatory
for voting members of the Operating Committee. See id. at 2. The
Commission, however, believes that Advisors, because they are
engaged in Plan business, just like other Disclosing Parties engaged
in Plan business, should be required to make the mandatory conflicts
of interest disclosures. With such disclosures, other Disclosing
Parties and the public can assess whether the Advisors are subject
to any conflicts as they carry out their responsibilities with the
Plans.
    \71\ RBC Letter, supra note 46, at 3.
---------------------------------------------------------------------------

    A third commenter suggested that ``there should be a mechanism or
process whereby recusal is required from discussion and voting in case
of a material conflict of interest.'' \72\ The commenter recommended
requiring recusal when ``a Participant exchange, or Advisory Committee
member's employer could be competing to be a service provider to the
Plans such as processor, or auditor.'' \73\
---------------------------------------------------------------------------

    \72\ Charles Schwab Letter, supra note 41, at 4. The commenter
stated that ``only a complete separation of functions--true
independence--of the Participants from the Administrators and
Processors can mitigate the conflict.'' Id. The Commission believes
that the modifications made are appropriate for these Amendments and
is not including this requirement in the Amendments.
    \73\ Id.
---------------------------------------------------------------------------

    One commenter asserted that ``[d]isclosure of potential conflicts
in and of itself does not necessarily mitigate any such conflict or the
perception of such conflict.'' \74\ The commenter suggested that
``[e]ffectively addressing an individual's conflict of interest,
whether perceived or in fact, includes mitigating and/or removing such
conflict.'' \75\ This commenter advocated for a recusal policy with
review of disclosures by a committee composed of both SRO and non-SRO
members, guidance from Plan legal counsel, and a vote by the
committee.\76\ The commenter suggested that individuals may be required
to recuse themselves for certain topics or for the tenure of their term
depending on the severity of the conflict.\77\
---------------------------------------------------------------------------

    \74\ TD Ameritrade Letter, supra note 24, at 3.
    \75\ Id.
    \76\ See id. at 4.
    \77\ See id.
---------------------------------------------------------------------------

    After considering the comments received in response to the Notice,
the Commission believes it is appropriate to require mandatory recusal
in certain situations. To promote transparency when recusals occur, new
Section (f)(2)(iv) of the CTA Plan (Section (e)(2)(iv) of the CQ Plan)
requires that all recusals, including a person's determination of
whether to voluntarily recuse himself or herself, be reflected in the
applicable meeting minutes. Increased transparency of recusals will
allow the public to assess whether Plan decisions have, or have not,
been informed by persons subject to potential conflicts of interest.
    With respect to specific recusals, the Commission is adding new
Section (f)(2)(i) of the CTA Plan (Section (e)(2)(i) of the CQ Plan) to
specify that a Disclosing Party ``may not appoint as its representative
a person that is responsible for or involved with the development,
modeling, pricing, licensing, or sale of proprietary data products
offered to customers of a securities information processor if the
person has a financial interest (including compensation) that is tied
directly to the exchange's proprietary data business and if that
compensation would cause a reasonable objective observer to expect the
compensation to affect the impartiality of the representative.'' To the
extent an exchange that offers proprietary market data products
appoints as its representative to the Plans such an individual, that
person has an inherent conflict of interest arising from his or her
financial interest in the exchange's proprietary data business.
    The effect of this requirement is that a Participant will not be
able to appoint as its representative a person that has a financial
interest (including

compensation) that is tied directly to the Participant's proprietary
data business if that compensation would cause a reasonable objective
observer to expect the compensation to affect the impartiality of the
representative. For example, if a person's primary job function is tied
directly to the success or growth of proprietary data products, and/or
some percentage of a person's compensation is tied directly to the
revenues or profits specifically of the exchange's proprietary data
business (as opposed to being tied more generally to the Participant's
overall revenue), that person could not serve as the Participant's
representative if that compensation would cause a reasonable objective
observer to expect the compensation to affect the impartiality of the
representative. If such person currently serves as the Participant's
representative, that person could either no longer serve as the
Participant's representative or no longer have such a financial
interest that is tied directly to the exchange's proprietary data
business.\78\
---------------------------------------------------------------------------

    \78\ This requirement is not designed to impact or reduce the
amount of any person's overall compensation, but rather to ensure
that the Participants do not choose as their representatives
individuals who receive compensation that is directly linked to
proprietary market data products.
---------------------------------------------------------------------------

    The Commission believes that the exchanges' commercial interests in
their proprietary data businesses, as well as the exchange
Administrators' access to confidential subscriber information, create a
potential conflict of interest that could influence decisions as to the
Plans' operation. In the case where a Participant chooses as its
representative a person who has a financial interest (including
compensation) that is tied directly to the exchange's proprietary data
business, then a reasonable objective observer could question whether
the representative is able to act in a manner consistent with the
interests of the Plans.\79\ In light of this conflict, even if such
individuals have the requisite expertise, the Commission believes that
it is appropriate to prohibit a Disclosing Party from appointing such
individuals as its representative to the Plans.\80\
---------------------------------------------------------------------------

    \79\ For example, a Participant's representative whose
compensation is tied directly to the Participant's proprietary
market data business could face a conflict of interest that is not
possible to sufficiently mitigate when working on Plan initiatives
that could potentially result in lower revenues for the
Participant's proprietary data business, such as SIP fee reductions
or expansions in SIP core data content that match what the
Participant provides in some of its proprietary market data
products. Those Plan initiatives could result in lower revenues for
the Participant's proprietary data business, which would
correspondingly reduce the representative's compensation that is
tied directly to that business.
    \80\ While a Participant could not appoint such person as its
representative to the Plans, it could utilize such person in other
capacities involving Plan business, such as the Processor role.
---------------------------------------------------------------------------

    The Commission is further modifying Section (f)(2) of the CTA Plan
(Section (e)(2) of the CQ Plan) by setting forth the following
scenarios in which recusal will be required. First, a Disclosing Party
will be ``recused from participating in Plan activities if it has not
submitted a required disclosure form or the Operating Committee votes
that its disclosure form is materially deficient.'' \81\ Such recusal
will be in effect until the Disclosing Party submits a sufficiently
complete disclosure form to the Administrator. Consistent with the
comments discussed above, this provision imposes a mechanism to recuse
a representative due to a Disclosing Party's complete failure to comply
with the disclosure requirements. For other cases where the disclosures
are made but found to be materially deficient by vote of the Operating
Committee, recusal also would be appropriate as an incentive for
Disclosing Parties to carefully prepare their disclosures and ensure
that they are not materially deficient.
---------------------------------------------------------------------------

    \81\ While the Operating Committee does not have an affirmative
responsibility to review each disclosure document and updates
thereto in the ordinary course, it may elect to do so, including,
for example, in instances where it has reason to suspect a
disclosure may be materially deficient, and the Operating Committee
may determine the best procedure for undertaking or completing such
a review. The ability of the Operating Committee to undertake this
review and vote on the matter is appropriate as a mechanism to
ensure that Disclosing Parties submit clear and complete
disclosures.
---------------------------------------------------------------------------

    In either case, these bases for recusal could be readily cured by
the recused party submitting a new or updated disclosure that is
complete in providing responses to all required items. Thus, the
recusal could be lifted by the party's submission of an updated
disclosure, though the Operating Committee could potentially again vote
that the disclosure form is materially deficient if it decides the
Disclosing Party did not rectify the material deficiency. The
Commission believes that these requirements provide a consequence for
failure to file a required disclosure or for filing a disclosure that
the Operating Committee votes to be materially deficient, and therefore
should promote both timely filings and consistency in the quality of
disclosures across Disclosing Parties.
    Second, the Commission is adopting a requirement for a Disclosing
Party to be recused from voting on matters, in which it or its
affiliate (i) is seeking a position or contract with the Plan or (ii)
has a position or contract with the Plan and whose performance is being
evaluated by the Plan. In both cases, the Commission believes recusal
is appropriate because the conflict of interest, real or perceived,
between the Disclosing Party's interests and the interest of the Plan
would be so material and potentially irreconcilable that a reasonable
objective observer would question the party's ability to be impartial
and not favor its own interests. Exchanges face considerable potential
conflicts as a result of their dual role of serving, or competing to
serve, as operators of the SIPs while simultaneously serving as a
Participant that participates in the discussion of, and ultimately
votes on, the selection and performance of such parties. The Commission
believes that recusal in those situations is appropriate because the
conflict of interest in those scenarios is so pronounced, and the
Disclosing Party and its affiliates are so materially conflicted, that
their participation and vote on the matter cannot be impartial and
additional measures are needed in those scenarios.

IV. Commission Findings

    For the reasons discussed throughout, the Commission finds that the
proposed Amendments to the Plans, as modified by the Commission, are
consistent with the requirements of the Act and the rules and
regulations thereunder, and in particular, Section 11A of the Act \82\
and Rule 608 \83\ thereunder in that they are necessary or appropriate
in the public interest, for the protection of investors and the
maintenance of fair and order markets, to remove impediments to, and
perfect the mechanisms of, a national market system.
---------------------------------------------------------------------------

    \82\ 15 U.S.C. 78k-1.
    \83\ 17 CFR 240.608.
---------------------------------------------------------------------------

    Section 11A of the Act \84\ sets forth Congress' finding that it is
in the public interest and appropriate for the protection of investors
and the maintenance of fair and orderly markets to ensure the prompt,
accurate, reliable and fair collection, processing, distribution, and
publication of information with respect to quotations for and
transactions in such securities and the fairness and usefulness of the
form and content of such information. The conflicts of interest
Amendments, as modified by the Commission, further these goals set
forth by Congress.
---------------------------------------------------------------------------

    \84\ 15 U.S.C. 78k-1(c)(1)(B).

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

V. Conclusion

    It is Therefore Ordered, pursuant to Section 11A of the Act,\85\
and the rules thereunder, that the proposed Amendments to the CTA and
CQ Plans (File No. SR-CTA/CQ-2019-01), as modified by the Commission,
are approved.
---------------------------------------------------------------------------

    \85\ 15 U.S.C. 78k-1.

    By the Commission.
J. Matthew DeLesDernier,
Assistant Secretary.

Exhibit A: Marked To Show Changes From the Proposal

    The Commission's additions are italicized; deletions are
[bracketed].

CTA PLAN

IV. Administration of the CTA Plan

    (a)-(e) No change.
    (f) [Disclosure of ]Potential Conflicts of Interests
    (1) Disclosure Requirements. The Participants, the Processor, the
Plan Administrator, [and ]members of the Advisory Committee, and each
service provider or subcontractor engaged in Plan business (including
the audit of subscribers' data usage) that has access to Restricted or
Highly Confidential Plan information (for purposes of this section,
``Disclosing Parties'') shall complete the applicable questionnaire
[attached to this CTA Plan as Exhibit F ]to provide the required
disclosures set forth below to disclose all material facts necessary to
identify potential conflicts of interest. The Operating Committee, a
Participant, Processor, or Administrator may not use a service provider
or subcontractor on Plan business unless that service provider or
subcontractor has agreed in writing to provide the disclosures required
by this section and has submitted completed disclosures to the
Administrator prior to starting work. If state laws, rules, or
regulations, or applicable professional ethics rules or standards of
conduct, would act to restrict or prohibit a Disclosing Party from
making any particular required disclosure, a Disclosing Party shall
refer to such law, rule, regulation, or professional ethics rule or
standard and include in response to that disclosure the basis for its
inability to provide a complete response. This does not relieve the
Disclosing Party from disclosing any information it is not restricted
from providing.
    (i) A potential conflict of interest may exist when personal,
business, financial, or employment relationships could be perceived by
a reasonable objective observer to affect the ability of a person to be
impartial.
    [(2)](ii) Updates to Disclosures. Following a material change in
the information disclosed pursuant to subparagraph (f)(1), a Disclosing
Party shall promptly update its disclosures. Additionally, a Disclosing
Party shall update annually any inaccurate information prior to the
Operating Committee's first quarterly meeting of a calendar year.
    [(3)](iii) Public Dissemination of Disclosures. The Disclosing
Parties shall provide the Administrator with its disclosures and any
required updates. The Administrator shall ensure that the disclosures
are promptly posted to the Plan's website.

(2) Recusal

    (i) A Disclosing Party may not appoint as its representative a
person that is responsible for or involved with the development,
modeling, pricing, licensing, or sale of proprietary data products
offered to customers of a securities information processor if the
person has a financial interest (including compensation) that is tied
directly to the exchange's proprietary data business and if that
compensation would cause a reasonable objective observer to expect the
compensation to affect the impartiality of the representative.
    (ii) A Disclosing Party (including its representative(s),
employees, and agents) will be recused from participating in Plan
activities if it has not submitted a required disclosure form or the
Operating Committee votes that its disclosure form is materially
deficient. The recusal will be in effect until the Disclosing Party
submits a sufficiently complete disclosure form to the Administrator.
    (iii) A Disclosing Party, including its representative(s), and its
affiliates and their representative(s), are recused from voting on
matters in which it or its affiliate (i) are seeking a position or
contract with the Plan or (ii) have a position or contract with the
Plan and whose performance is being evaluated by the Plan.
    (iv) All recusals, including a person's determination of whether to
voluntarily recuse himself or herself, shall be reflected in the
meeting minutes.
* * * * *

CQ PLAN

IV. Administration of the CQ Plan

    (a)-(d) No change.
    (e) [Disclosure of ]Potential Conflicts of Interests
    (1) Disclosure Requirements. The Participants, the Processor, the
Plan Administrator, [and ]members of the Advisory Committee, and each
service provider or subcontractor engaged in Plan business (including
the audit of subscribers' data usage) that has access to Restricted or
Highly Confidential Plan information (for purposes of this section,
``Disclosing Parties'') shall complete the applicable questionnaire
[attached to this CQ Plan as Exhibit E ]to provide the required
disclosures set forth below to disclose all material facts necessary to
identify potential conflicts of interest. The Operating Committee, a
Participant, Processor, or Administrator may not use a service provider
or subcontractor on Plan business unless that service provider or
subcontractor has agreed in writing to provide the disclosures required
by this section and has submitted completed disclosures to the
Administrator prior to starting work. If state laws, rules, or
regulations, or applicable professional ethics rules or standards of
conduct, would act to restrict or prohibit a Disclosing Party from
making any particular required disclosure, a Disclosing Party shall
refer to such law, rule, regulation, or professional ethics rule or
standard and include in response to that disclosure the basis for its
inability to provide a complete response. This does not relieve the
Disclosing Party from disclosing any information it is not restricted
from providing.
    (i) A potential conflict of interest may exist when personal,
business, financial, or employment relationships could be perceived by
a reasonable objective observer to affect the ability of a person to be
impartial.
    [(2)](ii) Updates to Disclosures. Following a material change in
the information disclosed pursuant to subparagraph (e)(1), a Disclosing
Party shall promptly update its disclosures. Additionally, a Disclosing
Party shall update annually any inaccurate information prior to the
Operating Committee's first quarterly meeting of a calendar year.
    [(3)](iii) Public Dissemination of Disclosures. The Disclosing
Parties shall provide the Administrator with its disclosures and any
required updates. The Administrator shall ensure that the disclosures
are promptly posted to the Plan's website.

(2) Recusal

    (i) A Disclosing Party may not appoint as its representative a
person that is responsible for or involved with the development,
modeling, pricing, licensing, or sale of proprietary data products
offered to customers of a securities information processor if the
person has a financial interest (including compensation) that is tied

directly to the exchange's proprietary data business and if that
compensation would cause a reasonable objective observer to expect the
compensation to affect the impartiality of the representative.
    (ii) A Disclosing Party (including its representative(s),
employees, and agents) will be recused from participating in Plan
activities if it has not submitted a required disclosure form or the
Operating Committee votes that its disclosure form is materially
deficient. The recusal will be in effect until the Disclosing Party
submits a sufficiently complete disclosure form to the Administrator.
    (iii) A Disclosing Party, including its representative(s), and its
affiliates and their representative(s), are recused from voting on
matters in which it or its affiliate (i) are seeking a position or
contract with the Plan or (ii) have a position or contract with the
Plan and whose performance is being evaluated by the Plan.
    (iv) All recusals, including a person's determination of whether to
voluntarily recuse himself or herself, shall be reflected in the
meeting minutes.
* * * * *

Required Disclosures for CTA Plan

    As part of the disclosure regime, [the Participants propose that
]the Participants, the Processors, the Administrators, [and ]members of
the Advisory Committee, and service providers and subcontractors must
respond to questions that are tailored to elicit responses that
disclose the potential conflicts of interest.
    The [Participants propose that the ]Participants must respond to
the following questions and instructions:
     Is the Participant's firm for profit or not-for-profit? If
the Participant's firm is for profit, is it publicly or privately
owned? If privately owned, list any owner with an interest of 5% or
more of the Participant, where to the Participant's knowledge, such
owner, or any affiliate controlling, controlled by, or under common
control with the owner, subscribes, directly or through a third-party
vendor, to SIP and/or exchange Proprietary Market Data products.
     Does the Participant firm offer real-time proprietary
equity market data that is filed with the SEC (``Proprietary Market
Data'')? If yes, list each product, describe its content, and provide a
link to where fees for each product are disclosed.[does the firm charge
a fee for such offerings?]
     Provide the names of the representative and any
alternative representatives designated by the Participant who are
authorized under the Plans to vote on behalf of the Participant. Also
provide a narrative description of the representatives' roles within
the Participant organization, including the title of each individual as
well as any direct responsibilities related to the development,
dissemination, sales, or marketing of the Participant's Proprietary
Market Data, and the nature of those responsibilities sufficient for
the public to identify the nature of any potential conflict of interest
that could be perceived by a reasonable objective observer as having an
effect on the Plan. If the representative works in or with the
Participant's Proprietary Market Data business, describe the
representative's roles and describe how that business and the
representative's Plan responsibilities impacts his or her compensation.
In addition, describe how a representative's responsibilities with the
Proprietary Market Data business may present a conflict of interest
with his or her responsibilities to the Plan.
     Does the Participant, its representative or its
alternative representative, or any affiliate have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
    The [Participants propose that the]Processors must respond to the
following questions and instructions:
     Is the Processor an affiliate of or affiliated with any
Participant? If yes, disclose the Participant(s) and describe the
nature of the affiliation. Include an entity-level organizational chart
depicting the Processor and its affiliates.[?]
     Provide a narrative description of the functions directly
performed by senior staff, the manager employed by the Processor to
provide Processor services to the Plans, and the staff that reports to
that manager (collectively, the ``Plan Processor'').
     Does the Plan Processor provide any services for any
Participant's Proprietary Market Data products or other Plans? If Yes,
disclose the services the Plan Processor performs and identify which
Plans. Does the Plan Processor have any profit or loss responsibility
for a Participant's Proprietary Market Data products or any other
professional involvement with persons the Processor knows are engaged
in the Participant's Proprietary Market Data business? If so, describe.
     List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan Processor.
     Does the Processor, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential conflicts of interest and the
effects they may have on the Plan.
    The [Participants propose that the ]Administrators must respond to
the following questions and instructions:
     Is the Administrator an affiliate of or affiliated with
any Participant? If yes, disclose the[which] Participant(s) and
describe the nature of the affiliation. Include an entity-level
organizational chart depicting the Administrator and its affiliates.[?]
     Provide a narrative description of the functions directly
performed by senior staff, the administrative services manager, and the
staff that reports to that manager (collectively, the ``Plan
Administrator'').
     Does the Plan Administrator provide any services for any
Participant's Proprietary Market Data products? If yes, what services?
Does the Plan Administrator have any profit or loss responsibility, or
licensing responsibility, for a Participant's Proprietary Market Data
products or any other professional involvement with persons the
Administrator knows are engaged in the Participant's Proprietary Market
Data business? If so, describe.
     List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan
Administrator.
     Does the Administrator, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential conflicts of interest and the
effects they may have on the Plan.
    The [Participants propose that the ]Members of the Advisory
Committee must respond to the following questions and instructions:
     Provide the Advisor's title and a brief description of the
Advisor's role within the firm.

     Does the Advisor have responsibilities related to the
firm's use or procurement of market data?
     Does the Advisor have responsibilities related to the
firm's trading or brokerage services?
     Does the Advisor's firm use the SIP? Does the Advisor's
firm use exchange Proprietary Market Data products?
     Does the Advisor's firm have an ownership interest of 5%
or more in one or more Participants? If yes, list the Participant(s).
     Does the Advisor actively participate in any litigation
against the Plans?
     Does the Advisor or the Advisor's firm have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
    Pursuant to Section IV(f)(1) of the Plan, each service provider or
subcontractor that has agreed in writing to provide required
disclosures and be treated as a Disclosing Party pursuant to Section
IV(f) of the Plan shall respond to the following questions and
instructions:
     Is the service provider or subcontractor affiliated with a
Participant, Processor, Administrator, or member of the Advisory
Committee? If yes, disclose with whom the person is affiliated and
describe the nature of the affiliation.
     If the service provider's or subcontractor's compensation
is on a commission basis or is tied to specific metrics, provide a
detailed narrative summary of how compensation is determined for
performing work on behalf of the Plan.
     Is the service provider or subcontractor subject to
policies and procedures (including information barriers) concerning the
protection of confidential information that includes affiliates? If so,
describe. If not, explain their absence.
     Does the service provider or subcontractor, or its
representative, have additional relationships or material economic
interests that could be perceived by a reasonable objective observer to
present a potential conflict of interest with its responsibilities to
the Plan? If so, provide a detailed narrative discussion of all
material facts necessary to identify the potential conflicts of
interest and the effects they may have on the Plan.
    The [Participants will post the ]responses to these questions will
be posted on the Plan's website. If a Disclosing Party has any material
changes in its responses, the Disclosing Party must promptly update its
disclosures. Additionally, the Disclosing Parties must[will] update the
disclosures on an annual basis to reflect any changes. This annual
update must be made before the first quarterly session meeting of each
calendar year, which is generally held in mid-February.
* * * * *

Required Disclosures for CQ Plan

    As part of the disclosure regime, [the Participants propose that
]the Participants, the Processors, the Administrators, [and ]members of
the Advisory Committee, and service providers and subcontractors must
respond to questions that are tailored to elicit responses that
disclose the potential conflicts of interest.
    The [Participants propose that the ]Participants must respond to
the following questions and instructions:
     Is the Participant's firm for profit or not-for-profit? If
the Participant's firm is for profit, is it publicly or privately
owned? If privately owned, list any owner with an interest of 5% or
more of the Participant, where to the Participant's knowledge, such
owner, or any affiliate controlling, controlled by, or under common
control with the owner, subscribes, directly or through a third-party
vendor, to SIP and/or exchange Proprietary Market Data products.
     Does the Participant firm offer real-time proprietary
equity market data that is filed with the SEC (``Proprietary Market
Data'')? If yes, list each product, describe its content, and provide a
link to where fees for each product are disclosed.[does the firm charge
a fee for such offerings?]
     Provide the names of the representative and any
alternative representatives designated by the Participant who are
authorized under the Plans to vote on behalf of the Participant. Also
provide a narrative description of the representatives' roles within
the Participant organization, including the title of each individual as
well as any direct responsibilities related to the development,
dissemination, sales, or marketing of the Participant's Proprietary
Market Data, and the nature of those responsibilities sufficient for
the public to identify the nature of any potential conflict of interest
that could be perceived by a reasonable objective observer as having an
effect on the Plan. If the representative works in or with the
Participant's Proprietary Market Data business, describe the
representative's roles and describe how that business and the
representative's Plan responsibilities impacts his or her compensation.
In addition, describe how a representative's responsibilities with the
Proprietary Market Data business may present a conflict of interest
with his or her responsibilities to the Plan.
     Does the Participant, its representative or its
alternative representative, or any affiliate have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
    The [Participants propose that the]Processors must respond to the
following questions and instructions:
     Is the Processor an affiliate of or affiliated with any
Participant? If yes, disclose the Participant(s) and describe the
nature of the affiliation. Include an entity-level organizational chart
depicting the Processor and its affiliates.[?]
     Provide a narrative description of the functions directly
performed by senior staff, the manager employed by the Processor to
provide Processor services to the Plans, and the staff that reports to
that manager (collectively, the ``Plan Processor'').
     Does the Plan Processor provide any services for any
Participant's Proprietary Market Data products or other Plans? If Yes,
disclose the services the Plan Processor performs and identify which
Plans. Does the Plan Processor have any profit or loss responsibility
for a Participant's Proprietary Market Data products or any other
professional involvement with persons the Processor knows are engaged
in the Participant's Proprietary Market Data business? If so, describe.
     List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan Processor.
     Does the Processor, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential

conflicts of interest and the effects they may have on the Plan.
    The [Participants propose that the ]Administrators must respond to
the following questions and instructions:
     Is the Administrator an affiliate of or affiliated with
any Participant? If yes, disclose the[which] Participant(s) and
describe the nature of the affiliation. Include an entity-level
organizational chart depicting the Administrator and its affiliates.[?]
     Provide a narrative description of the functions directly
performed by senior staff, the administrative services manager, and the
staff that reports to that manager (collectively, the ``Plan
Administrator'').
     Does the Plan Administrator provide any services for any
Participant's Proprietary Market Data products? If yes, what services?
Does the Plan Administrator have any profit or loss responsibility, or
licensing responsibility, for a Participant's Proprietary Market Data
products or any other professional involvement with persons the
Administrator knows are engaged in the Participant's Proprietary Market
Data business? If so, describe.
     List the policies and procedures established to safeguard
confidential Plan information that is applicable to the Plan
Administrator.
     Does the Administrator, or its representatives, have
additional relationships or material economic interests that could be
perceived by a reasonable objective observer to present a potential
conflict of interest with the representatives' responsibilities to the
Plan? If so, provide a detailed narrative discussion of all material
facts necessary to identify the potential conflicts of interest and the
effects they may have on the Plan.
    The [Participants propose that the ]Members of the Advisory
Committee must respond to the following questions and instructions:
     Provide the Advisor's title and a brief description of the
Advisor's role within the firm.
     Does the Advisor have responsibilities related to the
firm's use or procurement of market data?
     Does the Advisor have responsibilities related to the
firm's trading or brokerage services?
     Does the Advisor's firm use the SIP? Does the Advisor's
firm use exchange Proprietary Market Data products?
     Does the Advisor's firm have an ownership interest of 5%
or more in one or more Participants? If yes, list the Participant(s).
     Does the Advisor actively participate in any litigation
against the Plans?
     Does the Advisor or the Advisor's firm have additional
relationships or material economic interests that could be perceived by
a reasonable objective observer to present a potential conflict of
interest with their responsibilities to the Plan? If so, provide a
detailed narrative discussion of all material facts necessary to
identify the potential conflicts of interest and the effects they may
have on the Plan.
    Pursuant to Section IV(e)(1) of the Plan, each service provider or
subcontractor that has agreed in writing to provide required
disclosures and be treated as a Disclosing Party pursuant to Section
IV(e) of the Plan shall respond to the following questions and
instructions:
     Is the service provider or subcontractor affiliated with a
Participant, Processor, Administrator, or member of the Advisory
Committee? If yes, disclose with whom the person is affiliated and
describe the nature of the affiliation.
     If the service provider's or subcontractor's compensation
is on a commission basis or is tied to specific metrics, provide a
detailed narrative summary of how compensation is determined for
performing work on behalf of the Plan.
     Is the service provider or subcontractor subject to
policies and procedures (including information barriers) concerning the
protection of confidential information that includes affiliates? If so,
describe. If not, explain their absence.
     Does the service provider or subcontractor, or its
representative, have additional relationships or material economic
interests that could be perceived by a reasonable objective observer to
present a potential conflict of interest with its responsibilities to
the Plan? If so, provide a detailed narrative discussion of all
material facts necessary to identify the potential conflicts of
interest and the effects they may have on the Plan.
    The [Participants will post the ]responses to these questions will
be posted on the Plan's website. If a Disclosing Party has any material
changes in its responses, the Disclosing Party must promptly update its
disclosures. Additionally, the Disclosing Parties must[will] update the
disclosures on an annual basis to reflect any changes. This annual
update must be made before the first quarterly session meeting of each
calendar year, which is generally held in mid-February.
[FR Doc. 2020-10037 Filed 5-11-20; 8:45 am]
BILLING CODE 8011-01-P