year, would address the issue of potential seasonality. For example, if
the projection were based on a period shorter than one year, the
projection could be based on a period that typically has lighter
trading volume than the other half of the year, thereby causing the
projection to be too low.
bb. Cost Discipline Mechanisms
    The reasonableness of the Funding Proposal and the fees calculated
under the Funding Proposal are supported by key cost discipline
mechanisms for the CAT--a cost-based funding structure, cost
transparency, cost management efforts and oversight. Together, these
mechanisms help ensure the ongoing reasonableness of the CAT's costs
and the level of fees assessed to support those costs.
    First, the CAT NMS Plan requires that the Company operate on a
``break-even'' basis, with fees imposed to cover costs and an
appropriate reserve. Any surpluses would be treated as an operational
reserve to offset future fees and would not be distributed to the
Participants as profits.\134\ To ensure that the Participants'
operation of the CAT will not contribute to the funding of their other
operations, Section 11.1(c) of the CAT NMS Plan specifically states
that ``[a]ny surplus of the Company's revenues over its expenses shall
be treated as an operational reserve to offset future fees.'' In
addition, as set forth in Article VIII of the CAT NMS Plan, the Company
``intends to operate in a manner such that it qualifies as a `business
league' within the meaning of section 501(c)(6) of the [Internal
Revenue] Code.'' To qualify as a business league, an organization must
``not [be] organized for profit and no part of the net earnings of [the
organization can] inure[ ] to the benefit of any private shareholder or
individual.'' \135\ As the SEC stated when approving the CAT NMS Plan,
``the Commission believes that the Company's application for section
501(c)(6) business league status addresses issues raised by commenters
about the Plan's proposed allocation of profit and loss by mitigating
concerns that the Company's earnings could be used to benefit
individual Participants.'' \136\ The Internal Revenue Service has
determined that the Company is exempt from federal income tax under
section 501(c)(6) of the Internal Revenue Code.
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    \134\ CAT NMS Plan Approval Order at 84792.
    \135\ 26 U.S.C. 501(c)(6).
    \136\ CAT NMS Plan Approval Order at 84793.
---------------------------------------------------------------------------

    Second, the CAT's commitment to reasonable funding in support of
its regulatory obligations is further reinforced by the transparency it
has committed to provide on an ongoing basis regarding its financial
performance. The Company currently makes detailed financial information
about the CAT publicly available. Section 9.2(a) of the CAT NMS Plan
requires the Operating Committee to maintain a system of accounting
established and administered in accordance with GAAP and requires ``all
financial statements or information that may be supplied to the
Participants shall be prepared in accordance with GAAP (except that
unaudited statements shall be subject to year-end adjustments and need
not include footnotes).'' Section 9.2(a) of the CAT NMS Plan also
requires the Company to prepare and provide to each Participant ``as
soon as practicable after the end of each Fiscal Year, a balance sheet,
income statement, statement of cash flows and statement of changes in
equity for, or as of the end of, such year, audited by an independent
public accounting firm.'' The CAT NMS Plan requires that this audited
balance sheet, income statement, statement of cash flows and statement
of changes in equity be made publicly available. Among other things,
these financial statements provide operating expenses, including
technology, legal, consulting, insurance, professional and
administration and public relations costs. The Company also maintains a
dedicated web page on the CAT NMS Plan website that consolidates its
annual financial statements in a public and readily accessible
place.\137\
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    \137\ See CAT Audited Financial Statements, https://www.catnmsplan.com/audited-financial-statements.
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    In addition, the Company publicly provides the annual operating
budget for the Company as well as periodically provides updates to the
budget that occur during the year. The Company includes such budget
information on a dedicated web page on the CAT NMS Plan website to make
it readily accessible, like the CAT financial statements.
    CAT LLC also has held webinars providing additional detail about
CAT costs and about potential alternative funding models for the
CAT.\138\ In addition, CAT LLC plans to offer additional webinars on
cost and funding for the industry as appropriate going forward.
Collectively, these reports and other efforts provide extensive and
comprehensive information regarding the CAT's operations with respect
to its budgets, revenues, costs, and financial reserves, among other
information.
---------------------------------------------------------------------------

    \138\ See, e.g., CAT LLC Webinar CAT Costs (Sept. 21, 2021),
https://www.catnmsplan.com/events/cat-costs-september-21-2021; CAT
LLC Webinar, CAT Funding (Sept. 22, 2021), https://www.catnmsplan.com/events/cat-funding-september-22-2021; and CAT LLC
Webinar, CAT Funding (Apr. 6, 2022), https://www.catnmsplan.com/events/cat-funding.
---------------------------------------------------------------------------

    Third, CAT LLC regularly engages in and oversees efforts to reduce
CAT costs responsibly while appropriately funding its regulatory
obligations. CAT LLC's efforts to manage its expenses responsibly
include oversight of the CAT's annual budget, including technology and
other expenditures and initiatives. This oversight is informed by key
CAT working groups, such as the Technology Working Group, Regulatory
Working Group and Interpretive Working Group, each of which brings
varied expertise to issues of responsible cost management. In
particular, the Operating Committee currently utilizes a Cost
Management Working Group to analyze opportunities to manage CAT costs
responsibly. In addition, the Plan Processor regularly reviews options
to lower compute and storage needs and works with CAT technology
providers to provide services in a cost-effective manner. These
collective efforts have led to a variety of technological changes to
reduce costs.
    Fourth, the CAT's funding and operations are subject to the
oversight of the Commission. The CAT is extensively supervised by the
Commission, including regular and continuous attendance at Operating
Committee, Subcommittee and working group meetings. In addition, CAT
fees as well as cost management efforts that require an amendment of
the CAT NMS Plan are subject to review by the Commission's Division of
Trading and Markets, as well as public comment.
10. Alternative Models Considered
    CAT LLC has determined to propose the Funding Proposal to fund the
CAT for the reasons discussed above. In reaching this conclusion, CAT
LLC considered the advantages and disadvantages of a variety of
possible alternative funding and cost allocation models for the CAT in
detail. After analyzing the various alternatives and considering
comments on the

previously proposed models, CAT LLC determined that, although various
funding models may be reasonable and appropriate, the Funding Proposal
provides a variety of advantages in comparison to the alternatives, and
satisfies the requirements of the Exchange Act, including providing for
an equitable allocation of reasonable fees among CAT Reporters, not
being designed to permit unfair discrimination among CAT Reporters and
not imposing any burden on competition not necessary or appropriate in
furtherance of the purposes of the Exchange Act.
a. 2018 Fee Proposal
    CAT LLC previously filed a fee proposal in line with the CAT NMS
Plan--the 2018 Fee Proposal.\139\ Under that model, CAT LLC, among
other things, proposed a 75%-25% allocation of CAT costs between
Execution Venues (which included Participants and Execution Venue ATSs)
and Industry Members (other than Execution Venue ATSs), and required
Execution Venues to pay fees based on market share, and Industry
Members (other than Execution Venue ATSs) to pay fees based on CAT
message traffic.\140\
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    \139\ For a description of the 2018 Fee Proposal, see 2018 Fee
Proposal Release. CAT LLC later withdrew this proposed amendment.
Securities Exchange Act Rel. No. 82892 (Mar. 16, 2018), 83 FR 12633
(Mar. 22, 2018).
    \140\ In developing the 2018 Fee Proposal, CAT LLC considered
many variations of different aspects of that model. For example, CAT
LLC evaluated different cost allocations between Industry Members
(other than Execution Venue ATSs) and Execution Venues, including
80%-20%, 75%-25%, 70%-30% and 65%-35% allocations, and different
cost allocations between Equity and Options Execution Venues. CAT
LLC also considered different discounts for equities and options
market makers, different numbers of tiers of Industry Members and
Execution Venues, different fee levels for each tier, and other
aspects of the model.
---------------------------------------------------------------------------

    Each Industry Member (other than Execution Venue ATSs) would be
placed into one of seven tiers of fixed fees, based on CAT message
traffic in Eligible Securities. Options Market Maker and equity market
maker quotes would be discounted when calculating message traffic.
    CAT LLC determined to allocate 67% of Execution Venue costs
recovered to Equity Execution Venues and 33% to Options Execution
Venues. Each Equity Execution Venue would be placed in one of four
tiers of fixed fees based on market share, and each Options Execution
Venue would be placed in one of two tiers of fixed fees based on market
share. Equity Execution Venue market share would be determined by
calculating each Equity Execution Venue's proportion of the total
volume of NMS Stock and OTC Equity shares reported by all Equity
Execution Venues during the relevant time period. For purposes of
calculating market share, the OTC Equity Securities market share of
Execution Venue ATSs trading OTC Equity Securities as well as the
market share of the FINRA OTC reporting facility would be discounted.
Similarly, market share for Options Execution Venues would be
determined by calculating each Options Execution Venue's proportion of
the total volume of Listed Options contracts reported by all Options
Execution Venues during the relevant time period.
    The 2018 Fee Proposal was a very complex model with many
interrelated parts, including allocation percentages, discounts for
certain market behavior, and multiple tiered fees, and the complexity
raised concerns from the Commission regarding its use as the CAT
funding model. In addition, in response to the proposal, the industry
provided a number of other comments related to the proposal, including
comments regarding the proposed allocation of CAT costs between
Participants and Industry Members, and the ability of certain market
segments to afford the proposed CAT fee.\141\
---------------------------------------------------------------------------

    \141\ For a discussion of comments made regarding the Original
Funding Model and the 2018 Fee Proposal, see generally 2018 Fee
Proposal Release.
---------------------------------------------------------------------------

b. 2021 Fee Proposal
    In response to the comments on the 2018 Fee Proposal, CAT LLC
determined to revise various aspects of the proposed model, thereby
developing the 2021 Fee Proposal.\142\ The 2021 Fee Proposal would have
continued to require many of the same elements as the 2018 model,
including the bifurcated funding approach, and the use of market share
and message traffic for allocating costs, as required by the current
CAT NMS Plan. The 2021 Fee Proposal, however, proposed to revise the
model in certain ways, including (1) dividing the CAT costs between
Participants and Industry Members, rather than between Execution Venues
and Industry Members (other than Execution Venue ATSs); (2) eliminating
the use of tiers in calculating CAT fees for Participants and Industry
Members; (3) adopting certain minimum and maximum CAT fees for Industry
Members and Participants; (4) revising the allocation between Equity
Execution Venues and Options to be 60%-40%; and (5) excluding, rather
than discounting, market share in OTC Equity Shares from the
calculation of market share for FINRA.
---------------------------------------------------------------------------

    \142\ See 2021 Fee Proposal Release.
---------------------------------------------------------------------------

    Although the revisions of the 2021 Fee Proposal addressed certain
comments on the prior 2018 Fee Proposal, commenters continued to raise
issues regarding the proposal. For example, commenters provided
feedback regarding the 75%-25% cost allocation between Industry Members
and Participants, the 60%-40% cost allocation between Equity
Participants and Options Participants, the use of market share and
message traffic for allocating costs among Participants and Industry
Members, respectively, and the proposed minimum and maximum fees.
Noting these and other issues, the SEC determined to institute
proceedings to determine whether to disapprove the 2021 Fee Proposal or
to approve the proposal with any changes or subject to any conditions
the SEC deemed necessary or appropriate after considering public
comment.\143\ Ultimately, the Operating Committee determined to
withdraw the 2021 Fee Proposal.\144\
---------------------------------------------------------------------------

    \143\ See 2021 Fee Proposal OIP. See also Securities Exchange
Act Rel. No. 93227 (Oct. 1, 2021), 86 FR 55900 (Oct. 7, 2021).
    \144\ Letter from Mike Simon, Chair, CAT NMS Plan Operating
Committee, to Vanessa Countryman, Secretary, SEC (Dec. 8, 2021).
---------------------------------------------------------------------------

c. Revenue Funding Model
    CAT LLC also considered a model in which all CAT Reporters,
including both Industry Members and Participants, would pay fees based
solely on revenue. The concept underlying this proposal is that CAT
costs would be borne by CAT Reporters based on their ability to pay.
Under this model, Industry Member revenue would be calculated based on
revenue reported in FOCUS reports, and Participant revenue would be
calculated based on revenue information in Form 1 amendments and other
publicly reported figures.
    CAT LLC did not select this model for various reasons. Under this
approach, Participants as a group would only pay approximately 4% of
the total CAT costs. Given their role as SROs and their use of the CAT,
CAT LLC did not believe that such a small allocation of the CAT costs
to the Participants was appropriate. Using revenue also raised a
variety of practical issues. For example, questions were raised as to
what revenue was appropriate to include in the calculation of revenue
for Industry Members. The gross revenue set forth on FOCUS reports was
proposed, as it was similar to an existing FINRA regulatory

fee.\145\ However, questions were raised as to whether revenue
unrelated to NMS Securities or OTC Equity Securities, or otherwise
unrelated to the CAT, should be included for calculation of the CAT
fee. Eliminating revenue unrelated to CAT-related activity would have
been difficult or impossible. In addition, the lack of a uniform
approach to calculating revenue for the Participants could raise
inequities in the collection of a CAT fee.
---------------------------------------------------------------------------

    \145\ See paragraphs (c) and (d) of Section 1 of Schedule A of
FINRA's By-Laws regarding FINRA's annual Gross Income Assessment.
---------------------------------------------------------------------------

    To address the issues regarding the 96%-4% allocation and the
calculation of the Participant revenue in the straight revenue model
described above, CAT LLC considered an alternative version of the
revenue model in which the CAT costs would be allocated between
Industry Members and Participants based on a set percentage (e.g., 75%-
25%) and the Industry Member allocation would be allocated among
Industry Members based on revenue and the Participant allocation would
be allocated among Participants based on market share. However, this
alternative revenue model failed to address the issues regarding the
appropriate revenue calculations for Industry Members.
d. Message Traffic Only Model
    CAT LLC considered a funding model in which CAT costs were
allocated across all CAT Reporters--both Industry Members and
Participants--based on message traffic in the CAT. Specifically, CAT
LLC considered eliminating the concepts of a Participant allocation and
an Industry Member allocation entirely, and treating Participants and
Industry Members the same under the model. The use of message traffic,
however, raised issues regarding the predictability of fees. It also
introduced complexity to the model, as discounts were necessary for
certain types of activity to avoid fees that may adversely impact
market making activity and other market activity.
e. Alternative Allocation for the Funding Proposal
    The Operating Committee also discussed an alternative funding model
that would calculate fees in a manner similar to the Funding Proposal,
but would allocate the fee to one Industry Member, the CEBS, rather
than allocating one-third of the fees each to the CEBS, the CEBB and
the applicable Participant. This allocation would more closely parallel
the existing section 31 fee allocation structure that is already in
place. This alternative allocation would eliminate complexity from the
fee process, including the process of allocating fees among Industry
Members and Participants that are likely to be passed through to the
ultimate investors, and would provide for a more transparent funding
process for investors. Instead of using this approach, CAT LLC
determined to allocate costs among the main participants in a
transaction and allow those participants to determine whether and how
to recover the costs.
f. Sales Value Model
    CAT LLC also considered a funding model in which fees would be
calculated based on transaction sales values, similar to the method
used in the section 31/sales value fee programs. Under this model, the
per sales value fee rate would be calculated by dividing the annual CAT
budget by the projected annual total industry transaction sales values.
The fee would be calculated by multiplying the sales value fee rate by
a given trade's sales value. The CEBB, the CEBS and the relevant
Participant would each be assessed one-third of the fee, or, in the
alternative, the CEBS would be assessed two-thirds of the fee and the
relevant Participants would be assessed one-third of the fee. The same
rate would apply to all transactions equally, regardless of the type of
product in the trade (i.e., NMS Stocks, Listed Options or OTC Equity
Securities). Based on an analysis of 2021 data, CAT LLC observed that
the sales value model could potentially impose a disproportionate share
of the CAT costs on Participants and Industry Members trading NMS
Stocks versus Listed Options. In comparison, also based on an analysis
of 2021 data, CAT LLC observed that the Funding Proposal would impose
an equitable allocation of fees among Participants and Industry Members
trading NMS Stocks and Listed Options, as well as OTC Equity
Securities.
g. Other Models
    CAT LLC also considered other possible funding models. For example,
CAT LLC considered allocating the CAT costs equally among each of the
Participants, and then permitting each Participant to charge its own
members as it deems appropriate. CAT LLC determined that such an
approach raised a variety of issues, including the likely inconsistency
of the ensuing charges, potential for lack of transparency, and the
impracticality of multiple SROs submitting invoices for CAT charges.
CAT LLC also discussed the advantages and disadvantages of various
alternative models during the development of the CAT NMS Plan, such as
a cost allocation based on a strict pro-rata distribution, regardless
of the type or size of the CAT Reporters.\146\
---------------------------------------------------------------------------

    \146\ For a discussion of alternatives considered in the
drafting of the CAT NMS Plan, see Appendix C of the CAT NMS Plan at
C-88-C-89.
---------------------------------------------------------------------------

11. Satisfaction of Exchange Act and CAT NMS Plan Requirements
    The Funding Proposal offers a variety of benefits over the Original
Funding Model and satisfies each of the funding principles and other
requirements of the CAT NMS Plan, as proposed to be revised herein, as
well as the applicable requirements of the Exchange Act for the reasons
discussed below and for the reasons discussed in more detail above.
a. Funding Principle: Section 11.2(a) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principles set forth in
Section 11.2(a) of the CAT NMS Plan. Section 11.2(a) of the CAT NMS
Plan requires the Operating Committee, in establishing the funding of
the Company, to seek ``to create transparent, predictable revenue
streams for the Company that are aligned with the anticipated costs to
build, operate and administer the CAT and the other costs of the
Company.''
    First, by adopting a CAT-specific fee tied directly to CAT costs,
CAT LLC would be fully transparent regarding the costs of the CAT and
how those costs would be allocated among CAT Reporters. The CAT fees
would be designed solely to cover CAT costs, and no other regulatory
costs. In contrast, charging a general regulatory fee, which might
otherwise be used to cover CAT costs as well as other regulatory costs,
would be less transparent than the selected approach of charging a fee
designated to cover CAT-related costs only. Such a general regulatory
fee could cover a variety of regulatory costs without differentiating
those costs related to the CAT.
    Second, the Funding Proposal would provide a predictable revenue
stream for the Company. The Funding Proposal is designed to collect the
annual CAT costs each year, thereby providing for a predictable revenue
stream. In addition, to address the possibility of some variability in
the collected CAT fees, an unexpected increase in costs or variations
from the budgeted costs or projected executed equivalent share volume
of transactions in Eligible Securities, the CAT costs covered by the
Funding Proposal would include an operational reserve. The operational
reserve could be used in the event that

the total CAT fees collected differ from the actual CAT costs.
Moreover, the Funding Proposal includes a method for adjusting the
calculation of the Fee Rate during the year if there are changes in the
projected total volume of transactions in Eligible Securities or the
CAT costs.
    Third, the Funding Proposal provides for a revenue stream for the
Company that is aligned with the anticipated costs to build, operate
and administer the CAT and the other costs of the Company. The total
CAT fees to be collected from CAT Reporters are designed to cover the
CAT costs. Any surpluses collected would be treated as an operational
reserve to offset future fees and would not be distributed to the
Participants as profits.\147\
---------------------------------------------------------------------------

    \147\ CAT NMS Plan Approval Order at 84792.
---------------------------------------------------------------------------

b. Funding Principle: Section 11.2(b) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principle set forth in
Section 11.2(b) of the CAT NMS Plan, as proposed to be amended herein,
which would require the Operating Committee to seek ``to establish an
allocation of the Company's related costs among Participants and
Industry Members that is consistent with the Exchange Act, taking into
account the timeline for implementation of the CAT.'' As discussed in
detail above, the Funding Proposal establishes an allocation of CAT
costs among Participants and Industry Members that is consistent with
the Exchange Act. In addition, the Funding Proposal provides for an
equitable allocation of reasonable dues, is not unfairly discriminatory
and does not impose a burden on competition that is not necessary or
appropriate in furtherance of the Exchange Act. In addition, the
Funding Proposal takes into account the timeline for implementation of
the CAT. The CAT fees are designed to cover the CAT costs for each
relevant period.
c. Funding Principle: Section 11.2(c) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principle set forth in
Section 11.2(c) of the CAT NMS Plan, as proposed to be modified herein.
Section 11.2(c), as proposed to be modified herein, requires the
Operating Committee to seek ``to establish a fee structure in which the
fees charged to Participants and Industry Members are based upon the
executed equivalent share volume of transactions in Eligible
Securities, and the costs of the CAT.'' The Funding Proposal requires
Participants and Industry Members to pay fees based upon the executed
equivalent share volume of transactions in Eligible Securities, and the
costs of the CAT, as described above.
d. Funding Principle: Section 11.2(d) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principle set forth in
Section 11.2(d) of the CAT NMS Plan, which requires the Operating
Committee to seek ``to provide for ease of billing and other
administrative functions.'' The Funding Proposal satisfies this
principle in several ways. The Funding Proposal is modeled after the
existing section 31-related fee programs, with which the Participants
and Industry Members have a longstanding familiarity. The Funding
Proposal relies upon a basic calculation using a predetermined fee rate
along with an Industry Member or Participant's executed equivalent
share volume, thereby making the fee determination a straightforward
process.
    Furthermore, the Funding Proposal provides CAT Reporters with
predictable CAT fees. Because the Fee Rate is established in advance
for a relevant time period, Participants, CEBBs and CEBSs know the CAT
fee that applies to each transaction when it occurs. Accordingly,
Participants, CEBBs and CEBSs are able to easily estimate and validate
their applicable fees based on their own trading data. In addition, to
the extent any CAT fees are passed on to customers, the customers, too,
can calculate the applicable CAT fee for each transaction.
e. Funding Principle: Section 11.2(e) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principle set forth in
Section 11.2(e) of the CAT NMS Plan, which requires the Operating
Committee to seek ``to avoid any disincentives such as placing an
inappropriate burden on competition and a reduction in market
quality.'' The Funding Proposal would operate in a manner similar to
the funding models employed by the SEC and the Participants related to
section 31 of the Exchange Act, the FINRA TAF and the ORF. These fees
are long-standing, and have been approved by the Commission as
satisfying the requirements under the Exchange Act, including not
imposing a burden on competition that is not necessary or appropriate
under the Exchange Act. In addition, the Funding Proposal avoids
potentially burdensome fees for market makers or other market
participants based on message traffic. Furthermore, the Funding
Proposal addresses the specific trading characteristics of Listed
Options and OTC Equity Securities to avoid adverse effects of the
trading of those instruments. For example, the Funding Proposal
includes the discounting of transactions involving OTC Equity Shares
which, given the volume of shares typically involved in such securities
transactions, otherwise may result in disproportionate fees to market
participants transaction these securities.
    The Funding Proposal also would not unfairly burden FINRA or any of
the exchanges. The Funding Proposal is designed to be neutral as to the
manner of execution and place of execution. The CAT fees would be the
same regardless of whether the transaction is executed on an exchange
or in the over-the-counter market. All Participants are SROs that have
the same regulatory responsibilities under the Exchange Act. Their
usage of CAT Data will be for the same regulatory purposes. By treating
each Participant the same, the CAT fees would not become a competitive
issue by and among the Participants.
    The Funding Proposal also would not unfairly burden CAT Executing
Brokers. CAT LLC determined to charge CEBBs and CEBSs because such a
fee collection model is currently used and well-known in the securities
markets. As a result, the CAT fees could be paid by Industry Members
without requiring significant and potentially costly changes. Moreover,
the CEBBs and CEBSs would be permitted, but not required, to pass their
CAT fees through to their customers, who, in turn, could pass their CAT
fees to their customers, until the fee is imposed on the ultimate
participant in the transaction. With such a pass through, the CEBBs and
CEBSs would not ultimately incur the cost of all CAT fees related to
the transactions that they clear.
f. Funding Principle: Section 11.2(f) of the CAT NMS Plan
    The Funding Proposal satisfies the funding principle set forth in
Section 11.2(f) of the CAT NMS Plan, which requires the Operating
Committee to seek ``to build financial stability to support the Company
as a going concern.'' CAT LLC believes that the Funding Proposal is
structured to collect sufficient funds to pay for the cost of the CAT
going forward. In addition, the Funding Proposal would collect an
operational reserve for the CAT. This operational reserve is intended
to address potential shortfalls in collected CAT fees versus actual CAT
costs. Moreover, the Funding Proposal includes a requirement to adjust
the Fee Rate during the year in order to address any changes in the
projected or actual total volume of transactions in Eligible

Securities or the budgeted or actual CAT costs. Furthermore, the
Funding Proposal is designed to collect CAT fees continuously so as to
provide uninterrupted revenue to pay CAT bills; the CAT Fees related to
Prospective CAT Costs are not designed to sunset.
g. Section 11.1(c) of the CAT NMS Plan
    The Funding Proposal would satisfy the requirements in Section
11.1(c) of the CAT NMS Plan, as proposed to be modified herein. Section
11.1(c) of the CAT NMS Plan states that ``[t]o fund the development and
implementation of the CAT, the Company shall time the imposition and
collection of all fees on Participants and Industry Members in a manner
reasonably related to the timing when the Company expects to incur such
development and implementation costs.'' The CAT fees are designed to
cover the CAT costs for a relevant period. As such, on a going forward
basis, they are designed to be imposed close in time to when costs are
incurred. In addition, the Historical CAT Assessments are designed to
``take into account fees, costs and expenses (including legal and
consulting fees and expenses) reasonably incurred by the Participants
on behalf of the Company prior to the Effective Date in connection with
the creation and implementation of the CAT, and such fees, costs and
expenses shall be fairly and reasonably shared among the Participants
and Industry Members.''
    Section 11.1(c) of the CAT NMS Plan also requires that ``[a]ny
surplus of the Company's resources over its expenses shall be treated
as an operational reserve to offset future fees.'' The Company would
operate on a ``break-even'' basis, with fees imposed to cover costs and
an appropriate reserve. Any surpluses would not be distributed to the
Participants as profits. In addition, as set forth in Article VIII of
the CAT NMS Plan, the Company ``intends to operate in a manner such
that it qualifies as a `business league' within the meaning of section
501(c)(6) of the [Internal Revenue] Code.'' To qualify as a business
league, an organization must ``not [be] organized for profit and no
part of the net earnings of [the organization can] inure[ ] to the
benefit of any private shareholder or individual.'' \148\ As the SEC
stated when approving the CAT NMS Plan, ``the Commission believes that
the Company's application for section 501(c)(6) business league status
addresses issues raised by commenters about the Plan's proposed
allocation of profit and loss by mitigating concerns that the Company's
earnings could be used to benefit individual Participants.'' \149\ The
Internal Revenue Service has determined that the Company is exempt from
federal income tax under section 501(c)(6) of the Internal Revenue
Code.
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    \148\ 26 U.S.C. 501(c)(6).
    \149\ CAT NMS Plan Approval Order at 84793.
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h. Equitable Allocation of Reasonable Fees
    The proposed CAT fees provide for the ``equitable allocation of
reasonable dues, fees, and other charges among its members and issuers
and other persons using its facilities necessary or appropriate in
furtherance of the purposes of this chapter,'' \150\ as required by the
Exchange Act. CAT LLC believes that the CAT fees equitably allocate CAT
costs between and among Participants and Industry Members. For the
reasons discussed above, CAT LLC believes that the allocation of one-
third of the CAT costs each to Participants, CEBBs and CEBSs in the
Funding Proposal as well as the use of the total equivalent share
volume of transactions in Eligible Securities for allocating costs
provide for an equitable allocation of CAT costs among CAT Reporters.
---------------------------------------------------------------------------

    \150\ Sections 6(b)(4) and 15A(b)(5) of the Exchange Act.
---------------------------------------------------------------------------

    CAT LLC also believes that the Funding Proposal would provide for
reasonable fees. The transaction-based fees contemplated by the Funding
Proposal are a reasonable fee structure. The SROs have a long history
of charging transaction-based fees, as transactions are the intended
economic goal of the securities markets. In addition to the
transaction-based regulatory fees discussed above (e.g., the SROs'
section 31-related fees, the FINRA TAF and the ORF), the SROs charge a
variety of other types of transaction fees to fund their
operations.\151\ Indeed, each of the SROs collect transaction-based
fees from their members.\152\ In each case, the transaction-based fees
charged by SROs have been subject to the fee filing process and found
to satisfy the requirements of the Exchange Act. Not only is the type
of fee reasonable, but the level of the fee is reasonable as well.
Although the exact Fee Rate or Historical Fee Rate to be paid for any
particular period will be determined at a later date, the illustrative
example provides a per-transaction fee rate that is not excessive in
comparison to existing transaction fee rates.
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    \151\ The SEC has noted that SRO transaction fees account for a
significant portion of SRO revenue. Securities Exchange Act Rel. No.
50700 (Nov. 18, 2004), 69 FR 71256, 71271 (Dec. 8, 2004).
    \152\ See, e.g., NYSE Price List; Nasdaq Price List.
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i. No Unfair Discrimination
    The Funding Proposal is ``not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers,'' \153\
as required by the Exchange Act. In addition, the Funding Proposal does
not unfairly discriminate between Industry Members and Participants,
among Industry Members or among Participants. Both Participants and
Industry Members would contribute to the cost of the CAT; Participants
alone would no longer be required to shoulder the cost burden of the
CAT without the contribution of Industry Members. In addition, both
Participants and Industry Members would pay a fee based on the executed
equivalent share volume of their transactions in Eligible Securities;
the type of metric would not vary based on whether the CAT Reporter is
an Industry Member or Participant.
---------------------------------------------------------------------------

    \153\ Sections 6(b)(5) and 15A(b)(6) of the Exchange Act.
---------------------------------------------------------------------------

    Furthermore, the Fee Rate or Historical Fee Rate would be the same
regardless of the type of venue a trade was executed on, or how the
trade ultimately occurred more generally (e.g., in a manner that
generated more message traffic). In addition, the Funding Proposal
recognizes the different trading characteristics of Listed Options and
OTC Equity Securities as compared to NMS Stocks. The Funding Proposal
recognizes that Listed Options trade in contracts rather than shares,
and, therefore, counts the executed equivalent shares for Listed
Options accordingly. Similarly, in recognition of the different trading
characteristics of OTC Equity Securities as compared to NMS Stocks, the
Funding Proposal would discount the share volume of OTC Equity
Securities when calculating the CAT fees. As a result, the Funding
Proposal would not favor or unfairly burden any one type of trading
venue, product or product type.
    With the elimination of tiers, fees for Industry Members and
Participants are directly related to their executed equivalent share
volume of their transactions. With tiers, the relationship between a
CAT Reporter's share volume and the CAT fee would not have been as
direct.
j. No Burden on Competition
    The Funding Proposal does ``not impose any burden on competition
not necessary or appropriate in furtherance

of the purposes of this chapter,'' \154\ as required by the Exchange
Act, and it fairly and equitably allocates costs among CAT Reporters.
The Funding Proposal would operate in a manner similar to the funding
model employed by the SEC and the Participants related to section 31 of
the Exchange Act as well as the FINRA TAF \155\ and the ORF rules, and
these long-standing fees to cover regulatory costs have been approved
by the Commission as satisfying the requirements under the Exchange
Act, including not imposing a burden on the competition that is not
necessary or appropriate under the Exchange Act. Furthermore, the
Funding Proposal does not impose a burden on competition for the
reasons set forth above, including in Sections A.9.s and A.11.e of this
filing above.
---------------------------------------------------------------------------

    \154\ Sections 6(b)(8) and 15A(b)(9) of the Exchange Act.
    \155\ Although the FINRA TAF is designed to cover a subset of
the costs of FINRA services (e.g., costs to FINRA of the supervision
and regulation of members, including performing examinations,
financial monitoring, and policy, rulemaking, interpretive, and
enforcement activities) rather than all of FINRA's costs like the
CAT, the transaction-based calculation of the FINRA TAF and the
proposed CAT fees are similar.
---------------------------------------------------------------------------

B. Governing or Constituent Documents
    Not applicable.
C. Implementation of Amendment
    CAT LLC is filing this proposed amendment pursuant to Rule
608(b)(1) of Regulation NMS under the Exchange Act.\156\
---------------------------------------------------------------------------

    \156\ 17 CFR 242.608(b)(1).
---------------------------------------------------------------------------

D. Development and Implementation Phases
    The Participants expect to implement the proposed CAT fees upon
approval by the SEC, subject to applicable requirements for the
implementation of the CAT fees, including the requirements of section
19(b) of the Exchange Act with regard to Industry Member CAT Fees, the
satisfaction of applicable Financial Accountability Milestones as set
forth in Section 11.6 of the CAT NMS Plan, and the implementation of
the billing and collection system for the CAT fees.
E. Analysis of Impact on Competition
    CAT LLC does not believe that the proposed amendment would result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Exchange Act. CAT LLC notes that the
proposed amendment implements provisions of the CAT NMS Plan approved
by the Commission, subject to proposed revisions to the CAT NMS Plan
described above, and is designed to assist the Participants in meeting
their regulatory obligations pursuant to the CAT NMS Plan. Because all
Participants are subject to the Funding Proposal set forth in the
proposed amendment, this is not a competitive filing that raises
competition issues between and among the Participants. Furthermore, for
the reasons discussed above, including in Sections A.11.e and A.11.j of
this filing above, CAT LLC does not believe that the Funding Proposal
would result in any burden on competition that is not necessary or
appropriate in furtherance of the purpose of the Exchange Act.
F. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan
    Not applicable.
G. Approval by Plan Sponsors in Accordance With Plan
    Section 12.3 of the CAT NMS Plan states that, subject to certain
exceptions, the CAT NMS Plan may be amended from time to time only by a
written amendment, authorized by the affirmative vote of not less than
two-thirds of all of the Participants, that has been approved by the
SEC pursuant to Rule 608 of Regulation NMS under the Exchange Act or
has otherwise become effective under Rule 608 of Regulation NMS under
the Exchange Act. In addition, Section 4.3(a)(vi) of the Plan requires
the Operating Committee, by Majority Vote, to authorize action to
determine the appropriate funding-related policies, procedures and
practices-consistent with Article XI. The Operating Committee has
satisfied both of these requirements. In addition, the Funding Proposal
was discussed and voted on during the Operating Committee meetings.
H. Description of Operation of Facility Contemplated by the Proposed
Amendment
    Not applicable.
I. Terms and Conditions of Access
    Not applicable.
J. Method of Determination and Imposition, and Amount of, Fees and
Charges
    Section A of this filing describes in detail how CAT LLC developed
the Funding Proposal for the CAT.
K. Method and Frequency of Processor Evaluation
    Not applicable.
L. Dispute Resolution
    Section 11.5 of the CAT NMS Plan addresses the resolution of
disputes regarding CAT fees charged to Participants and Industry
Members. Specifically, Section 11.5 of the CAT NMS Plan states that:

[d]isputes with respect to fees the Company charges Participants
pursuant to Article XI of the CAT NMS Plan shall be determined by
the Operating Committee or a Subcommittee designated by the
Operating Committee. Decisions by the Operating Committee or such
designated Subcommittee on such matters shall be binding on
Participants, without prejudice to the rights of any Participant to
seek redress from the SEC pursuant to Rule 608 of Regulation NMS
under the Exchange Act or in any other appropriate forum.

    In addition, the Participants adopted rules to establish the
procedures for resolving potential disputes related to CAT fees charged
to Industry Members.\157\
---------------------------------------------------------------------------

    \157\ See Securities Exchange Act Rel. No. 81500 (Aug. 30,
2017), 82 FR 42143 (Sept. 6, 2017).
---------------------------------------------------------------------------

III. Solicitation of Comments

    Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the amendment is
consistent with the Exchange Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number 4-698 on the subject line.

Paper Comments

     Send paper comments to Secretary, Securities and Exchange
Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number 4-698. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's internet website (http://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed plan amendment that are filed
with the Commission, and all written communications relating to the
amendment between the Commission and any person, other than those that
may be withheld from the public in accordance with the provisions of 5
U.S.C. 552, will be available for website viewing and printing in the
Commission's Public Reference Room,

100 F Street NE, Washington, DC 20549, on official business days
between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing
also will be available for inspection and copying at the Participants'
offices. All comments received will be posted without change. Persons
submitting comments are cautioned that we do not redact or edit
personal identifying information from comment submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number 4-698 and should be submitted
on or before April 11, 2023.
---------------------------------------------------------------------------

    \158\ 17 CFR 200.30-3(a)(85).

    For the Commission, by the Division of Trading and Markets,
---------------------------------------------------------------------------
pursuant to delegated authority.\158\

    Dated: March 15, 2023.
Sherry R. Haywood,
Assistant Secretary.

EXHIBIT A

Proposed Revisions to CAT NMS Plan

Additions italicized; deletions [bracketed]
* * * * *

Article I

Definitions

* * * * *
    ``CAT Executing Broker'' means (a) with respect to a transaction in
an Eligible Security that is executed on an exchange, the Industry
Member identified as the Industry Member responsible for the order on
the buy-side of the transaction and the Industry Member responsible for
the sell-side of the transaction in the equity order trade event and
option trade event in the CAT Data submitted to the CAT by the relevant
exchange pursuant to the Participant Technical Specifications; and (b)
with respect to a transaction in an Eligible Security that is executed
otherwise than on an exchange and required to be reported to an equity
trade reporting facility of a registered national securities
association, the Industry Member identified as the executing broker and
the Industry Member identified as the contra-side executing broker in
the TRF/ORF/ADF transaction data event in the CAT Data submitted to the
CAT by FINRA pursuant to the Participant Technical Specifications;
provided, however, in those circumstances where there is a non-Industry
Member identified as the contra-side executing broker in the TRF/ORF/
ADF transaction data event or no contra-side executing broker is
identified in the TRF/ORF/ADF transaction data event, then the Industry
Member identified as the executing broker in the TRF/ORF/ADF
transaction data event would be treated as CAT Executing Broker for the
Buyer and for the Seller.
* * * * *
    [``Execution Venue'' means a Participant or an alternative trading
system (``ATS'') (as defined in Rule 300 of Regulation ATS) that
operates pursuant to Rule 301 of Regulation ATS (excluding any such ATS
that does not execute orders).]
* * * * *

Article XI

Funding of the Company

    Section 11.1. Funding Authority.
    (a) On an annual basis the Operating Committee shall approve [an] a
reasonable operating budget for the Company. The budget shall include
the projected costs of the Company, including the costs of developing
and operating the CAT for the upcoming year, and the sources of all
revenues to cover such costs, as well as the funding of any reserve
that the Operating Committee reasonably deems appropriate for prudent
operation of the Company.
    (i) Without limiting the foregoing, the reasonably budgeted CAT
costs shall include technology (including cloud hosting services,
operating fees, CAIS operating fees, change request fees and
capitalized developed technology costs), legal, consulting, insurance,
professional and administration, and public relations costs, a reserve
and such other cost categories as reasonably determined by the
Operating Committee to be included in the budget.
    (ii) For the reserve referenced in paragraph (a)(i) of this
Section, the budget will include an amount reasonably necessary to
allow the Company to maintain a reserve of not more than 25% of the
annual budget. To the extent collected CAT fees exceed CAT costs,
including the reserve of 25% of the annual budget, such surplus shall
be used to offset future fees. For the avoidance of doubt, the Company
will only include an amount for the reserve in the annual budget if the
Company does not have a sufficient reserve (which shall be up to but
not more than 25% of the annual budget). For the avoidance of doubt,
the calculation of the amount of the reserve would exclude the amount
of the reserve from the budget.
    (b) Subject to Section 11.1 and Section 11.2, the Operating
Committee shall have discretion to establish funding for the Company,
including: (i) establishing fees that the Participants shall pay; and
(ii) establishing fees for Industry Members that shall be implemented
by Participants. The Participants shall file with the SEC under Section
19(b) of the Exchange Act any such fees on Industry Members that the
Operating Committee approves, and such fees shall be labeled as
``Consolidated Audit Trail Funding Fees.''
    (c) To fund the development and implementation of the CAT, the
Company shall time the imposition and collection of all fees on
Participants and Industry Members in a manner reasonably related to the
timing when the Company expects to incur such development and
implementation costs. In determining fees on Participants and Industry
Members the Operating Committee shall take into account fees, costs and
expenses (including legal and consulting fees and expenses) reasonably
incurred by the Participants on behalf of the Company prior to the
Effective Date in connection with the creation and implementation of
the CAT, and such fees, costs and expenses shall be fairly and
reasonably shared among the Participants and Industry Members. Any
surplus of the Company's revenues over its expenses shall be treated as
an operational reserve to offset future fees.
    (d) Consistent with this Article XI, the Operating Committee shall
adopt policies, procedures, and practices regarding the budget and
budgeting process, [assignment of tiers,] resolution of disputes,
billing and collection of fees, and other related matters. [For the
avoidance of doubt, as part of its regular review of fees for the CAT,
the Operating Committee shall have the right to change the tier
assigned to any particular Person in accordance with fee schedules
previously filed with the Commission that are reasonable, equitable and
not unfairly discriminatory and subject to public notice and comment,
pursuant to this Article XI. Any such changes will be effective upon
reasonable notice to such Person.]
    Section 11.2. Funding Principles. In establishing the funding of
the Company, the Operating Committee shall seek:
    (a) to create transparent, predictable revenue streams for the
Company that are aligned with the anticipated costs to build, operate
and administer the CAT and the other costs of the Company;
    (b) to establish an allocation of the Company's related costs among
Participants and Industry Members that is consistent with the Exchange
Act, taking into account the timeline for implementation of the CAT
[and

distinctions in the securities trading operations of Participants and
Industry Members and their relative impact upon Company resources and
operations];
    (c) to establish a [tiered] fee structure in which the fees charged
to [: (i)] Participants and [CAT Reporters that are Execution Venues,
including ATSs, are based upon the level of market share; (ii)]
Industry Members[' non-ATS activities] are based upon the executed
equivalent share volume of transactions in Eligible Securities, and the
costs of the CAT [message traffic; and (iii) the CAT Reporters with the
most CAT-related activity (measured by market share and/or message
traffic, as applicable) are generally comparable (where, for these
comparability purposes, the tiered fee structure takes into
consideration affiliations between or among CAT Reporters, whether
Execution Venues and/or Industry Members)].
    (d) to provide for ease of billing and other administrative
functions;
    (e) to avoid any disincentives such as placing an inappropriate
burden on competition and a reduction in market quality; and
    (f) to build financial stability to support the Company as a going
concern.
    Section 11.3. Recovery.
    (a) Prospective CAT Costs. The Operating Committee will establish
[fixed] fees (``CAT Fees'') to be payable by [Execution Venues]
Participants and Industry Members with regard to CAT costs not
previously paid by the Participants (``Prospective CAT Costs'') as
follows [provided in this Section 11.3(a)]:
    (i) Fee Rate. The Operating Committee will calculate the Fee Rate
for the CAT Fee twice per year, once at the beginning of the year and
once during the year as follows.
    (A) General.
    (I) For the beginning of each year, the Operating Committee will
calculate the Fee Rate by dividing the reasonably budgeted CAT costs
for the year by the reasonably projected total executed equivalent
share volume of all transactions in Eligible Securities for the year.
Once the Operating Committee has approved such Fee Rate, the
Participants shall be required to file with the SEC pursuant to Section
19(b) of the Exchange Act CAT Fees to be charged to Industry Members
calculated using such Fee Rate. Participants and Industry Members will
be required to pay CAT Fees calculated using this Fee Rate once such
CAT Fees are in effect with regard to Industry Members in accordance
with Section 19(b) of the Exchange Act.
    (II) During each year, the Operating Committee will calculate a new
Fee Rate by dividing the reasonably budgeted CAT costs for the
remainder of the year by the reasonably projected total executed
equivalent share volume of all transactions in Eligible Securities for
the remainder of the year. Once the Operating Committee has approved
the new Fee Rate, the Participants shall be required to file with the
SEC pursuant to Section 19(b) of the Exchange Act CAT Fees to be
charged to Industry Members calculated using the new Fee Rate.
Participants and Industry Members will be required to pay CAT Fees
calculated using this new Fee Rate once such CAT Fees are in effect
with regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (III) For the avoidance of doubt, CAT Fees with a Fee Rate
calculated as set forth in this paragraph (a)(i) shall remain in effect
until the Operating Committee approves a new Fee Rate as described in
paragraph (a)(i) and CAT Fees with the new Fee Rate are in effect with
regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (IV) For the avoidance of doubt, the first CAT Fee may commence at
the beginning of the year or during the year. If it were to commence
during the year, the first CAT Fee would be calculated as described in
paragraph (II) of this Section.
    (B) Executed Equivalent Shares. For purposes of calculating CAT
Fees, executed equivalent shares in a transaction in Eligible
Securities will be reasonably counted as follows:
    (I) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;
    (II) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (III) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
    (C) Budgeted CAT Costs. The budgeted CAT costs for the year shall
be comprised of all reasonable fees, costs and expenses reasonably
budgeted to be incurred by or for the Company in connection with the
development, implementation and operation of the CAT as set forth in
the annual operating budget approved by the Operating Committee
pursuant to Section 11.1(a) of the CAT NMS Plan, or as adjusted during
the year by the Operating Committee.
    (D) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities. The Operating Committee shall
reasonably determine the projected total executed equivalent share
volume of all transactions in Eligible Securities for each relevant
period based on the executed equivalent share volume of all
transactions in Eligible Securities for the prior twelve months.
    (ii) Participant CAT Fees.
    (A) CAT Fee Obligation. Each Participant that is a national
securities exchange will be required to pay the CAT Fee for each
transaction in Eligible Securities executed on the exchange in the
prior month based on CAT Data. Each Participant that is a national
securities association will be required to pay the CAT Fee for each
transaction in Eligible Securities executed otherwise than on an
exchange in the prior month based on CAT Data. The CAT Fee for each
transaction in Eligible Securities will be calculated by multiplying
the number of executed equivalent shares in the transaction by one-
third and by the Fee Rate reasonably determined pursuant to paragraph
(a)(i) of this Section 11.3.
    (B) Effectiveness. Each Participant will be required to pay the CAT
Fee calculated using the Fee Rate reasonably determined pursuant to
paragraph (a)(i) of this Section 11.3 and approved by the Operating
Committee only if such CAT Fees are in effect with regard to Industry
Members in accordance with Section 19(b) of the Exchange Act.
    (iii) Industry Member CAT Fees.
    (A) CAT Fee Obligation. Each Industry Member that is the CAT
Executing Broker for the buyer in a transaction in Eligible Securities
(``CAT Executing Broker for the Buyer'' or ``CEBB'') and each Industry
Member that is the CAT Executing Broker for the seller in a transaction
in Eligible Securities (``CAT Executing Broker for the Seller'' or
``CEBS'') will be required to pay a CAT Fee for each such transaction
in Eligible Securities in the prior month based on CAT Data. The CEBB's
CAT Fee or CEBS's CAT Fee (as applicable) for each transaction in
Eligible Securities will be calculated by multiplying the number of
executed equivalent shares in the transaction by one-third and by the
Fee Rate reasonably determined pursuant to paragraph (a)(i) of this
Section 11.3.
    (B) Content of Fee Filings. When the Participants file with the SEC
pursuant to Section 19(b) of the Exchange Act CAT Fees to be charged to
Industry

Members calculated using the Fee Rate that the Operating Committee
approved in accordance with paragraph (a) of this Section 11.3, such
filings shall set forth (A) the Fee Rate; (B) the budget for the
upcoming year (or remainder of the year, as applicable), including a
brief description of each line item in the budget, including (1)
technology line items of cloud hosting services, operating fees, CAIS
operating fees, change request fees and capitalized developed
technology costs, (2) legal, (3) consulting, (4) insurance, (5)
professional and administration, and (6) public relations costs, a
reserve and/or such other categories as reasonably determined by the
Operating Committee to be included in the budget, and the reason for
changes in each such line item from the prior CAT Fee filing; (C) a
discussion of how the budget is reconciled to the collected fees; and
(D) the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year (or remainder of the
year, as applicable), and a description of the calculation of the
projection. The information provided in this Section would be provided
with sufficient detail to demonstrate that the budget for the upcoming
year, or part of year, as applicable, is reasonable and appropriate.
    (C) No Participant will make a filing with the SEC pursuant to
Section 19(b) of the Exchange Act regarding any CAT Fee related to
Prospective CAT Costs until the Financial Accountability Milestone
related to Period 4 described in Section 11.6 has been satisfied.
    (iv) CAT Fee Details.
    (A) Details regarding the calculation of a Participant or CAT
Executing Brokers' CAT Fees will be provided upon request to such
Participant or CAT Executing Broker. At a minimum, such details would
include each Participant or CAT Executing Broker's executed equivalent
share volume and corresponding fee by (1) Listed Options, NMS Stocks
and OTC Equity Securities, (2) by transactions executed on each
exchange and transactions executed otherwise than on an exchange, and
(3) by buy-side transactions and sell-side transactions.
    (B) For each CAT Fee, at a minimum, CAT LLC will make publicly
available the aggregate executed equivalent share volume and
corresponding aggregate fee by (1) Listed Options, NMS Stocks and OTC
Equity Securities, (2) by transactions executed on each exchange and
transactions executed otherwise than on an exchange, and (3) by buy-
side transactions and sell-side transactions.
    [(i) Each Execution Venue that: (A) executes transactions; or (B)
in the case of a national securities association, has trades reported
by its members to its trade reporting facility or facilities for
reporting transactions effected otherwise than on an exchange, in NMS
Stocks or OTC Equity Securities will pay a fixed fee depending on the
market share of that Execution Venue in NMS Stocks and OTC Equity
Securities, with the Operating Committee establishing at least two and
no more than five tiers of fixed fees, based on an Execution Venue's
NMS Stocks and OTC Equity Securities market share. For these purposes,
market share for Execution Venues that execute transactions will be
calculated by share volume, and market share for a national securities
association that has trades reported by its members to its trade
reporting facility or facilities for reporting transactions effected
otherwise than on an exchange in NMS Stocks or OTC Equity Securities
will be calculated based on share volume of trades reported, provided,
however, that the share volume reported to such national securities
association by an Execution Venue shall not be included in the
calculation of such national security association's market share.]
    [(ii) Each Execution Venue that executes transactions in Listed
Options will pay a fixed fee depending on the Listed Options market
share of that Execution Venue, with the Operating Committee
establishing at least two and no more than five tiers of fixed fees,
based on an Execution Venue's Listed Options market share. For these
purposes, market share will be calculated by contract volume.]
    (b) Past CAT Costs. The Operating Committee will establish [fixed]
one or more fees (each a ``Historical CAT Assessment'') to be payable
by Industry Members with regard to CAT costs previously paid by the
Participants (``Past CAT Costs'') as follows: [, based on the message
traffic generated by such Industry Member, with the Operating Committee
establishing at least five and no more than nine tiers of fixed fees,
based on message traffic. For the avoidance of doubt, the fixed fees
payable by Industry Members pursuant to this paragraph shall, in
addition to any other applicable message traffic, include message
traffic generated by: (i) an ATS that does not execute orders that is
sponsored by such Industry Member; and (ii) routing orders to and from
any ATS sponsored by such Industry Member.]
    (i) Calculation of Historical Fee Rates.
    (A) General. The Operating Committee will calculate the Historical
Fee Rate for each Historical CAT Assessment by dividing the Historical
CAT Costs for each Historical CAT Assessment by the reasonably
projected total executed equivalent share volume of all transactions in
Eligible Securities for the Historical Recovery Period for each
Historical CAT Assessment. Once the Operating Committee has approved
such Historical Fee Rate, the Participants shall be required to file
with the SEC pursuant to Section 19(b) of the Exchange Act such
Historical CAT Assessment to be charged to Industry Members calculated
using such Historical Fee Rate. Industry Members will be required to
pay such Historical CAT Assessment calculated using such Historical Fee
Rate once such Historical CAT Assessment is in effect in accordance
with Section 19(b) of the Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating each
Historical CAT Assessment, executed equivalent shares in a transaction
in Eligible Securities will be reasonably counted in the same manner as
set forth in paragraph (a)(i)(B) of this Section 11.3.
    (C) Historical CAT Costs. The Operating Committee will reasonably
determine the Historical CAT Costs sought to be recovered by each
Historical CAT Assessment, where the Historical CAT Costs will be Past
CAT Costs minus Past CAT Costs reasonably excluded from Historical CAT
Costs by the Operating Committee. Each Historical CAT Assessment will
seek to recover from CAT Executing Brokers two-thirds of Historical CAT
Costs incurred during the period covered by the Historical CAT
Assessment.
    (D) Historical Recovery Period.
    (I) The length of the Historical Recovery Period used in
calculating each Historical Fee Rate will be reasonably established by
the Operating Committee based upon the amount of the Historical CAT
Costs to be recovered by the Historical CAT Assessment; provided,
however, no Historical Recovery Period used in calculating the
Historical Fee Rate shall be less than 24 months or more than five
years.
    (II) Notwithstanding the length of the Historical Recovery Period
used in calculating the Historical Fee Rate, each Historical CAT
Assessment calculated using the Historical Fee Rate will remain in
effect until all Historical CAT Costs for the Historical CAT Assessment
are collected.
    (E) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities for Historical Recovery Period. The
Operating Committee shall reasonably determine the projected total
executed

equivalent share volume of all transactions in Eligible Securities for
each Historical Recovery Period based on the executed equivalent share
volume of all transactions in Eligible Securities for the prior twelve
months.
    (ii) Past CAT Costs and Participants. Because Participants
previously have paid Past CAT Costs via loans to the Company,
Participants would not be required to pay any Historical CAT
Assessment. In lieu of a Historical CAT Assessment, the Participants'
one-third share of Historical CAT Costs and such other additional Past
CAT Costs as reasonably determined by the Operating Committee will be
paid by the cancellation of loans made to the Company on a pro rata
basis based on the outstanding loan amounts due under the loans.
Historical CAT Assessments are designed to recover two-thirds of the
Historical CAT Costs.
    (iii) Historical CAT Assessment for Industry Members.
    (A) Each month in which a Historical CAT Assessment is in effect,
each CEBB and each CEBS shall pay a fee for each transaction in
Eligible Securities executed by the CEBB or CEBS from the prior month
as set forth in CAT Data, where the Historical CAT Assessment for each
transaction will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Historical
Fee Rate reasonably determined pursuant to paragraph (b)(i) of this
Section 11.3.
    (B) Historical CAT Assessment Fee Filings.
    (I) Participants will be required to file with the SEC pursuant to
Section 19(b) of the Exchange Act a filing for each Historical CAT
Assessment.
    (II) When the Participants file with the SEC pursuant to Section
19(b) of the Exchange Act a Historical CAT Assessment calculated using
the Historical Fee Rate that the Operating Committee approved in
accordance with paragraph (b) of this Section 11.3, such filing shall
set forth (A) the Historical Fee Rate; (B) a brief description of the
amount and type of the Historical CAT Costs, including (1) the
technology line items of cloud hosting services, operating fees, CAIS
operating fees, change request fees, and capitalized developed
technology costs, (2) legal, (3) consulting, (4) insurance, (5)
professional and administration and (6) public relations costs; (C) the
Historical Recovery Period and the reasons for its length; and (D) the
projected total executed equivalent share volume of all transactions in
Eligible Securities for the Historical Recovery Period, and a
description of the calculation of the projection. The information
provided in this Section would be provided with sufficient detail to
demonstrate that the Historical CAT Costs are reasonable and
appropriate.
    (III) No Participant will make a filing with the SEC pursuant to
Section 19(b) of the Exchange Act regarding any Historical CAT
Assessment until any applicable Financial Accountability Milestone
described in Section 11.6 has been satisfied.
    (iv) Historical CAT Assessment Details.
    (A) Details regarding the calculation of a CAT Executing Broker's
Historical CAT Assessment will be provided upon request to such CAT
Executing Broker. At a minimum, such details would include each CAT
Executing Broker's executed equivalent share volume and corresponding
fee by (1) Listed Options, NMS Stocks and OTC Equity Securities, (2) by
transactions executed on each exchange and transactions executed
otherwise than on an exchange, and (3) by buy-side transactions and
sell-side transactions.
    (B) For each Historical CAT Assessment, at a minimum, CAT LLC will
make publicly available the aggregate executed equivalent share volume
and corresponding aggregate fee by (1) Listed Options, NMS Stocks and
OTC Equity Securities, (2) by transactions executed on each exchange
and transactions executed otherwise than on an exchange, and (3) by
buy-side transactions and sell-side transactions.
    (c) The Operating Committee may establish any other fees ancillary
to the operation of the CAT that it reasonably determines appropriate,
including fees: (i) for the late or inaccurate reporting of information
to the CAT; (ii) for correcting submitted information; and (iii) based
on access and use of the CAT for regulatory and oversight purposes (and
not including any reporting obligations).
    (d) The Company shall make publicly available a schedule of
effective fees and charges adopted pursuant to this Agreement as in
effect from time to time. The Operating Committee shall review such fee
schedule on at least an annual basis and shall make any changes to such
fee schedule that it deems appropriate. The Operating Committee is
authorized to review such fee schedule on a more regular basis, but
shall not make any changes on more than a semiannual basis unless,
pursuant to a Supermajority Vote, the Operating Committee concludes
that such change is necessary for the adequate funding of the Company.
* * * * *

APPENDIX B

Fee Schedule

Consolidated Audit Trail Funding Fees for Participants

    (a) CAT Fee. Each Participant shall pay the CAT Fee set forth in
Section 11.3(a) of the CAT NMS Plan to Consolidated Audit Trail, LLC in
the manner prescribed by Consolidated Audit Trail, LLC on a monthly
basis based on the Participant's transactions in Eligible Securities in
the prior month.
* * * * *

EXHIBIT B

Proposed Revisions to CAT NMS Plan as Proposed To Be Revised in the
February 2023 Proposed Partial Amendment

Additions italicized; deletions [bracketed]
* * * * *

Article I

Definitions

* * * * *
    ``CAT Executing Broker'' means (a) with respect to a transaction in
an Eligible Security that is executed on an exchange, the Industry
Member identified as the Industry Member responsible for the order on
the buy-side of the transaction and the Industry Member responsible for
the sell-side of the transaction in the equity order trade event and
option trade event in the CAT Data submitted to the CAT by the relevant
exchange pursuant to the Participant Technical Specifications; and (b)
with respect to a transaction in an Eligible Security that is executed
otherwise than on an exchange and required to be reported to an equity
trade reporting facility of a registered national securities
association, the Industry Member identified as the executing broker and
the Industry Member identified as the contra-side executing broker in
the TRF/ORF/ADF transaction data event in the CAT Data submitted to the
CAT by FINRA pursuant to the Participant Technical Specifications;
provided, however, in those circumstances where there is a non-Industry
Member identified as the contra-side executing broker in the TRF/ORF/
ADF transaction data event or no contra-side executing broker is
identified in the TRF/ORF/ADF transaction data event, then the Industry
Member identified as the executing broker in the TRF/ORF/ADF
transaction data event would be treated as CAT Executing Broker for the
Buyer and for the Seller.
* * * * *

Article XI

Funding of the Company

    Section 11.1. Funding Authority.
    (a) On an annual basis the Operating Committee shall approve [an] a
reasonable operating budget for the Company. The budget shall include
the projected costs of the Company, including the costs of developing
and operating the CAT for the upcoming year, and the sources of all
revenues to cover such costs, as well as the funding of any reserve
that the Operating Committee reasonably deems appropriate for prudent
operation of the Company.
    (i) Without limiting the foregoing, the reasonably budgeted CAT
costs shall include technology (including cloud hosting services,
operating fees, CAIS operating fees, change request fees and
capitalized developed technology costs), legal, consulting, insurance,
professional and administration, and public relations costs, a reserve
and such other cost categories as reasonably determined by the
Operating Committee to be included in the budget.
    (ii) For the reserve referenced in paragraph (a)(i) of this
Section, the budget will include an amount reasonably necessary to
allow the Company to maintain a reserve of not more than 25% of the
annual budget. To the extent collected CAT fees exceed CAT costs,
including the reserve of 25% of the annual budget, such surplus shall
be used to offset future fees. For the avoidance of doubt, the Company
will only include an amount for the reserve in the annual budget if the
Company does not have a sufficient reserve (which shall be up to but
not more than 25% of the annual budget). For the avoidance of doubt,
the calculation of the amount of the reserve would exclude the amount
of the reserve from the budget.
    (b) Subject to Section 11.1 and Section 11.2, the Operating
Committee shall have discretion to establish funding for the Company,
including: (i) establishing fees that the Participants shall pay; and
(ii) establishing fees for Industry Members that shall be implemented
by Participants. The Participants shall file with the SEC under Section
19(b) of the Exchange Act any such fees on Industry Members that the
Operating Committee approves, and such fees shall be labeled as
``Consolidated Audit Trail Funding Fees.''
    (c) To fund the development and implementation of the CAT, the
Company shall time the imposition and collection of all fees on
Participants and Industry Members in a manner reasonably related to the
timing when the Company expects to incur such development and
implementation costs. In determining fees on Participants and Industry
Members the Operating Committee shall take into account fees, costs and
expenses (including legal and consulting fees and expenses) reasonably
incurred by the Participants on behalf of the Company prior to the
Effective Date in connection with the creation and implementation of
the CAT, and such fees, costs and expenses shall be fairly and
reasonably shared among the Participants and Industry Members. Any
surplus of the Company's revenues over its expenses shall be treated as
an operational reserve to offset future fees.
    (d) Consistent with this Article XI, the Operating Committee shall
adopt policies, procedures, and practices regarding the budget and
budgeting process, resolution of disputes, billing and collection of
fees, and other related matters.
    Section 11.2. Funding Principles. In establishing the funding of
the Company, the Operating Committee shall seek:
    (a) to create transparent, predictable revenue streams for the
Company that are aligned with the anticipated costs to build, operate
and administer the CAT and the other costs of the Company;
    (b) to establish an allocation of the Company's related costs among
Participants and Industry Members that is consistent with the Exchange
Act, taking into account the timeline for implementation of the CAT;
    (c) to establish a fee structure in which the fees charged to
Participants and Industry Members are based upon the executed
equivalent share volume of transactions in Eligible Securities, and the
costs of the CAT.
    (d) to provide for ease of billing and other administrative
functions;
    (e) to avoid any disincentives such as placing an inappropriate
burden on competition and a reduction in market quality; and
    (f) to build financial stability to support the Company as a going
concern.
    Section 11.3. Recovery.
    (a) Prospective CAT Costs. The Operating Committee will establish
fees (``CAT Fees'') to be payable by Participants and Industry Members
with regard to CAT costs not previously paid by the Participants
(``Prospective CAT Costs'') as follows:
    (i) Fee Rate. The Operating Committee will calculate the Fee Rate
for the CAT Fee twice per year, once at the beginning of the year and
once during the year as follows.
    (A) General.
    (I) For the beginning of each year, the Operating Committee will
calculate the Fee Rate by dividing the reasonably budgeted CAT costs
for the year by the reasonably projected total executed equivalent
share volume of all transactions in Eligible Securities for the year.
Once the Operating Committee has approved such Fee Rate, the
Participants shall be required to file with the SEC pursuant to Section
19(b) of the Exchange Act CAT Fees to be charged to Industry Members
calculated using such Fee Rate. Participants and Industry Members will
be required to pay CAT Fees calculated using this Fee Rate once such
CAT Fees are in effect with regard to Industry Members in accordance
with Section 19(b) of the Exchange Act.
    (II) During each year, the Operating Committee will calculate a new
Fee Rate by dividing the reasonably budgeted CAT costs for the
remainder of the year by the reasonably projected total executed
equivalent share volume of all transactions in Eligible Securities for
the remainder of the year. Once the Operating Committee has approved
the new Fee Rate, the Participants shall be required to file with the
SEC pursuant to Section 19(b) of the Exchange Act CAT Fees to be
charged to Industry Members calculated using the new Fee Rate.
Participants and Industry Members will be required to pay CAT Fees
calculated using this new Fee Rate once such CAT Fees are in effect
with regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (III) For the avoidance of doubt, CAT Fees with a Fee Rate
calculated as set forth in this paragraph (a)(i) shall remain in effect
until the Operating Committee approves a new Fee Rate as described in
paragraph (a)(i) and CAT Fees with the new Fee Rate are in effect with
regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (IV) For the avoidance of doubt, the first CAT Fee may commence at
the beginning of the year or during the year. If it were to commence
during the year, the first CAT Fee would be calculated as described in
paragraph (II) of this Section.
    (B) Executed Equivalent Shares. For purposes of calculating CAT
Fees, executed equivalent shares in a transaction in Eligible
Securities will be reasonably counted as follows:
    (I) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;

    (II) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (III) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
    (C) Budgeted CAT Costs. The budgeted CAT costs for the year shall
be comprised of all reasonable fees, costs and expenses reasonably
budgeted to be incurred by or for the Company in connection with the
development, implementation and operation of the CAT as set forth in
the annual operating budget approved by the Operating Committee
pursuant to Section 11.1(a) of the CAT NMS Plan, or as adjusted during
the year by the Operating Committee.
    (D) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities. The Operating Committee shall
reasonably determine the projected total executed equivalent share
volume of all transactions in Eligible Securities for each relevant
period based on the executed equivalent share volume of all
transactions in Eligible Securities for the prior twelve months.
    (ii) Participant CAT Fees.
    (A) CAT Fee Obligation. Each Participant that is a national
securities exchange will be required to pay the CAT Fee for each
transaction in Eligible Securities executed on the exchange in the
prior month based on CAT Data. Each Participant that is a national
securities association will be required to pay the CAT Fee for each
transaction in Eligible Securities executed otherwise than on an
exchange in the prior month based on CAT Data. The CAT Fee for each
transaction in Eligible Securities will be calculated by multiplying
the number of executed equivalent shares in the transaction by one-
third and by the Fee Rate reasonably determined pursuant to paragraph
(a)(i) of this Section 11.3.
    (B) Effectiveness. Each Participant will be required to pay the CAT
Fee calculated using the Fee Rate reasonably determined pursuant to
paragraph (a)(i) of this Section 11.3 and approved by the Operating
Committee only if such CAT Fees are in effect with regard to Industry
Members in accordance with Section 19(b) of the Exchange Act.
    (iii) Industry Member CAT Fees.
    (A) CAT Fee Obligation. Each Industry Member that is the CAT
Executing Broker for the buyer in a transaction in Eligible Securities
(``CAT Executing Broker for the Buyer'' or ``CEBB'') and each Industry
Member that is the CAT Executing Broker for the seller in a transaction
in Eligible Securities (``CAT Executing Broker for the Seller'' or
``CEBS'') will be required to pay a CAT Fee for each such transaction
in Eligible Securities in the prior month based on CAT Data. The CEBB's
CAT Fee or CEBS's CAT Fee (as applicable) for each transaction in
Eligible Securities will be calculated by multiplying the number of
executed equivalent shares in the transaction by one-third and by the
Fee Rate reasonably determined pursuant to paragraph (a)(i) of this
Section 11.3.
    (B) Content of Fee Filings. When the Participants file with the SEC
pursuant to Section 19(b) of the Exchange Act CAT Fees to be charged to
Industry Members calculated using the Fee Rate that the Operating
Committee approved in accordance with paragraph (a) of this Section
11.3, such filings shall set forth (A) the Fee Rate; (B) the budget for
the upcoming year (or remainder of the year, as applicable), including
a brief description of each line item in the budget, including (1)
technology line items of cloud hosting services, operating fees, CAIS
operating fees, change request fees and capitalized developed
technology costs, (2) legal, (3) consulting, (4) insurance, (5)
professional and administration, and (6) public relations costs, a
reserve and/or such other categories as reasonably determined by the
Operating Committee to be included in the budget, and the reason for
changes in each such line item from the prior CAT Fee filing; (C) a
discussion of how the budget is reconciled to the collected fees; and
(D) the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year (or remainder of the
year, as applicable), and a description of the calculation of the
projection. The information provided in this Section would be provided
with sufficient detail to demonstrate that the budget for the upcoming
year, or part of year, as applicable, is reasonable and appropriate.
    (C) No Participant will make a filing with the SEC pursuant to
Section 19(b) of the Exchange Act regarding any CAT Fee related to
Prospective CAT Costs until the Financial Accountability Milestone
related to Period 4 described in Section 11.6 has been satisfied.
    (iv) CAT Fee Details.
    (A) Details regarding the calculation of a Participant or CAT
Executing Brokers' CAT Fees will be provided upon request to such
Participant or CAT Executing Broker. At a minimum, such details would
include each Participant or CAT Executing Broker's executed equivalent
share volume and corresponding fee by (1) Listed Options, NMS Stocks
and OTC Equity Securities, (2) by transactions executed on each
exchange and transactions executed otherwise than on an exchange, and
(3) by buy-side transactions and sell-side transactions.
    (B) For each CAT Fee, at a minimum, CAT LLC will make publicly
available the aggregate executed equivalent share volume and
corresponding aggregate fee by (1) Listed Options, NMS Stocks and OTC
Equity Securities, (2) by transactions executed on each exchange and
transactions executed otherwise than on an exchange, and (3) by buy-
side transactions and sell-side transactions.
    (b) Past CAT Costs. The Operating Committee will establish one or
more fees (each a ``Historical CAT Assessment'') to be payable by
Industry Members with regard to CAT costs previously paid by the
Participants (``Past CAT Costs'') as follows:
    (i) Calculation of Historical Fee Rates.
    (A) General. The Operating Committee will calculate the Historical
Fee Rate for each Historical CAT Assessment by dividing the Historical
CAT Costs for each Historical CAT Assessment by the reasonably
projected total executed equivalent share volume of all transactions in
Eligible Securities for the Historical Recovery Period for each
Historical CAT Assessment. Once the Operating Committee has approved
such Historical Fee Rate, the Participants shall be required to file
with the SEC pursuant to Section 19(b) of the Exchange Act such
Historical CAT Assessment to be charged to Industry Members calculated
using such Historical Fee Rate. Industry Members will be required to
pay such Historical CAT Assessment calculated using such Historical Fee
Rate once such Historical CAT Assessment is in effect in accordance
with Section 19(b) of the Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating each
Historical CAT Assessment, executed equivalent shares in a transaction
in Eligible Securities will be reasonably counted in the same manner as
set forth in paragraph (a)(i)(B) of this Section 11.3.
    (C) Historical CAT Costs. The Operating Committee will reasonably
determine the Historical CAT Costs sought to be recovered by each
Historical CAT Assessment, where the Historical CAT Costs will be Past
CAT Costs minus Past CAT Costs reasonably excluded from Historical CAT
Costs by the Operating Committee. Each Historical CAT Assessment will
seek to

recover from CAT Executing Brokers two-thirds of Historical CAT Costs
incurred during the period covered by the Historical CAT Assessment.
    (D) Historical Recovery Period.
    (I) The length of the Historical Recovery Period used in
calculating each Historical Fee Rate will be reasonably established by
the Operating Committee based upon the amount of the Historical CAT
Costs to be recovered by the Historical CAT Assessment; provided,
however, no Historical Recovery Period used in calculating the
Historical Fee Rate shall be less than 24 months or more than five
years.
    (II) Notwithstanding the length of the Historical Recovery Period
used in calculating the Historical Fee Rate, each Historical CAT
Assessment calculated using the Historical Fee Rate will remain in
effect until all Historical CAT Costs for the Historical CAT Assessment
are collected.
    (E) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities for Historical Recovery Period. The
Operating Committee shall reasonably determine the projected total
executed equivalent share volume of all transactions in Eligible
Securities for each Historical Recovery Period based on the executed
equivalent share volume of all transactions in Eligible Securities for
the prior twelve months.
    (ii) Past CAT Costs and Participants. Because Participants
previously have paid Past CAT Costs via loans to the Company,
Participants would not be required to pay any Historical CAT
Assessment. In lieu of a Historical CAT Assessment, the Participants'
one-third share of [Past] Historical CAT Costs and such other
additional Past CAT Costs as reasonably determined by the Operating
Committee will be paid by the cancellation of loans made to [by] the
Company on a pro rata basis based on the outstanding loan amounts due
under the loans. Historical CAT Assessments are designed to recover
two-thirds of the Historical CAT Costs.
    (iii) Historical CAT Assessment for Industry Members.
    (A) Each month in which a Historical CAT Assessment is in effect,
each CEBB and each CEBS shall pay a fee for each transaction in
Eligible Securities executed by the CEBB or CEBS from the prior month
as set forth in CAT Data, where the Historical CAT Assessment for each
transaction will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Historical
Fee Rate reasonably determined pursuant to paragraph (b)(i) of this
Section 11.3.
    (B) Historical CAT Assessment Fee Filings.
    (I) Participants will be required to file with the SEC pursuant to
Section 19(b) of the Exchange Act a filing for each Historical CAT
Assessment.
    (II) When the Participants file with the SEC pursuant to Section
19(b) of the Exchange Act a Historical CAT Assessment calculated using
the Historical Fee Rate that the Operating Committee approved in
accordance with paragraph (b) of this Section 11.3, such filing shall
set forth (A) the Historical Fee Rate; (B) a brief description of the
amount and type of the Historical CAT Costs, including (1) the
technology line items of cloud hosting services, operating fees, CAIS
operating fees, change request fees, and capitalized developed
technology costs, (2) legal, (3) consulting, (4) insurance, (5)
professional and administration and (6) public relations costs; (C) the
Historical Recovery Period and the reasons for its length; and (D) the
projected total executed equivalent share volume of all transactions in
Eligible Securities for the Historical Recovery Period, and a
description of the calculation of the projection. The information
provided in this Section would be provided with sufficient detail to
demonstrate that the Historical CAT Costs are reasonable and
appropriate.
    (III) No Participant will make a filing with the SEC pursuant to
Section 19(b) of the Exchange Act regarding any Historical CAT
Assessment until any applicable Financial Accountability Milestone
described in Section 11.6 has been satisfied.
    (iv) Historical CAT Assessment Details.
    (A) Details regarding the calculation of a CAT Executing Broker's
Historical CAT Assessment will be provided upon request to such CAT
Executing Broker. At a minimum, such details would include each CAT
Executing Broker's executed equivalent share volume and corresponding
fee by (1) Listed Options, NMS Stocks and OTC Equity Securities, (2) by
transactions executed on each exchange and transactions executed
otherwise than on an exchange, and (3) by buy-side transactions and
sell-side transactions.
    (B) For each Historical CAT Assessment, at a minimum, CAT LLC will
make publicly available the aggregate executed equivalent share volume
and corresponding aggregate fee by (1) Listed Options, NMS Stocks and
OTC Equity Securities, (2) by transactions executed on each exchange
and transactions executed otherwise than on an exchange, and (3) by
buy-side transactions and sell-side transactions.
    (c) The Operating Committee may establish any other fees ancillary
to the operation of the CAT that it reasonably determines appropriate,
including fees: (i) for the late or inaccurate reporting of information
to the CAT; (ii) for correcting submitted information; and (iii) based
on access and use of the CAT for regulatory and oversight purposes (and
not including any reporting obligations).
    (d) The Company shall make publicly available a schedule of
effective fees and charges adopted pursuant to this Agreement as in
effect from time to time. The Operating Committee shall review such fee
schedule on at least an annual basis and shall make any changes to such
fee schedule that it deems appropriate. The Operating Committee is
authorized to review such fee schedule on a more regular basis, but
shall not make any changes on more than a semiannual basis unless,
pursuant to a Supermajority Vote, the Operating Committee concludes
that such change is necessary for the adequate funding of the Company.
* * * * *
APPENDIX B
Fee Schedule
Consolidated Audit Trail Funding Fees for Participants
    (a) CAT Fee. Each Participant shall pay the CAT Fee set forth in
Section 11.3(a) of the CAT NMS Plan to Consolidated Audit Trail, LLC in
the manner prescribed by Consolidated Audit Trail, LLC on a monthly
basis based on the Participant's transactions in Eligible Securities in
the prior month.
* * * * *

EXHIBIT C

CAT Fee Example for Illustrative Purposes Only

    The following sets forth an example of a Historical CAT Assessment
calculated under the Funding Proposal for illustrative purposes only.
The example sets forth the Historical CAT Assessment that each CAT
Executing Broker would pay related to CAT costs from prior to 2022
based on each CAT Executing Broker's transactions in December 2022. The
first chart, entitled ``Calculation of Historical CAT Assessment,''
describes how the example fees are calculated. The second chart,
entitled ``Aggregate Executed Equivalent Share Volume and Corresponding
Aggregate Fee for December 2022 for Certain Categories,'' sets forth
the aggregated amounts of

executed equivalent share volume and corresponding fee for December
2022 for the categories set forth in Proposed Section 11.3(b)(iv) of
the CAT NMS Plan, which include (1) Listed Options, NMS Stocks and OTC
Equity Securities, (2) by transactions executed on each exchange and
transactions executed otherwise than on an exchange, and (3) by buy-
side transactions and sell-side transactions. The third chart, entitled
``Historical CAT Assessment for Each CAT Executing Broker,'' sets forth
the example fees each CAT Executing Broker would pay based on its
transactions in Eligible Securities in December 2022 in accordance with
the parameters of the example.
    Note that Exhibit C only provides an illustrative example of how
the Funding Proposal would operate for informational purposes; the
calculation of the actual Historical CAT Assessment for CAT costs from
prior to 2022 would differ from this example in various ways. For
example, the illustrative example calculates the Historical Fee Rate
using the projected total executed equivalent share transactions in
Eligible Securities for 2023-2024, rather than the projected executed
equivalent share volume for the actual Historical Recovery Period, the
dates of which will be determined upon approval of the Funding
Proposal. In addition, the illustrative example calculates the
Historical CAT Assessment based on a CEBB and CEBS's trading activity
from December 2022, rather than trading activity during a relevant
month in which the Historical CAT Assessment would be in effect.
Moreover, the illustrative example, among other things, calculates the
executed equivalent shares for each executed contract for a transaction
in Listed Options using a 100 executed equivalent share multiplier,
instead of the specific multiplier applicable to each Listed Option; it
uses a simple projection calculation of doubling the total executed
equivalent share volume for 2022 (rather than a projection that
considers volume growth and other relevant factors); and it may include
cancelled trades or trades that were later corrected.\159\
---------------------------------------------------------------------------

    \159\ Section A.1.d of this filing discusses how cancellations
and corrections would be addressed under the Funding Proposal.

                                    Calculation of Historical CAT Assessment
----------------------------------------------------------------------------------------------------------------
                 Item                           Value                 Calculation        Proposed plan provision
----------------------------------------------------------------------------------------------------------------
Actual Total Executed Equivalent       4,039,821,841,560.31     Calculated using actual  Proposed Sections
 Share Volume of Transactions in        Executed Equivalent      transactions in          11.3(a)(i)(B) and
 Eligible Securities for 2022.          Shares.                  Eligible Securities      11.3(b)(i)(B).
                                                                 for 2022.
Historical Recovery Period...........  2 years................  Length between 2 and 5   Proposed Section
                                                                 years as determined by   11.3(b)(i)(D)(I).
                                                                 Operating Committee.
Projected Total Executed Equivalent    8,079,643,683,120.62     2*4,039,821,841,560.31   Proposed Section
 Share Volume of Transactions in        Executed Equivalent      Executed Equivalent      11.3(b)(i)(E).
 Eligible Securities for 2023-2024.     Shares.                  Shares (Actual
                                                                 Executed Equivalent
                                                                 Share Volume of
                                                                 Transactions in
                                                                 Eligible Securities
                                                                 for 2022 multiplied by
                                                                 two).
Historical CAT Costs for Pre-2022....  $337,688,610...........  $401,312,909-$63,624,29  Proposed Section
                                                                 9 (Past CAT Costs for    11.3(b)(i)(C).
                                                                 pre-2022 minus CAT
                                                                 Costs excluded from
                                                                 Past CAT Costs for pre-
                                                                 2022).
Historical Fee Rate..................  $0.0000417950 per        $337,688,610/            Proposed Section
                                        Executed Equivalent      8,079,643,683,120.62     11.3(b)(i)(A).
                                        Share.                   (Historical CAT Costs
                                                                 for pre-2022 divided
                                                                 by Projected Total
                                                                 Executed Equivalent
                                                                 Share Volume of
                                                                 Transactions in
                                                                 Eligible Securities
                                                                 for 2023-2024).
Historical CAT Assessment for CAT      See ``Historical Fee     Executed Equivalent      Proposed Section
 Executing Brokers for pre-2022         Assessment for Each      Share Volume of          11.3(b)(iii)(A).
 Historical CAT Costs for December      CAT Executing Broker''   Transactions in
 2022.                                  chart below.             Eligible Securities
                                                                 for December 2022 for
                                                                 each CAT Executing
                                                                 Broker multiplied by
                                                                 Historical Fee Rate
                                                                 multiplied by one-
                                                                 third.\160\
Total Amount to be Collected via       $225,125,740...........  2/3 * $337,688,610 (Two- Proposed Sections
 Historical CAT Assessment for pre-                              thirds of Historical     11.3(b)(i)(C) and
 2022 Historical CAT Costs.                                      CAT Costs).              11.3(b)(iii)(A).
----------------------------------------------------------------------------------------------------------------

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

    \160\ Because the Historical Fee Rate is multiplied by one-third
in calculating the Historical CAT Assessment for the example, CAT
Executing Brokers would pay $0.00001393167 per executed equivalent
share (that is, $0.0000417950 per executed equivalent share
multiplied by one-third).

    Aggregate Executed Equivalent Share Volume and Corresponding Aggregate Fee for December 2022 for Certain
                                                   Categories
----------------------------------------------------------------------------------------------------------------
                                                                                Aggregate historical
                                                                   Aggregate executed       CAT assessment for
                    Category of transaction                     equivalent share volume     December 2022 (in
                                                                   for December 2022             dollars)
----------------------------------------------------------------------------------------------------------------
Listed Options................................................       171,596,408,600.00             2,390,623.27
NMS Stocks....................................................       455,096,327,128.00             6,340,248.50
OTC Equity Securities.........................................         2,835,446,929.62                39,502.49
----------------------------------------------------------------------------------------------------------------
Buy-Side Transactions.........................................       314,765,626,228.81             4,385,208.51
Sell-Side Transactions........................................       314,762,556,428.81             4,385,165.75
----------------------------------------------------------------------------------------------------------------

Executed on BOX...............................................           11,476,557,600               159,887.53
Executed on Cboe BYX..........................................            5,010,889,784                69,810.03
Executed on Cboe BZX..........................................           28,387,794,900               395,489.18
Executed on Cboe EDGA.........................................            5,987,423,230                83,414.76
Executed on Cboe EDGX.........................................           35,456,933,206               493,974.03
Executed on Cboe C2...........................................            7,093,009,200                98,817.41
Executed on Cboe..............................................           31,832,709,200               443,482.57
Executed on IEX...............................................           10,534,111,236               146,757.68
Executed on LTSE..............................................               14,709,130                   204.92
Executed on MEMX..............................................           13,471,198,984               187,676.20
Executed on MIAX..............................................            9,473,736,600               131,984.90
Executed on MIAX Emerald......................................            4,451,989,200                62,023.61
Executed on MIAX PEARL........................................           13,382,643,690               186,442.48
Executed on Nasdaq BX.........................................            7,033,829,520                97,992.94
Executed on Nasdaq GEMX.......................................            2,750,988,600                38,325.85
Executed on Nasdaq ISE........................................            8,771,296,800               122,198.75
Executed on Nasdaq MRX........................................            2,373,050,600                33,060.54
Executed on Nasdaq PHLX.......................................           22,234,997,366               309,770.48
Executed on Nasdaq............................................           84,953,835,448             1,183,548.17
Executed on NYSE..............................................           46,589,923,124               649,075.09
Executed on NYSE American.....................................           12,939,380,646               180,267.09
Executed on NYSE Arca.........................................           57,732,682,568               804,312.26
Executed on NYSE Chicago......................................            1,851,452,536                25,793.81
Executed on NYSE National.....................................            2,482,827,634                34,589.92
Executed Otherwise than on an Exchange........................          203,240,211,856             2,831,474.07
----------------------------------------------------------------------------------------------------------------

                          Historical Fee Assessment for Each Cat Executing Broker \161\
----------------------------------------------------------------------------------------------------------------
                                                                  Executed equivalent
                                                                    share volume of           Historical CAT
                     CAT executing broker                           transactions in      assessment for December
                                                                eligible securities for     2022 (in dollars)
                                                                     December 2022
----------------------------------------------------------------------------------------------------------------
1.............................................................        86,112,198,133.20             1,199,686.09
2.............................................................        38,481,541,952.55               536,111.86
3.............................................................        38,393,700,002.03               534,888.08
4.............................................................        38,459,064,211.23               535,798.71
5.............................................................        27,384,672,407.15               381,514.02
6.............................................................        23,625,876,388.24               329,147.74
7.............................................................        22,953,981,909.23               319,787.13
8.............................................................        17,620,665,100.45               245,485.16
9.............................................................        17,628,940,532.54               245,600.45
10............................................................        20,031,215,101.53               279,068.13
11............................................................        16,301,270,280.00               227,103.80
12............................................................        19,404,461,254.15               270,336.41
13............................................................        11,441,178,404.00               159,394.64
14............................................................        12,179,858,717.98               169,685.68
15............................................................        12,076,770,928.00               168,249.50
16............................................................        11,623,298,048.64               161,931.87
17............................................................         9,955,221,266.53               138,692.78
18............................................................        10,285,573,046.70               143,295.13
19............................................................        10,481,313,179.31               146,022.12
20............................................................         9,456,042,067.81               131,738.39
21............................................................         7,969,275,763.65               111,025.26
22............................................................         5,853,036,941.30                81,542.54
23............................................................         9,044,202,748.00               126,000.78
24............................................................         8,129,937,025.67               113,263.54
25............................................................         9,466,559,704.00               131,884.92
26............................................................         8,098,701,385.00               112,828.38
27............................................................         6,220,173,476.92                86,657.36
28............................................................         4,940,607,300.00                68,830.87
29............................................................         5,496,193,202.99                76,571.11
30............................................................         4,183,004,192.80                58,276.20
31............................................................         3,748,760,073.00                52,226.46
32............................................................         3,930,225,757.70                54,754.58
33............................................................         2,926,196,700.00                40,766.79
34............................................................         4,040,159,976.45                56,286.15

35............................................................         2,462,962,342.00                34,313.16
36............................................................         3,255,347,005.69                45,352.40
37............................................................         1,795,144,783.11                25,009.35
38............................................................         1,533,939,983.00                21,370.33
39............................................................         2,462,084,862.71                34,300.94
40............................................................         2,226,415,053.41                31,017.66
41............................................................         1,847,364,910.34                25,736.86
42............................................................         2,416,691,618.00                33,668.53
43............................................................         1,232,981,799.00                17,177.49
44............................................................         2,181,268,648.12                30,388.70
45............................................................         2,131,136,467.07                29,690.27
46............................................................         1,099,857,600.00                15,322.85
47............................................................         1,469,689,428.23                20,475.22
48............................................................         2,168,992,900.00                30,217.68
49............................................................         1,496,908,444.00                20,854.42
50............................................................         1,534,294,028.00                21,375.27
51............................................................            65,606,592.00                   914.01
52............................................................         1,735,293,007.06                24,175.52
53............................................................         1,307,878,500.00                18,220.92
54............................................................         1,178,185,898.26                16,414.09
55............................................................         1,430,077,857.02                19,923.36
56............................................................         1,151,205,287.63                16,038.20
57............................................................         1,409,986,241.50                19,643.45
58............................................................         1,103,808,027.33                15,377.88
59............................................................         1,029,656,664.02                14,344.83
60............................................................           857,333,700.00                11,944.08
61............................................................           961,305,300.00                13,392.58
62............................................................         1,867,947,700.00                26,023.62
63............................................................         1,039,246,045.38                14,478.43
64............................................................         1,101,469,802.00                15,345.31
65............................................................           562,430,300.00                 7,835.59
66............................................................           733,501,357.00                10,218.89
67............................................................           877,224,476.00                12,221.20
68............................................................
69............................................................           829,161,852.00                11,551.60
70............................................................           966,607,368.00                13,466.45
71............................................................           821,501,400.00                11,444.88
72............................................................           677,405,637.00                 9,437.39
73............................................................         1,015,740,702.00                14,150.96
74............................................................           522,418,991.27                 7,278.17
75............................................................           989,301,187.72                13,782.61
76............................................................           773,642,309.00                10,778.12
77............................................................
78............................................................           590,057,809.16                 8,220.49
79............................................................           737,007,679.37                10,267.74
80............................................................           536,705,303.00                 7,477.20
81............................................................           767,854,826.21                10,697.49
82............................................................           635,942,409.58                 8,859.74
83............................................................           864,089,556.95                12,038.20
84............................................................           620,860,189.00                 8,649.61
85............................................................           700,713,844.00                 9,762.11
86............................................................           727,102,431.00                10,129.75
87............................................................           556,678,644.00                 7,755.46
88............................................................           581,059,177.09                 8,095.12
89............................................................           559,881,462.22                 7,800.08
90............................................................           483,502,237.48                 6,735.99
91............................................................           413,725,788.00                 5,763.89
92............................................................           610,245,108.09                 8,501.73
93............................................................           405,594,302.00                 5,650.60
94............................................................           353,080,033.04                 4,918.99
95............................................................           550,986,110.00                 7,676.15
96............................................................           522,200,254.96                 7,275.12
97............................................................           452,909,875.00                 6,309.79
98............................................................           314,934,600.00                 4,387.56
99............................................................         1,172,981,298.00                16,341.58
100...........................................................           418,591,392.71                 5,831.67
101...........................................................            56,226,707.15                   783.33
102...........................................................           444,528,797.00                 6,193.03

103...........................................................           243,033,674.00                 3,385.86
104...........................................................           826,825,093.31                11,519.05
105...........................................................           363,355,742.00                 5,062.15
106...........................................................           319,206,742.76                 4,447.08
107...........................................................           234,606,209.64                 3,268.45
108...........................................................           714,493,322.00                 9,954.08
109...........................................................           313,455,910.25                 4,366.96
110...........................................................         1,031,910,466.00                14,376.23
111...........................................................           258,090,705.06                 3,595.63
112...........................................................           472,580,692.79                 6,583.83
113...........................................................           431,793,880.31                 6,015.61
114...........................................................           337,914,803.56                 4,707.72
115...........................................................           339,736,815.43                 4,733.10
116...........................................................           909,158,616.00                12,666.09
117...........................................................           290,642,115.00                 4,049.13
118...........................................................           347,421,063.79                 4,840.15
119...........................................................           350,667,538.15                 4,885.38
120...........................................................           318,322,800.00                 4,434.77
121...........................................................           263,757,425.20                 3,674.58
122...........................................................
123...........................................................           375,530,471.00                 5,231.76
124...........................................................            53,557,200.00                   746.14
125...........................................................
126...........................................................           283,825,411.16                 3,954.16
127...........................................................           143,392,400.00                 1,997.69
128...........................................................           217,718,090.88                 3,033.17
129...........................................................           165,915,140.89                 2,311.47
130...........................................................           457,613,070.46                 6,375.31
131...........................................................           251,132,793.81                 3,498.70
132...........................................................           219,112,442.00                 3,052.60
133...........................................................            43,938,745.15                   612.14
134...........................................................           330,967,497.01                 4,610.93
135...........................................................           188,838,809.00                 2,630.84
136...........................................................           227,575,404.47                 3,170.50
137...........................................................           206,478,844.94                 2,876.59
138...........................................................
139...........................................................           292,467,800.00                 4,074.56
140...........................................................           165,645,008.32                 2,307.71
141...........................................................           214,739,622.63                 2,991.68
142...........................................................           185,617,991.19                 2,585.97
143...........................................................           165,469,188.00                 2,305.26
144...........................................................             5,019,600.00                    69.93
145...........................................................           956,355,049.08                13,323.62
146...........................................................            64,960,719.00                   905.01
147...........................................................           289,141,549.00                 4,028.22
148...........................................................           147,498,787.28                 2,054.90
149...........................................................           158,995,017.79                 2,215.06
150...........................................................           122,676,294.48                 1,709.08
151...........................................................           136,312,675.96                 1,899.06
152...........................................................            27,284,757.00                   380.12
153...........................................................           352,462,000.00                 4,910.38
154...........................................................           126,212,114.45                 1,758.34
155...........................................................
156...........................................................           128,125,560.32                 1,785.00
157...........................................................            60,988,464.36                   849.67
158...........................................................           131,730,011.56                 1,835.22
159...........................................................            74,526,683.59                 1,038.28