describe the established, non-discretionary methods that dictate the
terms of trading among multiple buyers and sellers on the facilities of
the NMS Stock ATS, including rules and procedures governing the
priority, pricing methodologies, allocation, matching, and execution of
orders and other trading interest. If these rules and procedures are
not the same for all subscribers and persons, the NMS Stock ATS would
be required to describe any differences.
    Part IV, Item 7(b) of proposed Form ATS-N is primarily designed to
inform market participants about how orders interact on an NMS Stock
ATS upon being entered into the system. Item 7(b) would require a
description, with specificity, of all rules and procedures relevant to
order interaction and execution, such as those addressing order
priority, pricing methodologies, allocation, matching, and execution of
orders and other trading interest. The Commission previously explained
in the Regulation ATS Adopting Release that use of established, non-
discretionary methods could include operation of a trading facility or
the setting of rules governing the trading of subscribers.\474\ For
example, the Commission considers the use of an algorithm by an
electronic trading system, which sets trading procedures and
priorities, to be a trading facility that uses established, non-
discretionary methods.\475\ Similarly, the Commission has previously
stated that rules imposing execution priorities, such as time and price
priority rules, would be ``established, non-discretionary methods.''
\476\
---------------------------------------------------------------------------

    \474\ See Regulation ATS Adopting Release, supra note 7, at
70851-52.
    \475\ See id. at 70851.
    \476\ See id. at 70852.
---------------------------------------------------------------------------

    Based on Commission experience, NMS Stocks ATSs employ various
terms and conditions under which orders interact and match. As noted
above, some NMS Stock ATSs may offer price-time priority to determine
how to match orders (potentially with various exceptions), while other
NMS Stock ATSs may offer midpoint-only matching with time
priority.\477\ Some NMS Stock ATSs might also take into account other
factors to determine priority. For example, an NMS Stock ATS may assign
either a lower or higher priority to an order entered by a subscriber
in a certain class (e.g., orders of proprietary traders or retail
investors) or routed from a particular source (e.g., orders routed by
the broker-dealer operator's SOR (or similar functionality) or
algorithm) when compared to an equally priced order entered by a
different subscriber or via a different source. Furthermore, in the
Commission's experience, an NMS Stock ATS might elect to apply
different priority rules for matching conditional orders than it does
for matching other order types.
---------------------------------------------------------------------------

    \477\ See supra Section III.B.
---------------------------------------------------------------------------

    Part IV, Item 7(c) of proposed Form ATS-N would require an NMS
Stock ATS to describe any trading procedures related to price
protection mechanisms, short sales, locked-crossed markets, the
handling of execution errors, time-stamping of orders and executions,
or price improvement functionality. If the trading procedures are not
the same for all subscribers and persons, the NMS Stock ATS would also
be required to describe any differences. Some ATSs that trade NMS
stocks apply various methods to determine an execution price based on
the circumstances of the match. For example, an ATS may price an
execution of a midpoint pegged order with a limit or market order at
the midpoint of the NBBO. An ATS executing a match of two limit orders,
or a limit and market order, might price the execution at or within the
NBBO, with the possibility of offering the limit order(s) price
improvement. On the other hand, an ATS that operates a block crossing
network, with specialized size discovery mechanisms, might calculate a
volume-weighted average price after the final size of the execution has
been determined.
    In the Commission's experience, NMS Stock ATSs have also adopted
other trading procedures governing the execution of orders, which the
NMS Stock ATS would be required to explain under Part IV, Item 7(c) of
proposed

Form ATS-N. For instance, an NMS Stock ATS might elect to use price
protections to re-price orders or prevent their execution under certain
circumstances, such as Limit Up Limit Down price bands pursuant to the
National Market System Plan to Address Extraordinary Market Volatility
(``LULD Plan'').\478\ An NMS Stock ATS might also permit short sales to
be executed on its system and would thus be required to configure its
system to comply with federal securities laws related to short sales,
including Regulation SHO.\479\ Additionally, an NMS Stock ATS could
have rules and procedures governing and/or precluding the execution of
orders in a locked or crossed market. If an NMS Stock ATS has any
procedures governing the handling of execution errors, such as the use
of an error account by the NMS Stock ATS, it would be required to
explain those procedures in Item 7(c).
---------------------------------------------------------------------------

    \478\ See Securities Exchange Act Release No. 67091 (May 31,
2012), 77 FR 33498 (June 6, 2012) (File No. 4-631) (``LULD Approval
Order''). The registered national securities exchanges and FINRA
filed the LULD Plan to create a market-wide limit up-limit down
mechanism to address extraordinary market volatility in NMS Stocks.
See id. at 33500. The Plan sets forth procedures that provide for
market-wide limit up-limit down requirements that would be designed
to prevent trades in individual NMS Stocks from occurring outside of
the specified price bands. See id.
    \479\ 17 CFR 242.200 through 242.204.
---------------------------------------------------------------------------

    Furthermore, under Part IV, Item 7(c) of proposed Form ATS-N, an
NMS Stock ATS would also be required to describe any protocols for
time-stamping orders and executions to ensure compliance with the
Exchange Act and the rules and regulations thereunder and any execution
procedures related to price improvement. For example, if an NMS Stock
ATS has procedures to reprice orders under its price protection
mechanisms, to reprice short sale orders to ensure compliance with
Regulation SHO, or to reprice orders due to price-sliding order types
(such as certain pegged order types), it would be required to explain
when it creates new timestamps for such re-priced orders.\480\ In
addition, any functionality or mechanism available on the NMS Stock ATS
that allows for price improvement would also need to be described in
response to this item.
---------------------------------------------------------------------------

    \480\ Additionally, if subscriber orders are routed from the NMS
Stock ATS and are not filled, or filled only in part on the NMS
Stock ATS, the Commission preliminarily believes that the NMS Stock
ATS should describe how such orders are time stamped for priority
purposes.
---------------------------------------------------------------------------

    The Commission preliminarily believes that information about how an
NMS Stock ATS prices and matches orders is useful to market
participants' and the Commission's understanding of that trading
center's operation. The Commission preliminarily believes that the
information required under Part IV, Items 7(b) and 7(c) of proposed
Form ATS-N would allow market participants to evaluate the terms and
conditions under which their orders will interact and execute on an NMS
Stock ATS, and would thus provide them with a better opportunity to
determine whether that NMS Stock ATS is the appropriate trading
destination for their orders. For example, a market participant whose
order would be given a higher priority on an NMS Stock ATS based on its
subscriber class may choose to first route its order to that venue,
whereas a market participant seeking to enter a conditional order may
choose to route an order based on an NMS Stock ATS's specific priority
rules governing conditional orders. Likewise, market participants
likely would want to know whether an NMS Stock ATS applies price
protection mechanisms, or other standards, that could re-price an order
or prevent it from executing under certain conditions. In addition, the
Commission preliminarily believes that the information provided in
response to Items 7(a), 7(b), and 7(c) would allow the Commission to
more easily evaluate whether the entity that filed the proposed Form
ATS-N meets the criteria of Rule 3b-16 and the definition of an NMS
Stock ATS.
Request for Comment
    395. Do you believe the Commission should require the disclosure of
the information on Part IV, Items 7(b) and 7(c) of Form ATS-N? Why or
why not? If so, what level of detail should be disclosed? Please be
specific.
    396. Do you believe Part IV, Item 7(b) of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS related to the established, non-
discretionary methods that dictate the terms of trading among multiple
buyers and sellers on the facilities of the NMS Stock ATS, including
rules and procedures governing the priority, pricing methodologies,
allocation, matching, and execution of orders and other trading
interest? Please explain.
    397. Do you believe Part IV, Item 7(c) of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding the trading procedures
related to price protection mechanisms, short sales, locked-crossed
markets, the handling of execution errors, time-stamping of orders and
executions, or price improvement functionality? Please explain.
    398. Is it sufficiently clear what information would be required by
Part IV, Items 7(b) and 7(c) of proposed Form ATS-N? Should these items
be refined in any way? If so, how? Please be specific.
    399. Do you believe there is other information that market
participants might find relevant or useful regarding the established
non-discretionary methods that dictate the terms of trading among
multiple buyers and sellers on the market or facilities of an NMS Stock
ATS? If so, describe such information and explain whether, and if so
why, such information should be required to be provided under proposed
Form ATS-N. Please support your arguments.
    400. Do you believe there is other information that market
participants might find relevant or useful regarding trading procedures
related to price protection mechanisms, short sales, locked-crossed
markets, the handling of execution errors, time-stamping of orders and
executions, or price improvement functionality on an NMS Stock ATS? If
so, describe such information and explain whether, and if so why, such
information should be required to be provided under proposed Form ATS-
N. Please support your arguments.
    401. Do you believe there is any information that would be required
by Part IV, Items 7(b) and 7(c) of proposed Form ATS-N that an NMS
Stock ATS should not be required to disclose due to concerns regarding
confidentiality, business reasons, trade secrets, burden, or any other
concerns? Why or why not? Please support your arguments.
    402. Are there any aspects of the non-discretionary methods that
dictate the terms of trading among buyers and sellers on which the
Commission should specifically require information that is not included
as a component under Part IV, Item 7(b) of proposed Form ATS-N?
    403. What are the potential costs and benefits of disclosing the
information required by Part IV, Items 7(b) and 7(c) of proposed Form
ATS-N? Would the proposed disclosures in Part IV, Items 7(b) and 7(c)
of proposed Form ATS-N require an NMS Stock ATS to reveal too much (or
not enough) information about its structure and operations? Why or why
not? Please support your arguments.
    404. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Items
7(b) and 7(c) of proposed Form ATS-N other than through disclosure on
proposed Form

ATS-N? If so, how else could this information be obtained and would
such alternative means be preferable to the proposed disclosures in
Part IV, Items 7(b) and 7(c)?

H. Suspension of Trading, System Disruption or Malfunction

    Part IV, Item 8 of proposed Form ATS-N would require an NMS Stock
ATS to describe any procedures governing trading in the event the NMS
Stock ATS suspends trading or experiences a system disruption or
malfunction. In addition, if the procedures governing trading during a
suspension or system disruption or malfunction are not the same for all
subscribers and persons, the NMS Stock ATS would be required to
describe any differences. This item is designed to inform market
participants of whether, among other things, an NMS Stock ATS will
continue to accept orders after suspension or system malfunction or
disruption occurs, whether the NMS Stock ATS routes, holds, or
continues to execute orders resting in the system prior to the
disruption, and the type of notice the NMS Stock ATS provides to
subscribers and other market participants during a suspension or system
disruption or malfunction. Examples of system disruptions would
include, but are not limited to, internal software problems that
prevent the NMS Stock ATS's system from opening or continuing
trading,\481\ a significant increase in volume that exceeds the ability
of the trading system of the NMS Stock ATS to process incoming
orders,\482\ and the failure of the ability of the trading system of
the NMS Stock ATS to receive NBBO or other external pricing information
that is used in the system's pricing methodology.
---------------------------------------------------------------------------

    \481\ See SCI Adopting Release, supra note 17 at 72254-55 n.28.
    \482\ See id. at 72255 n.29.
---------------------------------------------------------------------------

    The Commission preliminarily believes that information regarding an
NMS Stock ATS's procedures on how orders may be handled during a
suspension of trading or system disruption or malfunction would be
useful to market participants because such an event might preclude the
NMS Stock ATS from accepting and/or executing time sensitive orders and
could impact the price the subscriber receives. The information about
how an NMS Stock ATS would handle orders under such circumstances would
better inform a subscriber's trading decisions at the time of such an
event and thus help that subscriber accomplish its investing or trading
objectives.
    Information regarding the procedures for how an NMS Stock ATS would
handle orders during a suspension of trading or system disruption or
malfunction would also help the Commission better monitor the
securities markets. The Commission has recently noted that given the
speed and interconnected nature of the U.S. securities markets, a
seemingly minor systems problem at a single entity can quickly create
losses and liability for market participants, and spread rapidly across
the national market system, potentially creating widespread damage and
harm to market participants and investors.\483\ Accordingly, it is
important to fully understand what, if any, trading procedures an NMS
Stock ATS would follow during a suspension of trading or system
disruption or malfunction. The Commission preliminarily believes that
the disclosures that would be required by Item 8 would help the
Commission discover a potential violation of the federal securities
laws and rules or regulations thereunder in a more expeditious manner
than if the disclosures were not required. The Commission notes that it
is not proposing to require NMS Stock ATSs to adopt specific procedures
governing trading during a system disruption or malfunction as it did
under Regulation SCI for certain significant-volume ATSs that trade NMS
stocks or non-NMS stocks.\484\ Rather, under Part IV, Item 8 of
proposed Form ATS-N, the Commission is only requiring an NMS Stock ATS
to disclose what procedures, if any, it follows during a suspension of
trading or system disruption or malfunction on the NMS Stock ATS.
Accordingly, the disclosure requirements under Item 8, similar to other
items on proposed Form ATS-N, are intended to inform market
participants of an NMS Stock ATS's procedures rather than impose any
new procedural requirements on NMS Stock ATSs.
---------------------------------------------------------------------------

    \483\ See id. at 72253.
    \484\ See supra notes 102-103 and accompanying text.
---------------------------------------------------------------------------

Request for Comment
    405. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 8 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    406. Do you believe Part IV, Item 8 of proposed Form ATS-N captures
the information that is most relevant to understanding the operations
of the NMS Stock ATS regarding any procedures governing trading in the
event the NMS Stock ATS suspends trading or experiences a system
disruption or malfunction? Please explain.
    407. Is it sufficiently clear what information would be required by
Part IV, Item 8 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    408. Do you believe there is other information that market
participants might find relevant or useful regarding procedures
governing trading in the event an NMS Stock ATS suspends trading or
experiences a system disruption or malfunction? If so, describe such
information and explain whether, and if so why, such information should
be required to be provided under proposed Form ATS-N. Please support
your arguments.
    409. Do you believe there is any information that would be required
by Part IV, Item 8 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    410. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 8 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 8 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    411. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item 8
of proposed Form ATS-N other than through disclosure on proposed Form
ATS-N? If so, how else could this information be obtained and would
such alternative means be preferable to the proposed disclosures in
Part IV, Item 8?

I. Opening, Reopening, and Closing Processes, and After Hours
Procedures

    Part IV, Item 9 of proposed Form ATS-N would require an NMS Stock
ATS to describe its opening, reopening, and closing processes, if any,
and any after-hours trading procedures. Part IV, Item 9(a) of proposed
Form ATS-N would require an NMS Stock ATS to describe any opening and
reopening processes, including how orders or other trading interest are
matched and executed prior to the start of regular trading hours or
following a stoppage of trading in a security during regular trading
hours and how unexecuted orders or other trading interest are

handled at the time the NMS Stock ATS begins regular trading at the
start of regular trading hours or following a stoppage of trading in a
security during regular trading hours. An NMS Stock ATS would also be
required to describe any differences between pre-opening executions,
executions following a stoppage of trading in a security during regular
trading hours, and executions during regular trading hours. Part IV,
Item 9(b) of proposed Form ATS-N would require a description of any
closing process, including how unexecuted orders or other trading
interest are handled at the close of regular trading. An NMS Stock ATS
would also be required to describe any differences between the closing
executions and executions during regular trading hours. Part IV, Item
9(c) of proposed Form ATS-N would require a description of any after-
hours trading procedures, including how orders and trading interest are
matched and executed during after-hours trading. An NMS Stock ATS would
also be required to describe any differences between the after-hours
executions and executions during regular trading hours.
    Part IV, Item 9 of proposed Form ATS-N is designed to inform market
participants about whether an NMS Stock ATS uses any special procedures
to match orders outside of regular trading hours and/or processes to
set a single opening, reopening, or closing price to, for example,
maximize liquidity and accurately reflect market conditions at the
opening, reopening, or close of trading. The Commission notes that it
is standard practice for national securities exchanges to conduct
opening, reopening, and closing auctions, or similar procedures, to
start and conclude the trading day, or reopen trading in a security
during the trading day.\485\ Furthermore, to facilitate their opening
and closing processes, exchanges often permit members to enter orders
specially designated to execute on the opening or closing.\486\ The
disclosures under this item would allow for comparisons between NMS
Stock ATSs and exchanges.
---------------------------------------------------------------------------

    \485\ See, e.g., New York Stock Exchange Rule 123D (setting
forth the duties of NYSE Designated Market Maker when opening and
reopening trading in a stock); New York Stock Exchange Rule 123C
(setting forth the exchange's closing procedures); The Nasdaq Stock
Market LLC Rule 4752 (setting forth rules for the Nasdaq Opening
Cross); The Nasdaq Stock Market LLC Rule 4753 (setting forth rules
for the Nasdaq Halt Cross); The Nasdaq Stock Market LLC Rule 4754
(setting forth rules for the Nasdaq Closing Cross); BATS Exchange
Rules 11.23 and 11.24 (setting forth the exchange's procedures for
openings, closings and auctions following a trading halt).
    \486\ See, e.g., New York Stock Exchange Rule 13 (defining
Market-on-Open. Market-on-Close, Limit-on-Open, and Limit-on-Close,
and Closing Offset order types); The Nasdaq Stock Market LLC Rule
4752 (a) (defining Market on Open, Limit on Open, Opening Imbalance
Only, and Market Hours order types); The Nasdaq Stock Market LLC
Rule 4754(a) (defining Market on Close, Limit on Close, and
Imbalance Only order types); BATS Exchange Rule 11.23(a) (defining
Eligible Auction, Market-on-Open, Limit-on-Open, Late-Limit-on-Open,
Market-on-Close, Limit-on-Close, and Late Limit-on-Close order
types).
---------------------------------------------------------------------------

    Market participants would likely want to know about any special
opening, reopening, or closing processes, and after-hours trading
procedures, employed by an NMS Stock ATS. In particular, the Commission
preliminarily believes that market participants would want to know
which, if any, order types participate in an NMS Stock ATS's opening,
reopening, and/or closing processes, and after-hours trading. The
Commission preliminarily believes that such information would help
market participants assess whether participating in an NMS Stock ATS's
opening, reopening, or closing processes, or after-hours trading on the
NMS Stock ATS, would help accomplish their investing or trading
objectives and thus, cause them to route orders to the NMS Stock ATS.
    The disclosures required under Part IV, Item 9 of proposed Form
ATS-N are also designed to help the Commission to better oversee NMS
Stock ATSs and alert the Commission about any potential regulatory
issues arising from an NMS Stock ATS's opening, reopening, or closing
processes, or after-hours trading procedures. For example, under Rule
611(b)(3) of Regulation NMS,\487\ single-priced opening and closing
transactions are excepted from the Order Protection Rule under Rule
611(a) of Regulation NMS.\488\ The Commission preliminarily believes
the disclosures required under Part IV, Item 9 of proposed Form ATS-N
would help the Commission analyze whether the opening, reopening, and/
or closing processes of an NMS Stock ATS, and after-hours trading
procedures, are consistent with the Exchange Act and the rules and
regulations thereunder.
---------------------------------------------------------------------------

    \487\ See 17 CFR 242.611(b)(3).
    \488\ See 17 CFR 242.611(a).
---------------------------------------------------------------------------

Request for Comment
    412. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 9 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    413. Do you believe Part IV, Item 9 of proposed Form ATS-N captures
the information that is most relevant to understanding the operations
of the NMS Stock ATS regarding its opening, reopening, or closing
processes, if any, and any after-hours trading procedures? Please
explain.
    414. Do you believe there is other information that market
participants might find relevant or useful regarding the opening or
reopening processes, closing process, or after-hours trading procedures
on the NMS Stock ATS? If so, describe such information and explain
whether, and if so why, such information should be required to be
provided under proposed Form ATS-N. Please support your arguments.
    415. Is it sufficiently clear what information would be required by
Part IV, Item 9 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    416. Do you believe there is any information that would be required
by Part IV, Item 9 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    417. Do you believe the information that would be required by Part
IV, Item 9 of proposed Form ATS-N would be useful to market
participants when deciding whether to trade on the NMS Stock ATS and
would assist them in devising appropriate trading strategies to help
accomplish their investing or trading objectives? Why or why not?
Please support your arguments.
    418. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 9 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 9 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    419. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item 9
of proposed Form ATS-N other than through disclosure on proposed Form
ATS-N? If so, how else could this information be obtained and would
such alternative means be preferable to the proposed disclosures in
Part IV, Item 9?

J. Outbound Routing

    Part IV, Item 10(a) of Proposed Form ATS-N would require an NMS
Stock ATS to describe the circumstances under which orders or other
trading interest are routed from the NMS Stock ATS to another trading
center, including whether outbound routing occurs at the

affirmative instruction of the subscriber or at the discretion of the
broker-dealer operator, and the means by which routing is performed
(e.g., a third party or order management system or a SOR (or similar
functionality) or algorithm of the broker-dealer operator or any of its
affiliates). If the means by which orders or other trading interest are
routed from the NMS Stock ATS are not the same for all subscribers and
persons, the NMS Stock ATS would be required to describe any
differences under Part IV, Item 10(b) of proposed Form ATS-N.
    Based on Commission experience, some NMS Stock ATSs, by way of
their broker-dealer operator, provide outbound routing services whereby
a subscriber's order or trading interest could be routed to another
trading center.\489\ Orders and trading interest could be routed to
other trading centers under a variety of circumstances. For instance, a
subscriber could instruct the NMS Stock ATS to route its orders to
another trading center if it is not immediately executed on the NMS
Stock ATS upon entry. Also, a subscriber could enter an order on the
NMS Stock ATS that rests as an open order on the NMS Stock ATS and is
concurrently routed to another trading center for potential execution.
If the order is executed at the away trading center, the NMS Stock ATS
would cancel the order resting as an open order on the NMS Stock ATS.
If the order is executed on the NMS Stock ATS, the order that was
routed to the away market would be canceled.
---------------------------------------------------------------------------

    \489\ ``Trading center'' under Regulation NMS is defined as ``a
national securities exchange or national securities association that
operates an SRO trading facility, an alternative trading system, an
exchange market maker, an OTC market maker, or any other broker or
dealer that executes orders internally by trading as principal or
crossing orders as agent.'' 17 CFR 242.600(b)(78).
---------------------------------------------------------------------------

    The descriptions in response to Part IV, Item 10 of proposed Form
ATS-N would be required to include who determines routing destinations,
whether the subscriber, the broker-dealer operator, or both. This
information is meant to illuminate when subscribers would have control
over potential routing destinations and when the broker-dealer operator
would have discretion to route away. The Commission preliminarily
believes that subscribers would find it useful to be aware of any
instance in which the broker-dealer operator has discretion to route
trading interest so that a subscriber could better protect its
interests and monitor any such routing. Item 10 of proposed Form ATS-N
would also require a description of the means by which the routing is
performed. Examples of the means of outbound routing could include a
third-party router, an order management system or SOR (or similar
functionality) or algorithm of the broker-dealer operator or any of its
affiliates, or any other functionality used to outbound route trading
interest.
    The Commission preliminarily believes that it is important for
subscribers and potential subscribers to know at whose discretion any
outbound routing occurs and who would be performing the routing. The
Commission preliminarily believes that such disclosures concerning
outbound routing would provide subscribers and potential subscribers
with the ability to gauge how their orders would be handled if they are
not executed on the NMS Stock ATS. Subscribers and potential
subscribers might, for example, have concerns about the leakage of
confidential trading information when their orders are routed to other
trading centers. Part IV, Item 10 of proposed Form ATS-N is designed to
provide subscribers and potential subscribers with relevant information
to evaluate the potential for leakage of their confidential trading
information. In addition, subscribers and potential subscribers could
have concerns about the treatment of their confidential trading
information should their orders be routed by a third party or the SOR
(or similar functionality) or algorithm of the broker-dealer operator.
Overall, the Commission preliminarily believes that information about
routing would likely be useful to market participants when deciding
whether to subscribe or otherwise submit orders to an NMS Stock ATS
that might be eligible for routing.
    The Commission also preliminarily believes that the disclosures
required by Part IV, Item 10 of proposed Form ATS-N would aid it in
evaluating whether an NMS Stock ATS is in compliance with Rule
301(b)(10) of Regulation ATS.\490\ The Commission could use the
disclosures required under Item 10 of proposed Form ATS-N to evaluate
whether there are any risks to the confidentiality of trading
information on an NMS Stock ATS due to the outbound routing
functionality being used. These disclosures would provide the
Commission with insight into what trading information may be visible to
the entity performing the NMS Stock ATS's outbound routing functions,
such as a third party or the broker-dealer operator's SOR (or similar
functionality) or algorithm.
---------------------------------------------------------------------------

    \490\ See 17 CFR 242.301(b)(10).
---------------------------------------------------------------------------

Request for Comment
    420. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 10 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    421. Do you believe Part IV, Item 10 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding the circumstances under which
orders or other trading interest are routed from the NMS Stock ATS to
another trading center? Please explain.
    422. Is it sufficiently clear what information would be required by
Part IV, Item 10 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    423. What mechanisms are available for NMS Stock ATSs to perform
outbound routing? Do you believe there is any additional information
that the Commission should require NMS Stock ATSs to disclose with
regard to outbound routing? If so, explain what information and why.
Please support your arguments.
    424. Do you believe there is any information that would be required
by Part IV, Item 10 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    425. Do you believe that the disclosures required under Part IV,
Item 10 of proposed Form ATS-N would provide market participants with
relevant information to evaluate the potential for leakage of their
confidential trading information? Why or why not? Please be specific.
    426. Do you believe transparency in how an NMS Stock ATS routes
orders to other trading centers is useful to market participants when
deciding whether to trade on the NMS Stock ATS and would assist them in
devising appropriate trading strategies to help accomplish their
investing or trading objectives? Why or why not?
    427. Do you believe there is other information that market
participants might find relevant or useful regarding the circumstances
under which orders or other trading interest are routed from the NMS
Stock ATS to another trading center? If so, describe such information
and explain whether, and if so why, such information should be required
to be provided under proposed Form ATS-N. Please support your
arguments.
    428. What are the potential costs and benefits of disclosing the
information

required by Part IV, Item 10 of proposed Form ATS-N? Would the proposed
disclosures in Part IV, Item 10 of proposed Form ATS-N require an NMS
Stock ATS to reveal too much (or not enough) information about its
structure and operations? Why or why not? Please support your
arguments.
    429. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
10 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If so, how else could this information be obtained and
would such alternative means be preferable to the proposed disclosures
in Part IV, Item 10?

K. Market Data

    Part IV, Item 11 of proposed Form ATS-N would require an NMS Stock
ATS to disclose its sources and use of market data. Part IV, Item 11(a)
of proposed Form ATS-N would require a description of the market data
used by the NMS Stock ATS and the source of that market data (e.g.,
market data feeds disseminated by the consolidated data processor
(``SIP'') and market data feeds disseminated directly by an exchange or
other trading center or third-party vendor of market data). Part IV,
Item 11(b) of proposed Form ATS-N would require the NMS Stock ATS to
describe the specific purpose for which the market data is used by the
NMS Stock ATS, including how market data is used to determine the NBBO,
protected quotes, pricing of orders and executions, and routing
destinations. For instance, an NMS Stock ATS can elect to use market
data feeds for purposes of complying with the trade through rule of
Rule 611 of Regulation NMS \491\ and for pricing executions on the NMS
Stock ATS that are derived from prices on other trading centers, such
as an execution at the mid-point of the NBBO. An NMS Stock ATS also
might use data feeds to determine the prices available at other trading
centers for purposes of routing orders or other trading interest.
---------------------------------------------------------------------------

    \491\ See 17 CFR 242.611(a).
---------------------------------------------------------------------------

    The Commission preliminarily believes that market participants
would likely find it useful to know the source and specific purpose for
which market data is used by an NMS Stock ATS. For instance, the market
data received by an NMS Stock ATS might affect the price at which
orders are executed on the NMS Stock ATS.\492\ In addition, because of
the latency differences between the SIP and the direct data feeds of
the exchanges,\493\ the source of an NMS Stock ATS's market data could
impact the price received by a market participant, depending on the
ATS's source of the market data. Accordingly, the Commission
preliminarily believes that Part IV, Item 11 of proposed Form ATS-N
would provide market participants with information to assist them in
developing optimal trading strategies to account for any potential
latency differences between market data feeds. Furthermore, the
Commission preliminarily believes that these disclosures would assist
subscribers to understand the procedures employed by the NMS Stock ATS
for complying with Regulation NMS, including an understanding about how
their orders might be routed by the NMS Stock ATS. The Commission also
preliminarily believes that the disclosures required under Item 11
could help the Commission in understanding how market data is used for
purposes of monitoring developments in market structure.
---------------------------------------------------------------------------

    \492\ See supra Section VIII.G (explaining how NMS Stock ATSs
might use the NBBO to set execution prices). See also Morgan Stanley
letter, supra note 197, (stating it received customer questions
specific to the use of direct market data feeds by the dark pool's
servers and algorithmic strategies).
    \493\ See 2010 Equity Market Structure Release, supra note 124,
at 3611 (``Given the extra step required for SROs to transmit market
data to plan processors, and for plan processors to consolidate the
information and distribute it the public, the information in the
individual data feeds of exchanges and ECNs generally reaches market
participants faster than the same information in the consolidated
data feeds.'').
---------------------------------------------------------------------------

Request for Comment
    430. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 11 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    431. Do you believe Part IV, Item 11 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding the sources and use of market
data? Please explain.
    432. Is it sufficiently clear what information would be required by
Part IV, Item 11 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    433. Do you believe there is other information that market
participants might find relevant or useful regarding the sources and
use of market data? If so, describe such information and explain
whether, and if so why, such information should be required to be
provided under proposed Form ATS-N. Please support your arguments.
    434. Do you believe there is any information that would be required
by Part IV, Item 11 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    435. Are there any other applications for which NMS Stock ATSs use
market data that the Commission should specifically identify and/or
discuss under Part IV, Item 11 of Proposed Form ATS-N?
    436. Do you believe that transparency regarding what market data an
NMS Stock ATS uses and how the NMS Stock ATS uses that market data is
useful to market participants when deciding whether to trade on the NMS
Stock ATS and would assist them in devising appropriate trading
strategies to help accomplish their investing or trading objectives?
Why or why not?
    437. Do you believe that the disclosures required under Part IV,
Item 11 of Proposed Form ATS-N would assist the Commission to
understand the procedures employed by an NMS Stock ATS for complying
with Regulation NMS and to understand how orders are priced, handled,
and routed by the NMS Stock ATS? Why or why not?
    438. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
11 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If so, how else could this information be obtained and
would such alternative means be preferable to the proposed disclosures
in Part IV, Item 11?
    439. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 11 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 11 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.

L. Fees

    Part IV, Item 12 of proposed Form ATS-N would require the NMS Stock
ATS to disclose and describe its fee and rebate structure. Part IV,
Item 12(a) of proposed Form ATS-N would require an NMS Stock ATS to
describe any fees, rebates, or other charges of the NMS Stock ATS
(e.g., connectivity fees, subscription fees, execution fees, volume
discounts) and provide the range (e.g., high and low) of such fees,
rebates, or other charges. If the fees, rebates, or other charges of
the NMS Stock ATS are not the same for all subscribers and persons, the
NMS Stock

ATS would be required to describe any differences under Part IV, Item
12(b) of proposed Form ATS-N.
    The Commission preliminarily believes that by requiring a
description of an NMS Stock ATS's fees, rebates, and other charges,
market participants would be able to review and evaluate the fee
structure of each NMS Stock ATS. If an NMS Stock ATS has a recognized
fee structure, such as a maker-taker pricing model,\494\ that
information would be required to be disclosed under Part IV, Item 12 of
proposed Form ATS-N. The Commission preliminarily believes these
disclosures would allow market participants to analyze the fee
structures across NMS Stock ATSs in an expedited manner and decide
which ATS offers them the best pricing according to the characteristics
of their order flow, the type of participant they are (if relevant), or
any other aspects of an ATS's fee structure that serves to provide
incentivizes or disincentives for specific market participants or
trading behaviors. For instance, an institutional subscriber that
commonly adds non-marketable, resting orders that offer liquidity may
choose to subscribe to an ATS that rewards liquidity-providing orders
with rebates. The types of fees charged for services also could
influence whether a market participant subscribes to, or the extent to
which it participates on, an NMS Stock ATS. For instance, an NMS Stock
ATS with relatively higher connectivity fees and relatively lower
execution fees may not be as attractive to a market participant that
only intends to send the NMS Stock ATS a small amount of trading
interest.
---------------------------------------------------------------------------

    \494\ Under the maker-taker pricing model, non-marketable,
resting orders that offer (make) liquidity at a particular price
receive a liquidity rebate if they are executed, while incoming
orders that execute against (take) the liquidity of resting orders
are charged an access fee. See 2010 Equity Market Structure Release,
supra note 124, at 3598-3599.
---------------------------------------------------------------------------

    The Commission also is proposing to require that NMS Stock ATSs
describe any differences in their fees, rebates, or other charges among
differing types of subscribers or other persons. The Commission
preliminarily believes that this information would further illuminate
the types of subscribers and/or trading interest that the NMS Stock ATS
may be trying to attract.\495\ This information would allow market
participants to observe whether an NMS Stock ATS is offering more
preferential treatment to other market participants and, therefore, aid
market participants in deciding where to route their trading interest
accordingly.\496\
---------------------------------------------------------------------------

    \495\ See Bloomberg Tradebook letter, supra note 190 and
accompanying text (recommending that the Commission ask ATSs to
complete a questionnaire including questions relating to any special
fees or rebates which lead to a preference of one order over
another).
    \496\ But see supra notes 92-95 and 427-429 and accompanying
text (discussing the fair access requirements of Regulation ATS).
---------------------------------------------------------------------------

    Part IV, Item 12 of proposed Form ATS-N also would require that the
NMS Stock ATS provide the range (e.g., high and low) of such fees,
rebates, or other charges. For these disclosures, the types of fees
should be categorized in the same manner as the NMS Stock ATS divides
fees internally or on its fee schedule. For example, if an NMS Stock
ATS provides rebates for liquidity added onto the ATS, then the range
for such rebates would be required by this item. If these rebates are
further divided into differing rebate amounts depending on order types
used, then the range of such rebates for each order type would also
need to be disclosed on proposed Form ATS-N.
    Item 12, however, does not require NMS Stock ATSs to disclose a
complete schedule of their fees. In some cases, the fee schedules
employed by NMS Stock ATSs are highly bespoke, and it may not be
practical or desirable to require an NMS Stock ATS to disclose the fee
schedule applicable to each subscriber to the NMS Stock ATS. The
Commission, therefore, is proposing that the NMS Stock ATS disclose
only the range of fees for each service. These disclosures are designed
to give market participants an awareness of the fees charged by the NMS
Stock ATS and allow market participants to understand and compare fees
across NMS Stock ATSs, which could reduce the search costs of market
participants in deciding where to send their orders and trading
interest. The Commission preliminarily believes that the disclosures
required by Part IV, Item 12 of proposed Form ATS-N would also assist
the Commission in better understanding the fee structures of NMS Stock
ATSs and trends in the market as part of the Commission's overall
review of market structure.
Request for Comment
    440. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 12 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    441. Do you believe Part IV, Item 12 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding its fee and rebate structure?
Please explain.
    442. Is it sufficiently clear what information would be required by
Part IV, Item 12 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    443. Do you believe the Commission should require NMS Stock ATSs to
publicly disclose their fees, charges, and rebates on proposed Form
ATS-N? Why or why not?
    444. Do you believe the Commission should require NMS Stock ATSs to
disclose their complete fee schedules? Are there other ways that NMS
Stock ATSs earn revenue about which the Commission should require
disclosure?
    445. Do you believe there is other information that market
participants might find relevant or useful regarding fees, rebates and
other charges? If so, describe such information and explain whether,
and if so why, such information should be required to be provided under
proposed Form ATS-N. Please support your arguments.
    446. Do you believe there is any information that would be required
by Part IV, Item 12 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    447. Do you believe that the information required by Part IV, Item
12 of proposed Form ATS-N would assist market participants and the
Commission in comparing fees across NMS Stock ATSs? Why or why not?
Please support your arguments.
    448. Do you believe that the information required by Part IV, Item
12 of proposed Form ATS-N would allow the Commission to gather further
information and analyze trends in the market, including how the
prevalence of different fee structures may impact different categories
of market participants? Would this information assist the Commission in
evaluating the potential incentives and disincentives created by
different fee structures in the market for NMS stocks? Why or why not?
Please support your arguments.
    449. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 12 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 12 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    450. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
12 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If

so, how else could this information be obtained and would such
alternative means be preferable to the proposed disclosures in Part IV,
Item 12?

M. Trade Reporting, Clearance and Settlement

    Part IV, Item 13 would require an NMS Stock ATS to describe its
arrangements or procedures for trade reporting, clearance, and
settlement of transactions. Part IV, Item 13(a) of proposed Form ATS-N
would require an NMS Stock ATS to describe any arrangements or
procedures for reporting transactions on the NMS Stock ATS and if the
trade reporting procedures are not the same for all subscribers and
persons, the NMS Stock ATS would be required to describe any
differences. Part IV, Item 13(b) of proposed Form ATS-N would require
an NMS Stock ATS to describe any arrangements or procedures undertaken
by the NMS Stock ATS to facilitate the clearance and settlement of
transactions on the NMS Stock ATS. If the clearance and settlement
procedures are not the same for all subscribers and persons, the NMS
Stock ATS would be required to describe any differences. The Commission
notes that Item 13 of proposed Form ATS-N would solicit similar
information that is solicited pursuant to Exhibit F, subsection (d) of
Form ATS, which currently requires ATSs to provide their procedures
governing execution, reporting, clearance, and settlement of
transactions effected through the ATS.\497\
---------------------------------------------------------------------------

    \497\ In contrast to current Form ATS, Form ATS-N further would
require that an NMS Stock ATS describe any differences in the manner
in which its trade reporting, clearance, and settlement procedures
are applied among subscribers and other persons. Also, Exhibit F,
subsection (d) of Form ATS requires ATSs to provide the procedures
governing execution in the same section as reporting and clearance
and settlement procedures, whereas Form ATS-N would require
information on execution procedures under a separate item, Part IV,
Item 7.
---------------------------------------------------------------------------

    Trade reporting furthers the transparent, efficient, and fair
operation of the securities markets.\498\ For example, among other
requirements, a broker-dealer operator of an NMS Stock ATS that is a
member of FINRA has trade reporting obligations to FINRA under FINRA
Rule 4552 and FINRA Rule 6730. The Commission preliminarily believes
the proposed disclosure of the trade reporting procedures of an NMS
Stock ATS under Part IV, Item 13(a) of proposed Form ATS-N would also
allow the Commission and the NMS Stock ATS's SRO to more easily review
the compliance of the NMS Stock ATS with its applicable trade reporting
obligations. The Commission also preliminarily believes market
participants may also find the disclosure of these procedures useful to
understanding how their trade information is reported.
---------------------------------------------------------------------------

    \498\ See Regulation ATS Adopting Release, supra note 7, at
70887 (stating the market-wide transaction and quotation reporting
plans operated by the registered national securities exchanges are
responsible for the transparent, efficient, and fair operations of
the securities markets).
---------------------------------------------------------------------------

    Part IV, Item 13(b) of proposed Form ATS-N would require that an
NMS Stock ATS describe any arrangements or procedures undertaken by the
NMS Stock ATS to facilitate the clearance and settlement of
transactions on the NMS Stock ATS. The Commission has previously stated
that the integrity of the trading markets depends on the prompt and
accurate clearance and settlement of securities transactions.\499\ For
example, the description of procedures required by Item 13(b) of
proposed Form ATS-N could include the process through which an NMS
Stock ATS clears a trade (e.g., whether the NMS Stock ATS becomes a
counterparty to a transaction, interposing itself between two
counterparties to a transaction, or whether the NMS Stock ATS submits
trades to a registered clearing agency for clearing) and any
requirements an NMS Stock ATS places on its subscribers, or other
persons whose orders are routed to an NMS Stock ATS, to have clearance
and settlement systems and/or arrangements with a clearing firm. The
Commission preliminarily believes market participants would likely find
the disclosures required by Item 13(b) to be useful in understanding
the measures undertaken by an NMS Stock ATS to facilitate clearance and
settlement of subscriber orders on the NMS Stock ATS and allow them to
more easily compare the clearance arrangements required across NMS
Stock ATSs as part of deciding where to route their trading interest.
The Commission preliminarily believes that the disclosures required by
Part IV, Item 13 of proposed Form ATS-N may assist the Commission in
better understanding the trade reporting, clearance and settlement
procedures of NMS Stock ATSs and trends in the market as part of the
Commission's overall review of market structure.
---------------------------------------------------------------------------

    \499\ See id. at 70897.
---------------------------------------------------------------------------

Request for Comment
    451. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 13 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    452. Do you believe Part IV, Item 13 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding its arrangements or
procedures for trade reporting, clearance, and settlement of
transactions? Please explain.
    453. Do you believe there is other information that market
participants might find relevant or useful regarding procedures for
trade reporting, clearance, and settlement of transactions on the NMS
Stock ATSs? If so, describe such information and explain whether, and
if so why, such information should be required to be provided under
proposed Form ATS-N. Please support your arguments.
    454. Is it sufficiently clear what information would be required by
Part IV, Item 13 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific
    455. Do you believe there is any information that would be required
by Part IV, Item 13 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    456. Do you believe that the information required by Part IV, Item
13 of proposed Form ATS-N will assist market participants in the manner
described above? Why or why not? Please support your arguments.
    457. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 13 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 13 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    458. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
13 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If so, how else could this information be obtained and
would such alternative means be preferable to the proposed disclosures
in Part IV, Item 13?

N. Order Display and Execution Access

    Part IV, Item 14 of proposed Form ATS-N would require an NMS Stock
ATS to provide the following information if the NMS Stock ATS displays
orders in an NMS stock to any person other than employees of the NMS
Stock ATS and executed 5% or more of the average daily trading

volume in that NMS stock as reported by an effective transaction
reporting plan for four of the preceding six calendar months: (a) The
ticker symbol for each such NMS stock displayed for each of the last 6
calendar months; (b) the manner in which the NMS Stock ATS displays
such orders on a national securities exchange or through a national
securities association; and (c) how the NMS Stock ATS provides access
to such orders displayed in the national market system equivalent to
the access to other orders displayed on that exchange or
association.\500\
---------------------------------------------------------------------------

    \500\ In response to Part IV, Item 14 of proposed Form ATS-N, an
NMS Stock ATS filing a Form ATS-N would indicate ``not applicable''
if the NMS Stock ATS had not triggered the volume thresholds under
Rule 301(b)(3)(i) of Regulation ATS before commencing operations
pursuant to an effective Form ATS-N. If an NMS Stock ATS triggers
the Rule 301(b)(3)(i) thresholds after commencing operations
pursuant to an effective Form ATS-N, the Commission generally would
consider this to be a material change to the operations of the NMS
Stock ATS (assuming it is not already complying with the display and
access requirements of Rule 301(b)(3)), and the NMS Stock ATS would
be required to file a Form ATS-N Amendment pursuant to proposed Rule
304(a)(2)(i)(A). In the case where an NMS Stock ATS has voluntarily
chosen to comply with the display and access requirements of Rule
301(b)(3)(ii) and (iii) before crossing the relevant thresholds, the
NMS Stock ATS would nevertheless have to file a Form ATS-N Amendment
upon surpassing the thresholds within 30 days after the end of the
calendar quarter pursuant to proposed Rule 304(a)(2)(i)(B).
---------------------------------------------------------------------------

    The information elicited in Part IV, Item 14 relates to an NMS
Stock ATS's obligations under current Rule 301(b)(3) of Regulation ATS,
which applies if an ATS displays a subscriber order in an NMS stock to
any person other than ATS employees, and during at least 4 of the
preceding 6 calendar months, executed 5% or more of the average daily
trading volume in that NMS Stock as reported by an effective
transaction reporting plan. Rule 301(b)(3)(ii) and (iii) requires
qualifying ATSs to report their highest bid and lowest offer for the
relevant NMS stock for inclusion in the quotation data made available
by the national securities exchange or national securities association
to which it reports and provide equivalent access to effect a
transaction with other orders displayed on the exchange or by the
association.\501\ Under the current regulatory regime for ATSs, there
is no mechanism under which an ATS must notify the Commission, its SRO,
or market participants after it has triggered those requirements.\502\
---------------------------------------------------------------------------

    \501\ See 17 CFR 242.301(b)(3)(ii) and (iii).
    \502\ In contrast, an ATS that triggers the ``fair access''
requirements under Rule 301(b)(5), see supra notes 92-95 and 426-429
and accompanying text, is required to attach Exhibit C to Form ATS-
R, which is filed with the Commission, but not publicly available.
Exhibit C of Form ATS-R requires an ATS that triggered the fair
access requirements to: (1) Provide a list of all persons granted,
denied, or limited access to the ATS during the period covered by
the ATS-R and (2) designate for each person (a) whether they were
granted, denied, or limited access, (b) the date the ATS took such
action, (c) the effective date of such action, and (d) the nature of
any denial on limitation of access. See supra note 453.
---------------------------------------------------------------------------

    The information required by Part IV, Item 14 of proposed Form ATS-N
is designed to elicit information about how the NMS Stock ATS complies
with the requirements of Rule 301(b)(3) of Regulation ATS when
applicable. The Commission preliminarily believes that the disclosure
of the information required by Item 14 of proposed Form ATS-N would
facilitate the Commission's oversight of NMS Stock ATSs and their
compliance with Rule 301(b)(3) and help the Commission discover a
potential violation of the federal securities laws and rules or
regulations thereunder in a more expeditious manner than if the
disclosures were not required. In part, because the thresholds required
for display and access are counted for each NMS stock individually, an
NMS Stock ATS would be required to disclose the ticker symbol for the
relevant NMS stock to aid the Commission in evaluating its compliance.
The Commission also preliminarily believes that these disclosures would
help ensure that market participants and the Commission are aware when
an NMS Stock ATS has become a significant source of liquidity in an NMS
stock. Further, the Commission preliminarily believes that market
participants would find the information disclosed in this item useful
to understand how they can access applicable quotations.
Request for Comment
    459. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 14 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    460. Do you believe Part IV, Item 14 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding the NMS Stock ATS's
obligations under current Rule 301(b)(3) of Regulation ATS? Please
explain.
    461. Do you believe there is other information that market
participants might find relevant or useful regarding the NMS Stock
ATS's obligations under current Rule 301(b)(3) of Regulation ATS? If
so, describe such information and explain whether, and if so why, such
information should be required to be provided under proposed Form ATS-
N. Please support your arguments.
    462. Is it sufficiently clear what information would be required by
Part IV, Item 14 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    463. Do you believe there is any information that would be required
by Part IV, Item 14 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    464. Do you believe that the information required by Part IV, Item
14 of proposed Form ATS-N will assist market participants in accessing
applicable quotations and ensuring they receive equivalent access on
the NMS Stock ATS? Why or why not? Please support your arguments.
    465. Do you believe that the imposition of the requirements of Rule
301(b)(3) on an NMS Stock ATS crossing the relevant volume thresholds
of Rule 301(b)(3)(i) and meeting the display requirement of the rule,
should constitute a material change in the operations of the NMS Stock
ATS such that it should be reported to the Commission in advance? Why
or why not?
    466. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 14 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 14 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    467. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
14 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If so, how else could this information be obtained and
would such alternative means be preferable to the proposed disclosures
in Part IV, Item 14?

    In 2009, the Commission published a proposal to address certain
practices with respect to undisplayed liquidity, which is trading
interest that is available for execution at a trading center, but is
not included in the consolidated quotation data that is widely
disseminated to the public.\503\ Among other things, the Commission
proposed amending Rule 301(b)(3) of Regulation ATS to lower the trading
volume threshold that triggers public display obligations for ATSs from
5% or more of the aggregate average daily share volume for an NMS stock
as reported by an effective transaction reporting plan to 0.25% or more
of the aggregate average daily share volume for an NMS stock as
reported by an effective transaction reporting plan.\504\ The
Commission also proposed to change the definition of ``bid'' or
``offer'' in Regulation NMS to clarify that the public quoting
requirements apply to actionable indications of interest privately
transmitted by dark pools to selected market participants.\505\
---------------------------------------------------------------------------

    \503\ See generally Regulation of Non-Public Trading Interest,
supra note 123.
    \504\ See id. at 61216.
    \505\ See id.
---------------------------------------------------------------------------

Request for Comment
    468. Do you believe that the Commission should lower the 5% trading
volume threshold in Rule 301(b)(3) of Regulation ATS that triggers the
public display requirement for ATSs? Why or why not? If so, what is the
appropriate threshold level? Please support your arguments.
    469. Do you believe that the Commission should define actionable
indications of interest in the definition of ``bid'' and ``offer'' in
Regulation NMS? Why or why not? Please support your arguments.

O. Fair Access

    Part IV, Item 15 of proposed Form ATS-N would require an NMS Stock
ATS to provide the following information if the NMS Stock ATS executes
5% or more of the average daily trading volume in an NMS stock as
reported by an effective transaction reporting plan for four of the
preceding six calendar months: (a) The ticker symbol for each NMS stock
for each of the last 6 calendar months; and (b) a description of the
written standards for granting access to trading on the NMS Stock
ATS.\506\ As explained above,\507\ Rule 301(b)(5)(ii)(A) of Regulation
ATS requires an ATS to establish written standards for granting access
to trading on its system when it crosses the fair access thresholds of
Rule 301(b)(5)(i) and does not meet the exception set forth in Rule
301(b)(5)(iii). If an ATS crosses the fair access thresholds, Rule
301(b)(5)(ii)(B) requires the ATS to ``not unreasonably prohibit or
limit any person in respect to access to services offered by such
alternative trading system by applying the [written] standards . . . in
an unfair or discriminatory manner.'' \508\
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    \506\ In response to Part IV, Item 15 of proposed Form ATS-N, an
NMS Stock ATS filing a Form ATS-N would indicate ``not applicable''
if the NMS Stock ATS had not triggered the volume thresholds under
Rule 301(b)(5)(i) of Regulation ATS before commencing operations
pursuant to an effective Form ATS-N. If an NMS Stock ATS triggers
the Rule 301(b)(5)(i) thresholds after commencing operations
pursuant to an effective Form ATS-N, the Commission would generally
consider this to be a material change to the operations of the NMS
Stock ATS (assuming it is not already complying with the fair access
requirements of Rule 301(b)(5)), and the NMS Stock ATS would be
required to file a Form ATS-N Amendment pursuant to proposed Rule
304(a)(2)(i)(A). In the case where an NMS Stock ATS has voluntarily
chosen to comply with the fair access requirements of Rule
301(b)(5)(ii) before crossing the relevant thresholds, the NMS Stock
ATS would nevertheless have to file a Form ATS-N Amendment upon
surpassing the thresholds within 30 days after the end of the
calendar quarter pursuant to Rule proposed 304(a)(2)(i)(B).
    \507\ See supra notes 92-95 and accompanying text.
    \508\ See 17 CFR 242.301(b)(5)(ii)(B).
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    The Commission preliminarily believes that the disclosure of the
information requested by Part IV, Item 15 of proposed Form ATS-N would
facilitate the Commission's oversight of NMS Stock ATSs and their
compliance with Rule 301(b)(5). Because the volume thresholds required
for fair access are counted for each NMS stock individually, an NMS
Stock ATS would be required to disclose the ticker symbol for the
relevant NMS stock to aid the Commission in evaluating the NMS Stock
ATS's compliance. The Commission also preliminarily believes that it is
important for market participants to be aware of whether an NMS Stock
ATS is a significant source of liquidity for an NMS stocks and
therefore, must provide fair access. Although Exhibit C of Form ATS-R
requires an ATS to notify the Commission when it has crossed a fair
access threshold in a particular calendar quarter,\509\ there is
currently no requirement that an ATS must notify the public when it has
done so. The Commission preliminarily believes that having such
information publicly available will help market participants better
evaluate trading opportunities and where to route orders in order to
reach their trading and/or investment objectives. The Commission
preliminarily believes that the disclosures that would be required by
Item 15 would help the Commission discover a potential violation of the
federal securities laws and rules or regulations thereunder in a more
expeditious manner than if the disclosures were not required.
---------------------------------------------------------------------------

    \509\ See supra note 453.
---------------------------------------------------------------------------

Request for Comment
    470. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 15 of Form ATS-N? Why or why not? If
so, what level of detail should be disclosed? Please be specific.
    471. Do you believe Part IV, Item 15 of proposed Form ATS-N
captures the information that is most relevant to understanding the
operations of the NMS Stock ATS regarding the written standards for
granting access to trading on its system when it crosses the fair
access thresholds of Rule 301(b)(5)(i) (and does not meet the exception
set forth in Rule 301(b)(5)(iii))? Please explain.
    472. Do you believe there is other information that market
participants might find relevant or useful regarding the written
standards for granting access to trading on its system when it crosses
the fair access thresholds of Rule 301(b)(5)(i) (and does not meet the
exception set forth in Rule 301(b)(5)(iii))? If so, describe such
information and explain whether, and if so why, such information should
be required to be provided under proposed Form ATS-N. Please support
your arguments.
    473. Do you believe there is any information that would be required
by Part IV, Item 15 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    474. Is it sufficiently clear what information would be required by
Part IV, Item 15 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    475. Do you believe that the disclosures under Part IV, Item 15 of
proposed Form ATS-N would help market participants better evaluate
trading opportunities and where to route orders in order to reach their
investment objectives? Why or why not? Please support your arguments.
    476. Do you believe that the imposition of the requirements of Rule

301(b)(5) on an NMS Stock ATS crossing the relevant volume thresholds
of Rule 301(b)(5)(i) should constitute a material change in the
operations of the NMS Stock ATS such that it should be reported to the
Commission in advance? Why or why not?
    477. What are the potential costs and benefits of disclosing the
information required by Part IV, Item 15 of proposed Form ATS-N? Would
the proposed disclosures in Part IV, Item 15 of proposed Form ATS-N
require an NMS Stock ATS to reveal too much (or not enough) information
about its structure and operations? Why or why not? Please support your
arguments.
    478. Do you believe there are other ways to obtain the same
information as would be required from NMS Stock ATSs by Part IV, Item
15 of proposed Form ATS-N other than through disclosure on proposed
Form ATS-N? If so, how else could this information be obtained and
would such alternative means be preferable to the proposed disclosures
in Part IV, Item 15?

P. Market Quality Statistics Published or Provided by the NMS Stock ATS
to Subscribers

    Part IV, Item 16 of proposed Form ATS-N would require an NMS Stock
ATS to explain and provide certain aggregate platform-wide market
quality statistics that it publishes or provides to one or more
subscribers regarding the NMS Stock ATS.\510\ Under Item 16, if the NMS
Stock ATS publishes or otherwise provides to one or more subscribers
aggregate platform-wide order flow and execution statistics of the NMS
Stock ATS that are not otherwise required disclosures under Exchange
Act Rule 605 of Regulation NMS, it would be required to: (i) List and
describe the categories of the aggregate platform-wide order flow and
execution statistics published or provided; (ii) describe the metrics
and methodology used to calculate the aggregate platform-wide order
flow and execution statistics; and (iii) attach as Exhibit 5 the most
recent disclosure of the aggregate platform-wide order flow and
execution statistics published or provided to one or more subscribers
for each category or metric as of the end of the calendar quarter. An
NMS Stock ATS would not be required to develop or publish any new
statistics for purposes of making this disclosure; it would only be
required to make the disclosures for statistics it already otherwise
collects and publishes or provides to one or more subscribers to the
NMS Stock ATS.
---------------------------------------------------------------------------

    \510\ An NMS Stock ATS would only be required to provide order
flow and execution statistics that are aggregated across the ATS as
a whole, not subscriber-specific order flow and execution
statistics.
---------------------------------------------------------------------------

    The Commission preliminarily believes that some NMS Stock ATSs
voluntarily publish or otherwise provide to subscribers aggregate
platform-wide order flow and execution statistics that do not fall
under the statistical information that is required to be disclosed
under Exchange Act Rule 605,\511\ which requires market centers, such
as NMS Stock ATSs, to publish monthly reports of statistics on their
order executions. To the extent an NMS Stock ATS publishes or provides
such aggregate platform-wide statistics to one or more subscribers,
Part IV, Items 16(a) and (b) of proposed Form ATS-N would require the
NMS Stock ATS to list and describe the categories or metrics of the
statistics it publishes or provides to subscribers and describe any
criteria or methodology that the ATS uses to calculate those
statistics, respectively. Item 16(c) would require the NMS Stock ATS to
attach as Exhibit 5 the most recent disclosure of order flow and
execution statistics published or provided for each category or metric
as of the end of the calendar quarter.\512\ To comply with the
requirements of Item 16(c), an NMS Stock ATS would file a Form ATS-N
Amendment with an updated Exhibit 5 within 30 calendar days after the
end of each calendar quarter.\513\
---------------------------------------------------------------------------

    \511\ 17 CFR 242.605.
    \512\ For instance, if an NMS Stock ATS publishes or provides a
particular statistic on a daily basis, the NMS Stock ATS would
include in Exhibit 5 the statistic that was published or provided to
one or more subscribers on the last trading day of the calendar
quarter (e.g., the statistic published or provided on June 30th or
last trading day prior to June 30th). If an NMS Stock ATS publishes
or provides a particular statistic weekly, the NMS Stock ATS would
be required to include in Exhibit 5 the statistic that was published
or provided to one or more subscribers at the end of the week prior
to the end of the calendar quarter (e.g., the statistic published
for the last full week of June).
    \513\ See proposed Rule 304(a)(2)(i)(B).
---------------------------------------------------------------------------

    Under Part IV, Item 16, an NMS Stock ATS would be required to
explain and provide any aggregate platform-wide order flow or execution
statistic that is not otherwise a required disclosure under Exchange
Act Rule 605 and published or provided to one or more subscribers by
the NMS Stock ATS. An example of a type of statistic that would be a
required disclosure under Item 16 would be statistics related to the
percentage of midpoint executions on the NMS Stock ATS that the NMS
Stock ATS publishes or otherwise provides to subscribers. The NMS Stock
ATS would be required to list that category under Part IV, Item 16(a)
and explain how the NMS Stock ATS calculates that statistic under Item
16(b). Within 30 calendar days after the end of each calendar quarter,
the NMS Stock ATS would be required to attach an Exhibit 5 containing
the most recent percentage it disseminated during the previous quarter.
The Commission preliminarily believes that requiring the NMS Stock ATS
to provide the statistic on Form ATS-N on a quarterly basis would allow
market participants to obtain insight into the nature of trading on the
NMS Stock ATS on a sufficiently frequent basis while minimizing the
reporting burden for the NMS Stock ATS.
    The Commission preliminarily believes that an NMS Stock ATS may
choose to create and publish or provide to one or more subscribers
information concerning order flow and execution quality for different
reasons. For example, the NMS Stock ATS may have concluded that
publication of certain statistics may highlight certain characteristics
of the NMS Stock ATS that would attract certain order flow. Or a
subscriber may have requested that the NMS Stock ATS provide certain
aggregated information concerning order flow and execution quality that
the subscriber needed to assess the ATS's operations. The Commission
notes that certain performance metrics and statistics may be important
factors for investors and subscribers in comparing and selecting an ATS
that is most appropriate for their investment objectives.\514\ Indeed,
Exchange Act Rule 605 currently requires ATSs to provide quarterly
public reports containing certain information concerning ATS
executions. As such, to the extent that an NMS Stock ATS has made a
determination to create and publish or provide to subscribers certain
aggregate platform-wide order flow and execution quality statistics,
the Commission preliminarily believes that others may also find such
information useful when evaluating an NMS Stock ATS as a possible venue
to which to route orders in order to accomplish their investing or
trading objectives.
---------------------------------------------------------------------------

    \514\ See generally Tuttle: ATS Trading in NMS Stocks, supra
note 126.
---------------------------------------------------------------------------

    The Commission also solicits comment on whether other standardized
statistical disclosures should be required from NMS Stock ATSs and the
nature and extent of any such metrics or statistics that commenters
believe should be disclosed.
Request for Comment
    479. Do you believe the Commission should require the disclosure of
the information on Part IV, Item 16 of Form ATS-N? Why or why not? If
so, what

level of detail should be disclosed? Please be specific.
    480. Do you believe that the statistics required on Part IV, Item
16 of Form ATS-N should be provided on a more or less frequent basis?
Why or why not? If so, how often should the statistics be provided
(e.g., on a daily, weekly, monthly, quarterly, or annual basis)? Please
support your arguments.
    481. Is it sufficiently clear what information would be required by
Part IV, Item 16 of proposed Form ATS-N? Should the item be refined in
any way? If so, how? Please be specific.
    482. Do you believe that the disclosures under Part IV, Item 16 of
proposed Form ATS-N would help market participants better evaluate
trading opportunities and where to route orders in order to reach their
investment objectives? Why or why not? Please support your arguments.
    483. Do you believe that the Commission should require standardized
public disclosures of performance metrics or statistics for each NMS
Stock ATS? Why or why not? Please support your arguments. If so, what
metrics or statistics should NMS Stock ATSs be required to disclose
publicly? Please be specific.
    484. What percentage of NMS Stock ATSs publish or provide market
quality statistics not otherwise required under Exchange Act Rule 605?
Please explain how you have calculated this number.
    485. Do you believe that there are other statistics or data that an
NMS Stock ATS should be required to provide on proposed Form ATS-N that
would be useful to market participants that either subscribe to or are
considering subscribing to the NMS Stock ATS? If so, please identify
those metrics and explain how they would be useful to market
participants. Please support your arguments.
    486. Should the Commission require NMS Stock ATSs to disclose on
Form ATS-N, statistics regarding the extent of trading by the broker-
dealer operator and its affiliates on the NMS Stock ATS? Why or why
not? If so, what statistics should be required to be disclosed? Please
support your arguments. If you believe that an NMS Stock ATS should
disclose statistics about the extent of its broker-dealer operator's
and its affiliates' trading activity on the NMS Stock ATS, how often
should these statistics be disclosed (e.g., on a weekly, monthly,
quarterly, annual basis)?
    487. Do you believe there is any information that would be required
by Part IV, Item 16 of proposed Form ATS-N that an NMS Stock ATS should
not be required to disclose due to concerns regarding confidentiality,
business reasons, trade secrets, burden, or any other concerns? Why or
why not? Please support your arguments.
    The Commission also notes that some industry participants have
previously requested public statistics about the quality of these
markets. In the 2010 Equity Market Structure Release, the Commission
solicited public comment about, among other things, market structure
performance and order execution quality, and how transparency could be
improved in these areas.\515\ For example, the Commission noted that an
important objective of many dark pools is to offer institutional
investors an efficient venue in which to trade in large size with
minimized market impact,\516\ and requested comment on the extent to
which dark pools meet this objective of improving execution quality for
the large orders of institutional investors.\517\ In seeking comment on
other tools to protect investor interests, the Commission also
requested comment on Exchange Act Rules 605 and Exchange Act Rule
606.\518\ Exchange Act Rule 606 requires broker-dealers to publish
quarterly reports on their routing practices, including the venues to
which they route orders for execution.\519\ Specifically, the
Commission asked about the currency of Exchange Act Rules 605 and 606
and whether the information provided on the reports was useful to
investors and their brokers in assessing the quality of order execution
and routing practices.\520\
---------------------------------------------------------------------------

    \515\ See Equity Market Structure Release, supra note 124 at
3602-3614. See also supra Section III.D (discussing certain comments
received on the Equity Market Structure Release).
    \516\ See Equity Market Structure Release, supra note 124 at
3612.
    \517\ See id.
    \518\ 17 CFR 242.606.
    \519\ See 2010 Equity Market Structure Release, supra note 124,
at 3605-3606.
    \520\ See id.
---------------------------------------------------------------------------

    In response, some commenters stated their concern about the lack of
market quality information available to the public about ATSs and other
trading centers. For example, one commenter expressed support for
national securities exchanges and ATSs to disclose how often a
functionality is used and more market quality statistics, such as
quote-per-execution ratios, duration of quotes and number of times
orders are routed out without getting filled so that investors and
other market participants could better gauge execution quality.\521\
Another commenter stated that ``regulators should direct broker-dealers
to provide public reports of order routing and execution quality
metrics that are geared toward retail investors.'' \522\ This commenter
also stated that ``the Commission should direct broker-dealers to
provide institutional clients with standardized execution venue
statistical analysis reports'' and noted its commitment ``to working
with other industry groups to develop consistent industry templates,
which it believes will greatly enhance institutional investors' ability
to evaluate their brokers' routing practices and the quality of
execution provided by different venues.'' \523\ Another commenter
stated its belief that publicly available order routing and execution
quality statistics pursuant to Rules 605 and 606 do not provide
information to measure broker-dealers' and execution venues'
performance with respect to specific institutional investors and that
the reports are not presented in a uniform manner that allows for easy
comparison across different broker-dealers and venues.\524\
---------------------------------------------------------------------------

    \521\ Goldman Sachs letter, supra note 175, at 10.
    \522\ See SIFMA letter #2, supra note 175 at 12. For example,
the commenter suggested including information on ``(i) percent of
shares Improved, (ii) average price improvement, (iii) net Price
Improvement per share, and (iv) effective/quoted spread ratio.''
    \523\ See SIFMA letter #2, supra note 175 at 13. The commenter
gave examples of the types of information (per venue) that should be
incorporated into these reports as: (i) Percentage of orders
executed, (ii) average number of shares ordered and executed, (iii)
fill rates--overall, taken, added, and routed, and (iv) percentage
executed displayed and undisplayed.
    \524\ See letter from Dorothy M. Donohue, Deputy General
Counsel, Investment Company Institute; Stuart J. Kaswell, Executive
Vice President & Managing Director, General Counsel, Managed Funds
Association; and Randy Snook, Executive Vice President, Securities
Industry and Financial Markets Association, dated October 23, 2014,
at 2.
    This commenter also provided a template for disclosure of order
routing and execution quality information that institutional
investors could request from their broker-dealers, which included,
among other things: The number of total shares routed as actionable
IOIs; the percent of shares routed to the venue by the broker that
resulted in executions at that venue); the average length of time
(measured in milliseconds) that orders (other than IOCs) were posted
to a venue before being filled or cancelled; the average size, by
number of shares, of each order actually executed on the venue; the
aggregate number of shares executed at the venue that were priced at
or near the mid-point between the bid and the offer; and the
percentage of total shares executed that were executed at or near
the midpoint between the bid and the offer. See id. at ``Broker
Routing Venue Analysis Template Definitions.''
---------------------------------------------------------------------------

    With regard to the comment that the execution quality statistics
currently made public under Rules 605 and 606 are inadequate, the
Commission notes that it is considering proposing to amend Rules 600
and 606 to standardize and improve transparency around how broker-
dealers handle and route institutional customer orders. These

revisions being considered would include addressing commenter concerns
regarding disclosures by broker-dealers about the trading venues to
which they route orders, particularly with respect to order and
execution sizes, fill rates, price improvement, and the use of
actionable indications of interests.\525\ The Commission also is
considering disclosures to facilitate the ability of institutional
investors to assess potential conflicts of interest and risks of
information leakage.
---------------------------------------------------------------------------

    \525\ See id.
---------------------------------------------------------------------------

Request for Comment
    488. Do you believe that there is information that the Commission
should require NMS Stock ATSs to disclose other than the information
that is currently available to market participants from order execution
reports pursuant to Exchange Act Rule 605? Why or why not? Please
support your arguments. If so, what information should be disclosed and
how would the information be useful to market participants? Please
explain. Do you believe that there is information that the Commission
should require a broker-dealer operator of the NMS Stock ATS to
disclose other than the information that is currently available to
market participants from order routing reports pursuant to Exchange Act
Rules 606? Why or why not? Please support your arguments.
    489. Do you believe that there are other means by which market
quality metrics should be required to be made available by NMS Stock
ATSs to market participants, other than as disclosures on proposed Form
ATS-N? Why or why not? Please support your arguments. If so, please
identify by what means and why? Please support your arguments.
    490. Do you believe that an NMS Stock ATS should be required to
disclose information about orders entered into its system and the
ultimate disposition of such orders? Why or why not? Please support
your arguments. For example, should NMS Stock ATSs disclose information
regarding the average order size, average execution size, and
percentage of orders marked immediate or cancel? Why or why not? Please
support your arguments.
    491. Do you believe that NMS Stock ATSs should be required to
disclose whether the NMS Stock ATS provided order flow and execution
statistics to some subscribers and not others? Why or why not? Please
support your arguments.
    492. Do you believe that NMS Stock ATSs should be required to
disclose execution information such as the total number and percentage
of shares executed at the midpoint, total number and percentage of
shares executed at the national best bid, total number and percentage
of shares executed at the national best offer, total number and
percentage of shares executed between the national best bid and the
midpoint, and total number and percentage of shares executed between
the midpoint and the national best offer? Why or why not? Please
support your arguments. If so, do you believe such information should
be disclosed publicly on an aggregated basis or should the information
be disclosed to each subscriber based on its own orders? Please support
your arguments.
    493. Do you believe that the joint-industry plan should be amended
for publicly disseminating consolidated trade data to require real-time
disclosure of the identity of NMS Stock ATSs on reports of their
executed trades? Why or why not? Please support your arguments.
Alternatively, should executions on NMS Stock ATSs be publicly
disseminated on a delayed basis? \526\ Why or why not? Please support
your arguments. If so, how should this be done and what would be the
appropriate delay? Please explain.
---------------------------------------------------------------------------

    \526\ FINRA Rule 4552 requires each ATS to report to FINRA
weekly volume information and number of trades regarding equity
securities transactions within the ATS. Each ATS is also required to
use a single MPID when reporting information to FINRA and to report
weekly aggregate volume information on a security-by-security basis
to FINRA.
---------------------------------------------------------------------------

    494. Do you believe that there are other data elements that should
be provided by NMS Stock ATSs in the consolidated trade data? What are
they and why should they be required? Please be specific.

IX. Proposed Amendment to Rule 301(b)(10): Written Safeguards and
Written Procedures To Protect Confidential Trading Information

    Current Rule 301(b)(10) of Regulation ATS \527\ requires every ATS
to have in place safeguards and procedures to protect subscribers'
confidential trading information and to separate ATS functions from
other broker-dealer functions, including proprietary and customer
trading.\528\ In the Regulation ATS Adopting Release, the Commission
recognized that some broker-dealer operators provide traditional
brokerage services as well as access to their ATS(s).\529\ The
Commission further stated that Rule 301(b)(10) was not intended to
preclude an ATS from providing its traditional brokerage services;
rather, Rule 301(b)(10) was designed to prevent the misuse of private
customer information in the system for the benefit of other customers,
the ATS's operator, or its employees.\530\ The Commission also stated
its belief that the sensitive nature of trading information subscribers
send to ATSs requires such systems to take certain steps to ensure the
confidentiality of such information.\531\ To illustrate its point, the
Commission provided the example that unless subscribers consent,
registered representatives of an ATS should not disclose information
regarding trading activities of such subscribers to other subscribers
that could not be ascertained from viewing the ATS's screens directly
at the time the information is conveyed.\532\ As a result of its
concerns regarding confidentiality, the Commission adopted Rule
301(b)(10), which was designed to eliminate the potential for abuse of
the confidential trading information that subscribers send to
ATSs.\533\
---------------------------------------------------------------------------

    \527\ See 17 CFR 242.301(b)(10).
    \528\ See Regulation ATS Adopting Release, supra note 7, at
70879.
    \529\ See id.
    \530\ See id.
    \531\ See id.
    \532\ The Commission stated that its concern regarding
confidentiality grew out of its inspections of some ECNs, during
which the Commission and its staff found that some of the broker-
dealers operating ECNs used the same personnel to operate the ECN as
they did for more traditional broker-dealer activities, such as
handling customer orders that were received by telephone. These
types of situations create the potential for misuse of the
confidential trading information in the ECN, such as customers'
orders receiving preferential treatment, or customers receiving
material confidential information about orders in the ECN. See id.
    \533\ See id.
---------------------------------------------------------------------------

    Rule 301(b)(10), however, does not currently require that the
safeguards and procedures mandated under Rule 301(b)(10) be
memorialized in writing. The Commission is now proposing to amend Rule
301(b)(10) to require that such safeguards and procedures be reduced to
writing.\534\ Specifically, the Commission proposes to amend Rule
301(b)(10)(i) to require that all ATSs (including non-NMS Stock ATSs)
establish written safeguards and written procedures to protect
subscribers' confidential trading information.\535\ This would include
an ATS adopting written safeguards and written procedures that limit
access to the confidential trading information of subscribers to those
employees of the ATS who are operating the system or are responsible
for its compliance with

Regulation ATS or any other applicable rules,\536\ and implementing
written standards controlling employees of the ATS trading for their
own accounts.\537\ The Commission is also proposing to amend Rule
301(b)(10)(ii) to require that the oversight procedures, which an ATS
adopts and implements to ensure that the above safeguards and
procedures are followed, be in writing.\538\
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    \534\ As discussed above, proposed Form ATS-N would also require
NMS Stock ATSs to describe the written safeguards and procedures.
See Part III, Item 10 of Proposed Form ATS-N. See also supra Section
VII.B.11.
    \535\ See proposed Rule 301(b)(10)(i).
    \536\ See proposed Rule 301(b)(10)(i)(A).
    \537\ See proposed Rule 301(b)(10)(i)(B).
    \538\ See proposed Rule 301(b)(10)(ii).
---------------------------------------------------------------------------

    The Commission continues to believe that safeguards and procedures
to ensure the confidential treatment of ATS subscribers' trading
information are important, and that the potential for misuse of such
information continues to exist. The Commission preliminarily believes
that requiring an ATS to reduce to writing those safeguards and
procedures, as well as its oversight procedures to ensure that such
safeguards and procedures are followed, would strengthen the
effectiveness of the ATS's safeguards and procedures and would better
enable the ATS to protect confidential subscriber trading information
and implement and monitor the adequacy of, and the ATS's compliance
with, its safeguards and procedures. For example, if an ATS were
required to reduce its safeguards and procedures to writing, it could
self-audit--or if it chose to do so, undergo a third-party audit--for
compliance with those safeguards and procedures, and also assess their
adequacy. In addition, the Commission preliminarily believes that
reducing ATSs' safeguards and procedures under Rule 301(b)(10) to
writing will help the Commission and its staff, and the staff of the
SRO of which an ATS's broker-dealer operator is a member, evaluate
whether an ATS has established such procedures and safeguards, whether
the ATS has implemented and is abiding by them, and whether they comply
with the requirements of Rule 301(b)(10). This should enable the
Commission, and the applicable SRO(s), to exercise more effective
oversight of ATSs regarding the ATSs' compliance with Rule 301(b)(10)
and other federal securities laws, rules, and regulations. The
Commission also preliminary believes that its proposal would benefit
market participants because they would be able to better evaluate the
implementation of such safeguards and procedures, due to the proposed
rule to reduce those safeguards and procedures to writing.
Request for Comment
    495. Do you believe the Commission should require ATSs to reduce to
writing their safeguards and procedures as described above? Why or why
not? Should the requirement apply to all ATSs or only a subset such as
NMS Stock ATSs? Please support your arguments.
    496. Do you believe that requiring ATSs to reduce to writing their
safeguards and procedures, as proposed, would help to ensure that
subscribers' confidential trading information is protected and not
misused? If not, why not? Please support your arguments.
    497. Are there other conditions that the Commission should
implement to achieve the goal of protecting subscribers' confidential
trading information? If so, what are they and why would they be
preferable? Please be specific.
    498. Currently, how common is it for ATSs to reduce to writing
their safeguards and procedures to protect subscribers' confidential
trading information and/or their oversight procedures to ensure that
those safeguards and procedures are followed? For ATSs that have not
reduced their safeguards and procedures to protect subscribers'
confidential trading information to writing, how do they currently
ensure their compliance with the requirements of Rule 301(b)(10)?
Please be specific.
    499. For ATSs that have not reduced to writing their safeguards and
procedures to protect subscribers' confidential trading information
and/or their oversight procedures to ensure that those safeguards and
procedures are followed, how long would it take to do so? Please
explain.

X. Recordkeeping Requirements

    The Commission is proposing to amend Rules 303(a)(1) and 303(a)(2)
of Regulation ATS to reflect its proposed amendments to Rule 301(b)(2)
\539\ and 301(b)(10),\540\ and its proposed addition of Rule 304.\541\
In addition, the Commission is proposing to make a minor technical
amendment to Rule 303.
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    \539\ See supra Section IV.C.
    \540\ See supra Section IX.
    \541\ See supra Section IV.C.
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    Currently, unless not required to comply with Regulation ATS
pursuant to Rule 301(a) \542\ of Regulation ATS, ATS must comply with
the recordkeeping requirements of Regulation ATS. Specifically, Rule
301(b)(8) \543\ requires an ATS to make and keep current the records
specified in Rule 302 \544\ and to preserve the records specified in
Rule 303.\545\ In the Regulation ATS Adopting Release, the Commission
stated that the requirements to make and preserve records set forth in
Regulation ATS are necessary to create a meaningful audit trail and
permit surveillance and examination to help ensure fair and orderly
markets.\546\
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    \542\ 17 CFR 242.301(a).
    \543\ See 17 CFR 242.301(b)(8).
    \544\ See 17 CFR 242.302.
    \545\ See 17 CFR 242.303.
    \546\ See Regulation ATS Adopting Release, supra note 7, at
70877-78.
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    Rule 303(a)(1) requires an ATS to preserve certain records for at
least three years, the first two years in an easily accessible
place.\547\ Specifically, Rule 303(a)(1) \548\ requires an ATS to
preserve: All records required to be made pursuant to Rule 302; all
notices provided to subscribers, including notices addressing hours of
operation, system malfunctions, changes to system procedures, and
instructions pertaining to access to the ATS; documents made or
received in the course of complying with the system capacity,
integrity, and security standards in Rule 301(b)(6), if applicable;
\549\ and, if the ATS is subject to the fair access requirements under
Rule 304(b)(5),\550\ a record of its access standards. Rule 303(a)(2)
\551\ requires that certain other records must be kept for the life of
the ATS and any successor enterprise, including partnership articles or
articles of incorporation (as applicable), and copies of reports filed
pursuant to Rule 301(b)(2),\552\ which includes current Form ATS, and
records made pursuant to Rule 301(b)(5).\553\ In particular, reports
required to be maintained for the life of the ATS or any successor
enterprise include initial operation reports, amendments, and cessation
of operations reports, filed on Form ATS.\554\
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    \547\ See 17 CFR 242.303(a)(1).
    \548\ See 17 CFR 242.303(a)(1).
    \549\ See supra notes 96-100 and accompanying text.
    \550\ See supra notes 92-95 and accompanying text.
    \551\ See 17 CFR 242.303(a)(2).
    \552\ See 17 CFR 242.301(b)(2).
    \553\ See supra notes 92-95 and accompanying text.
    \554\ See 17 CFR 242.301(b)(2).
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    The Commission is proposing to amend the record preservation
requirements of Rule 303 to incorporate the preservation of records
that would be created pursuant to the proposed requirements that NMS
Stock ATSs file Forms ATS-N, Form ATS-N Amendments, and notices of
cessation instead of Form ATS. Specifically, the Commission is
proposing to amend Rule 303(a)(2)(ii) to require that an ATS shall
preserve, for the life of the enterprise and of any successor
enterprise, copies of reports filed pursuant to Rule 301(b)(2) or--in
the case of an NMS

Stock ATS--Rule 304, and records made pursuant to Rule 301(b)(5).\555\
As a result, because an NMS Stock ATS would be required to file Forms
ATS-N, Form ATS-N Amendments, and notices of cessation pursuant to
proposed Rule 304, instead of on Form ATS, the NMS Stock ATS would be
required to preserve those reports for the life of the enterprise and
of any successor enterprise pursuant to the proposed amendments to Rule
303(a)(2).\556\ The Commission is not proposing any amendments to the
recordkeeping requirements of Rule 302, or any other amendments to the
record preservation requirements of Rule 303(a)(2).
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    \555\ See proposed Rule 301(a)(2)(ii).
    \556\ The Commission notes that an NMS Stock ATS that had
previously made filings on Form ATS would be required to preserve
those filings for the life of the enterprise, as well as filings
made going forward on Form ATS-N.
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    The Commission is also proposing amendments to the record
preservation requirements of Rule 303(a)(1) to incorporate the
Commission's proposed amendments to Rule 301(b)(10),\557\ which would
require an ATS to reduce to writing its safeguards and procedures to
ensure confidential treatment of subscribers' trading information and
the oversight procedures to ensure that those safeguards and procedures
are followed.\558\ Accordingly, the Commission is proposing to require
an ATS, for a period of not less than three years, the first two years
in an easily accessible place, to preserve at least one copy of the
written safeguards and written procedures to protect subscribers'
confidential trading information and the written oversight procedures
created in the course of complying with Rule 301(b)(10).\559\ The
Commission is not proposing to amend any other aspects of the records
preservation requirements of Rule 303(a)(1). The Commission
preliminarily believes that the proposed amendments to Rule 303 are
necessary to create a meaningful audit trail of an ATS's current and
previous written safeguards and procedures pursuant to Rule 301(b)(2)
and permit surveillance and examination to help ensure fair and orderly
markets,\560\ without imposing any undue burden on ATSs.
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    \557\ See proposed Rule 301(b)(10).
    \558\ See supra Section VII (discussing the Commission's
proposed amendments to Rule 301(b)(10)).
    \559\ See proposed Rule 303(a)(1)(v).
    \560\ See Regulation ATS Adopting Release, supra note 7, at
70877-78.
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    Finally, the Commission proposes to make a minor technical
amendment to Rule 303(a). Currently, Rule 303(a) references ``paragraph
(b)(9) of Sec.  242.301'' when setting forth the record preservation
requirements for ATSs. The Commission is proposing to change the above
reference to ``paragraph (b)(8) of Sec.  242.301'' because Rule
301(b)(8) sets forth the recordkeeping requirements for ATSs.
Request for Comment
    500. Do you believe the Commission should amend the recordkeeping
requirements for ATSs as proposed? Why or why not?
    501. Do you believe that there are any other requirements of Rule
303 that should be amended to satisfy the objectives of this proposal?
If so, what are they and why?
    502. Do you believe that the proposed amendments to the record
preservation requirements of Rule 303 are reasonable? If not, why?
Please support your arguments.

XI. General Request for Comment

    The Commission is requesting comments from all members of the
public. The Commission particularly requests comment from the point of
view of persons who operate ATSs that would meet the proposed
definition of NMS Stock ATS, subscribers to those systems, investors,
and registered national securities exchanges. The Commission seeks
comment on all aspects of the proposed rule amendments and proposed
form, particularly the specific questions posed above. Commenters
should, when possible, provide the Commission with data to support
their views. Commenters suggesting alternative approaches should
provide comprehensive proposals, including any conditions or
limitations that they believe should apply, the reasons for their
suggested approaches, and their analysis regarding why their suggested
approaches would satisfy the objectives of the proposed amendments. The
Commission will carefully consider the comments it receives.
    503. Do you believe that there is other information about the
nature or extent of the operations of an NMS Stock ATS that should be
disclosed on proposed Form ATS-N? Are there specific topics about which
the Commission should request more information? If so, what information
should be disclosed and why?
    504. Do you believe that there are activities of an NMS Stock ATS
broker-dealer operator and its affiliates that may give rise to
potential conflicts of interest, other than those described, that
should be disclosed on Form ATS-N? If so, what information should be
disclosed and why? If so, what are they and why?
    505. Is there other information or data that would be useful for a
market participant to consider when evaluating an NMS Stock ATS as a
potential trading center for its orders? If so, what are they and why?

XII. Paperwork Reduction Act

    Certain provisions of the proposal contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\561\ The titles of these requirements
are:
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    \561\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

     Requirements for Alternative Trading Systems That Are Not
National Securities Exchanges--Rule 301, Form ATS and Form ATS-R, 17
CFR 242.301 (OMB Control No. 3235-0509);
     Rule 303 (17 CFR 242.303) Record Preservation Requirements
for Alternative Trading Systems (OMB Control No. 3235-0505).
     Rule 304 and Form ATS-N (a proposed new collection of
information).
    We are submitting these requirements to the Office of Management
and Budget (``OMB'') for review and approval in accordance with the PRA
and its implementing regulations.\562\ We are applying for an OMB
control number for the proposed new collection of information in
accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11. If adopted,
responses to the new collection of information would be mandatory. An
agency may not conduct or sponsor, and a person is not required to
respond to, a collection of information unless it displays a currently
valid OMB control number.\563\
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    \562\ 44 U.S.C. 3507; 5 CFR 1320.11.
    \563\ 5 CFR 1320.11(l).
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A. Summary of Collection of Information

    The proposed amendments to Regulation ATS include two new
categories of obligations that would require a collection of
information within the meaning of the PRA. The first category relates
to Rule 301(b)(10) of Regulation ATS \564\ and would apply to all ATSs,
while the second category relates to proposed Form ATS-N and would
apply only to NMS Stock ATSs.
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    \564\ 17 CFR 242.301(b)(10).
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1. Requirements Relating to Rule 301(b)(10) of Regulation ATS
    Under Rule 301(b)(10) of Regulation ATS, all ATSs are currently
required to: (1) Establish adequate safeguards and procedures to
protect subscribers'

confidential trading information; and (2) adopt and implement adequate
oversight procedures to ensure that the safeguards and procedures
established to protect subscribers' confidential trading information
are followed. Rule 301(b)(10) of Regulation ATS further requires that
the safeguards and procedures to protect subscribers' confidential
trading information shall include: (1) Limiting access to the
confidential trading information of subscribers to those employees of
the ATS who are operating the system or responsible for its compliance
with Regulation ATS or any other applicable rules; and (2) implementing
standards controlling employees of the ATS trading for their own
accounts. The proposed amendments to Regulation ATS would require
written safeguards and written procedures to protect subscribers'
confidential trading information and written oversight procedures to
ensure that the safeguards and procedures are followed.
    In addition, the Commission proposes to amend Rule 303(a)(1) \565\
of Regulation ATS to provide that all ATSs must preserve at least one
copy of their written safeguards and written procedures to protect
subscribers' confidential trading information and the written oversight
procedures created in the course of complying with Rule 301(b)(10) of
Regulation ATS. Under the proposed amendment, Rule 303(a)(1)(v) would
be added to Regulation ATS to require an ATS to preserve such written
safeguards and written procedures, and written oversight procedures for
a period of not less than three years, the first two years in an easily
accessible place.\566\
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    \565\ 17 CFR 242.303(a)(1).
    \566\ Id.
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2. Requirements Relating to Proposed Rules 301(b)(2)(viii) and 304 of
Regulation ATS, Including Proposed Form ATS-N
    As described above, the Commission proposes that any ATS that meets
the definition of an NMS Stock ATS would be required to complete Form
ATS-N and file it with the Commission in a structured format.\567\ Upon
the Commission declaring a Form ATS-N effective, the Commission would
make the Form ATS-N publicly available. The Commission would also make
publicly available upon filing all properly filed Form ATS-N Amendments
and notices of cessation on Form ATS-N. The proposed amendments to
Regulation ATS would also require each NMS Stock ATS to make public via
posting on its Web site a direct URL hyperlink to the Commission's Web
site that contains the documents enumerated in proposed Rule 304(b)(2).
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    \567\ See generally supra Section IV.
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    Proposed Form ATS-N consists of five parts. First, the entity
submitting the filing would indicate whether it is submitting or
withdrawing an initial filing. The entity would also indicate the type
of filing--whether the filing is a Form ATS-N, a Form ATS-N Amendment
(whether a material amendment, periodic amendment, or correcting
amendment), or a notice of cessation, and if it is a notice of
cessation, the date the NMS Stock ATS will cease to operate. If the
filing is a Form ATS-N Amendment, the NMS Stock ATS would also be
required to provide a brief narrative description of the amendment and
a redline(s) showing changes to Part III and/or Part IV of proposed
Form ATS-N. Part I would require that entity to state the name of the
Registered Broker Dealer of the NMS Stock ATS (i.e., the broker-dealer
operator), the name under which the NMS Stock ATS conducts business, if
any, the MPID of the NMS Stock ATS, and whether it is an NMS Stock ATS
currently operating pursuant to a previously filed initial operation
report on Form ATS. Part II would require registration information
regarding the broker-dealer operator of the ATS, such as the broker-
dealer's file number with the Commission, the name of the national
securities association with which the broker-dealer operator is a
member, the effective dates of the broker-dealer's registration with
the Commission and membership in the national securities association,
and the broker-dealer operator's CRD Number. In addition, Part II would
require the address of the physical location of the NMS Stock ATS
matching system, the NMS Stock ATS's mailing address, and a URL to the
Web site of the NMS Stock ATS. Part II would also require information
regarding the legal status of the broker-dealer operator of the NMS
Stock ATS (e.g., corporation, partnership, sole proprietorship) and its
date of formation. Furthermore, Part II of proposed Form ATS-N would
require the NMS Stock ATS to attach the following three exhibits: (1)
Exhibit 1--a copy of any materials currently provided to subscribers or
other persons related to the operations of the NMS Stock ATS or the
disclosures on Form ATS-N; (2) Exhibit 2A--a copy of the most recently
filed or amended Schedule A of the broker-dealer operator's Form BD
disclosing information relating to direct owners and executive
officers; and (3) Exhibit 2B--a copy of the most recently filed or
amended Schedule B of the broker-dealer operator's Form BD disclosing
information related to indirect owners. In lieu of attaching Exhibits
2A and 2B to proposed Form ATS-N, the NMS Stock ATSs would be able to
provide a URL address for where the required documents can be found.
    Part III of proposed Form ATS-N would require an NMS Stock ATS to
provide certain disclosures related to the activities of the broker-
dealer operator and its affiliates in connection with the NMS Stock
ATS. Part III consists of ten items, which are summarized here, and
explained in greater detail below in the discussion of the estimated
burdens related to each disclosure requirement. Part III of proposed
Form ATS-N would include disclosures relating to: (1) Whether the
broker-dealer operator, or any of its affiliates, operate or control
any non-ATS trading centers and how such non-ATS trading centers
coordinate or interact with the NMS Stock ATS, if at all; (2) whether
the broker-dealer operator, or any of its affiliates, operates another
NMS Stock ATS and how such other NMS Stock ATS coordinates or interacts
with the NMS Stock ATS completing the Form ATS-N, if at all; (3) the
products and services offered by the broker-dealer operator, or any of
its affiliates, to subscribers in connection with their use of the NMS
Stock ATS; (4) whether the broker-dealer operator, or any of its
affiliates, has any formal or informal arrangement with an unaffiliated
person(s), or affiliate(s) of such person(s), that operates a trading
center regarding access to the NMS Stock ATS, including preferential
routing arrangements; (5) whether the broker-dealer operator or any of
its affiliates enter orders or other trading interest on the NMS Stock
ATS and the manner in which such trading is done; (6) whether the
broker-dealer operator or any of its affiliates use a SOR(s) (or
similar functionality), an algorithm(s), or both to send or receive
orders or other trading interest to or from the NMS Stock ATS, and the
interaction or coordination between the SOR(s) (or similar
functionality) or algorithm(s) and the NMS Stock ATS; (7) whether there
are any employees of the broker-dealer operator that service the
operations of the NMS Stock ATS that also service any other business
unit(s) of the broker-dealer operator or any affiliate(s) other than
the NMS Stock ATS, and the roles and responsibilities of such shared
employees; (8) whether any operation, service, or function of the NMS
Stock ATS is performed by any

person(s) other than the broker-dealer operator, a description of such
operation, service, or function, and whether those person(s), or any of
their affiliates, may enter orders or other trading interest on the NMS
Stock ATS; (9) whether the NMS Stock ATS makes available or applies any
service, functionality, or procedure of the NMS Stock ATS to the
broker-dealer operator or its affiliates that is not available or does
not apply to a subscriber(s) to the NMS Stock ATS and a description of
such service, functionality, or procedure; and (10) a description of
the written safeguards and written procedures to protect the
confidential trading information of subscribers to the NMS Stock ATS,
including (a) a description of the means by which a subscriber can
consent or withdraw consent to the disclosure of confidential trading
information, (b) identification of the positions or titles of any
persons that have access to confidential trading information, the type
of confidential trading information those persons can access, and the
circumstances under which they can access it, (c) a description of the
written standards controlling employees of the NMS Stock ATS trading
for their own accounts, and (d) a description of the written oversight
procedures to ensure that the ATS's Rule 301(b)(10) safeguards and
procedures are implemented and followed.
    Part IV of proposed Form ATS-N would require an NMS Stock ATS to
provide certain disclosures related to the manner of operations of the
NMS Stock ATS. Part IV consists of 15 items, which are summarized here,
and explained in greater detail below in the discussion of the
estimated burdens related to each disclosure requirement. Part IV of
proposed Form ATS-N would include disclosures relating to: (1)
Subscribers to the NMS Stock ATS, including any eligibility
requirements to gain access to the services of the ATS, the terms or
conditions of any contractual agreement for access, the types of
subscribers and other persons that use the services of the ATS, any
formal or informal arrangement the NMS Stock ATS may have with a
subscriber or person to provide liquidity to the ATS (including the
terms and conditions of each arrangement and the identity of any
liquidity provider that is an affiliate of the broker-dealer operator),
the circumstances by which a subscriber or other person may be limited
or denied access to the NMS Stock ATS, and any differences in the
treatment of different subscribers and persons with respect to
eligibility, terms and conditions of use, criteria for distinguishing
among subscribers or other persons, and limitations and denials of
access; (2) the days and hours of operation of the NMS Stock ATS,
including the times when orders or other trading interest are entered
and the time when pre-opening or after-hours trading occur, and whether