[Federal Register Volume 87, Number 231 (Friday, December 2, 2022)]
[Notices]
[Pages 74183-74199]
[FR Doc No: 2022-26235]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96394; File No. 4-698]

Joint Industry Plan; Notice of Filing of Partial Amendment No. 1
to an Amendment to the National Market System Plan Governing the
Consolidated Audit Trail

November 28, 2022.
    On May 13, 2022, the Operating Committee for Consolidated Audit
Trail, LLC (``CAT LLC''), on behalf of the following parties to the
National Market System Plan Governing the Consolidated Audit Trail (the
``CAT NMS Plan'' or ``Plan''):\1\ BOX Exchange LLC; Cboe BYX Exchange,
Inc.; Cboe BZX Exchange, Inc.; Cboe EDGA Exchange, Inc.; Cboe EDGX
Exchange, Inc.; Cboe C2 Exchange, Inc.; Cboe Exchange, Inc.; Financial
Industry Regulatory Authority, Inc.; Investors Exchange LLC; Long-Term
Stock Exchange, Inc.; MEMX, LLC; Miami International Securities
Exchange LLC; MIAX Emerald, LLC; MIAX PEARL, LLC; Nasdaq BX, Inc.;
Nasdaq GEMX, LLC; Nasdaq ISE, LLC; Nasdaq MRX, LLC; Nasdaq PHLX LLC;
The NASDAQ Stock Market LLC, New York Stock Exchange LLC; NYSE American
LLC; NYSE Arca, Inc.; NYSE Chicago, Inc.; and NYSE National, Inc.
(collectively, the ``Participants,'' ``self-regulatory organizations,''
or ``SROs'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') pursuant to Section 11A(a)(3) of the Securities
Exchange Act of 1934 (``Exchange Act''),\2\ and Rule 608 thereunder,\3\
a proposed amendment to the CAT NMS Plan (``Proposed Amendment'') to
implement a revised funding model (``Executed Share Model'') for the
consolidated audit trail (``CAT'') and to establish a fee schedule for
Participant CAT fees in accordance with the Executed Share Model
(``Proposed Participant Fee Schedule'').\4\ The Proposed Amendment was
published for comment in the Federal Register on June 1, 2022.\5\ On
August 30, 2022, pursuant to Rule 608(b)(2)(i) of Regulation NMS,\6\
the Commission instituted proceedings to determine

whether to disapprove the Proposed Amendment.\7\
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    \1\ The CAT NMS Plan is a national market system plan approved
by the Commission pursuant to Section 11A of the Exchange Act and
the rules and regulations thereunder. See Securities Exchange Act
Release No. 79318 (November 15, 2016), 81 FR 84696 (November 23,
2016) (``CAT NMS Plan Approval Order''). The CAT NMS Plan functions
as the limited liability company agreement of the jointly owned
limited liability company formed under Delaware state law through
which the Participants conduct the activities of the CAT
(``Company''). On August 29, 2019, the Participants replaced the CAT
NMS Plan in its entirety with the limited liability company
agreement of a new limited liability company named Consolidated
Audit Trail, LLC (``CAT LLC''), which became the Company. The latest
version of the CAT NMS Plan is available at https://catnmsplan.com/about-cat/cat-nms-plan.
    \2\ 15 U.S.C. 78k-1(a)(3).
    \3\ 17 CFR 242.608.
    \4\ See Letter from Michael Simon, CAT NMS Plan Operating
Committee Chair, to Vanessa Countryman, Secretary, Commission (May
13, 2022).
    \5\ See Securities Exchange Act Release No. 94984 (May 25,
2022), 87 FR 33226 (June 1, 2022) (``Notice'' or ``Proposing
Release''). Comments received in response to the Notice can be found
on the Commission's website at https://www.sec.gov/comments/4-698/4-698-a.htm.
    \6\ 17 CFR 242.608(b)(2)(i).
    \7\ See Securities Exchange Act Release No. 95634 (Aug. 30,
2022), 87 FR 54558 (Sept. 6, 2022) (``OIP''). Comments received in
response to the OIP can be found on the Commission's website at
https://www.sec.gov/comments/4-698/4-698-a.htm.
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    On November 16, 2022, CAT LLC submitted a letter (the ``CAT LLC
Letter'') to propose a partial amendment of the Proposed Amendment
(``Partial Amendment No. 1'') and to respond to the Commission's
solicitation of comments in the OIP and comments received on the
OIP.\8\ Sections I and II below contains an executive summary of
Partial Amendment No. 1 and a description of the proposed revisions to
the Proposed Amendment, which were substantially prepared by CAT LLC on
behalf of the Participants.\9\ The Commission is publishing this notice
to solicit comments on Partial Amendment No. 1 from interested persons.
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    \8\ See Letter from Michael Simon, CAT NMS Plan Operating
Committee Chair, to Vanessa Countryman, Secretary, Commission (Nov.
15, 2022) (``Partial Amendment No. 1'').
    \9\ This notice includes only Sections I and II of the CAT LLC
Letter, which describe the changes proposed by Partial Amendment No.
1. The full text of the CAT LLC Letter, which includes the
Participants responses to the OIP in Section III thereof, is
available on the Commission's website at https://www.sec.gov/comments/4-698/4-698-a.htm.
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I. Executive Summary

    CAT LLC proposes to amend the CAT NMS Plan \10\ to implement a
revised funding model--Executed Share Model--for the consolidated audit
trail (``CAT'') and to establish a fee schedule for Participant CAT
fees in accordance with the Executed Share Model. The SEC published the
Proposed Amendment for comment on May 25, 2022.\11\ After considering
the comments provided in response to the Proposed Amendment, the issues
discussed in the OIP and comments submitted in response to the OIP,\12\
CAT LLC continues to believe that the Executed Share Model satisfies
the applicable requirements of the Exchange Act as well as the funding
principles and other requirements of the CAT NMS Plan, as proposed to
be revised.
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    \10\ The twenty-five Participants of the CAT NMS Plan are: BOX
Exchange LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe
EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange,
Inc., Cboe Exchange, Inc., Financial Industry Regulatory Authority,
Inc. (``FINRA''), Investors Exchange LLC, Long-Term Stock Exchange,
Inc., MEMX LLC, Miami International Securities Exchange LLC, MIAX
Emerald, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC,
Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock
Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE
Arca, Inc., NYSE Chicago, Inc. and NYSE National, Inc.
    \11\ See Notice, supra note 5.
    \12\ Letter from Ellen Greene, Managing Director, Equities and
Options Market Structure, SIFMA, to Vanessa Countryman, Secretary,
SEC (Oct. 7, 2022) (``SIFMA Letter'').
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    The Executed Share Model would provide reasonable fees that are
equitably allocated, not unfairly discriminatory, and do not impose an
undue burden on competition, in that the model reflects a reasonable
effort to allocate costs based on the extent to which different CAT
Reporters participate in and benefit from the equities and options
markets. Moreover, the Executed Share Model would be consistent with
past fee structures that have been approved by the Commission. It also
is transparent, would be relatively easy to calculate and administer,
and is designed to not have an impact on market activity because it is
neutral as to the location and manner of execution. CAT LLC has gone
through an extensive process of evaluating and seeking comment on
various funding models since the inception of CAT. As the Commission is
aware, the Exchange Act does not require CAT LLC to demonstrate that
the Executed Share Model is superior to any other potential proposal.
Instead, CAT LLC must demonstrate that the Executed Share Model is
consistent with the Exchange Act and the rules and regulations
thereunder. CAT LLC believes that the Executed Share Model satisfies
the requirements of the Exchange Act and should be approved by the
Commission.
    CAT LLC, however, proposes to amend the Proposed Amendment to
provide additional detail and clarity on the Executed Share Model in
response to the OIP. Specifically, CAT LLC proposes to amend the
Proposed Amendment by making changes summarized below and discussed in
detail in Section II of this letter. In addition to these proposed
revisions, CAT LLC responds to each of the other issues raised in the
SEC's OIP in Section III of the CAT LLC Letter.\13\
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    \13\ See supra note 9.
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    (1) CAT LLC proposes to make the following general changes to the
description of the Executed Share Model as set forth in the Proposed
Amendment:
     Restructure the description of the Executed Share Model in
the CAT NMS Plan to fully describe the process for calculating the
Historical CAT Assessment and the CAT Fees related to Prospective CAT
Costs, rather than describing certain aspects of the Executed Share
Model in the Participant fee schedule or in the Participant fee filings
related to the Industry Member fees. (Proposed Section 11.3 of the CAT
NMS Plan)
     Impose the payment obligation on the executing broker for
the buyer for the transaction (``EBB'') instead of the clearing broker
for the buyer for the transaction (``CBB''), and impose the payment
obligation on the executing broker for the seller for the transaction
(``EBS''), rather than the clearing broker for the seller for the
transaction (``CBS''). (Proposed Sections 11.3(a)(iii)(A) and
(b)(iii)(A) of the CAT NMS Plan)
     Provide for the use of a twelve-month lookback, rather
than a six-month lookback, for the calculation of equivalent executed
share volume projections. (Proposed Sections 11.3(a)(i)(D) and
(b)(i)(E) of the CAT NMS Plan)
     Amend the CAT funding principles to clarify that the CAT
Fees with regard to Prospective CAT Costs and the Historical CAT
Assessment are intended to be cost-based fees--that is, the fees are
designed to recover the cost of the creation, implementation and
operation of the CAT. (Proposed 11.2(c) of the CAT NMS Plan)
    (2) In addition to the above general changes, CAT LLC proposes to
amend the description of CAT Fees related to Prospective CAT Costs as
follows:
     Require the calculation of a Fee Rate for the CAT Fee
twice a year, once at the beginning of the year and once during the
year, and to require the Participants to file with the SEC pursuant to
Section 19(b) of the Exchange Act the CAT Fees to be charged to
Industry Members calculated using the Fee Rates calculated twice a
year. (Proposed Section 11.3(a)(i)(A)(I) and (II) of the CAT NMS Plan)
     Explain that CAT Fees will remain in effect until the
Operating Committee approves a new Fee Rate and the CAT Fees with the
new Fee Rate are in effect with regard to Industry Members in
accordance with Section 19(b) of the Exchange Act. (Proposed Section
11.3(a)(i)(A)(III) of the CAT NMS Plan)
     Provide additional detail regarding the categories
included in the CAT budget: technology, legal, consulting, insurance,
professional and administration, and public relations costs, a reserve
and such other categories as determined by the Operating Committee.
(Proposed Section 11.1(a)(i) of the CAT NMS Plan)
     Describe the size of the reserve as not more than 25% of
the annual budget, and state that, to the extent collected CAT Fees
exceed CAT costs, including the reserve of 25% of the annual budget,
such surplus shall be used to offset future fees. (Proposed Section
11.1(a)(ii) of the CAT NMS Plan)

     Clarify that Participants will be required to pay the CAT
Fees approved by the Operating Committee only if such CAT Fees are in
effect with regard to Industry Members in accordance with Section 19(b)
of the Exchange Act. (Proposed Section 11.3(a)(ii)(B) of the CAT NMS
Plan)
     Require the fee filings pursuant to Section 19(b) of the
Exchange Act for CAT Fees related to Prospective CAT Costs to provide
details regarding the calculation of the fee, including the Fee Rate,
budget, projected volume, and the reconciliation of the budget to the
fees. (Proposed Section 11.3(a)(iii)(B) of the CAT NMS Plan)
    (3) Furthermore, CAT LLC proposes to describe in detail the
Historical CAT Assessment in the CAT NMS Plan by making the following
revisions to the CAT NMS Plan:
     Describe the Historical CAT Assessment as described in the
Proposed Amendment in the CAT NMS Plan in detail, including that the
Historical CAT Assessment applies to Industry Members, how it will be
used to repay the Participants, the manner of calculating the
Historical Fee Rate, a description of the calculation of the Historical
CAT Assessment, and a description of the fee filings under Section
19(b) of the Exchange Act for the Historical CAT Assessment. (Proposed
Section 11.3(b) of the CAT NMS Plan)
     State that the length of the Historical Recovery Period
used in calculating the Historical Fee Rate will not be less than 24
months or more than five years, and that the Historical CAT Assessment
calculated using the Historical Fee Rate will remain in effect until
all Historical CAT Costs are collected. (Proposed Section 11.3(b)(i)(D)
of the CAT NMS Plan)
     Clarify that Participants would not be obligated to pay
the Historical CAT Assessment as Participants have previously paid Past
CAT Costs via loans to CAT LLC, and the Historical CAT Assessment paid
by Industry Members would be used by CAT LLC to repay a portion of the
loans made to CAT LLC by the Participants on a pro rata basis.
(Proposed Section 11.3(b)(ii) of the CAT NMS Plan)
     State that the Participants will file fee filings pursuant
to Section 19(b) of the Exchange Act to charge Industry Members the
Historical CAT Assessment, and such filings will provide details
regarding the calculation of the Historical CAT Assessment, including
the Historical Fee Rate, Historical CAT Costs, and projected volume.
(Proposed Section 11.3(b)(i)(A) and (iii)(B) of the CAT NMS Plan)

II. Proposed Revisions to Proposed Amendment

    CAT LLC has reviewed the SEC's OIP and the comment letter submitted
in response to the OIP and it has determined to propose revisions to
the Proposed Amendment. These proposed revisions are discussed in this
Section II below. In addition, Exhibit A attached hereto sets forth the
cumulative changes proposed to be made to the CAT NMS Plan, including
both those changes set forth in the Proposed Amendment as well as the
additional revisions proposed in Partial Amendment No. 1. Exhibit B
attached hereto sets forth the proposed additional revisions to the
Proposed Amendment as described in Partial Amendment No. 1.

A. Role of Clearing Brokers

    Under the Proposed Amendment, the CBS, the CBB and the Participant
would each pay a fee equal to the number of executed equivalent shares
in the transaction multiplied by one-third and a specified fee rate.
CAT LLC determined to assess fees upon clearing firm Industry Members
because this is the current practice for other fees, such as the
options regulatory fee (``ORF''), and thus this approach would reduce
administrative burdens. CAT LLC acknowledged, however, that this
approach may impose an excessive financial burden on clearing firms and
noted that they may pass-through the CAT fees to their clients, who may
pass-through their CAT fees until the fees are imposed on the account
that executed the transaction. As described in the OIP, certain
commenters questioned whether the Proposed Amendment would impose an
undue burden on clearing firms. In response to this proposal and the
related comments, the SEC requested in the OIP ``[c]ommenters' views on
whether the Participants have demonstrated why imposing CAT fees only
on clearing brokers, instead of on all Industry Members is consistent
with the Exchange Act and Rule 608 of Regulation NMS, and whether such
allocation is an unreasonable burden on competition.'' \14\ In its
comment letter, SIFMA raised concerns regarding the cost burden that
clearing firms would experience under the Proposed Amendment.\15\
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    \14\ Request for Comment No. 8, OIP at 54578.
    \15\ SIFMA Letter at 4-5. CAT LLC notes, however, that, contrary
to the description set forth in the SIFMA Letter, the Historical CAT
Assessment would be assessed based on current market activity, not
past market activity. Accordingly, the process of passing fees
through for the Historical CAT Assessment would be the same as with
CAT Fees related to Prospective CAT Costs.
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    CAT LLC recognizes that imposing the fee payment obligation on
clearing brokers, rather than Industry Members more generally,
potentially may impose a significant financial burden on clearing firms
if the fees imposed on clearing firms are not passed through to their
clients. Accordingly, CAT LLC proposes to amend the Proposed Amendment
to assess the payment obligation on the EBB instead of the CBB, and to
assess the payment obligation on the EBS, rather than the CBS. Charging
the EBBs and EBSs would reflect the executing role the EBB and EBS have
in each transaction. Like with CBBs and CBSs, EBBs and EBSs also may
choose to pass the CAT fee on to their clients.
    To implement this change, CAT LLC proposes to state in proposed
Sections 11.3(a)(iii)(A) and (b)(iii)(A) that EBBs and EBSs would have
the obligation to pay the CAT Fee and the Historical CAT Assessment.
Specifically, proposed Section 11.3(a)(iii)(A) would state that the EBB
and EBS would be required to pay the CAT Fee:
    Each Industry Member that is the executing broker for the buyer in
a transaction in Eligible Securities (``Executing Broker for the
Buyer'' or ``EBB'') and each Industry Member that is the executing
broker for the seller in a transaction in Eligible Securities
(``Executing Broker for the Seller'' or ``EBS'') will be required to
pay a CAT Fee for each such transaction in Eligible Securities in the
prior month based on CAT Data. The EBB's CAT Fee or EBS's CAT Fee (as
applicable) for each transaction in Eligible Securities will be
calculated by multiplying the number of executed equivalent shares in
the transaction by one-third and by the Fee Rate determined pursuant to
paragraph (a)(i) of this Section 11.3.
    Similarly, proposed Section 11.3(b)(iii)(A) would state that the
EBB and EBS would be required to pay the Historical CAT Assessment:
    Each month in which the Historical CAT Assessment is in effect,
each EBB and each EBS shall pay a fee for each transaction in Eligible
Securities executed by the EBB or EBS from the prior month as set forth
in CAT Data, where the Historical CAT Assessment for each transaction
will be calculated by multiplying the number of executed equivalent
shares in the transaction by one-third and by the Historical Fee Rate
determined pursuant to paragraph (b)(i) of this Section 11.3.

B. Mid-Year Fee Adjustment

    Under the Proposed Amendment, the Operating Committee may, but is
not required to, adjust the Fee Rate once

during the year either to coordinate the CAT fees with adjustments to
budgeted or actual CAT costs or actual or projected volume during the
year. In response to this proposal, the SEC requested in the OIP
``[c]ommenters' views on whether the Participants should be required to
change the Fee Rate when the budget or projected executed equivalent
share volume changes.'' \16\
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    \16\ Request for Comment No. 9, OIP at 54578.
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    CAT LLC recognizes the need to align CAT fees with CAT costs.
Requiring the adjustment of the Fee Rate mid-year in response to
changes in the budgeted or actual costs or projected or actual total
executed equivalent share volume during the year would likely lead to
the greater alignment of CAT fees and CAT costs, thereby potentially
avoiding the collection of fees in excess of CAT costs or fees that are
insufficient to cover CAT costs. Accordingly, CAT LLC proposes to
require a mid-year adjustment of the Fee Rate for the CAT Fee, rather
than having discretion to adjust the fee mid-year. Specifically, CAT
LLC proposes to state in proposed paragraph (a)(i) of Section 11.3 that
``[t]he Operating Committee will calculate the Fee Rate for the CAT Fee
twice per year, once at the beginning of the year and once during the
year.'' In addition, CAT LLC proposes a new paragraph (a)(i)(A)(II) of
Section 11.3 that would state the following:

    During each year, the Operating Committee will calculate a new
Fee Rate by dividing the budgeted CAT costs for the remainder of the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the remainder of the year.
Once the Operating Committee has approved the new Fee Rate, the
Participants shall be required to file with the SEC pursuant to
Section 19(b) of the Exchange Act CAT Fees to be charged to Industry
Members calculated using the new Fee Rate. Participants and Industry
Members will be required to pay CAT Fees calculated using this new
Fee Rate once such CAT Fees are in effect with regard to Industry
Members in accordance with Section 19(b) of the Exchange Act.

C. Lookback Period

    As described in the Proposed Amendment, the calculation of the Fee
Rate requires the determination of the projected total executed
equivalent share volume of transactions in Eligible Securities for the
year. In the Proposed Amendment, CAT LLC proposed to determine this
projection based on the total executed equivalent share volume of
transactions in Eligible Securities from the prior six months. CAT LLC
reasoned that the use of the data from the prior six months provides an
appropriate balance between using data from a period that is
sufficiently long to avoid short term fluctuations while providing data
close in time to the upcoming year. In the OIP, however, the SEC asked
for commenters' views on the ``use of total executed equivalent share
volume from the prior six months to determine a projected total for the
year instead of using the past year's total executed equivalent share
volume.'' \17\
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    \17\ Request for Comment No. 16, OIP at 54578.
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    CAT LLC recognizes that the use of the prior twelve months, rather
than the prior six months, would address the issue of potential
seasonality. For example, the projection could be based on a period
that typically has lighter trading volume than the other half of the
year, thereby causing the projection to be too low. In addition, like
the six-month look back, the twelve-month look back would be
sufficiently long to avoid short term fluctuations in trading while
providing data close in time to the upcoming year. Accordingly, CAT LLC
proposes to amend the Proposed Amendment to use a twelve-month lookback
for the calculation of the projection. With a twelve-month lookback,
the Operating Committee would determine the projected total executed
equivalent share volume of transactions in Eligible Securities for an
upcoming year based on the total executed equivalent share volume from
the prior twelve months. In addition, CAT LLC proposes to allow the
Operating Committee to base its projection on the prior twelve months,
but to use its discretion to analyze the likely volume for the upcoming
year. As set forth in proposed Section 11.3(a)(iii)(B), Participants
will be required to provide a description of the calculation of the
projection in their fee filings pursuant to Section 19(b) of the
Exchange Act.
    To implement this change, CAT LLC proposes to reference the twelve-
month look back period in proposed paragraphs (a)(i)(D) and (b)(i)(E)
of Section 11.3 of the CAT NMS Plan. Proposed paragraph (a)(i)(D) of
Section 11.3 would state that ``[t]he Operating Committee shall
determine the projected total executed equivalent share volume of all
transactions in Eligible Securities for each relevant period based on
the executed equivalent share volume of all transactions in Eligible
Securities for the prior twelve months.'' Similarly, proposed paragraph
(b)(i)(E) of Section 11.3 of the CAT NMS Plan would state that ``[t]he
Operating Committee shall determine the projected total executed
equivalent share volume of all transactions in Eligible Securities for
the Historical Recovery Period based on the executed equivalent share
volume of all transactions in Eligible Securities for the prior twelve
months.''

D. 19b-4 Fee Filing Process for Fee Rate Changes

    The SEC has requested ``[c]ommenters' views on whether the Proposed
Amendment provides sufficient clarity and detail regarding the content
and process relating to the fee filing pursuant to Section 19(b) and
Rule 19b-4 thereunder with regard to Fee Rate changes applicable to
Industry Members.'' \18\ In its comment letter, SIFMA requests that CAT
LLC provide additional detail regarding the process for collecting CAT
fees from Industry Members, including any triggers and/or annual review
mechanisms that would result in new fee filings in the future as a
result of Fee Rate changes.\19\
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    \18\ Request for Comment No. 13, OIP at 54578.
    \19\ SIFMA Letter at 5-7.
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    In response, CAT LLC proposes to restructure the proposed changes
to Section 11.3 of the CAT NMS Plan, make additional changes to add
clarity and detail regarding the CAT fees under the Executed Share
Model, and to provide additional detail regarding the fee filing
process with regard to fee rate changes applicable to Industry Members,
including the requirement to calculate the Fee Rate twice per year and
to make fee filings pursuant to Section 19(b) twice a year with regard
to the CAT Fees for Prospective CAT Costs. Proposed Section 11.3(a) in
the Proposed Amendment described the fees to be charged Participants
and proposed Section 11.3(b) in the Proposed Amendment described the
fees to be charged Industry Members. CAT LLC proposes to revise this
structure by addressing CAT Fees related to Prospective CAT Costs in
proposed Section 11.3(a) and the Historical CAT Assessment in proposed
Section 11.3(b). With these changes, CAT LLC intends to make the fee
filing process for setting and changing the CAT fees a straightforward
and easy to implement process.
1. CAT Fees Related to Prospective CAT Costs
    CAT LLC proposes to restructure and revise proposed Section 11.3(a)
of the CAT NMS Plan to provide greater clarity and detail regarding CAT
Fees related to Prospective CAT Costs calculated pursuant to the
Executed Share Model. With the proposed additional revisions, proposed
Section 11.3(a) of the CAT

NMS Plan would describe that the CAT Fees related to Prospective CAT
Costs apply to both Participants and Industry Members, the manner of
calculating the Fee Rate, the description of the calculation of the
Participant CAT Fee, a description of the calculation of the Industry
Member CAT Fee, and a description of the fee filings under Section
19(b) of the Exchange Act for Industry Member CAT Fees. The following
describes the proposed revisions to Section 11.3(a) of the CAT NMS
Plan.
a. Introductory Statement
    In the Proposed Amendment, proposed Section 11.3(a) described the
fees to be charged Participants pursuant to the Executed Share Model.
CAT LLC proposes to revise proposed Section 11.3(a) to address CAT Fees
related to Prospective CAT Costs for both Participants and Industry
Members. Accordingly, CAT LLC proposes to revise the introductory
statement in proposed Section 11.3(a), which was originally proposed to
state that ``[t]he Operating Committee will establish fees to be
payable by Participants,'' to state that ``[t]he Operating Committee
will establish fees (``CAT Fees'') to be payable by Participants and
Industry Members with regard to CAT costs not previously paid by the
Participants (``Prospective CAT Costs'') as follows.''
b. Calculation of the Fee Rate
    CAT LLC proposes to move the description of the calculation of the
Fee Rate for CAT Fees related to Prospective CAT Costs from proposed
paragraph (b) of the Participant fee schedule to proposed Section
11.3(a) of the CAT NMS Plan. Moving the discussion of the calculation
of the Fee Rate from the Participant fee schedule to proposed Section
11.3(a) would clarify in the CAT NMS Plan that the proposed calculation
of the CAT Fee would apply to both Participants and Industry Members.
i. Fee Rate
    Proposed paragraph (b)(1) of the Participant fee schedule as set
forth in the Proposed Amendment describes the timing and manner of
calculating the Fee Rate for CAT Fees related Prospective CAT Costs.
The proposed paragraph states the following:

    The Operating Committee will calculate the Fee Rate at the
beginning of each year by dividing the budgeted CAT costs for the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year. After setting the
Fee Rate at the beginning of each year, the Fee Rate may be adjusted
once during the year, if necessary, due to changes in the budgeted
or actual costs or projected or actual total executed equivalent
share volume during the year.

    CAT LLC proposes to move the description of the timing and method
for calculating the Fee Rate to proposed Section 11.3(a)(i) of the CAT
NMS Plan, and to provide additional detail regarding the Fee Rate in
that provision. In addition, proposed Section 11.3(a)(i) will differ
from the description in the Proposed Amendment as it will require the
calculation of the Fee Rate twice per year, and to require the
Participants to make a fee filing pursuant to Section 19(b) for
Industry Member CAT Fees twice a year using the calculated Fee Rate.
    Proposed Section 11.3(a)(i) of the CAT NMS Plan would state that
CAT Fees related to Prospective CAT Costs will be calculated twice a
year. Specifically, this proposed provision would state that ``[t]he
Operating Committee will calculate the Fee Rate for the CAT Fee twice
per year, once at the beginning of the year and once during the year as
follows.''
    Proposed Section 11.3(a)(i)(A)(I) of the CAT NMS Plan would
describe the annual calculation of the Fee Rate and the requirement for
Participants to file a fee filing for CAT Fees to be charged Industry
Members calculated using the Fee Rate. This proposed provision also
would state that Participants and Industry Members would be required to
pay such CAT Fees once the CAT Fees are in effect with regard to
Industry Members. This proposed provision would not change how the Fee
Rate would be calculated; such calculation would be the same as
described in the Proposed Amendment. Specifically, this proposed
provision would state:

    At the beginning of each year, the Operating Committee will
calculate the Fee Rate by dividing the budgeted CAT costs for the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year. Once the Operating
Committee has approved such Fee Rate, the Participants shall be
required to file with the SEC pursuant to Section 19(b) of the
Exchange Act CAT Fees to be charged to Industry Members calculated
using such Fee Rate. Participants and Industry Members will be
required to pay CAT Fees calculated using this Fee Rate once such
CAT Fees are in effect with regard to Industry Members in accordance
with Section 19(b) of the Exchange Act.

    Proposed Section 11.3(a)(i)(A)(II) of the CAT NMS Plan describes
the mid-year calculation of a new Fee Rate, as discussed above in
Section II(B) of this letter. This proposed section would describe the
mid-year calculation of the Fee Rate and the requirement for
Participants to file a fee filing for CAT Fees to be charged Industry
Members calculated using the Fee Rate. This proposed provision also
would state that Participants and Industry Members would be required to
pay such CAT Fees once the CAT Fees are in effect with regard to
Industry Members. Specifically, this proposed provision would state:

    During each year, the Operating Committee will calculate a new
Fee Rate by dividing the budgeted CAT costs for the remainder of the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the remainder of the year.
Once the Operating Committee has approved the new Fee Rate, the
Participants shall be required to file with the SEC pursuant to
Section 19(b) of the Exchange Act CAT Fees to be charged to Industry
Members calculated using the new Fee Rate. Participants and Industry
Members will be required to pay CAT Fees calculated using this new
Fee Rate once such CAT Fees are in effect with regard to Industry
Members in accordance with Section 19(b) of the Exchange Act.

    This proposed provision would not change how the Fee Rate would be
calculated; such calculation would be the same as described in the
Proposed Amendment. This proposed provision, however, would make the
mid-year Fee Rate adjustment mandatory, rather than discretionary.
    CAT LLC also proposes to add Section 11.3(a)(i)(A)(III) of the CAT
NMS Plan to clarify that CAT Fees related to Prospective CAT Costs do
not sunset automatically; such CAT Fees would remain in place until new
CAT Fees are in place with a new Fee Rate. Specifically, this proposed
provision would state:

    For the avoidance of doubt, CAT Fees with a Fee Rate calculated
as set forth in this paragraph (a)(i) shall remain in effect until
the Operating Committee approves a new Fee Rate as described in this
paragraph (a)(i) and CAT Fees with the new Fee Rate are in effect
with regard to Industry Members in accordance with Section 19(b) of
the Exchange Act.

    This provision clarifies, but does not change, the substance of the
Proposed Amendment. This proposed change and the use of continuous fees
more generally are discussed in more detail in Section II(H) of this
letter.
ii. Executed Equivalent Shares
    Paragraph (b)(2) of the Participant fee schedule as set forth in
the Proposed Amendment describes how executed equivalent shares would
be counted. CAT LLC proposes to move this proposed paragraph (b)(2) of
the Participant fee schedule as set forth in the Proposed Amendment to
proposed

Section 11.3(a)(i)(B) of the CAT NMS Plan. Accordingly, proposed
Section 11.3(a)(i)(B) of the CAT NMS Plan would state the following:
    For purposes of calculating the fees, executed equivalent shares in
a transaction in Eligible Securities will be counted as follows:

    (I) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;
    (II) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (III) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
iii. Budgeted CAT Costs
    CAT LLC proposes to move proposed paragraph (b)(3) of the
Participant fee schedule as set forth in the Proposed Amendment to
proposed Section 11.3(a)(i)(C). Accordingly, proposed Section
11.3(a)(i)(C) of the CAT NMS Plan would state the following, which is
the same as proposed paragraph (b)(3) of the Participant fee schedule
in the Proposed Amendment:

    The budgeted CAT costs for the year shall be comprised of all
fees, costs and expenses budgeted to be incurred by or for the
Company in connection with the development, implementation and
operation of the CAT as set forth in the annual operating budget
approved by the Operating Committee pursuant to Section 11.1(a) of
the CAT NMS Plan, or as adjusted during the year by the Operating
Committee.

    CAT LLC also proposes to provide additional details regarding what
is included in the annual operating budget approved by the Operating
Committee pursuant to Section 11.1(a) of the CAT NMS Plan in new
proposed paragraphs (a)(i) and (ii) of Section 11.1 of the CAT NMS
Plan. As discussed in detail below in Section II(I), proposed Section
11.1(a)(i) would describe the categories of costs to be included in the
CAT budget: ``technology, legal, consulting, insurance, professional
and administration, and public relations costs, a reserve, and such
other cost categories as determined by the Operating Committee to be
included in the budget.''
    In addition, proposed Section 11.1(a)(ii) of the CAT NMS Plan would
provide additional details regarding the use and size of the reserve.
Specifically, proposed Section 11.1(a)(ii) of the CAT NMS Plan would
state that ``[f]or the reserve referenced in paragraph (a)(i) of this
Section, the budget will include an amount necessary to allow the
Company to maintain a reserve of not more than 25% of the annual
budget,'' and, if the CAT Fees exceed CAT costs, including the reserve,
then the surplus will be used to offset future fees. An analysis of
budgeted CAT costs and actual CAT costs for 2020, 2021 and the first
nine months of 2022 demonstrates that actual CAT costs were
approximately 20% higher than budgeted amounts over this period on a
cumulative average basis. Based on the magnitude of historical budget
to actual variances as well as the difficulty in accurately predicting
various variable CAT costs, CAT LLC believes that a 25% reserve would
appear to be reasonable. In addition, this provision would clarify that
each year CAT LLC would collect sufficient funds to maintain a reserve
of 25% of the annual budget. For example, if CAT LLC only had a reserve
of 5% of the annual budget at the end of a year, the budget for the
next year would include an additional amount for the reserve of not
more than 20% of the annual budget.
iv. Projected Total Executed Equivalent Share Volume of Transactions in
Eligible Securities
    CAT LLC proposes to move proposed paragraph (b)(4) of the
Participant fee schedule as set forth in the Proposed Amendment to
proposed Section 11.3(a)(i)(D) of the CAT NMS Plan. Accordingly,
proposed Section 11.3(a)(i)(D) of the CAT NMS Plan would be the same as
proposed paragraph (b)(4) of the Participant fee schedule in the
Proposed Amendment except for the change regarding the length of the
lookback period as discussed above in Section II(C) of this letter.
Specifically, Section 11.3(a)(i)(D) of the CAT NMS Plan would state
that ``[t]he Operating Committee shall determine the projected total
executed equivalent share volume of all transactions in Eligible
Securities for each relevant period based on the executed equivalent
share volume of all transactions in Eligible Securities for the prior
twelve months.''
c. Participant CAT Fee for Prospective CAT Costs
    CAT LLC proposes to describe the Participant CAT Fees related to
Prospective CAT Costs in proposed Section 11.3(a)(ii) of the CAT NMS
Plan. Proposed paragraph (a)(ii) of Section 11.3 would be the same as
proposed Section 11.3(a)(i) and (ii) as set forth in the Proposed
Amendment, with two minor changes. Instead of referring to ``a fee''
generally, the paragraph would refer to the ``CAT Fee.'' The use of the
term ``CAT Fee'' would clarify that this paragraph applies to the CAT
Fee related to Prospective CAT Costs, not the Historical CAT
Assessment. In addition, the general reference to ``the applicable fee
rate for the relevant period'' would be replaced with the more specific
reference to the Fee Rate ``determined pursuant to paragraph (a)(i) of
this Section 11.3.'' As discussed above, proposed Section 11.3(a)(i)
describes the calculation of the Fee Rate for the CAT Fees related to
Prospective CAT Costs. Accordingly, proposed Section 11.3(a)(ii)(A) of
the CAT NMS Plan would state the following:

    Each Participant that is a national securities exchange will be
required to pay the CAT Fee for each transaction in Eligible
Securities executed on the exchange in the prior month based on CAT
Data. Each Participant that is a national securities association
will be required to pay the CAT Fee for each transaction in Eligible
Securities executed otherwise than on an exchange in the prior month
based on CAT Data. The CAT Fee for each transaction in Eligible
Securities will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Fee
Rate determined pursuant to paragraph (a)(i) of this Section 11.3.

    CAT LLC also proposes to add paragraph (a)(ii)(B) to Section 11.3
of the CAT NMS Plan to clarify that Participants would only be required
to pay CAT Fees when Industry Members are required to pay CAT Fees. The
Executed Share Model is designed to cover 100% of CAT costs by
allocating costs between and among Participants and Industry Members.
However, the CAT Fees charged to Participants are implemented via a
different process than CAT Fees charged to Industry Members. CAT Fees
charged to Participants are implemented via an approval by the
Operating Committee in accordance with the requirements of the CAT NMS
Plan. In contrast, CAT Fees charged to Industry Members may only become
effective in accordance with the requirements of Section 19(b) of the
Exchange Act. Accordingly, proposed paragraph (a)(ii)(B) of Section
11.3 of the CAT NMS Plan would state that ``[e]ach Participant will be
required to pay the CAT Fee calculated using the Fee Rate determined
pursuant to paragraph (a)(i) of this Section 11.3 and approved by the
Operating Committee only if such CAT Fees are in effect with regard to
Industry Members in accordance with Section 19(b) of the Exchange
Act.''
d. Industry Member CAT Fees for Prospective CAT Costs
i. Industry Member CAT Fee Obligation
    CAT LLC proposes to describe the CAT Fees related to Prospective
CAT

Costs that are charged to Industry Members in proposed Section
11.3(a)(iii)(A) of the CAT NMS Plan. This proposed paragraph would be
similar to proposed Section 11.3(b)(i) and (ii) of the CAT NMS Plan as
set forth in the Proposed Amendment subject to several changes. Instead
of referring to ``a fee'' generally, the paragraph would refer to the
``CAT Fee.'' The use of the term ``CAT Fee'' would clarify that this
paragraph applies to the CAT Fee related to Prospective CAT Costs, not
the Historical CAT Assessment. In addition, the general reference to
``the applicable fee rate for the relevant period'' would be replaced
with the more specific reference to the Fee Rate ``determined pursuant
to paragraph (a)(i) of this Section 11.3.'' As discussed above,
proposed Section 11.3(a)(i) of the CAT NMS Plan describes the
calculation of the Fee Rate for the CAT Fees related to Prospective CAT
Costs. Furthermore, the proposed language would simplify the provision
by eliminating repetitive language that was set forth in proposed
Section 11.3(b)(i) and (ii) of the CAT NMS Plan as set forth in the
Proposed Amendment. Finally, as discussed above, the provision would
refer to EBBs and EBSs, rather than CBBs and CBSs. Accordingly,
proposed Section 11.3(a)(iii)(A) of the CAT NMS Plan would state the
following:

    Each Industry Member that is the executing broker for the buyer
in a transaction in Eligible Securities (``Executing Broker for the
Buyer'' or ``EBB'') and each Industry Member that is the executing
broker for the seller in a transaction in Eligible Securities
(``Executing Broker for the Seller'' or ``EBS'') will be required to
pay a CAT Fee for each such transaction in Eligible Securities in
the prior month based on CAT Data. The EBB's CAT Fee or EBS's CAT
Fee (as applicable) for each transaction in Eligible Securities will
be calculated by multiplying the number of executed equivalent
shares in the transaction by one-third and by the Fee Rate
determined pursuant to paragraph (a)(i) of this Section 11.3.
ii. Fee Filings Under Section 19(b) of the Exchange Act
    CAT LLC proposes to provide additional detail as to the information
that Participants would be required to include in their fee filings for
CAT Fees in proposed paragraph (a)(iii)(B) of Section 11.3 of the CAT
NMS Plan. The proposed paragraph sets forth the information about the
CAT Fees related to Prospective CAT Costs that should be included in
the fee filings required to be made by the Participants pursuant to
Section 19(b) of the Exchange Act.\20\ Specifically, such filings would
be required to include (1) the Fee Rate; (2) the budget for the year
(or remainder of the year, as applicable), including a brief
description of each line item in the budget (including technology,
legal, consulting, insurance, professional and administration, and
public relations costs, a reserve and such other categories as
determined by the Operating Committee to be included in the budget) and
the reason for changes in each such line item from the prior CAT Fee
filing; (3) a discussion of how the budget is reconciled to the
collected fees; and (4) the projected total executed equivalent share
volume of all transactions in Eligible Securities for the year (or
remainder of the year, as applicable), and a description of the
calculation of the projection. This detail would describe how the Fee
Rate is calculated, and explain how the budget used in the calculation
is reconciled to the collected fees. Such detailed information would
provide Industry Members and other interested parties with a clear
understanding of the calculation of the CAT Fees and their relationship
to CAT costs.\21\
---------------------------------------------------------------------------

    \20\ CAT LLC expects the fee filings required to be made by the
Participants pursuant to Section 19(b) of the Exchange Act with
regard to CAT Fees to be filed pursuant to Section 19(b)(3)(A) of
the Exchange Act. In accordance with Section 19(b)(3)(A) of the
Exchange Act, fee filings made pursuant to Section 19(b)(3)(A) of
the Exchange Act would be effective upon filing.
    \21\ As a practical matter, the fee filing would provide the
exact fee per executed equivalent share to be paid for the CAT Fees,
by multiplying the Fee Rate by one-third and describing the relevant
number of decimal places for the fee.
---------------------------------------------------------------------------

2. Historical CAT Assessment
    CAT LLC proposes to restructure and revise proposed Section 11.3(b)
of the CAT NMS Plan as set forth in the Proposed Amendment to provide
greater clarity and detail regarding the Historical CAT Assessment.
With the proposed additional revisions, like with the description of
the CAT Fee related to Prospective CAT Costs in proposed Section
11.3(a) of the CAT NMS Plan, proposed Section 11.3(b) of the CAT NMS
Plan would describe the Historical CAT Assessment, including that the
Historical CAT Assessment is charged to Industry Members, how it will
be used to repay the Participants, the manner of calculating the
Historical Fee Rate, a description of the calculation of the Historical
CAT Assessment, and description of the fee filings under Section 19(b)
of the Exchange Act for the Historical CAT Assessment. The following
describes the proposed revisions to Section 11.3(b) of the CAT NMS
Plan.
a. Introductory Statement
    In the Proposed Amendment, proposed Section 11.3(b) of the CAT NMS
Plan describes the fees to be charged Industry Members pursuant to the
Executed Share Model. CAT LLC proposes to revise proposed Section
11.3(b) of the CAT NMS Plan to address the Historical CAT Assessment to
be charged to Industry Members. Accordingly, CAT LLC proposes to revise
the introductory statement in proposed Section 11.3(b) of the CAT NMS
Plan, which was originally proposed to state that ``[t]he Operating
Committee will establish fees to be payable by Industry Members,'' to
state that ``[t]he Operating Committee will establish fees
(``Historical CAT Assessment'') to be payable by Industry Members with
regard to CAT costs previously paid by the Participants (``Past CAT
Costs'') as follows.'' \22\
---------------------------------------------------------------------------

    \22\ Note that there may be one or more Historical CAT
Assessments, depending upon the timing of any approval of the
amendment to the CAT NMS Plan and the completion of the Financial
Accountability Milestones. For a discussion of the Financial
Accountability Milestones, see Section 11.6 of the CAT NMS Plan.
---------------------------------------------------------------------------

b. Calculation of Historical Fee Rate
    In the Proposing Release, CAT LLC stated that Industry Member CAT
fees for Past CAT Costs would be calculated in accordance with the
Executed Share Model, and that the Fee Rate for the CAT fees related to
Past CAT Costs would be calculated by dividing the Past CAT Costs for
the relevant period (as determined by the Operating Committee) by the
projected total executed equivalent share volume of all transactions in
Eligible Securities for the relevant period based on CAT Data. CAT LLC
proposes to provide details regarding the calculation of the Historical
CAT Assessment in proposed Section 11.3(b) of the CAT NMS Plan. The
detail would be similar to the detail provided in proposed Section
11.3(a) of the CAT NMS Plan regarding CAT Fees related to Prospective
CAT Costs, including a description of the calculation of the Historical
Fee Rate, the counting method for executed equivalent shares, the
Historical CAT Costs, the Historical Recovery Period, and the projected
total executed equivalent share volume of transactions in Eligible
Securities for the Historical Recovery Period.
i. Historical Fee Rate
    Proposed Section 11.3(b)(i)(A) of the CAT NMS Plan would describe
the

calculation of the Historical Fee Rate for the Historical CAT
Assessment and the requirement for Participants to file a fee filing
for the Historical CAT Assessment. This proposed provision also would
state that Industry Members would be required to pay the Historical CAT
Assessment once such Historical CAT Assessment is in effect in
accordance with Section 19(b) of the Exchange Act. Specifically, this
proposed provision also would state that:

    The Operating Committee will calculate the Historical Fee Rate
for the Historical CAT Assessment by dividing the Historical CAT
Costs by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the Historical Recovery
Period. Once the Operating Committee has approved such Historical
Fee Rate, the Participants shall be required to file with the SEC
pursuant to Section 19(b) of the Exchange Act the Historical CAT
Assessment to be charged Industry Members calculated using such
Historical Fee Rate. Industry Members will be required to pay the
Historical CAT Assessment calculated using this Historical Fee Rate
once such Historical CAT Assessment is in effect in accordance with
Section 19(b) of the Exchange Act.

    This proposed provision would not change how the Historical Fee
Rate would be calculated; such calculation would be the same as
described in the Proposed Amendment.
ii. Executed Equivalent Shares
    As described in the Proposing Release, the Historical CAT
Assessment would be calculated based on the same executed equivalent
share calculation as CAT Fees related to Prospective CAT Costs.
Accordingly, proposed Section 11.3(b)(i)(B) of the CAT NMS Plan would
make it clear that the calculation is the same for both types of fees.
Specifically, proposed Section 11.3(b)(i)(B) of the CAT NMS Plan would
state that ``[f]or purposes of calculating the Historical CAT
Assessment, executed equivalent shares in a transaction in Eligible
Securities will be counted in the same manner as set forth in paragraph
(a)(i)(B) of this Section 11.3.''
iii. Historical CAT Costs
    The Proposing Release stated generally that the Operating Committee
will determine the Past CAT Costs sought to be recovered through the
Historical CAT Assessment. CAT LLC proposes to make this approach clear
in the language of the CAT NMS Plan by adding proposed Section
11.3(b)(i)(C) of the CAT NMS Plan, which would state that ``[t]he
Operating Committee will determine the Historical CAT Costs sought to
be recovered by the Historical CAT Assessment, where the Historical CAT
Costs will be Past CAT Costs minus Past CAT Costs excluded from
Historical CAT Costs by the Operating Committee.'' As discussed below,
the Historical CAT Costs, which were discussed in detail in CAT LLC's
response to comments,\23\ also will be discussed in the fee filings
regarding the Historical CAT Assessment that are required to be made
under Section 19(b) of the Exchange Act.
---------------------------------------------------------------------------

    \23\ Letter to Vanessa Countryman, Secretary, SEC, from Mike
Simon, Chair, Operating Committee, CAT, (Aug. 16, 2022) at 23-28
(``CAT Response Letter'').
---------------------------------------------------------------------------

iv. Historical Recovery Period
    The Proposing Release did not discuss the length of time during
which the Historical CAT Assessment would be in effect. As the total
amount of the Historical CAT Costs have not yet been determined because
the fee model has not yet been approved and CAT LLC continues to incur
costs, CAT LLC had not determined the appropriate recovery period.
Based on CAT costs incurred to date, however, CAT LLC believes that the
Historical Recovery Period should not be less than 24 months or more
than five years. In analyzing the potential Historical Recovery
Periods, CAT LLC sought to weigh the need for a reasonable Historical
Fee Rate that spreads the Historical CAT Costs over an appropriate
amount of time and the need to repay the loan notes to the Participants
in a timely fashion. CAT LLC analyzed potential recovery periods using
the Historical CAT Costs through 2022 as discussed in the CAT Response
Letter \24\ and the total executed equivalent share volume of
transactions in Eligible Securities for 2021 to calculate the projected
total executed equivalent share volume of transactions.\25\ Based on
the variables in this analysis, CAT LLC determined that the Historical
Fee Rate would range from approximately $0.00002-$0.00006 per executed
equivalent share for a two through five-year period. CAT LLC believes
that such Historical Fee Rates would be reasonable even if Industry
Members were required to pay the Historical CAT Assessment and the
ongoing CAT Fee at the same time. CAT LLC notes, however, that the
actual Historical CAT Assessment would be calculated using up-to-date
Historical CAT Costs and executed equivalent share volume.
---------------------------------------------------------------------------

    \24\ Id.
    \25\ Proposing Release at 33246.
---------------------------------------------------------------------------

    Proposed Section 11.3(b)(i)(D)(I) of the CAT NMS Plan would
describe the Historical Recovery Period used in calculating the
Historical Fee Rate. This proposed provision would state that ``[t]he
length of the Historical Recovery Period used in calculating the
Historical Fee Rate will be established by the Operating Committee
based upon the amount of the Historical CAT Costs to be recovered by
the Historical CAT Assessment.'' This proposed provision, however,
would state that Historical Recovery Period used for calculating the
Historical Fee Rate would not be less than 24 months or more than five
years. As discussed below, the Historical Recovery Period is used to
calculate the Historical Fee Rate. The actual recovery period may be
longer or shorter than the Historical Recovery Period depending on the
actual executed equivalent share volumes during the time that the
Historical CAT Assessment is in effect.
    Proposed Section 11.3(b)(i)(D)(II) of the CAT NMS Plan would
describe the length of the time that the Historical CAT Assessment
would be in effect, which may be greater than or less than the
Historical Recovery Period, depending on the Historical CAT Assessment
fees collected based on the actual volume. The Historical CAT
Assessment would remain in effect until all Historical CAT Costs are
collected. Accordingly, this provision states that ``[n]otwithstanding
the length of the Historical Recovery Period used in calculating the
Historical Fee Rate, the Historical CAT Assessment calculated using the
Historical Fee Rate will remain in effect until all Historical CAT
Costs are collected.''
v. Projected Total Executed Equivalent Share Volume of Transactions in
Eligible Securities for Historical Recovery Period
    As described in the Proposing Release, the Historical Fee Rate
would be calculated by using ``the projected total executed equivalent
share volume of all transactions in Eligible Securities for the
relevant period based on CAT Data.'' CAT LLC proposes to clarify the
manner of calculating the projected total executed equivalent share
volume for the Historical CAT Assessment by adding proposed Section
11.3(b)(i)(E) to the CAT NMS Plan. CAT LLC proposes to state in this
provision that the projection will be determined based on transactions
in Eligible Securities for the prior twelve months. Accordingly,
proposed Section 11.3(b)(i)(E) of the CAT NMS Plan would state that
``[t]he Operating Committee shall determine the projected total
executed equivalent share volume of all transactions in Eligible
Securities for the Historical Recovery Period based on the executed
equivalent share volume of all

transactions in Eligible Securities for the prior twelve months.''
c. Past CAT Costs and Participants
    As described in the Proposing Release, because the Participants
have paid all CAT costs to date, the Participants would not pay the
Historical CAT Assessment; only Industry Members would be required to
pay the Historical CAT Assessment. Proposed Section 11.3(a)(iv) of the
CAT NMS Plan as set forth in the Proposed Amendment clarified this
point by stating that ``[n]otwithstanding anything to contrary,
Participants will not be required to a pay a CAT fee related to CAT
costs previously paid by the Participants in a manner determined by the
Operating Committee (`Past CAT Costs').'' However, the Proposing
Release provided additional color regarding the Participants
obligations with regard to certain Past CAT Costs. Specifically, it
stated that Participants would remain responsible for the one-third of
Past CAT Costs allocated to Participants under the Executed Share
Model, as well as 100% of certain other past CAT Costs. The CAT fees
related to included Past CAT Costs would recoup two-thirds of the
included Past CAT Costs; the Participants have paid for and would not
be reimbursed for the remaining one-third of the included Past CAT
Costs. The CAT fees related to included Past CAT Costs paid by the
Industry Members would be used to reimburse the Participants for the
two-thirds of included Past CAT Costs allocated to Industry Members.
The CAT fees for the included Past CAT Costs collected from Industry
Members will be allocated to Participants for repayment of the
outstanding loan notes of the Participants to the Company on a pro rata
basis; such fees would not be allocated to Participants based on the
executed equivalent share volume of transactions in Eligible
Securities. CAT LLC proposes to amend proposed Section 11.3 of the CAT
NMS Plan to add this detail to the CAT NMS Plan.
    Specifically, CAT LLC proposes to delete proposed Section
11.3(a)(iv) of the CAT NMS Plan as set forth in the Proposed Amendment
and replace it with proposed Section 11.3(b)(ii) of the CAT NMS Plan.
Proposed Section 11.3(b)(ii) would clarify that the Participants would
not be required to pay the Historical CAT Assessment as the
Participants previously have paid Past CAT Costs. It would state that,
``[b]ecause Participants previously have paid Past CAT Costs via loans
to the Company, Participants would not be required to pay the
Historical CAT Assessment.'' In addition, proposed Section 11.3(b)(ii)
of the CAT NMS Plan would clarify that the Historical CAT fees
collected from Industry Members would be allocated to Participants for
repayment of the outstanding loan notes of the Participants to the
Company on a pro rata basis; such fees would not be allocated to
Participants based on the executed equivalent share volume of
transactions in Eligible Securities. Specifically, proposed Section
11.3(b)(ii) of the CAT NMS Plan would state that ``[t]he Historical CAT
Assessment to be paid by Industry Members and collected by the Company
will be used by the Company to repay a portion of the loans from the
Participants to the Company on a pro rata basis.'' Furthermore,
proposed Section 11.3(b)(ii) of the CAT NMS Plan would emphasize that
``[t]he Historical CAT Assessment is designed to recover two-thirds of
the Historical CAT Costs from Industry Members.''
d. Historical CAT Assessment for Industry Members
i. Industry Member Obligation
    CAT LLC proposes to describe the Historical CAT Assessment charged
to Industry Members in proposed Section 11.3(b)(iii)(A) of the CAT NMS
Plan. This proposed paragraph (b)(iii)(A) of Section 11.3 of the CAT
NMS Plan would be similar to proposed Section 11.3(a)(iii)(A) of the
CAT NMS Plan discussed above, but would provide additional specifics
regarding the Historical CAT Assessment. In particular, this paragraph
would refer to the ``Historical CAT Assessment,'' ``Historical Fee
Rate'' and the ``Historical Recovery Period.'' Specifically, this
proposed paragraph would state that:

    Each month in which the Historical CAT Assessment is in effect,
each EBB and each EBS shall pay a fee for each transaction in
Eligible Securities executed by the EBB for the buyer or EBS for the
seller from the prior month as set forth in CAT Data, where the
Historical CAT Assessment for each transaction will be calculated by
multiplying the number of executed equivalent shares in the
transaction by one-third and by the Historical Fee Rate determined
pursuant to paragraph (b)(i) of this Section 11.3.
ii. Fee Filings Under Section 19(b) of the Exchange Act
    CAT LLC proposes to provide additional detail as to when
Participants would file fee filings for the Historical CAT Assessment
and what would be required to be included in such filings. Proposed
Section 11.3(b)(iii)(B) would describe the requirements for filings for
the Historical CAT Assessment.\26\ The proposed paragraph would state
that ``[w]hen the Participants file with the SEC under Section 19(b) of
the Exchange Act the Historical CAT Assessment to be charged to
Industry Members that the Operating Committee approved in accordance
with paragraph (b) of this Section 11.3,'' the filing should set forth
the following information: (1) the Historical Fee Rate; (2) a brief
description of the amount and type of the Historical CAT Costs; (3) the
Historical Recovery Period and the reason for its length; and (4) the
projected total executed equivalent share volume of all transactions in
Eligible Securities for the Historical Recovery Period, and a
description of the calculation of the projection.\27\
---------------------------------------------------------------------------

    \26\ CAT LLC expects the fee filings required to be made by the
Participants pursuant to Section 19(b) of the Exchange Act with
regard to the Historical CAT Assessment to be filed pursuant to
Section 19(b)(3)(A) of the Exchange Act. In accordance with Section
19(b)(3)(A) of the Exchange Act, fee filings made pursuant to
Section 19(b)(3)(A) of the Exchange Act would be effective upon
filing.
    \27\ As a practical matter, the fee filing would provide the
exact fee per executed equivalent share to be paid for the
Historical CAT Assessment, by multiplying the Historical Fee Rate by
one-third and describing the relevant number of decimal places for
the fee.
---------------------------------------------------------------------------

E. Calculation of Past CAT Costs: Relevant Period

    The SEC requested ``[c]ommenters' views on the calculation of the
Past CAT Costs Fee Rate, including any views on the relevant period to
be used by the Operating Committee to calculate the Fee Rate for Past
CAT Costs.'' \28\ As discussed above in Section II(D) of this letter,
CAT LLC proposes to add substantial detail regarding the calculation of
the Historical Fee Rate to proposed Section 11.3(b) of the CAT NMS
Plan. Included in those proposed changes is a provision that addresses
the Historical Recovery Period used in calculating the Historical Fee
Rate for the Historical CAT Assessment, and a provision that addresses
the length of time that the Historical CAT Assessment would be in
effect.
---------------------------------------------------------------------------

    \28\ Request for Comment No. 17, OIP at 54578.
---------------------------------------------------------------------------

F. Proposed Plan Changes To Describe Executed Share Model

    The SEC requested ``[c]ommenters' views on the proposed changes to
Section 11.3 of the CAT NMS Plan in order to conform the Plan to the
Executed Shares Model by revising the manner in which fees to recover
costs will be assessed on Participants and Industry Members.'' \29\ As
described in detail above, CAT LLC has restructured proposed Section
11.3 and added

additional detail to Section 11.3 to provide a more detailed
description of the implementation of the Executed Share Model in the
CAT NMS Plan.
---------------------------------------------------------------------------

    \29\ Request for Comment No. 32, OIP at 54579.
---------------------------------------------------------------------------

    In addition, CAT LLC proposes to amend the CAT funding principles
to clarify that the CAT Fee and the Historical CAT Assessment are
intended to be cost-based fees--that is, the fees are designed to
recover the cost of the creation, implementation and operation of the
CAT. CAT LLC proposes to amend the funding principle set forth in
Section 11.2(c) by making a specific reference to the costs of the CAT.
With this proposed change, proposed Section 11.2(c) would state that
``[i]n establishing the funding of the Company, the Operating Committee
shall seek: . . . to establish a fee structure in which the fees
charged to Participants and Industry Members are based upon the
executed equivalent share volume of transactions in Eligible
Securities, and the costs of the CAT.''

G. Reconciliation of Budget to Fees

    In the OIP, the SEC requested comment on ``whether the Proposed
Amendment needs a discussion of how the budget will be reconciled to
fees.'' \30\ If the CAT LLC collects a surplus of fees above and beyond
what is required for the CAT costs, including the requisite reserve,
such surpluses would be used to offset future fees and would not be
distributed to the Participants as profits.\31\ To provide transparency
regarding this reconciliation process, CAT LLC proposes to require that
Participants provide a discussion of how the budget is reconciled to
the collected fees in their fee filings pursuant Section 19(b) of the
Exchange Act. CAT LLC proposes to include this requirement in Section
11.3(a)(iii)(B) of the CAT NMS Plan.
---------------------------------------------------------------------------

    \30\ Request for Comment No. 24, OIP at 54578.
    \31\ Section 11.1(c) of the CAT NMS Plan specifically states
that ``[a]ny surplus of the Company's revenues over its expenses
shall be treated as an operational reserve to offset future fees.''
---------------------------------------------------------------------------

H. Continuous Fees Versus Sunsetting Fees

    CAT LLC does not propose to require the proposed CAT Fees to sunset
automatically; instead, a CAT Fee would continue until a new CAT Fee is
in place in accordance with the requirements of the CAT NMS Plan and
Section 19(b) of the Exchange Act. In response to this proposal, the
SEC requested ``[c]ommenters' views on whether it is necessary or
appropriate in the public interest for the Proposed Amendment to permit
the Fee Rate to potentially remain in effect even if the budget or
projected executed equivalent share volume changes (both would be used
to calculate the Fee Rate under the Executed Share Model) or if the Fee
Rate should sunset after a year. For example, if the Commission
temporarily suspends and institutes proceedings to determine whether to
approve or to disapprove a Section 19(b) fee filing to institute a new
Fee Rate, the old Fee Rate could remain in effect during the
proceedings.'' \32\ In its comment letter, SIFMA advocates for a
trigger or automatic review to ensure that the fee rate remains aligned
with the CAT costs.\33\ CAT LLC believes that the Proposed Amendment,
with the revisions proposed herein, would address the concerns related
to the alignment of CAT costs and CAT fees.
---------------------------------------------------------------------------

    \32\ Request for Comment No. 11, OIP at 54578.
    \33\ SIFMA Letter at 5-7.
---------------------------------------------------------------------------

    CAT LLC believes that it is critical that a CAT fee remain in place
at all times. The financial viability of the CAT would be put at risk
without a constant source of revenue. CAT LLC pays various bills,
including technology bills, on a monthly basis. Accordingly, even short
delays in the implementation of new CAT fees after the sunsetting of a
prior CAT fee may have a deleterious effect on the operation of the
CAT. Indeed, adopting sunsetting fees would contradict the funding
principle of seeking to ``build financial stability to support the
Company as a going concern.'' \34\ CAT LLC proposes to add Section
11.3(a)(i)(A)(III) of the CAT NMS Plan to clarify that CAT Fees related
to Prospective CAT Costs do not sunset automatically; such CAT Fees
would remain in place until new CAT Fees with a new Fee Rate is in
effect.
---------------------------------------------------------------------------

    \34\ Section 11.2(f) of the CAT NMS Plan.
---------------------------------------------------------------------------

    Moreover, CAT LLC does not believe that a sunsetting requirement is
necessary to ensure that the CAT Fees are closely coordinated with
Prospective CAT costs. CAT LLC has proposed a comprehensive, multi-
pronged approach to ensure that the CAT Fees are closely tied to CAT
costs. First, CAT LLC will be required to calculate the Fee Rates for
the CAT Fees based on budgeted CAT costs. In addition, CAT LLC will be
required to calculate the Fee Rate twice a year to determine whether
the Fee Rate has changed due to changes in the budgeted or actual costs
or actual or projected executed equivalent share volume, and to make a
fee filing twice a year to reflect this calculation. Accordingly, the
Fee Rate will be required to be updated twice a year, thereby ensuring
the CAT Fees are closely tied to CAT costs.
    Second, the CAT NMS Plan requires that the Company operate on a
``break-even'' basis, with fees imposed to cover costs and an
appropriate reserve. Any surpluses would be treated as an operational
reserve to offset future fees and would not be distributed to the
Participants as profits. To ensure that the Participants' operation of
the CAT will not contribute to the funding of their other operations,
Section 11.1(c) of the CAT NMS Plan specifically states that ``[a]ny
surplus of the Company's revenues over its expenses shall be treated as
an operational reserve to offset future fees.'' Moreover, as discussed
in detail in Section II(I) and (G) of this letter, CAT LLC proposes to
amend the CAT NMS Plan to limit the reserve to no more than 25% of the
annual budget and to clarify that CAT fees collected in excess of the
CAT costs, including the reserve, will be used to offset future
fees.\35\
---------------------------------------------------------------------------

    \35\ See proposed Section 11.1(a)(i) and (ii) of the CAT NMS
Plan.
---------------------------------------------------------------------------

    Third, as discussed above in Section II(D) of this letter, CAT LLC
proposes to amend the CAT NMS Plan to require Participants to provide
significant details in their fee filings regarding Industry Member CAT
Fees. Proposed paragraph (a)(iii)(B) of Section 11.3 of the CAT NMS
Plan would state that ``[w]hen Participants file with the SEC pursuant
to Section 19(b) of the Exchange Act CAT Fees to be charged to Industry
Members calculated using the Fee Rate that the Operating Committee
approved in accordance with paragraph (a) of this Section 11.3'' such
filings would be required to include (1) the Fee Rate; (2) the budget
for the upcoming year (or remainder of the year, as applicable),
including a brief description of each line item in the budget
(including technology, legal, consulting, insurance, professional and
administration, and public relations costs, a reserve and/or such other
categories as determined by the Operating Committee to be included in
the budget) and the reason for changes in each such line item from the
prior CAT Fee filing; (3) a discussion of how the budget is reconciled
to the collected fees; and (4) the projected total executed equivalent
share volume of all transactions in Eligible Securities for the year
(or remainder of the year, as applicable), and a description of the
calculation of the projection. This detail would describe how the Fee
Rate is calculated and explain how the budget used in the calculation
is reconciled to the collected fees. Such detailed information would
provide Industry Members and other interested parties

with a clear understanding of the calculation of the CAT fees and their
relationship to CAT costs.

I. Definition of Budgeted CAT Costs

    The Proposed Amendment would state that the budgeted CAT costs for
the year shall be ``comprised of all fees, costs and expenses budgeted
to be incurred by or for the Company in connection with the
development, implementation and operation of the CAT as set forth in
the annual operating budget approved by the Operating Committee
pursuant to Section 11.1(a) of the CAT NMS Plan, or as adjusted during
the year by the Operating Committee.'' The SEC requested
``[c]ommenters' views on the costs that would be included in the
proposed definition of Budgeted CAT Costs in the Proposed Participant
Fee Schedule.'' \36\ CAT LLC believes that budgeted CAT costs
appropriately include the costs set forth in the approved budget for
CAT LLC. In addition, CAT LLC believes that using budgeted CAT costs,
rather than CAT costs already incurred, allows the Company to collect
fees prior to when bills become payable.
---------------------------------------------------------------------------

    \36\ Request for Comment No. 24, OIP at 54578.
---------------------------------------------------------------------------

    The budgeted CAT costs for the upcoming year would be the costs set
forth in the annual operating budget for the Company required pursuant
to Section 11.1(a) of the CAT NMS Plan. Section 11.1(a) states that
``[o]n an annual basis the Operating Committee shall approve an
operating budget for the Company. The budget shall include the
projected costs of the Company, including the costs of developing and
operating the CAT for the upcoming year, and the sources of all revenue
to cover such costs, as well as the funding of any reserve that the
Operating Committee reasonably deems appropriate for prudent operation
of the Company.''
    The CAT costs budgeted for the year would be comprised of all fees,
costs and expenses estimated to be incurred by or for the Company in
connection with the development, implementation and operation of the
CAT during the year. These CAT costs would include, but not be limited
to, Plan Processor costs, insurance costs, third-party support costs
and an operational reserve. Plan Processor costs would consist of the
Plan Processor's ongoing costs, including development costs. This
amount would be based upon the fees due to the Plan Processor pursuant
to the Company's agreement with the Plan Processor. Insurance costs
would include cyber insurance and director liability insurance. Third-
party support costs would include legal fees, consulting fees, vendor
fees and audit fees. In addition, the Operating Committee aims to
accumulate the necessary funds to establish an operating reserve for
the Company through the CAT fees charged to CAT Reporters. As set forth
in Section 11.1(a) of the CAT NMS Plan, the Operating Committee may
include in the budget ``funding of any reserve that the Operating
Committee reasonably deems appropriate for prudent operation of the
Company.'' \37\ CAT LLC proposes to add proposed Section 11.1(a)(i) to
provide additional clarity regarding the costs to be included in the
CAT budget by listing the types of CAT costs to be included in the
budget. Specifically, proposed Section 11.1(a)(i) of the CAT NMS Plan
would state that ``[w]ithout limiting the foregoing, the budgeted CAT
costs shall include technology, legal, consulting, insurance,
professional and administration, and public relations costs, a reserve,
and such other categories as determined by the Operating Committee to
be included in the budget.''
---------------------------------------------------------------------------

    \37\ Section 11.1(a) of the CAT NMS Plan.
---------------------------------------------------------------------------

    As required by Section 11.1(c) of the CAT NMS Plan, any surpluses
collected will be treated as an operational reserve to offset future
fees and will not be distributed to the Participants as profits. In the
Proposed Amendment, CAT LLC stated that ``[a]lthough the Operating
Committee may determine at its discretion that a different level of
reserves is appropriate in the future, the Operating Committee proposes
to include in the budget for purposes of determining CAT fees an
operational reserve comprised of three months of ongoing CAT costs.''
\38\ To provide additional clarity regarding the size of the reserve,
CAT LLC proposes to add proposed paragraph (a)(ii) to Section 11.1 of
the CAT NMS Plan to set forth the parameters for the size of the
reserve. Specifically, proposed Section 11.1(a)(ii) of the CAT NMS Plan
would state that ``[t]he budget will include a reserve in the amount of
not more than 25% of the annual budget.'' In addition, CAT LLC proposes
to clarify how CAT fees collected in excess of CAT costs, including the
reserve, would be used. Specifically, proposed paragraph (a)(ii) of
Section 11.1 of the CAT NMS Plan would state that ``[t]o the extent
collected CAT fees exceed CAT costs, including the reserve of 25% of
the annual budget, such surplus will be used to offset future fees.''
---------------------------------------------------------------------------

    \38\ Proposing Release at 33228.
---------------------------------------------------------------------------

    To address potential changes related to the CAT during the year,
the Operating Committee may adjust the budgeted CAT costs for the year
as it reasonably deems appropriate for the prudent operation of the
Company. For example, the Operating Committee may determine that an
adjustment to the budget is necessary if actual costs during the year
are more or less than the budget, or if unanticipated expenditures are
necessary. To the extent that the Operating Committee adjusts the
budgeted CAT costs during the year and determines to adjust the Fee
Rate, the adjusted budgeted CAT costs would be used in calculating the
new Fee Rate for the remaining months of the year.
    The Operating Committee has determined to publicly provide the
annual operating budget for the Company as well as any updates to the
budget that occur during the year. This publicly available budget
information describes in detail the budget for the Company. For
example, among other things, the budget provides specific budgeted
technology costs (including cloud hosting services, operating fees,
Customer and Account Information System (``CAIS'') operating fees and
change request fees) and general and administrative costs (including
legal, consulting, insurance, professional and administration, and
public relations). The Company provides such budget information on a
dedicated web page on the CAT NMS Plan website to make it readily
accessible for CAT Reporters and others.

III. Solicitation of Comments

    The Commission seeks comments on the Proposed Amendment, as
modified by Partial Amendment No. 1. Interested persons are invited to
submit written data, views, and arguments concerning the foregoing,
including whether the Proposed Amendment, as modified by Partial
Amendment No. 1 is consistent with the Exchange Act. Comments may be
submitted by any of the following methods:

Electronic Comments

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

Paper Comments

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

All submissions should refer to File Number 4-698. This file number
should be included on the subject line if email is used. To help the
Commission

process and review your comments more efficiently, please use only one
method. The Commission will post all comments on the Commission's
internet website (http://www.sec.gov/rules/sro.shtml). Copies of the
submission, all subsequent amendments, all written statements with
respect to Partial Amendment No. 1 that are filed with the Commission,
and all written communications relating to Partial Amendment No. 1
between the Commission and any person, other than those that may be
withheld from the public in accordance with the provisions of 5 U.S.C.
552, will be available for website viewing and printing in the
Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549, on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of the filing also will be available for inspection
and copying at the Participants' offices. All comments received will be
posted without change. Persons submitting comments are cautioned that
we do not redact or edit personal identifying information from comment
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number 4-698
and should be submitted on or before December 23, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\39\
---------------------------------------------------------------------------

    \39\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.

EXHIBIT A:

Cumulative Proposed Revisions to CAT NMS Plan

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

ARTICLE I

DEFINITIONS

* * * * *
    [``Execution Venue'' means a Participant or an alternative trading
system (``ATS'') (as defined in Rule 300 of Regulation ATS) that
operates pursuant to Rule 301 of Regulation ATS (excluding any such ATS
that does not execute orders).]
* * * * *

ARTICLE XI

FUNDING OF THE COMPANY

    Section 11.1. Funding Authority.
    (a) On an annual basis the Operating Committee shall approve an
operating budget for the Company. The budget shall include the
projected costs of the Company, including the costs of developing and
operating the CAT for the upcoming year, and the sources of all
revenues to cover such costs, as well as the funding of any reserve
that the Operating Committee reasonably deems appropriate for prudent
operation of the Company.
    (i) Without limiting the foregoing, the budgeted CAT costs shall
include technology, legal, consulting, insurance, professional and
administration, and public relations costs, a reserve and such other
cost categories as determined by the Operating Committee to be included
in the budget.
    (ii) For the reserve referenced in paragraph (a)(i) of this
Section, the budget will include an amount necessary to allow the
Company to maintain a reserve of not more than 25% of the annual
budget. To the extent collected CAT fees exceed CAT costs, including
the reserve of 25% of the annual budget, such surplus shall be used to
offset future fees.
    (b) Subject to Section 11.2, the Operating Committee shall have
discretion to establish funding for the Company, including: (i)
establishing fees that the Participants shall pay; and (ii)
establishing fees for Industry Members that shall be implemented by
Participants. The Participants shall file with the SEC under Section
19(b) of the Exchange Act any such fees on Industry Members that the
Operating Committee approves, and such fees shall be labeled as
``Consolidated Audit Trail Funding Fees.''
    (c) To fund the development and implementation of the CAT, the
Company shall time the imposition and collection of all fees on
Participants and Industry Members in a manner reasonably related to the
timing when the Company expects to incur such development and
implementation costs. In determining fees on Participants and Industry
Members the Operating Committee shall take into account fees, costs and
expenses (including legal and consulting fees and expenses) incurred by
the Participants on behalf of the Company prior to the Effective Date
in connection with the creation and implementation of the CAT, and such
fees, costs and expenses shall be fairly and reasonably shared among
the Participants and Industry Members. Any surplus of the Company's
revenues over its expenses shall be treated as an operational reserve
to offset future fees.
    (d) Consistent with this Article XI, the Operating Committee shall
adopt policies, procedures, and practices regarding the budget and
budgeting process, [assignment of tiers,] resolution of disputes,
billing and collection of fees, and other related matters. [For the
avoidance of doubt, as part of its regular review of fees for the CAT,
the Operating Committee shall have the right to change the tier
assigned to any particular Person in accordance with fee schedules
previously filed with the Commission that are reasonable, equitable and
not unfairly discriminatory and subject to public notice and comment,
pursuant to this Article XI. Any such changes will be effective upon
reasonable notice to such Person.]
    Section 11.2. Funding Principles. In establishing the funding of
the Company, the Operating Committee shall seek:
    (a) to create transparent, predictable revenue streams for the
Company that are aligned with the anticipated costs to build, operate
and administer the CAT and the other costs of the Company;
    (b) to establish an allocation of the Company's related costs among
Participants and Industry Members that is consistent with the Exchange
Act, taking into account the timeline for implementation of the CAT
[and distinctions in the securities trading operations of Participants
and Industry Members and their relative impact upon Company resources
and operations];
    (c) to establish a [tiered] fee structure in which the fees charged
to [: (i)] Participants and [CAT Reporters that are Execution Venues,
including ATSs, are based upon the level of market share; (ii)]
Industry Members[' non-ATS activities] are based upon the executed
equivalent share volume of transactions in Eligible Securities, and the
costs of the CAT [message traffic; and (iii) the CAT Reporters with the
most CAT-related activity (measured by market share and/or message
traffic, as applicable) are generally comparable (where, for these
comparability purposes, the tiered fee structure takes into
consideration affiliations between or among CAT Reporters, whether
Execution Venues and/or Industry Members)].
    (d) to provide for ease of billing and other administrative
functions;
    (e) to avoid any disincentives such as placing an inappropriate
burden on competition and a reduction in market quality; and
    (f) to build financial stability to support the Company as a going
concern.
    Section 11.3. Recovery.
    (a) The Operating Committee will establish [fixed] fees (``CAT
Fees'') to be payable by [Execution Venues] Participants and Industry
Members with

regard to CAT costs not previously paid by the Participants
(``Prospective CAT Costs'') as follows [provided in this Section
11.3(a)]:
    (i) Fee Rate. The Operating Committee will calculate the Fee Rate
for the CAT Fee twice per year, once at the beginning of the year and
once during the year.
    (A) General.
    (I) At the beginning of each year, the Operating Committee will
calculate the Fee Rate by dividing the budgeted CAT costs for the year
by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year. Once the Operating
Committee has approved such Fee Rate, the Participants shall be
required to file with the SEC pursuant to Section 19(b) of the Exchange
Act CAT Fees to be charged to Industry Members calculated using such
Fee Rate. Participants and Industry Members will be required to pay CAT
Fees calculated using this Fee Rate once such CAT Fees are in effect
with regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (II) During each year, the Operating Committee will calculate a new
Fee Rate by dividing the budgeted CAT costs for the remainder of the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the remainder of the year. Once
the Operating Committee has approved the new Fee Rate, the Participants
shall be required to file with the SEC pursuant to Section 19(b) of the
Exchange Act CAT Fees to be charged to Industry Members calculated
using the new Fee Rate. Participants and Industry Members will be
required to pay CAT Fees calculated using this new Fee Rate once such
CAT Fees are in effect with regard to Industry Members in accordance
with Section 19(b) of the Exchange Act.
    (III) For the avoidance of doubt, CAT Fees with a Fee Rate
calculated as set forth in this paragraph (a)(i) shall remain in effect
until the Operating Committee approves a new Fee Rate as described in
paragraph (a)(i) and CAT Fees with the new Fee Rate are in effect with
regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating CAT
Fees, executed equivalent shares in a transaction in Eligible
Securities will be counted as follows:
    (I) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;
    (II) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (III) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
    (C) Budgeted CAT Costs. The budgeted CAT costs for the year shall
be comprised of all fees, costs and expenses budgeted to be incurred by
or for the Company in connection with the development, implementation
and operation of the CAT as set forth in the annual operating budget
approved by the Operating Committee pursuant to Section 11.1(a) of the
CAT NMS Plan, or as adjusted during the year by the Operating
Committee.
    (D) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities. The Operating Committee shall
determine the projected total executed equivalent share volume of all
transactions in Eligible Securities for each relevant period based on
the executed equivalent share volume of all transactions in Eligible
Securities for the prior twelve months.
    (ii) Participant CAT Fees.
    (A) CAT Fee Obligation. Each Participant that is a national
securities exchange will be required to pay the CAT Fee for each
transaction in Eligible Securities executed on the exchange in the
prior month based on CAT Data. Each Participant that is a national
securities association will be required to pay the CAT Fee for each
transaction in Eligible Securities executed otherwise than on an
exchange in the prior month based on CAT Data. The CAT Fee for each
transaction in Eligible Securities will be calculated by multiplying
the number of executed equivalent shares in the transaction by one-
third and by the Fee Rate determined pursuant to paragraph (a)(i) of
this Section 11.3.
    (B) Effectiveness. Each Participant will be required to pay the CAT
Fee calculated using the Fee Rate determined pursuant to paragraph
(a)(i) of this Section 11.3 and approved by the Operating Committee
only if such CAT Fees are in effect with regard to Industry Members in
accordance with Section 19(b) of the Exchange Act.
    (iii) Industry Member CAT Fees.
    (A) CAT Fee Obligation. Each Industry Member that is the executing
broker for the buyer in a transaction in Eligible Securities
(``Executing Broker for the Buyer'' or ``EBB'') and each Industry
Member that is the executing broker for the seller in a transaction in
Eligible Securities (``Executing Broker for the Seller'' or ``EBS'')
will be required to pay a CAT Fee for each such transaction in Eligible
Securities in the prior month based on CAT Data. The EBB's CAT Fee or
EBS's CAT Fee (as applicable) for each transaction in Eligible
Securities will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Fee Rate
determined pursuant to paragraph (a)(i) of this Section 11.3.
    (B) Content of Fee Filings. When Participants file with the SEC
pursuant to Section 19(b) of the Exchange Act CAT Fees to be charged to
Industry Members calculated using the Fee Rate that the Operating
Committee approved in accordance with paragraph (a) of this Section
11.3, such filings shall set forth (A) the Fee Rate; (B) the budget for
the upcoming year (or remainder of the year, as applicable), including
a brief description of each line item in the budget, including
technology, legal, consulting, insurance, professional and
administration, and public relations costs, a reserve and/or such other
categories as determined by the Operating Committee to be included in
the budget, and the reason for changes in each such line item from the
prior CAT Fee filing; (C) a discussion of how the budget is reconciled
to the collected fees; and (D) the projected total executed equivalent
share volume of all transactions in Eligible Securities for the year
(or remainder of the year, as applicable), and a description of the
calculation of the projection.
    [(i) Each Execution Venue that: (A) executes transactions; or (B)
in the case of a national securities association, has trades reported
by its members to its trade reporting facility or facilities for
reporting transactions effected otherwise than on an exchange, in NMS
Stocks or OTC Equity Securities will pay a fixed fee depending on the
market share of that Execution Venue in NMS Stocks and OTC Equity
Securities, with the Operating Committee establishing at least two and
no more than five tiers of fixed fees, based on an Execution Venue's
NMS Stocks and OTC Equity Securities market share. For these purposes,
market share for Execution Venues that execute transactions will be
calculated by share volume, and market share for a national securities
association that has trades reported by its members to its trade
reporting facility or facilities for reporting transactions effected
otherwise than on an exchange in NMS Stocks or OTC Equity Securities
will be calculated based on share volume of trades reported, provided,
however, that the share volume reported to such national securities
association by an Execution

Venue shall not be included in the calculation of such national
security association's market share.]
    [(ii) Each Execution Venue that executes transactions in Listed
Options will pay a fixed fee depending on the Listed Options market
share of that Execution Venue, with the Operating Committee
establishing at least two and no more than five tiers of fixed fees,
based on an Execution Venue's Listed Options market share. For these
purposes, market share will be calculated by contract volume.]
    (b) Past CAT Costs. The Operating Committee will establish [fixed]
fees (``Historical CAT Assessment'') to be payable by Industry Members
with regard to CAT costs previously paid by the Participants (``Past
CAT Costs'') as follows: [, based on the message traffic generated by
such Industry Member, with the Operating Committee establishing at
least five and no more than nine tiers of fixed fees, based on message
traffic. For the avoidance of doubt, the fixed fees payable by Industry
Members pursuant to this paragraph shall, in addition to any other
applicable message traffic, include message traffic generated by: (i)
an ATS that does not execute orders that is sponsored by such Industry
Member; and (ii) routing orders to and from any ATS sponsored by such
Industry Member.]
    (i) Calculation of Historical Fee Rate.
    (A) General. The Operating Committee will calculate the Historical
Fee Rate for the Historical CAT Assessment by dividing the Historical
CAT Costs by the projected total executed equivalent share volume of
all transactions in Eligible Securities for the Historical Recovery
Period. Once the Operating Committee has approved such Historical Fee
Rate, the Participants shall be required to file with the SEC pursuant
to Section 19(b) of the Exchange Act the Historical CAT Assessment to
be charged Industry Members calculated using such Historical Fee Rate.
Industry Members will be required to pay the Historical CAT Assessment
calculated using this Historical Fee Rate once such Historical CAT
Assessment is in effect in accordance with Section 19(b) of the
Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating the
Historical CAT Assessment, executed equivalent shares in a transaction
in Eligible Securities will be counted in the same manner as set forth
in paragraph (a)(i)(B) of this Section 11.3.
    (C) Historical CAT Costs. The Operating Committee will determine
the Historical CAT Costs sought to be recovered by the Historical CAT
Assessment, where the Historical CAT Costs will be Past CAT Costs minus
Past CAT Costs excluded from Historical CAT Costs by the Operating
Committee.
    (D) Historical Recovery Period.
    (I) The length of the Historical Recovery Period used in
calculating the Historical Fee Rate will be established by the
Operating Committee based upon the amount of the Historical CAT Costs
to be recovered by the Historical CAT Assessment; provided, however, no
Historical Recovery Period used in calculating the Historical Fee Rate
shall be less than 24 months or more than five years.
    (II) Notwithstanding the length of the Historical Recovery Period
used in calculating the Historical Fee Rate, the Historical CAT
Assessment calculated using the Historical Fee Rate will remain in
effect until all Historical CAT Costs are collected.
    (E) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities for Historical Recovery Period. The
Operating Committee shall determine the projected total executed
equivalent share volume of all transactions in Eligible Securities for
the Historical Recovery Period based on the executed equivalent share
volume of all transactions in Eligible Securities for the prior twelve
months.
    (ii) Past CAT Costs and Participants. Because Participants
previously have paid Past CAT Costs via loans to the Company,
Participants would not be required to pay the Historical CAT
Assessment. The Historical CAT Assessment to be paid by Industry
Members and collected by the Company will be used by the Company to
repay a portion of the loans from the Participants to the Company on a
pro rata basis. The Historical CAT Assessment is designed to recover
two-thirds of the Historical CAT Costs.
    (iii) Historical CAT Assessment for Industry Members.
    (A) Each month in which the Historical CAT Assessment is in effect,
each EBB and each EBS shall pay a fee for each transaction in Eligible
Securities executed by the EBB or EBS from the prior month as set forth
in CAT Data, where the Historical CAT Assessment for each transaction
will be calculated by multiplying the number of executed equivalent
shares in the transaction by one-third and by the Historical Fee Rate
determined pursuant to paragraph (b)(i) of this Section 11.3.
    (B) Historical CAT Fee Filing. When the Participants file with the
SEC pursuant to Section 19(b) of the Exchange Act the Historical CAT
Assessment calculated using the Historical Fee Rate that the Operating
Committee approved in accordance with this Section 11.3, such filing
shall set forth (A) the Historical Fee Rate; (B) a brief description of
amount and type of the Historical CAT Costs; (C) the Historical
Recovery Period and the reasons for its length; and (D) the projected
total executed equivalent share volume of all transactions in Eligible
Securities for the Historical Recovery Period, and a description of the
calculation of the projection.
    (c) The Operating Committee may establish any other fees ancillary
to the operation of the CAT that it reasonably determines appropriate,
including fees: (i) for the late or inaccurate reporting of information
to the CAT; (ii) for correcting submitted information; and (iii) based
on access and use of the CAT for regulatory and oversight purposes (and
not including any reporting obligations).
    (d) The Company shall make publicly available a schedule of
effective fees and charges adopted pursuant to this Agreement as in
effect from time to time. The Operating Committee shall review such fee
schedule on at least an annual basis and shall make any changes to such
fee schedule that it deems appropriate. The Operating Committee is
authorized to review such fee schedule on a more regular basis, but
shall not make any changes on more than a semiannual basis unless,
pursuant to a Supermajority Vote, the Operating Committee concludes
that such change is necessary for the adequate funding of the Company.
* * * * *

APPENDIX B

Fee Schedule

Consolidated Audit Trail Funding Fees for Participants

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

EXHIBIT B:

Proposed Additional Revisions to Proposed Changes in Proposed Amendment

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

ARTICLE XI

FUNDING OF THE COMPANY

    Section 11.1. Funding Authority.
    (a) On an annual basis the Operating Committee shall approve an
operating budget for the Company. The budget shall include the
projected costs of the Company, including the costs of developing and
operating the CAT for the upcoming year, and the sources of all
revenues to cover such costs, as well as the funding of any reserve
that the Operating Committee reasonably deems appropriate for prudent
operation of the Company.
    (i) Without limiting the foregoing, the budgeted CAT costs shall
include technology, legal, consulting, insurance, professional and
administration, and public relations costs, a reserve and such other
cost categories as determined by the Operating Committee to be included
in the budget.
    (ii) For the reserve referenced in paragraph (a)(i) of this
Section, the budget will include an amount necessary to allow the
Company to maintain a reserve of not more than 25% of the annual
budget. To the extent collected CAT fees exceed CAT costs, including
the reserve of 25% of the annual budget, such surplus shall be used to
offset future fees.
    (b) Subject to Section 11.2, the Operating Committee shall have
discretion to establish funding for the Company, including: (i)
establishing fees that the Participants shall pay; and (ii)
establishing fees for Industry Members that shall be implemented by
Participants. The Participants shall file with the SEC under Section
19(b) of the Exchange Act any such fees on Industry Members that the
Operating Committee approves, and such fees shall be labeled as
``Consolidated Audit Trail Funding Fees.''
    (c) To fund the development and implementation of the CAT, the
Company shall time the imposition and collection of all fees on
Participants and Industry Members in a manner reasonably related to the
timing when the Company expects to incur such development and
implementation costs. In determining fees on Participants and Industry
Members the Operating Committee shall take into account fees, costs and
expenses (including legal and consulting fees and expenses) incurred by
the Participants on behalf of the Company prior to the Effective Date
in connection with the creation and implementation of the CAT, and such
fees, costs and expenses shall be fairly and reasonably shared among
the Participants and Industry Members. Any surplus of the Company's
revenues over its expenses shall be treated as an operational reserve
to offset future fees.
    (d) Consistent with this Article XI, the Operating Committee shall
adopt policies, procedures, and practices regarding the budget and
budgeting process, resolution of disputes, billing and collection of
fees, and other related matters.
    Section 11.2. Funding Principles. In establishing the funding of
the Company, the Operating Committee shall seek:
    (a) to create transparent, predictable revenue streams for the
Company that are aligned with the anticipated costs to build, operate
and administer the CAT and the other costs of the Company;
    (b) to establish an allocation of the Company's related costs among
Participants and Industry Members that is consistent with the Exchange
Act, taking into account the timeline for implementation of the CAT;
    (c) to establish a fee structure in which the fees charged to
Participants and Industry Members are based upon the executed
equivalent share volume of transactions in Eligible Securities, and the
costs of the CAT.
    (d) to provide for ease of billing and other administrative
functions;
    (e) to avoid any disincentives such as placing an inappropriate
burden on competition and a reduction in market quality; and
    (f) to build financial stability to support the Company as a going
concern.
    Section 11.3. Recovery.
    (a) Prospective CAT Costs. The Operating Committee will establish
fees (``CAT Fees'') to be payable by Participants and Industry Members
with regard to CAT costs not previously paid by the Participants
(``Prospective CAT Costs'') as follows:
    (i) Fee Rate. The Operating Committee will calculate the Fee Rate
for the CAT Fee twice per year, once at the beginning of the year and
once during the year as follows:
    (A) General.
    (I) At the beginning of each year, the Operating Committee will
calculate the Fee Rate by dividing the budgeted CAT costs for the year
by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year. Once the Operating
Committee has approved such Fee Rate, the Participants shall be
required to file with the SEC pursuant to Section 19(b) of the Exchange
Act CAT Fees to be charged to Industry Members calculated using such
Fee Rate. Participants and Industry Members will be required to pay CAT
Fees calculated using this Fee Rate once such CAT Fees are in effect
with regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (II) During each year, the Operating Committee will calculate a new
Fee Rate by dividing the budgeted CAT costs for the remainder of the
year by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the remainder of the year. Once
the Operating Committee has approved the new Fee Rate, the Participants
shall be required to file with the SEC pursuant to Section 19(b) of the
Exchange Act CAT Fees to be charged to Industry Members calculated
using the new Fee Rate. Participants and Industry Members will be
required to pay CAT Fees calculated using this new Fee Rate once such
CAT Fees are in effect with regard to Industry Members in accordance
with Section 19(b) of the Exchange Act.
    (III) For the avoidance of doubt, CAT Fees with a Fee Rate
calculated as set forth in this paragraph (a)(i) shall remain in effect
until the Operating Committee approves a new Fee Rate as described in
paragraph (a)(i) and CAT Fees with the new Fee Rate are in effect with
regard to Industry Members in accordance with Section 19(b) of the
Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating CAT
Fees, executed equivalent shares in a transaction in Eligible
Securities will be counted as follows:
    (I) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;
    (II) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (III) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
    (C) Budgeted CAT Costs. The budgeted CAT costs for the year shall
be comprised of all fees, costs and expenses budgeted to be incurred by
or for the Company in connection with the development, implementation
and operation of the CAT as set forth in the annual operating budget
approved by the Operating Committee pursuant to Section 11.1(a) of the
CAT NMS Plan, or as adjusted during the year by the Operating
Committee.
    (D) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities. The Operating Committee shall
determine the projected total executed equivalent

share volume of all transactions in Eligible Securities for each
relevant period based on the executed equivalent share volume of all
transactions in Eligible Securities for the prior twelve months.
    (ii) Participant CAT Fees.
    (A) CAT Fee Obligation. Each Participant that is a national
securities exchange will be required to pay [a fee] the CAT Fee for
each transaction in Eligible Securities executed on the exchange in the
prior month based on CAT Data. Each Participant that is a national
securities association will be required to pay [a fee] the CAT Fee for
each transaction in Eligible Securities executed otherwise than on an
exchange in the prior month based on CAT Data. [(ii)] The [fee] CAT Fee
for each transaction in Eligible Securities will be calculated by
multiplying the number of executed equivalent shares in the transaction
by one-third and by the [applicable fee rate for the relevant period
(``] Fee Rate ['')] determined pursuant to paragraph (a)(i) of this
Section 11.3.
    (B) Effectiveness. Each Participant will be required to pay the CAT
Fee calculated using the Fee Rate determined pursuant to paragraph
(a)(i) of this Section 11.3 and approved by the Operating Committee
only if such CAT Fees are in effect with regard to Industry Members in
accordance with Section 19(b) of the Exchange Act.
    [(iii) Participants will be required to pay a CAT fee with regard
to CAT costs not previously paid by the Participants (``Prospective CAT
Costs''). The Fee Rate for the CAT fee related to Prospective CAT Costs
will be calculated by dividing the budgeted CAT costs for the relevant
period (as determined by the Operating Committee) by the projected
total executed equivalent share volume of all transactions in Eligible
Securities for the relevant period based on CAT Data.]
    [(iv) Notwithstanding anything to the contrary, Participants will
not be required to pay a CAT fee related to CAT costs previously paid
by the Participants in a manner determined by the Operating Committee
(``Past CAT Costs'').]
    (iii) Industry Member CAT Fees.
    (A) CAT Fee Obligation. Each Industry Member that is the executing
broker for the buyer in a transaction in Eligible Securities
(``Executing Broker for the Buyer'' or ``EBB'') and each Industry
Member that is the executing broker for the seller in a transaction in
Eligible Securities (``Executing Broker for the Seller'' or ``EBS'')
will be required to pay a CAT Fee for each such transaction in Eligible
Securities in the prior month based on CAT Data. The EBB's CAT Fee or
EBS's CAT Fee (as applicable) for each transaction in Eligible
Securities will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Fee Rate
determined pursuant to paragraph (a)(i) of this Section 11.3.
    (B) Content of Fee Filings. When the Participants file with the SEC
pursuant to Section 19(b) of the Exchange Act CAT Fees to be charged to
Industry Members calculated using the Fee Rate that the Operating
Committee approved in accordance with paragraph (a) of this Section
11.3, such filings shall set forth (A) the Fee Rate; (B) the budget for
the upcoming year (or remainder of the year, as applicable), including
a brief description of each line item in the budget, including
technology, legal, consulting, insurance, professional and
administration, and public relations costs, a reserve and/or such other
categories as determined by the Operating Committee to be included in
the budget, and the reason for changes in each such line item from the
prior CAT Fee filing; (C) a discussion of how the budget is reconciled
to the collected fees; and (D) the projected total executed equivalent
share volume of all transactions in Eligible Securities for the year
(or remainder of the year, as applicable), and a description of the
calculation of the projection.
    (b) Past CAT Costs. The Operating Committee will establish fees
(``Historical CAT Assessment'') to be payable by Industry Members with
regard to CAT costs previously paid by the Participants (``Past CAT
Costs'') as follows:
    (i) Calculation of Historical Fee Rate.
    (A) General. The Operating Committee will calculate the Historical
Fee Rate for the Historical CAT Assessment by dividing the Historical
CAT Costs by the projected total executed equivalent share volume of
all transactions in Eligible Securities for the Historical Recovery
Period. Once the Operating Committee has approved such Fee Rate, the
Participants shall be required to file with the SEC pursuant to Section
19(b) of the Exchange Act the Historical CAT Assessment to be charged
to Industry Members calculated using such Historical Fee Rate. Industry
Members will be required to pay Historical CAT Assessment calculated
using this Historical Fee Rate once such Historical CAT Assessment is
in effect in accordance with Section 19(b) of the Exchange Act.
    (B) Executed Equivalent Shares. For purposes of calculating the
Historical CAT Assessment, executed equivalent shares in a transaction
in Eligible Securities will be counted in the same manner as set forth
in paragraph (a)(i)(B) of this Section 11.3.
    (C) Historical CAT Costs. The Operating Committee will determine
the Historical CAT Costs sought to be recovered by the Historical CAT
Assessment, where the Historical CAT Costs will be Past CAT Costs minus
Past CAT Costs excluded from Historical CAT Costs by the Operating
Committee.
    (D) Historical Recovery Period.
    (I) The length of the Historical Recovery Period used in
calculating the Historical Fee Rate will be established by the
Operating Committee based upon the amount of the Historical CAT Costs
to be recovered by the Historical CAT Assessment; provided, however, no
Historical Recovery Period used in calculating the Historical Fee Rate
shall be less than 24 months or more than five years.
    (II) Notwithstanding the length of the Historical Recovery Period
used in calculating the Historical Fee Rate, the Historical CAT
Assessment calculated using the Historical Fee Rate will remain in
effect until all Historical CAT Costs are collected.
    (E) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities for Historical Recovery Period. The
Operating Committee shall determine the projected total executed
equivalent share volume of all transactions in Eligible Securities for
the Historical Recovery Period based on the executed equivalent share
volume of all transactions in Eligible Securities for the prior twelve
months.
    (ii) Past CAT Costs and Participants. Because Participants
previously have paid Past CAT Costs via loans to the Company,
Participants would not be required to pay the Historical CAT
Assessment. The Historical CAT Assessment to be paid by Industry
Members and collected by the Company will be used by the Company to
repay a portion of the loans from the Participants to the Company on a
pro rata basis. The Historical CAT Assessment is designed to recover
two-thirds of the Historical CAT Costs.
    (iii) Historical CAT Assessment for Industry Members.
    (A) Each month in which the Historical CAT Assessment is in effect,
each EBB and each EBs shall pay a fee for each transaction in Eligible
Securities executed by the EBB or EBS from the prior month as set forth
in CAT Data, where the Historical CAT Assessment for each transaction
will be calculated by multiplying the number of executed equivalent
shares in the transaction by one-third and by the

Historical Fee Rate determined pursuant to paragraph (b)(i) of this
Section 11.3.
    (B) Historical CAT Fee Filing. When the Participants file with the
SEC pursuant to Section 19(b) of the Exchange Act the Historical CAT
Assessment calculated using the Historical Fee Rate that the Operating
Committee approved in accordance with paragraph (b) of this Section
11.3, such filing shall set forth (A) the Historical Fee Rate; (B) a
brief description of the amount and type of the Historical CAT Costs;
(C) the Historical Recovery Period and the reasons for its length; and
(D) the projected total executed equivalent share volume of all
transactions in Eligible Securities for the Historical Recovery Period,
and a description of the calculation of the projection.
    [(i) Each Industry Member that is the clearing firm for the buyer
in a transaction in Eligible Securities (``Clearing Broker for the
Buyer'' or ``CBB'') will be required to pay a fee for each such
transaction in Eligible Securities based on CAT Data. The CBB's fee for
each transaction in Eligible Securities will be calculated by
multiplying the number of executed equivalent shares in the transaction
by one-third and by the Fee Rate.]
    [(ii) Each Industry Member that is the clearing firm for the seller
in a transaction in Eligible Securities (``Clearing Broker for the
Seller'' or ``CBS'') will be required to pay a fee for each transaction
in Eligible Securities based on CAT Data. The CBS's fee for each
transaction in Eligible Securities will be calculated by multiplying
the number of executed equivalent shares in the transaction by one-
third and by the Fee Rate.]
    [(iii) CBBs and CBSs will be required to pay CAT fees related to
Past CAT Costs. The Fee Rate for the CAT fees related to Past CAT Costs
will be calculated by dividing the Past CAT Costs for the relevant
period (as determined by the Operating Committee) by the projected
total executed equivalent share volume of all transactions in Eligible
Securities for the relevant period based on CAT Data.]
    [(iv) CBBs and CBSs will be required to pay CAT fees related to
Prospective CAT Costs. The Fee Rate for the CAT fees related to
Prospective CAT Costs will be the same as set forth in paragraph
(a)(iv) above.]
    (c) The Operating Committee may establish any other fees ancillary
to the operation of the CAT that it reasonably determines appropriate,
including fees: (i) for the late or inaccurate reporting of information
to the CAT; (ii) for correcting submitted information; and (iii) based
on access and use of the CAT for regulatory and oversight purposes (and
not including any reporting obligations).
    (d) The Company shall make publicly available a schedule of
effective fees and charges adopted pursuant to this Agreement as in
effect from time to time. The Operating Committee shall review such fee
schedule on at least an annual basis and shall make any changes to such
fee schedule that it deems appropriate. The Operating Committee is
authorized to review such fee schedule on a more regular basis, but
shall not make any changes on more than a semiannual basis unless,
pursuant to a Supermajority Vote, the Operating Committee concludes
that such change is necessary for the adequate funding of the Company.
* * * * *

APPENDIX B

Fee Schedule

Consolidated Audit Trail Funding Fees for Participants

    (a) CAT Fee.
    [(1) Each Participant that is a national securities exchange shall
pay a fee for each transaction in Eligible Securities executed on the
exchange based on CAT Data, where the fee for each transaction will be
calculated by multiplying the number of executed equivalent shares in
the transaction by one-third and by the Fee Rate.
    (2) Each Participant that is a national securities association
shall pay a fee for each transaction in Eligible Securities executed
otherwise than on exchange based on CAT Data, where the fee for each
transaction will be calculated by multiplying the number of executed
equivalent shares in the transaction by one-third and by the Fee Rate.
    (b) Fee Rate.
    (1) The Operating Committee will calculate the Fee Rate at the
beginning of each year by dividing the budgeted CAT costs for the year
by the projected total executed equivalent share volume of all
transactions in Eligible Securities for the year. After setting the Fee
Rate at the beginning of each year, the Fee Rate may be adjusted once
during the year, if necessary, due to changes in the budgeted or actual
costs or projected or actual total executed equivalent share volume
during the year.
    (2) For purposes of calculating the fees, executed equivalent
shares in a transaction in Eligible Securities will be counted as
follows:
    (i) each executed share for a transaction in NMS Stocks will be
counted as one executed equivalent share;
    (ii) each executed contract for a transaction in Listed Options
will be counted based on the multiplier applicable to the specific
Listed Option (i.e., 100 executed equivalent shares or such other
applicable multiplier); and
    (iii) each executed share for a transaction in OTC Equity
Securities shall be counted as 0.01 executed equivalent share.
    (3) Budgeted CAT Costs. The budgeted CAT costs for the year shall
be comprised of all fees, costs and expenses budgeted to be incurred by
or for the Company in connection with the development, implementation
and operation of the CAT as set forth in the annual operating budget
approved by the Operating Committee pursuant to Section 11.1(a) of the
CAT NMS Plan, or as adjusted during the year by the Operating
Committee.
    (4) Projected Total Executed Equivalent Share Volume of
Transactions in Eligible Securities. The Operating Committee shall
determine the projected total executed equivalent share volume of all
transactions in Eligible Securities for each relevant period based on
the executed equivalent share volume of all transactions in Eligible
Securities for the prior six months.]
    [(c) Fee Payments/Collection.] Each Participant shall pay the CAT
Fee [fee] set forth in Section 11.3(a) of the CAT NMS Plan [paragraph
(a)] to Consolidated Audit Trail, LLC in the manner prescribed by
Consolidated Audit Trail, LLC on a monthly basis based on the
Participant's transactions in Eligible Securities in the prior month.
* * * * *
[FR Doc. 2022-26235 Filed 12-1-22; 8:45 am]
BILLING CODE 8011-01-P