distinguish between orders or other trading interest displayed in
external venues with real-time access to systems designed to take
advantage of this information, such as liquidity providers and SORs,
and orders or other trading interest displayed in external venues
without real-time access to systems designed to take advantage of this
information, such as vendors (where no further information is needed or
possibly not required).\990\ The final disclosure requirement does not
draw a distinction between these orders and trading interests. Market
participants can be very sensitive to precisely how and when their
orders and trading interest are displayed or otherwise made known, and
the Commission remains concerned that subscribers to NMS Stock ATSs
might not know the full extent to which their orders and trading
interest are displayed.\991\ While the display of orders or trading
interest at venues in real time that have systems designed to take
advantage of such information may raise the most acute concerns, we
believe that market participants should have a full understanding about
how and when an ATS displays their orders or trading interest.
---------------------------------------------------------------------------

    \990\ See Fidelity Letter at 8.
    \991\ See Proposal, supra note 2, at 81072.
---------------------------------------------------------------------------

    Differences in the latencies associated with the NMS Stock ATS
displaying subscriber orders and trading interest due to a
functionality of the ATS would be responsive to the request in Part
III, Item 15(c).\992\ For example, if an NMS Stock ATS transmits and
displays its proprietary data feed to certain subscribers faster than
other subscribers as a result of the alternative means offered by the
ATS to connect, such information would be responsive.
---------------------------------------------------------------------------

    \992\ See supra note 850. We proposed to require an NMS Stock
ATS to disclose differences among subscribers regarding the display
of orders and trading interest in Part IV, Item 6(a) of proposed
Form ATS-N.
---------------------------------------------------------------------------

    Part IV, Item 6(b) of proposed Form ATS-N, requested the identity
of any individuals in responding to whom the order and trading interest
would be displayed or made known. One commenter raises confidentiality
concerns with the requirement to publicly identify the position and
title of the natural person to whom orders or other trading interest
are displayed, because it believes that it would be relatively easy
through social media to reverse engineer certain identities, and such
information would require frequent updates with little market
utility.\993\
---------------------------------------------------------------------------

    \993\ See Fidelity Letter at 8. See also SIFMA Letter at 23
(suggesting that identifying individuals by title or more specific
identifying characteristics would present security and privacy
issues, as well as client confidentiality issues).

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

    We have revised the request so that Part III, Item 15 of adopted
Form ATS-N does not require the NMS Stock ATS to identify natural
persons. We understand commenters' potential confidentiality concerns
and had modified the request to make clear that the request does not
seek the names of natural persons or their identity. Instead, it
requires the NMS Stock ATS to only identify the recipient of displayed
information, by functionality of the broker-dealer operator or the type
of market participant, or both.\994\ For example, if orders bound for
the NMS Stock ATS pass through the broker-dealer operator's common
gateway, SOR, or algorithm, the NMS Stock ATS would need to disclose
these functionalities as the order was displayed to a functionality of
the broker-dealer operator that would likely be outside the NMS Stock
ATS. If orders resting in the NMS Stock ATS are displayed to certain
subscribers or one or more of the broker-dealer operator business
units, the NMS Stock ATS would need to identify these subscribers and
business units of the broker-dealer operator by type of market
participant (e.g., institutional investors, principal trading firms,
market makers, affiliates, trading desks at the broker-dealer operator,
market data vendors, clearing entities, and potential subscribers,
among others). We believe this modification addresses commenters'
concerns, obviates the need for any redaction of information, and
reduces the frequency of updates necessary as compared to responses
identifying individual persons as proposed.
---------------------------------------------------------------------------

    \994\ See Part III, Item 1 of adopted Form ATS-N (providing
examples of types of market participants).
---------------------------------------------------------------------------

    We are revising Part III, Item 15 of adopted Form ATS-N to address
another commenter's concern that certain persons at the ATS in
technical or quality assurance roles would need to be disclosed even
though they may not be involved with trading activity.\995\ Part III,
Item 15 now specifies that the request does not include ``employees of
the NMS Stock ATS who are operating the system.'' so that employees of
the NMS Stock ATS in non-trading related roles, such as technical,
quality assurance, compliance or accounting roles, among others, that
support the ATS's operations would not be captured under the adopted
Item.\996\
---------------------------------------------------------------------------

    \995\ See SIFMA Letter at 23.
    \996\ The NMS Stock ATS would still be subject to the
requirements of Rule 301(b)(10) and required to establish adequate
safeguards and procedures to protect subscribers' confidential
trading information, which must include: Limiting access to the
confidential trading information of subscribers to those employees
of the ATS who are operating the system or responsible for its
compliance with these or any other applicable rules; and
implementing standards controlling employees of the ATS trading for
their own accounts. See 17 CFR 242.301(b)(10).
---------------------------------------------------------------------------

    Finally, we are adding a ``yes'' or ``no'' questions in Part III,
Item 15(a) that asks if the NMS Stock ATS operates as an ECN as defined
in Rule 600(a)(23) of Regulation NMS. In the Proposal, the Commission
noted that NMS Stock ATSs that are also ECNs may differ in how and
where orders or other trading interest are displayed, and that Part IV,
Item 6 of proposed Form ATS-N was designed inform market participants
about how ECN display orders.\997\ We believe that adding this ``yes''
or ``no'' question would allow the NMS Stock ATS to identify itself to
market participants as an ECN. An ATS that indicates ``yes'' to Part
III, Item 15(a) would also be required to provide information in
response to Part III, Item 15(b) and 15(c).
---------------------------------------------------------------------------

    \997\ See Proposal, supra note 2, at 81072.
---------------------------------------------------------------------------

16. Routing
    Part IV, Item 10(a) of proposed Form ATS-N would have required
disclosures about outbound routing. We are adopting Part IV, Item 10(a)
of proposed Form ATS-N with modifications, renaming the request as
``Routing,'' and renumbering the request as Part III, Item 16 of
adopted Form ATS-N.
    One commenter sought to understand whether the description of
outbound routing required by the Item was limited to outbound routing
performed as a functionality of the ATS itself rather than routing of
client orders by the broker-dealer operator to third-party execution
venues.\998\ The commenter believes that if this Item also applies to
routing performed by the broker-dealer operator, all broker-dealers,
whether or not they operate an ATS, should be required to publicly
disclose routing information. Furthermore, the commenter also argues
for ``required disclosure of routing by a broker-dealer to any
affiliate ATS'' and of ``the method by which a broker-dealer interacts
with the ATSs that it operates. '' \999\
---------------------------------------------------------------------------

    \998\ See Liquidnet Letter at 12.
    \999\ Id. We note that adopted Form ATS-N requires disclosure on
both subjects. Part II, Item 1(a) of adopted Form ATS-N solicits
information about the entry of orders and trading interest by the
broker-dealer operator, including its business unit(s), into the NMS
Stock ATS. Part II, Item 1(d) of adopted Form ATS-N solicits
information about orders and trading interest in the NMS Stock ATS
that can be routed to a trading center of the broker-dealer
operator, which would include affiliates of the NMS Stock ATS, and
if so, the NMS Stock ATS must provide information that is required
in response to Part III, Item 16 of adopted Form ATS-N.
---------------------------------------------------------------------------

    As the commenter points out above, order handling and the routing
of orders by the broker-dealer operator in its capacity as a broker-
dealer may be separate from routing of orders in the ATS to other
execution venues. As noted above,\1000\ we did not intend to require
broker-dealer operators to disclose information about their handling of
customer orders when such orders are not routed to or residing in the
NMS Stock ATS. In response to the commenter's concerns, the adopted
Item does not request information about routing of orders and trading
interest by the broker-dealer operator that are not routed to or
residing in the NMS Stock ATS.
---------------------------------------------------------------------------

    \1000\ See supra Section V.D.15.
---------------------------------------------------------------------------

    We made several changes to Part IV, Item 10(a) of proposed Form
ATS-N in response to comments (and adopted as Part III, Item 16).
First, we are requiring an NMS Stock ATS to indicate whether orders and
trading interest in the ATS can be routed to a destination outside the
ATS, and if the answer to that question is ``yes,'' whether affirmative
instructions from a subscriber must be obtained before their orders or
trading interest is routed from the ATS. If the NMS Stock ATS indicates
that ``yes'' instructions from a subscriber must first be obtained, the
NMS Stock ATS will be required to describe the affirmative instruction
and how the affirmative instruction is obtained. If instructions from a
subscriber need not be first obtained, the NMS Stock ATS will be
required to explain when orders in the NMS Stock ATS can be routed from
the NMS Stock ATS (e.g., at the discretion of the broker-dealer
operator).\1001\
---------------------------------------------------------------------------

    \1001\ We have consolidated the discussion of how orders can be
removed from the NMS Stock ATS in Part III, Item 7(a)(vii) of
adopted Form ATS-N.
---------------------------------------------------------------------------

    In Part III, Item 16 of adopted Form ATS-N, we are removing the
proposed requirement to ``describe the circumstances'' of outbound
routing more broadly, and instead, are now requiring, as applicable,
that the NMS Stock ATS ``describe the affirmative instruction'' of the
subscriber and ``explain how the affirmative instruction is obtained.''
This change is consistent with the instruction in the Proposal to
``describe the circumstances,'' but provides more specific instruction.
Moreover, if trading interest can be routed away from the NMS Stock ATS
without the affirmative instruction of the subscriber, we are no longer
limiting the alternative to be when it happens at the discretion of the
broker-dealer, as proposed, but instead, are requiring an explanation
of when orders can be routed from the NMS Stock ATS. We

believe that phrasing the request this way reflects that trading
interest can be routed from the NMS Stock ATS in different ways and
better accommodates potential future developments in the industry. We
believe that the information in this Item will provide a subscriber
with the necessary information to authorize routing and understand how
its orders in the ATS can be routed from the ATS, and help prevent the
subscriber from unknowingly agreeing to the routing of their trading
interest.
    We are not adopting in Part III, Item 16 of Form ATS-N the proposed
requirements that the NMS Stock ATS explain the means by which routing
is performed, or that the NMS Stock ATS explain any differences among
subscribers in the means by which trading interest is routed, as this
could expand the scope of Form ATS-N beyond ATS activity and into the
other broker-dealer functions of the broker-dealer operator.
17. Closing
    Part IV, Item 9(b) of proposed Form ATS-N would have required
disclosures about the NMS Stock ATS's closing process. We did not
receive specific comment on Part IV, Item 9(b) of proposed Form ATS-N.
We are adopting Part IV, Item 9(b) with certain modifications discussed
below, and renumbering the request as Part III, Item 17 (``Closing'')
of adopted Form ATS-N. Part III, Item 17 is designed to inform market
participants about whether an NMS Stock ATS uses any special procedures
to match orders at the close of regular trading. The Item is designed
to provide market participants with information about any special
closing processes used by the NMS Stock ATS, particularly whether there
are any order types used during the close.
    The vast majority of requests in Part III of adopted Form ATS-N
relate to trading during regular hours. Therefore, when discussing
differences between trading during the close and during regular hours,
the NMS Stock ATS must discuss differences as compared to relevant
information disclosed in Part III Items, including, among others, order
types (Item 7), order interaction, priority, matching, and execution
procedures (Item 11), segmentation (Item 13), and display (Item 15). We
believe this information will be important for market participants to
understand in evaluating whether participating in the closing process
is consistent with their trading objectives.\1002\
---------------------------------------------------------------------------

    \1002\ As discussed in the Proposal, the Item would, for
example, require disclosure of any procedures to match orders to set
a single closing price to maximize liquidity and accurately reflect
market conditions at the close of trading. See Proposal, supra note
2, at 81077 (discussing closing auctions and orders designed to
execute at the close of trading).
---------------------------------------------------------------------------

18. Trading Outside of Regular Trading Hours
    Part IV, Item 9(c) of proposed Form ATS-N would have required
disclosures regarding after-hours trading. The Commission did not
receive any comments regarding the substance of Part IV, Item 9(c) of
proposed Form ATS-N. The Commission is adopting Part IV, Item 9(c) of
proposed Form ATS with certain modifications, as discussed below, and
relocating the request as Part III, Item 18 (``Trading Outside of
Regular Trading Hours'') of adopted Form ATS-N.
    The Commission is merging requests from Part IV, Item 9(a), which
requested information about pre-opening executions,\1003\ and Part IV,
Item 9(c), which requested information about after-hours trading. We
believe that the potential for redundant disclosures, as observed by
commenters,\1004\ would be reduced by merging these two requests.
---------------------------------------------------------------------------

    \1003\ Part IV, Item 9(a) of proposed Form ATS-N requested the
NMS Stock ATS describe any differences between pre-opening
executions, executions following a stoppage of trading in a security
during regular trading hours, and executions during regular trading
hours.
    \1004\ See, e.g., SIFMA Letter at 20.
---------------------------------------------------------------------------

    This Item will require NMS Stock ATSs to indicate in Part III,
Items 18(a) and 18(b) whether the ATS conducts trading outside regular
trading hours, and indicate whether there are any differences between
trading outside of regular trading hours and trading during regular
hours. To the extent that there are differences, the NMS Stock ATS must
describe those differences. Similar to Item 17 (requesting differences
between the closing and regular trading hours), an NMS Stock ATS must
discuss differences in trading outside of regular trading hours as
compared to the relevant information disclosed in Part III Items,
including, among others, order types (Item 7), order interaction,
priority, matching, and execution procedures (Item 11), segmentation
(Item 13), and display (Item 15). Many of the disclosures discussed
elsewhere in Form ATS-N will relate to regular trading hours so the ATS
can simply discuss any differences between trading during regular hours
and trading outside regular trading hours in Part III, Item 18(b).
19. Fees
    Part IV, Item 12 of proposed Form ATS-N would have required
disclosures about fees. We are adopting Part IV, Item 12 of proposed
Form ATS-N with modifications, which are discussed below, and
renumbering the request as Part III, Item 19 (``Fees'') of adopted Form
ATS-N. Some commenters suggest that the Commission exercise restraint
in the area of fees given that they are the product of negotiations
between sophisticated financial institutions and leave to market
competition the setting of appropriate fees.\1005\ Another commenter
suggests that NMS Stock ATSs be allowed to voluntarily report their fee
structure.\1006\
---------------------------------------------------------------------------

    \1005\ See UBS Letter at 8; LeveL ATS at 6 (stating that ATS
subscribers are sophisticated counterparties that have a keen sense
of the market for the services provided and are not in need of the
fee disclosures proposed).
    \1006\ See STA Letter at 3-4.
---------------------------------------------------------------------------

    The Commission continues to believe that disclosures regarding fees
on Form ATS-N are necessary and important, and should not be voluntary
for NMS Stock ATSs. Fee disclosures on Form ATS-N are designed to allow
all market participants to analyze the fee structures across NMS Stock
ATSs in an expedited manner and decide which ATS offers them the best
pricing according to the characteristics of their order flow, the type
of participant they are (if relevant), or any other aspects of an ATS's
fee structure that serves to provide incentives or disincentives for
specific market participants or trading behaviors. As NMS Stock ATSs
have become a significant source of liquidity in NMS Stocks,\1007\ we
believe that disclosures about their fees are warranted as, in the
Commission's experience, fees can be a primary factor for market
participants in deciding where to route their orders and trading
interest. Several commenters express support, on behalf of different
types of market participants, for fee disclosures on Form ATS-N.\1008\
---------------------------------------------------------------------------

    \1007\ See supra Section II.A.1.
    \1008\ See ICI Letter at 10; HMA Letter at 18 (suggesting that
disclosure of the details regarding fees (among other topics in part
III) is essential for investors or routing brokers seeking to
understand how the ATS works). See also SIFMA Letter at 25 (stating
that a broad description of compensation mechanisms is appropriate
and a description of the mechanisms and categories of fee structure
would offer an appropriate level of clarity and transparency); KCG
Letter at 7 (stating the Commission should require standard
documents, including pricing schedules).
---------------------------------------------------------------------------

    In addition, given commenters' concerns that the use of the term
``describe'' in Form ATS-N is vague and would lead to discursive
disclosures and obscure key information,\1009\ the

Commission is providing additional specificity on the Item's
requirements and more examples in the text of the Item. The Commission
is adding to Part III, Item 19 requests that NMS Stock ATSs include in
their descriptions: The structure of the fee, variables that impact the
fee, and differentiation among types of subscribers, along with
examples of responsive information included in a parenthetical in the
text of each subpart.\1010\ The Item also would still require a range
of fees as proposed.
---------------------------------------------------------------------------

    \1009\ See supra note 941 and accompanying text.
    \1010\ We are including examples of responsive information in
parentheticals in the text of the item. For instance, for
descriptions of the structure of the fee, the Commission is
providing as examples a fixed fee, volume-based and transaction-
based fee structures. For the description of variables that may
impact the fee, the Commission is providing as examples: The types
of securities traded, block orders, and the form of connectivity to
the ATS. For the description of the differentiation among types of
subscribers for the fee, the Commission is providing as examples of
the types of subscribers: Broker-dealers, institutional investors,
and retail.
---------------------------------------------------------------------------

    One commenter recommends that the Commission require that any
description of a differential fee structure contain enough information
for a market participant to understand exactly which, or which level,
of fees/rebates/charges apply to each type of subscriber or other
person and the criteria that the NMS Stock ATS uses to sort subscribers
into different fee categories so that market participants can assess
eligibility requirements for different fee tiers.\1011\
---------------------------------------------------------------------------

    \1011\ See ICI Letter at 10.
---------------------------------------------------------------------------

    The Commission recognizes that the fee structures of NMS Stock ATSs
can vary and that not all NMS Stock ATSs apply set tiers or categories
of fees for subscribers; \1012\ however, the Commission agrees with the
commenter that a market participant should have sufficient information
to understand the fees for using the services of the NMS Stock ATS.
Recognizing the various fees that can be charged by NMS Stock ATSs, the
Commission is specifying in the fee request the types of information
that an NMS Stock ATS must provide in response to the Commission's
proposed request to describe its fees (e.g., the structure of the fees,
variables that impact each fee, differentiation among types of
subscribers, and the range of fees). These disclosures are designed to
provide market participants with more insight regarding the fees
charged so that they can better understand how fees may apply to them
and assess how such fees may impact their trading strategies. This
approach does not require NMS Stock ATSs to provide comprehensive fee
schedules but still gives subscribers meaningful information about the
fees the NMS Stock ATS charges.\1013\ Although the fees charged for NMS
Stock ATS services may be individually negotiated between the broker-
dealer operator and the subscriber, the disclosures about the type of
fees charged by the NMS Stock ATS are designed to help market
participants discern how an NMS Stock ATS's fees are organized and
compare that information across NMS Stock ATSs, which could reduce the
search costs of market participants in deciding where to send their
orders and trading interest. Relatedly, the Commission recognizes that
a requirement to disclose the complete fee schedule for each subscriber
may provide more information, but this would not be desirable or
preferable given the fees for NMS Stock ATSs can be highly bespoke and
specific to each subscriber.\1014\
---------------------------------------------------------------------------

    \1012\ See Liquidnet Letter at 12 (stating it has in place over
1,500 subscriber agreements).
    \1013\ See SIFMA Letter at 25-26 (stating a description of the
mechanisms and categories of fee structures would offer an
appropriate level of clarity and transparency).
    \1014\ One commenter notes that it agrees with the Commission on
this point, and states that the concept of a fixed fee schedule
would not be practical or appropriate in this context. See Liquidnet
Letter at 13.
---------------------------------------------------------------------------

    One commenter suggests that a description of the mechanisms and
categories of fee structures would offer an appropriate level of
clarity and transparency, and that the disclosure of the existence of
rebates or commission relating to volume is workable, but a high/low
range of fees or more client-specific descriptions affect registrants'
ability to negotiate custom agreements with subscribers.\1015\ Part
III, Item 19 of adopted Form ATS-N does not require or reveal customer-
specific information regarding the fees or terms and conditions of fee
agreements that result in the high or low in the range of fees
disclosed. Part III, Item 19 of adopted Form ATS-N requests the range
of fees and does not require the NMS Stock ATS to disclose the name of
the customer, or even the types of subscriber, who is the highest or
lowest in the range.
---------------------------------------------------------------------------

    \1015\ See SIFMA Letter at 25-26.
---------------------------------------------------------------------------

    A commenter states that the Commission also should require an NMS
Stock ATS to explain whether it discriminates among different types of
subscribers in establishing fees, rebates, or other charges.\1016\ In
Part IV, Item 12(b) of proposed Form ATS-N, we proposed that NMS Stock
ATSs describe any differences if the fees, rebates, or other charges of
the NMS Stock ATS were not the same ``for all subscribers and
persons.'' We continue to believe that NMS Stock ATSs should be
required to disclose differences in the treatment of subscribers;
however, the Commission is changing Part III, Item 19 to require a
description of any differentiation among ``types of subscribers''
because the Commission did not intend to require fee differences among
individual subscribers. Rather, we believe that differences in fees,
rebates and other charges among ``types of subscribers'' would be more
informative to market participants about the fee structure of the ATS
than disclosures of individual differences between subscribers, which
could result from particular negotiations with individual subscribers.
This information would allow subscribers to observe whether an NMS
Stock ATS is offering preferential treatment among types of subscribers
with regards to fees, and therefore, the information could aid them in
deciding where to route their trading interest.
---------------------------------------------------------------------------

    \1016\ See ICI Letter at 10 (recommending NMS Stock ATSs explain
whether they discriminate among different types of subscribers in
establishing fees, rebates, or other charges).
---------------------------------------------------------------------------

    Another commenter suggests that the Commission should require NMS
Stock ATSs to provide complete information about their sources of
revenue, including revenue arrangements the ATS may have with other
trading centers.\1017\ The commenter suggests funds and other market
participants would use these disclosures to evaluate the potential for
information leakage attendant to routing orders to a particular NMS
Stock ATS or whether these arrangements may disadvantage subscribers of
the ATS, including funds. We do not believe that disclosure of all of
an ATS's sources of revenue would likely contribute more to
subscribers' understanding of conflicts of interest than the
combination of the disclosures in this Item and the disclosures in Part
II of adopted the Form ATS-N, which include disclosures regarding ATS-
related activities of the broker-dealer operator and its affiliates,
such as Part II, Item 4.\1018\
---------------------------------------------------------------------------

    \1017\ See id.
    \1018\ See supra Section V.C.4 (discussing any formal or
informal arrangements between the Broker-Dealer Operator and a
Trading Center to access the NMS Stock ATS services).
---------------------------------------------------------------------------

    Other commenters express various reasons for why they believe the
Commission should not require some or all of the disclosures on fees of
Part IV, Item 12 of proposed Form ATS-N. Commenters state that NMS
Stock ATSs, and especially NMS Stock ATSs of multi-service broker-
dealers, may establish fees based on a number of factors, including the
depth and breadth of a client relationship, or the full suite of
brokerage services made available to

the client.\1019\ The commenters believe that because fees are set
taking into account these other factors, any disclosures on the range
of fees on the NMS Stock ATS would be misleading.\1020\ As discussed in
the Proposal, the types of fees charged to use an NMS Stock ATS's
services could influence whether a market participant subscribes to, or
the extent to which it participates on, the NMS Stock ATS.\1021\ The
Commission recognizes, as indicated by commenters, that fees charged
for the use of the NMS Stock ATS services can be bundled with non-ATS
services that the broker-dealer operator offers to subscribers of the
ATS. While Part IV, Item 12 of proposed Form ATS-N request did not
explicitly identify bundled service fees, the proposed request did
require a description of any fees, rebates, or other charges of the NMS
Stock ATS. As a type of fee for use of the services of the NMS Stock
ATS, bundled service fees would have been responsive to Part IV, Item
12 of proposed Form ATS-N.
---------------------------------------------------------------------------

    \1019\ See UBS Letter at 8; Morgan Stanley Letter at 4; STA
Letter at 3-4; LeveL ATS Letter at 6.
    \1020\ See UBS Letter at 8; STA Letter at 3-4; Morgan Stanley
Letter at 4.
    \1021\ See Proposal, supra note 2, at 81080.
---------------------------------------------------------------------------

    To avoid potential confusion about fees charged by an NMS Stock
ATS, and to account for bundled service fees charged to a subscribers
by multi-service broker-dealer operators of NMS Stock ATSs, the
Commission is adding a separate and specific request to Part III, Item
19(b) of adopted Form ATS-N. Specifically, the Commission is requiring
that the NMS Stock ATS describe any bundled fees, including a summary
of the bundled services and products offered by the broker-dealer
operator or its affiliates, the structure of the fee, variables that
impact the fee (including, for example, whether the particular broker-
dealer services selected would impact the fee), differentiation among
types of subscribers, and range of fees. Part III, Item 19(b) is
designed to allow market participants to better evaluate fees for
bundled services that include access to the NMS Stock ATS. NMS Stock
ATSs will be required to provide information, including the relevant
services and products offered by the broker-dealer operator and its
affiliates for each bundled fee offered, that will provide context to
market participants with which to assess how fees could apply to them
as subscribers.
    Another commenter states its understanding that the disclosures
required would relate only to the fees that the ATS charges for its
services, and not include brokerage services, because otherwise, it
believes there would be unfair discrimination relative to broker-
dealers that do not operate an ATS.\1022\ To the extent that a broker-
dealer operator bundles its services with its NMS Stock ATS services,
and the ATS services do not have an explicit fee, then the broker-
dealer operator would not be required to provide a range of fees
charged for the bundled services. On the other hand, if a broker-dealer
operator bundles its services with its NMS Stock ATS services and
charges an explicit fee for the ATS services, then the fee for the ATS
services should be taken into account for determining the range of fees
under this Item. Further, if a broker-dealer operator sometimes bundles
its services with its NMS Stock ATS services for certain subscribers,
but charges a separate fee for ATS services, it would be required to
provide the information responsive to this Item, including the range,
for the separate fee for ATS services.
---------------------------------------------------------------------------

    \1022\ See Liquidnet Letter at 12.
---------------------------------------------------------------------------

    A commenter also suggests the Item be expressly limited to fees set
by the ATS operator and not include fees from other affiliates or third
parties (e.g., related to co-location).\1023\ Part III, Item 19(a) of
adopted Form ATS-N covers charges to subscribers for their ``use of the
NMS Stock ATS services.'' \1024\ The fee information disclosed in Part
III, Item 19 of adopted Form ATS-N must include fees resulting from a
subscriber's use of the NMS Stock ATS services that are charged by the
broker-dealer operator, or a third party, such as a service provider to
the NMS Stock ATS. The Item's required disclosures are not limited by
the entity charging the fee; rather, if the fee is for use of the NMS
Stock ATS services, then the Item's requests apply regardless of the
entity charging the fee. Many broker-dealer operators today outsource
some or all of the operations of the NMS Stock ATS to third parties
(e.g., such as the matching engine). To the extent that subscribers are
charged a fee by the third-party service provider of the NMS Stock ATS,
the NMS Stock ATS would be required to disclose such fees in Part III,
Item 19(a) of Form ATS-N.
---------------------------------------------------------------------------

    \1023\ See SIFMA Letter at 26.
    \1024\ The NMS Stock ATS services generally include those
services used for the purpose of effecting transactions in NMS
Stock, or for submitting, disseminating or displaying orders on the
ATS. See 17 CFR 242.300(b).
---------------------------------------------------------------------------

    On the other hand, Part III, Item 19(a) of adopted Form ATS-N does
not request information on fees charged for non-ATS services by a third
party not in contract with the broker-dealer operator. If, for example,
the NMS Stock ATS is located in a facility owned by a third party, and
in order to co-locate to the NMS Stock ATS a subscriber would be
required to lease physical space from the third-party facility owner, a
fee for the space rental would not be required to be disclosed on Form
ATS-N by the NMS Stock ATS. On the other hand, if an NMS Stock ATS
provides co-location services for subscribers and charges a fee to
those subscribers for the co-location services, such fee would be
responsive to Part III, Item 19 of Form ATS-N. In addition, to the
extent that a broker-dealer operator enters into an agreement or
arrangement with a third party for that third party to provide a
service of the NMS Stock ATS to subscribers and charge a fee that is
passed back to the broker-dealer operator in any form, the broker-
dealer operator would be required to disclose that fee in response to
Part III, Item 19 of Form ATS-N. In such a case, to prevent an NMS
Stock ATS from circumventing disclosure otherwise responsive to Part
III, Item 19(b) of adopted Form ATS-N, the pass-backed fee by the third
party is a fee ``for the use of NMS Stock ATS services.''
    Another commenter suggests that clients are highly interested in
understanding whether an ATS offers rebates to subscribers and would
support the inclusion of this question.\1025\ In response to the
commenter, the disclosure requests under Item 19 will contain a stand-
alone Item--Item 19(c)--which requests information about rebates and
discounts of fees that are identified in subparts (a) and (b) of Item
19. Item 19(c) requires information about rebates and discounts that is
similar to that which is required for fees (e.g., the structure of the
rebate or discount, variables that impact the rebate or discount,
differentiation among types of subscribers, and range of rebate or
discount).
---------------------------------------------------------------------------

    \1025\ See UBS Letter at 8. We proposed in Part IV, Item 12(a)
of proposed Form ATS-N that the NMS Stock ATS describe ``any fees,
rebates, or other charges'' of the NMS Stock ATS.
---------------------------------------------------------------------------

20. Suspension of Trading
    Part IV, Item 8 of proposed Form ATS-N would have required
disclosures regarding any procedures governing trading during a
suspension of trading, disruption or malfunction. The Commission is
adopting Part IV, Item 8 with certain modifications, renaming it
``Suspension of Trading,'' and renumbering the request to Part III,
Item 20 in adopted Form ATS-N. Part III, Item 20 is designed to, for
example, inform market participants of whether, among other things, an
NMS Stock ATS

will continue to accept orders after a suspension, whether the NMS
Stock ATS routes, holds, or continues to execute orders resting in the
system prior to the suspension, and the type of notice provided to
market participants during a suspension. Furthermore, as discussed in
the Proposal,\1026\ one of the primary concerns of the Commission is
that given the speed and interconnected nature of the U.S. securities
markets, a seemingly minor systems problem at a single entity can
quickly create losses and liability for market participants, and spread
rapidly across the national market system, potentially creating
widespread damage and harm to market participants and investors.
Accordingly, it is important to fully understand what, if any, trading
procedures an NMS Stock ATS would follow when trading is suspended or
stopped. Consistent with the Proposal, we are adding the phrase
``including the suspension of trading in individual NMS stocks'' to
Item 20(a) to make clear that the procedures to suspend trading in an
NMS stock by an NMS Stock ATS are required by this request.\1027\
---------------------------------------------------------------------------

    \1026\ See Proposal, supra note 2, at 81076.
    \1027\ Based on Commission experience, an NMS Stock ATS's
procedures may include the suspension of trading in an NMS stock
security to not trigger the requirements of Rule 301(b)(3) or Rule
301(b)(5) of Regulation ATS. See Proposal, supra note 2, at 81104.
---------------------------------------------------------------------------

    We received two comments regarding Part IV, Item 8 of proposed Form
ATS-N. One commenter suggests that this information would be better
suited as a disclosure to subscribers rather than formally filed with
the Commission and publicly disclosed.\1028\ We do not agree and
believe that this information would allow non-subscribers to better
evaluate their brokers' order routing practices and whether the routing
of their orders to an NMS Stock ATS would achieve their trading or
investment strategies.
---------------------------------------------------------------------------

    \1028\ See SIFMA Letter at 24-25.
---------------------------------------------------------------------------

    Another commenter requests that the Commission consider harmonizing
any definitions used in the Item with those found in Regulation
SCI.\1029\ As discussed in the Proposal, the Commission does not intend
to alter or amend the requirements of Regulation SCI with this Item,
nor does it intend to require NMS Stock ATSs to adopt specific
procedures during a system disruption as it did in Regulation
SCI.\1030\ Instead, we are requiring an NMS Stock ATS to disclose what
procedures, if any, it follows when suspending or stopping trading so
that market participants can better understand how their orders will be
handled under those circumstances.
---------------------------------------------------------------------------

    \1029\ See UBS Letter at 8.
    \1030\ See Proposal, supra note 2, at 81076. We are removing
references to ``system disruptions'' to mitigate any confusion with
Regulation SCI. We believe this technical change does not change the
substantive information required.
---------------------------------------------------------------------------

21. Trade Reporting
    Part IV, Item 13(a) of proposed Form ATS-N would have required
disclosures regarding trade reporting. We are adopting Part IV, Item
13(a) of proposed Form ATS-N with certain modifications discussed
below, and renumbering the request as Part III, Item 21 of adopted Form
ATS-N. One commenter suggests that the prompt to disclose ``any
arrangements'' is broad and poses challenges to keep current and
recommends it would be more useful to limit the requested arrangements
to those that are material to or a core feature of the operations of
the ATS.\1031\ In response to this comment, we are revising the request
to focus on ``material'' arrangements for reporting transactions on the
NMS Stock ATS. We recognize that there could be arrangements relevant
to trade reporting, such as the specific software used to report, that
play a minor role in the ATS's trade reporting and need not be
disclosed. We believe that this change clarifies the Form ATS-N
requirement and reduces potential burdens on NMS Stock ATSs while
providing market participants with sufficient information to understand
how their trade information will be reported.
---------------------------------------------------------------------------

    \1031\ See SIFMA Letter at 26.
---------------------------------------------------------------------------

    In addition, we are adding a phrase to the Item to make clear that
the explanation of procedures or material arrangements required
includes ``where an ATS reports transactions and under what
circumstances.'' We believe this language will help NMS Stock ATSs
better understand what would be responsive to Part III, Item 21 of
adopted Form ATS-N and focus their responses accordingly, and is
consistent with the request in Part IV, Item 13(a) of proposed Form
ATS-N. For example, the NMS Stock ATS will be required to disclose the
SRO to which it reports transactions, and any alternative trade
reporting destinations, if applicable. Information about where an NMS
Stock ATS reports transactions and under what circumstances would have
been responsive to Part IV, Item 13(a) of proposed Form ATS-N, which
required the NMS Stock ATS to ``describe any arrangements or procedures
for reporting transactions on the NMS Stock ATS.'' The addition of the
phrase to Item 21(a) clarifies those procedures that would be
responsive to the request. Finally, we are revising the proposed Item
to clarify that the NMS Stock ATS explain any ``procedures and material
arrangements'' (emphasis added), instead of ``procedures or material
arrangements'' (emphasis added). We intended that a description of both
procedures and material arrangements would provide a complete and
comprehensive disclosure of the most important aspects of the NMS Stock
ATS's trade reporting.
22. Clearance and Settlement
    Part IV, Item 13(b) of proposed Form ATS-N would have required
disclosures regarding clearance and settlement. The Commission is
adopting Part IV, Item 13(b) of proposed Form ATS-N with certain
modifications discussed below, and renumbering it as Part III, Item 22
of adopted Form ATS-N. The integrity of the trading markets depends on
the prompt and accurate clearance and settlement of securities
transactions.\1032\ Part III, Item 22 is designed to help market
participants understand the measures the NMS Stock ATS takes to
facilitate clearance and settlement of transactions, including the
process through which an NMS Stock ATS clears a trade (e.g., whether
the NMS Stock ATS becomes a counterparty to a transaction, interposing
itself between two counterparties to a transaction, or whether the NMS
Stock ATS submits trades to a registered clearing agency for clearing)
and any requirements an NMS Stock ATS places on its subscribers, or
other persons whose orders are routed to an NMS Stock ATS, to have
clearance and settlement systems and/or arrangements with a clearing
firm.\1033\
---------------------------------------------------------------------------

    \1032\ See Proposal, supra note 2, at 81081.
    \1033\ Id.
---------------------------------------------------------------------------

    One commenter suggests that the prompt to disclose ``any
arrangements'' is broad and poses challenges to keep current and
recommends it would be more useful to limit the requested arrangements
to those that are material to or a core feature of the operations of
the ATS.\1034\ In response to this comment, and for similar reasons to
those stated above for Part III, Item 21 (``Trade Reporting''), we are
revising this request to focus the Item on ``material'' arrangements to
facilitate the clearance and settlement of transaction on the NMS Stock
ATS. For example, an arrangement under which a third party would have a
role in clearance and settlement on the NMS Stock ATS may constitute a
material arrangement that could trigger the disclosure requirement
under Part III, Item 22. Limiting the explanation required to material
arrangements will reduce the burden on

NMS Stock ATSs while at the same time still allowing market
participants to understand and more easily compare clearing
arrangements required across NMS Stock ATSs.
---------------------------------------------------------------------------

    \1034\ See SIFMA Letter at 26.
---------------------------------------------------------------------------

    For similar reasons as stated above for Part III, Item 21 (``Trade
Reporting''), we are revising this request to state that the NMS Stock
ATS describe any ``procedures and material arrangements'' (emphasis
added), instead of ``procedures or material arrangements'' (emphasis
added). In addition, we are removing the phrase ``undertaken by the NMS
Stock ATS'' from the proposed requirement. NMS Stock ATSs may engage a
third party to facilitate the clearance and settlement of transactions
on the NMS Stock ATS, and we do not intend to limit the procedures and
material arrangements explained to only those specifically performed by
the NMS Stock ATS.
23. Market Data
    Part IV, Item 11 of proposed Form ATS-N would have required
disclosures regarding market data. The Commission is adopting Part IV,
Item 11 of proposed Form ATS-N with certain modifications and
renumbering the request as Part III, Item 23 of adopted Form ATS-N.
Market data is a critical component to understanding the operations of
an NMS Stock ATS. For instance, the market data received by an NMS
Stock ATS might affect the price at which orders and trading interest
is prioritized and executed in the ATS, including orders that are
pegged to an outside reference price. The source of an NMS Stock ATS's
market data could impact the execution price received by a subscriber.
Disclosures about the NMS Stock ATS's sources of market data, and how
the ATS uses such data, can help to inform market participants about
how their orders would be handled and executed by the NMS Stock ATS.
    One commenter recommends the elimination of prompts that it
suggests request proprietary, sensitive, or duplicative information.
The commenter instead recommends a general, high-level description
regarding the determination of NBBO and pricing.\1035\ As routing is a
function performed by a broker-dealer and outside the ATS, the
Commission is revising the request to make clear that an NMS Stock ATS
would not be required to provide information about the market data that
the broker-dealer operator uses to route orders and trading interest
from the NMS Stock ATS to away destinations. Part III, Item 23 would
require information, however, about the ATS's use of market data to
determine when resting orders and trading interest will be removed from
inside the NMS Stock ATS because these orders and trading interest
reside inside the ATS and the data used to act on them could impact
their execution.
---------------------------------------------------------------------------

    \1035\ See SIFMA Letter at 25.
---------------------------------------------------------------------------

    An NMS Stock ATS would also be required to provide information
about how the ATS uses market data to provide the services it offers.
Among other things, for example, the NMS Stock ATS would need to
disclose in response to Part III, Item 23, of adopted Form ATS-N, its
use of market data to display, price, prioritize, execute, and remove
trading interest. As part of its explanation for how the NMS Stock ATS
uses market data, the ATS would be required to specify, if applicable,
when the ATS may change between its use of different sources of market
data to provide its services.
    Given commenters' concerns that the use of the term ``describe'' in
Form ATS-N is vague and would lead to discursive disclosures and
obscure key information,\1036\ the Commission is providing additional
examples in the text of the Item to give NMS Stock ATSs more guidance
on the types of information that would be responsive to the request,
including how the ATS determines the NBBO and protected quotes in the
Item.
---------------------------------------------------------------------------

    \1036\ See supra note 941.
---------------------------------------------------------------------------

    One commenter believes that the form should require annual
disclosures of an NMS Stock ATS's approximate latency (in microseconds)
to receive market data feeds, assemble the NBBO, and deliver the
updated NBBO to the matching engine.\1037\ As discussed elsewhere in
relation to comments requesting quantitative data,\1038\ the Commission
is not adopting ongoing reporting requirements for NMS Stock ATSs to
report performance metrics of their system and therefore not requiring
NMS Stock ATS to disclose this information. The information above could
be important to market participants because they could be concerned,
for example, about price impacts on their trading interest if the NMS
Stock ATS compiles the NBBO slower than other trading venues, or that
they would trade on stale prices, as well as the potential for
information leakage. To address the commenter's concern, the Commission
is providing guidance to NMS Stock ATSs that, in response to Part III,
Item 23, the NMS Stock ATS should explain how market data is received
by the ATS, compiled, and delivered to the matching engine. For
example, among other possible arrangements, the NMS Stock ATS could
explain in response to the Item that market data is received by the
broker-dealer operator and assembled there, and subsequently delivered
to the matching engine, or that market data is sent directly to the
matching engine, which normalizes the data for its use.
---------------------------------------------------------------------------

    \1037\ See HMA Letter at 19.
    \1038\ See Section V.D.13 (discussing why the Commission is
requiring narrative responses instead of a quantitative component,
such as the percentage of orders and trades per segmented class),
and V.D.26 (discussing why the Commission is requiring narrative
responses instead of quantitative data from NMS Stock ATSs).
---------------------------------------------------------------------------

24. Order Display and Execution Access
    Part IV, Item 14 of proposed Form ATS-N would have required
disclosures regarding order display and execution access pursuant to
Rule 301(b)(3). The Commission is adopting Part IV, Item 14 in proposed
Form ATS-N, with certain modifications, and renumbering this Item as
Part III, Item 24 in adopted Form ATS-N.
    One commenter recommends eliminating this request altogether on the
grounds that it is unclear how subscribers would benefit from the
detailed information under this Item or how it would be used.\1039\ The
Commission does not agree. As noted in the Proposal, under the current
regulatory regime for ATSs, there is no mechanism under which an ATS
must notify the Commission, its SRO, or market participants after it
has triggered the order display requirements.\1040\ Thus, the
commenter's suggestion that the Item is more appropriate in the context
of a Commission examination would not remedy the current lack of notice
to the public once the NMS Stock ATS triggers the order display
requirement. This notice would inform the Commission and the public
whether an NMS Stock ATS is subject to Rule 301(b)(3). Removing Part
IV, Item 14 (adopted as Part III, Item 24) would forego the benefit to
market participants of knowing when an NMS Stock ATS has become a
significant source of liquidity in an NMS stock and how they can access
applicable quotations of that ATS. The commenter maintains, but does
not describe how, the required disclosure would undermine the NMS Stock
ATS's subscriber access criteria, and we do not agree that the required
disclosure would do so.
---------------------------------------------------------------------------

    \1039\ See SIFMA Letter at 27.
    \1040\ See Proposal, supra note 2, at 81082.
---------------------------------------------------------------------------

    We recognize that an NMS Stock ATS may not be subject to Rule
301(b)(3)(ii) of Regulation ATS even if the ATS displays subscriber
orders in an NMS stock to any person (other than employees of the ATS)
(Rule 301(b)(3)(i)(A)), and executes 5% or

more of the average daily trading volume in that NMS stock as reported
by an effective transaction reporting plan during at least four of the
preceding six calendar months (Rule 301(b)(3)(i)(B)).\1041\ If an NMS
Stock ATS satisfies the Rule 301(b)(3)(i) threshold, the ATS must also
meet the criteria of Rule 301(b)(3)(ii) to be subject to the
requirements of Rules 301(b)(3)(ii) and (iii). As proposed, Part IV,
Item 14 of Form ATS-N would have required that an NMS Stock ATS that
meets the threshold requirements of Rule 301(b)(3)(i), but is not
subject to Rules 301(b)(3)(ii) and (iii), to provide information about
how they display and provide execution access. This was not the
Commission's intended result. Rather, the Commission intended for an
NMS Stock ATS that is subject to Rule 301(b)(3)(ii) and (iii) to
provide the information that the Commission proposed in Part IV, Item
14(a)-(c) of proposed Form ATS-N. Therefore, the Commission is
modifying the disclosure requirement of this Item and relocating it to
Part III, Item 24 of Form ATS-N. As adopted, Part III, Item 24(a) of
Form ATS-N asks if the NMS Stock ATS meets the threshold requirements
of Rule 301(b)(3)(i) of Regulation ATS, and, if so, whether the NMS
Stock ATS is required to comply with Rule 301(b)(3)(ii) of Regulation
ATS (i.e., does the ATS display to more than one person in the system).
If the NMS Stock ATS is required to comply with Rule 301(b)(3)(ii),
Part III, Item 24(b) requires the NMS Stock ATS to provide the
information that the Commission proposed in Part IV, Item 14(a)-(c) of
proposed Form ATS-N (i.e., the ticker symbol of the NMS stocks
displayed, information about how the ATS displays such orders, and
information about how the ATS provides access to such orders).\1042\
---------------------------------------------------------------------------

    \1041\ See Liquidnet Letter at 13-14 (stating that the ``order
display requirement of [Rule 301(b)(ii)] only applies where orders
are `displayed to more than one person in the [ATS]'' such that the
disclosure obligation of proposed Part IV, Item 14 would only apply
where an ATS displays orders to more than one subscriber in
securities where it has exceeded the applicable 5% threshold).
    \1042\ If the NMS Stock ATS responds ``no'' to Part III, Item
24(a) it will not be required to respond to Item 24(b), and if it
responds ``yes'' to Item 24(a) but ``no'' to Item 24(b), it will not
be required to provide any additional information in response to
Item 24.
---------------------------------------------------------------------------

    To ensure consistency with Rule 301(b)(3) of Regulation ATS, the
Commission is making minor modifications to the request to better
comport with requirements of Rule 301(b)(3), and in response to the
commenter's concerns regarding proposed Form ATS-N's disclosure
requirements for NMS Stock ATSs that meet the threshold requirements of
Rule 301(b)(3)(i), but may not be subject to Rules 301(b)(ii) and
(iii).\1043\
---------------------------------------------------------------------------

    \1043\ See Liquidnet Letter at 13-14.
---------------------------------------------------------------------------

25. Fair Access
    Part IV, Item 15 of proposed Form ATS-N would have required
disclosures regarding the fair access requirement of Rule 301(b)(5).
The Commission is adopting Part IV, Item 15 of proposed Form ATS-N,
with certain modifications, and renumbering this Item as Part III, Item
25 in adopted Form ATS-N. The Commission received comment recommending
the elimination of the request altogether on the grounds that it is
unclear how subscribers would benefit from the detailed information
under the Item or how it would be used.\1044\
---------------------------------------------------------------------------

    \1044\ See SIFMA Letter at 27.
---------------------------------------------------------------------------

    The Commission does not agree for the same reason discussed above
in connection with Part III, Item 24. As noted in the Proposal,
although triggering the fair access provision requires the NMS Stock
ATSs to provide certain information confidentially to the Commission
under Exhibit C of Form ATS-R,\1045\ there is no mechanism under which
an ATS must notify market participants after it has triggered the fair
access threshold under the current regulatory regime for ATSs.\1046\
Removing Part IV, Item 15 of proposed Form ATS-N (adopted Part III,
Item 25) as suggested by the commenter, would forego the benefit to
market participants of knowing when an NMS Stock ATS has become a
significant source of liquidity in an NMS stock and must comply with
fair access requirements of Rule 301(b)(5). We believe that the
information that an NMS Stock ATS will be required to disclose pursuant
to Part III, Item 25 will allow market participants to assess whether
fair access is in fact being granted by NMS Stock ATSs that meet the
fair access threshold of Rule 301(b)(5), in part by making publicly
available a description of the NMS Stock ATS's written standards for
granting access. In addition, the commenter mentions that, but does not
describe how, the required disclosure would undermine the NMS Stock
ATS's subscriber access criteria.
---------------------------------------------------------------------------

    \1045\ See Proposal, supra note 2, at 81082, n.502. An ATS that
meets any of the trading volume thresholds set forth in Rule
301(b)(5)(i), must comply with the requirements of Rule
301(b)(5)(ii) (including the requirement to disclose to the
Commission on Form ATS-R the information required by Rule
301(b)(5)(ii)(D)), unless it meets the exception set forth in Rule
301(b)(5)(iii).
    \1046\ See Proposal, supra note 2, at 81082.
---------------------------------------------------------------------------

    Similar to Part IV, Item 14 of proposed Form ATS-N as discussed
above,\1047\ Part IV, Item 15 of proposed Form ATS-N would have applied
to an NMS Stock ATS that meets the threshold requirements of Rule
301(b)(5)(i), but is not required to comply with Rule 301(b)(5)(ii).
The Commission intended for an NMS Stock ATS to provide this
information only if it is required to comply with Rule 301(b)(5)(ii).
Therefore, the Commission is modifying the disclosure requirement of
this Item and relocating it to Part III, Item 25 of adopted Form ATS-N.
As adopted, Part III, Item 25(a) of Form ATS-N asks if the NMS Stock
ATS meets the threshold requirements of Rule 301(b)(5)(i)(A) of
Regulation ATS and if so, whether the NMS Stock ATS is required to
comply with Rule 301(b)(5)(ii) of Regulation ATS (i.e., the ATS does
not meet the exception set forth in Rule 301(b)(5)(iii)). If the NMS
Stock ATS is required to comply with Rule 301(b)(5), Part III, Item
25(b) requires the NMS Stock ATS to provide the information that the
Commission proposed in Part IV, Item 15(a) and 15(b) of proposed Form
ATS-N (i.e., the ticker symbol of each NMS stock and a description of
the ATS's written standards for granting access to trading on the
ATS).\1048\
---------------------------------------------------------------------------

    \1047\ See supra Section V.D.24.
    \1048\ If the NMS Stock ATS responds ``no'' to Part III, Item
25(a), it will not be required to respond to Item 25(b), and if it
responds ``yes'' to Item 25(a) but ``no'' to Item 25(b), it will not
be required to provide any additional information in response to
Item 25.
---------------------------------------------------------------------------

    To ensure consistency with Rule 301(b)(5) of Regulation ATS, the
Commission is making minor modifications to the request to better
comport with requirements of Rule 301(b)(5), and for consistency with
the modifications the Commission is making to Part III, Item 24
described above.
26. Aggregate Platform-Wide Data; Trading Statistics
a. Disseminated Aggregated Platform-Wide Data
    Part IV, Item 16 of proposed Form ATS-N would have required
disclosures regarding market quality statistics published or provided
to subscribers. The disclosure requests in Part IV, Item 16 of proposed
Form ATS-N are now contained in Part III, Item 26 of adopted Form ATS-
N.
    We received several comments on Part IV, Item 16 of proposed Form
ATS-N. Some commenters express concerns about the potential effects
that the public disclosure of the information under Part IV, Item 16
would have on the flow of information to

subscribers.\1049\ One commenter expresses concern that the proposed
requirements of Part IV, Item 16 would have made the process of
providing information requested by customers more difficult, noting
that it receives information requests on an ongoing basis from traders
at more than 800 firms.\1050\ Another commenter questions the value
that the snapshot disclosed under Part IV, Item 16 would have for the
general public, and states that adopting Part IV, Item 16 as proposed
would cause NMS Stock ATSs to stop sharing some categories of
information with clients.\1051\
---------------------------------------------------------------------------

    \1049\ See SIFMA Letter at 27; Liquidnet Letter at 15.
    \1050\ See Liquidnet Letter at 15.
    \1051\ See SIFMA Letter at 27.
---------------------------------------------------------------------------

    We continue to believe that it is appropriate to require an NMS
Stock ATS to make public aggregate, platform-wide order flow and
execution statistics it already otherwise collects and publishes or
provides to one or more subscribers to the NMS Stock ATS. We believe
that an NMS Stock ATS may choose to create and publish or provide to
one or more subscribers or persons information concerning order flow
and execution quality for different reasons. Certain performance
metrics and statistics may be important factors for market participants
in comparing and selecting an ATS that is most appropriate for their
investment objectives.
    We acknowledge a commenter's point that that these disclosures
might limit communication between NMS Stock ATSs and their participants
to the extent that an NMS Stock ATS chooses to cease providing such
statistics to subscribers due to the Form ATS-N requirements.\1052\
However, we believe that only a few NMS Stock ATSs would take this type
of action because such ATSs would have already chosen to distribute
such statistics to outside persons, thus triggering the requirements of
Item 26. Furthermore, we believe that the benefits of this disclosure--
requiring that all market participants have an equal opportunity to
analyze aggregate platform-wide order flow and execution data that is
distributed by an NMS Stock ATS--justify the potential cost of some
ATSs choosing to no longer distribute such statistics to select
subscribers on their platforms.
---------------------------------------------------------------------------

    \1052\ See id.
---------------------------------------------------------------------------

    Another commenter believes this request should not require the
disclosure of ``bespoke'' statistics for a subscriber.\1053\ The
commenter is concerned that if an NMS Stock ATS has to amend its Form
ATS-N each time it receives a subscriber's request for additional
information, it will not provide investors with additional information;
accordingly, the commenter suggests revising Part IV, Item 16 in a way
that would not discourage an NMS Stock ATS from providing additional
market quality information to investors. We share the concern that if
an NMS Stock ATS is compelled to amend its Form ATS-N each time it
receives a request for additional information from a market
participant, it will not provide investors with this information. Item
26, however, would not require an NMS Stock ATS to amend its Form ATS
every time it receives a data request. As explained in the Proposal, to
comply with this request, an NMS Stock ATS would only be required to
file a Form ATS-N updating amendment on a quarterly basis.\1054\ We are
not modifying the language or substantive requirements in adopted Form
ATS-N. Rather, to provide greater clarity regarding when and how NMS
Stock ATSs are required to respond to Item 26(a), we are adding an
instruction to Form ATS-N to state that an NMS Stock ATS shall file a
Form ATS-N amendment pursuant to Rule 304(a)(i)(2)(B) of Regulation ATS
to provide information in response to Item 26(a). Furthermore, as
explained above, the benefits of this disclosure justify the potential
cost of some ATSs choosing to no longer distribute such statistics to
select subscribers on their platforms.
---------------------------------------------------------------------------

    \1053\ See MFA/AIMA Letter at 5.
    \1054\ See Proposal, supra note 2, at 81084. As also explained
in the Proposal, if, for example, an NMS Stock ATS publishes or
provides a particular statistic on a daily basis, the NMS Stock ATS
would include in Exhibit 4 of adopted Form ATS-N the statistic that
was published or provided to one or more subscribers on the last
trading day of the calendar quarter (e.g., the statistic published
or provided on June 30th or last trading day prior to June 30th).
See id. at n.512. If an NMS Stock ATS publishes or provides a
particular statistic weekly, the NMS Stock ATS would be required to
include in Exhibit 4 of adopted Form ATS-N the statistic that was
published or provided to one or more subscribers at the end of the
week prior to the end of the calendar quarter (e.g., the statistic
published for the last full week of June). See id.
---------------------------------------------------------------------------

    In addition, one commenter believes that broker-dealer operators
and their affiliated broker-dealers should be permitted to respond to
individualized questions from subscribers and to continue to provide
customized reports in the course of responding to those individualized
questions without attendant Form ATS-N revisions or amendment
requirements.\1055\ This commenter states that without clarification
regarding how individualized or custom reports are to be treated, this
disclosure requirement could potentially introduce misleading or skewed
information into the public arena, which could undermine the
transparency goals of the proposed rules.\1056\ Similarly, one
commenter states that the Commission should clarify that Part IV, Item
16 would not apply when an NMS Stock ATS provides data to a customer
relating to that customer's specific usage of the ATS.\1057\ The
commenter states that institutions must have access to this type of
information to fulfill their best execution obligations, but making
this type of information public could compromise an institution's
anonymity.\1058\ We note that Part III, Item 26 of adopted Form ATS-N
requires only aggregate platform-wide data and, thus, would not apply
when an NMS Stock ATS provides a participant with individualized or
custom reports containing data relating to that participant's specific
usage of the ATS.
---------------------------------------------------------------------------

    \1055\ See SIFMA Letter at 27.
    \1056\ See id.
    \1057\ See Liquidnet Letter at 16.
    \1058\ See id.
---------------------------------------------------------------------------

    Commenters also recommend changes and/or other clarifications to
the requests under Part IV, Item 16 of proposed Form ATS-N. One of
these commenters recommends that the Commission eliminate the public
disclosure requirements under Item 16 and instead propose a revised
report on aggregate order flow and execution that is to be filed on an
annual and confidential basis with the Commission as an exhibit to Form
ATS-N.\1059\ As noted above, we are adopting the proposed disclosure
requests, as the public disclosure of the material encompassed by Part
IV, Item 16 of proposed Form ATS-N will benefit market participants.
---------------------------------------------------------------------------

    \1059\ See SIFMA Letter at 28.
---------------------------------------------------------------------------

    Another commenter recommends revising Part IV, Item 16 of proposed
Form ATS-N to only mandate the disclosure of the required market
quality statistics when the NMS Stock ATS publishes or otherwise
provides such statistics to a substantial portion of its subscribers
(e.g., 10% or more).\1060\ As explained above, we believe that there is
a strong policy objective behind ensuring that the information
encompassed by Part III, Item 26 of adopted Form ATS-N is available to
a wide array or market participants. We believe that setting a
threshold for when these disclosure requirements are

triggered would not advance this policy objective because an NMS Stock
ATS would be able to limit distribution of the statistics encompassed
by Part II, Item 26 of adopted Form ATS-N to a select number of
participants on the ATS.
---------------------------------------------------------------------------

    \1060\ See MFA/AIMA Letter at 5; see also 17 CFR 242.605
(requiring market centers, which include ATSs, to make available for
each calendar month an electronic report on certain categories of
order execution information).
---------------------------------------------------------------------------

    As an alternative to the proposed requirements for the disclosure
of aggregate platform-wide statistics on Form ATS-N, a commenter
recommends that the Commission designate specific execution statistics
for all ATSs to provide.\1061\ However, if the Commission were to adopt
the requests of Part IV, Item 16 as proposed, the commenter believes
that the Commission should clarify that trade-specific data would not
be subject to this filing requirement, including pre-trade and post-
trade transaction cost analyses. The commenter also requests
clarification that this disclosure request only covers execution
quality statistics and that other types of statistics are not included.
By way of example, the commenter believes that disclosing the
percentage of customers that have used a specific product or product
feature would not trigger the requirements of Part III, Item 26 because
that information would not be considered a market quality statistic.
Finally, the commenter believes that NMS Stock ATSs should be permitted
to file the relevant statistics under Part III, Item 26 without filing
any associated communication to a specific customer (such as the other
contents of an email containing these statistics or a questionnaire
submitted by the customer), as this could compromise customer
anonymity.
---------------------------------------------------------------------------

    \1061\ See Liquidnet Letter at 15. We are not expanding the
regulatory regime of Regulation ATS to require the public disclosure
of specific, standardized statistics for ATSs. See also infra
Section V.D.26.b.
---------------------------------------------------------------------------

    We confirm that Part III, Item 26 of adopted Form ATS-N only
requires the disclosure of order flow and execution statistics, and
that trade-specific data that does not include aggregate, platform-wide
information would not be covered by this request. We note, however,
that whether or not a specific type of statistic should be categorized
as an order and execution statistic or considered aggregate, platform-
wide data will depend on the nature of the specific statistics being
compiled by the NMS Stock ATS. An NMS Stock ATS should independently
evaluate any statistics that it compiles and distributes to determine
whether they are responsive to this disclosure request. We also agree
that protecting customer anonymity should be a priority with any public
disclosure under this Item, and thus, an ATS would not be required to
publicly file customer communications associated with the responsive
statistics.
    While we are not changing the substance of the proposed data
request being adopted in Part III, Item 26, we are making technical
modifications to improve the means by which the disclosures are filed
on Form ATS-N. We believe that these modifications will make it easier
for market participants to review and compare the filed information. In
addition to changing the proposed request into a ``yes'' or ``no''
question in adopted Form ATS-N, Part III, Item 26 requires the NMS
Stock ATS to attach both the responsive statistics and its explanation
of the categories or metrics of those statistics as Exhibits 4 and 5,
respectively, rather than including such information as part of the
form, as was proposed. We believe it will be easier for market
participants to review the disclosures as stand-alone documents than it
would be if they were filed and publicly posted as narratives in the
form. Also, in lieu of filing Exhibits 4 and 5, the NMS Stock ATS may
certify that the information requested under Exhibits 4 and 5 is
available at the website provided in Part I, Item 5 of the form and is
accurate as of the date of the filing.
b. Other Standardized Statistical Disclosures
    In the Proposal, we solicited comment on whether other standardized
statistical disclosures should be required from NMS Stock ATSs and the
nature and extent of any such metrics or statistics that commenters
believe should be disclosed.\1062\ Several commenters believe that the
Commission should add additional public statistical disclosure
requirements to the ATS regulatory regime.\1063\ We believe that it is
appropriate to take an incremental approach to the disclosure of
additional market statistics. At this time, we believe it is
appropriate to only require NMS Stock ATSs to provide to all market
participants--via public disclosure on Form ATS-N--aggregate, platform
wide order flow and execution statistics that they already collect and
distribute and that would be encompassed by adopted Item 26.
Accordingly, we are not adopting rules to require NMS Stock ATSs or
national securities exchanges to report quantitative data above what
these trading centers are already required to report under current
federal securities laws.\1064\
---------------------------------------------------------------------------

    \1062\ See Proposal, supra note 2, at 81084-85.
    \1063\ See, e.g., T. Rowe Price Letter at 1 (recommending that
ATSs be required to collect and disclose statistics about the
percentage of volume executed in block and demi-block sizes,
percentage of volume executed relative to national best bid/offer
(i.e., near, far, midpoint, and intra-spread), trade size and market
cap distribution, and aggregate statistics regarding
counterparties); Citadel Letter at 4 (advocating for the Commission
to require the reporting of end-of-day trade information that the
commenter believes would bring greater transparency to market
participants); HMA Letter at 22 (recommending that ATSs be required
to collect and disclose statistics about Order Trading and
Descriptive Statistics, Subscriber Characteristics, and ATS
Relationship and Trading Statistics); Anonymous at 1 (stating that
the same data produced by national securities exchanges should also
be provided by ATSs, including transactional short sale data); and
Liquidnet Letter at 16 (recommending that ATSs be required to
publicly report all individual ATS executions on an attributed
basis, which could be subject to a suitable delay period, such as 30
days).
    \1064\ See 17 CFR 242.605 and 17 CFR 242.606.
---------------------------------------------------------------------------

    We also received comments advocating that this rulemaking include
amendments to Rule 605 of Regulation NMS.\1065\ Other commenters
recommend enhancing the disclosure requirement of Rule 606 of
Regulation NMS.\1066\ Should we decide to take action with respect to
the reporting of additional market quality data under Rule 605, we
would do so in a separate rulemaking. Additionally, a separate
rulemaking has been proposed to amend Rule 606 by requiring additional
disclosures by broker-dealers to customers about the routing of their
institutional orders.\1067\ We are currently considering the proposal
and comments received.
---------------------------------------------------------------------------

    \1065\ See 17 CFR 242.605. Rule 605 generally requires a market
center that trades NMS stocks to make available to the public
monthly electronic execution reports that include uniform
statistical measures of execution quality. See HMA Letter at 20;
Consumer Federation of America Letter at 7; Markit Letter at 5-6.
    \1066\ 17 CFR 242.606. Rule 606 of Regulation NMS requires every
broker or dealer to make publicly available for each calendar
quarter a report on its routing of non-directed orders in NMS
securities during that quarter. See Markit Letter at 6-7; ICI Letter
at 8.
    \1067\ See Securities Exchange Act Release No. 78309 (July 13,
2016), 81 FR 49432 (July 27, 2016).
---------------------------------------------------------------------------

VI. Amendments to Rule 301(b)(10) and Rule 303(a)(1) for Written
Safeguards and Written Procedures To Protect Confidential Trading
Information

    Current Rule 301(b)(10) of Regulation ATS \1068\ requires every ATS
to have in place safeguards and procedures to protect subscribers'
confidential trading information and to separate ATS functions from
other broker-dealer functions, including proprietary and customer
trading.\1069\ Rule 301(b)(10), however, does not currently require
that the safeguards and procedures

mandated under Rule 301(b)(10) be memorialized in writing.
---------------------------------------------------------------------------

    \1068\ See 17 CFR 242.301(b)(10).
    \1069\ See Regulation ATS Adopting Release, supra note 3, at
70879.
---------------------------------------------------------------------------

    We proposed to amend Rule 301(b)(10)(i) to require that all ATSs
(including both NMS Stock ATSs and non-NMS Stock ATSs) adopt written
safeguards and written procedures that limit access to the confidential
trading information of subscribers to those employees of the ATS who
are operating the system or are responsible for its compliance with
Regulation ATS or any other applicable rules,\1070\ and implement
written standards controlling employees of the ATS trading for their
own accounts.\1071\ In addition, proposed Rule 301(b)(10)(ii) would
require that the oversight procedures, which an ATS adopts and
implements to ensure that the above safeguards and procedures are
followed, be in writing.\1072\
---------------------------------------------------------------------------

    \1070\ See Rule 301(b)(10)(i)(A).
    \1071\ See Rule 301(b)(10)(i)(B).
    \1072\ See Rule 301(b)(10)(ii).
---------------------------------------------------------------------------

    We received five comments on the proposed amendment to Rule
301(b)(10).\1073\ Four commenters indicate that they support the
requirement that ATSs memorialize safeguards and procedures in writing
as proposed.\1074\ An additional commenter does not object to the
Commission's proposal to require that an ATS's procedures to protect
confidential information be memorialized in writing.\1075\
---------------------------------------------------------------------------

    \1073\ See ICI Letter at 10; MFA/AIMA Letter at 6; HMA Letter at
23; STANY Letter at 2; Liquidnet Letter at 17. See also Investor
Advocate Letter at 2.
    \1074\ See ICI Letter at 10; MFA/AIMA Letter at 6; HMA Letter at
23; STANY Letter at 2.
    \1075\ See Liquidnet Letter at 17. In addition, this commenter
expresses concern that the requirements of Regulation ATS relating
to protection of confidential information could be interpreted in a
manner that would be harmful to long-term investors by prohibiting
broker-dealers that operate ATSs from providing information to
customers that the customers can use to evaluate and enhance their
trading performance, such reports of participants' positive action
rates and the positive action rates of the contras with which they
match. See id. The commenter is concerned that if Rule 301(b)(10) is
interpreted to restrict the distribution of this type of
information, this would harm long-term investors. See id. Proposed
and adopted amendments to Rule 301(b)(10) to require an ATS to
maintain written procedures to protect confidential trading
information neither (i) change the standard for what constitutes
adequate safeguards and procedures to protect subscribers'
confidential trading information nor (ii) narrow or expand the scope
of what is considered to be confidential trading information under
that rule. In general, the determination of what constitutes
subscribers' confidential trading information is a facts and
circumstances analysis, but it is also outside of the scope of this
rulemaking to provide interpretive guidance about the scope of Rule
301(b)(10).
---------------------------------------------------------------------------

    We are adopting the amendments to Rule 301(b)(10) as proposed. We
continue to believe that safeguards and procedures to ensure the
confidential treatment of ATS subscribers' trading information are
important, and that the potential for misuse of such information
continues to exist. We also continue to believe that requiring an ATS
to reduce to writing those safeguards and procedures, as well as its
oversight procedures to ensure that such safeguards and procedures are
followed, will strengthen the effectiveness of the ATS's safeguards and
procedures and will better enable the ATS to protect confidential
subscriber trading information and implement and monitor the adequacy
of, and the ATS's compliance with, its safeguards and procedures.\1076\
The proposed revisions would aid investors, market participants, and
regulators by consolidating written safeguards and procedures into one
place for easy review and evaluation.\1077\ Further, we agree with the
comment that asserts that the process of consolidating these safeguards
and procedures may facilitate ATS operators' identification of gaps or
opportunities for improvement of these measures.\1078\ In addition, we
believe that reducing ATSs' safeguards and procedures under Rule
301(b)(10) to writing will help the Commission and its staff, and the
staff of the SRO of which an ATS's broker-dealer operator is a member,
evaluate whether an ATS has established such procedures and safeguards,
whether the ATS has implemented and is abiding by them, and whether
they comply with the requirements of Rule 301(b)(10). This should
assist the Commission, and the applicable SRO(s), to exercise more
effective oversight of ATSs regarding the ATSs' compliance with Rule
301(b)(10) and other federal securities laws, rules, and regulations.
Furthermore, we believe that the amendments we are adopting to Rule
301(b)(1) will benefit market participants because they will be able to
better evaluate the implementation of such safeguards and procedures,
once they are reduced to writing.
---------------------------------------------------------------------------

    \1076\ In addition, we are requiring public disclosure related
to such safeguards and procedures. See supra Section V.C.6.
    \1077\ See HMA Letter at 23.
    \1078\ See id.
---------------------------------------------------------------------------

    We also proposed to amend the record preservation requirements of
Rule 303(a)(1) to incorporate the amendments to Rule 301(b)(10).\1079\
We received no comments on the proposed change to Rule 303(a)(1).\1080\
We are adopting, as proposed, Rule 303(a)(1)(v), which requires that an
ATS, for a period of not less than three years, the first two years in
an easily accessible place, preserve at least one copy of the written
safeguards and written procedures to protect subscribers' confidential
trading information and the written oversight procedures created in the
course of complying with Rule 301(b)(10).\1081\
---------------------------------------------------------------------------

    \1079\ See supra Section V.C.8.
    \1080\ See supra Section III.B.6.
    \1081\ See proposed Rule 303(a)(1)(v).
---------------------------------------------------------------------------

VII. EDGAR Filing Requirements; Structured Data

    Form ATS-N would be filed electronically in a structured format
through EDGAR. By filing in EDGAR, NMS Stock ATSs will be given the
option of filing using a web-fillable Form ATS-N which will render into
XML in EDGAR, or to file directly in XML using the XML schema for NMS
Stock ATSs as published on the Commission's website. With both options,
the Commission will receive the Form ATS-N information in XML format.
For those NMS Stock ATSs that would prefer to manually key in all of
their Form ATS-N responses, as had been originally proposed by us,
those NMS Stock ATSs can do so using the Commission's web-fillable Form
ATS-N, which will render into XML in EDGAR. For those NMS Stock ATSs
that would prefer to map the information in their existing systems so
that filing of Form ATS-N can be more automated and more efficient for
them, those NMS Stock ATS can file in XML using the XML schema as
published on the Commission's website. The Commission's XML schema and
the Commission's web-fillable Form ATS-N both reflect the same set of
custom XML tags and XML restrictions designed by the Commission to
submit the disclosures in Form ATS-N.
    As we proposed, all effective Forms ATS-N and all properly filed
Form ATS-N amendments will be made publicly available. Because Form
ATS-N will be filed in an XML format (either using the Commission's
web-fillable form or as an XML file submitted according to the
Commission's XML schema) in EDGAR, once effective, all Forms ATS-N will
be centrally located on EDGAR for the public to access in the same XML
format in which the Form ATS-N was received by the Commission.
    The XML format is a text-searchable format that does not require
the use of optical character recognition and will enhance the
Commission's and the public's abilities to better gather, analyze,
aggregate, compare, and use the Form ATS-N data. Requiring XML should
result in the Form ATS-N data being provided in a consistent,
structured format. XML is an open

standard that defines, or ``tags,'' data using standard definitions.
The tags establish a consistent structure of identity and context. This
consistent structure can be automatically recognized and processed by a
variety of software applications such as databases, financial reporting
systems, and spreadsheets, and then made immediately available to the
end user to search, aggregate, compare, and analyze.
    In addition, XML is an open standard that is maintained by a
consensus based market standards organization, rather than the
Commission, and undergoes constant review. As updates to XML or
industry practice develop, the Commission's XML schema and web-fillable
XML architecture may also have to be updated to reflect the updates in
technology. If that occurs, the supported version of the XML schema
would be made available on the Commission's website and the outdated
version of the schema would be removed in order to maintain data
quality and consistency with the standard, while the web-fillable Form
ATS-N would be updated in EDGAR to reflect the same changes in
technology as the Commission's XML schema.
    The Commission's XML schema and architecture for the web-fillable
Form ATS-N would also incorporate certain validations to help ensure
consistent formatting and completeness among all Forms ATS-N, in other
words, to help ensure data quality. Validations are restrictions placed
on the formatting for each data element so that comparable data is
presented comparably. However, these validations would not be designed
to ensure the underlying accuracy of the data. Any Form ATS-N filed in
EDGAR would have to comply with validations that are incorporated
within the XML schema, otherwise the Form ATS-N will not be accepted by
EDGAR.
    We believe that requiring Form ATS-N be provided in an XML format
would provide the Commission and the public with data about NMS Stock
ATSs in a format that facilitates search capabilities, and comparative
analyses across NMS Stock ATSs and across filings, including more
advanced text analytics for the more narrative responses of Form ATS-N.
Absent this requirement, users of the Form ATS-N data that wanted to
aggregate the data or search across filings or filers would need to
spend additional time transferring the data into a consistent format
before it could be analyzed, or incur the cost of a service provider
that specializes in this data aggregation and comparison process.
Further, unrestricted manual entry of data may lead to errors, thereby
potentially reducing data quality and usability.
    We understand that there are costs associated with structuring and
that these costs may vary depending on the filer and the type of
structuring. By offering two options for filers to submit Form ATS-N in
EDGAR, filers will be able to select the method best suited to their
situation. Overall, the we believe that the XML format of Form ATS-N
will have enhanced benefits for the Commission's and the public's use
of Form ATS-N while minimizing costs relative to filers having to file
Form ATS-N using other structured formats.\1082\ Requiring the
Commission's XML schema with its incorporated validations (whether
submitted as XML or in the web-fillable form) will help ensure that the
data that filers submit is complete and appropriately formatted so that
additional time will not have to be spent on subsequent Form ATS-N
filings to correct for those errors. By comparison, the EFFS system
originally proposed does not support the open-source XML format, but
rather a proprietary XML implementation called XFDL. As a result, the
EFFS system has fewer validation capabilities and cannot test for
consistency and completeness as broadly as the XML format, and in
particular, at the element level. In addition, as proposed, filers
would have been required to individually upload each narrative response
as a separate exhibit, whereas the XML format permits filers to provide
all their narrative responses in one structured XML file, which will
slightly diminish their time spent in filing in the Form ATS-N
narrative information.
---------------------------------------------------------------------------

    \1082\ See infra Section X.D.11.
---------------------------------------------------------------------------

    End users will be able to download the consistently structured
information directly into databases and analyze it using various
software. This would enhance their ability to conduct large-scale
analysis and immediate cross-filing comparisons of NMS Stock ATSs, as
well as comparisons across reporting periods within the same and among
different NMS Stock ATSs. Moreover, as an open standard, XML is widely
available to the public at no cost. By comparison, viewing information
in the current EFFS system requires a license of a commercial
proprietary viewer, which currently is not separately available to
every member of the public without licensing.
    Commenters who supported the standardization of Form ATS-N
information also underscored the importance of making the information
comparable.\1083\ While the commenters did not make specific reference
to the structured format, having the Form ATS-N information submitted
using the Commission's XML schema or the web-fillable form will enhance
the comparability of the Form ATS-N data by ensuring that the
information has been submitted completely and consistently. Two
commenters addressed the importance of completeness to Form ATS-N
filings.\1084\ With the Commission's XML schema, the restrictions
incorporated into the schema (and consequently, also reflected in the
web-fillable form) will help test for completeness of the data before
submission and reduce filer uncertainty on the completeness and
consistency of their filing. One commenter recommends that we consider
ways to present information that would improve the readability and
navigability of disclosure through the use of technology such as
hyperlinks and/or XBRL technology.\1085\ The XML format is a technology
format that presents the data consistently, which improves the
readability and navigability of the data. In fact, XBRL is an XML-based
technology, but, as discussed later, we do not think that XBRL is the
appropriate format for this form.\1086\ While hyperlinks may be useful
in some situations to cross-reference information, hyperlinks do not by
themselves enhance the comparability of the underlying data, but can be
incorporated within the XML format, as permitted.
---------------------------------------------------------------------------

    \1083\ See Fidelity Letter at 1; Morgan Stanley Letter at 2;
SIFMA Letter at 3; UBS Letter at 2-3.
    \1084\ See MFA/AIMA Letter at 4; SIFMA Letter at 32-33.
    \1085\ See Fidelity Letter at 5.
    \1086\ See infra Section X.D.11.
---------------------------------------------------------------------------

    Because Form ATS-N filings will be submitted electronically,\1087\
we are revising Rule 101 of Regulation S-T \1088\ to add paragraph
(a)(1)(xxi) to the list of mandated electronic submissions.
Specifically, paragraph (a)(1)(xvii) adds to this list Form ATS-N.
---------------------------------------------------------------------------

    \1087\ See supra Section V.A.1.
    \1088\ 17 CFR 232.101.
---------------------------------------------------------------------------

VIII. Effective Date and Compliance Date

    We did not receive any comments about the effective date for the
amendments. The rules being adopted today will become effective 60 days
after the date of publication in the Federal Register.
    With regard to the adopted amendments to Rules 301(b)(10) and
303(a)(1)(v) of Regulation ATS,\1089\ we

believe the 60 day effective date provides sufficient time for ATSs to
memorialize in writing their safeguards and procedures to protect
subscribers' confidential trading information (to the extent that those
safeguards and procedures are not currently maintained in written
form). Current Rule 301(b)(10) of Regulation ATS \1090\ requires every
ATS to have safeguards and procedures that limit access to the
confidential trading information of subscribers to those employees of
the ATS who are operating the system or are responsible for its
compliance with Regulation ATS or any other applicable rules,\1091\ and
implement standards controlling employees of the ATS trading for their
own accounts.\1092\ We note that the adopted amendments to Rules
301(b)(10) and 303(a)(1)(v) do not modify that requirement other than
to require that those safeguards and procedures be written, pursuant to
Rule 301(b)(1) and preserved pursuant to Rule 303(a)(1)(v).
Accordingly, we believe that the 60 days after the final rule is
published in the Federal Register is reasonable for the amendments to
Rules 301(b)(10) and 303(a)(1)(v) to become effective, and for ATSs to
comply with those rules.
---------------------------------------------------------------------------

    \1089\ See supra Section VI.
    \1090\ See 17 CFR 242.301(b)(10).
    \1091\ See Rule 301(b)(10)(i)(A).
    \1092\ See Rule 301(b)(10)(i)(B).
---------------------------------------------------------------------------

    We believe that the compliance dates provided in Rules 304 and
301(b)(2)(viii) provide sufficient time for NMS Stock ATSs to prepare
and file Form ATS-N disclosures with the Commission. Rule
304(a)(1)(iv)(A) requires a Legacy NMS Stock ATS to file with the
Commission an initial Form ATS-N, in accordance with Rule 304, no
earlier than January 7, 2019, and no later than February 8, 2019.\1093\
Rule 301(b)(2)(viii) provides that a Legacy NMS Stock ATS that is
operating pursuant to an initial operation report on Form ATS on file
with the Commission as of January 7, 2019 shall be subject to the
requirements of Rule 301(b)(2)(i) through (vii) until the Legacy NMS
Stock ATS files an initial Form ATS-N with the Commission pursuant to
Rule 304(a)(1)(iv)(A).\1094\ In addition, pursuant to Rule
301(b)(2)(viii), as of January 7, 2019, an entity seeking to operate as
a new NMS Stock ATS shall also be subject to Rule 304 and the rules
amended in relation.\1095\
---------------------------------------------------------------------------

    \1093\ See supra Section IV.A.4.a. See also Rule
304(a)(1)(iv)(A).
    \1094\ See supra Section III.B.4.
    \1095\ See supra Section III.B.4; IV.A.1. See also supra note
291 and accompanying text.
---------------------------------------------------------------------------

IX. Paperwork Reduction Act

    Certain provisions of the proposal contain ``collection of
information'' requirements within the meaning of the Paperwork
Reduction Act of 1995 (``PRA'').\1096\ The titles of these requirements
are:
---------------------------------------------------------------------------

    \1096\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

     Requirements for Alternative Trading Systems That Are Not
National Securities Exchanges--Rule 301, Form ATS and Form ATS-R, 17
CFR 242.301 (OMB Control No. 3235-0509);
     Rule 303 (17 CFR 242.303) Record Preservation Requirements
for Alternative Trading Systems (OMB Control No. 3235-0505); and
     Rule 304 and Form ATS-N (a new collection of information).
    In accordance with 44 U.S.C. 3507(d) and 5 CFR 1320.11, we
submitted these requirements to the Office of Management and Budget
(``OMB'') for review and approval in accordance with the PRA and its
implementing regulations.\1097\ The title for the new collection of
information in Rule 304 and Form ATS-N is ``Rule 304 and Form ATS-N.''
We have applied for a new OMB Control Number for this collection in
accordance with 44 U.S.C. 3507(j) and 5 CFR 1320.13. An agency may not
conduct or sponsor, and a person is not required to respond to, a
collection of information requirement unless it displays a currently
valid OMB control number.
---------------------------------------------------------------------------

    \1097\ 44 U.S.C. 3507; 5 CFR 1320.11.
---------------------------------------------------------------------------

    In the Proposal, we solicited comments on the proposed collection
of information burdens and asked whether commenters agree with our
estimate of the number of respondents and burdens of the Proposal. We
received one comment on our estimates of the collection of information
burden included in the Proposal, which is addressed below.\1098\
---------------------------------------------------------------------------

    \1098\ See infra note 1235 and accompanying text.
---------------------------------------------------------------------------

A. Summary of Collection of Information

    The amendments to Regulation ATS include two new categories of
obligations that require a collection of information within the meaning
of the PRA. The first category relates to Rule 301(b)(10) and Rule 303
of Regulation ATS \1099\ and applies to all ATSs, while the second
category relates to Form ATS-N and applies only to NMS Stock ATSs.
---------------------------------------------------------------------------

    \1099\ 17 CFR 242.301(b)(10); 17 CFR 242.303.
---------------------------------------------------------------------------

1. Requirements Relating to Rule 301(b)(10) and 303(a)(1) of Regulation
ATS
    The amendments to Regulation ATS will require an ATS to place in
writing the safeguards and procedures required by Rule 301(b)(10) to
protect subscribers' confidential trading information and oversight
procedures to ensure that the safeguards and procedures are followed.
In addition, we are amending Rule 303(a)(1) \1100\ of Regulation ATS to
require an ATS to preserve at least one copy of written safeguards and
written procedures, and written oversight procedures created in the
course of complying with Rule 301(b)(10) for a period of not less than
three years, the first two years in an easily accessible place.\1101\
---------------------------------------------------------------------------

    \1100\ 17 CFR 242.303(a)(1).
    \1101\ Id.
---------------------------------------------------------------------------

2. Requirements Relating to Rules 301(b)(2)(viii) and 304 of Regulation
ATS, Including Form ATS-N
    Any ATS that meets the definition of an NMS Stock ATS is required
to complete an initial Form ATS-N, file it with the Commission via
EDGAR, and make public via posting on its website a direct URL
hyperlink to the Commission's website that contains the documents
enumerated in Rule 304(b)(2).\1102\
---------------------------------------------------------------------------

    \1102\ See generally Section IV.
---------------------------------------------------------------------------

    Form ATS-N requires that the entity submitting the filing would
indicate whether the NMS Stock ATS currently operates pursuant to a
Form ATS, and the type of Form ATS-N filing--whether the Form ATS-N is
an initial Form ATS-N, a Form ATS-N amendment (whether a material
amendment, updating amendment, correcting amendment, or order display
and fair access amendment), a notice of cessation, and if it is a
notice of cessation, the date the NMS Stock ATS will cease to operate,
or if it is a withdrawal. If the filing is a Form ATS-N amendment, the
NMS Stock ATS is also required to provide a brief summary of the
amendment and the EDGAR accession number for the Form ATS-N filing to
be amended. If the filing is a withdrawal, the NMS Stock ATS is
required to provide the EDGAR accession number for the Form ATS-N
filing to be withdrawn.
    Part I requires information about the broker-dealer operator.\1103\
Part II of Form ATS-N requires an NMS Stock ATS to disclose information
about the ATS-related activities of the broker-dealer operator and its
affiliates.\1104\ Part

III of Form ATS-N requires an NMS Stock ATS to provide certain
information about the manner of operations of the NMS Stock ATS.\1105\
Part IV of Form ATS-N requires an NMS Stock ATS to provide contact
information. In addition, Form ATS-N will require NMS Stock ATSs to
file the form electronically via EDGAR with a typed signature.\1106\
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    \1103\ See Section V.B.2.
    \1104\ See Section V.C.
    \1105\ See Section V.D.
    \1106\ See Section V.A.1.
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    We are also amending Rule 303(a)(2)(ii) to require that an NMS
Stock ATS preserve, for the life of the enterprise and of any successor
enterprise, copies of reports filed pursuant to Rule 304.\1107\
---------------------------------------------------------------------------

    \1107\ See Rule 303(a)(2)(ii).
---------------------------------------------------------------------------

    Furthermore, an ATS that trades both NMS stocks and non-NMS stocks
will be required to file both a Form ATS-N with respect to its trading
of NMS stocks and a revised Form ATS that removes discussion of those
aspects of the ATS related to the trading of NMS stocks. The ATS will
also be required to file two Forms ATS-R filings--one to report its
trading volume in NMS stocks and another to report its trading volume
in non-NMS stocks.

B. Proposed Use of Information

1. Amendments to Rule 301(b)(10) and 303(a)(1) of Regulation ATS
    We continue to believe that both the Commission and the SRO of
which the ATS's broker-dealer operator is a member will use the written
safeguards and written procedures required by the amendments to Rule
301(b)(10) to better understand how each ATS protects subscribers'
confidential trading information from unauthorized disclosure and
access. We continue to believe that the information contained in the
records required to be preserved by Rule 303(a)(1)(v) will be used by
examiners and other representatives of the Commission, state securities
regulatory authorities, and SROs to evaluate whether ATSs are in
compliance with Regulation ATS as well as other applicable rules and
regulations. We also believe that the requirement to memorialize in
writing the safeguards and procedures to protect subscribers'
confidential trading information will help assist ATSs in more
effectively complying with their existing legal requirements under
Regulation ATS; in particular, the requirements to protect the
confidentiality of subscribers' trading information under Rule
301(b)(10) of Regulation ATS.
2. Rules 301(b)(2)(viii), 304 of Regulation ATS, Including Form ATS-N,
and 301(b)(9)
    We believe that market participants will use the information
publicly disclosed on Form ATS-N to compare and evaluate NMS Stock ATSs
when making their routing decisions.\1108\ In addition, we believe we
will use the information disclosed on Form ATS-N, Form ATS, and Form
ATS-R to oversee the growth and development of NMS Stock ATSs.\1109\ We
believe that the information contained in the records required to be
preserved by the amendment to Rule 303(a)(2)(ii) will be used by
examiners and other representatives of the Commission, state securities
regulatory authorities, and SROs to evaluate whether ATSs are in
compliance with Regulation ATS as well as other applicable rules and
regulations.
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    \1108\ See supra Section III.A.1.a.
    \1109\ See id.
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C. Respondents

    The ``collection of information'' requirements under the amendments
to Regulation ATS relating to Rule 301(b)(10) and Rule 303(a)(1)(v)
would apply to all ATSs, including NMS Stock ATSs. The ``collection of
information'' requirements under the amendments to Regulation ATS
relating to Rule 304, Form ATS-N, and the amendments to Rule
303(a)(2)(ii) would apply only to NMS Stock ATSs, and the ``collection
of information'' requirements under the amendments to Rule 301(b)(9)
would apply to NMS Stock ATSs that also transact in both NMS stocks and
non-NMS stocks. Currently, there are 87 ATSs that have filed Form ATS
with us. Of these 87 ATSs, 41 would meet the definition of an NMS Stock
ATS.\1110\ Accordingly, the we estimate that 87 entities would be
required to comply with the amendments related to Rule 301(b)(10) of
Regulation ATS and 41 entities would be required to complete Form ATS-
N.\1111\
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    \1110\ As of March 31, 2018, 41 ATS have disclosed on their Form
ATS that they trade or expect to trade NMS stock.
    \1111\ We recognize that there may be new entities that will
seek to become ATSs, or NMS Stock ATSs, that would be required to
comply with the proposed amendments to Rule 301(b)(10). From January
2014 through the first half of 2017, an average of 12 Form ATS
initial operation reports were filed each year with us. Similarly,
some ATSs may cease operations in the normal course of business or
possibly in response to the proposed amendments to Regulation ATS.
From January 2014 through the March 31, 2018, an average of 9 ATSs,
including those that trade NMS stocks have ceased operations. For
the purposes of this paperwork burden analysis, we assume that 87
respondents would be required to comply with the proposed amendments
to Rule 301(b)(10), if adopted. We are estimating that the number of
entities that may file a Form ATS initial operation report would
generally offset any ATSs that may file a Form ATS cessation of
operations report.
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    In addition, there are currently 10 ATSs that trade, or have
indicated in Exhibit B to their Form ATS that they expect to trade,
both NMS stocks and non-NMS stocks on the ATS.\1112\ Under the
amendments to Regulation ATS, these 10 entities would be required to
file a Form ATS-N to disclose information about their NMS stock
activities and file a Form ATS to disclose information about their non-
NMS stock activities. Consequently, these 10 ATSs would have to amend
their Forms ATS to remove information regarding operations related to
the trading of NMS stocks and on an ongoing basis, file separate Forms
ATS-R to report trading volume in NMS stocks and trading volume in non-
NMS stocks.\1113\
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    \1112\ Data compiled from Forms ATS and ATS-R submitted to us as
of March 31, 2018. These 10 ATSs are included within the 41 NMS
Stock ATSs.
    \1113\ Pursuant to Rule 301(b)(9), all ATSs are required to file
Form ATS-R within 30 calendar days after the end of each calendar
quarter in which the market has operated, and within 10 calendar
days after the ATS ceases to operate. An ATS that trades both NMS
stocks and non-NMS stocks would report its transactions in NMS
stocks on one Form ATS-R, and its transaction volume in other
securities on a separate Form ATS-R.
---------------------------------------------------------------------------

    With respect to Form ATS-N, we recognize there may be entities that
might file a Form ATS-N to operate an NMS Stock ATS in the future. From
January 2014 through March 2018, an average of 2 new ATSs per year
disclose that they trade or expect to trade NMS stocks on their Form
ATS initial operation reports, and would therefore fall within the
definition of an NMS Stock ATS. Similarly, some ATSs that currently
trade NMS stocks may choose to cease operations rather than comply with
the amendments requiring them to file Form ATS-N. Other ATSs may choose
to cease operations in the normal course of business. From January 2014
through March 2018, an average of 9 ATSs that trade NMS stocks have
ceased operations each year.\1114\
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    \1114\ In the Proposal, we cited the average number of new ATSs
and ATSs that ceased operations from 2012 through the first half of
2015, which were 2 and 6, respectively. See Proposal, supra note 2,
at 81092.
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    We believe that most ATSs that currently trade NMS stocks would
continue to operate notwithstanding the amendments to Regulation ATS.
For the purposes of this analysis of the paperwork burden associated
with the amendments to Regulation ATS, we assume that there will be 41
respondents. This number assumes that most ATSs that currently trade
NMS

stocks would file a Form ATS-N with the Commission. We acknowledge that
some ATSs may cease operations altogether and other entities that may
commence operations as an NMS Stock ATS. Based on the current number of
initial operation reports and cessation of operations reports on
current Form ATS for ATSs that trade NMS stocks described above, we
estimate that 2 to 3 new entities will file initial Form ATS-N to
become an NMS Stock ATS and 7 to 9 NMS Stock ATSs will cease operations
in each of the next three years.

D. Total Initial and Annual Reporting and Recordkeeping Burdens

1. Rules 301(b)(10) and 303(a)(1)(v) of Regulation ATS
a. Baseline Measurements
    We believe that ATSs--in particular, ATSs whose broker-dealer
operators are large, multi-service broker-dealers--generally have and
maintain in writing their safeguards and procedures to protect
subscribers' confidential trading information, as well as the oversight
procedures to ensure such safeguards and procedures are followed.\1115\
However, neither Rule 301(b)(10) nor Rule 303(a)(1) of Regulation ATS
currently requires that an ATS have and preserve those safeguards and
procedures in writing. For ATSs that currently have and preserve in
written format the safeguards and procedures to protect subscribers'
confidential trading information under Rule 301(b)(10) of Regulation
ATS, we estimate that the average annual burden they voluntarily
undertake to update and preserve those written safeguards and written
procedures is 4 hours.\1116\ Because neither current Rule 301(b)(10)
nor current Rule 303(a)(1) requires an ATS to have and preserve its
safeguards and procedures to protect subscribers' confidential trading
information in writing, this burden is not reflected in the current PRA
baseline burdens for Rules 301 and 303.\1117\ In accordance with the
below analysis, we are modifying the current PRA burdens for Rules 301
and 303 to account for the new requirement that ATSs have and preserve
in written format the safeguards and procedures to protect subscribers'
confidential trading information.\1118\
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    \1115\ See infra Section VI.
    \1116\ Attorney at 2 hours + Compliance Clerk at 2 hours = 4
burden hours. For ATSs that do not have their safeguards and
procedures or oversight procedures in a written format, these firms
would incur a one-time initial burden to record their safeguards and
procedures as well as their oversight procedures in a written format
as described below.
    \1117\ See FR Doc. 2014-02143, 79 FR 6236 (February 3, 2014)
(Request to OMB for Extension of Rule 301 and Forms ATS and ATS-R;
SEC File No. 270-451; OMB Control No. 3235-0509) (hereinafter ``Rule
301 PRA Update''); FR Doc. 2013-17474, 78 FR 43943 (July 22, 2013)
(Request to OMB for Extension of Rule 303; SEC File No. 270-450; OMB
Control No. 3235-0505) (hereinafter ``Rule 303 PRA Update'').
    \1118\ See infra note 1125 and accompanying text.
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b. Burdens
    We recognize that Rules 301(b)(10) and 303(a)(1)(v) of Regulation
ATS would impose certain burdens on respondents. For ATSs that
currently have and preserve in written format the safeguards and
procedures to protect subscribers' confidential trading information and
written oversight procedures to ensure such safeguards and procedures
are followed, we believe that there will be no increased burden under
the amendments to Rules 301(b)(10) and 303(a)(1)(v) of Regulation ATS.
We believe that the current practices of those ATSs would already be in
compliance with the rules and the amendments should not require these
ATSs to take any actions in addition to those currently undertaken.
    For ATSs that have not recorded in writing their safeguards and
procedures to protect subscribers' confidential trading information and
oversight procedures to ensure such safeguards and procedures are
followed, there will be an initial, one-time burden to memorialize them
in a written document(s). In the Proposal, we estimated that an ATS's
initial, one-time burden to put in writing its safeguards and
procedures to protect subscribers' confidential trading information and
the oversight procedures to ensure such safeguards and procedures are
followed would be 8 hours.\1119\ We did not receive any comment on the
preliminary estimates. Because ATSs are already required to have
safeguards and procedures to protect subscribers' confidential trading
information and to have oversight procedures to ensure such safeguards
and procedures are followed, we believe that recording these items in a
written format would not impose a substantial burden on ATSs and would
rely on internal staff to record the ATS's Rule 301(b)(10) procedures
in writing. Therefore, we estimate that an ATS's initial, one-time
burden to put in writing its safeguards and procedures to protect
subscribers' confidential trading information and the oversight
procedures to ensure such safeguards and procedures are followed would
be approximately 8 hours,\1120\ but we estimate that the burden could
range between 5 and 10 hours.\1121\ We estimate that, of the 87 current
ATSs, 15 ATSs might not have their safeguards and procedures to protect
subscribers' confidential trading information or oversight procedures
to ensure such safeguards and procedures are followed in writing, and
would therefore be subject to this one-time initial burden.\1122\
Accordingly, we estimate that the aggregate initial, one-time burden on
all ATSs would be 120 hours based on our highest approximation of the
additional burden per ATS.\1123\
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    \1119\ See Proposal, supra note 2, at 81094.
    \1120\ Attorney at 7 hours + Compliance Clerk at 1 hour = 8
burden hours.
    \1121\ Attorney at 4-9 hours + Compliance Clerk at 1 hour = 5-10
burden hours.
    \1122\ It is likely that most, if not all, ATSs already fulfill
their Rule 301(b)(10) obligations in writing, given the practical
difficulty in ensuring such safeguards and procedures, as well as
oversight procedures, are ``adequate,'' as required under Rule
301(b)(10), and contain all necessary components.
    \1123\ (Attorney at 7 hours + Compliance Clerk at 1 hour) x (15
ATSs) = 120 burden hours.
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    We estimate that the average annual, ongoing burden per ATS to
update and preserve written safeguards and written procedures to
protect subscribers' confidential trading information, as well as to
update and preserve the written standards controlling employees of the
ATS trading for their own account and the written oversight procedures,
would be 4 hours.\1124\ As a result, we estimate that the total
aggregate, ongoing burden per year for all ATSs would be 348
hours,\1125\ and thus, we are modifying the current PRA burden
estimates for Rules 301 and 303 to account for this increased burden on
ATSs.
---------------------------------------------------------------------------

    \1124\ See supra note 1116 and accompanying text.
    \1125\ (Attorney at 2 hours + Compliance Clerk at 2 hours) x 87
ATSs = 348 burden hours.
---------------------------------------------------------------------------

2. Rules 301(b)(2)(viii) and 304 of Regulation ATS, Including Form ATS-
N
a. Baseline Measurements
    Currently, Rule 301(b)(2)(i) of Regulation ATS \1126\ requires an
ATS to file an initial operation report on current Form ATS at least 20
days prior to commencing operation as an alternative trading system.
Current Form ATS requires information regarding the operation of the
ATS, including, among other things, classes of subscribers, the types
of securities traded, the outsourcing of operations of the ATS to other
entities, the procedures governing the entry of orders, the means of
access to the ATS, and procedures governing execution and reporting.
Regarding amendments to an existing Form ATS, Rule 301(b)(2)(ii) of
Regulation ATS \1127\ requires an ATS to file amendments to its current
Form ATS at least 20

calendar days prior to implementing a material change to its
operations. Rule 301(b)(2)(iii) of Regulation ATS \1128\ requires an
ATS to file amendments to its current Form ATS within 30 calendar days
after the end of each calendar quarter if any information contained in
its initial operation report becomes inaccurate and has not been
previously reported to the Commission.\1129\ Regarding shutting down an
ATS, Rule 301(b)(2)(v) of Regulation ATS \1130\ requires an ATS to
promptly file a cessation of operation report on current Form ATS upon
ceasing operations as an ATS.
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    \1126\ 17 CFR 242.301(b)(2)(i).
    \1127\ 17 CFR 242.301(b)(2)(ii).
    \1128\ 17 CFR 242.301(b)(2)(iii).
    \1129\ In addition, Rule 301(b)(2)(iv) requires an ATS to
promptly file an amendment on current Form ATS after the discovery
that any information previously filed on current Form ATS was
inaccurate when filed. 17 CFR 242.301(b)(2)(iv).
    \1130\ 17 CFR 242.301(b)(2)(v).
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    Our currently approved estimate for an initial operation report on
current Form ATS is 20 hours to gather the necessary information,
provide the required disclosures in Exhibits A through I, and submit
the Form ATS to the Commission.\1131\ With respect to Form ATS
amendments, we understand, based on the review of Form ATS amendments
by the Commission and its staff, that ATSs that trade NMS stocks
typically amend their Form ATS on average twice per year.\1132\ The
frequency and scope of Form ATS amendments vary depending on whether
the ATS is implementing a material change or an updating change. Some
ATSs may not change how they operate or anything else that might
require an amendment to Form ATS in a given year while others may
implement a number of changes during a given year that require Form ATS
amendments. Our currently approved estimated average compliance burden
for each amendment to Form ATS is approximately 6 hours.\1133\
Accordingly, the estimated average annual ongoing burden of updating
and amending Form ATS is approximately 12 hours per NMS Stock
ATS.\1134\ With respect to ceasing operations, the currently approved
average estimated compliance burden for an ATS to complete a notice of
cessation is 2 hours to check the appropriate box on Form ATS and send
the notice of cessation to the Commission.\1135\ Our currently approved
estimate for the average compliance burden for each Form ATS-R filing
is 4 hours.\1136\
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    \1131\ Attorney at 13 hours + Compliance Clerk at 7 hours = 20
burden hours. See Rule 301 PRA Update, supra note 1117, 79 FR 6237.
    \1132\ See id.
    \1133\ Attorney at 4.5 hours + Compliance Clerk at 1.5 hours = 6
burden hours. See id.
    \1134\ 2 Form ATS amendments filed annually x 6 burden hours per
Form ATS amendment = 12 burden hours per ATS.
    \1135\ Attorney at 1.5 hours + Compliance Clerk at 0.5 hours = 2
burden hours. See PRA Update, supra note 1117, 79 FR 6237.
    \1136\ Attorney at 3 hours + Compliance Clerk at 1 hour = 4
burden hours. See id.
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b. Burdens
    We recognize that Rules 301(b)(2)(viii) and 304 of Regulation ATS,
including Form ATS-N, would impose certain burdens on
respondents.\1137\ Although many of the disclosures required by Form
ATS-N are currently required by Form ATS, Form ATS-N requires an NMS
Stock ATS to provide significantly more detail in those disclosures
than currently required by Form ATS. Form ATS-N also requires
additional disclosures not currently mandated by current Form ATS such
as those contained in Part II of adopted Form ATS-N. Under the
amendments to Regulation ATS, NMS Stock ATSs will be required to
complete and file the enhanced and additional disclosures on Form ATS-
N.\1138\ Section IX.D.2.b.i below provides the estimated burden above
the current Form ATS baseline of each item of Form ATS-N. Many of the
disclosure items on Form ATS-N are already required disclosures by
respondents in whole or in part on current Form ATS, while other
disclosure items on Form ATS-N are novel (i.e., current Form ATS does
not require some form of the disclosure). Section IX.D.2.b.ii
aggregates these new burdens and the additional burdens above the
current Form ATS baseline that will be imposed by Form ATS-N.
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    \1137\ In establishing the estimates below with respect to Form
ATS-N, we have considered its estimate of the burden for an SRO to
amend a Form 19b-4. Specifically, we estimated that 34 hours is the
amount of time required to complete an average rule filing and 129
hours is the amount of time required to complete a complex rule
filing, and three hours is the amount of time required to complete
an average amendment to a rule filing. See Securities Exchange Act