NMS Stock ATS currently operates pursuant to a Form ATS. Rules 304 and
301(b)(2)(viii) required an NMS Stock ATS to file a Form ATS-N no later
than February 8, 2019. After February 8, 2019, this check box became
obsolete. The Commission is also proposing new Part I, Item 1.B, which
would require the NMS Stock ATS to indicate whether the registered
broker-dealer has been authorized by its national securities
association to operate an ATS. The Commission believes this would
facilitate compliance with and oversight of the requirement that an ATS
complies with the rules of an SRO, including to obtain approval to
operate an ATS.\322\ In addition, to avoid confusion, the Commission is
proposing to delete language in the signature block in Part IV of Form
ATS-N that refers to the signatory as ``duly sworn.'' The Commission
notes that Form ATS-N filings, which are submitted to EDGAR, are not
required to be notarized; \323\ instead, they are subject to the rules
governing electronic signatures set forth in Rule 302 of Regulation S-
T.\324\
---------------------------------------------------------------------------

    \322\ See supra note 203 and accompanying text.
    \323\ Unlike Form ATS, Form ATS-N does not have a notarization
block.
    \324\ 17 CFR 232.302.
---------------------------------------------------------------------------

    The Commission is proposing to replace the current definition of
``Person'' in Form ATS-N, which is provided by the Investment Advisers
Act of 1940 (``Advisers Act'') \325\ with the different definition of
``Person'' as defined under the Exchange Act.\326\ Because Regulation
ATS is a Commission regulation under the Exchange Act, and NMS Stock
ATSs are subject to various Exchange Act Rules,\327\ the Commission
believes that it is more appropriate to apply the definition of
``Person'' under the Exchange Act than the definition of ``Person''
under the Advisers Act, which is not applicable to ATSs. Although the
definitions are not identical, the Commission believes the differences
between the definitions are unlikely to result in differences to the
disclosures

required by Form ATS-N.\328\ To the extent ATSs might have found
ambiguous the Commission's use of the Advisers Act definition in the
context of an Exchange Act rule, the Commission believes that this
proposed change will mitigate any such concerns. The Commission is also
proposing to change the definition of ``NMS Stock ATS'' to conform to
the proposed changes to the definition in Rule 300 and state that NMS
Stock ATSs shall not trade securities other than NMS stocks.\329\
---------------------------------------------------------------------------

    \325\ 15 U.S.C. 80a-2(a)(28) (defining ``Person'' as ``a natural
person or a company'').
    \326\ 15 U.S.C. 78c(a)(9) (defining the term ``person'' as a
natural person, company, government, or political subdivision,
agency, or instrumentality of a government).
    \327\ See NMS Stock ATS Adopting Release, supra note 1, at
38768.
    \328\ The Exchange Act's inclusion of a ``government, or
political subdivision, agency or instrumentality of a government''
under the definition of ``Person'' is unlikely to result in any
changes to the disclosures required by the items in Form ATS-N that
use the word ``Person'' as, in the Commission's experience, these
entities are generally not involved in the operations of NMS Stock
ATSs as subscribers or otherwise.
    \329\ See supra note 93 and accompanying text.
---------------------------------------------------------------------------

    In Part III, Item 1, the Commission is proposing to remove the
checkbox ``NMS Stock ATS'' under the list of types of subscriber to an
NMS Stock ATS. A broker-dealer operator of an NMS Stock ATS seeking to
access another NMS Stock ATS would involve the broker-dealer operator
for the NMS Stock ATS becoming a subscriber to the ATS, not the ATS
that the broker-dealer operates. In this scenario, an NMS Stock ATS
that accepts a broker-dealer operator for another NMS Stock ATS would
mark the checkbox for broker and/or dealer in Part III, Item 1 on Form
ATS-N as appropriate. The Commission is also proposing to add insurance
companies, pension funds, and corporations to the list of types of
subscribers in Part III, Item 1 on Form ATS-N. The Commission believes
that adding these checkboxes will provide more granular information on
the types of subscribers participating on an NMS Stock ATS in an
easier-to-read format.
    In Part II, Item 4(b) of Form ATS-N, the Commission is proposing to
delete the phrase ``if yes to Item 4(a).'' This phrase was included in
Form ATS-N in error. The NMS Stock ATS would be required to respond to
Part II, Item 4(b) regardless of its response to Part II, Item 4(a).
    In Part II, Item 6(a) of Form ATS-N, the Commission is proposing to
add language to the definition of ``shared employee'' to clarify that
the Item solicits disclosures relating to both any employee of the
broker-dealer operator and any employee of its affiliate that provides
services to both the operations of the NMS Stock ATS and any other
business unit or any affiliate of the broker-dealer operator. The
proposed amendment is designed to clarify the existing requirements of
the Item.
    The Commission is proposing to add the term ``market data'' to the
examples listed in Part III, Item 19 of the types of fees that NMS
Stock ATSs must disclose. While most NMS Stock ATSs do not disseminate
market data, the Commission believes that they can and a description of
an NMS Stock ATS's market data fees is currently required by the
Item.\330\ The Commission believes that adding the example could assist
NMS Stock ATSs in responding comprehensively to the Item. The
Commission is also including the example in Form ATS-G as Government
Securities ATSs are primarily lit venues that offer market data to
subscribers. The Commission is also proposing to change the term
``Order Display and Fair Access Amendment'' throughout Form ATS-N to
``Contingent Amendment'' to conform to proposed changes to Rule
304.\331\ Furthermore, the Commission is proposing several grammatical
and technical changes to Form ATS-N to correct and clarify certain
items on the form. These changes are listed in Section XIII infra.
---------------------------------------------------------------------------

    \330\ Part III, Item 19 requires NMS Stock ATSs to identify and
describe any (emphasis added) fees or charges for use of the
Government Securities ATS services, including the type of fees.
    \331\ See supra note 176.
---------------------------------------------------------------------------

Request for Comment
    122. Should the Commission adopt alternative EDGAR filing
requirements or formats for Form ATS-N (e.g., filing in XBRL format)?
    123. Would the use of the Exchange Act definition of ``Person''
instead of the Advisers Act definition of ``Person'' result in
differences to the information required to be disclosed by Form ATS-N?
    124. Should the Commission require a broker-dealer operator for an
NMS Stock ATS to disclose its LEI, in addition to its CRD Number and
MPID, which NMS Stock ATSs are currently required to provide, on Form
ATS-N?

VI. Proposed Amendments to Regulation SCI for Government Securities ATS

    The Commission proposes to amend Regulation SCI to expand the
definition of ``SCI alternative trading system'' to include Government
Securities ATSs that meet a specified volume threshold. A Government
Securities ATS that meets the proposed amended definition of ``SCI
alternative trading system'' would fall within the definition of ``SCI
entity'' and, as a result, would be subject to the requirements of
Regulation SCI. The Commission believes that the proposal to extend the
requirements of Regulation SCI to Government Securities ATSs that trade
a significant volume in U.S. Treasury Securities or Agency Securities
would help to address the technological vulnerabilities, and improve
the Commission's oversight, of the core technology of key entities in
the markets for government securities.
    The Commission adopted Regulation SCI in November 2014 to
strengthen the technology infrastructure of the U.S. securities
markets.\332\ As discussed in the Regulation SCI Adopting Release, a
number of factors contributed to the Commission's proposal and adoption
of Regulation SCI. These factors included: The evolution of the markets
becoming significantly more dependent upon sophisticated, complex, and
interconnected technology; the successes and limitations of the
Automation Review Policy (``ARP'') Inspection Program; a significant
number of, and lessons learned from, recent systems issues at exchanges
and other trading venues; \333\ and increased concerns over the
potential for ``single points of failure'' in the securities
markets.\334\ Regulation SCI is designed to strengthen the
infrastructure of the U.S. securities markets, reduce the occurrence of
systems issues in those markets, improve their resiliency when
technological issues arise, and establish an updated and formalized
regulatory framework, thereby helping to ensure more effective
Commission oversight of such systems.\335\
---------------------------------------------------------------------------

    \332\ See Regulation SCI Adopting Release, supra note 2, at
72252-56 for a discussion of the background of Regulation SCI.
    \333\ See id. at 72253-56.
    \334\ See id. at 72277-79.
    \335\ Id. at 72253, 72256.
---------------------------------------------------------------------------

    The key market participants that are currently subject to
Regulation SCI are called ``SCI entities'' and include certain SROs
(including stock and options exchanges, registered clearing agencies,
FINRA and the MSRB) (``SCI SROs''); alternative trading systems that
trade NMS and non-NMS stocks exceeding specified volume thresholds
(``SCI ATSs''); the exclusive SIPs (``plan processors''); and certain
exempt clearing agencies.\336\ Regulation SCI, among other things,
requires these SCI entities to establish, maintain, and enforce written
policies and procedures reasonably designed to ensure that their key
automated systems have levels of capacity, integrity, resiliency,
availability, and security adequate to maintain their operational
capability and promote the maintenance of fair and orderly markets, and
that such systems operate in accordance with the Exchange Act and the
rules and

regulations thereunder and the entities' rules and governing documents,
as applicable.\337\ Broadly speaking, Regulation SCI also requires SCI
entities to take appropriate corrective action when systems issues
occur; provide certain notifications and reports to the Commission
regarding systems problems and systems changes; inform members and
participants about systems issues; conduct business continuity and
disaster recovery testing and penetration testing; conduct annual
reviews of their automated systems; and make and keep certain books and
records.\338\
---------------------------------------------------------------------------

    \336\ See 17 CFR 242.1000.
    \337\ See 17 CFR 242.1001; infra notes 365-374.
    \338\ See 17 CFR 242.1001-1007; infra notes 365-386.
---------------------------------------------------------------------------

    Regulation SCI applies primarily to the systems of, or operated on
behalf of, SCI entities that directly support any one of six key
securities market functions--trading, clearance and settlement, order
routing, market data, market regulation, and market surveillance (``SCI
systems'').\339\ With respect to security, Regulation SCI also applies
to systems that, if breached, would be reasonably likely to pose a
security threat to SCI systems (``indirect SCI systems'').\340\ In
addition, certain systems whose function are critical to the operation
of the markets, including those that represent single points of failure
(defined as ``critical SCI systems''), are subject to certain
heightened requirements.\341\
---------------------------------------------------------------------------

    \339\ See 17 CFR 242.1000.
    \340\ Id.
    \341\ Id. See also Regulation SCI Adopting Release, supra note
2, at 72277. Paragraph (1) of the definition of ``critical SCI
systems'' in Rule 1000 of Regulation SCI specifically enumerates
certain systems to be within its scope, including those that
directly support functionality relating to: (i) clearance and
settlement systems of clearing agencies; (ii) openings, reopenings,
and closings on the primary listing market; (iii) trading halts;
(iv) initial public offerings; (v) the provision of consolidated
market data; or (vi) exclusively-listed securities. 17 CFR
242.1000(1).
---------------------------------------------------------------------------

    When adopting Regulation SCI, the Commission included within the
scope of Regulation SCI those entities ``that play a significant role
in the U.S. securities markets and/or have the potential to impact
investors, the overall market, or the trading of individual
securities.'' \342\ The Commission identified by function the key
market participants it believed were integral to ensuring the
stability, integrity, and resiliency of securities market
infrastructure.\343\ As discussed below, SCI ATSs are currently among
those entities that are subject to Regulation SCI, as they are heavily
reliant on automated systems and represent a significant pool of
liquidity for NMS and non-NMS stocks.\344\ However, when the Commission
adopted Regulation SCI, the Commission applied it to ATSs that trade
NMS stocks and non-NMS stocks, but not to fixed income ATSs. Rather, in
the context of the municipal and corporate debt markets, the Commission
stated that fixed income markets rely much less on automation and
electronic trading than markets that trade NMS stocks or non-NMS
stocks.\345\ The Commission also stated that the municipal and
corporate debt markets tend to be less liquid than the equity markets,
with slower execution times and less complex routing strategies.\346\
---------------------------------------------------------------------------

    \342\ See Regulation SCI Adopting Release, supra note 2, at
72258.
    \343\ See id. at 72254.
    \344\ See id. at 72262-63. Rule 1000 of Regulation SCI defines
SCI ATS to mean an ATS, which, during at least four of the preceding
six calendar months, had: (1) With respect to NMS stocks: (i) five
percent or more in any single NMS stock, and 0.25 percent or more in
all NMS stocks, of the average daily dollar volume reported by an
effective transaction reporting plan, or (ii) one percent or more,
in all NMS stocks, of the average daily dollar volume reported by an
effective transaction reporting plan; or (2) with respect to equity
securities that are not NMS stocks and for which transactions are
reported to an SRO, five percent or more of the average daily dollar
volume as calculated by the SRO to which such transactions are
reported. See 17 CFR 242.1000. Rule 1000 also states that an ATS
that meets one of these thresholds is not required to comply with
Regulation SCI until six months after satisfying the threshold for
the first time. See id.
    \345\ See Regulation SCI Adopting Release, supra note 2, at
72270.
    \346\ See id.
---------------------------------------------------------------------------

    Although the Commission differentiated fixed income securities
generally from equity securities when it adopted Regulation SCI, in
light of the increasing automation of the government securities market
and the operational similarities between many Government Securities
ATSs and NMS Stock ATSs,\347\ the Commission preliminarily believes
that it would be appropriate to apply the requirements of Regulation
SCI to Government Securities ATSs that meet certain volume thresholds.
As the Commission previously stated, while technological developments
provide many benefits to the U.S. securities markets, they also
increased the risk of operational problems that have the potential to
cause a widespread impact on the securities market and its
participants.\348\ The application of Regulation SCI to Government
Securities ATSs that trade a significant volume of U.S. Treasury
Securities or Agency Securities would further help to address those
technological vulnerabilities, and improve the Commission's oversight,
of the core technology used by key U.S. securities markets
participants.
---------------------------------------------------------------------------

    \347\ See supra Section I.A.
    \348\ See Regulation SCI Adopting Release, supra note 2, at
72253.
---------------------------------------------------------------------------

    Accordingly, under this proposal, the definition of ``SCI ATSs''
would be expanded to include certain Government Securities ATSs that
meet certain volume thresholds with respect to U.S. Treasury Securities
and/or Agency Securities, as the Commission believes such ATSs
similarly rely heavily on automated systems and represent a significant
source of orders and trading interest in these asset classes.\349\
Specifically, the definition of ``SCI ATS'' would be revised to include
those ATSs which, during at least four of the preceding six calendar
months: Had, with respect to U.S. Treasury Securities, five percent
(5%) or more of the average weekly dollar volume traded in the United
States as provided by the SRO to which such transactions are reported;
or had, with respect to Agency Securities, five percent (5%) or more of
the average daily dollar volume traded in the United States as provided
by the SRO to which such transactions are reported. These proposed
thresholds are the same as those being proposed for Government
Securities ATSs with respect to the Fair Access Rule under Regulation
ATS.\350\
---------------------------------------------------------------------------

    \349\ See paragraphs (3) and (4) of the proposed definition of
``SCI ATS'' under Rule 1000 of Regulation SCI.
    \350\ See supra Section II.D. (Application of Fair Access to
Government Securities ATSs).
---------------------------------------------------------------------------

    The Commission believes that the proposed thresholds for applying
Regulation SCI to Government Securities ATSs are appropriate measures
to identify those ATSs that have the potential to significantly impact
investors and the market should a systems issue occur.\351\ Currently,
the Commission believes that approximately three ATSs trading U.S.
Treasury Securities and one ATS trading Agency Securities would be
subject to Regulation SCI under the proposed five percent volume
thresholds.\352\ The ATS with the largest market volume in U.S.
Treasury Securities has around 24 percent of

market volume, while each of the second and third largest is slightly
above five percent market share. The one ATS that would exceed the
proposed threshold for Agency Securities accounts for roughly 13
percent of volume in Agency Securities.\353\ If the proposed volume
thresholds were 7.5 or 10 percent, however, only one ATS trading U.S.
Treasury Securities and one ATS trading Agency Securities would be
subject to Regulation SCI.\354\ The Commission is requesting comment on
whether these proposed volume thresholds should be set higher or lower
for trading of U.S. Treasury Securities or Agency Securities by a
Government Securities ATS.
---------------------------------------------------------------------------

    \351\ Under the proposal, Regulation SCI would not apply to
Government Securities ATSs that trade repos, including repos on U.S.
Treasury Securities and Agency Securities. Based on information
available to the Commission, the Commission does not believe that
ATSs today capture a significant market share for trading repos nor
do they rely on the same level of automation as ATSs that trade U.S.
Treasury Securities or Agency Securities. The Commission is
requesting comment on this preliminary assessment and whether the
Commission should amend Regulation SCI to require Government
Securities ATSs that trade repos, including repos on U.S. Treasury
Securities and Agency Securities, to be subject to the requirements
of Regulation SCI.
    \352\ See supra Section II.D and infra Section X.B.1a.
    \353\ See infra Table X.1.
    \354\ See id.
---------------------------------------------------------------------------

    The Commission believes that the proposed volume thresholds to
apply Regulation SCI to a Government Securities ATS that trades U.S.
Treasury Securities and Agency Securities are reasonable as compared to
volume thresholds for applying Regulation SCI to ATSs that trade NMS
stocks and ATSs that trade equity securities that are not NMS stocks.
First, an ATS that trades NMS stocks is subject to Regulation SCI if
its trading volume reaches: (i) Five percent or more in any single NMS
stock and one-quarter percent or more in all NMS stocks of the average
daily dollar volume reported by applicable transaction reporting plans;
or (ii) one percent or more in all NMS stocks of the average daily
dollar volume reported by applicable transaction reporting plans. With
respect to non-NMS equity securities, an ATS is subject to Regulation
SCI if its trading volume is five percent or more of the average daily
dollar volume (across all non-NMS equity securities) as calculated by
the SRO to which such transactions are reported. The proposed SCI
volume thresholds for Government Securities ATSs would be similar to
those for ATSs that trade non-NMS equity securities. The Commission
believes that basing the thresholds on volume as provided by the SRO to
which such transactions are reported is reasonable given that there is
no transaction reporting plan for government securities and thus, the
trading figures are based on dollar volume traded in the United States
as provided by the SRO to which such transactions are reported.
    In addition, the Commission believes that the proposed volume
thresholds to apply Regulation SCI to a Government Securities ATS that
trades U.S. Treasury Securities and Agency Securities are reasonable
compared to volume thresholds that would subject an ATS to Rule
301(b)(6) under Regulation ATS (i.e., the Capacity, Integrity, and
Security Rule) for the ATS's trading of corporate bonds and municipal
securities. While Regulation SCI is not applicable to ATSs that trade
corporate bonds or municipal securities, an ATS that trades corporate
bonds or municipal securities is subject to Rule 301(b)(6) if its
trading volume reaches 20 percent or more of the average daily volume
traded in the United States for either corporate bonds or municipal
securities.\355\ When the Commission adopted Regulation SCI, it decided
not to apply Regulation SCI and its lower volume thresholds to the
fixed income markets, concluding that a systems issue in fixed income
markets would not have had as significant or widespread an impact as in
the equities market.\356\ Among other things, the Commission reasoned
that the fixed income markets at the time relied much less on
automation and electronic trading than the equities markets, and that
the municipal securities and corporate bond fixed income markets tended
to be less liquid than the equity markets, with slower execution times
and less complex routing strategies.\357\ As explained above, however,
ATSs for government securities now operate with complexity similar to
that of markets that trade NMS stocks in terms of automation and speed
of trading, the use of limit order books, order types, algorithms,
connectivity, data feeds, and the active participation of PTFs.\358\
Government securities also make up more than half of the outstanding
debt issuances in the U.S. bond market and play a critical role in the
U.S. and global economies.\359\ An ATS whose government securities
volume falls between five percent and 20 percent of trading volume
could significantly impact investors and the market should a systems
issue occur, as discussed below in this section. By proposing to apply
Regulation SCI to Government Securities ATSs with a threshold of below
20 percent the Commission seeks to impose the more stringent
protections of Regulation SCI to these ATSs because of their importance
to the U.S. securities markets. The Commission also recognizes that
ATSs for corporate bonds and municipal securities are becoming
increasingly electronic and as part of this release, the Commission is
requesting comment on, among other things, whether the 20 percent
volume threshold under Rule 301(b)(6) of Regulation ATS should be
amended to capture ATSs that might be critical markets for those
securities.
---------------------------------------------------------------------------

    \355\ See 17 CFR 242.301(b)(6). The requirements of Rule
301(b)(6) are less rigorous than the requirements of Regulation SCI.
Among other things, Rule 301(b)(6) requires an ATS to notify the
Commission staff of material systems outages and significant systems
changes and that the ATS establish adequate contingency and disaster
recovery plans. See id. Currently, there are no ATSs that are
subject to requirements of Rule 301(b)(6) of Regulation ATS.
    \356\ See Regulation SCI Adopting Release, supra note 2, at
72270.
    \357\ See id.
    \358\ See supra note 5.
    \359\ See supra notes 5-7 and accompanying text.
---------------------------------------------------------------------------

    When adopting Regulation SCI, the Commission stated that it would
``monitor and evaluate the implementation of Regulation SCI, the risks
posed by the systems of other market participants, and the continued
evolution of the securities markets, such that it may consider, in the
future, extending the types of requirements in Regulation SCI to
additional categories of market participants.'' \360\ The Commission
believes that the continued evolution of the securities markets,
including advancements in technology, have resulted in significant
changes in how government securities trade.\361\ In particular, the
structure of the U.S. Treasury market has evolved in recent years and
electronic trading has become an increasingly important feature of the
interdealer market for U.S. Treasury Securities.\362\ As stated by
various sources, the secondary interdealer cash markets for on-the-run
U.S. Treasury Securities have evolved such that those markets operate
with complexity similar to that of markets that trade NMS stocks in
terms of automation and speed of trading, the use of limit order books,
order types, algorithms, and the active participation of PTFs on
ATSs.\363\
---------------------------------------------------------------------------

    \360\ See Regulation SCI Adopting Release, supra note 2, at
72270.
    \361\ See supra Section I.A.
    \362\ See supra note 14 and accompanying text.
    \363\ See supra notes 14-15 and accompanying text.
---------------------------------------------------------------------------

    Given this evolution in the U.S. Treasury market, the Commission
now believes that there are Government Securities ATSs that operate
with similar complexity as SCI ATSs that are currently subject to
Regulation SCI, and that Government Securities ATSs with significant
trading volume play an important role in the government securities
markets and face similar technological vulnerabilities as existing SCI
entities. The Commission believes that, without appropriate safeguards
in place for these Government Securities ATSs, technological
vulnerabilities could lead to the potential for failures, disruptions,
delays, and intrusions, which could place government

securities market participants at risk, and could possibly interfere
with the maintenance of fair and orderly markets. For example, a
systems issue could occur at a Government Securities ATS with
significant trading volume (e.g., a systems disruption or a
cybersecurity incident that prevented the ATS from operating or being
accessible to its subscribers), such that certain market participants
or the government securities markets broadly could be significantly
impacted until such time that the issue was resolved at the ATS. In
addition, applying Regulation SCI to these Government Securities ATSs
would help the Commission improve its oversight of the market for
government securities, thereby continuing its efforts to address
technological vulnerabilities of the core technology systems of key
U.S. securities markets entities.
    As proposed, those Government Securities ATSs trading U.S. Treasury
Securities and/or Agency Securities that met the volume thresholds
under the revised definition of SCI ATS would be subject to the
requirements of Regulation SCI, as described below.\364\ Rule 1001(a)
of Regulation SCI requires SCI entities to have policies and procedures
reasonably designed to ensure that their SCI systems and, for purposes
of security standards, indirect SCI systems, have levels of capacity,
integrity, resiliency, availability, and security adequate to maintain
their operational capability and promote the maintenance of fair and
orderly markets, and includes certain minimum requirements for those
policies and procedures relating to capacity planning, stress tests,
systems development and testing methodology, the identification of
vulnerabilities, business continuity and disaster recovery plans
(including geographic diversity and resumption goals), market data, and
monitoring.\365\ Rule 1001(a)(3) of Regulation SCI requires that SCI
entities periodically review the effectiveness of these policies and
procedures, and take prompt action to remedy any deficiencies.\366\
Rule 1001(a)(4) of Regulation SCI provides that, for purposes of the
provisions of Rule 1001(a), an SCI entity's policies and procedures
will be deemed to be reasonably designed if they are consistent with
current SCI industry standards, which shall be comprised of information
technology practices that are widely available to information
technology professionals in the financial sector and issued by an
authoritative body that is a U.S. governmental entity or agency,
association of U.S. governmental entities or agencies, or widely
recognized organization; \367\ however, Rule 1001(a)(4) of Regulation
SCI also makes clear that compliance with such ``current SCI industry
standards'' is not the exclusive means to comply with these
requirements.
---------------------------------------------------------------------------

    \364\ The Commission is requesting comment on whether all of the
obligations in Regulation SCI should apply to Government Securities
ATSs that would be SCI ATSs, or whether only certain requirements
should be imposed, such as those requiring written policies and
procedures, notification of systems problems, business continuity
and disaster recovery testing (including testing with subscribers of
ATSs), and penetration testing.
    \365\ 17 CFR 242.1001(a)(1)-(2).
    \366\ 17 CFR 242.1001(a)(3).
    \367\ 17 CFR 242.1001(a)(4). The Commission notes that,
concurrent with the Commission's adoption of Regulation SCI,
Commission staff issued staff guidance on current SCI industry
standards as referenced in Regulation SCI. The staff guidance listed
examples of publications in nine domains describing processes,
guidelines, frameworks, or standards an SCI entity could look to in
developing reasonable policies and procedures to comply with Rule
1001(a) of Regulation SCI. See ``Staff Guidance on Current SCI
Industry Standards,'' November 19, 2014, available at: https://www.sec.gov/rules/final/2014/staff-guidance-current-sci-industry-standards.pdf. The domains included: Application controls; capacity
planning; computer operations and production environment controls;
contingency planning; information security and networking; audit;
outsourcing; physical security; and systems development methodology.
---------------------------------------------------------------------------

    Rule 1001(b) of Regulation SCI requires that each SCI entity
establish, maintain, and enforce written policies and procedures
reasonably designed to ensure that its SCI systems operate in a manner
that complies with the Exchange Act and the rules and regulations
thereunder and the entity's rules and governing documents, as
applicable, and specifies certain minimum requirements for such
policies and procedures.\368\ Rule 1001(b)(3) of Regulation SCI
requires that SCI entities periodically review the effectiveness of
these policies and procedures, and take prompt action to remedy any
deficiencies.\369\ Rule 1001(b)(4) of Regulation SCI provides
individuals with a safe harbor from liability under Rule 1001(b) if
certain conditions are met.\370\
---------------------------------------------------------------------------

    \368\ 17 CFR 242.1001(b)(1)-(2).
    \369\ 17 CFR 242.1001(b)(3).
    \370\ 17 CFR 242.1001(b)(4).
---------------------------------------------------------------------------

    Rule 1001(c) of Regulation SCI requires SCI entities to establish,
maintain, and enforce reasonably designed written policies and
procedures that include the criteria for identifying responsible SCI
personnel, the designation and documentation of responsible SCI
personnel, and escalation procedures to quickly inform responsible SCI
personnel of potential SCI events.\371\ Rule 1000 of Regulation SCI
defines ``responsible SCI personnel'' to mean, for a particular SCI
system or indirect SCI system impacted by an SCI event, such senior
manager(s) of the SCI entity having responsibility for such system, and
their designee(s).\372\ Rule 1000 also defines ``SCI event'' to mean an
event at an SCI entity that constitutes a system disruption, a systems
compliance issue, or a systems intrusion.\373\ Rule 1001(c)(2) of
Regulation SCI requires that SCI entities periodically review the
effectiveness of these policies and procedures, and take prompt action
to remedy any deficiencies.\374\
---------------------------------------------------------------------------

    \371\ 17 CFR 242.1001(c).
    \372\ 17 CFR 242.1000.
    \373\ A ``systems disruption'' means an event in an SCI entity's
SCI systems that disrupts, or significantly degrades, the normal
operation of an SCI system. A ``systems compliance issue'' means
``an event at an SCI entity that has caused any SCI system of such
entity to operate in a manner that does not comply with the Act and
the rules and regulations thereunder or the entity's rules or
governing documents, as applicable.'' A ``systems intrusion'' means
any unauthorized entry into the SCI systems or indirect SCI systems
of an SCI entity.'' See 17 CFR 242.1000.
    \374\ 17 CFR 242.1001(c)(2).
---------------------------------------------------------------------------

    Under Rule 1002 of Regulation SCI, SCI entities have certain
obligations related to SCI events. Specifically, when any responsible
SCI personnel has a reasonable basis to conclude that an SCI event has
occurred, the SCI entity must begin to take appropriate corrective
action which must include, at a minimum, mitigating potential harm to
investors and market integrity resulting from the SCI event and
devoting adequate resources to remedy the SCI event as soon as
reasonably practicable.\375\ Rule 1002(b) provides the framework for
notifying the Commission of SCI events including, among other things,
to: Immediately notify the Commission of the event; provide a written
notification within 24 hours that includes a description of the SCI
event and the system(s) affected, with other information required to
the extent available at the time; provide regular updates regarding the
SCI event until the event is resolved; and submit a final detailed
written report regarding the SCI event.\376\ Rule 1002(c) of Regulation
SCI also requires that SCI entities disseminate information to their
members or participants regarding SCI events.\377\ These information

dissemination requirements are scaled based on the nature and severity
of an event. Specifically, for ``major SCI events,'' SCI entities are
required to promptly disseminate certain information about the event to
all of its members or participants. For SCI events that are not ``major
SCI events,'' SCI entities must, promptly after any responsible SCI
personnel has a reasonable basis to conclude that an SCI event has
occurred, disseminate certain information to those SCI entity members
and participants reasonably estimated to have been affected by the
event. In addition, dissemination of information to members or
participants is permitted to be delayed for systems intrusions if such
dissemination would likely compromise the security of the SCI entity's
systems or an investigation of the intrusion.\378\
---------------------------------------------------------------------------

    \375\ See 17 CFR 242.1002(a).
    \376\ See 17 CFR 242.1002(b). For any SCI event that ``has had,
or the SCI entity reasonably estimates would have, no or a de
minimis impact on the SCI entity's operations or on market
participants,'' Rule 1002(b)(5) provides an exception to the general
Commission notification requirements under Rule 1002(b). Instead, an
SCI entity must make, keep, and preserve records relating to all
such SCI events, and submit a quarterly report to the Commission
regarding any such events that are systems disruptions or systems
intrusions.
    \377\ See 17 CFR 242.1002(c).
    \378\ See id. In addition, the information dissemination
requirements of Rule 1002(c) do not apply to SCI events to the
extent they relate to market regulation or market surveillance
systems, or to any SCI event that has had, or the SCI entity
reasonably estimates would have, no or a de minimis impact on the
SCI entity's operations or on market participants. See 17 CFR
242.1002(c)(4).
---------------------------------------------------------------------------

    Rule 1003(a) of Regulation SCI requires SCI entities to provide
reports to the Commission relating to system changes, including a
report each quarter describing completed, ongoing, and planned material
changes to their SCI systems and the security of indirect SCI systems,
during the prior, current, and subsequent calendar quarters, including
the dates or expected dates of commencement and completion.\379\ Rule
1003(b) of Regulation SCI also requires that an SCI entity conduct an
``SCI review'' not less than once each calendar year.\380\ ``SCI
review'' is defined in Rule 1000 of Regulation SCI to mean a review,
following established procedures and standards, that is performed by
objective personnel having appropriate experience to conduct reviews of
SCI systems and indirect SCI systems, and which review contains: A risk
assessment with respect to such systems of an SCI entity; and an
assessment of internal control design and effectiveness of its SCI
systems and indirect SCI systems to include logical and physical
security controls, development processes, and information technology
governance, consistent with industry standards.\381\ Under Rule
1003(b)(2)-(3), SCI entities are also required to submit a report of
the SCI review to their senior management, and must also submit the
report and any response by senior management to the report, to their
board of directors as well as to the Commission.\382\
---------------------------------------------------------------------------

    \379\ See 17 CFR 242.1003(a).
    \380\ See 17 CFR 242.1003(b).
    \381\ See 17 CFR 242.1000. Rule 1003(b)(1) of Regulation SCI
also states that penetration test reviews of an SCI entity's
network, firewalls, and production systems must be conducted at a
frequency of not less than once every three years, and assessments
of SCI systems directly supporting market regulation or market
surveillance must be conducted at a frequency based upon the risk
assessment conducted as part of the SCI review, but in no case less
than once every three years. See 17 CFR 242.1003(b)(1)(i)-(ii).
    \382\ See 17 CFR 242.1003(b)(2)-(3).
---------------------------------------------------------------------------

    Rule 1004 of Regulation SCI sets forth the requirements for testing
an SCI entity's business continuity and disaster recovery plans with
its members or participants. This rule requires that, with respect to
an SCI entity's business continuity and disaster recovery plan,
including its backup systems, each SCI entity shall: (a) Establish
standards for the designation of those members or participants that the
SCI entity reasonably determines are, taken as a whole, the minimum
necessary for the maintenance of fair and orderly markets in the event
of the activation of such plans; \383\ (b) designate members or
participants pursuant to the standards established and require
participation by such designated members or participants in scheduled
functional and performance testing of the operation of such plans, in
the manner and frequency specified by the SCI entity, provided that
such frequency shall not be less than once every 12 months; and (c)
coordinate the testing of such plans on an industry- or sector-wide
basis with other SCI entities.
---------------------------------------------------------------------------

    \383\ See 17 CFR 242.1004.
---------------------------------------------------------------------------

    SCI entities are required by Rule 1005 of Regulation SCI to make,
keep, and preserve certain records related to their compliance with
Regulation SCI.\384\ Rule 1006 of Regulation SCI provides for certain
requirements relating to the electronic filing, on Form SCI, of any
notification, review, description, analysis, or report to the
Commission required to be submitted under Regulation SCI.\385\ Finally,
Rule 1007 of Regulation SCI contains requirements relating to a written
undertaking when records required to be filed or kept by an SCI entity
under Regulation SCI are prepared or maintained by a service bureau or
other recordkeeping service on behalf of the SCI entity.\386\
---------------------------------------------------------------------------

    \384\ See 17 CFR 242.1005. Rule 1005(a) of Regulation SCI
relates to recordkeeping provisions for SCI SROs, whereas Rule
1005(b) relates to the recordkeeping provision for SCI entities
other than SCI SROs.
    \385\ See 17 CFR 242.1006.
    \386\ See 17 CFR 242.1007.
---------------------------------------------------------------------------

Request for Comment
    125. Should Regulation SCI apply to Government Securities ATSs that
meet the proposed definition of SCI ATS? If so, are the proposed
revisions to the definition of SCI ATS appropriate?
    126. What are the risks associated with systems issues at a
significant Government Securities ATS? What impact would a systems
issue have on the trading of government securities and the maintenance
of fair and orderly markets? Should all the requirements set forth in
Regulation SCI apply to Government Securities ATSs that meet the
proposed definition of SCI ATS?
    127. Should Government Securities ATSs that meet the proposed
volume thresholds for SCI ATSs be governed by the Capacity, Integrity,
and Security Rule instead of being defined as SCI entities? Are there
Government Securities ATSs that play a significant role in the
secondary market for U.S. Treasury Securities but do not meet the
proposed volume thresholds for SCI ATSs for which a different threshold
should be established to mandate compliance with the Capacity,
Integrity, and Security Rule? If yes, what additional regulatory
requirements, if any, should be imposed on such ATSs? What would be the
costs and benefits associated with applying Rule 301(b)(6) to
Government Securities ATSs that are not SCI ATSs?
    128. Should the Commission amend Regulation ATS to require
Government Securities ATSs to comply with Rule 301(b)(6) but adopt a
threshold that is lower or higher than 20 percent? For example, should
the Commission amend Rule 301(b)(6) to subject Government Securities
ATSs, or certain Government Securities ATSs, to the requirements of the
rule if the Government Securities ATS reaches a 5 percent, 7.5 percent,
10 percent, or 15 percent volume threshold?
    129. Do commenters believe that, even though certain Government
Securities ATSs play a significant rule in the U.S. securities markets,
regulatory requirements such as Regulation SCI and the Capacity,
Integrity, and Security Rule are not necessary? If so, please
specifically explain how the policy goals of Regulation SCI and the
Capacity, Integrity, and Security Rule would continue to be achieved
for such systems without relevant regulation.
    130. Should the volume threshold to meet the definition of SCI ATS
include trading in U.S. Treasury Securities and Agency Securities?
Should Regulation SCI be applied to ATSs for any other type of
government securities? Should Regulation SCI be applied to ATSs that
trade repos or reverse repos on government securities, including repos
or reverse repos on U.S. Treasury Securities, Agency Securities, or
both?

    131. Should the proposed five percent threshold test for U.S.
Treasury Securities be applied to all types of U.S. Treasury Securities
or only to a subset(s) of U.S. Treasury Securities? For example, should
the five percent volume test only be applied to transaction volume in
on-the-run U.S. Treasury Securities? Should the five percent threshold
only be applied to transaction volume in all Agency Securities or only
to a subset(s) of Agency Securities?
    132. Is the five percent threshold an appropriate threshold to
capture ATSs that are significant markets for trading in U.S. Treasury
Securities or Agency Securities? Would the five percent threshold
capture ATSs that are not significant markets for U.S. Treasury
Securities and Agency Securities? If commenters believe that there
should be a percent threshold for a subset of U.S. Treasury Securities,
such as on-the-run U.S. Treasury Securities or off-the-run U.S.
Treasury Securities, what should that threshold be?
    133. Should the Commission adopt a percent volume threshold that is
lower than five percent for U.S. Treasury Securities, Agency
Securities, or both? If so, what percentage threshold should the
Commission adopt for Treasury Securities and Agency Securities? For
example, should the Commission adopt a threshold that is four percent,
three percent, two percent, or one percent for U.S. Treasury
Securities? Should the Commission adopt a threshold that is four
percent, three percent, two percent, or one percent for Agency
Securities? Should there be no threshold for U.S. Treasury Securities?
Should there be no threshold for Agency Securities? Please support your
views.
    134. Should the Commission adopt a percent volume threshold that is
higher than five percent for U.S. Treasury Securities, Agency
Securities, or both? For example, should the Commission adopt a
threshold that is 7.5 percent, 10 percent, 15 percent, or 20 percent
for U.S. Treasury Securities? Should the Commission adopt a threshold
that is 7.5 percent, 10 percent, 15 percent, or 20 percent for Agency
Securities?
    135. Is it appropriate to use five percent of average weekly dollar
volume traded in the United States as a threshold for application of
Regulation SCI requirements to U.S. Treasury Securities? If the average
weekly dollar volumes were to include transactions in the secondary
cash market for U.S. Treasury Securities by non-FINRA members, which
currently are not reported to, or collected by, the SRO that makes
public average weekly dollar volume statistics, should the Regulation
SCI threshold change? If so, what should be the appropriate threshold?
Please support your views.
    136. Is it appropriate to use five percent of average daily dollar
volume traded in the United States as a threshold for the application
of Regulation SCI requirements to Agency Securities?
    137. Is the proposed four out of six month period an appropriate
period to measure the volume thresholds for U.S. Treasury Securities,
Agency Securities, or both? If not, what period of time would be
appropriate?
    138. Should the proposed Regulation SCI volume threshold
measurement for Government Securities ATSs take into account whether
Government Securities ATSs under common control share the same
technology platform? For example, should two or more Government
Securities ATSs under common control and operating on the same
technology platform be viewed as a single entity required to aggregate
volume for purposes of determining whether the threshold test has been
satisfied?
    139. Should only certain provisions of Regulation SCI apply to
Government Securities ATSs that meet the proposed definition of SCI
ATS? For example, should they only be subject to certain aspects of
Regulation SCI? If so, which provisions should apply? Do commenters
believe that different or unique requirements should apply to the
systems of such Government Securities ATSs? What should they be and
why?
    140. In what instances, if at all, should the systems of Government
Securities ATSs that meet the proposed definition of SCI ATS be defined
as ``critical SCI systems''? Please describe.
    141. Which subscribers or types of subscribers should Government
Securities ATSs that meet the proposed definition of SCI ATS consider
as ``designated members or participants'' that should be required to
participate in the annual mandatory business continuity and disaster
recovery testing? Please describe.
    142. Should Government Securities ATSs that meet the proposed
definition of SCI ATS not be defined as SCI entities but should be
required to comply with provisions comparable to provisions of
Regulation SCI?
    143. What are the current practices of Government Securities ATSs
with respect to the subject matter covered by Regulation SCI? To what
extent do Government Securities ATSs have practices that are consistent
with the requirements under Regulation SCI? To what extent do
Government Securities ATSs' practices differ from the requirements
under Regulation SCI? Please describe and be specific. Would the
application of Regulation SCI or the Capacity, Integrity, and Security
Rule weaken ATSs' existing capacity, integrity, and security programs?
    144. Are there characteristics specific to the government
securities market that would make applying Regulation SCI broadly or
any specific provision of Regulation SCI to Government Securities ATSs
unduly burdensome and inappropriate?
    145. As commenters think about whether and how to apply Regulation
SCI to Government Securities ATSs, are there any lessons commenters can
draw from the market stress during Spring 2020, including, for example,
lessons learned regarding business continuity or capacity planning?

VII. General Request for Comment

    The Commission is requesting comments from all members of the
public. The Commission particularly requests comment from the point of
view of persons who operate ATSs that would meet the proposed
definition of Government Securities ATS, subscribers to those systems,
and investors. The Commission seeks comment on all aspects of the
proposed rule amendments and proposed form, particularly the specific
questions posed above. Commenters are requested to provide empirical
data in support of any arguments or analyses. With respect to any
comments, the Commission notes that they are of the greatest assistance
to its rulemaking initiative if accompanied by supporting data and
analysis of the issues addressed in those comments and by alternatives
to the Commission's proposals where appropriate.

VIII. Concept Release on Electronic Corporate Bond and Municipal
Securities Market

    The SEC Fixed Income Market Structure Advisory Committee
(``FIMSAC''), formed by the Commission in 2017, was established to
provide the Commission ``with diverse perspectives on the structure and
operations of the U.S. fixed income markets, as well as advice and
recommendations on matters related to fixed income market structure.''
\387\ In 2018, the Committee made a recommendation to the Commission
concerning the regulation of corporate and municipal debt trading
platforms.\388\ The FIMSAC's core

concern was the lack of regulatory harmonization among fixed income
electronic trading platforms, recognizing that some firms were
regulated as ATSs, while some were regulated as broker-dealers or not
at all. The FIMSAC stated that the varying regulatory treatment among
fixed income electronic trading platforms is based on differences in
trading protocols or business models. The FIMSAC concluded that these
distinctions in regulatory oversight complicate efforts to improve the
efficiency and resiliency of the fixed income electronic trading
markets. Furthermore, the FIMSAC stated that without a unifying
regulatory framework for all fixed income electronic trading platforms,
market structures will likely fragment further as regulators adopt new
regulations that apply to only one type of platform.
---------------------------------------------------------------------------

    \387\ FIMSAC Charter art. 3 (November 15, 2017), available at
https://www.sec.gov/files/fimsac-charter.pdf.
    \388\ See FIMSAC, Recommendation for the SEC to Review the
Framework for the Oversight of Electronic Trading Platforms for
Corporate and Municipal Bonds (July 16, 2018), available at https://www.sec.gov/spotlight/fixed-income-advisory-committee/fimsac-electronic-trading-platforms-recommendation.pdf. For purposes of
this concept release, corporate debt securities (``corporate debt'')
and municipal debt securities (``municipal debt'') are collectively
referred to as ``fixed income securities,'' which do not include
government securities.
---------------------------------------------------------------------------

    As such, the FIMSAC recommended, among other things, that the
Commission form, together with FINRA and the MSRB, a joint working
group to review the regulatory framework for oversight of fixed income
electronic trading platforms.\389\ Furthermore, when the Commission
adopted the enhanced transparency rules for NMS Stock ATSs, the
Commission stated that in light of the recent recommendations of the
FIMSAC, and comments received on the proposal to amend Regulation ATS
for NMS Stock ATSs, the Commission would review the regulatory
framework for fixed income electronic trading platforms, including to
consider whether the Commission should propose amendments to Regulation
ATS (and any other applicable rules) to account for operational and
regulatory differences among fixed income electronic trading
platforms.\390\
---------------------------------------------------------------------------

    \389\ Specifically, the FIMSAC recommended that the SEC, FINRA,
and MSRB form a joint working group to conduct a review of the
regulatory framework for oversight of electronic trading platforms
used in the corporate and municipal bond markets: (i) To ensure that
the regulatory framework best promotes the growth of fair and
effective fixed income electronic trading markets; (ii) to ensure
that no regulatory gaps or inconsistencies in the application of
such regulation exist that increase the potential for investor harm,
systemic risk or unfair competition; (iii) to consider whether
Regulation ATS (and any other applicable rules) should be amended to
account for differences in protocols and market structures commonly
used to trade fixed income as compared to equities; (iv) to ensure
that regulation is not unfairly promoting or impeding specific
trading protocols and business models over others; and (v) to
consider whether any existing regulation impacting the fixed income
electronic trading markets is unnecessary from a cost-benefit
perspective. See id.
    \390\ See Regulation NMS Stock ATS Adopting Release, supra note
1, at 38783-84.
---------------------------------------------------------------------------

    While the trading protocols generally differ from those used in the
interdealer secondary cash markets for on-the-run U.S. Treasury
Securities, trading of corporate debt and municipal debt often does
occur on ATSs and other electronic platforms. These electronic
platforms might offer various protocols for bringing together buyers
and sellers in fixed income securities, including auctions, central
limit order books, negotiation functionalities, and request for quote
platforms (``RFQ platforms''). The Commission is soliciting public
comment to obtain information about fixed income electronic trading
platforms, including their operations, services, fees, market data, and
participants.\391\ This information could help the Commission and other
regulators evaluate potential regulatory gaps that may exist among
these platforms with respect to access to markets, system integrity,
surveillance, and transparency, among other things. The Commission
expects that the comments it receives will ultimately inform regulatory
policy. The Commission requests comment on the following:
---------------------------------------------------------------------------

    \391\ While this concept release is focused on electronic
trading platforms for corporate debt and municipal debt, to the
extent commenters believe comments are relevant to electronic
trading platforms for other types of debt securities, including
government securities, that information would be helpful to the
Commission.
---------------------------------------------------------------------------

    146. Given the technological developments in the fixed income
electronic trading markets and electronic trading of fixed income
securities, do commenters believe that the current regulatory framework
for fixed income electronic trading platforms best promotes the growth
of fair and efficient markets for investors? If not, what regulatory
approach(es) would best address the needs of the market and market
participants? Does the current regulatory structure for national
securities exchanges, broker-dealers, and ATSs cover the full range of
fixed income electronic trading platforms operating today? If not,
please explain any gaps in the regulatory structure and to which
platforms it does not apply.
    147. Exchange Act Rule 3b-16(a) sets forth a functional test of
whether a system meets the definition of an exchange. Specifically,
Rule 3b-16(a) provides that an organization, association, or group of
persons meets the Exchange Act definition of ``exchange'' if it: (1)
Brings together the orders for securities of multiple buyers and
sellers; and (2) uses established, non-discretionary methods (whether
by providing a trading facility or by setting rules) under which such
orders interact with each other, and the buyers and sellers entering
such orders agree to the terms of a trade. Is the Commission's approach
under Exchange Act Rule 3b-16(a) appropriate for fixed income
electronic trading platforms? If not, what elements of the definition
of exchange under Rule 3b-16(a) do commenters believe that the
Commission should consider changing and why? For example, should or
should not the element of ``orders'' in Rule 3b-16(a) be included in
the definition of exchange with regard to fixed income electronic
trading platforms?
    148. Are there particular elements of the definition of exchange
under Exchange Act Rule 3b-16(a) that should or should not be changed
with respect to fixed income electronic trading platforms, or more
specifically, the corporate debt markets or municipal debt markets?
What are commenters' views on the potential consequences of expanding
or limiting the definition of exchange under Rule 3b-16(a) with regard
to these trading platforms or markets? For instance, what are
commenters' views on how changing Rule 3b-16(a) could benefit or harm
investors and the market participants that use fixed income electronic
trading platforms? Should the Commission, rather than amending Rule 3b-
16(a), issue guidance on the elements of Rule 3b-16(a) regarding
considerations relevant to the definition of exchange in the context of
a fixed income platform? If so, what elements of Rule 3b-16(a) should
the Commission issue guidance on and why? For example, should the
Commission issue guidance on what is considered an ``order'' under Rule
3b-16(a)? Given the technological changes in the securities industry
since Regulation ATS was adopted in 1998, should the Commission revise,
or provide additional, examples in Regulation ATS of systems that fall
within or outside the definition of exchange under Rule 3b-16? \392\
---------------------------------------------------------------------------

    \392\ See Regulation ATS Adopting Release, supra note 35, at
70854-56.
---------------------------------------------------------------------------

    149. As noted above, fixed income electronic trading platforms
offer a variety of different trading protocols and business models, and
the FIMSAC expressed concern about varying regulatory treatment among
these trading platforms. What do commenters believe are the key common
characteristics of a fixed income

electronic trading platform that should merit their common regulation
under the securities laws?
    150. As noted above, securities intermediaries generally are
regulated either as exchanges or as brokers or dealers. What do
commenters believe are the key regulatory standards that should apply
to fixed income electronic trading platforms? Are there aspects of the
current regulatory structure, other than regulatory treatment, that
should not apply to these trading platforms? Are there other standards
not addressed in the current regulation that should be considered? How
could the current regulatory structure for these trading platforms be
improved?
    151. What do commenters believe are the key inconsistencies in the
regulation of fixed income electronic trading platforms? Do these
inconsistencies create risks to the integrity of the market for fixed
income securities, and if so, how? Do these inconsistencies create
burdens on competition among market participants, and if so, how?
    152. Is the current regulatory framework for fixed income
electronic trading platforms unfairly promoting or impeding specific
trading platforms or trading protocols over others, and if so, how?
How, if at all, is the current regulatory structure hindering
automation of the markets?
    153. The Commission, FINRA, and the MSRB all have important roles
in the regulation of corporate and municipal debt markets. Do
commenters believe that the combined regulation of these markets is
effective? If not, how could collective regulation of these markets be
improved?
    154. Should the Commission consider a definition of exchange that
is unique for fixed income electronic trading platforms? If so, what
should that definition be and what aspects of the fixed income
electronic trading markets should the definition address or not
address? What are commenters' views on how such a definition would be
advantageous or disadvantageous to market participants that use fixed
income electronic trading platforms and investors? How would a
definition of exchange tailored for fixed income electronic trading
platforms promote fair and orderly markets? How could such a definition
be crafted in a way that would account for potential changes in
technology that could be applied to fixed income markets and trading in
the future? Would a separate definition of exchange for fixed income
electronic trading platforms conflict, or create investor confusion,
with regard to a definition of exchange for other asset classes, such
as government securities, NMS stock, or OTC equity securities?
    155. Some electronic platform providers offer their customers a
suite of different types of electronic trading protocols (e.g.,
auctions, request for quotes, central limit order books) that are
designed to find and match counterparties. These electronic platform
providers might also offer voice protocols or a hybrid of voice and
electronic protocols and pricing data and facilitate trade reporting
and clearing services. Do electronic platform providers such as these
provide fixed income market participants with a marketplace for buying
and selling fixed income products? Should all the protocols and
services offered by electronic platform providers be considered
together for purposes of the definition of exchange under federal
securities laws?
    156. Are the current conditions to the exemption from the
definition of an ``exchange'' under Regulation ATS appropriate for ATSs
that trade corporate or municipal debt securities (``Fixed Income
ATSs'')? For example, should Fixed Income ATSs that file a confidential
Form ATS with the Commission be subject to the similar operational
transparency rules as an NMS Stock ATS that files a public Form ATS-N
with the Commission and disclose similar detailed information about the
ATS's manner of operations and ATS-related activities of the broker-
dealer operator and its affiliates? If yes, what types of disclosures
should such a form solicit? What type of disclosures should such a form
not solicit? How should the form compare to Form ATS-N?
    157. Should the Commission continue to require Fixed Income ATSs to
file a Form ATS but make Form ATS public? If so, how, if at all, should
Form ATS be amended?
    158. Rule 304 of Regulation ATS provides a process for the
Commission to review Form ATS-N before it becomes effective and the NMS
Stock ATS can operate pursuant to the exemption under Exchange Act Rule
3a1-1(a)(2). Rule 304 also provides the Commission with the opportunity
to declare the Form ATS-N ineffective after notice and opportunity for
hearing. Fixed Income ATSs operate pursuant to the same exemption
provided under Exchange Act Rule 3a1-1(a)(2) as NMS Stock ATSs but are
not subject to Rule 304. Should the Commission amend Regulation ATS to
apply Rule 304 of Regulation ATS to Fixed Income ATSs?
    159. Today, ATSs can only transact in securities; however, an ATS
may, in addition to its Rule 3b-16 activity, conduct secondary
transactions in securities in manners that may not meet a criteria of
Exchange Act Rule 3b-16(a). Should the Commission amend Regulation ATS
to require Fixed Income ATSs to only operate in a manner that meets the
criteria of Rule 3b-16(a)? What would be the advantages and
disadvantages to investors and the Commission should the Commission
require this?
    160. The Fair Access Rule applies when an ATS, during at least four
of the preceding six months, had five percent or more of the average
daily volume of municipal securities traded in the United States or had
five percent or more of the average daily volume of corporate debt
securities traded in the United States. Do commenters believe that the
current fair access threshold under Rule 301(b)(5) of Regulation ATS
for Fixed Income ATSs continues to be appropriate to capture ATSs with
a significant percentage of the trading volume in corporate debt and
municipal debt? If not, do commenters believe that access to Fixed
Income ATSs is an important goal that the Commission should consider in
regulating such platforms? If so, are there circumstances in which a
Fixed Income ATS should be able to limit access to its system, or
alternatively, should be required to grant access to its system? Are
the current requirements of the Fair Access Rule appropriate for Fixed
Income ATSs? Should the definition of exchange and Regulation ATS be
amended so that the Fair Access Rule applies to transactions in fixed
income securities occurring through various platforms offered by a
broker-dealer and its affiliates in which the broker-dealer also
operates a Fixed Income ATS? Should the Fair Access Rule apply to
platforms that trade fixed income securities but are not Fixed Income
ATSs?
    161. The current Capacity, Integrity, and Security Rule under Rule
301(b)(6) of Regulation ATS applies when an ATS, during at least four
of the preceding six months, had 20 percent or more of the average
daily volume of municipal securities traded in the United States or had
20 percent or more of the average daily volume of corporate debt
securities traded in the United States. Do commenters believe that the
current Capacity, Integrity, and Security Rule continues to be
appropriate to capture ATSs with a significant percentage of the
trading volume in corporate debt and municipal debt? Should the
Commission amend Rule 301(b)(6) to lower the current 20 percent
threshold? If so, should the Commission adopt a threshold of, for
example, 5

percent, 7.5 percent, 10 percent or 15 percent? Please support your
views. Do commenters believe that the Capacity, Integrity, and Security
Rule requirements are appropriate for Fixed Income ATSs? Should the
requirements apply to all Fixed Income ATSs? Should the Capacity,
Integrity, and Security Rule requirements apply to non-ATS platforms
for corporate bonds and municipal securities operated by a broker-
dealer that also operates a Fixed Income ATS? Should the Capacity,
Integrity, and Security Rule apply to platforms that trade corporate
bonds and municipal securities but are not Fixed Income ATSs?
    162. ATSs that trade equity securities--both NMS stocks and non-NMS
stocks--are no longer subject to the Capacity, Integrity, and Security
Rule under Rule 301(b)(6) of Regulation ATS. Rather they are now
subject to the requirements of Regulation SCI.\393\ Should the Fixed
Income ATSs be subject to Regulation SCI rather than the Capacity,
Integrity, and Security Rule under Regulation ATS? If yes, should the
same threshold tests for applying Regulation SCI to an ATS be applied
to Fixed Income ATSs when determining if a given Fixed Income ATS is an
``SCI ATS?'' If not, what trading volume or other threshold should
apply to Fixed Income ATS?
---------------------------------------------------------------------------

    \393\ See supra notes 286 and 345 and accompanying text.
---------------------------------------------------------------------------

    163. Do commenters believe that it is clear when a fixed income
electronic trading platform meets the definition of a broker-dealer
under the Exchange Act? Should the Commission provide guidance? Are
there particular fact patterns that commenters believe would be helpful
for the guidance to address?
    164. Should broker-dealers offering customers protocols or
facilities to buy and sell fixed income securities that would not meet
the Exchange Act definition of ``exchange'' otherwise be subject to the
same operational transparency rules as ATSs? If yes, should these
broker-dealers be required to: (1) File a form with the Commission
similar to the confidential Form ATS; or (2) file a form with the
Commission similar to public Form ATS-N for NMS Stock ATSs?
Alternatively, should these broker-dealers be subject to operational
transparency requirements that are different than ATSs? If so, what
form of operational transparency is appropriate? What type of
information would be important for the broker-dealer to disclose to its
customers about the platform that it operates? Do commenters have
concerns that increased operational transparency requirements for these
broker-dealers might cause an undue burden on competition for them? Do
commenters think that increasing operational transparency for these
broker-dealers would benefit competition in the market?
    165. Do commenters believe that there are fixed income electronic
trading platforms that are not registered as either a broker-dealer or
a national securities exchange and that do not operate as an ATS but
perform similar market functions as a broker-dealer, national
securities exchange, or an ATS? If so, please explain what these
systems are and how they may be different or the same as a broker-
dealer, national securities exchange, or ATS that operates as a fixed
income electronic trading platform. Do commenters believe that such
platforms should or should not be required to register with the
Commission? Do commenters believe that such platforms should or should
not be required to operate pursuant to an exemption from the definition
of an exchange, such as Regulation ATS? Should such platforms be
required to register as something other than a broker-dealer or
national securities exchange? Should such systems be subject to the
same operational transparency requirements for broker-dealers, national
securities exchanges, or ATSs? What aspects of these systems would be
important to market participants who may use these platforms? Do
commenters believe that there is sufficient oversight of these
platforms by the Commission? If not, how should the Commission enhance
oversight of these platforms?
    166. As commenters think about whether and how to change the
regulatory framework for fixed income electronic trading platforms, are
there any lessons commenters can draw from the market stress during
Spring 2020, including, for example, lessons learned regarding business
continuity or capacity planning?

IX. Paperwork Reduction Act

    Certain provisions of the proposed rule amendments contain
``collection of information'' requirements within the meaning of the
Paperwork Reduction Act of 1995 (``PRA'').\394\ The Commission is
submitting these collections of information to the Office of Management
and Budget (``OMB'') for review in accordance with 44 U.S.C 3507(d) and
5 CFR 1320.11. An agency may not conduct or sponsor, and a person is
not required to respond to, a collection of information unless the
agency displays a currently valid control number. The title of the new
collection of information is ``Form ATS-G.'' The titles of the existing
collections of information are:
---------------------------------------------------------------------------

    \394\ 44 U.S.C. 3501 et seq.

------------------------------------------------------------------------
                                                            OMB control
              Rule                      Rule title              No.
------------------------------------------------------------------------
Rule 304 of Regulation ATS.....  Regulation ATS Rule 304       3235-0763
                                  and Form ATS-N.
Rule 301 of Regulation ATS.....  Regulation ATS Rule 301       3235-0509
                                  Amendments.
Rule 302 of Regulation ATS.....  Rule 302 (17 CFR              3235-0510
                                  242.302) Recordkeeping
                                  Requirements for
                                  Alternative Trading
                                  Systems.
Rule 303 of Regulation ATS.....  Rule 303 (17 CFR              3235-0505
                                  242.303) Record
                                  Preservation
                                  Requirements for
                                  Alternative Trading
                                  Systems.
Rule 15b1-1 under the Exchange   Form BD and Rule 15b1-1       3235-0012
 Act.                             Application for
                                  Registration as a
                                  Broker-Dealer.
Rule 10(b) of Regulation S-T...  Form ID................       3235-0328
Rules 1001 through 1007 of       Regulation SCI and Form       3235-0703
 Regulation SCI.                  SCI.
------------------------------------------------------------------------

A. Summary of Collection of Information

    The proposed amendments to Regulation ATS include five new
categories of obligations that would require a collection of
information within the meaning of the PRA: (1) Requiring Currently
Exempted Government Securities ATSs to comply with the applicable
provisions of Rule 301(b) of Regulation ATS; \395\ (2) applying the
requirements of proposed

Form ATS-G to Government Securities ATSs, including both Currently
Exempted Government Securities ATSs and Legacy Government Securities
ATSs that operate pursuant to a Form ATS on file with the Commission as
of the Compliance Date; (3) amending Regulation ATS to apply the Fair
Access Rule to Government Securities ATSs that have significantly large
trading volume in U.S. Treasury Securities or Agency Securities; (4)
amending Form ATS and Form ATS-R to provide that such forms be filed
electronically; (5) applying the requirements of Regulation SCI to the
trading of U.S. Treasury Securities and Agency Securities on Government
Securities ATSs. The proposed new collections of information are
summarized in the following table below:
---------------------------------------------------------------------------

    \395\ 17 CFR 242.301. The applicable provisions are Rules
301(b)(1), 301(b)(8), 301(b)(9), and 301(b)(10).

----------------------------------------------------------------------------------------------------------------
                                                                                ATSs that are not
                                     Legacy Filers    Currently Exempted                       NMS Stock ATSs or
                                         \396\            Government        NMS Stock ATSs        Government
                                                        Securities ATSs                         Securities ATSs
----------------------------------------------------------------------------------------------------------------
Broker-dealer registration (Rule  Existing            New requirement...  Existing            Existing
 301(b)(1)).                       requirement.                            requirement.        requirement.
Fair Access Rule (Rule            New requirement...  New requirement...  Existing            Existing
 301(b)(5)).                                                               requirement.        requirement for
                                                                                ATSs that trade
                                                                                certain
                                                                                securities.
Recordkeeping requirements (Rule  Existing            New requirement...  Existing            Existing
 301(b)(8)).                       requirement.                            requirement.        requirement.
Form ATS-R reporting (Rule        Revised             New requirement...  Revised             Revised
 301(b)(9)).                       requirements of                         requirements of     requirements of
                                   Form ATS-R.                             Form ATS-R.         Form ATS-R.
Written safeguards and written    Existing            New requirement...  Existing            Existing
 procedures to ensure the          requirement.                            requirement.        requirement.
 confidential treatment of
 trading information (Rule
 301(b)(10)).
Recordkeeping requirements (Rule  Existing            New requirement...  Existing            Existing
 302).                             requirement.                            requirement.        requirement.
Record preservation requirements  Existing            New requirement...  Existing            Existing
 (Rule 303).                       requirement.                            requirement.        requirement.
Form ATS/Form ATS-G/Form ATS-N    New requirement     New requirement     Revised             Revised
 filing requirements (Rules        under Rule 304.     under Rule 304.     requirements of     requirements of
 301(b)(2) and 304).                                                       Form ATS-N, filed   Form ATS, filed
                                                                           pursuant to Rule    pursuant to Rule
                                                                           304.                301(b)(2).
Regulation SCI..................  New requirement...  New requirement...  Existing            Existing
                                                                           requirement.        requirement for
                                                                                ATSs that trade
                                                                                certain
                                                                                securities.
----------------------------------------------------------------------------------------------------------------

1. Requirements Relating to Application of Rule 301(b) of Regulation
ATS to Currently Exempted Government Securities ATSs
---------------------------------------------------------------------------

    \396\ See text accompanying infra note 422 for the definition of
``Legacy Filers.''
---------------------------------------------------------------------------

    The Commission is proposing to amend Regulation ATS to remove the
exemption from compliance for ATSs that solely trade government
securities or repos and, therefore, require these ATSs to comply with
the information collection requirements of Regulation ATS.\397\
---------------------------------------------------------------------------

    \397\ These requirements are listed on the table above and
described in detail in supra Sections II.C and II.E.
---------------------------------------------------------------------------

2. Requirements Relating to Proposed Amendments to Rules
301(b)(2)(viii) and 304 of Regulation ATS, Including Proposed Form ATS-
G, and Amendments to Rule 301(b)(9)
    The Commission proposes that any ATS that meets the definition of
Government Securities ATS would be required to complete Form ATS-G and
file it with the Commission in a structured format via EDGAR.\398\ The
proposal would also require each Government Securities ATS to make
public via posting on its website (i) a direct URL hyperlink to the
Commission's website that contains Form ATS-G filings and (ii) the most
recently disseminated Covered Form.\399\
---------------------------------------------------------------------------

    \398\ See generally supra Sections II.F; II.H.
    \399\ See supra Section II.G.
---------------------------------------------------------------------------

    Proposed Form ATS-G would require that the responding entity
provide information about the type of filing on the cover page.\400\
Part I of proposed Form ATS-G would require information about the
broker-dealer operator.\401\ Proposed Part II would require a
Government Securities ATS to disclose information about the ATS-related
activities of the broker-dealer operator and its affiliates.\402\
Proposed Part III would require the Government Securities ATS to
provide certain disclosures about the manner of operations of the
ATS.\403\ Proposed Part IV would require the Government Securities ATS
to provide contact information and consent to service of any civil
action brought by, or any notice of any proceeding before, the
Commission or an SRO in connection with the ATS's activities.\404\
---------------------------------------------------------------------------

    \400\ See supra Section III.A.1.
    \401\ See supra Section III.A.2.
    \402\ See supra Section III.B.
    \403\ See supra Section III.C.
    \404\ See supra Section III.D.
---------------------------------------------------------------------------

    A Government Securities ATS would be required by Rule 301(b)(9) to
file a Form ATS-R filing for the ATS to report its trading volume in
government securities and repos.\405\ An ATS that is not an NMS Stock
ATS or Government Securities ATS would be subject to Rule 301(b)(2) and
file a Form ATS, and, in accordance with Rule 301(b)(9), a Form ATS-
R.\406\
---------------------------------------------------------------------------

    \405\ See supra Section II.H.
    \406\ See id.
---------------------------------------------------------------------------

3. Requirements Relating to Proposed Amendments to Rule 301(b)(5)
    The Commission is proposing to amend Regulation ATS to require an
ATS that has a significantly large percentage of volume of trading in
U.S. Treasury Securities or Agency Securities to comply with the Fair
Access Rule.\407\ Under proposed Rule 301(b)(5), an ATS that reaches a
certain volume of trading in U.S. Treasury Securities or Agency
Securities would be required to, among others things, establish written
standards for granting access to trading on their systems and apply
these standards fairly, and is prohibited from unreasonably prohibiting
or limiting any person with respect to trading in the stated
securities. Government Securities ATSs that meet the fair access
thresholds would also need to comply with Rule 303(a)(1)(iii),\408\
which requires that, for a period of not less than three years, the
first two years in an easily accessible place, an ATS preserve at least
one copy of its

standards for access to trading, all documents relevant to its decision
to grant, deny, or limit access to any person, and all other documents
made or received by the ATS in the course of complying with Rule
301(b)(5).\409\
---------------------------------------------------------------------------

    \407\ 17 CFR 242.301(b)(5). See supra Section II.D.
    \408\ 17 CFR 242.303(a)(1)(iii).
    \409\ See supra note 123.
---------------------------------------------------------------------------

4. Requirements Related to Proposed Amendments to Rule 301(b)(2), Form
ATS, and Form ATS-R
    Rule 301(b)(2) of Regulation ATS requires that every ATS subject to
Regulation ATS file an initial operation report,\410\ amendments to its
initial operation report,\411\ and a cessation of operations report on
Form ATS.\412\ ATSs are required to file quarterly transaction reports
on Form ATS-R pursuant to Rule 301(b)(9).\413\ The Commission proposes
to require respondents to submit these reports electronically.\414\ The
Commission is also proposing changes to modernize Form ATS and Form
ATS-R.\415\
---------------------------------------------------------------------------

    \410\ See 17 CFR 242.301(b)(2)(vi).
    \411\ See 17 CFR 242.301(b)(2)(ii).
    \412\ See 17 CFR 242.301(b)(2)(v).
    \413\ See 17 CFR 242.301(b)(9)(i). An ATS must also file Form
ATS-R more frequently upon request of the Commission. See Form ATS-R
Instructions.
    \414\ See supra Section IV.
    \415\ See id.
---------------------------------------------------------------------------

5. Requirements Related to Amendments to Regulation SCI
    The Commission is proposing to expand the definition of ``SCI ATS''
under Regulation SCI to include Government Securities ATSs that meet
certain volume thresholds with respect to U.S. Treasury Securities and/
or Agency Securities. Under the proposal, a Government Securities ATS
that meets the proposed amended definition of ``SCI ATS'' would fall
within the definition of ``SCI entity'' and, as a result, would be
subject to the requirements of Regulation SCI.\416\
---------------------------------------------------------------------------

    \416\ For further details regarding the requirements of
Regulation SCI, see Regulation SCI Adopting Release, supra note 2.
---------------------------------------------------------------------------

B. Proposed Use of Information

1. Proposed Amendments To Apply Rule 301(b) of Regulation ATS to
Currently Exempted Government Securities ATSs
    Records requested by Rule 301(b)(8), as well as Rules 302 and 303,
and information provided pursuant to the proposed broker-dealer
registration requirements under Section 15 or Section 15C(a)(1)(A) of
the Exchange Act, including Form BD and SRO membership requirements,
would allow the Commission and SROs to examine Currently Exempted
Government Securities ATSs for compliance with the conditions of
exemption provided under Exchange Act Rule 3a1-1(a) and Regulation
ATS.\417\ Information disclosed on Form ATS-R by Currently Exempted
Government Securities ATSs under proposed Rule 301(b)(9) would permit
the Commission to monitor the trading on these ATSs for compliance with
the Exchange Act and applicable rules thereunder and enforce the Fair
Access Rule. Information contained in the records required to be
preserved pursuant to proposed Rules 301(b)(10) and 303(a)(1)(v) would
be used by the Commission, state securities regulatory authorities, and
SROs to better understand how each Currently Exempted Government
Securities ATS protects subscribers' confidential trading information.
---------------------------------------------------------------------------

    \417\ See supra note 101 and accompanying text.
---------------------------------------------------------------------------

2. Proposed Amendments to Rule 301(b)(5) of Regulation ATS
    The Commission will use the information related to the Fair Access
Rule for Government Securities ATSs to monitor the growth and
development of Government Securities ATSs. In addition, the Commission
believes that this information will help the Commission oversee
Government Securities ATSs to evaluate for compliance with the Fair
Access Rule, which the Commission believes will ensure that qualified
market participants have fair access to the nation's securities
markets.
3. Proposed Amendments to Rule 301(b)(2), Form ATS, and Form ATS-R
    The Commission uses the information provided pursuant to Rule 301
to monitor the growth and development of ATSs and oversee ATSs for the
purpose of protecting investors. In particular, the information
collected and reported to the Commission by ATSs enables the Commission
to evaluate the operation of ATSs with regard to national market system
goals, and to monitor the competitive effects of these systems to
ascertain whether the regulatory framework remains appropriate with
respect to such systems. Without the information required by Rule 301,
the Commission would be limited in its ability to comply with its
statutory obligations, including to provide for the protection of
investors and to promote the maintenance of fair and orderly markets.
4. Proposed Application of Regulation SCI to Government Securities ATSs
    The Commission would use information provided pursuant to
Regulation SCI to, among other things, advance the goal of improving
Commission review and oversight of U.S. securities market
infrastructure and help promote the maintenance of fair and orderly
markets.\418\
---------------------------------------------------------------------------

    \418\ See Regulation SCI Adopting Release, supra note 2, at
Section V.B.
---------------------------------------------------------------------------

5. Proposed Rules 301(b)(2)(viii) and 304 of Regulation ATS, Including
Proposed Form ATS-G, and Proposed Rule 301(b)(9)
    The Commission believes that market participants would use the
information publicly disclosed on proposed Form ATS-G to compare and
evaluate information about different Government Securities ATSs. In
addition, the Commission would use the information disclosed on
proposed Form ATS-G and Form ATS-R to oversee the growth and
development of Government Securities ATSs. The Commission believes that
the information contained in the records required to be preserved by
Rule 303(a)(2)(ii) would be used by examiners and other representatives
of the Commission, state securities regulatory authorities, and SROs to
evaluate whether Government Securities ATSs are in compliance with
Regulation ATS as well as other applicable rules and regulations.

C. Respondents

    The below table describes the applicable respondents for each
category of ``collection of information'' requirements:
---------------------------------------------------------------------------

    \419\ The ``collection of information'' requirements relating to
Rule 301(b), Rule 302, and Rule 303 have previously been established
for Legacy Government Securities ATSs that have previously disclosed
on their Form ATS their intention to trade government securities or
repos. See FR Doc. 2014-02143, 79 FR 6236 (February 3, 2014)
(Submission for OMB Review, Extension: Rule 301 and Forms ATS and
ATS-R; SEC File No. 270-451; OMB Control No. 3235-0509) (``Rule 301
OMB Update'').
    \420\ The ``collection of information'' requirements relating to
Rule 304 and Form ATS-G would replace the requirements of current
Rule 301(b)(2).

------------------------------------------------------------------------
     ``Collection of information''
              requirement                     Applicable respondents
------------------------------------------------------------------------
Applicable sections of Rule 301(b),      Currently Exempted Government
 Rule 302, and Rule 303.                  Securities ATSs and any
                                          Government Securities ATSs
                                          that are established in the
                                          future.\419\
Rule 301(b)(2)(viii), Rule 304 and Form  All Government Securities
 ATS-G, and Rule 301(b)(9).               ATSs.\420\

Form ATS...............................  All ATSs that file a Form ATS.
Form ATS-R.............................  All ATSs that file a Form ATS,
                                          Form ATS-N, or Form ATS-G.
Rule 301(b)(5) and Regulation SCI......  All Government Securities ATSs
                                          that reach the volume
                                          thresholds.
------------------------------------------------------------------------

    The following chart summarizes the Commission's estimated number of
respondents:
[GRAPHIC] [TIFF OMITTED] TP31DE20.000

    The Commission estimates that there are 7 Currently Exempted
Government Securities ATSs that would be newly subject to the
requirements of the exemption under Rule 3a1-1(a)(2) and required to
comply with the applicable sections of Rule 301(b), Rule 302, and Rule
303.\421\ Of these 7 Currently Exempted Government Securities ATSs, the
Commission estimates that 1 is currently operated by a bank and would
be newly subject to broker-dealer registration requirements under
Section 15 or Section 15C(a)(1)(A) of the Exchange Act.
---------------------------------------------------------------------------

    \421\ The Commission estimates that 5 ATSs that do not have a
Form ATS on file with the Commission limit their trading activity to
government securities and 2 ATSs limit their trading activity to
repos.
---------------------------------------------------------------------------

    In addition, there are 19 ATSs operating pursuant to a Form ATS
currently on file with the Commission that have noticed that they trade
government securities or repos (``Legacy

Filers'').\422\ Accordingly, the Commission estimates that 26
Government Securities ATSs would be required to comply with Regulation
ATS, including Rule 304, Form ATS-G, and the proposed amendments
related to Rule 301(b)(9).\423\ Under the proposed amendments to
Regulation ATS, 17 broker-dealers, each of which operates a Legacy
Filer, would be required to file a Form ATS to disclose information
about their activities in securities other than NMS stock, government
securities, or repos, if any.\424\ Consequently, these 17 broker-
dealers would have to amend Forms ATS to remove discussion of those
aspects of the ATS related to the trading of government securities and
repos, and on an ongoing basis, file separate Forms ATS-R to report
trading volume in government securities or repos.\425\
---------------------------------------------------------------------------

    \422\ Based on data compiled from Forms ATS submitted to the
Commission as of July 1, 2020, 18 ATSs have disclosed on their Form
ATS their intention to trade government securities, and 3 ATSs have
disclosed their intention to trade repos. 2 of the 3 Government
Securities ATSs that have noticed their intention to trade repos
have also noticed their intention to trade government securities.
    \423\ These 26 ATSs include 19 Legacy Filers that operate
pursuant to a Form ATS as of June 1, 2020 and 7 Currently Exempted
Government Securities ATSs that would be newly subject to the
requirements of the Exchange Act Rule 3a1-1(a)(2) exemption. As
discussed below, the Commission recognizes that there may be new
entities that will seek to become Government Securities ATSs, that
would be required to comply with Regulation ATS, including proposed
amendments to Rule 304, Rule 301(b)(9), and Form ATS-G.
    \424\ As of July 1, 2020, 2 of the 19 Legacy Filers trade only
government securities or repos. Therefore, 2 broker-dealers that
operate these Legacy Filers would not be subject to the proposed
requirement to amend Form ATS and file separate Forms ATS-R.
    \425\ See proposed Rule 301(b)(9).
---------------------------------------------------------------------------

    The Commission believes that of the 19 Legacy Filers, most would
continue to operate notwithstanding the proposed amendments to
Regulation ATS. For the purposes of this analysis of the paperwork
burden associated with the proposed amendments to Regulation ATS, and
to make a complete account of the impact on potential respondents, the
Commission assumes that there will be 26 respondents. The Commission
believes that this number is reasonable, as it assumes that most Legacy
Filers would file a Form ATS-G with the Commission, and acknowledges
that there may be some entities that may choose to commence operations
as a Government Securities ATS and others that cease operations
altogether. In the Commission's experience with implementation of Form
ATS-N, a small number of NMS Stock ATSs either filed a cessation of
operations report before they were required to file an initial Form
ATS-N or did not file an initial Form ATS-N. These ATSs may have ceased
operations and did not file a cessation of operations report or
determined not to file initial Form ATS-N for a variety of business
reasons, including to not comply with the new requirements of Form ATS-
N. The Commission observes that from 2015 through the end of 2019,
there was an average of 1 new ATS per year that disclosed that it
trades or expects to trade government securities or repos on its
initial operation report on Form ATS and 1 Government Securities ATS
that ceased operations each year. Based on this information, the
Commission estimates that 1 new entity will file to become a Government
Securities ATS and 1 Government Securities ATS will cease operations in
each of the next three years.
    Currently, there are 53 ATSs that file Form ATS. As of July 1,
2020, 2 of these trade only government securities or repos and, as
proposed, would only be required to file a Form ATS-G and amendments to
Form ATS-G after the Compliance Date. Accordingly, the Commission
estimates that 51 ATSs will continue to file Form ATS amendments. The
Commission also estimates that 34 NMS Stock ATSs will continue to file
Form ATS-N. In addition, the Commission estimates 94 ATSs will be
required to file Form ATS-R, including 87 ATSs that currently file Form
ATS-R and 7 Currently Exempted Government Securities ATSs.\426\
---------------------------------------------------------------------------

    \426\ The numbers of respondents are based on data compiled from
Forms ATS and ATS-R filed with the Commission as of July 1, 2020.
One broker-dealer operates both a Legacy Filer and an NMS Stock ATS.
For purposes of estimating the burden applicable to this Legacy
Filer and NMS Stock ATS, the Commission counts each ATS operated by
a broker-dealer as a separate respondent because each such ATS has
separate filing obligations. See infra Section IX.D.4.
---------------------------------------------------------------------------

    The Commission estimates that of the 26 Government Securities ATSs,
3 will meet the proposed volume thresholds and be subject to the Fair
Access Rule and Regulation SCI.\427\ The Commission believes that this
number is reasonable based on the Commission's review of the Forms ATS-
R of Legacy Filers.
---------------------------------------------------------------------------

    \427\ See supra Sections II.D and VI. The Commission believes
that 3 Government Securities ATSs and 1 Government Securities ATS
will meet the proposed volume threshold for U.S. Treasury Securities
and Agency Securities, respectively. The Commission estimates that
the Government Securities ATS that will meet the threshold for
Agency Securities will also meet the threshold for U.S. Treasury
Securities. Accordingly, the Commission estimates that, as proposed,
3 Government Securities ATSs will be subject to the Fair Access Rule
and Regulation SCI. In addition, the Commission believes that 1 of
the 3 Government Securities ATSs that would be subject to Regulation
SCI is currently an SCI entity.
---------------------------------------------------------------------------

D. Total Initial and Annual Reporting and Recordkeeping Burdens

1. Rule 301(b) of Regulation ATS to Currently Exempted Government
Securities ATSs
a. Application of Rule 301(b)(1) to Currently Exempted Government
Securities ATSs
    The Commission recognizes that applying Rule 301(b)(1) to Currently
Exempted Government Securities ATSs would impose a new burden on
Currently Exempted Government Securities ATSs that are banks, as
proposed Rule 301(b)(1) would require these ATSs to register as broker-
dealers under Section 15 or Section 15C(a)(1)(A) of the Exchange Act.
Based upon the existing burdens for completing and filing Form BD and
amending Form BD when information originally reported on Form BD
changes or becomes inaccurate, the Commission estimates that burdens
for registering with the Commission as a broker-dealer under Section 15
or Section 15C(a)(1)(A) \428\ would impose the following initial and
annual burdens:
---------------------------------------------------------------------------

    \428\ The Commission believes that the burden to register as a
government securities broker or dealer would be, for the purposes
for this PRA analysis, the same as the burden to register as a
broker-dealer because the information the ATS is required to provide
in Form BD and amended Form BD is similar regardless of whether the
ATS is registering under Section 15 or Section 15C(a)(1)(A). Sole
government securities broker-dealers must indicate that they are
registering as a government securities broker or dealer under
Section 15C of the Exchange Act on Item 2.C of Form BD. Otherwise,
the information required to be provided on Form BD is identical.

----------------------------------------------------------------------------------------------------------------
                      Burden                                Initial burden                 Annual burden
----------------------------------------------------------------------------------------------------------------
Filing and amending Form BD.......................  Per ATS: 2.75 hours \429\....  Per ATS: 1 hour\431\
                                                    Industry: 2.75 hours \430\...  Industry: 1 hour \432\
----------------------------------------------------------------------------------------------------------------

b. Application of Rules 301(b)(8), 302, and 303 of Regulation ATS to
Currently Exempted Government Securities ATSs
---------------------------------------------------------------------------

    \429\ See FR Doc. 2019-16601, 84 FR 38086 (August 5, 2019)
(Submission for OMB Review, Extension: Rule 15b1-1/Form BD; SEC File
No. 270-19; OMB Control No. 3235-0012).
    \430\ Compliance Manager at 2.75 hours x 1 bank-operated
Currently Exempted Government Securities ATS = 2.75 burden hours.
The Commission recognizes that the time necessary to complete Form
BD would vary depending on the nature and complexity of the
Currently Exempted Government Securities ATS.
    \431\ The Commission estimates that the additional annual burden
hours necessary for a Currently Exempted Government Securities ATS
to complete and file an amended Form BD would be approximately 0.33
hours. The Commission received an average of 10,959 Form BD
amendments per year from fiscal year 2016 to 2019. As of 2019, there
were 3,700 broker-dealers registered with the Commission. Based on
this estimate, the Commission estimates that Currently Exempted
Government Securities ATSs would file 3 amendments per year.
    \432\ Compliance Manager at 0.33 hours x 3 amendments x 1
Currently Exempted Government Securities ATS = 1 burden hour.
---------------------------------------------------------------------------

    The Commission recognizes that applying Rule 301(b)(8) to Currently
Exempted Government Securities ATSs would impose a new burden on
Currently Exempted Government Securities ATSs, which are currently not
required to comply with these requirements. Rule 301(b)(8) would
require Currently Exempted Government Securities ATSs to comply with
the requirements of Rules 302 and 303 of Regulation ATS. Based on the
Commission's currently approved estimates for ATSs, including Legacy
Filers,\433\ the Commission estimates that the proposed application of
Rules 301(b)(8), 302, and 303 to Currently Exempted Government
Securities ATSs would impose the following annual burdens:
---------------------------------------------------------------------------

    \433\ As the requirements of Rules 301(b)(8), 302, and 303 would
be identical for Currently Exempted Government Securities ATSs and
Legacy Filers, the Commission believes that the hourly burden would
be the same for Currently Exempted Government Securities ATSs as it
is for Legacy Filers.

------------------------------------------------------------------------
                    Burden                           Annual burden
------------------------------------------------------------------------
Recordkeeping requirements under Rule 302....  Per ATS: 45 hours \434\
                                               Industry: 315 hours \435\
Record preservation requirements under Rule    Per ATS: 15 hours \436\
 303.                                          Industry: 105 hours \437\
                                              --------------------------
    Total--Rule 301(b)(8)....................  Per ATS: 60 hours
                                               Industry: 420 hours
------------------------------------------------------------------------

c. Application of Rule 301(b)(9) to Currently Exempted Government
Securities ATSs
---------------------------------------------------------------------------

    \434\ Compliance Clerk at 45 hours = 45 burden hours. See FR
Doc. 2019-19237, 84 FR 47028 (September 6, 2019) (Submission for OMB
Review, Extension: Rule 302; SEC File No. 270-453; OMB Control No.
3235-0510).
    \435\ 45 hours x 7 Currently Exempted Government Securities ATSs
= 315 burden hours.
    \436\ Compliance Clerk at 15 hours = 15 burden hours. See FR
Doc. 2016-16040, 81 FR 44338, 44339 (Submission for OMB Review,
Extension: Rule 303; SEC File No. 270-450; OMB Control No. 3235-
0505).
    \437\ 15 hours x 7 Currently Exempted Government Securities ATSs
= 105 burden hours.
---------------------------------------------------------------------------

    The Commission recognizes that the proposed application of Rule
301(b)(9) to Currently Exempted Government Securities ATSs would impose
a burden on these respondents, as Currently Exempted Government
Securities ATSs are currently not required to comply with these
requirements. The Commission estimates that the proposed application of
Rule 301(b)(9) to Currently Exempted Government Securities ATSs would
impose the following annual burden:
---------------------------------------------------------------------------

    \438\ Attorney at 3 hours + Compliance Manager at 0.25 hours
Clerk at 1.5 hours = 4.75 burden hours. See infra notes 525, 526,
and 528. The annual burden per Currently Exempted Government
Securities ATS would be 4.75 hours x 4 filings = 19 burden hours.
    \439\ The aggregate annual burden would be 4.75 hours x 4
filings x 7 Currently Exempted Government Securities ATSs = 133
burden hours.

------------------------------------------------------------------------
                    Burden                           Annual burden
------------------------------------------------------------------------
Form ATS-R...................................  Per ATS: 19 hours.\438\
                                               Industry: 133 hours.\439\
------------------------------------------------------------------------

    The Commission's currently approved estimate for the average
compliance burden for each Form ATS-R filing, including Form ATS-R
filings by Legacy Filers, is 4 hours.\440\ The Commission is proposing
amendments to Form ATS-R, which would add an additional burden of 0.75
hours per filing,\441\ and therefore the average compliance burden for
each Form ATS-R filing would be 4.75 hours.
d. Application of Rules 301(b)(10) and 303(a)(1)(v) to Currently
Exempted Government Securities ATSs
    The Commission recognizes that Rules 301(b)(10) and 303(a)(1)(v) of
Regulation ATS would impose certain new burdens on respondents as
Currently Exempted Government Securities ATSs are not currently subject
to these requirements. Based on the currently-approved burdens for
Legacy Filers,\442\ the Commission estimates that the proposed
application of Rules 301(b)(10) and 303(a)(1)(v) to Currently Exempted
Government Securities ATSs would impose the following initial and
annual burdens:

------------------------------------------------------------------------
             Burden                 Initial burden       Annual burden
------------------------------------------------------------------------
Written safeguards and written    Per ATS: 10         Per ATS: 4
 procedures requirement under      hours.\443\.        hours.\445\
 Rules 301(b)(10) and             Industry: 70 hours  Industry: 28 hours
 303(a)(1)(v).                     \444\.              \446\
------------------------------------------------------------------------

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

    \440\ Attorney at 3 hours + Compliance Clerk at 1 hour = 4
burden hours. See Rule 301 OMB Update, supra note 419, at 6237.
    \441\ See supra Section V.C and infra Section IX.D.4 (discussing
proposed changes to Form ATS-R applicable to all ATSs).
    \442\ See NMS Stock ATS Adopting Release, supra note 1, at
38868.
    \443\ The Commission estimates that a Currently Exempted
Government Securities ATS's initial, one-time burden would be
approximately 10 hours (Attorney at 9 hours + Compliance Clerk at 1
hour = 10 burden hours) based on the Commission's highest
approximation of the additional burden per ATS, but that the burden
could range between 5 and 10 hours (Attorney at 4-9 hours +
Compliance Clerk at 1 hour = 5-10 burden hours). See id.
    \444\ (Attorney at 9 hours + Compliance Clerk at 1 hour) x 7
Currently Exempted Government Securities ATSs = 70 burden hours.
    \445\ Attorney at 2 hours + Compliance Clerk at 2 hours = 4
burden hours. See NMS Stock ATS Adopting Release, supra note 1, at
38868.
    \446\ 4 hours x 7 Currently Exempted Government Securities ATSs
= 28 burden hours.
---------------------------------------------------------------------------

2. Proposed Amendments to Rules 301(b)(2)(viii) and 304 of Regulation
ATS, Including Proposed Form ATS-G
a. Baseline Measurements
    The Commission estimates that the proposed amendments to Rules
301(b)(2)(viii) and 304 would impose the following initial and annual
baseline burdens to Legacy Filers, which are equivalent to the
currently approved estimates for Form ATS and Form ATS-R:

----------------------------------------------------------------------------------------------------------------
                  Baseline burden                      Initial baseline burden         Annual baseline burden
----------------------------------------------------------------------------------------------------------------
Initial operation report on Form ATS..............  Per ATS: 20 hours \447\......  N/A.
                                                    Industry:  380 hours.........
Form ATS amendments (twice per year) \448\........  N/A..........................  Per ATS: 12 hours.\449\
                                                                                Industry: 228 hours.
Cessation of operations report on Form ATS........  N/A..........................  Per ATS: 2 hours.\450\
                                                                                Industry: 2 hours.\451\
Form ATS-R........................................  N/A..........................  Per ATS: 16 hours.\452\
                                                                                Industry: 304 hours.
    Total--baseline burden........................  Per ATS: 20 hours............  Per ATS: 30 hours.
                                                    Industry: 380 hours..........  Industry: 534 hours.
----------------------------------------------------------------------------------------------------------------

    Currently Exempted Government Securities ATSs are not currently
required to comply with the requirements of Rule 301(b)(2). The
Commission estimates that the proposed amendments to Rules
301(b)(2)(viii) and 304 would impose initial and annual baseline
burdens equivalent to those for Legacy Filers described above.
---------------------------------------------------------------------------

    \447\ Attorney at 13 hours + Compliance Clerk at 7 hours = 20
burden hours. See Rule 301 OMB Update, supra note 419, at 6237.
    \448\ During the fiscal year of 2019, the Commission received 39
amendments from the 19 Legacy Filers. Accordingly, the Commission
estimates that Legacy Filers amend their Form ATS on average twice
per year.
    \449\ The Commission estimates the current average compliance
burden for each amendment to Form ATS is: Attorney at 4.5 hours +
Compliance Clerk at 1.5 hours = 6 burden hours. 2 Form ATS
amendments filed annually x 6 hours per Form ATS amendment = 12
burden hours per ATS. See id.
    \450\ Attorney at 1.5 hours + Compliance Clerk at 0.5 hours = 2
burden hours. See id.
    \451\ 2 hours x approximately 1 cessation of operations report
on Form ATS per year = 2 burden hours. See supra Section IX.D.
    \452\ Attorney at 3 hours + Compliance Clerk at 1 hour = 4
burden hours. See Rule 301 OMB Update, supra note 419, at 6237. 4
Form ATS-R filings annually x 4 hours per Form ATS-R filing = 16
burden hours.
---------------------------------------------------------------------------

b. Burdens
    The Commission believes that although many of the disclosures
required by proposed Form ATS-G are currently required by Form ATS,
proposed Form ATS-G would require a Government Securities ATS to
provide significantly more detail in those disclosures than currently
is required by Form ATS, as well as additional disclosures not
currently mandated by Form ATS.\453\ In addition, because Currently
Exempted Government Securities ATSs are not required to complete a Form
ATS, the Commission estimates that Currently Exempted Government
Securities ATSs will incur a burden equivalent to the current baseline
burdens on Legacy Filers as a result of the proposal.\454\
---------------------------------------------------------------------------

    \453\ In establishing the estimates below with respect to
proposed Form ATS-G, the Commission has considered its estimate of
the burden for an SRO to amend a Form 19b-4. Specifically, the
Commission estimated that 34 hours is the amount of time required to
complete an average rule filing; 129 hours is the amount of time
required to complete a complex rule filing; and 3 hours is the
amount of time required to complete an average amendment to a rule
filing. See Securities Exchange Act Release No. 50486 (October 4,
2004), 69 FR 60287, 60294 (October 8, 2004).
    \454\ See supra Section IX.D.2.a.
---------------------------------------------------------------------------

i. Analysis of Estimated Additional Burden for Proposed Form ATS-G
    Although Form ATS-G is tailored to describe operations relevant to
Government Securities ATSs, the information requests on Form ATS-N and
Form ATS-G are, for the most part, very similar. In the Commission's
experience implementing Form ATS-N, the Commission believes that the
estimates calculated in the NMS Stock ATS Adopting Release continue to
be reasonable estimates of the burden hours imposed by Form ATS-N, and
therefore, reasonable estimates of the burden hours imposed by Form
ATS-G.\455\ As discussed below, due to requests unique to Form ATS-G,
the Commission estimates that Form ATS-G would require 5.75 more burden
hours than Form ATS-N. Accordingly, the Commission estimates that the
additional burden hours for filing a Form ATS-G would result in a total
additional burden of 114.15 hours per Government Securities ATS above
the current 20-burden hour baseline for an initial operation report on
Form ATS.\456\ The below chart compares the estimated burdens for Form
ATS-G to the currently-approved estimates for Form ATS-N: \457\
---------------------------------------------------------------------------

    \455\ See NMS Stock ATS Adopting Release, supra note 1, at
38869-81.
    \456\ 108.4 additional burden hours for filing a Form ATS-N that
the Commission estimated in the NMS Stock ATS Adopting Release +
5.75 hours added to the burden for requests unique to Form ATS-G =
114.15 additional burden hours. See NMS Stock ATS Adopting Release,
supra note 1, at Section IX.D.2. The NMS Stock ATS Adopting Release
stated that the Commission estimated that Form ATS-N would add an
additional 107.4 hours to the baseline for each ATS. See id. at
n.1228 and accompanying text. However, the actual total of the
estimated burden hours of the items in Form ATS-N in the NMS Stock
ATS Adopting Release is 108.4 (not 107.4). See id. at 38868-81.
Therefore, the Commission is using the estimated total of 108.4
additional burden hours for Form ATS-N as basis for estimating the
additional burden hours for Form ATS-G.
    \457\ See id. Items for which the burden hours differ between
Form ATS-G and Form ATS-N are italicized.

------------------------------------------------------------------------
                                                        ATS-G     ATS-N
                      Rule/item                        (hours)   (hours)
------------------------------------------------------------------------
Part I \458\........................................      0.75       0.5
  Part I Total......................................      0.75       0.5
Part II, 1(a).......................................      4.25      4.25
Part II, 1(b).......................................      0.25      0.25
Part II, 1(c).......................................         1         1
Part II, 1(d) \459\.................................       1.5       0.5
Part II, 2(a).......................................      6.25      6.25
Part II, 2(b).......................................      0.25      0.25
Part II, 2(c).......................................         1         1
Part II, 2(d) \461\.................................       1.5       0.5
Part II, 3..........................................       1.5       1.5
Part II, 4..........................................         4         4
Part II, 5..........................................         3         3
Part II, 6..........................................         5         5
Part II, 7..........................................       1.5       1.5
  Part II Total.....................................        31        29
Part III, 1.........................................       0.5       0.5
Part III, 2.........................................         1         1
Part III, 3.........................................         1         1
Part III, 4.........................................       0.5       0.5
Part III, 5.........................................      10.5      10.5
Part III, 6.........................................       2.5       2.5
Part III, 7.........................................         4         4
Part III, 8.........................................         1         1
Part III, 9.........................................         1         1
Part III, 10........................................      1.25      1.25
Part III, 11........................................         6         6
Part III, 12........................................         1         1
Part III, 13........................................         6         6
Part III, 14........................................         2         2
Part III, 15 \460\..................................       4.5         5
Part III, 16 \462\..................................         6         2
Part III, 17........................................      1.25      1.25
Part III, 18........................................      1.25      1.25
Part III, 19........................................         6         6
Part III, 20........................................       2.5       2.5
Part III, 21 & 22...................................       0.5       0.5
Part III, 23........................................         5         5
Part III, 24 (only applies to select respondents)           10         5
 \463\..............................................
Part III, 25 \464\..................................         7         5
Part III, 26........................................         0         7
  Part III Total....................................     82.25     78.75
  Part IV Total.....................................         0         0
                                                     -------------------
    Total...........................................    114.15     108.4
------------------------------------------------------------------------

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

    \458\ See infra note 465 and accompanying text.
    \459\ See supra note 466 and accompanying text.
    \460\ See supra note 467 and accompanying text.
    \461\ See supra note 466 and accompanying text.
    \462\ See supra note 468 and accompanying text.
    \463\ See supra note 470 and accompanying text. Other than as
described below, the information required by Part III, Item 24 of
Form ATS-G is similar to the information required by Part III, Item
25 of Form ATS-N.
    \464\ The information required by Part III, Item 25 of Form ATS-
G is identical to the information required by Part III, Item 26 of
Form ATS-G.

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

    Part I of proposed Form ATS-G is identical to Part I for Form ATS-
N, as proposed, except that Part I, Item 5 of Form ATS-G requires a
Government Securities ATS to select the types of securities the ATS
trades (i.e., U.S. Treasury Securities, Agency Securities, repos, or
other). If the ATS selects ``other,'' it would be required to list the
types of securities it trades. The Commission believes that the
information required by the proposed disclosure under Part I, Item 5 is
already required under Exhibit B of current Form ATS, which requires an
ATS to provide, among other things, lists of securities and the types
of securities the ATS trades or expects to trade. Consequently, the
Commission believes that preparing this Item would not impose a
significant additional burden above the baseline. The Commission
estimates that, on average, preparing Part I, Item 5 for proposed Form
ATS-G would add 0.25 hours above the baseline for each Government
Securities ATS, resulting in an aggregate initial burden of 6.5 hours
above the baseline for all Government Securities ATSs.\465\
---------------------------------------------------------------------------

    \465\ Compliance Clerk at 0.25 hours = 0.25 burden hours. 0.25
hours x 26 Government Securities ATSs = 6.5 burden hours.
---------------------------------------------------------------------------

    Part II of proposed Form ATS-G is identical to Part II for Form
ATS-N except for Part II, Items 1(d) and 2(d) of Form ATS-G. Part II,
Items 1(d) and 2(d) of Form ATS-G would additionally require a
Government Securities ATS to identify the trading venue operated or
controlled by its broker-dealer operator or its affiliate,
respectively, to which orders and trading interest in the ATS could be
sent, and explain under what circumstances orders and trading interest
are sent from the ATS to the trading venue. These requirements are
similar to Part III, Item 16 of Form ATS-N, which requires an NMS Stock
ATS to provide disclosures surrounding orders and trading interest in
the ATS being routed to a destination outside the ATS. The Commission
therefore estimates that, on average, preparing these narratives in
Part II, Items 1(d) and 2(d) would each add one hour to the approved
estimated burden hours to prepare Part II, Items 1 and 2 of Form ATS-N,
resulting in an aggregate burden of 52 hours above the baseline for all
Government Securities ATSs.\466\
---------------------------------------------------------------------------

    \466\ Attorney at 0.25 hours + Compliance Manager at 0.25 hours
+ Sr. Systems Analyst at 0.5 hours = 1 burden hour. The burden hours
to answer ``yes'' or ``no'' questions whether orders and trading
interest in the Government Securities ATS can be sent to a trading
venue operated or controlled by the broker-dealer operator or its
affiliate in proposed Part II, Items 1(d) and 2(d) of Form ATS-G,
respectively, are accounted for in the approved estimated burden for
preparing Part II of Form ATS-N. See infra note 475. The aggregate
hours would be: 26 Government Securities ATSs x (1 hour (for Part
II, Item 1(d)) + 1 hour (for Part II, Item 2(d))) = 52 burden hours.