capture the required information and transmit it to the Central
Repository in compliance with the CAT NMS Plan for small OATS-reporting
broker-dealers would be approximately 1,800 burden hours.\3458\ The
Commission believed the burden hours would be associated with work
performed by internal technology, compliance and legal staff in
connection with the implementation of CAT data reporting. The
Commission also preliminarily estimated that each small OATS-reporting
broker-dealer would incur approximately $124,373 in initial external
outsourcing costs.\3459\
---------------------------------------------------------------------------

    \3458\ This estimate assumed that, based on the expected FTE
count provided, a small OATS-reporting broker-dealer would have to
hire 1 new FTE for implementation. The salary attributed to the 1
FTE would be (1 x $424,350 FTE cost) = $424,350 per year. To
determine the number of burden hours to be incurred by the current
0.5 FTE for implementation, multiply 0.5 FTE by 1,800 hours per year
= 900 initial burden hours.
    \3459\ The Commission preliminarily believed the outsourcing
cost would be the cost of the service bureau, which would include
the compliance and legal costs associated with changing to CAT Data
reporting. The Commission assumes these costs of changing to CAT
Data reporting would be included in the cost of the service bureau
because the broker-dealers would be relying on the expertise of the
service bureau to report their data to CAT on their behalf. See
Notice, supra note 5, at Section IV.F.1.C(2), n. 941.

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

    Therefore, the Commission preliminarily estimated that the average
one-time initial burden per small OATS-reporting broker-dealer would be
1,800 burden hours and external costs of $124,373, for an estimated
aggregate initial burden of 1,450,800 hours \3460\ and an estimated
aggregate initial external cost of $100,244,638.\3461\
---------------------------------------------------------------------------

    \3460\ The Commission preliminarily estimates that 806 small
OATS-reporting broker-dealers would be impacted by this information
collection. (806 small OATS-reporting broker-dealers x 1,800 burden
hours) = 1,450,800 aggregate initial burden hours.
    \3461\ ($124,373 in outsourcing costs) x (806 small OATS-
reporting broker-dealers) = $100,244,638 in aggregate initial
external costs.
---------------------------------------------------------------------------

(b) Small OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily believed that it would
take a small OATS-reporting broker-dealer 1,350 ongoing burden hours
per year \3462\ to continue compliance with the Rule. The Commission
preliminarily believed the burden hours would be associated with work
performed by internal technology, compliance and legal staff in
connection with the ongoing operation of CAT Data reporting. The
Commission preliminarily estimated that it would cost, on average,
approximately $124,373 in ongoing external outsourcing costs \3463\ to
ensure ongoing compliance with Rule 613.
---------------------------------------------------------------------------

    \3462\ 1,350 ongoing burden hours = (0.75 FTE for maintenance of
CAT Data reporting systems) x (1,800 working hours per year).
    \3463\ See Notice, supra note 5, at Section IV.F.1.c(2)B.ii. See
supra note 3459.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
ongoing annual burden per small OATS-reporting broker-dealer would be
approximately 1,350 hours, plus $124,373 in external costs, for an
estimated aggregate ongoing burden of 1,088,100 hours \3464\ and an
estimated aggregate ongoing external cost of $100,244,638.\3465\
---------------------------------------------------------------------------

    \3464\ The Commission preliminarily estimates that 806 small
OATS-reporting broker-dealers would be impacted by this information
collection. (806 small OATS-reporting broker-dealers x 1,350 burden
hours) = 1,088,100 aggregate ongoing burden hours to ensure ongoing
compliance with Rule 613.
    \3465\ $100,244,638 = $124,373 in ongoing outsourcing costs x
806 broker-dealers.
---------------------------------------------------------------------------

ii. Small Non-OATS-Reporting Broker-Dealers
    In addition to firms that currently report to OATS, the Commission
estimates there are 799 broker-dealers that are currently exempt from
OATS reporting rules due to firm size, or excluded because all of their
order flow is routed to a single OATS reporter, such as a clearing
firm, that would incur CAT reporting obligations.\3466\ A further 24
broker-dealers have SRO memberships only with one Participant; \3467\
the Commission believes this group is comprised mostly of floor brokers
and further believes these firms would experience CAT implementation
and ongoing reporting costs similar in magnitude to small equity
broker-dealers that currently have no OATS reporting
responsibilities.\3468\
---------------------------------------------------------------------------

    \3466\ See Section V.F.1.c.(2)B., supra. Rule 613 does not
exclude from data reporting obligations SRO members that quote or
execute transactions in NMS Securities and Listed Options that route
to a single market participant; see also CAT NMS Plan, supra note 5,
at Appendix C, Section B.7(b)(ii)(B)(2).
    \3467\ See Section V.F.1.c.(2)B., supra.
    \3468\ Id.
---------------------------------------------------------------------------

    The Commission assumes these broker-dealers would have very low
levels of CAT reporting, similar to those of the lowest activity firms
that currently report to OATS. For these firms, the Commission assumes
that under CAT they would incur the average estimated service bureau
cost of broker-dealers that currently report fewer than 350,000 OATS
ROEs per month, which is $124,373 annually.\3469\ Furthermore, because
these firms have more limited data reporting requirements than other
firms, the Commission assumes these firms currently have only 0.1 full-
time employees currently dedicated to regulatory data reporting
activities.\3470\ The Commission assumes these firms would require 2
full-time employees for one year to implement CAT.\3471\
---------------------------------------------------------------------------

    \3469\ Id.
    \3470\ Id.
    \3471\ Id.
---------------------------------------------------------------------------

    Small non-OATS-reporting broker-dealers that outsource their
regulatory data reporting would likely face internal staffing burdens
and costs associated with ongoing activity, such as maintaining any
systems that transmit data to their service providers. Based on
conversations with market participants, the Commission estimates these
firms would need 0.75 full-time employees annually to perform or
monitor CAT reporting.
(a) Small Non-OATS-Reporting Broker-Dealers--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that the
average initial burden to develop and implement the needed systems
changes to capture the required information and transmit it to the
Central Repository in compliance with the Rule for small, non-OATS-
reporting broker-dealers would be approximately 3,600 initial burden
hours.\3472\ The Commission believed the burden hours would be
associated with work performed by internal technology, compliance and
legal staff in connection with the implementation of CAT Data
reporting. The Commission also preliminarily estimated that each small
non-OATS-reporting broker-dealer would incur approximately $124,373 in
initial external outsourcing costs.\3473\
---------------------------------------------------------------------------

    \3472\ 3,600 initial burden hours = (2 FTEs for implementation
of CAT Data reporting systems) x (1,800 working hours per year).
    \3473\ See Section V.F.1.c.(2)B., supra.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
one-time initial burden per small OATS-reporting broker-dealer would be
3,600 burden hours and external costs of $124,373 for an estimated
aggregate initial burden of 2,962,800 hours \3474\ and an estimated
aggregate initial external cost of $102,358,979.\3475\
---------------------------------------------------------------------------

    \3474\ The Commission preliminarily estimates that 823 small
non-OATS-reporting broker-dealers would be impacted by this
information collection. (823 small non-OATS-reporting broker-dealers
x 3,600 burden hours) = 2,962,800 aggregate initial burden hours.
    \3475\ ($124,373 in outsourcing costs) x (823 small non-OATS-
reporting broker-dealers) = $102,358,979 in aggregate initial
external costs.
---------------------------------------------------------------------------

(b) Small Non-OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily believed that it would
take a small non-OATS-reporting broker-dealer 1,350 ongoing burden
hours per year \3476\ to continue compliance with the Rule. The
Commission preliminarily estimated that it would cost, on average,
approximately $124,373 in ongoing external outsourcing costs \3477\ to
ensure ongoing compliance with Rule 613.
---------------------------------------------------------------------------

    \3476\ 1,350 ongoing burden hours = (0.75 FTEs for maintenance
of CAT data reporting systems) x (1,800 working hours per year).
    \3477\ The Commission assumed these firms would have very low
levels of CAT reporting, similar to those of the lowest activity
firms that currently report to OATS. For these firms, the Commission
assumes that under CAT they would incur the average estimated
service bureau cost of firms that currently OATS report fewer than
350,000 OATS ROEs per month of $124,373 annually.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
ongoing annual burden per small non-OATS-reporting broker-dealer would
be approximately 1,350 hours, plus $124,373 in external costs, for an
estimated aggregate ongoing burden of 1,111,050 hours \3478\ and an
estimated

aggregate ongoing external cost of $102,358,979.\3479\
---------------------------------------------------------------------------

    \3478\ The Commission preliminarily estimated that 823 small
non-OATS-reporting broker-dealers would be impacted by this
information collection. (823 small non-OATS-reporting broker-dealers
x 1,350 burden hours) = 1,111,050 aggregate ongoing burden hours to
ensure ongoing compliance with Rule 613.
    \3479\ ($124,373 in ongoing external outsourcing costs) x 823 =
$102,358,979 in aggregate ongoing external costs to ensure ongoing
compliance with Rule 613.
---------------------------------------------------------------------------

(2) Comments/Responses on Broker-Dealer Data Collection and Reporting
Costs
    As noted above, the Commission's estimates are based on whether
broker-dealers currently insource or outsource, or are likely to
insource or outsource, their CAT Data reporting obligations. The
Commission provided in the Notice an analysis of the compliance cost
estimates for broker-dealers that included analyzing whether estimates
provided in the Plan and based on a Reporters Study survey were
reliable.\3480\ The Commission preliminarily believed that the cost
estimates for small broker-dealers were not reliable. The Commission
then developed and calibrated its Outsourcing Cost Model to estimate
average current data reporting costs and average Plan compliance costs
for broker-dealers that the Commission expects will rely on service
bureaus to perform their CAT Data reporting responsibilities
(Outsourcers).\3481\ For the Insourcers, the Commission continued to
rely on the large broker-dealer estimates from the Plan.\3482\ The
Commission's preliminary initial and ongoing burden hour and cost
estimates, as well as the Plan's estimates, are aggregate estimates for
a broker-dealer's compliance with the data collection and reporting
requirement under Rule 613; they do not quantify the burden hours or
external cost estimates for each individual component comprising the
broker-dealer's data collection and reporting responsibility.
---------------------------------------------------------------------------

    \3480\ See Notice, supra note 5, at 30712-26.
    \3481\ See Section V.F.1.c(1), supra.
    \3482\ Id.
---------------------------------------------------------------------------

    The Commission received comments on the reliability of its
Outsourcing Cost Model for small broker-dealers and its re-estimation
of costs. One commenter believed that the Commission's estimates of
service bureau charges for a small firm were reasonable.\3483\ Another
commenter noted that Outsourcers must expend internal resources even
when relying on their service providers to accomplish current data
reporting.\3484\ A third commenter stated that broker-dealers that
clear for others may have higher implementation costs since they may
have to support more broker-dealers as a result of the CAT.\3485\
---------------------------------------------------------------------------

    \3483\ See Data Boiler Letter at 36.
    \3484\ Specifically, this commenter references EBS reporting,
but indicates that Industry Members sometimes must also be involved
in preparing EBS request responses. See FIF Letter at 34.
    \3485\ See TR Letter, at 3-4.
---------------------------------------------------------------------------

    With respect to the comment that the Outsourcing Cost Model does
not account for internal expenses, the Commission notes that its cost
estimates explicitly assume that Outsourcers have employee expenses
that cover these activities.\3486\ In response to the commenters
concerned that the Commission's estimates do not account for an
increase in costs for broker-dealers that clear for other broker-
dealers or provide support to introducing broker-dealers, the
Commission continues to believe in the reliability of the analysis of
broker-dealers implementation costs presented in the Notice, and notes
that the Reporters Study estimates for large broker-dealers are likely
to include these expenses because respondents are likely to include
broker-dealers that provide these services. The Commission
acknowledges, however, that there are some broker-dealers that would be
classified as Outsourcers or new reporters and the additional
implementation costs that these firms face due to clearing for other
broker-dealers or supporting introducing broker-dealers are not
captured by the Outsourcing Cost Model. The Commission cannot estimate
the number of broker-dealers that would bear these costs because the
Commission lacks data on the number of broker-dealers that clear for
other broker-dealers that would be classified as new reporters or
Outsourcers. Furthermore, the Commission lacks data to estimate the
magnitude of these costs because the Plan does not provide this data
and the Commission is unaware of any data available to it that it could
use to estimate these costs.
---------------------------------------------------------------------------

    \3486\ See Notice, supra note 5, at 30723.
---------------------------------------------------------------------------

    The Commission also received several comments on uncertainties in
the cost estimates for broker-dealers arising from not knowing the
choice of Plan Processor,\3487\ not having Technical
Specifications,\3488\ differences in bids preventing broker-dealers
from providing more definitive cost estimates,\3489\ and a lack of
detail in the CAT NMS Plan.\3490\
---------------------------------------------------------------------------

    \3487\ TR Letter at 4; FSI Letter at 6.
    \3488\ See, e.g., FSR Letter at 10; and Fidelity Letter at 6.
    \3489\ FSI Letter at 6.
    \3490\ SIFMA Letter at 42 and FSI Letter at 6.
---------------------------------------------------------------------------

    In response to comment letters that identified these sources of
uncertainties related to the costs broker-dealers will incur, the
Commission acknowledges that such costs depend on the technical
specifications, which are likely to remain unknown until the Plan
Processor is selected. The Commission also notes that final Bids will
not be submitted until after the Plan is approved, so the Commission is
unable to quantify the degree of variation in broker-dealer
implementation costs across Bids.
    Additionally, the Commission received a number of comments relating
to the costs of the individual components comprising the broker-dealer
data collection and reporting requirement, such as customer
information, the open/close indicator for equities, listing exchange
symbology, allocation report timestamp, and quote sent time. In the
Notice, as noted above, the Commission provided aggregate burden hour
and external cost estimates for the broker-dealer data collection and
reporting requirement of Rule 613. Although the costs of these specific
data elements were not discussed in the Notice Paperwork Reduction Act
analysis, the Commission has considered these comments because they
relate to the overall data collection and reporting information
collection.
A. Customer Information
    In the Notice, the Commission stated that it believed the
requirement in the CAT NMS Plan to report customer information for each
transaction represents a significant source of costs.\3491\ One
commenter believed that the costs for providing customer information to
the Central Repository would comprise a significant proportion of costs
to the total industry and that the costs associated with the management
of sensitive information could increase costs.\3492\
---------------------------------------------------------------------------

    \3491\ See Notice, supra note 5, at Section IV.F.3.a.
    \3492\ Data Boiler Letter at 37.
---------------------------------------------------------------------------

    Two commenters stated that including Customer Identifying
Information on new order reports would result in significant costs for
the industry.\3493\ In Response Letter I, the Participants suggested
that the Commission amend (and the Commission has accordingly amended)
the CAT NMS Plan to clarify that Customer Identifying Information and
Customer Account Information would not be reported with the original
receipt or origination of an order.\3494\
---------------------------------------------------------------------------

    \3493\ TR Letter at 8-9; FIF Letter at 9-10, 86.
    \3494\ Response Letter I at 34.
---------------------------------------------------------------------------

    One commenter requested clarification that only active accounts
would be reported as part of the

customer definition process, which could reduce costs incurred for
reporting customer information.\3495\ In Response Letter I, the
Participants suggested that the Commission amend the Plan to add a
definition of ``Active Account,'' defined as an account that has had
activity in Eligible Securities within the last six months.
Additionally, the Participants suggested that the Commission amend (and
the Commission has amended) Section 6.4(d)(iv) of the Plan by
clarifying that each broker-dealer must submit an initial set of
customer information for Active Accounts at the commencement of
reporting to the Central Repository, as well as any updates, additions,
or other changes in customer information, including any such customer
information for any new Active Accounts.\3496\
---------------------------------------------------------------------------

    \3495\ FIF Letter at 10.
    \3496\ Response Letter I at 35.
---------------------------------------------------------------------------

    The Commission considered these comments and the Participants'
responses and continues to believe that the requirement in the CAT NMS
Plan to report customer information represents a significant proportion
of total costs to the industry. The Commission is not amending its
broker-dealer data collection and reporting external cost estimates in
response to commenters. Commenters did not provide cost estimates that
would allow the Commission to estimate such costs, and the amendments
to the Plan clarify that the Plan does not require customer information
to be reported on order origination.
B. Open/Close Indicator for Equities
    The Commission received comments on the costs to report an open/
close indicator on orders to buy or sell equities. Several commenters
agreed with the Commission's analysis that an open/close indicator
represents a significant proportion of costs to the Plan.\3497\ Two
commenters indicated that it would require significant process changes
across multiple systems,\3498\ and one provided a list of the different
types of systems impacted by the open/close indicator.\3499\ Some
commenters mentioned that the open/close indicator is currently not
populated for equities.\3500\ Further, several commenters implied that
the costs of the open/close indicator were not included in the cost
estimates in the Notice.\3501\ In Response Letter I, the Participants
indicated that the open/close indicator is not captured on equities or
on certain options transactions such as Options' Market Maker
transactions.\3502\
---------------------------------------------------------------------------

    \3497\ TR Letter at 9; SIFMA Letter at 35-36; FIF Letter at 83-
86.
    \3498\ SIFMA Letter at 35; FIF Letter at 4, 84.
    \3499\ FIF Letter at 84.
    \3500\ TR Letter at 9, FIF Letter at 4, 83-85, SIFMA Letter at
35.
    \3501\ Specifically, one commenter stated that the inclusion of
the open/close indicator for equities was a surprise (FIF Letter at
84) and two commenters wanted additional cost benefit analysis on
the open/close indicator (FIF Letter at 84; SIFMA Letter at 36).
    \3502\ Response Letter I at 21, 22.
---------------------------------------------------------------------------

    The Commission considered these comments and is modifying the Plan
to eliminate the requirement to report an open/close indicator for
equities and on Options Market Maker quotations. Although the
Commission believes this will reduce the compliance costs for broker-
dealers, Participants, and the Central Repository, the Commission
cannot quantify the savings and is thus not amending its external cost
estimates in response to commenters.
    The Participants' statement that open/close indicators are not
reported on some options orders is consistent with the Commission's
experience and the analysis in the Notice. While the economic analysis
in the Notice did not explicitly separate the costs associated with an
open/close indicator for equities and an open/close indicator for
options, the Commission believes that the costs of the open/close
indicator for options are included in the cost estimates of the Notice.
However, because the Plan will no longer require the reporting of the
open/close indicator for Options Market Maker quotations, the
Commission now believes there will be an additional cost savings
associated with not having to report this indicator as part of CAT.
C. Listing Exchange Symbology
    In the Notice, the Commission explained its belief that the
requirement to use listing exchange symbology could represent a
significant source of costs,\3503\ because broker-dealers do not
necessarily use listing exchange symbology when placing orders on other
exchanges or off-exchange. One commenter stated that it did not expect
the use of listing exchange symbology to be much more costly than the
use of existing symbology.\3504\ However, another commenter suggested
that accepting only listing exchange symbology is costly and
invasive.\3505\ One other commenter stated that listing exchange
symbology would also be a significant source of costs to options.\3506\
The Participants responded in Response Letter II that it was their
understanding that all broker-dealers subject to OATS or EBS reporting
requirements currently use the listing exchange symbology when
submitting such reports.\3507\ Further, they stated in Response Letter
III that broker-dealers currently use symbology translation solutions
when submitting data to exchanges or when submitting to regulatory
reporting systems such as OATS or EBS.\3508\
---------------------------------------------------------------------------

    \3503\ See Notice, supra note 5, at 30730-30731.
    \3504\ FIF Letter at 12, 95.
    \3505\ Data Boiler Letter at 37-38.
    \3506\ Bloomberg Letter at 5.
    \3507\ Response Letter II at 7.
    \3508\ Response Letter III at 13.
---------------------------------------------------------------------------

    The Commission considered the comments and now believes that the
incremental cost for CAT Reporters to translate from their existing
symbology to listing exchange symbology would be less than as discussed
in the Notice and would not be a substantial contributor to aggregate
costs. The Commission is not amending its external cost estimates for
broker-dealer data collection and reporting in response to commenters.
D. Allocation Report Timestamp
    Several commenters noted that there would be costs associated with
reporting timestamps on allocation reports.\3509\ One of these
commenters mentioned that the requirement to report allocation
timestamps would mean that broker-dealers would incur unnecessary costs
to acquire additional resources.\3510\ One commenter estimated that the
currently proposed allocation timestamp requirement, with a one
millisecond timestamp granularity and a 50 millisecond clock offset,
would cost the industry $88,775,000 in initial implementation costs and
$13,925,000 in ongoing annual costs.\3511\ The commenter further
estimated that a modified allocation timestamp requirement, with a one
second timestamp granularity and a one second clock offset, would cost
the industry $44,050,000 in initial implementation costs and $5,035,833
in ongoing annual costs.\3512\ In Response Letter I, the Participants
recommended an amendment to the Plan that would specify a one-second
timestamp for allocation time on Allocation Reports,\3513\ and the
Commission is amending the Plan to reflect this recommendation.
---------------------------------------------------------------------------

    \3509\ FSR Letter, at 9; SIFMA Letter, at 35; FIF Letter, at 3-
4, 11, 86-89.
    \3510\ FSR Letter at 9.
    \3511\ FIF Letter at 87-89.
    \3512\ FIF Letter at 88, Table 6.
    \3513\ Response Letter I at 25.
---------------------------------------------------------------------------

    The Commission considered these comments and is increasing its
external cost estimates for broker-dealer data collection and reporting
in response to the comments. The Commission is now

adding one commenter's estimate of $44,050,000 in implementation costs
and $5,035,833 in ongoing costs to the estimates of costs to broker-
dealers.\3514\ The Commission believes the cost estimates received to
be credible because they are based on a survey of industry participants
who are informed of the Allocation Time requirement and the changes
that broker-dealers would need to make to comply with the requirement.
---------------------------------------------------------------------------

    \3514\ See Section V.F.3.a(4), supra. The total cost estimates
of the CAT Plan reflect these implementation and ongoing costs.
---------------------------------------------------------------------------

E. Quote Sent Time
    In the Notice, the Commission estimated that the requirement that
Options Market Makers submit quote sent times to the exchanges would
cost between $36.9 million and $76.8 million over five years.\3515\ The
Commission concluded that this requirement did not represent a
significant source of costs. The Commission received a comment stating
that the estimated 5-year cost to Options Market Makers for adding a
timestamp to the quote times was between the range of $39.9 million and
$76.8 million. The commenter further stated that this is ``not a
trivial cost for providing one data element to the consolidated audit
trail.'' \3516\ The Commission continues to believe that the estimates
in the Notice are credible estimates for the costs for Options Market
Makers to send the Quote Sent Time field to exchanges. In response to
the comment, the Commission notes that the implied annual costs would
be much lower than the five year costs and the Commission agrees that
the costs of quote sent time are significant.
---------------------------------------------------------------------------

    \3515\ See FIF, SIFMA, and Security Traders Association, Cost
Survey Report on CAT Reporting of Options Quotes by Market Makers
(November 5, 2013), available at http://www.catnmsplan.com/industryfeedback/p601771.pdf; see also CAT NMS Plan, supra note 5,
at Appendix C, Section B.7(b)(iv)(B).
    \3516\ FIF Letter at 65.
---------------------------------------------------------------------------

    The Quote Sent Time cost estimate was not included in the cost
estimates in the Notice, therefore the Commission is now adding this
cost to its estimates for Options Market Maker data collection and
reporting.\3517\ The Commission is using the maximum 5-year cost
estimate to Options Market Makers provided by the commenter ($76.8
million) and has divided it into $17,400,000 in aggregate
implementation external costs, and $11,880,000 in aggregate ongoing
external costs,\3518\ as provided in the burden hours and external cost
estimates discussion for Options Market Makers in Section
VI.D.2.a.(3)A.i.(b), below.
---------------------------------------------------------------------------

    \3517\ See Section V.F.1.c(2)B, supra.
    \3518\ The Commission assumes that the ratio of ongoing to
implementation costs for Quote Sent Time would be the same as the
ratio of ongoing to implementation costs for the other costs
incurred by broker-dealers for data collection and reporting to CAT.
See supra note 2526; see also Section V.F.3.a(6), supra.
---------------------------------------------------------------------------

(3) Order Estimates
A. Insourcers
i. Large Non-OATS Reporting Broker-Dealers
    The Commission notes that, in this Order Paperwork Reduction Act
analysis, the Commission has divided the discussion of the burden hours
and cost estimates associated with large non-OATS-reporting broker-
dealers into two separate categories: ELPs and Options Market Makers.
The Commission believes that it is necessary to discuss these
categories separately to account for the addition of the Quote Sent
Time cost to the external costs to be incurred solely by Options Market
Makers.
(a) Electronic Liquidity Providers
    As noted above,\3519\ in the CAT NMS Plan, the Participants, based
on the Reporters Study's large broker-dealer cost estimates, estimated
the following average initial external cost and FTE count figures that
a large non-OATS reporting broker-dealer would expect to incur to adopt
the systems changes needed to comply with the data reporting
requirements of Rule 613 under Approach 1: $450,000 in external
hardware and software costs; 8.05 internal FTEs; \3520\ and $9,500 in
external third party/outsourcing costs.\3521\ The Participants also
estimated the following average ongoing external cost and internal FTE
count figures that a large non-OATS reporting broker-dealer would
expect to incur to maintain data reporting systems to be in compliance
with Rule 613: $80,000 in external hardware and software costs; 7.41
internal FTEs; \3522\ and $1,300 in external third party/outsourcing
costs.\3523\ The Participants also estimated the following average
ongoing external cost and internal FTE count figures that a large non-
OATS reporting broker-dealer would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $80,000 in
external hardware and software costs; 7.41 internal FTEs; \3524\ and
$1,300 in external third party/outsourcing costs.\3525\
---------------------------------------------------------------------------

    \3519\ See Section VI.D.2.a.(1)A.i., supra.
    \3520\ Approach 1 also provided $3,200,000 in initial internal
FTE costs. The Commission believed the $3,200,000 in internal FTE
costs is the Participants' estimated cost of the 8.05 FTEs. (8.05
FTEs) x ($401,440 Participants' assumed annual cost per FTE provided
in the CAT NMS Plan) = $3,231,592. See CAT NMS Plan, supra note 5,
at n. 192. See also supra note 3320.
    \3521\ See CAT NMS Plan, supra note 5, at Section
B.7(b)(iii)(c)(2)(a). The Commission believed that the third party/
outsourcing costs may be attributed to the use of service bureaus
(potentially), technology consulting, and legal services.
    \3522\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 5, at n.192. See also supra note 3320 .
    \3523\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
    \3524\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 5, at Appendix C, Section B.7(b)(ii)(C), n.192; see
also supra note 3320.
    \3525\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
---------------------------------------------------------------------------

    As it did in the Notice, the Commission relies on the Reporters
Study's large broker-dealer cost estimates in estimating costs for
large broker-dealers that can practicably decide between insourcing or
outsourcing their regulatory data reporting functions. The Commission
estimates that there are 14 large broker-dealers that are not OATS
reporters currently in the business of electronic liquidity provision
that would be classified as Insourcers.\3526\ The Commission assumes
the 14 ELPs would be typical of the Reporters Study's large, non-OATS
reporting firms; for these firms, the Commission relies on the cost
estimates provided under Approach 1\3527\ for large, non-

OATS reporting firms in the CAT NMS Plan.
---------------------------------------------------------------------------

    \3526\ These broker-dealers are not FINRA members and thus have
no regular OATS reporting obligations. See supra note 2560.
    \3527\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(A)(2). The Reporters Study requested broker-dealer
respondents to provide estimates to report to the Central Repository
under two approaches. Approach 1 assumes CAT Reporters would submit
CAT Data using their choice of industry protocols. Approach 2
assumes CAT Reporters would submit data using a pre-specified
format. Approach 1's aggregate costs are higher than those for
Approach 2 for all market participants except in one case where
service bureaus have lower Approach 1 costs. Id. at Section
B.7(b)(iii)(C)(2). For purposes of this Paperwork Reduction Act
analysis, the Commission is not relying on the cost estimates for
Approach 2 because overall the Approach 1 aggregate estimates
represent the higher of the proposed approaches. The Commission
believes it would be more comprehensive to use the higher of the two
estimates for its Paperwork Reduction Act analysis estimates.
---------------------------------------------------------------------------

    Once an ELP has established the appropriate systems and processes
required for collection and transmission of the required information to
the Central Repository, such broker-dealers would be subject to ongoing
annual burdens associated with, among other things, personnel time to
monitor each ELP's reporting of the required data and the maintenance
of the systems to report the required data; and implementing changes to
trading systems that might result in additional reports to the Central
Repository.
(i) Electronic Liquidity Providers--Initial Burden and Costs
    Based on the comment that provided estimates for a modified
allocation timestamp requirement, with a one second timestamp
granularity and a one second clock offset,\3528\ the Commission now
estimates that the initial cost to an ELP to implement the modified
allocation timestamp requirement would be $250,000.\3529\ The
Commission believes that this cost would be an external hardware and
software cost related to adding this functionality to servers. The
Commission is adding the cost of the modified allocation timestamp
requirement to the external costs to be incurred by ELPs.
---------------------------------------------------------------------------

    \3528\ FIF Letter at 88, Table 6. The commenter based its
implementation and ongoing estimates on a survey it conducted of
broker-dealers to estimate the costs associated with the allocation
report timestamp requirement. The commenter noted that the estimates
do not account for all Insourcers (the cost estimates cover the 126
large OATS-reporting broker-dealer Insourcers, but not the 14 ELPs
or 31 Options Market Makers), nor do they cover Outsourcing broker-
dealers. The Commission believes those categories may not have been
included in the estimates due to a lack of participation by such
broker-dealers in the survey. The Commission is assuming, for its
Paperwork Reduction Act cost estimates, that the portion of the
estimates attributed by the commenter to service bureaus will be
passed-through to their Outsourcing broker-dealer clients that rely
on service bureaus to perform their regulatory data reporting. The
Commission is thus applying the portion of the commenter's cost
estimates attributed to the 126 Insourcers to all 171 Insourcers, as
well as the portion of the cost estimates attributed to the 13
service bureaus across the 1,629 broker-dealers that are categorized
as Outsourcing broker-dealers.
    \3529\ The commenter stated that this requirement would cost the
industry $44,050,000 in initial implementation costs. The commenter
attributed $42,750,000 of the implementation cost estimate to 126
Insourcers. For purposes of this Paperwork Reduction Act analysis,
the Commission is applying the portion of the cost estimates
attributed to the 126 Insourcers to all 171 Insourcers. $42,750,000/
171 Insourcers = $250,000 in initial costs to implement the modified
allocation timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    Based on this information, the Commission estimates that the
average initial burden associated with implementing regulatory data
reporting to capture the required information and transmit it to the
Central Repository in compliance with the Rule for each ELP would be
approximately 14,490 initial burden hours.\3530\
---------------------------------------------------------------------------

    \3530\ 14,490 initial burden hours = (8.05 FTEs for implementing
CAT Data reporting systems) x (1,800 working hours per year).
---------------------------------------------------------------------------

    The Commission also now estimates that these broker-dealers would,
on average, incur approximately $700,000 in initial costs for hardware
and software to implement the systems changes needed to capture the
required information and transmit it to the Central Repository,\3531\
and an additional $9,500 in initial third party/outsourcing
costs.\3532\ Therefore, the Commission now estimates that the average
one-time initial burden per ELP would be 14,490 internal burden hours,
and the initial external cost per ELP would be $709,500,\3533\ for an
estimated aggregate initial burden of 202,860 hours \3534\ and an
estimated aggregate initial external cost of $9,933,000.\3535\
---------------------------------------------------------------------------

    \3531\ $700,000 = ($450,000 in initial hardware and software
costs) + ($250,000 in initial hardware and software costs to
implement the modified allocation timestamp requirement).
    \3532\ See supra note 3436.
    \3533\ ($700,000 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) = $709,500 in initial
external costs to implement data reporting systems.
    \3534\ The Commission estimates that 14 ELPs would be impacted
by this information collection. (14 ELPs) x (14,490 burden hours) =
202,860 initial burden hours to implement data reporting systems.
    \3535\ ($709,500 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) x 14 ELPs =
$9,933,000 in initial external costs to implement data reporting
systems.
---------------------------------------------------------------------------

(ii) Electronic Liquidity Providers--Ongoing Burden and Costs
    Based on the comment that provided estimates for a modified
allocation timestamp requirement, with a one second timestamp
granularity and a one second clock offset,\3536\ the Commission now
estimates that the ongoing cost to an ELP to maintain the modified
allocation timestamp requirement would be $29,166.67.\3537\ The
Commission believes that this cost would be an external hardware and
software cost related to maintenance of the modified allocation
timestamp. The Commission is adding the cost of the modified allocation
timestamp requirement to the external costs to be incurred by ELPs.
---------------------------------------------------------------------------

    \3536\ See supra note 3528.
    \3537\ The commenter stated that this requirement would cost the
industry $5,035,833 in ongoing costs. The commenter attributed
$4,987,500 of the ongoing cost estimate to 126 Insourcers. For
purposes of this Paperwork Reduction Act analysis, the Commission is
applying the portion of the cost estimates attributed to the 126
Insourcers to all 171 Insourcers. $4,987,500/171 Insourcers =
$29,166.67 in ongoing costs to maintain the modified allocation
timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    Based on this information, the Commission believes that it would
take an ELP 13,338 burden hours per year \3538\ to continue to comply
with the Rule. The Commission also now estimates that it would cost, on
average, approximately $109,166.67 per year per ELP to maintain systems
connectivity to the Central Repository and purchase any necessary
hardware, software, and other materials,\3539\ and an additional $1,300
in third party/outsourcing costs.\3540\
---------------------------------------------------------------------------

    \3538\ 13,338 ongoing burden hours = (7.41 ongoing FTEs to
maintain CAT data reporting systems) x (1,800 working hours per
year).
    \3539\ $109,166.67 = ($80,000 in ongoing external hardware and
software costs) + ($29,166.67 to maintain the modified allocation
timestamp requirement).
    \3540\ See supra note 3421.
---------------------------------------------------------------------------

    Therefore, the Commission now estimates that the average ongoing
annual burden per ELP would be approximately 13,338 hours, and the
ongoing external cost per ELP would be $110,466.67 \3541\ to maintain
the systems necessary to collect and transmit information to the
Central Repository, for an estimated aggregate ongoing burden of
186,732 hours \3542\ and an estimated aggregate ongoing external cost
for the ELPs of $1,546,533.38.\3543\
---------------------------------------------------------------------------

    \3541\ ($109,166.67 in ongoing external hardware and software
costs) + ($1,300 ongoing external third party/outsourcing costs) =
$110,466.6769 in ongoing external costs per ELP.
    \3542\ The Commission estimates that 14 ELPs would be impacted
by this information collection. (14 ELPs) x (13,338 burden hours) =
186,732 aggregate ongoing burden hours.
    \3543\ ($109,166.67 in ongoing external hardware and software
costs) + ($1,300 ongoing external third party/outsourcing costs) x
(14 ELPs) = $1,546,533.38 in aggregate ongoing external costs.
---------------------------------------------------------------------------

(b) Options Market Makers
    As noted above,\3544\ in the CAT NMS Plan, the Participants, based
on the Reporters Study's large broker-dealer cost estimates, estimated
the following average initial external cost and FTE count figures that
a large non-OATS reporting broker-dealer would expect to incur to adopt
the systems changes needed to comply with the data reporting
requirements of Rule 613 under Approach 1: $450,000 in external
hardware and software costs; 8.05 internal FTEs; \3545\ and $9,500 in
external third party/outsourcing

costs.\3546\ The Participants also estimated the following average
ongoing external cost and internal FTE count figures that a large non-
OATS reporting broker-dealer would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $80,000 in
external hardware and software costs; 7.41 internal FTEs; \3547\ and
$1,300 in external third party/outsourcing costs.\3548\ The
Participants also estimated the following average ongoing external cost
and internal FTE count figures that a large non-OATS reporting broker-
dealer would expect to incur to maintain data reporting systems to be
in compliance with Rule 613: $80,000 in external hardware and software
costs; 7.41 internal FTEs; \3549\ and $1,300 in external third party/
outsourcing costs.\3550\ As it did in the Notice, the Commission relies
on the Reporters Study's large broker-dealer cost estimates in
estimating costs for large broker-dealers that can practicably decide
between insourcing or outsourcing their regulatory data reporting
functions.\3551\ The Commission estimates that there are 31 broker-
dealers that may transact in options but not in equities that can be
classified as Insourcers.\3552\ Although the exemptive relief may
relieve these firms of the obligation to report their options quoting
activity to the Central Repository, these firms may have customer
orders and other activity off-exchange that would cause them to incur a
CAT reporting obligation. The Commission assumes the 31 Options Market
Makers would be typical of the Reporters Study's large, non-OATS
reporting firms; for these firms, the Commission relies on the cost
estimates provided under Approach 1 \3553\ for large, non-OATS
reporting firms in the CAT NMS Plan.
---------------------------------------------------------------------------

    \3544\ See Section VI.D.2.a.(1)A.i., supra.
    \3545\ Approach 1 also provided $3,200,000 in initial internal
FTE costs. The Commission believed the $3,200,000 in internal FTE
costs is the Participants' estimated cost of the 8.05 FTEs. (8.05
FTEs) x ($401,440 Participants' assumed annual cost per FTE provided
in the CAT NMS Plan) = $3,231,592. See CAT NMS Plan, supra note 5,
at n. 192. See also supra note 3320.
    \3546\ See CAT NMS Plan, supra note 5, at Section
B.7(b)(iii)(c)(2)(a). The Commission believed that the third party/
outsourcing costs may be attributed to the use of service bureaus
(potentially), technology consulting, and legal services.
    \3547\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 5, at n.192. See also supra note 3320.
    \3548\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
    \3549\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 5, at Appendix C, Section B.7(b)(ii)(C), n.192; see
also supra note 3320.
    \3550\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
    \3551\ See CAT NMS Plan, supra note 5, at Appendix C, Section
A.6(c).
    \3552\ See supra note 2562.
    \3553\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(A)(2). The Reporters Study requested broker-dealer
respondents to provide estimates to report to the Central Repository
under two approaches. Approach 1 assumes CAT Reporters would submit
CAT Data using their choice of industry protocols. Approach 2
assumes CAT Reporters would submit data using a pre-specified
format. Approach 1's aggregate costs are higher than those for
Approach 2 for all market participants except in one case where
service bureaus have lower Approach 1 costs. Id. at Section
B.7(b)(iii)(C)(2). For purposes of this Paperwork Reduction Act
analysis, the Commission is not relying on the cost estimates for
Approach 2 because overall the Approach 1 aggregate estimates
represent the higher of the proposed approaches. The Commission
believes it would be more comprehensive to use the higher of the two
estimates for its Paperwork Reduction Act analysis estimates.
---------------------------------------------------------------------------

    Once an Options Market Maker has established the appropriate
systems and processes required for collection and transmission of the
required information to the Central Repository, such broker-dealers
would be subject to ongoing annual burdens associated with, among other
things, personnel time to monitor each Options Market Maker's reporting
of the required data and the maintenance of the systems to report the
required data; and implementing changes to trading systems that might
result in additional reports to the Central Repository.
(i) Options Market Makers--Initial Burden and Costs
    Based on this information, the Commission estimates that the
average initial burden associated with implementing regulatory data
reporting to capture the required information and transmit it to the
Central Repository in compliance with the Rule for each Options Market
Maker would be approximately 14,490 initial burden hours.\3554\
---------------------------------------------------------------------------

    \3554\ 14,490 initial burden hours = (8.05 FTEs for implementing
CAT Data reporting systems) x (1,800 working hours per year).
---------------------------------------------------------------------------

    The Commission also estimates that these options firm would, on
average, incur approximately $450,000 in initial costs for hardware and
software to implement the systems changes needed to capture the
required information and transmit it to the Central Repository, and an
additional $9,500 in initial third party/outsourcing costs.\3555\
Additionally, based on the comment that provided estimates for a
modified allocation timestamp requirement, with a one second timestamp
granularity and a one second clock offset,\3556\ the Commission now
estimates that the initial cost to an Options Market Maker to implement
the modified allocation timestamp requirement would be $250,000.\3557\
The Commission believes that this cost would be an external hardware
and software cost related to adding this functionality to servers. The
Commission is adding the cost of the modified allocation timestamp
requirement to the external costs to be incurred by Options Market
Makers.
---------------------------------------------------------------------------

    \3555\ See supra note 3436.
    \3556\ See supra note 3528.
    \3557\ The commenter stated that this requirement would cost the
industry $44,050,000 in initial implementation costs. The commenter
attributed $42,750,000 of the implementation cost estimate to 126
Insourcers. For purposes of this Paperwork Reduction Act analysis,
the Commission is applying the portion of the cost estimates
attributed to the 126 Insourcers to all 171 Insourcers. $42,750,000/
171 Insourcers = $250,000 in initial costs to implement the modified
allocation timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    The Commission also is adding a cost estimate for the requirement
that an Options Market Maker submit a Quote Sent Time to an
exchange.\3558\ The Commission is using the maximum 5-year cost
estimate to Options Market Makers provided by a commenter ($76.8
million) \3559\ and has divided it into $17,400,000 in aggregate
implementation external costs, and $11,880,000 in aggregate ongoing
external costs.\3560\
---------------------------------------------------------------------------

    \3558\ See Section VI.D.2.a.(1)E., supra; see also supra note
2526; Section V.F.3.a(6), supra; Section V.F.1.c(2)B., supra.
    \3559\ FIF Letter at 65.
    \3560\ See supra note 2526.
---------------------------------------------------------------------------

    The Commission estimates that that this requirement will impose an
additional initial hardware and software cost per Options Market Maker
of $561,290.32.\3561\ Based on this information, the Commission now
estimates that Options Market Makers would, on average, incur
approximately $1,261,290.32 in initial costs for hardware and software
to implement the systems changes needed to capture the required
information and transmit it to the Central Repository,\3562\ and an
additional $9,500 in initial third party/outsourcing costs. Therefore,
the

Commission now estimates that the average one-time initial burden per
options firm would be 14,490 internal burden hours, and the initial
external cost per Options Market Maker would be $1,270,790.32,\3563\
for an estimated aggregate initial burden of 449,190 hours \3564\ and
an estimated aggregate initial external cost of $39,394,499.92.\3565\
---------------------------------------------------------------------------

    \3561\ The Commission estimates that the implementation cost of
the Quote Sent Time requirement is approximately $17,400,000. See
Section V.F.1.c(2)B., supra. ($17,400,000 in implementation costs)/
(31 Options Market Makers) = $561,290.21 in initial external costs
to implement the Quote Sent Time requirement per Options Market
Maker.
    \3562\ $1,261,290.32 = ($450,000 in initial hardware and
software costs) + ($250,000 in initial hardware and software costs
to implement the modified allocation timestamp requirement) +
($561,290.32 in initial hardware and software costs to implement the
requirement that an Options Market Maker submit a Quote Sent Time).
    \3563\ ($1,261,290.32 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) = $1,270,790.32 in
initial external costs to implement data reporting systems.
    \3564\ The Commission estimates that 31 Options Market Makers
would be impacted by this information collection. (31 Options Market
Makers) x (14,490 burden hours) = 449,190 initial burden hours to
implement data reporting systems.
    \3565\ ($1,270,790.32 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) x (31 Options Market
Makers) = $39,394,499.92 in initial external costs to implement data
reporting systems.
---------------------------------------------------------------------------

(ii) Options Market Makers--Ongoing Burden and Costs
    Based on the comment that provided estimates for a modified
allocation timestamp requirement, with a one second timestamp
granularity and a one second clock offset,\3566\ the Commission
estimates that the ongoing cost to an Options Market Maker to maintain
the modified allocation timestamp requirement would be
$29,166.67.\3567\ The Commission believes that this cost would be an
external hardware and software cost related to maintenance of the
modified allocation timestamp. The Commission is adding the cost of the
modified allocation timestamp requirement to the external costs to be
incurred by Options Market Makers.
---------------------------------------------------------------------------

    \3566\ See supra note 3528.
    \3567\ The commenter stated that this requirement would cost the
industry $5,035,833 in ongoing costs. The commenter attributed
$4,987,500 of the ongoing cost estimate to 126 Insourcers. For
purposes of this Paperwork Reduction Act analysis, the Commission is
applying the portion of the cost estimates attributed to the 126
Insourcers to all 171 Insourcers. $4,987,500/171 Insourcers =
$29,166.67 in ongoing costs to maintain the modified allocation
timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    The Commission also is adding a cost estimate for the requirement
that an Options Market Maker submit a Quote Sent Time to an
exchange.\3568\ The Commission is using the maximum 5-year cost
estimate to Options Market Makers provided by a commenter ($76.8
million) \3569\ and has divided it into $17,400,000 in aggregate
implementation external costs, and $11,880,000 in aggregate ongoing
external costs.\3570\ The Commission estimates that this requirement
will impose an additional ongoing hardware and software cost per
Options Market Maker of $383,255.81.\3571\ Based on this information,
the Commission now believes that it would take an Options Market Maker
13,338 burden hours per year \3572\ to continue to comply with the
Rule. The Commission also now estimates that it would cost, on average,
approximately $492,422.48 per year per Options Market Maker to maintain
systems connectivity to the Central Repository and purchase any
necessary hardware, software, and other materials,\3573\ and an
additional $1,300 in third party/outsourcing costs.\3574\
---------------------------------------------------------------------------

    \3568\ See Section VI.D.2.a.(1)E., supra; see also supra note
2526; Section V.F.3.a(6), supra; Section V.F.1.c(2)B., supra.
    \3569\ FIF Letter at 65.
    \3570\ See supra note 2526.
    \3571\ The Commission estimates that the ongoing cost of the
Quote Sent Time requirement is approximately $11,880,000. See
Section V.F.1.c(2)B., supra. ($11,880,000 in ongoing costs)/(31
Options Market Maker) = $383,255.81 in ongoing external costs to
maintain the Quote Sent Time requirement per Options Market Maker.
    \3572\ 13,338 ongoing burden hours = (7.41 ongoing FTEs to
maintain CAT data reporting systems) x (1,800 working hours per
year).
    \3573\ $492,422.48 = ($80,000 in ongoing external hardware and
software costs) + ($29,166.67 to maintain the modified allocation
timestamp requirement) + ($383,255.81 in ongoing external costs to
maintain the Quote Sent Time requirement per options firm).
    \3574\ See supra note 3548.
---------------------------------------------------------------------------

    Therefore, the Commission now estimates that the average ongoing
annual burden per Options Market Maker would be approximately 13,338
hours, and the ongoing external cost per Options Market Maker would be
$493,722.48 \3575\ to maintain the systems necessary to collect and
transmit information to the Central Repository, for an estimated
aggregate ongoing burden of 413,478 hours \3576\ and an estimated
aggregate ongoing external cost to Options Market Makers of
$15,305,396.88.\3577\
---------------------------------------------------------------------------

    \3575\ ($492,422.48 in ongoing external hardware and software
costs) + ($1,300 ongoing external third party/outsourcing costs) =
$493,722.48 in ongoing external costs per options firm.
    \3576\ The Commission estimates that 31 options firms would be
impacted by this information collection. (31 options firms) x
(13,338 burden hours) = 413,478 aggregate ongoing burden hours.
    \3577\ ($492,422.48 in ongoing external hardware and software
costs) + ($1,300 ongoing external third party/outsourcing costs) x
(31 options firms) = $15,305,396.88 in aggregate ongoing external
costs.
---------------------------------------------------------------------------

ii. Large OATS-Reporting Broker-Dealers
    As noted above,\3578\ in the CAT NMS Plan, the Participants, based
on the Reporters Study's large broker-dealer cost estimates, estimated
the following average initial external cost and internal FTE count
figures that a large OATS-reporting broker-dealer would expect to incur
as a result of the implementation of the consolidated audit trail under
Approach 1: $750,000 in hardware and software costs; 14.92 internal
FTEs; \3579\ and $150,000 in external third party/outsourcing
costs.\3580\ The Participants also estimated the following average
ongoing external cost and internal FTE count figures that a large OATS-
reporting broker-dealer would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $380,000 in
ongoing external hardware and software costs; 10.03 internal FTEs;
\3581\ and $120,000 in ongoing external third party/outsourcing
costs.\3582\
---------------------------------------------------------------------------

    \3578\ See Section VI.D.2.a.(1)(A)ii., supra.
    \3579\ Approach 1 also provided $6,000,000 in initial internal
FTE costs. The Commission believes the $6,000,000 in initial
internal FTE costs is the Participants' estimated cost of the 14.92
FTEs. (14.92 FTEs) x ($401,440 Participants' assumed annual cost per
FTE provided in the CAT NMS Plan) = $5,989,485. See CAT NMS Plan,
supra note 5, at Appendix C, Section B.7(b)(ii)(C), n.192; see also
supra note 3320.
    \3580\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(a). The CAT NMS Plan did not break down these
third party costs into categories. The Commission believes that
these costs may be attributed to the use of service bureaus,
technology consulting, and legal services.
    \3581\ Approach 1 also provided $4,000,000 in internal FTE costs
related to maintenance. The Commission believes the $4,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 10.03 FTEs. (10.03 FTEs) x ($401,440 Participants' assumed
annual cost per FTE provided in the CAT NMS Plan) = $4,026,443. See
CAT NMS Plan, supra note 5, at Appendix C, Section B.7(b)(ii)(C),
n.192; see also supra note 3320.
    \3582\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not categorize these
third party costs. The Commission believes that these costs may be
attributed to the use of service bureaus, technology consulting, and
legal services.
---------------------------------------------------------------------------

    As it did in the Notice, based on the Commission's analysis of data
provided by FINRA and discussions with market participants, the
Commission estimates that 126 broker-dealers, which reported more than
350,000 OATS ROEs between June 15 and July 10, 2015, would
strategically decide to either self-report CAT Data or outsource their
CAT data reporting functions.\3583\ To conduct its Paperwork Burden
Analysis for the 126 broker-dealers, the Commission is relying on the
Reporters Study estimates used by the CAT NMS Plan of expected costs
that a large OATS-reporting broker-dealer would incur as a result of
the implementation of the consolidated audit trail under Approach 1.
---------------------------------------------------------------------------

    \3583\ See Notice, supra note 5, at 30718; see also id., at
n.901 (stating that the Commission believes that broker-dealers that
report fewer than 350,000 OATS ROEs per month are unlikely to be
large enough to support the infrastructure required for insourcing
data reporting activities).
---------------------------------------------------------------------------

    Once a large OATS-reporting broker-dealer has established the
appropriate systems and processes required for collection and
transmission of the required information to the Central Repository,
such broker-dealers would

be subject to ongoing annual burdens and costs associated with, among
other things, personnel time to monitor each broker-dealer's reporting
of the required data and the maintenance of the systems to report the
required data; and implementing changes to trading systems which might
result in additional reports to the Central Repository.
(a) Large OATS-Reporting Broker-Dealers--Initial Burden and Costs
    In this Order, based on the comment that provided estimates for a
modified allocation timestamp requirement, with a one second timestamp
granularity and a one second clock offset,\3584\ the Commission is
estimating that the initial cost to a large OATS-reporting broker-
dealer to implement the modified allocation timestamp requirement would
be $250,000.\3585\ The Commission believes that this cost would be an
external hardware and software cost related to adding this
functionality to servers. The Commission is adding the cost of the
modified allocation timestamp requirement to the external costs to be
incurred by large-OATS-reporting broker-dealers.
---------------------------------------------------------------------------

    \3584\ See supra note 3528.
    \3585\ The commenter stated that this requirement would cost the
industry $44,050,000 in initial implementation costs. The commenter
attributed $42,750,000 of the implementation cost estimate to 126
Insourcers. For purposes of this Paperwork Reduction Act analysis,
the Commission is applying the portion of the cost estimates
attributed to the 126 Insourcers to all 171 Insourcers. $42,750,000/
171 Insourcers = $250,000 in initial costs to implement the modified
allocation timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    Based on this information the Commission now estimates that these
large OATS-reporting broker-dealers would, on average, incur
approximately $1,000,000 in initial external costs for hardware and
software to implement the systems changes needed to capture the
required information and transmit it to the Central Repository,\3586\
and an additional $150,000 in initial external third party/outsourcing
costs.\3587\ Therefore, the Commission now estimates that the average
one-time initial burden per large OATS-reporting broker-dealer would be
26,856 burden hours and external costs of $1,150,000 to implement CAT
data reporting systems,\3588\ for an estimated aggregate initial burden
of 3,383,856 hours \3589\ and an estimated aggregate initial external
cost of $189,000,000.\3590\
---------------------------------------------------------------------------

    \3586\ $1,000,000 = ($750,000 in initial external hardware and
software costs) + ($250,000 to implement the modified allocation
timestamp).
    \3587\ See supra note 3421.
    \3588\ ($1,000,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) =
$1,150,000 in initial external costs per large OATS-reporting
broker-dealer to implement CAT data reporting systems.
    \3589\ The Commission estimates that 126 large OATS-reporting
broker-dealers would be impacted by this information collection.
(126 large OATS-reporting broker-dealers) x (26,856 initial burden
hours) = 3,383,856 initial burden hours to implement data reporting
systems.
    \3590\ ($1,000,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) x
(126 large OATS-reporting broker-dealers) = $189,000,000 in initial
external costs to implement data reporting systems.
---------------------------------------------------------------------------

(b) Large OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In this Order, additionally, based on the comment that provided
estimates for a modified allocation timestamp requirement, with a one
second timestamp granularity and a one second clock offset,\3591\ the
Commission estimates that the ongoing cost to a large OATS-reporting
broker-dealer to maintain the modified allocation timestamp requirement
would be $29,166.67.\3592\ The Commission believes that this cost would
be an external hardware and software cost related to maintenance of the
modified allocation timestamp. The Commission is adding the cost of the
modified allocation timestamp requirement to the external costs to be
incurred by large OATS-reporting broker-dealers.
---------------------------------------------------------------------------

    \3591\ See supra note 3528.
    \3592\ The commenter stated that this requirement would cost the
industry $5,035,833 in ongoing costs. The commenter attributed
$4,987,500 of the ongoing cost estimate to 126 Insourcers. For
purposes of this Paperwork Reduction Act analysis, the Commission is
applying the portion of the cost estimates attributed to the 126
Insourcers to all 171 Insourcers. $4,987,500/171 Insourcers =
$29,166.67 in ongoing costs to maintain the modified allocation
timestamp requirement per Insourcer.
---------------------------------------------------------------------------

    Based on this information the Commission believes that it would
take a large OATS-reporting broker-dealer 18,054 ongoing burden hours
per year \3593\ to continue compliance with the Rule. The Commission
now estimates that it would cost, on average, approximately $409,166.67
per year per large OATS-reporting broker-dealer to maintain systems
connectivity to the Central Repository and purchase any necessary
hardware, software, and other materials,\3594\ and an additional
$120,000 in external ongoing third party/outsourcing costs.\3595\
---------------------------------------------------------------------------

    \3593\ 18,054 ongoing burden hours = (10.03 ongoing FTEs for
maintenance of CAT data reporting systems) x (1,800 working hours
per year).
    \3594\ $409,166.67 = ($380,000 in ongoing external hardware and
software costs) + ($29,166.67 to maintain the modified allocation
timestamp requirement).
    \3595\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b).
---------------------------------------------------------------------------

    Therefore, the Commission now estimates that the average ongoing
annual burden per large OATS-reporting broker-dealer would be
approximately 18,054 burden hours, plus $529,166.67 \3596\ to maintain
the systems necessary to collect and transmit information to the
Central Repository, for an estimated aggregate burden of 2,274,804
hours \3597\ and an estimated aggregate ongoing external cost of
$66,675,000.42.\3598\
---------------------------------------------------------------------------

    \3596\ ($409,166.67 in ongoing external hardware and software
costs) + ($120,000 in ongoing external third party/outsourcing
costs) = $529,166.67 in ongoing external costs per large OATS-
reporting broker-dealer.
    \3597\ The Commission estimates that 126 large OATS-reporting
broker-dealers would be impacted by this information collection.
(126 large OATS-reporting broker-dealers) x (18,054 burden hours) =
2,274,804 aggregate ongoing burden hours.
    \3598\ ($409,166.67 in ongoing external hardware and software
costs) + ($120,000 in ongoing external third party/outsourcing
costs) x (126 large OATS-reporting broker-dealers) = $66,675,000.42
in aggregate ongoing external costs.
---------------------------------------------------------------------------

B. Outsourcers
i. Small OATS-Reporting Broker-Dealers
    As it did in the Notice, based on data provided by FINRA, the
Commission estimates that there are 806 broker-dealers that report
fewer than 350,000 OATS ROEs monthly. The Commission believes that
these broker-dealers generally outsource their regulatory reporting
obligations because during the period June 15-July 10, 2015,
approximately 88.9% of their 350,000 OATS ROEs were reported through
service bureaus, with 730 of these broker-dealers reporting more than
99% of their OATS ROEs through one or more service bureaus.\3599\ The
Commission estimates that these firms currently spend an aggregate of
$100.1 million on annual outsourcing costs.\3600\ The Commission
estimates these 806 broker-dealers would spend $100.2 million in
aggregate to outsource their regulatory data reporting to service
bureaus to report in accordance with Rule 613,\3601\ or $124,373 per
broker-dealer.\3602\ These external outsourcing cost estimates are
calculated using the information from staff discussions with service
bureaus and other market

participants, as applied to data provided by FINRA.\3603\
---------------------------------------------------------------------------

    \3599\ See Notice, supra note 5, at 30718. Because of the
extensive use of service bureaus in these categories of broker-
dealers, the Commission assumes that these broker-dealers are likely
to use service bureaus to accomplish their CAT data reporting.
    \3600\ The average broker-dealer in this category reported
15,185 OATS ROEs from June 15-July 10, 2015; the median reported
1,251 OATS ROEs. Of these broker-dealers, 39 reported more than
100,000 OATS ROEs during the sample period. See Section
V.F.1.c.(2)B., supra.
    \3601\ Id.
    \3602\ $124,373 = $100,200,000/806 broker-dealers. This amount
is the average estimated annual outsourcing cost to firms that
currently report fewer than 350,000 OATS ROEs per month. Id.
    \3603\ See Section V.F.1.c.(2)B., supra.
---------------------------------------------------------------------------

    Firms that outsource their regulatory data reporting still face
internal staffing burdens associated with this activity. These
employees perform activities such as answering inquiries from their
service bureaus, and investigating reporting exceptions. Based on
conversations with market participants, the Commission estimates that
these firms currently have 0.5 full-time employees devoted to these
activities.\3604\ The Commission estimates that these firms would need
to hire one additional full-time employee for one year to implement CAT
reporting requirements.\3605\
---------------------------------------------------------------------------

    \3604\ Id.
    \3605\ Id.
---------------------------------------------------------------------------

    Small OATS-reporting broker-dealers that outsource their regulatory
data reporting would likely face internal staffing burdens and external
costs associated with ongoing activity, such as maintaining any systems
that transmit data to their service providers. Based on conversations
with market participants, the Commission estimates these firms would
need 0.75 FTEs on an ongoing basis to perform or monitor CAT
reporting.\3606\
---------------------------------------------------------------------------

    \3606\ See Section IV.F.1.c.(2)B., supra.
---------------------------------------------------------------------------

(a) Small OATS-Reporting Broker-Dealers--Initial Burden and Costs
    In this Order, additionally, based on the comment that provided
estimates for a modified allocation timestamp requirement, with a one
second timestamp granularity and a one second clock offset,\3607\ the
Commission estimates that the initial cost to a small OATS-reporting
broker-dealer to implement this requirement would be $798.04.\3608\ The
Commission believes that this cost would be an external hardware and
software cost related to adding this functionality to servers. The
Commission is adding the cost of the modified allocation timestamp
requirement to the external costs to be incurred by small OATS-
reporting broker-dealers.
---------------------------------------------------------------------------

    \3607\ See supra note 3528.
    \3608\ The commenter stated that this requirement would cost the
industry $44,050,000 in initial implementation costs. The commenter
attributed $1,300,000 of the implementation cost estimate to 13
service bureaus. For purposes of this Paperwork Reduction Act
analysis, the Commission is assuming that the portion of the
estimates attributed by the commenter to service bureaus will be
passed-through to their Outsourcing broker-dealer clients that rely
on service bureaus to perform their regulatory data reporting. The
Commission is thus applying the portion of the commenter's cost
estimates attributed to the 13 service bureaus across the 1,629
broker-dealers that are categorized as Outsourcing broker-dealers.
$1,300,000/1,629 Outsourcing broker-dealers = $798.04 in initial
costs to implement the modified allocation timestamp requirement per
Outsourcing broker-dealer.
---------------------------------------------------------------------------

    Based on this information, the Commission estimates that the
average initial burden to implement the needed systems changes to
capture the required information and transmit it to the Central
Repository in compliance with the CAT NMS Plan for small OATS-reporting
broker-dealers would be approximately 1,800 burden hours.\3609\ The
Commission believes the burden hours would be associated with work
performed by internal technology, compliance and legal staff in
connection with the implementation of CAT data reporting. The
Commission also now estimates that each small OATS-reporting broker-
dealer would incur approximately $125,171.04 in initial external
costs.\3610\ Therefore, the Commission now estimates that the average
one-time initial burden per small OATS-reporting broker-dealer would be
1,800 burden hours and external costs of $125,171.04, for an estimated
aggregate initial burden of 1,450,800 hours \3611\ and an estimated
aggregate initial external cost of $100,887,858.24.\3612\
---------------------------------------------------------------------------

    \3609\ This estimate assumes that, based on the expected FTE
count provided, a small OATS-reporting broker-dealer would have to
hire 1 new FTE for implementation. The salary attributed to the 1
FTE would be (1 FTE) x ($424,350 FTE cost) = $424,350 per year. To
determine the number of burden hours to be incurred by the current
0.5 FTE for implementation, multiply 0.5 FTE by 1,800 hours per year
= 900 initial burden hours.
    \3610\ $125,171.04 = ($124,373 in initial outsourcing costs) +
($798.04 to implement the allocation timestamp).
    \3611\ The Commission estimates that 806 small OATS-reporting
broker-dealers would be impacted by this information collection.
(806 small OATS-reporting broker-dealers) x (1,800 burden hours) =
1,450,800 aggregate initial burden hours.
    \3612\ ($124,373 in initial outsourcing costs) + ($798.04 to
implement the allocation timestamp) x (806 small OATS-reporting
broker-dealers) = $100,887,858.24 in aggregate initial external
costs.
---------------------------------------------------------------------------

(b) Small OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In this Order, the Commission estimates that it would cost, on
average, approximately $124,373 in ongoing external outsourcing costs
\3613\ to ensure ongoing compliance with Rule 613. Additionally, based
on the comment that provided estimates for a modified allocation
timestamp requirement, with a one second timestamp granularity and a
one second clock offset,\3614\ the Commission estimates that the
ongoing cost to a small OATS-reporting broker-dealer to maintain the
modified allocation timestamp requirement would be $66.50.\3615\ The
Commission believes that this cost would be an external hardware and
software cost related to maintenance of the modified allocation
timestamp. The Commission is adding the cost of the modified allocation
timestamp requirement to the external costs to be incurred by small
OATS-reporting broker-dealers
---------------------------------------------------------------------------

    \3613\ See supra note 3610.
    \3614\ See supra note 3528.
    \3615\ The commenter stated that this requirement would cost the
industry $5,035,833 in ongoing costs. The commenter attributed
$108,333 of the ongoing cost estimate to 13 service bureaus. For
purposes of this Paperwork Reduction Act analysis, the Commission is
assuming that the portion of the estimates attributed by the
commenter to service bureaus will be passed-through to their
Outsourcing broker-dealer clients that rely on service bureaus to
perform their regulatory data reporting. The Commission is thus
applying the portion of the commenter's cost estimates attributed to
the 13 service bureaus across the 1,629 broker-dealers that are
categorized as Outsourcing broker-dealers. $108,333/1,629
Outsourcing broker-dealers = $66.50 in ongoing costs to maintain the
modified allocation timestamp requirement per Outsourcing broker-
dealer.
---------------------------------------------------------------------------

    Therefore, the Commission now estimverage ongoing annual burden per
small OATS-reporting broker-dealer would be approximately 1,350 hours,
plus $124,439.50,\3616\ in external costs, for an estimated aggregate
ongoing burden of 1,088,100 hours \3617\ and an estimated aggregate
ongoinates that the ag external cost of $100,298,237.\3618\
---------------------------------------------------------------------------

    \3616\ $124,439.50 = ($124,373 in ongoing outsourcing costs) +
($66.50 to maintain the allocation timestamp)
    \3617\ The Commission estimates that 806 small OATS-reporting
broker-dealers would be impacted by this information collection.
(806 small OATS-reporting broker-dealers) x (1,350 burden hours) =
1,088,100 aggregate ongoing burden hours to ensure ongoing
compliance with Rule 613.
    \3618\ $100,298,237 = ($124,373 in ongoing outsourcing costs) +
($66.50 to maintain the allocation timestamp) x (806 broker-
dealers).
---------------------------------------------------------------------------

ii. Small Non-OATS-Reporting Broker-Dealers
    In addition to firms that currently report to OATS, as it did in
the Notice, the Commission estimates there are 799 broker-dealers that
are currently exempt from OATS reporting rules due to firm size, or
excluded because all of their order flow is routed to a single OATS
reporter, such as a clearing firm, that would incur CAT reporting
obligations.\3619\ A further 24 broker-dealers have SRO memberships
only with one Participant; \3620\ the Commission believes this group is
comprised mostly of floor brokers and further believes these firms
would experience CAT implementation and

ongoing reporting costs similar in magnitude to small equity broker-
dealers that currently have no OATS reporting responsibilities.\3621\
---------------------------------------------------------------------------

    \3619\ See Section V.F.1.c.(2)B., supra. Rule 613 does not
exclude from data reporting obligations SRO members that quote or
execute transactions in NMS Securities and Listed Options that route
to a single market participant; see also CAT NMS Plan, supra note 5,
at Appendix C, Section B.7(b)(ii)(B)(2).
    \3620\ See Section V.F.1.c.(2)B., supra.
    \3621\ Id.
---------------------------------------------------------------------------

    The Commission assumes these broker-dealers would have very low
levels of CAT reporting, similar to those of the lowest activity firms
that currently report to OATS. For these firms, the Commission assumes
that under CAT they would incur the average estimated service bureau
cost of broker-dealers that currently report fewer than 350,000 OATS
ROEs per month, which is $124,373 annually.\3622\ Furthermore, because
these firms have more limited data reporting requirements than other
firms, the Commission assumes these firms currently have only 0.1 full-
time employees currently dedicated to regulatory data reporting
activities.\3623\ The Commission assumes these firms would require 2
full-time employees for one year to implement CAT.\3624\
---------------------------------------------------------------------------

    \3622\ Id.
    \3623\ Id.
    \3624\ Id.
---------------------------------------------------------------------------

    Small non-OATS-reporting broker-dealers that outsource their
regulatory data reporting would likely face internal staffing burdens
and costs associated with ongoing activity, such as maintaining any
systems that transmit data to their service providers. Based on
conversations with market participants, the Commission estimates these
firms would need 0.75 full-time employees annually to perform or
monitor CAT reporting.
(a) Small Non-OATS Reporting Broker-Dealers--Initial Burden and Costs
    In this Order, additionally, based on the comment that provided
estimates for a modified allocation timestamp requirement, with a one
second timestamp granularity and a one second clock offset,\3625\ the
Commission estimates that the initial cost to a small non-OATS-
reporting broker-dealer would be $798.04.\3626\ The Commission believes
that this cost would be an external hardware and software cost related
to adding this functionality to servers. The Commission is adding the
cost of the modified allocation timestamp requirement to the external
costs to be incurred by small non-OATS-reporting broker-dealers.
---------------------------------------------------------------------------

    \3625\ See supra note 3528.
    \3626\ The commenter stated that this requirement would cost the
industry $44,050,000 in initial implementation costs. The commenter
attributed $1,300,000 of the implementation cost estimate to 13
service bureaus. For purposes of this Paperwork Reduction Act
analysis, the Commission is assuming that the portion of the
estimates attributed by the commenter to service bureaus will be
passed-through to their Outsourcing broker-dealer clients that rely
on service bureaus to perform their regulatory data reporting. The
Commission is thus applying the portion of the commenter's cost
estimates attributed to the 13 service bureaus across the 1,629
broker-dealers that are categorized as Outsourcing broker-dealers.
$1,300,000/1,629 Outsourcing broker-dealers = $798.04 in initial
costs to implement the modified allocation timestamp requirement per
Outsourcing broker-dealer.
---------------------------------------------------------------------------

    Based on this information, the Commission now estimates that the
average initial burden to develop and implement the needed systems
changes to capture the required information and transmit it to the
Central Repository in compliance with the Rule for small, non-OATS-
reporting broker-dealers would be approximately 3,600 initial burden
hours.\3627\ The Commission believes the burden hours would be
associated with work performed by internal technology, compliance and
legal staff in connection with the implementation of CAT Data
reporting. The Commission also now estimates that each small non-OATS-
reporting broker-dealer would incur approximately $125,171.04 in
initial external outsourcing costs.\3628\ Therefore, the Commission now
estimates that the average one-time initial burden per small non-OATS-
reporting broker-dealer would be 3,600 burden hours and external costs
of $125,171.04 for an estimated aggregate initial burden of 2,962,800
hours \3629\ and an estimated aggregate initial external cost of
$103,015,765.92.\3630\
---------------------------------------------------------------------------

    \3627\ 3,600 initial burden hours = (2 FTEs for implementation
of CAT Data reporting systems) x (1,800 working hours per year).
    \3628\ $125,171.04 = ($124,373 in initial outsourcing costs) +
($798.04 to implement the allocation timestamp).
    \3629\ The Commission estimates that 823 small non-OATS-
reporting broker-dealers would be impacted by this information
collection. (823 small non-OATS-reporting broker-dealers) x (3,600
burden hours) = 2,962,800 aggregate initial burden hours.
    \3630\ $103,015,765.92 = ($124,373 in initial outsourcing costs)
+ ($798.04 to implement the allocation timestamp) x (823 small non-
OATS-reporting broker-dealers).
---------------------------------------------------------------------------

(b) Small Non-OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In this Order, additionally, based on the comment that provided
estimates for a modified allocation timestamp requirement, with a one
second timestamp granularity and a one second clock offset,\3631\ the
Commission estimates that the ongoing cost to a small non-OATS-
reporting broker-dealer to maintain the modified allocation timestamp
requirement would be $66.50.\3632\ The Commission believes that this
cost would be an external hardware and software cost related to
maintenance of the modified allocation timestamp. The Commission is
adding the cost of the modified allocation timestamp requirement to the
external costs to be incurred by small non-OATS-reporting broker-
dealers
---------------------------------------------------------------------------

    \3631\ See supra note 3528.
    \3632\ The commenter stated that this requirement would cost the
industry $5,035,833 in ongoing costs. The commenter attributed
$108,333 of the ongoing cost estimate to 13 service bureaus. For
purposes of this Paperwork Reduction Act analysis, the Commission is
assuming that the portion of the estimates attributed by the
commenter to service bureaus will be passed-through to their
Outsourcing broker-dealer clients that rely on service bureaus to
perform their regulatory data reporting. The Commission is thus
applying the portion of the commenter's cost estimates attributed to
the 13 service bureaus across the 1,629 broker-dealers that are
categorized as Outsourcing broker-dealers. $108,333/1,629
Outsourcing broker-dealers = $66.50 in ongoing costs to maintain the
modified allocation timestamp requirement per Outsourcing broker-
dealer.
---------------------------------------------------------------------------

    Therefore, the Commission now estimates that the average ongoing
annual burden per small non-OATS-reporting broker-dealer would be
approximately 1,350 hours, plus $124,439.50 \3633\ in external costs,
for an estimated aggregate ongoing burden of 1,111,050 hours \3634\ and
an estimated aggregate ongoing external cost of $102,413,708.50.\3635\
---------------------------------------------------------------------------

    \3633\ $124,439.50 = ($124,373 in ongoing outsourcing costs) +
($66.50 to maintain the allocation timestamp)
    \3634\ The Commission estimates that 823 small non-OATS-
reporting broker-dealers would be impacted by this information
collection. (823 small non-OATS-reporting broker-dealers x 1,350
burden hours) = 1,111,050 aggregate ongoing burden hours to ensure
ongoing compliance with Rule 613.
    \3635\ $102,413,708.50 = ($124,373 in ongoing outsourcing costs)
+ ($66.50 to maintain the allocation timestamp) x (823 small non-
OATS reporting broker-dealers).
---------------------------------------------------------------------------

E. Summary of Collection of Information Under the CAT NMS Plan, as
Amended by the Commission

    As noted above,\3636\ the Commission is amending the CAT NMS Plan,
resulting in a new information collection requirement, ``CAT NMS Plan
Reporting and Disclosure Requirements.'' The Commission is requesting
public comment on the new collection of information requirement in this
Order. The Commission is applying for an OMB control number for the
proposed new collection of information in accordance with 44 U.S.C.
3507(j) and 5 CFR 1320.13, and OMB has not yet assigned a control
number to the new collection. Responses to the new collection of
information would be mandatory. An agency may not conduct or sponsor,
and a person is not required to respond to, a collection of

information unless it displays a currently valid OMB control number.
---------------------------------------------------------------------------

    \3636\ See Section VI.
---------------------------------------------------------------------------

1. One-Time Reports
a. Independent Audit of Expenses Incurred Prior to the Effective Date
    Section 6.6(a)(i) of the CAT NMS Plan requires the Participants to
provide to the Commission, and make public, an independent audit of
fees, costs and expenses incurred by the Participants on behalf of the
Company, prior to the Effective Date, in connection with the creation
and implementation of the CAT, at least one month prior to submitting
any rule filing to establish initial fees to the Commission.
b. Review of Clock Synchronization Standards
    Section 6.6(a)(ii) of the CAT NMS Plan now requires a written
assessment of clock synchronization standards, including consideration
of industry standards based on the type of CAT Reporter, Industry
Member and type of system, within six months of effectiveness of the
Plan.
c. Coordinated Surveillance Report
    Section 6.6(a)(iii) of the CAT NMS Plan requires the Participants
to submit a written report detailing the Participants' consideration of
coordinated surveillance (e.g., entering into a Rule 17d-2 agreements
or regulatory services agreements), within 12 months of effectiveness
of the Plan.
d. Assessment of Industry Member Bulk Access to Reported Data
    Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to
provide a written report discussing the feasibility, benefits, and
risks of allowing an Industry Member to bulk download the Raw Data it
submitted to the Central Repository, within 24 months of effectiveness
of the Plan.
e. Assessment of Errors in Customer Information Fields
    Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to
submit a written assessment of the nature and extent of errors in the
Customer information submitted to the Central Repository and whether to
prioritize the correction of certain data fields over others, within 36
months of effectiveness of the Plan.
f. Report on Impact of Tiered Fees on Market Liquidity
    Section 6.6(a)(vi) of the CAT NMS Plan now requires the
Participants to submit a written report to study the impact of tiered-
fees on market liquidity, including an analysis of the impact of the
tiered-fee structure on Industry Members' provision of liquidity,
within 36 months of effectiveness of the Plan.
g. Assessment of Material Systems Change on Error Rate
    Section 6.6(a)(vii) of the CAT NMS Plan requires a written
assessment of the projected impact of any Material Systems Change on
the Maximum Error Rate, prior to the implementation of any Material
Systems Change.
2. Non-Report Commission-Created Information Collections
a. Financial Statements
    Section 9.2 of the CAT NMS Plan now requires that the CAT LLC
financials be (i) in compliance with GAAP, (ii) be audited by an
independent public accounting firm, and (iii) be made publicly
available.
b. Background Checks
    Section 6.1(g) of the CAT NMS Plan now requires each Participant to
conduct background checks of its employees and contractors that will
use the CAT System.

F. Proposed Use of Information Under the CAT NMS Plan, as Amended by
the Commission

1. Independent Audit of Expenses Incurred Prior to the Effective Date
    Section 6.6(a)(i) of the CAT NMS Plan requires the Participants to
provide to the Commission, and make public, an independent audit of
fees, costs and expenses incurred by the Participants on behalf of the
Company, prior to the Effective Date, in connection with the creation
and implementation of the CAT, at least one month prior to submitting
any rule filing to establish initial fees to the Commission. The
Commission notes that any such filing will be published for notice and
comment, and that such an audit would facilitate public comment and the
Commission's review of these filings to ensure the fees imposed on
Industry Members are reasonable, equitable and not unfairly
discriminatory.
2. Review of Clock Synchronization Standards
    Section 6.6(a)(ii) of the CAT NMS Plan now requires a written
assessment of clock synchronization standards, including consideration
of industry standards based on the type of CAT Reporter, Industry
Member and type of system. The Commission believes that the
Participants should consider the Plan's clock synchronization standards
based on the diversity of the CAT Reporter, Industry Member, and type
of system promptly and propose any appropriate amendments for
Commission consideration, within six months of effectiveness of the
Plan.
3. Coordinated Surveillance Report
    Section 6.6(a)(iii) of the CAT NMS Plan now requires the
Participants to submit a written report detailing the Participants'
consideration of coordinated surveillance (e.g., entering into a Rule
17d-2 agreements or regulatory services agreements), within 12 months
of effectiveness of the Plan. The Commission notes that the CAT will
allow regulators to conduct cross-market surveillances and to review
conduct that occurs across the markets. As a result, the Commission
believes that it may be efficient for the Participants to coordinate to
conduct cross market surveillances.
4. Assessment of Industry Member Bulk Access to Reported Data
    Section 6.6(a)(iv) of the CAT NMS Plan now requires the
Participants to provide a written report discussing the feasibility,
benefits and risks of allowing an Industry Member to bulk download the
Raw Data it submitted to the Central Repository, within 24 months of
effectiveness of the Plan. Commenters expressed a desire for bulk
access to their own data for surveillance and internal compliance
purposes, as well as possible error correction purposes. While the
Participants did not permit such access in the Plan citing security and
cost concerns, they did represent that they would consider allowing
bulk access to the audit trail data reported by Industry Members once
CAT is operational. The Commission believes a report discussing the
feasibility of this type of access will ensure the Participants
consider the issue and are responsive to Industry requests.
5. Assessment of Errors in Customer Information Fields
    Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to
submit a written assessment of the nature and extent of errors in the
Customer information submitted to the Central Repository and whether
the correction of certain data fields should be prioritized. The
Commission believes that requiring such an assessment of errors could
help ensure that the accuracy of CAT Data is achieved in the most
prompt and efficient manner.
6. Report on Impact of Tiered Fees on Market Liquidity
    Section 6.6(a)(vi) of the CAT NMS Plan now requires the
Participants to

submit a written report to study the impact of tiered-fees on market
liquidity, including an analysis of the impact of the tiered-fee
structure on Industry Members' provision of liquidity, within 36 months
of effectiveness of the Plan. One commenter expressed concern that use
of a tiered-fees structure could discourage the display of quotes. In
response the Participants explained that one of the reasons they chose
to use a tiered-fee funding model was to limit disincentives to
providing liquidity. To help determine whether the Plan's funding model
actually achieves the Participants' stated objective, the Commission
believes it is appropriate to require them to provide this assessment.
The Commission believes that a report that explains the observed impact
on liquidity after reporting begins will allow the Commission and the
Participants to determine whether or not the tier-fee structure
discourages Industry Member from providing liquidity.
7. Assessment of Material Systems Change on Error Rate
    The Commission is amending the Plan to require Participants to
provide the Commission a written assessment of the projected impact of
any Material Systems Change on the Maximum Error Rate, prior to the
implementation of any Material Systems Change. The Commission believes
that Material Systems Changes either could result in new challenges for
CAT Reporters or simplify the means for reporting data. In either case,
the appropriateness of the Maximum Error Rate could be impacted, and
thus warrant a change. Accordingly, the Commission believes it
appropriate to require the Participants to provide the Commission an
assessment of the projected impact on the Maximum Error Rate, including
any recommended changes thereto, prior to the implementation of any
Material Systems Change.
8. Financial Statements
    Section 9.2 of the CAT NMS Plan now requires that the CAT LLC
financials be (i) in compliance with GAAP, (ii) be audited by an
independent public accounting firm, and (iii) be made publicly
available. The Commission believes that this requirement will promote
greater transparency with respect to the Company's financial
accounting.
9. Background Checks
    Section 6.1(g) of the CAT NMS Plan now requires each Participant to
conduct background checks of its employees and contractors that will
use the CAT System. The Commission believes that such a requirement
generally should extend to Participants with respect to all of their
users that have access to CAT Data and therefore has amended the Plan
to require that each Participant conduct background checks for its
employees and contractors that will use the CAT System. The Commission
believes that this amendment to the Plan is appropriate in order to
better manage the risk of bad actors accessing to the CAT System.

G. Total Initial and Annual Reporting and Recordkeeping Burden of
Information Collection Under the CAT NMS Plan, as Amended by the
Commission

1. Burden on National Securities Exchanges and National Securities
Associations
a. Independent Audit of Expenses Incurred Prior to the Effective Date
    Section 6.6(a)(i) of the CAT NMS Plan now requires the Participants
to provide to the Commission an independent audit of fees, costs and
expenses incurred by the Participants on behalf of the Company, prior
to the Effective Date, in connection with the creation and
implementation of the CAT, at least one month prior to submitting any
rule filing to establish initial fees to the Commission.
    The Commission preliminarily estimates that each Participant would
incur an initial, one-time external cost of the audit of $238.09.\3637\
The Commission preliminarily estimates that the aggregate initial, one-
time external cost of the audit is $5,000.\3638\
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    \3637\ The Commission estimates that the cost of the audit would
be an aggregate, external cost of $5,000. $5,000/21 Participants =
$238.09 per Participant. See Section V.F.1.b., supra.
    \3638\ Id.
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b. Review of Clock Synchronization Standards
    Section 6.6(a)(ii) of the CAT NMS Plan now requires a written
assessment of clock synchronization standards, including consideration
of industry standards based on the type of CAT Reporter, Industry
Member and type of system, within six months of effectiveness of the
Plan.
    The Commission preliminarily estimates that it would take each
Participant approximately 19 initial, one-time burden hours of internal
legal and information technology staff time to prepare and submit the
assessment of clock synchronization standards.\3639\ The Commission
believes that this burden would mostly be comprised of information
technology staff time to conduct the assessment, with less time
allocated to internal legal staff for review of the assessment.
Additionally, the Commission now preliminarily estimates that on
average, each Participant would outsource 0.5 hours of legal time to
assist in the review of the assessment, for an initial, one-time
external cost of approximately $200.\3640\ Therefore, the Commission
preliminarily estimates that the initial, one-time burden of preparing
and submitting the assessment would be 19 initial, one-time burden
hours per Participant plus $200 of external costs for outsourced legal
counsel per Participant, for an estimated aggregate initial, one-time
burden of approximately 399 hours \3641\ and an estimated aggregate
initial, one-time external cost of $4,200.\3642\
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    \3639\ The Commission estimates that 19 internal burden hours =
(Computer Operations Department Manager at 5 hours) + (Senior
Systems Analyst at 5 hours) + (Systems Analyst at 5 hours) +
(Attorney at 2 hours) + (Assistant General Counsel at 2 hours).
    \3640\ $200 = ($400 per hour rate for outside legal services) x
(0.5 hours). The Commission based this estimate on the assumption
that the assessment would require approximately one-fifth the effort
of review by outside counsel as the document required by Rule 613(i)
regarding the expansion of the CAT to other securities because the
Commission believes the assessment is not as comprehensive as the
expansion document since it is limited to clock synchronization
standards. See Section VI.D.1.e., supra.
    \3641\ 399 initial internal burden hours = (19 initial, one-time
burden hours) x (21 Participants).
    \3642\ $4,200 = (21 Participants) x ($400 per hour rate for
outside legal services) x (0.5 hours).
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c. Coordinated Surveillance Report
    Section 6.6(a)(iii) of the CAT NMS Plan now requires the
Participants to submit a written report detailing the Participants'
consideration of coordinated surveillance (e.g., entering into Rule
17d-2 agreements or regulatory services agreements), within 12 months
of effectiveness of the Plan.
    The Commission preliminarily estimates that it would take each
Participant approximately 85.71 initial burden hours of internal legal,
compliance, business operations, and information technology staff time
to prepare and submit the report.\3643\ The

Commission preliminarily estimates that on average, each Participant
would outsource 2.5 hours of legal time to assist in the drafting and
review of the report, for an initial, one-time external cost of
approximately $1,000.\3644\ Therefore, the Commission preliminarily
estimates that the initial, one-time burden of preparing and submitting
the report would be 85.71 initial, one-time burden hours per
Participant plus $1,000 of external costs for outsourced legal counsel
per Participant, for an estimated aggregate initial, one-time burden of
1,799.91 hours \3645\ and an estimated aggregate initial, one-time
external cost of $21,000.\3646\
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    \3643\ The Commission calculates the total estimated burden
hours based on a similar formulation used for calculating the total
estimated burden hours of Rule 613(i)'s requirement for a document
addressing expansion of the CAT to other securities. See Section
VI.D.1.e., supra. The Commission assumes that the preparation of the
report would be approximately one-half as burdensome as the document
required by Rule 613(i). Because the Commission believes that the
report would be half as burdensome as the document required by Rule
613(i), the Commission believes that all of the Participants would
need 1 FTE for the report. (1 FTE) x (1,800 working hours per year)
= 1,800 initial, one-time burden hours per year for all of the
Participants. (1,800 burden hours per year)/(21 Participants) =
85.71 initial, one-time burden hours per Participant for preparation
and submission of the report.
    \3644\ $1,000 = ($400 per hour rate for outside legal services)
x (2.5 hours). The Commission based this estimate on the assumption
that the report would require approximately one-tenth the effort of
drafting by outside counsel as the document required by Rule 613(i)
regarding the expansion of the CAT to other securities. See Section
VI.D.1.e., supra.
    \3645\ 1,799.91 initial, one-time burden hours = (85.71 initial,
one-time burden hours) x (21 Participants).
    \3646\ $21,000 = (21 Participants) x ($400 per hour rate for
outside legal services) x (2.5 hours).
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d. Assessment of Industry Member Bulk Access to Reported Data
    Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to
provide a written report discussing the feasibility, benefits, and
risks of allowing an Industry Member to bulk download the Raw Data it
submitted to the Central Repository, within 24 months of effectiveness
of the Plan.
    The Commission preliminarily estimates that it would take each
Participant approximately 15 initial, one-time burden hours of internal
legal, compliance, business operations, and information technology
staff time to prepare and submit the assessment.\3647\ The Commission
preliminarily estimates that on average, each Participant would
outsource five hours of legal time to assist in the preparation and
review of the assessment, for an initial, one-time external cost of
approximately $2,000.\3648\ Therefore, the Commission preliminarily
estimates that the initial one-time burden of submitting a written
assessment would be 15 initial burden hours per SRO plus $2,000 of
external costs for outsourced legal counsel per Participant, for an
estimated aggregate initial burden of approximately 315 hours \3649\
and an estimated aggregate initial external cost of $42,000.\3650\
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    \3647\ The Commission estimates that 15 internal burden hours =
(Computer Operations Department Manager at 2 hours) + (Senior
Database Administrator at 5 hours) + (Senior Systems Analyst at 2
hours) + (Systems Analyst at 2 hours) + (Attorney at 2 hours) +
(Assistant General Counsel at 2 hours).
    \3648\ $2,000 = ($400 per hour rate for outside legal services)
x (5 hours). The Commission is basing this estimate on the
assumption that the assessment would require approximately twice the
effort of drafting by outside counsel as the document required by
Rule 613(i) regarding the expansion of the CAT to other securities.
The Commission attributes this difference to ensuring that any
potential security issues regarding industry bulk access of data are
sufficiently reviewed and addressed. See Section VI.D.1.e., supra.
    \3649\ 315 initial one-time internal burden hours = (15 initial,
one-time burden hours per Participant) x (21 Participants).
    \3650\ $42,000 = (21 Participants) x ($400 per hour rate for
outside legal services) x (5 hours).
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e. Assessment of Errors in Customer Information Fields
    Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to
submit a written assessment of errors in the customer information
submitted to the Central Repository and whether to prioritize the
correction of certain data fields over others, within 36 months of
effectiveness of the Plan.
    The Commission preliminarily estimates that it would take each
Participant approximately 24 initial, one-time burden hours of internal
legal, compliance, and information technology staff time to prepare and
submit the assessment of errors.\3651\ The Commission estimates that on
average, each Participant would outsource 1.25 hours of legal time to
assist in the review of the assessment, for an initial, one-time
external cost of approximately $500.\3652\ Therefore, the Commission
now preliminarily estimates that the initial, one-time burden of
preparing and submitting a written assessment would be 24 initial, one-
time burden hours per SRO plus $500 of external costs for outsourced
legal counsel per Participant, for an estimated aggregate initial, one-
time burden of approximately 504 hours \3653\ and an estimated
aggregate initial, one-time external cost of $10,500.\3654\
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    \3651\ The Commission estimates that 24 internal burden hours =
(Computer Operations Department Manager at 3 hours) + (Senior
Database Administrator at 4 hours) + (Senior Systems Analyst at 2
hours) + (Systems Analyst at 2 hours) + (Compliance Attorney at 5
hours) + (Attorney at 4 hours) + (Assistant General Counsel at 4
hours).
    \3652\ The Commission calculated the total estimated external
cost based on the revised burden hour estimate for the written
assessment of the operation of the CAT. See Section VI.D.1.f.b,
supra. The Commission assumes that the preparation and submission of
the error assessment would cost approximately half as much as the
revised written assessment. The revised written assessment estimate
provides that each Participant would outsource 2.5 hours of legal
time to assist in the review of the assessment, for an external cost
of approximately $1,000. The Commission estimates that each
Participant would outsource approximately 1.25 hours of legal time,
for an initial, one-time external cost of $500 (1.25 hours x $400
per hour rate for outside legal services) to assist in drafting the
error assessment.
    \3653\ 504 initial, one-time burden hours = (24 initial, one-
time burden hours per Participant) x (21 Participants).
    \3654\ $10,500 = (21 Participants) x ($400 per hour rate for
outside legal services) x (1.25 hours).
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f. Report on Impact of Tiered Fees on Market Liquidity
    Section 6.6(a)(vi) of the CAT NMS Plan now requires the
Participants to submit a written report to study the impact of tiered-
fees on market liquidity, including an analysis of the impact of the
tiered-fee structure on Industry Members' provision of liquidity,
within 36 months of effectiveness of the Plan.
    The Commission preliminarily estimates that it would take each
Participant approximately 21.43 initial, one-time burden hours of
internal legal and business operations staff time to prepare and submit
the report studying the impact of tiered fees on market
liquidity.\3655\ The Commission also preliminarily estimates that on
average, each Participant would outsource 0.5 hours of legal time to
assist in drafting the report, for an initial, one-time external cost
of approximately $200.\3656\ Therefore, the Commission now
preliminarily estimates that the initial, one-time burden of preparing
and submitting the report studying the impact of tiered fees on market
liquidity would be 21.43 initial, one-time burden hours per Participant
plus $200 of external costs for outsourced legal counsel per
Participant, for an estimated

aggregate initial, one-time burden of approximately 450 hours \3657\
and an estimated aggregate initial, one-time external cost of
$4,200.\3658\
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    \3655\ The Commission calculated the total estimated burden
hours based on a similar formulation used for calculating the total
estimated burden hours of Rule 613(i)'s requirement for a document
addressing expansion of the CAT to other securities. See Section
VI.D.1.e., supra. The Commission assumes that the preparation of the
assessment would be approximately one-eighth as burdensome as the
document required by Rule 613(i). As noted in note 3394, to estimate
the Rule 613(i) burden, the Commission is applying the internal
burden estimate provided in the CAT NMS Plan for Plan development
over a 6-month period, and dividing the result in half. See CAT NMS
Plan, supra note 5, at Appendix C, Section B.7(b)(iii). 0.667 FTEs
required for all Participants per month to develop the CAT NMS Plan
= (20 FTEs/30 months). 0.667 FTEs x 6 months = 4 FTEs. 4 FTEs/2 = 2
FTEs needed for all of the Participants to create and submit the
Rule 613(i) document. (2 FTEs) x (\1/8\) = 0.25 FTE to prepare and
submit the report studying the impact of tiered fees on market
liquidity. (0.25 FTE x 1,800 working hours per year) = 450 initial,
one-time burden hours for all of the Participants to review and
comment on the written assessment. (450 burden hours/21
Participants) = 21.43 initial, one-time burden hours per Participant
to prepare and submit the report.
    \3656\ $200 = ($400 per hour rate for outside legal services) x
(0. 5 hours).
    \3657\ 450 initial, one-time burden hours = (21.43 initial, one-
time burden hours) x (21 Participants).
    \3658\ $4,200 = (21 Participants) x ($400 per hour rate for
outside legal services) x (0.5 hours).
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g. Assessment of Material Systems Change on Error Rate
    Section 6.6(a)(vii) of the CAT NMS Plan requires a written
assessment of the projected impact of any Material Systems Change on
the Maximum Error Rate, prior to the implementation of any Material
Systems Change.
    The Commission preliminarily estimates that the CAT may have four
Material Systems Changes per year. Based on this estimate, the
Commission preliminarily estimates that each Participant would incur
5.95 \3659\ burden hours to prepare and submit each assessment, or 23.8
annual burden hours per year,\3660\ for an aggregate, ongoing estimate
of 125 burden hours per report,\3661\ or an aggregate ongoing estimate
of 500 burden hours per year.\3662\
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    \3659\ This estimate is based on the quarterly material system
change reports required under Rule 1003(a)(1) of Regulation SCI. The
Commission estimated that each SCI entity would incur a burden of
125 hours to comply with the quarterly report on material changes to
SCI systems required under Rule 1003(a)(1) (7.5 hours by an
Attorney, 7.5 hours by a Compliance Manager, 5 hours by a Chief
Compliance Officer, 30 hours by a Senior Business Analyst, and 75
hours by a Senior Systems Analyst). See Regulation Systems
Compliance and Integrity, Securities Exchange Act Release No. 73639
(December 5, 2014), 79 FR 72251, at 72390, n.1656. Because the CAT
is an SCI System of the Participants, the Commission is assuming for
its estimates that each Participant would incur an equal portion of
the 125 burden hours per report.
    \3660\ The Commission estimates that there would be four
Material System Changes per year. 5.95 burden hours per report x 4
reports per year = 23.8 annual burden hours per year.
    \3661\ (5.95 burden hours per report) x 21 Participants = 125
burden hours per report.
    \3662\ (125 burden hours) x (4 reports per year) = 500 annual
burden hours.
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h. Financial Statements
    Section 9.2 of the CAT NMS Plan now requires that the CAT LLC
financials be (i) in compliance with GAAP, (ii) be audited by an
independent public accounting firm, and (iii) be made publicly
available. The Commission preliminarily estimates that each Participant
would incur an annual external cost of $3,095.24 \3663\ associated with
this requirement, for an aggregate annual, ongoing external cost of
$65,000 to the Participants.\3664\
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    \3663\ ($65,000 annual, external cost)/( 21 Participants) =
$3,095.24 per Participant. See supra note 2503 (explaining the
source of the $65,000 estimate, stating that the Commission drew
this estimate from a recent Commission adopting release and an
industry report); see also Section V.F.1.b., supra.
    \3664\ See supra note 2503 (explaining the source of the $65,000
estimate); see also Section V.F.1.b., supra.
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i. Background Checks
    Section 6.1(g) of the CAT NMS Plan now requires each Participant to
conduct background checks of its employees and contractors that will
use the CAT System.\3665\ The Commission preliminarily estimates that
this requirement will impact approximately 1,500 users.\3666\ The
Commission preliminarily estimates that each Participant would need to
have background checks of approximately 71 users.\3667\ For its
estimates, the Commission is assuming that these would be background
checks using fingerprints submitted to the Attorney General of the
United States for identification and processing.\3668\ The Commission
preliminarily estimates that it would take approximately 15 minutes
\3669\ to create and submit each fingerprint card.\3670\ The total
reporting burden per Participant is therefore preliminarily estimated
to be 17.75 initial, one-time burden hours,\3671\ for an aggregate,
initial burden of 374.01 hours.\3672\ The Commission preliminarily
estimates that the total initial external cost per Participant would be
$2,603.04,\3673\ for an aggregate, initial external cost of
$54,987.45.\3674\
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    \3665\ The Commission notes that Section 17(f)(2) of the
Exchange Act already mandates that each national securities exchange
and national securities association require each of its partners,
directors, officers and employees be fingerprinted and such
fingerprints to be submitted to the Attorney General of the United
States for identification and appropriate processing. 15 U.S.C.
78q(f)(2).
    \3666\ This number is based on conversations with Participants.
    \3667\ 71.42 users per Participant = (1,500 users)/(21
Participants).
    \3668\ The Commission is basing this assumption on the
requirements of Section 17(f)(2). 15 U.S.C. 78q(f)(2).
    \3669\ This is based on the per respondent burden in Extension
of Rule 17f-2, SEC File No. 270-35, OMB Control No. 3235-0029, 79 FR
42563 (July 22, 2014).
    \3670\ The Commission is assuming that this would be a burden of
15 minutes for a Compliance Manager per fingerprint card.
    \3671\ 17.81 burden hours = (Compliance Manager at 15 minutes) x
(71.42 users).
    \3672\ 374.01 = (17.75 initial one-time burden hours) x (21
Participants).
    \3673\ 71.42 x 45% hard copy fingerprinting = 32.14 users. 71 x
55% electronic fingerprinting = 39.28 users. (32.14 hard copy
fingerprinting users) x ($44.50 per hard copy fingerprint) =
$1,430.23 for hard copy fingerprinting users per Participant. (39.28
electronic fingerprinting users) x ($30.25 per electronic
fingerprint) = $1,188.22 for electronic fingerprint users per
Participant. $1,430.23 + $1,188.22 = $2,618.45 per Participant in
initial external costs for fingerprinting.
    \3674\ $54,987.45 = ($2,618.45 per Participant) x (21
Participants).
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    The Commission preliminarily estimates that the ongoing internal
burden hours for each Participant would be approximately 4.26 annual
burden hours,\3675\ for an aggregate annual burden hour amount of 89.51
burden hours.\3676\ The Commission also preliminarily estimates that
the ongoing external cost to be incurred by each Participant would be
approximately $625.07,\3677\ for an aggregate annual external cost of
$13,126.37.\3678\
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    \3675\ The Commission assumes that the finance industry has a
rate of 23.87% turnover per year, based on a monthly rate for both
employment separations and hires of 1.8% for the finance and
insurance industry in September 2016. See http://www.bls.gov/news.release/pdf/jolts.pdf (news release from the Bureau of Labor
Statistics, dated November 8, 2016). The Commission preliminarily
estimates that the Participants will have to annually conduct
background checks of 23.87% of the 1,500 users, or 358.05 users per
year. (358.05 users)/(21 Participants) = 17.05 users that will need
to be subject to background checks on an annual basis. Based on this
estimate, the Commission estimates that each Participant would incur
a burden of 4.26 ongoing annual burden hours = (Compliance Manager
at 15 minutes) x (17.05 users).
    \3676\ 89.51 annual ongoing burden hours = (4.26 ongoing annual
burden hours per Participant) x (21 Participants).
    \3677\ See supra note 3675. Based on the Commission's estimate
that 17.05 users will need to be subject to background checks
annually, the Commission estimates that 45% of the 17.05 users would
submit hard copy fingerprints and 55% of the 17.05 users would
submit electronic fingerprints to conduct their background checks.
45% of 17.05 = 7.67 users that would submit hard copy fingerprints.
55% of 17.05 = 9.38 users that would submit electronic fingerprints.
(7.67 hard copy fingerprinting users) x ($44.50 per hard copy
fingerprint) = $341.32 for hard copy fingerprinting users per
Participant. (9.38 electronic fingerprinting users) x ($30.25 per
electronic fingerprint) = $283.75 for electronic fingerprint users
per Participant. $341.32 + $283.75 = $625.07 per Participant in
initial external costs for fingerprinting.
    \3678\ ($625.07 per Participant in annual, ongoing external
costs) x (21 Participants) = $13,126.37 to conduct a fingerprint-
based background check of the users.
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2. Request for Comment
    Pursuant to 44 U.S.C. 3506(c)(2)(A), the Commission solicits
comments on the ``CAT NMS Plan Reporting and Disclosure Requirements''
collection of information to: