[Federal Register Volume 86, Number 152 (Wednesday, August 11, 2021)]
[Notices]
[Pages 44142-44225]
[FR Doc No: 2021-17113]

Vol. 86

Wednesday,

No. 152

August 11, 2021

Part II

Securities and Exchange Commission

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Joint Industry Plan; Order Approving, as Modified, a National Market
System Plan Regarding Consolidated Equity Market Data August 6, 2021.;
Notice

Federal Register / Vol. 86 , No. 152 / Wednesday, August 11, 2021 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-92586; File No. 4-757]

Joint Industry Plan; Order Approving, as Modified, a National
Market System Plan Regarding Consolidated Equity Market Data

August 6, 2021.

I. Introduction

    On August 11, 2020, pursuant to Section 11A of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 608 of Regulation NMS
thereunder,\2\ Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe
EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, Inc.,
Investors Exchange LLC (``IEX''), Long Term Stock Exchange, Inc.
(``LTSE''), MEMX LLC (``MEMX''), Nasdaq BX, Inc., Nasdaq ISE, LLC,
Nasdaq PHLX LLC, Nasdaq Stock Market LLC (``Nasdaq''), New York Stock
Exchange LLC (``NYSE''), NYSE American LLC, NYSE Arca, Inc., NYSE
Chicago, Inc., NYSE National, Inc., and Financial Industry Regulatory
Authority, Inc. (``FINRA'') (collectively, the ``SROs'' or
``Participants'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') a proposed new national market system plan
governing the public dissemination of real-time consolidated equity
market data for national market system (``NMS'') stocks (the ``CT Plan
or ``Plan''). The CT Plan was published for comment in the Federal
Register on October 13, 2020.\3\
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ See Notice of Filing of a National Market System Plan
Regarding Consolidated Equity Market Data, Securities Exchange Act
Release No. 90096 (Oct. 6, 2020), 85 FR 64565 (Oct. 13, 2020)
(``Notice'').
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    On January 11, 2021, the Commission instituted proceedings, under
Rule 608(b)(2)(i) of Regulation NMS,\4\ to determine whether to approve
the CT Plan, disapprove the CT Plan, or approve the CT Plan with any
changes or subject to any conditions the Commission deems necessary or
appropriate after considering public comment.\5\ On April 8, 2021, the
Commission extended the deadline for Commission action on the CT Plan
and designated June 10, 2021, as the new date by which the Commission
would be required to take action.\6\ On June 9, 2021, the Commission
further extended the deadline for Commission action on the CT Plan and
designated August 9, 2021, as the date by which the Commission would be
required to take action.\7\
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    \4\ 17 CFR 242.608(b)(2)(i).
    \5\ See Order Instituting Proceedings to Determine Whether to
Approve or Disapprove a National Market System Plan Regarding
Consolidated Equity Market Data, Securities Exchange Act Release No.
90885 (Jan. 11, 2021), 86 FR 4142 (Jan. 15, 2021) (File No. 4-757)
(``Order Instituting Proceedings''). Comments received in response
to the Notice and Order Instituting Proceedings can be found on the
Commission's website at https://www.sec.gov/comments/4-757/4-757.htm.
    \6\ See Securities Exchange Act Release No. 91504 (Apr. 8,
2021), 86 FR 19667 (Apr. 14, 2021).
    \7\ See Securities Exchange Act Release No. 92130 (June 9,
2021), 86 FR 31543 (June 14, 2021).
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    This Order approves the CT Plan, with modifications that are
described in detail below. The Commission concludes that the CT Plan,
as modified, is necessary or appropriate in the public interest, for
the protection of investors and the maintenance of fair and orderly
markets, to remove impediments to, and perfect the mechanism of a
national market system, or is otherwise in furtherance of the purposes
of the Act. A copy of the CT Plan, marked to reflect the modifications
the Commission has made, is Attachment A to this Order.

II. Discussion and Commission Findings

A. Background

    On May 6, 2020, the Commission ordered the SROs to act jointly in
developing and filing with the Commission a proposed new national
market system plan to govern the public dissemination of real-time,
consolidated equity market data for NMS stocks (``Governance Order'')
\8\ to replace the existing equity data plans.\9\ The Commission sought
to address with the Governance Order, among other things, the inherent
conflicts of interest between the self-regulatory organizations' role
in collecting and disseminating consolidated equity market data and
their interests in selling proprietary data products. As the Commission
stated in the Governance Order, since the adoption of Regulation NMS in
2005,
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    \8\ See Order Directing the Exchanges and the Financial Industry
Regulatory Authority to Submit a New National Market System Plan
Regarding Consolidated Equity Market Data, Securities Exchange Act
Release No. 88827 (May 6, 2020), 85 FR 28702 (May 13, 2020) (File
No. 4-757).
    \9\ The three equity data plans that currently govern the
collection, consolidation, processing, and dissemination of SIP data
are (1) the Consolidated Tape Association Plan (``CTA Plan''), (2)
the Consolidated Quotation Plan (``CQ Plan''), and (3) the Joint
Self-Regulatory Organization Plan Governing the Collection,
Consolidation, and Dissemination of Quotation and Transaction
Information for Nasdaq-Listed Securities Traded on Exchanges on an
Unlisted Trading Privileges Basis (``UTP Plan'') (collectively, the
``Equity Data Plans''). See Governance Order, supra note 8, 85 FR at
28703 & n.34.

developments in technology and changes in the equities markets have
heightened an inherent conflict of interest between the
Participants' collective responsibilities in overseeing the Equity
Data Plans and their individual interests in maximizing the
viability of proprietary data products that they sell to market
participants. This conflict of interest, combined with the
concentration of voting power in the Equity Data Plans among a few
large ``exchange groups''--multiple exchanges operating under one
corporate umbrella--has contributed to significant concerns
regarding whether the consolidated feeds meet the purposes for them
set out by Congress and by the Commission in adopting the national
market system. Additionally, the Commission believes that the
continued existence of three separate NMS plans for equity market
data creates inefficiencies and unnecessarily burdens ongoing
improvements in the provision of equity market data to market
participants. Addressing the issues with the current governance
structure of the Equity Data Plans . . . is a key step in responding
to broader concerns about the consolidated data feeds.\10\
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    \10\ See Governance Order, supra note 8, 85 FR at 28702.

    Moreover, as stated in the Governance Order, ``[t]he Commission
believes that the demutualization of the exchanges and the
proliferation of proprietary exchange data products have heightened the
conflicts between the SROs' business interests in proprietary data
offerings and their obligations as SROs under the national market
system to ensure prompt, accurate, reliable, and fair dissemination of
core data through the jointly administered Equity Data Plans.'' \11\
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    \11\ See id. at 28704.
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    Thus, the Commission determined that the current governance
structure of the existing Equity Data Plans is ``inadequate to respond
to changes in the market and in the ownership of exchanges, and to the
evolving needs of investors and other market participants,'' \12\ and
the Commission ordered the SROs to develop and file with the Commission
a proposed new NMS plan regarding equity market data with a set of
specified governance provisions designed to address the issues
identified by the Commission,\13\ and to ensure the ``prompt, accurate,
reliable, and fair collection, processing, distribution, and
publication of information with respect to quotations for and
transactions in such securities and the fairness and usefulness of the
form and content of such information.'' \14\
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    \12\ Id. at 28702.
    \13\ See id. at 28729-31.
    \14\ 15 U.S.C. 78k-1(c)(1)(B).
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    The Commission also acknowledged in the Governance Order that the
SROs, ``as the parties that have been operating the NMS plans, can
provide unique

insight in formulating the specific terms and provisions'' of the new
NMS plan for consolidated equity market data.\15\ Accordingly, the
Governance Order did not dictate all of the specific terms of the new
NMS plan and contemplated that the operational and other terms of the
plan not directed by the Governance Order would be proposed by the SROs
and considered by the Commission after public comment.\16\ The CT Plan
filed by the SROs includes both provisions directed by the Commission
in the Governance Order and other provisions that have been proposed by
the SROs.
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    \15\ Governance Order, supra note 8, 85 FR at 28711.
    \16\ See id. at 28705, 28718 n.244.
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    Below, this Order first addresses the threshold issue of the
Commission's authority to modify the CT Plan proposed by the SROs, and
then it separately addresses each of the proposed provisions of the
Plan, discussing the comments received and explaining the
modifications, if any, that the Commission is making.

B. The Commission's Authority To Modify the CT Plan

    As noted above, the Commission is modifying the CT Plan proposed by
the SROs. Several commenters argued that, before modifying the CT Plan,
the Commission should publish notice for public comment of the specific
changes it proposes. One commenter urges the Commission not to make
substantial modifications to the CT Plan in an order purporting to
approve the plan without providing the opportunity for public comment,
asserting that public comment is required by the Administrative
Procedure Act (``APA'').\17\ One commenter asserts that the Notice
provides an insufficient opportunity for comment, arguing that the
Commission has not stated its position regarding any of the 62 separate
topics of interest identified in the Notice or proposed any specific
textual changes upon which the SROs and other persons can meaningfully
comment.\18\ This commenter further argues that this approach does not
comply with notice and comment obligations under the Act, Rule 608, or
the APA.\19\
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    \17\ See Letter from Patrick Sexton, EVP, General Counsel &
Corporate Secretary, Cboe Global Markets, Inc. (Nov. 12, 2020)
(``Cboe Letter''), at 9. This commenter argues that any changes to
the governance of the SIP operating committees should be made
through amendments to the current plans. See id. at 6 n.13. As the
Commission explained in the Governance Order, one of its goals was
to reduce redundancies, inefficiencies, and inconsistencies among
the three existing Equity Data Plans by replacing them with a new,
single plan. See Governance Order, supra note 8, 85 FR at 28710.
    \18\ See Letter from Elizabeth K. King, Chief Regulatory
Officer, ICE, General Counsel and Corporate Secretary, NYSE (Nov.
16, 2020) (``NYSE Letter I''), at 5, 32.
    \19\ See NYSE Letter I, supra note 18, at 32. This commenter
also generally asserts that the Commission cannot make a finding
that the CT Plan is necessary or appropriate in the public interest,
for the protection of investors and the maintenance of fair and
orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system, or otherwise in furtherance
of the purposes of the Act. See Letter from Elizabeth K. King, Chief
Regulatory Officer, ICE, General Counsel and Corporate Secretary,
NYSE (Feb. 4, 2021) (``NYSE Letter II''), at 2. As explained
throughout this Order, the Commission disagrees and finds that, as
modified, the CT Plan meets these standards.
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    Another commenter also asserts that, if the Commission determines
to approve the CT Plan with modifications, it should first publish the
exact text of its proposed amendments and seek comment on them.\20\
This commenter argues that the need to publish proposed modifications
for comment is evidenced by the ``numerous errors and potential
unintended consequences visited on the current Equity Data Plans by the
Commission's hasty issuance'' of the conflicts and confidentiality
orders.\21\ This commenter argues that if the Commission does not
publish the specific proposed modifications of the CT Plan, the SROs
and other interested persons will be ``deprived of the opportunity to
comment that is afforded them by the Administrative Procedure Act.''
\22\
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    \20\ See Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq (Nov. 12, 2020) (``Nasdaq Letter I''),
at 3.
    \21\ Id.
    \22\ Id. at 7.
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    The Commission does not agree that it is required to publish notice
of specific proposed plan language in order to modify a proposed NMS
plan. Under Rule 608, the Commission can approve a proposed NMS plan
``with such changes or subject to such conditions as the Commission may
deem necessary or appropriate, if it finds that such plan . . . is
necessary or appropriate in the public interest, for the protection of
investors and the maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a national market
system, or otherwise in furtherance of the purposes of the Act.'' \23\
As set forth below, the Commission finds that each of its modifications
of the CT Plan is necessary or appropriate. Moreover, the Commission
asked extensive and detailed questions in the Notice that encompass
each of the areas of the Plan the Commission is modifying and provided
an opportunity for the public to comment on each of these topics as
well as the Plan as a whole. As discussed throughout this Order, the
Commission has carefully considered the comments received in response
to these questions, as well as all other comments received, before
finding that each of the modifications made is necessary or appropriate
in order to sufficiently address the core problem identified in the
Governance Order.\24\
    The Commission believes that this process has provided the public
sufficient notice of, and an opportunity to comment on, the areas of
modification and it was not necessary to provide a second round of
comment on the specific language of the modifications approved in this
Order. And the Commission finds that, as modified, the CT Plan is
necessary or appropriate in the public interest, for the protection of
investors and the maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a national market
system.\25\
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    \23\ 17 CFR 242.608(b)(2).
    \24\ See CSX Transp. v. Surface Transp. Bd., 584 F.3d 1076, 1081
(D.C. Cir. 2009); City of Portland v. EPA, 507 F.3d 706, 715 (D.C.
Cir. 2007).
    \25\ See 17 CFR 242.608(b)(2).
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C. The Provisions of the CT Plan

1. Recitals
    The Recitals of the CT Plan set forth the procedural history of the
CT Plan, the proposed schedule for implementation of the CT Plan, and
the SROs' acknowledgement of their regulatory obligations with respect
to the CT Plan. As discussed below, the Commission is modifying certain
of the Recitals with respect to the timeline for implementation of the
CT Plan, as well as the Recital of the regulatory obligations of the
SROs to the CT Plan.
(a) Implementation of the CT Plan
    Paragraphs (b) and (c) of the Recitals set forth the implementation
schedule for the CT Plan that the SROs have proposed. Paragraph (b) of
the Recitals defines the ``Effective Date'' of the CT Plan as the later
of the date that the Commission has approved the CT Plan or the date
that the SROs have filed a certificate of formation with the State of
Delaware to form the Company as a limited liability company (``LLC'').
Paragraph (c) of the Recitals provides that the CT Plan will become
operative as an NMS plan that governs the public dissemination of real-
time consolidated equity market data on the ``Operative Date,'' which
is defined as the first day of the month that is at least 90 days after
the latest of five specified tasks has been accomplished:

    (i) SRO Voting Representatives and Non-SRO Voting Representatives
of the Operating Committee have been selected;
    (ii) Fees have been established by the Operating Committee, are
effective as an amendment to the CT Plan pursuant to Rule 608 of
Regulation NMS, and are ready to be implemented;
    (iii) Agreements have been entered with the Processors currently
performing under the CQ Plan, CTA Plan, and UTP Plan;
    (iv) Agreements have been entered with an Administrator and all
required contracts with vendors and subscribers have been finalized and
systems to administer distributions and fees are in place; and
    (v) The Operating Committee and, if applicable, the Commission have
approved all policies and procedures that are necessary or appropriate.
    In the Notice, the Commission sought comment on whether the timing
provisions might result in undue delay in the effectiveness of the CT
Plan.\26\ The Commission asked whether the CT Plan should require that
the certificate of formation be filed within a certain period of time,
and whether 10 days would be an appropriate amount of time.\27\ The
Commission also asked several questions about the actions that would be
required to be taken before the CT Plan becomes operative.
Specifically, the Commission sought comment on, among other things,
whether the CT Plan should set deadlines for completion of each of the
requisite actions, whether the Operating Committee should be required
by the CT Plan to provide updates on the status of implementation, and,
if so, whether such updates should be made public.\28\ The Commission
also sought comment on whether the CT Plan should require that the
selection of the Operating Committee be the first action undertaken
after the Effective Date.\29\
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    \26\ See Notice, supra note 3, 85 FR at 64567 (Question 1).
    \27\ Id.
    \28\ See Notice, supra note 3, 85 FR at 64567 (Question 2).
    \29\ Id.
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    In response to the Notice, the Commission received a number of
comments supporting changes to the CT Plan to establish specified
timeframes within which the requisite actions must occur for the CT
Plan to be effective or operative.\30\ These commenters express concern
that the absence of specified deadlines in the CT Plan will cause the
SROs to unduly delay its implementation.\31\ Specifically, one
commenter argues that it would be ``nonsensical to rely on the SROs,
many of whom have no incentive to change the current governance
structure, to take actions on a timely basis to ensure the
implementation of the Plan.'' \32\ Another commenter acknowledges that
the SROs will have significant control and influence over how and when
the necessary steps to implement the CT Plan are completed and asserts
that, without a reasonable deadline or target date for completion,
there is a ``significant risk'' that implementation will be delayed
indefinitely, undermining important public policy goals.\33\ Another
commenter similarly argues that the CT Plan fails to meet the core
objectives of the Commission's Governance Order because the required
number of steps would delay full implementation of the plan for an
indefinite period, possibly years.\34\
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    \30\ See, e.g., Letter from Ellen Greene, Managing Director,
Equity and Options Market Structure, SIFMA (Nov. 12, 2020) (``SIFMA
Letter I''), at 3; Letter from Ellen Greene, Managing Director,
Equity and Options Market Structure, SIFMA (Feb. 18, 2021) (``SIFMA
Letter II''), at 2; Letter from Michael Blasi, SVP, Enterprise
Infrastructure, and Krista Ryan, VP, Associate General Counsel,
Fidelity Investments (Nov. 12, 2020) (``Fidelity Letter''), at 2-3;
Letter from John Ramsay, Chief Market Policy Officer, IEX (Nov. 13,
2020) (``IEX Letter''), at 1-2; Letter from Rich Steiner, Head of
Client Advocacy and Market Innovation, RBC Capital Markets (Nov. 12,
2020) (``RBC Letter''), at 4; Letter from Thomas M. Merritt, Deputy
General Counsel, Virtu Financial, Inc. (Nov. 11, 2020) (``Virtu
Letter''), at 2; Letter from Jeffrey T. Brown, Senior Vice
President, Legislative and Regulatory Affairs, Charles Schwab & Co.,
Inc. (Nov. 12, 2020) (``Schwab Letter I''), at 2; Letter from
Jeffrey T. Brown, Senior Vice President, Legislative and Regulatory
Affairs, Charles Schwab & Co., Inc. (Feb. 11, 2021) (``Schwab Letter
II''), at 5; Letter from Joe Wald, Managing Director, Co-Head of
Electronic Trading, and Ray Ross, Managing Director, Co-Head of
Electronic Trading, BMO Capital Markets Group (Nov. 18, 2020) (``BMO
Letter I''), at 2-3; Letter from Joe Wald, Managing Director, Co-
Head of Electronic Trading, and Ray Ross, Managing Director, Co-Head
of Electronic Trading, BMO Capital Markets Group (Feb. 19, 2021)
(``BMO Letter II''), at 2; Letter from Anders Franzon, General
Counsel, MEMX (Feb. 5, 2021) (``MEMX Letter''), at 2-3; Letter from
Hubert De Jesus, Managing Director, Global Head of Market Structure
and Electronic Trading, and Samantha DeZur, Director, Global Public
Policy, BlackRock (Feb. 5, 2021) (``BlackRock Letter II''), at 2;
Letter from Jennifer W. Han, Managing Director & Counsel, Regulatory
Affairs, Managed Funds Association (Nov. 18, 2020) (``MFA Letter''),
at 4-5.
    \31\ See, e.g., IEX Letter, supra note 30, at 1; MFA Letter,
supra note 30, at 5; BMO Letter I, supra note 30, at 2; BMO Letter
II, supra note 30, at 2; Fidelity Letter, supra note 30, at 3;
Letter from Dorothy Donohue, Deputy General Counsel, Securities
Regulation, Investment Company Institute (Nov. 12, 2020) (``ICI
Letter I''), at 6-7; Letter from Dorothy Donohue, Deputy General
Counsel, Securities Regulation, Investment Company Institute (Feb.
5, 2021) (``ICI Letter II''), at 2; RBC Letter, supra note 30, at 3;
Letter from Kelvin To, Founder and President, Data Boiler
Technologies, LLC (Nov. 12, 2020) (``Data Boiler Letter I''), at 20.
    \32\ BMO Letter II, supra note 30, at 2.
    \33\ IEX Letter, supra note 30, at 1.
    \34\ See RBC Letter, supra note 30, at 3.
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    One commenter acknowledges that there will be ``some work'' in
implementing the CT Plan, but states that the lack of deadlines and the
number of conditions associated with the effective and operative dates
are ``very concerning.'' \35\ Another commenter recommends that the
Commission closely monitor implementation and potentially penalize the
SROs for unwarranted delays.\36\ One commenter points to the National
Market System Plan Governing the Consolidated Audit Trail (``CAT NMS
Plan'') as a cautionary tale resulting from a lack of deadlines or
accountability in meeting them,\37\ while another commenter favorably
promotes the CAT NMS Plan's use of target deadlines for critical
implementation deadlines, quarterly progress reports, and financial
incentives.\38\
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    \35\ SIFMA Letter I, supra note 30, at 3.
    \36\ See ICI Letter I, supra note 31, at 7; ICI Letter II, supra
note 31, at 2. This commenter urges the Commission to provide
financial incentives to the SROs either through fines or through not
allowing the SROs to collect SIP fees for some period of time. See
ICI Letter I, supra note 31, at 7.
    \37\ See Virtu Letter, supra note 30, at 2.
    \38\ See Fidelity Letter, supra note 30, at 3.
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    Two commenters recommend making the Effective Date of the CT Plan
the date of the Commission's approval order,\39\ without regard to the
proposed delay for the administrative step of filing the LLC agreement
with Delaware. One commenter does not express a view about the
propriety of a 10 day requirement, but recommends that the SROs be
required to file the LLC's certificate of formation with Delaware ``as
promptly as the Commission determines is practicable following
Commission approval'' of the plan.\40\ Another commenter anticipates no
difficulty with filing the certificate of formation as an LLC and
recommends ten business days as an appropriate timeframe.\41\
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    \39\ See SIFMA Letter I, supra note 30, at 3; SIFMA Letter II,
supra note 30, at 2; Virtu Letter, supra note 30, at 2.
    \40\ RBC Letter, supra note 30, at 3.
    \41\ See Fidelity Letter, supra note 30, at 2-3.
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    A number of commenters support imposing a one-year deadline for the
Operative Date for the CT Plan.\42\ One commenter suggests that a
deadline for implementation of one year from the date of Commission
approval of the CT Plan is reasonable and states that, if additional
time proves necessary, the

CT Plan can provide for obtaining an extension based on a showing of
good cause.\43\ One commenter states that, because the changes required
of the plan are ``primarily organizational rather than operational,'' a
period of no more than one year from the effective date to the
operational date would be reasonable.\44\ Another commenter supports a
one-year deadline for the completion of the necessary steps to fully
transition to operating under the CT Plan, subject to an extension only
for good cause shown.\45\ This commenter suggests that, immediately
upon approval of the CT Plan, the Operating Committee, including the
Non-SRO Voting Representatives, should be formed and begin meeting to
complete the remaining prerequisites, including the adoption of
fees.\46\ This commenter acknowledges the timing complexity of adopting
fees under the new CT Plan and selecting and onboarding a new
Administrator, emphasizing that the one year deadline is an ``ambitious
project'' that will require a commitment from both the SROs and
industry participants to ensure a smooth transition.\47\ Another
commenter also supports requiring the CT Plan to become operational
within one year and urges the Commission to finalize the proposal
expeditiously.\48\
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    \42\ See SIFMA Letter I, supra note 30, at 3; SIFMA Letter II,
supra note 30, at 2; Fidelity Letter, supra note 30, at 4; IEX
Letter, supra note 30, at 2; RBC Letter, supra note 30, at 4; Virtu
Letter, supra note 30, at 2; Schwab Letter I, supra note 30, at 2;
Schwab Letter II, supra note 30, at 5; BMO Letter I, supra note 30,
at 2; MEMX Letter, supra note 30, at 2-3; BlackRock Letter II, supra
note 30, at 2.
    \43\ See IEX Letter, supra note 30, at 2.
    \44\ RBC Letter, supra note 30, at 4.
    \45\ See MEMX Letter, supra note 30, at 3.
    \46\ See id.
    \47\ See id.
    \48\ See BlackRock Letter II, supra note 30, at 2.
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    Other commenters argue that there is no reasonable way to impose
deadlines on any part of the process.\49\ One of these commenters
expresses concern that the Commission is ``vastly underestimating'' the
amount of time needed to implement the new CT Plan, particularly given
the Commission's requirements with respect to an Administrator and a
new fee schedule.\50\ Another of these commenters argues that any
deadline the Commission sets at this point would be ``inherently
arbitrary'' and would do nothing to move the project forward,
cautioning that, ``rushing to complete an inherently complex project
may result in costly errors.'' \51\
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    \49\ See Nasdaq Letter I, supra note 20, at 10; Letter from
Erika Moore, Vice President and Corporate Secretary, Nasdaq (Feb. 5,
2021) (``Nasdaq Letter II''), at 2; NYSE Letter I, supra note 18, at
33; Cboe Letter, supra note 17, at 5.
    \50\ Cboe Letter, supra note 17, at 6.
    \51\ Nasdaq Letter I, supra note 20, at 11.
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    In highlighting the difficulty in specifying deadlines for
completing the Operative Date prerequisites, another commenter states
that, because neither the SROs nor the Commission has jurisdiction over
the individuals that constitute the Advisory Committee, any timeframes
imposed on the Advisory Committee members to select the Non-SRO Voting
Representatives would be unenforceable and the Operating Committee
cannot function until the Non-SRO Voting Representatives have been
selected.\52\ This commenter further emphasizes the complexity and
uncertainty of determining fees, selecting an independent Administrator
through a request-for-proposal (``RFP'') process, and negotiating new
contracts with processors, data vendors and subscribers.\53\ This
commenter states that because the RFP process is ``so specialized and
idiosyncratic,'' there is ``no way to reasonably impose time limits on
any part of that process, let alone a time limit for the entire process
overall.'' \54\
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    \52\ See NYSE Letter I, supra note 18, at 33.
    \53\ See id. at 33-35. This commenter further states that the
90-day period between the finalization of earlier actions and the
operational date is ``prudent'' and is the current industry standard
for announcing the implementation of changes to market data plans.
See id. at 35-36.
    \54\ NYSE Letter I, supra note 18, at 35. As examples, this
commenter points out that OPRA's process to select a processor took
two years even though OPRA ultimately decided to retain the same
processor and cites the CAT NMS Plan for the risk that a selected
administrator might be unable to perform the necessary functions,
requiring that the RFP process be repeated. See id.
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    Other commenters recommend that the CT Plan require a detailed
project plan with interim dates,\55\ and public progress reports.\56\
One of these commenters states that because implementation will be a
complex undertaking, it will be important for both the Commission and
outside stakeholders to have reasonable visibility into progress.\57\
Another of these commenters argues that the SROs should be required to
provide a detailed implementation plan with timeframes for each step
and the rationale for each timeframe.\58\ One of these commenters
states that it will be important for the CT Plan to require the
Operating Committee to provide periodic public updates on the status of
implementation.\59\ One commenter agrees, recommending that the CT Plan
set ``milestone dates while remaining flexible depending on progress.''
\60\ This commenter favors periodic public updates on implementation
from the Operating Committee.\61\
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    \55\ See Fidelity Letter, supra note 30, at 2-3; IEX Letter,
supra note 30, at 2.
    \56\ See Fidelity Letter, supra note 30, at 3; IEX Letter, supra
note 30, at 2; BMO Letter I, supra note 30, at 3; BMO Letter II,
supra note 30, at 2; ICI Letter I, supra note 31, at 7.
    \57\ See IEX Letter, supra note 30, at 2.
    \58\ See ICI Letter I, supra note 31, at 7.
    \59\ See BMO Letter I, supra note 30, at 3; BMO Letter II, supra
note 30, at 2.
    \60\ Data Boiler Letter I, supra note 31, at 20. For example,
this commenter argues against an overly prescriptive timeframe,
suggesting that the process for nomination and selection of Non-SRO
Voting Representatives should not take more than 90 days, with a 30-
day extension in case of an unprecedented event, such as a pandemic.
See id. at 28.
    \61\ See id. at 20.
---------------------------------------------------------------------------

    Additionally, two commenters suggest that the Commission should
``clarify'' that the fee schedules for the current Equity Data Plans
will remain in effect and apply to the CT Plan until the CT Plan
Operating Committee files a new schedule with the Commission and the
Commission approves that schedule.\62\
---------------------------------------------------------------------------

    \62\ SIFMA Letter I, supra note 30, at 3; IEX Letter, supra note
30, at 2.
---------------------------------------------------------------------------

    Finally, one commenter also asserts that the implementation of the
new CT Plan before the existing contracts between the Equity Data Plans
and the Administrators and Processors expire would constitute a Fifth
Amendment ``taking.'' \63\
---------------------------------------------------------------------------

    \63\ See Nasdaq Letter I, supra note 20, at 10-11.
---------------------------------------------------------------------------

    While the Commission recognizes the challenges associated with
completing the actions required for implementation of the CT Plan, the
Commission also believes that the SROs have the relevant expertise and
experience--both with respect to operating NMS plans generally and with
respect to the dissemination of equity market data specifically--to
implement the CT Plan. In particular, the Commission found in the
Governance Order that the SROs could provide ``unique insight in
formulating the terms and conditions of the New Consolidated Data
Plan,'' \64\ even as it also highlighted the inherent conflicts of
interest faced by SROs in the operation of the existing plans.\65\ The
Commission disagrees with the comment that it is ``vastly
underestimating'' the time needed to implement the CT Plan,\66\ and
instead believes, consistent with the views of other market
participants,\67\ that the SROs should be able to use their extensive
experience in operating the existing Equity Data Plans to complete the
specific actions needed to implement the CT Plan within the timeframes
specified below. Moreover, the Commission believes that fully
implementing the CT Plan within prescribed deadlines is important,
because implementation of the CT Plan is critical to reducing existing
redundancies, inefficiencies, and inconsistencies in the current Equity

Data Plans and to modernizing plan governance.\68\ Although one
commenter recommends that the CT Plan explicitly provide for obtaining
an extension based on a showing of good cause, in case good faith
efforts by the Operating Committee are nonetheless unable to meet one
or more of the specified deadlines,\69\ the Commission does not believe
that it is necessary or appropriate to add a provision to the CT Plan
regarding an extension of these deadlines. Further, the Commission does
not believe that it is necessary or appropriate to suggest at this time
how it might view a future request for an extension from the Operating
Committee or other affected parties.\70\
---------------------------------------------------------------------------

    \64\ Governance Order, supra note 8, 85 FR at 28711.
    \65\ See, e.g., id. at 28713.
    \66\ See Cboe Letter, supra note 17, at 6.
    \67\ See supra notes 42-48 and accompanying text.
    \68\ See Governance Order, supra note 8, 85 FR at 28703-05,
28711.
    \69\ See IEX Letter, supra note 30, at 2; see also MEMX Letter,
supra note 30, at 3 (supporting a one-year deadline with an
extension only for good cause shown).
    \70\ There are well-known mechanisms in existing law by which
affected parties make such requests. If such a request were made at
some point in the future, the Commission would decide whether to
grant or deny the relief sought under the facts and circumstances
applicable at that time.
---------------------------------------------------------------------------

    Additionally, the Commission disagrees with the commenter's
statement that, because neither the Commission nor the SROs have
jurisdiction over Non-SRO Voting Representatives, placing timeframes on
the selection of Non-SRO Voting Representatives by the existing
Advisory Committee of the Equity Data Plans will be unenforceable and
therefore futile.\71\ The Commission fully expects, based on the
widespread support among market participants for providing voting power
to non-SROs,\72\ that the Advisory Committee members will willingly
undertake the task of selecting Non-SRO Voting Representatives.
Moreover, the two-month deadline imposed on the selection of SRO and
Non-SRO Voting Representatives in this provision is consistent with the
timeframe set forth in the procedures proposed by the SROs in Section
4.2(b)(v) of the CT Plan for selection of Non-SRO Voting
Representatives, and there is considerable overlap between the
categories of market participants represented on the Advisory Committee
and the categories of market participants who would be Non-SRO Voting
Representatives.
---------------------------------------------------------------------------

    \71\ See NYSE Letter I, supra note 18, at 33.
    \72\ See, e.g., IEX Letter, supra note 30, at 2; ICI Letter II,
supra note 31, at 1; BMO Letter I, supra note 30, at 3; BMO Letter
II, supra note 30, at 2.
---------------------------------------------------------------------------

    Finally, the Commission disagrees with one commenter's statement
that the timing of implementation of the CT Plan prior to the
expiration of the existing contracts between the current Equity Data
Plans and the Administrators and Processors would constitute a
``taking'' without just compensation under the Fifth Amendment of the
U.S. Constitution.\73\ As the Commission stated in the Governance Order
in response to similar concerns previously expressed by the same
commenter,\74\ the commenter fails to demonstrate how the proposal
would ``impermissibly interfere with a protected property interest.''
\75\ Nor does the Commission anticipate any economic harm to the
processors of the current Equity Data Plans.\76\ And operation of the
Equity Data Plans is a ``fundamental component'' of the national market
system, which is itself highly regulated pursuant to the broad
authority provided the Commission by Congress.\77\ The Commission
continues to believe that the commenter's argument that the
implementation of the CT Plan would constitute a Fifth Amendment taking
lacks merit.
---------------------------------------------------------------------------

    \73\ See Nasdaq Letter I, supra note 20, at 10-11.
    \74\ See Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq (Feb. 28, 2020), at 13-14 (responding to
the Commission's Proposed Order, infra note 483); see also Nasdaq
Letter I, supra note 20, at 10-11.
    \75\ Governance Order, supra note 8, 85 FR at 28725, 28727.
    \76\ See id. at 28727.
    \77\ Id. at 28725.
---------------------------------------------------------------------------

    Accordingly, the Commission finds that, to facilitate the
implementation of the CT Plan on a timely basis, it is appropriate to
modify the CT Plan, as discussed below, to add specified deadlines to
paragraphs (b) and (c) of the Recitals of the CT Plan and to add new
paragraph (d) to the Recitals.
    First, with respect to the proposed definition of the Effective
Date of the CT Plan, set forth in paragraph (b) of the Recitals, the
Commission shares concerns raised by commenters about the uncertainty
of the timing associated with defining the Effective Date as the later
of the date of Commission approval or the SROs' filing of the required
certificate with the State of Delaware.\78\ The Commission agrees with
commenters that the act of filing the certificate of formation of the
LLC is administrative and can be accomplished expeditiously.\79\
Accordingly, the Commission is modifying paragraph (b) of the Recitals
of the CT Plan to define the Effective Date as the date of Commission
approval of the CT Plan as an NMS plan governing the public
dissemination of real-time consolidated market data for Eligible
Securities \80\ pursuant to Rule 608 of Regulation NMS.\81\ The
Commission finds that the modification of this provision is appropriate
because Commission approval of the CT Plan, as modified, will finalize
all of the terms of the CT Plan and because defining the Effective Date
in this way will support timely implementation of the CT Plan and
reduce the potential for unnecessary delay.
---------------------------------------------------------------------------

    \78\ See SIFMA Letter I, supra note 30, at 3; SIFMA Letter II,
supra note 30, at 2; Virtu Letter, supra note 30, at 2.
    \79\ See, e.g., Fidelity Letter, supra note 30, at 2-3.
    \80\ Section 1.1(w) of Article I of the proposed CT Plan defines
the term ``Eligible Securities'' as ``(i) any equity security, as
defined in Section 3(a)(11) of the Act, or (ii) a security that
trades like an equity security, in each case that is listed on a
national securities exchange.''
    \81\ 17 CFR 242.608.
---------------------------------------------------------------------------

    In addition, the Commission is modifying paragraph (b) of the
Recitals of the CT Plan to require that the documents needed to create
the LLC be filed by the SROs with the State of Delaware within 10
business days of the Effective Date. The Commission finds that this
modification is appropriate because, once the language of the CT Plan
as modified by the Commission is available to the SROs, 10 business
days is a sufficient period of time for the SROs to execute the
modified CT Plan and undertake the administrative step of filing the
necessary formation documents for the CT Plan LLC with the State of
Delaware.
    With respect to the proposed definition of the Operative Date, the
Commission agrees with commenters that the CT Plan should set forth a
date certain for the CT Plan to become operational and should also
specify deadlines for interim steps to be completed.\82\ The Commission
believes that the language of paragraph (c) of the Recitals--which
provides that the CT Plan will be operative on the first day of the
month that is at least 90 days after the specified actions--could serve
to unnecessarily delay implementation of the CT Plan because it fails
to impose deadlines that will help ensure the completion of the
requisite actions in a timely manner.\83\
---------------------------------------------------------------------------

    \82\ See SIFMA Letter I, supra note 30, at 3; SIFMA Letter II,
supra note 30, at 2; Fidelity Letter, supra note 30, at 4; IEX
Letter, supra note 30, at 2; RBC Letter, supra note 30, at 4; Virtu
Letter, supra note 30, at 2; Schwab Letter I, supra note 30, at 2;
Schwab Letter II, supra note 30, at 5; BMO Letter I, supra note 30,
at 2; MEMX Letter, supra note 30, at 2-3; BlackRock Letter II, supra
note 30, at 2.
    \83\ While one commenter states that the proposed 90-day testing
period is consistent with the current industry standard of
announcing changes to market data plans before implementation, see
NYSE Letter I, supra note 18, at 35-36, the Commission's concern is
not with the 90-day period itself, but with the lack of any
deadlines to determine when the 90-day period would begin. The
Commission believes that any such testing period should take place
within a prescribed period for implementation of the CT Plan, not
simply at the end of an indefinite period in which other preliminary
steps take place.

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

    In addition, the Commission shares the view of commenters,
particularly those with experience with the operation of the current
Equity Data Plans, that it is not unreasonable to require the CT Plan
to become operational within one year of the date of Commission
approval.\84\ The Commission further agrees that meeting these
deadlines is an ``ambitious project'' that will undoubtedly require a
commitment from both the SROs and other industry participants.\85\ As
discussed below, while implementation of the CT Plan would, among other
things, require selecting a new Administrator (which would in turn
require new contracts with vendors and subscribers, as well as new
billing systems) and would also require entering into new contracts
with the existing Processors, the Commission believes that the SROs
have the expertise and experience, with diligence and commitment, to
enable the Operating Committee of the CT Plan to complete all of the
required actions within one year while avoiding costly errors. Although
the CT Plan would be a new NMS plan, significant expertise and
experience would be directly transferrable from the operation of the
Equity Data Plans to the implementation of the CT Plan. Not only have
the SROs run the Equity Data Plans for decades, but the current
processors for the Equity Data Plan would, as proposed by the SROs, be
the processors for the CT Plan. Therefore, the Commission disagrees
that setting deadlines would be ``inherently arbitrary'' or ``may
result in costly errors.'' \86\ A number of market participants,
including market participants that have experience with the operation
of the current Equity Data Plans,\87\ have commented that it is
appropriate for the Commission to set deadlines for implementation of
the CT Plan and that the specific actions required to fully implement
the CT Plan, described below, can be accomplished within the timeframe
that the Commission is prescribing. The Commission agrees with these
commenters and believes, for the reasons discussed below, that the
prescribed timeframes are achievable and that costly errors can be
avoided. Therefore, the Commission is modifying paragraph (c) of the
Recitals to the CT Plan to require the LLC Agreement to become
operative as an NMS plan governing the public dissemination of real-
time consolidated equity market data for Eligible Securities within 12
months of the Effective Date. The Commission finds that the
modification to paragraph (c) of the Recitals of the CT Plan is
appropriate because it will create a certain and achievable date for
implementation and require the SROs to implement the CT Plan in a
timely manner for the benefit of all market participants.
---------------------------------------------------------------------------

    \84\ See IEX Letter, supra note 30, at 2; MEMX Letter, supra
note 30, at 2-3. See also SIFMA Letter I, supra note 30, at 3; SIFMA
Letter II, supra note 30, at 2; Fidelity Letter, supra note 30, at
4; RBC Letter, supra note 30, at 4; Virtu Letter, supra note 30, at
2; Schwab Letter I, supra note 30, at 2; Schwab Letter II, supra
note 30, at 5; BMO Letter I, supra note 30, at 2; BlackRock Letter
II, supra note 30, at 2.
    \85\ MEMX Letter, supra note 30, at 3.
    \86\ Nasdaq Letter I, supra note 20, at 11.
    \87\ See IEX Letter, supra note 30, at 2; MEMX Letter, supra
note 30, at 2-3. See also SIFMA Letter I, supra note 30, at 3; SIFMA
Letter II, supra note 30, at 2; Fidelity Letter, supra note 30, at
4; RBC Letter, supra note 30, at 4; Virtu Letter, supra note 30, at
2; Schwab Letter I, supra note 30, at 2; Schwab Letter II, supra
note 30, at 5; BMO Letter I, supra note 30, at 2; BlackRock Letter
II, supra note 30, at 2.
---------------------------------------------------------------------------

    Paragraph (c) of the Recitals of the CT Plan also sets forth the
five specified actions that must be completed before the Operative
Date. The Commission is concerned that the sequence for completion of
the required actions is not expressly clear from the CT Plan. If, for
example, certain actions required prior to the Operative Date were
taken before the selection of the entire Operating Committee, including
Non-SRO Voting Representatives, those initial decisions would be made
by the SROs alone, in a manner inconsistent with the Commission's
Governance Order.\88\
---------------------------------------------------------------------------

    \88\ See Governance Order, supra note 8, 85 FR at 28714-20.
---------------------------------------------------------------------------

    To address this uncertainty, the Commission is modifying paragraph
(c) of the Recitals by renumbering it as paragraph (d) and adding a
specific deadline for each of the required actions. The Commission has
modified renumbered paragraph (d) to add the following language: ``[i]n
support of ensuring that the CT Plan is fully operational by the
Operative Date, the following actions shall be completed within the
specified periods.'' As discussed below, the Commission is modifying
each of the requisite actions now set forth in subparagraphs (i)-(iv)
of renumbered paragraph (d) of the Recitals to add specificity. The new
language is intended to set forth the sequence for completion of the
required actions, as well as to prescribe deadlines for completion. In
addition, the Commission is adding new subparagraphs (v) and (vi) of
renumbered paragraph (d) of the Recitals to specify the obligations of
the Operating Committee. The Commission finds that the modifications to
renumbered paragraph (d) of the Recitals are appropriate because they
will provide clear timelines for the Operating Committee and greater
certainty for other industry participants and because they will
establish achievable objectives to facilitate CT Plan implementation.
    Specifically, the Commission is modifying subparagraph (i) of
renumbered paragraph (d) of the Recitals to provide that the SRO Voting
Representatives and Non-SRO Voting Representatives of the Operating
Committee must be determined pursuant to the requirements of Section
4.2 of Article IV of the CT Plan within two months of the Effective
Date. This timeframe is consistent with subparagraph (v) of Section
4.2(b) of Article IV of the CT Plan, which, as proposed by the SROs,
contemplates a process for selecting Non-SRO Voting Representatives
that could be completed within two months. In light of these provisions
of Section 4.2(b)(v) of the CT Plan, as well as the Commission's belief
that the Advisory Committee members have an incentive to facilitate
non-SROs having a vote on plan governance, the Commission believes that
the Advisory Committee of the current Equity Data Plans will proceed
promptly to select, pursuant to Section 4.2 of the CT Plan, the Non-SRO
Voting Representatives to serve on the Operating Committee. The
Commission also believes that the SROs, who have already selected their
representatives to the operating committees of the existing Equity Data
Plans, and who have extensive experience in doing so, should be able to
select their Voting Representatives to the CT Plan Operating Committee
within the timeframe provided. Accordingly, the Commission finds that
the modification to this provision is appropriate because it will
establish a reasonable timeframe for selecting the Non-SRO and SRO
Voting Representatives to form the Operating Committee--an
indispensable first step of the implementation process.
    The Commission is further modifying subparagraph (ii) of renumbered
paragraph (d) of the Recitals to provide that the Operating Committee
must file with the Commission pursuant to Rule 608 of Regulation NMS
\89\ an amendment to the CT Plan governing proposed fees with respect
to the existing exclusive SIP model \90\ within

four months of the Effective Date, which is two months after the
deadline for the formation of the Operating Committee. The Commission
believes that the four-month period to file a proposed CT Plan fee
schedule with the Commission is a reasonable and appropriate timeframe
for several reasons. First, given the importance of market data fees to
both SROs and other market participants, the Commission believes that
the determination of CT Plan fees will be a critical priority for both
SROs and Non-SRO Voting Representatives. Assessing fees to subscribers
for access to the SIP data is one of the fundamental responsibilities
of the Operating Committee and one of the issues most consequential to
both SROs and other market participants. Second, the Commission
believes that a number of persons selected to be members of the
Operating Committee are likely to have detailed and substantial pre-
existing knowledge and experience with the content and pricing of the
equity data products that are disseminated under the current
centralized SIP model. Third, the four-month period is a deadline
solely for filing the proposed fees with the Commission and not a
requirement that the fee schedule be approved by the Commission and
implemented within the four month period. Instead, the required fee
filing would commence the process for Commission consideration of the
proposed fees, which will include an opportunity for public comment.
Accordingly, the Commission finds that the modification to this
provision is appropriate because it provides sufficient time after the
formation of the Operating Committee for proposed fees to be discussed
by knowledgeable and experienced persons, agreed upon, and filed with
the Commission.
---------------------------------------------------------------------------

    \89\ 17 CFR 242.608.
    \90\ Several commenters express views with respect to the
interaction of the CT Plan with Commission Rule 614(e), the recently
adopted Market Data Infrastructure Rule. 17 CFR 242.614(e). One of
these commenters states, ``[t]he timely implementation of the CT
Plan would undoubtedly facilitate the success of any new market data
infrastructure regime and, at the very least, will be important to
ensure that, upon Commission approval, the implementation of any
such regime is not impeded.'' BMO Letter I, supra note 30, at 3.
Another commenter, pointing to the lack of analysis of the impact of
the Infrastructure rulemaking, suggests that the SROs acknowledge
that the CT Plan may need to be amended to accommodate the competing
consolidator model. See SIFMA Letter I, supra note 30, at 3. Other
commenters express the view that the two initiatives are
``inextricably intertwined.'' Nasdaq Letter I, supra note 20, at 34-
36 (incorporating its brief filed jointly with NYSE and CBOE); see
also NYSE Letter I, supra note 18, at 3. Because the existing
exclusive SIP model will continue to operate during the transition
to the competing consolidator model, the participation of Non-SRO
Voting Representatives in Operating Committee deliberations on the
fee filing required by subparagraph (ii) of renumbered paragraph (d)
of the Recitals would facilitate the determination of the fee
schedule that will be needed to commence consolidated equity market
data dissemination under the new CT Plan. In addition, the Non-SRO
Voting Representatives' participation would likely provide valuable
perspectives on fees that may serve as a reference point for, among
other things, future fees under the competing consolidator model.
---------------------------------------------------------------------------

    The Commission is also modifying subparagraph (iii) of renumbered
paragraph (d) of the Recitals to provide that the Operating Committee
must enter into agreements with the Processors performing under the
current Equity Data Plans within eight months of the Effective Date.
The Processors performing under the current Equity Data Plans are
performing pursuant to existing contracts, and the CT Plan as submitted
by the SROs provides that the Operating Committee shall enter into
agreements with those same Processors. While one commenter states that
retaining the existing Processors would require, at a minimum,
``negotiation of new contracts and related service level agreements,''
\91\ the Commission believes that concerns about the need to
renegotiate all of the terms of the existing contracts are not well
founded because the CT Plan does not by its terms change any of the
technical provisions of the existing Equity Data Plans with respect to
the dissemination of consolidated equity market data. And the SROs have
not suggested that the terms of the new contracts of the Processors
will be materially different than the existing contracts under the
Equity Data Plans. Consequently, the Commission believes that the
technical and business terms of the new Processor contracts with the CT
Plan are likely to be substantially identical to the existing
contracts. Therefore, the Commission finds that the modification to
this provision is appropriate because the Operating Committee should
encounter little unavoidable difficulty in executing agreements with
the Processors within the prescribed timeframe, and the change will
facilitate timely implementation for the benefit of market
participants.
---------------------------------------------------------------------------

    \91\ NYSE Letter, supra note 18, at 34.
---------------------------------------------------------------------------

    Moreover, the Commission is modifying subparagraph (iv) of
renumbered paragraph (d) of the Recitals to require that the proposed
actions relating to the selection and duties of an Administrator,
discussed in greater detail below, pursuant to Section 6.4 of Article
VI and Section 4.3 of Article IV of the CT Plan, be completed within
eight months of the Effective Date. The amended provision provides that
the Administrator must be prepared to transition to the CT Plan, by
finalizing new contracts with vendors and subscribers and having in
place systems to administer distributions and fees, before the
Operative Date.
    While commenters argue that deadlines could not reasonably be
imposed on the process of selecting an Administrator and preparing to
implement the CT Plan,\92\ the Commission disagrees. One commenter
points to the difficulties attendant in selecting a processor for the
CAT NMS Plan,\93\ but the Commission does not view the circumstances to
be analogous. In the case of the CAT NMS Plan, the SROs were tasked
with implementing the first-ever consolidated audit trail for equities
trading, a complex NMS system without precedent. Here, by contrast, the
Operating Committee will be conducting an RFP process to select an
Administrator to perform functions with which market participants,
whether SROs or market data consumers, have extensive familiarity.
Thus, the Commission believes that crafting the necessary requirements
for the RFP and evaluating proposals submitted in response should be a
substantially less complicated and time-consuming process than
searching for a processor to build an entirely new and comprehensive
database. Moreover, with respect to certain commenters' concerns that
it will be difficult to find an Administrator with the necessary
expertise, the Commission understands that a number of different types
of entities, such as accounting firms, market data administration
firms, or consulting firms, would be capable of serving as
Administrator to the CT Plan and providing the requisite billing,
auditing, and licensing services. The Commission finds that the
modifications to the provision are appropriate because, given the
extensive experience of the SROs over several decades in supervising--
or serving as--the administrators of the Equity Data Plans, the process
of selecting an Administrator, as well as the duties assigned to the
firm selected pursuant to the provisions of the CT Plan, should be able
to be completed within the established timeframes.
---------------------------------------------------------------------------

    \92\ See Nasdaq Letter I, supra note 20, at 10; Nasdaq Letter
II, supra note 49, at 2; NYSE Letter I, supra note 18, at 33; Cboe
Letter, supra note 17, at 5-6.
    \93\ See NYSE Letter I, supra note 18, at 35.
---------------------------------------------------------------------------

    In addition, the Commission is adding new subparagraph (v) of
renumbered paragraph (d) of the Recitals to explicitly impose
responsibility on the Operating Committee to ensure that all of the
requirements set forth in the preceding subparagraphs of renumbered
paragraph (d) have been satisfied prior to the Operative Date. In
particular, the

provision provides that ``before the Operative Date, the Operating
Committee will be required to ensure that the Administrator and the
Processors have developed, implemented, and suitably tested the systems
necessary with respect to the existing exclusive SIP model \94\--
including dissemination systems, billing and audit systems, and
appropriate contracts with Vendors and Subscribers--and, if applicable,
the Operating Committee has expeditiously filed any necessary policies
and procedures with the Commission. This new language is designed to
impose on the Operating Committee not only the initial obligation to
select an Administrator and Processors, but also the explicit ongoing
responsibility to oversee the Administrator and Processors' specific
efforts to implement the CT Plan. The Commission finds that this
modification is appropriate because the inclusion of this language
establishes that the Operating Committee's obligation to oversee the
development of all systems, agreements, and policies and procedures
necessary to facilitate the implementation of the CT Plan within the
prescribed timeframe continues beyond the time when the Administrator
and Processors have been selected.
---------------------------------------------------------------------------

    \94\ This provision is designed to require the Operating
Committee to oversee the Administrator's and Processors' efforts to
test all pertinent systems prior to the transition from the existing
Equity Data Plans to the CT Plan.
---------------------------------------------------------------------------

    Finally, the Commission is adding new subparagraph (vi) to
renumbered paragraph (d) of the Recitals to impose on the Operating
Committee the obligation to provide quarterly written progress reports
to the Commission, and to make these reports publicly available,
beginning three months after the Effective Date and continuing every
three months until the Operative Date. These quarterly reports would be
required to address the actions undertaken and the progress made toward
completing each of the required actions listed in paragraph (d) with
respect to implementation of the CT Plan. The Commission shares
commenters' views that transparency with respect to the progress made
to satisfy the requirements of the CT Plan would benefit not only the
Commission but also interested market participants.\95\ The requirement
to provide progress reports in writing to the Commission on a quarterly
basis and to make them publicly available is designed to help ensure
that affected market participants are informed about the status of the
steps that are taken to implement the CT Plan within the prescribed
time periods. Providing periodic updates to the Commission should also
facilitate holding the Operating Committee accountable for its progress
in completing the interim steps towards satisfying the longer-range
requirements.
---------------------------------------------------------------------------

    \95\ See Fidelity Letter, supra note 30, at 3; IEX Letter, supra
note 30, at 2; BMO Letter I, supra note 30, at 3; BMO Letter II,
supra note 30, at 2; ICI Letter I, supra note 31, at 7. While one of
these commenter urges the Commission to provide financial incentives
to the SROs either through fines or through not allowing the SROs to
collect SIP fees for some period of time, see ICI Letter I, supra
note 31, at 7, the Commission believes that the required quarterly
progress reports and the involvement of the Operating Committee,
including the Non-SRO Voting Representatives, should be sufficient
to ensure timely implementation of the CT Plan.
---------------------------------------------------------------------------

    The Commission believes that the required frequency of the progress
reports, one report every three months, should be sufficient to
identify for the Commission any notable delays in completing the
interim steps needed to satisfy the deadlines established for CT Plan
implementation without imposing unnecessary burdens on efforts to
implement the CT Plan. The Commission believes that this requirement
should not be overly burdensome to the Operating Committee or distract
from its performance of the specified actions required by the CT Plan,
because the quarterly reports would essentially reflect the analysis
the Operating Committee would need to undertake in any event for its
diligent oversight of the implementation process. The Commission finds
that the modifications to renumbered paragraph (d) of the Recitals of
the CT Plan are appropriate because the specified deadlines and
sequence for completion prescribed by the provision will provide
greater certainty regarding timeframes for the Operating Committee and
other market participants and will establish achievable objectives to
facilitate implementation of the CT Plan.
    For the reasons discussed above, the Commission is approving
paragraph (b), which has been renumbered as paragraph (c), and
renumbered paragraph (d) of the Recitals of the CT Plan, as modified.
(b) SRO Duties to the CT Plan
    Paragraph (f) of the Recitals, renumbered as paragraph (g) as a
result of the modifications discussed above, sets forth the SROs'
statement of their regulatory obligations to the CT Plan. With respect
to several provisions of the CT Plan discussed below,\96\ a commenter
expresses concern that the SROs are disclaiming any duty or obligation
to the CT Plan.\97\ The Commission agrees with another commenter that
the regulatory obligations of SROs with respect to the CT Plan are set
by the federal securities laws and regulations,\98\ but finds that it
is appropriate to reiterate that the provisions of the CT Plan do not
lessen any of the SROs' regulatory obligations. Accordingly, the
Commission is modifying this provision to add the following sentence,
``No provision of this Agreement shall be construed to limit or
diminish the obligations and duties of the Members as self-regulatory
organizations under the federal securities laws and the regulations
thereunder.'' \99\ The Commission finds that the modification to
renumbered paragraph (g) of the Recitals of the CT Plan is appropriate
because it ensures that the text of the CT Plan reflects the
relationship between the CT Plan's provisions and the SROs' regulatory
obligations. For the reasons discussed above, the Commission is
approving this provision as modified.
---------------------------------------------------------------------------

    \96\ See infra notes 443-454 and accompanying text.
    \97\ See MFA Letter, supra note 30, at 1-2.
    \98\ See Nasdaq Letter I, supra note 20, at 16-17.
    \99\ The ``Members'' of the LLC Agreement, as defined in the
first paragraph of the LLC Agreement, are the SROs identified in
Exhibit A to the LLC Agreement.
---------------------------------------------------------------------------

(c) Other Provisions of the Recitals
    Paragraph (a) of the Recitals establishes that the CT Plan is filed
with the Commission in response to the Commission's Governance Order.
Paragraphs (d) and (e) of the Recitals as proposed establish that the
current Equity Data Plans will continue to operate until the Operative
Date.
    The Commission received no comment on paragraphs (a), (d), and (e)
of the Recitals as proposed. The Commission is approving paragraph (a)
as proposed, and paragraphs (d) and (e), renumbered as paragraphs (e)
and (f), otherwise as proposed.
2. Definitions
    Article I of the CT Plan sets forth the defined terms used
throughout the CT Plan and its Exhibits. In the Notice, the Commission
sought comment on several of the proposed definitions.\100\
Specifically, the Commission requested comment on the proposed scope
and use of the following defined terms: ``CT Feeds,'' ``Covered
Persons,'' ``Fees,'' ``Member Observer,'' and ``Public Information.''
After considering the comments received, the Commission

finds that it is appropriate to modify several of the proposed
definitions.\101\
---------------------------------------------------------------------------

    \100\ See Notice, supra note 3, 85 FR at 64567-68 (Questions 4-
8).
    \101\ While one commenter suggests that the definition of
``fees'' should be ``similar to the comprehensiveness in defining
`royalties for copyright works' in the music industry,'' Data Boiler
Letter I, supra note 31, at 22-23; Letter from Kelvin To, Founder
and President, Data Boiler Technologies, LLC (Jul. 20, 2021) (``Data
Boiler Letter II''), at 2, the commenter has not provided specific
suggestions as to how this high-level analogy would be appropriately
applied in the context of consolidated equity market data. Further,
the Commission does not believe that the analogy is apt in the
context of data that the SROs have a regulatory obligation to
disseminate through an NMS plan.
---------------------------------------------------------------------------

    First, for the reasons discussed below in Section II.C.11(a) of
this Order, the Commission is expanding the definition of ``Company
Indemnified Party,'' \102\ set forth in Article I, Section 1.1(k) and
referred to in Article XII, Section 12.2, Section 12.3, and Section
12.4 of the CT Plan,\103\ to include Non-SRO Voting Representatives.
---------------------------------------------------------------------------

    \102\ As proposed, Section 1.1(k) defines the term ``Company
Indemnified Party'' as ``a Person, and any other Person of whom such
Person is the legal representative, that is or was a Member or an
SRO Voting Representative.''
    \103\ The term ``Company Indemnified Party'' is also referred to
in Section 1.1(kk) (``Losses'') and Section 1.1(ccc) (``Party to a
Proceeding'') of Article I of the CT Plan.
---------------------------------------------------------------------------

    Second, for the reasons discussed below in Section II.C.5(k)(iii)
of this Order, the Commission is modifying Article I, Section 1.1(n),
of the CT Plan--the proposed definition of ``Covered Persons'' \104\--
to define the phrase ``representatives of the Members'' to include SRO
Voting Representatives, alternate SRO Voting Representatives, and
Member Observers, to expand the definition of Covered Persons to
include SRO Applicant Observers, and to delete the phrase, ``and the
employers of Non-SRO Voting Representatives.'' The term, Covered
Persons, is referred to in Section 4.11 of Article IV of the CT Plan
and Exhibit C to the CT Plan.\105\
---------------------------------------------------------------------------

    \104\ As proposed, Section 1.1(n) of Article I defines the term
``Covered Persons'' as ``representatives of the Members, the Non-SRO
Voting Representatives, SRO Applicants, the Administrator, and the
Processors; affiliates, employees, and agents of the Operating
Committee, a Member, the Administrator, and the Processors; any
third parties invited to attend meetings of the Operating Committee
or subcommittees; and the employers of Non-SRO Voting
Representatives. Covered Persons do not include staff of the SEC.''
    \105\ The term ``Covered Persons'' is also referred to in
Section 1.1(l) (``Confidential Information'') of Article I of the CT
Plan.
---------------------------------------------------------------------------

    Third, for the reasons discussed below in Section II.C.5(d)(iii) of
this Order, the Commission is modifying the definition of ``Executive
Session,'' \106\ set forth in Article I, Section 1.1(z), to require
that the other persons as deemed appropriate to attend Executive
Session will be determined by ``majority vote of'' the SRO Voting
Representatives. The term ``Executive Session'' is referred to in
Article IV, Section 4.2(d), Section 4.3(c), and Section 4.4(g) of the
CT Plan and Exhibit C to the CT Plan.
---------------------------------------------------------------------------

    \106\ As proposed, Section 1.1(z) of Article I defines the term,
``Executive Session,'' as a meeting of the Operating Committee
pursuant to Section 4.4(g), which includes SRO Voting
Representatives, Member Observers, SEC staff, and other persons as
deemed appropriate by the SRO Voting Representatives.
---------------------------------------------------------------------------

    Fourth, for the reasons discussed below in Section II.C.5(j)(ii) of
this Order, the Commission is modifying the definition of ``Member
Observer,'' \107\ set forth in Article I, Section 1.1(oo), to require
that a Member Observer be an employee of a Member or any attorney to a
Member, and to provide that a Member's designation of a Member Observer
is subject to the limitation contained in Article IV, Section
4.10(b)(i) of the CT Plan. The term ``Member Observer'' is referred to
in Article IV, Section 4.4 and Section 4.7 of the CT Plan and Exhibit C
to the CT Plan.\108\
---------------------------------------------------------------------------

    \107\ As proposed, Section 1.1(oo) of Article I defines the term
``Member Observer'' as any individual, other than a Voting
Representative, that a Member, in its sole discretion, determines is
necessary in connection with such Member's compliance with its
obligations under Rule 608(c) of Regulation NMS to attend Operating
Committee and subcommittee meetings.''
    \108\ The term ``Member Observer'' is also referred to in
Section 1.1(z) (``Executive Session'') of Article I of the CT Plan.
---------------------------------------------------------------------------

    Fifth, for the reasons discussed below in Section II.C.5(k)(ii) of
this Order, the Commission is modifying the definition of ``Highly
Confidential Information,'' as set forth in Article I, Section
1.1(ii),\109\ to replace the phrase, ``personnel matters'' with the
phrase ``personnel matters that affect the employees of the SROs or the
Company.'' The term ``Highly Confidential Information'' is referred to
in Article IV, Section 4.4 and Section 4.10 of the CT Plan and Exhibit
B to the CT Plan.
---------------------------------------------------------------------------

    \109\ The term ``Highly Confidential Information'' is also
referred to in Section 1.1(l) (``Confidential Information''), and
Section 1.1(kkk) (``Public Information'') of Article I of the CT
Plan.
---------------------------------------------------------------------------

    Finally, for the reasons discussed below in Section II.C.11(a) of
this Order, the Commission is modifying Section 1.1(eee) of Article I
of the CT Plan, referred to in Article XII, Section 12.2 of the CT
Plan,\110\ to expand the definition of the term ``Party to a
Proceeding,'' \111\ to include Non-SRO Voting Representatives.
---------------------------------------------------------------------------

    \110\ The term, ``Party to a Proceeding,'' is also referred to
in Section 1.1(kk) (``Losses'') of Article I of the CT Plan.
    \111\ As proposed, Section 1.1(eee) of Article I defines the
term, ``Party to a Proceeding,'' as a ``Company Indemnified Party
that is, was, or is threatened to be made, a party to a Proceeding,
or is involved in a Proceeding, by reason of the fact that such
Company Indemnified Party is or was a Member and/or an SRO Voting
Representative.''
---------------------------------------------------------------------------

    Except for the modifications identified above, the Commission is
approving Article I of the CT Plan as proposed.
3. Organization of LLC
    The SROs propose to organize the new NMS plan for consolidated
equity market data in the form of a Delaware limited liability company
pursuant to a limited liability company agreement, entitled the Limited
Liability Company Agreement (``LLC Agreement'') of CT Plan LLC
(``Company'' or ``LLC'').\112\ The Members (i.e., the equity owners) of
the LLC will be the 17 national securities exchanges for equities and
FINRA,\113\ each of which will be a ``Participant'' of the CT Plan as
an effective NMS plan for the dissemination of consolidated equity
market data.
---------------------------------------------------------------------------

    \112\ See Article II, Section 2.1 of the CT Plan.
    \113\ See Article III, Section 3.1 of the CT Plan. The names and
addresses of each Member are set forth in Exhibit A to the CT Plan.
---------------------------------------------------------------------------

    The CT Plan states that the purposes of the LLC are to engage in
the following activities on behalf of the Members: (i) The collection,
consolidation, and dissemination of Transaction Reports, Quotation
Information, and such other information concerning Eligible Securities
as the Members shall agree as provided therein; (ii) contracting for
the distribution of such information; (iii) contracting for and
maintaining facilities to support any activities permitted in the LLC
Agreement and guidelines adopted thereunder, including the operation
and administration of the System; \114\ (iv) providing for those other
matters set forth in the LLC Agreement and in all guidelines adopted
thereunder; (v) operating the System to comply with Applicable Laws;
and (vi) engaging in any other business or activity that now or
thereafter may be necessary, incidental, proper, advisable, or
convenient to accomplish any of the foregoing purposes and that is not
prohibited by the Delaware Limited Liability Company Act (``Delaware
Act''), the Act, or other Applicable Law.\115\ The LLC Agreement
itself, including its appendices, is the CT Plan. Under the CT Plan,
the governing body

of the LLC would be the Operating Committee, which would comprise
representatives of the Members and the Non-SRO Voting
Representatives.\116\
---------------------------------------------------------------------------

    \114\ Section 1.1(yyy) of Article I of the proposed CT Plan
defines the term ``System'' as ``all data processing equipment,
software, communications facilities, and other technology and
facilities, utilized by the Company or the Processors in connection
with the collection, consolidation, and dissemination of Transaction
Reports, Quotation Information, and other information concerning
Eligible Securities.''
    \115\ See Article II, Section 2.4 of the CT Plan.
    \116\ See Article IV, Section 4.1(a) of the CT Plan.
---------------------------------------------------------------------------

    In their Transmittal Letter, the SROs assert that, while the
Governance Order requires Operating Committee approval for actions
other than the selection of Non-SRO Voting Representatives and the
decision to enter into Executive Session, certain provisions of the CT
Plan that concern solely the operation of the LLC as an LLC and that
are unrelated to consolidation and distribution of equity market data
should require only a majority vote of the Members. Specifically, the
SROs propose that the following actions require only a majority vote of
the Members: (1) The selection of Officers of the LLC (other than the
Chair and Secretary), if needed, and (2) certain decisions concerning
the operation of the LLC as an LLC and approval of amendments to LLC-
related provisions of the CT Plan, including provisions related to
indemnification, dissolution of the LLC, and tax-related matters.\117\
The SROs assert that neither of these topics would affect the
consolidation and distribution of equity market data and that,
therefore, the Members should have the sole authority to make decisions
related to these topics, with Commission approval where necessary.\118\
---------------------------------------------------------------------------

    \117\ See Transmittal Letter, supra at 2.
    \118\ See id.
---------------------------------------------------------------------------

    Several commenters raise concerns with the proposed LLC structure
and the Members' exclusive powers thereunder.\119\ One commenter states
that the LLC structure is ``flawed'' and ``defies America's `Free
Enterprise' concept.'' \120\ The commenter further states that, under
the LLC structure proposed, the Members of the LLC will retain control
over the actions under the CT Plan.\121\ Another commenter asserts that
the CT Plan ``appears perfectly designed to facilitate the continued
neglect of the distribution of consolidated market data in order to
benefit the sale of SROs' proprietary market data feeds,'' \122\ and
states that the CT Plan would allow the SROs to prioritize the sale of
their proprietary market data products over the interests and statutory
purposes of the CT Plan.\123\ This commenter asserts that the Plan
``incentivizes the SROs to run the Plan and the LLC poorly to the
extent they believe it is in their self-interest'' and there is ``no
downside for an SRO to act in its self-interest contrary to the Plan as
they are exculpated in taking any such action.'' \124\ This commenter
states that it fears that the CT Plan structure will not promote the
goals of Section 11A, given the absence of any obligations on the SROs
to operate the plan consistent with its statutory purpose,\125\ and
suggests that a balance must be struck with the principle of creating a
governing arrangement that is reasonably designed to ensure that the CT
Plan will carry out its statutory purpose.\126\
---------------------------------------------------------------------------

    \119\ See Data Boiler Letter I, supra note 31, at 4, 23, 25, 49;
MFA Letter, supra note 30, at 1-2, 3; RBC Letter, supra note 30, at
10; BMO Letter II, supra note 30, at 2.
    \120\ Data Boiler Letter I, supra note 31, at 25. This commenter
also states that because of CT Plan's role and public purpose, it
should be a non-profit rather than LLC. See id. at 24. The commenter
opines that a non-profit structure would be ``better than an LLC in
preserving an independent status when dealing with the establishment
of fees, manners in entering into contracts with an Administrator
and Processor(s), and other applicable policies and procedures. . .
.'' Id. at 19; see also Data Boiler Letter II, supra note 101, at 2.
    \121\ See Data Boiler Letter I, supra note 31, at 21, 24, 30;
see also RBC Letter, supra note 30, at 10.
    \122\ MFA Letter, supra note 30, at 3.
    \123\ See MFA Letter, supra note 30, at 1-2 (stating, CT Plan as
proposed is likely to ``preserve the misaligned incentives that gave
rise to the Order.''); see also BMO Letter II, supra note 30, at 2.
    \124\ MFA Letter, supra note 30, at 3.
    \125\ See id. at 2.
    \126\ See id.
---------------------------------------------------------------------------

    One commenter states that the CT Plan does not include all of the
necessary provisions for an LLC agreement to function appropriately as
an NMS plan, but does not provide further details about what is
missing.\127\ Another commenter states that more detail needs to be
provided on the types of decisions that would fall under ``the
operation of the CT Plan as an LLC'' and ``modifications to the LLC-
related provisions of the CT Plan'' in order to ensure that non-SRO
representatives have an opportunity to participate in any material
decisions related to the regulatory operations of the CT Plan.\128\
---------------------------------------------------------------------------

    \127\ See Data Boiler Letter I, supra note 31, at 25.
    \128\ Virtu Letter, supra note 30, at 5.
---------------------------------------------------------------------------

    Another commenter, however, supports the LLC structure as proposed,
arguing that the Non-SRO Voting Representatives do not need to be
members of the LLC in order to fulfill their role on the Operating
Committee,\129\ and that providing the Non-SRO Voting Representatives
with an economic interest in the CT Plan is inappropriate because ``it
would provide individuals with a claim on revenues that they did
nothing to generate and expose them to funding obligations that they
would not be prepared to support.'' \130\
---------------------------------------------------------------------------

    \129\ See Nasdaq Letter I, supra note 20, at 14.
    \130\ Id. at 14-15.
---------------------------------------------------------------------------

    The Governance Order did not specify the form or structure of the
plan, and for the reasons discussed below, the Commission finds that it
is appropriate for the SROs to organize this NMS plan as an LLC
agreement. Foremost, an LLC agreement provides a formal legal structure
through which the SROs will fulfill their obligations with respect to
consolidated equity market data, which will necessarily entail, among
other things, entering into contracts with the Administrator and the
Processors, as well as, in all likelihood, outside counsel,
accountants, and other parties. The Commission believes that
structuring the CT Plan as an LLC will reduce ambiguities with respect
to rights and obligations related to such contracts and with respect to
the financial rights responsibilities of each SRO to the CT Plan and to
each other.\131\ Moreover, the use of an LLC structure for a NMS plan
is not novel. The most recent NMS plan approved by the Commission, CAT
NMS Plan, employs an LLC structure,\132\ as does the Options Price
Reporting Authority Plan (``OPRA Plan''),\133\ and the Commission does
not believe that it is necessary to prescribe a different legal
structure here.
---------------------------------------------------------------------------

    \131\ As noted above, however, the terms of the CT Plan shall
not be construed to limit or diminish the obligations and duties of
the Members of the LLC as SROs under the federal securities laws.
See text accompanying note 99, supra.
    \132\ See Securities Exchange Act Release No. 79318 (Nov. 15,
2016), 81 FR 84696 (Nov. 23, 2016) (Order Approving the National
Market System Plan Governing the Consolidated Audit Trail).
    \133\ See Securities Exchange Act Release No. 61367 (Jan. 15,
2010), 75 FR 3765 (Jan. 22, 2010) (Notice of Immediate Effectiveness
of Proposed Amendment To Revise the Plan for Reporting of
Consolidated Options Last Sale Reports and Quotation Information To
Serve as the Operating Agreement for OPRA LLC).
---------------------------------------------------------------------------

    As described above, some commenters are concerned that the LLC
Agreement as proposed would allow the SROs to continue to act
exclusively in their own self-interest, rather than in the interest of
the Plan, as significant powers would rest exclusively with the SROs.
The Commission, however, does not believe that the choice of an LLC
structure over other structures for the CT Plan will permit the SROs to
act exclusively in their own self-interest. First, the terms of the LLC
agreement must be consistent with the regulatory obligations of the
SROs as set by the federal securities laws and regulations, and SROs
also have direct obligations under the federal securities laws and
regulations. And second, as required by the Governance Order, the CT
Plan provides Non-SRO Voting Representatives with voting rights on the
Operating Committee that is responsible for managing the activities

of the CT Plan, which will provide a means to mitigate the inherent
conflicts of interests between the SROs' ``collective responsibilities
in overseeing the Equity Data Plans and their individual interest in
maximizing the viability of proprietary data products that they sell to
market participants.'' \134\ Though one commenter suggests that a non-
profit structure for the CT Plan would better ensure independence in
decisions relating to fees and administrator contracts than, for
example, an LLC, the Commission believes that the requirement of the
Governance Order that non-SROs have a vote on matters before the
Operating Committee, together with the SROs' obligations under the
federal securities laws and regulations, is sufficient at this time to
mitigate conflicts of interests in making such decisions, regardless of
the corporate structure used.
---------------------------------------------------------------------------

    \134\ Governance Order, supra note 8, 85 FR at 28707, 28715-16.
---------------------------------------------------------------------------

    Moreover, the Commission is modifying certain other provisions of
the CT Plan to help ensure that the CT Plan meaningfully includes non-
SROs in Operating Committee decision-making, consistent with the
Governance Order.\135\ Each of the following modifications is discussed
in greater detail below.
---------------------------------------------------------------------------

    \135\ See, e.g., Governance Order, supra note 8, 85 FR at 28707.
---------------------------------------------------------------------------

    First, as discussed below in Section II.C.5(d)(iii), the Commission
is modifying the CT Plan to limit the circumstances under which the SRO
Voting Representatives may meet outside the presence of the Non-SRO
Voting Representatives in Executive Session. Second, as discussed below
in Section II.C.5(g)(iii), the Commission is modifying the CT Plan to
limit the topics that may be addressed in a legal subcommittee without
the Non-SRO Voting Representatives present and to require certain
records of legal subcommittee meetings be kept to enhance transparency
and accountability regarding the use of that subcommittee. Third, as
discussed below in Section II.C.5(h), the Commission is modifying the
CT Plan to require that the creation and assignment of any officer
positions and duties be subject to a vote of the Operating Committee,
rather than by a majority vote of the SROs. Fourth, as discussed below
in Section II.C.5(g)(iii), the Commission is modifying the CT Plan to
apply the Exculpation provisions available to the SROs to Non-SRO
Voting Representatives. And fifth, as discussed below in Section
II.C.12(e), the Commission is modifying the CT Plan to remove the
provision that would allow the SROs to modify Article IX (Allocations),
Article X (Records and Accounting; Reports), Article XI (Dissolution
and Termination), and Article XII (Exculpation and Indemnification) by
a majority vote of Members.
    Finally, one commenter states that the CT Plan does not include all
of the necessary provisions for an LLC agreement to function
appropriately as an NMS plan.\136\ The commenter does not, however,
identify the areas in which it believes the agreement is deficient.
---------------------------------------------------------------------------

    \136\ See Data Boiler Letter I, supra note 31, at 25
---------------------------------------------------------------------------

    For the reasons stated above, the Commission finds that it is
appropriate for the CT Plan to be structured as an LLC Agreement, and
is approving Article II as proposed.
4. Membership (Obligations and Liabilities)
    Pursuant to Article III, Section 3.2(a) of the CT Plan, any
national securities association or national securities exchange whose
market, facilities, or members, as applicable, trades Eligible
Securities may become a Member by (i) providing written notice to the
Company; (ii) executing a joinder to the LLC Agreement; (iii) paying a
Membership Fee to the Company as determined pursuant to Section 3.2(b)
(``Membership Fee''); and (iv) executing a joinder to any other
agreements to which all of the other Members have been made party in
connection with being a Member.\137\ Membership Fees paid will be added
to the general revenues of the Company.\138\
---------------------------------------------------------------------------

    \137\ See Article III, Section 3.2(a) of the CT Plan.
    \138\ See id.
---------------------------------------------------------------------------

    Article III, Section 3.2 of the CT Plan specifies that the factors
that will be considered in determining a Membership Fee are: (1) The
portion of costs previously paid by the Company (or by the Members
prior to the formation of the Company) for the development, expansion
and maintenance of the System which, under generally accepted
accounting principles (``GAAP''), would have been treated as capital
expenditures and would have been amortized over the five years
preceding the admission of the new member; and (2) an assessment of
costs incurred and to be incurred by the LLC for modifying the System
or any part thereof to accommodate the new member, which costs are not
otherwise required to be paid or reimbursed by the new Member.\139\ The
CT Plan prohibits a Member's transfer of its Membership Interest in the
LLC, except in connection with the withdrawal of a Member from the LLC,
as discussed below.\140\
---------------------------------------------------------------------------

    \139\ See Article III, Section 3.2(b) of the CT Plan. The
proposed CT Plan provides that Participants of the CQ Plan, CTA
Plan, and UTP Plan are not required to pay the Membership Fee. See
Article III, Section 3.2(c) of the CT Plan.
    \140\ See Article III, Section 3.3 of the CT Plan.
---------------------------------------------------------------------------

    Pursuant to Article III, Section 3.4, any Member may voluntarily
withdraw from the LLC by: (i) Providing not less than 30 days' prior
written notice of such withdrawal to the LLC, (ii) causing the LLC to
file with the Commission an amendment to effectuate the
withdrawal,\141\ and (iii) transferring such Member's Membership
Interest to the LLC.\142\ If a Member ceases to be a registered
national securities association or registered national securities
exchange, that Member automatically withdraws from the LLC.\143\
Section 3.4 further provides that after withdrawal from Membership, the
Member will remain liable for any obligations arising prior to
withdrawal.\144\ A withdrawing Member is entitled to receive a portion
of the Net Distributable Operating Income attributable to the period
prior to the Member's withdrawal.\145\
---------------------------------------------------------------------------

    \141\ Any withdrawal will not be effective until an amendment to
the Agreement is approved by the Commission. See Article III,
Section 3.4(c) of the CT Plan.
    \142\ See Article III, Section 3.4(a) of the CT Plan.
    \143\ See Article III, Section 3.4(b) of the CT Plan. Article
III, Section 3.5 of the CT Plan provides that a Member's bankruptcy
under Section 18-304 of the Delaware Act shall not itself cause a
withdrawal of such Member from the Company.
    \144\ See Article III, Section 3.4(d)(i) of the CT Plan.
    \145\ See Article III, Section 3.4(d)(ii) of the CT Plan.
---------------------------------------------------------------------------

    Pursuant to proposed Sections 3.4(d)(iii) and (iv), a Member that
has withdrawn from the LLC will no longer have the right to have its
Transaction Reports, Quotation Information, or other information
disseminated over the System, and the Capital Account of that Member
will not be allocated profits and losses of the LLC. In addition,
Article III of the CT Plan provides that no Member, unless authorized
by the Operating Committee, has the authority to represent the LLC or
to make any expenditure on behalf of the LLC; provided, however, that
the Tax Matters Partner may represent, act for, sign for or bind the
LLC as permitted under Sections 10.2 and 10.3 of the LLC
Agreement.\146\ In addition, the CT Plan provides that, following the
Operative Date, each Member will be required to comply with the
provisions of the Plan

and enforce compliance with the Plan by its members.\147\
---------------------------------------------------------------------------

    \146\ See Article III, Section 3.7(d) of the CT Plan.
    \147\ See Article III, Section 3.6 of the CT Plan.
---------------------------------------------------------------------------

    These provisions relating to joining and withdrawing from the CT
Plan as a Member and enforcing compliance with the Plan are similar to
those existing in other NMS Plans.\148\ The Commission received no
comments addressing these provisions. Accordingly, the Commission is
approving Section 3.4, as proposed.
---------------------------------------------------------------------------

    \148\ See, e.g., CAT NMS Plan, Article III.
---------------------------------------------------------------------------

    Article III of the CT Plan also sets forth the obligations and
liabilities of the Members. Article III, Section 3.7(b) provides that
Members will not be required to contribute capital or make loans to the
LLC, nor will Members have any liability for the debts and liabilities
of the LLC.\149\ This section also states that it is the intent of the
Members that no distribution to any Member pursuant to the LLC
Agreement will be considered a return of money or other property paid
or distributed in violation of the Delaware Act, and that any such
payment will be considered a compromise within the meaning of Delaware
Act, and the Member receiving any payment will not be required to
return any payment to any person, provided that a Member will be
required to return any payment made due to a clear accounting or
similar error or as otherwise provide in Section 3.7(b).\150\ Finally,
Section 3.7(e) provides that no Member owes any duty (fiduciary or
otherwise) to the LLC or to any other Member other than the duties
expressly set forth in the LLC Agreement.
---------------------------------------------------------------------------

    \149\ However, in the event that the Processors or the
Administrator have not been paid pursuant to the terms of the
Processor Services Agreements and Administrative Services Agreement,
the proposed CT Plan requires each Member to return to the Company
its pro rata share of any moneys distributed to it by the Company
until an aggregated amount equal to the amount owed has been
recontributed to the Company. The Company will pay the amount(s)
owed. See Article III, Section 3.7(b) of the CT Plan.
    \150\ See Article III, Section 3.7(c) of the CT Plan. The
proposed CT Plan further provides that if any court of competent
jurisdiction holds that any Member is obligated to make any such
payment, such obligation shall be the obligation of such Member and
not of the Operating Committee. See id.
---------------------------------------------------------------------------

    In the Notice, the Commission sought comment on Article III,
Section 3.7 and the provision that states that SROs shall have no
liability for the debt, liabilities, commitments, or any other
obligations of the CT Plan or for any losses of the CT Plan. The
Commission asked if the provision is consistent with the SROs'
obligations to, and purposes of, the CT Plan. Several commenters
express concern with this provision.\151\ One commenter states that the
Members should not receive special liability protections.\152\ Another
commenter states that the liability carve-out for SROs is too
broad.\153\ This commenter states that the provisions in Article III,
Section 3.7 would ``significantly increase the likelihood that Plan
activities would be contrary to the role and public purpose of the Plan
as part of the national market system,'' thereby creating a conflict of
interest with SROs' obligations with respect to the Plan under federal
securities rules and regulations.\154\ Another commenter views the
provisions of Article III, Section 3.7 as allowing the LLC to have
upside profit, but relieving the SROs of responsibility for any debt,
liabilities, commitment, or any other obligations.\155\ This commenter
further states that the SROs have significant influence on how the LLC
operates through control of the Operating Committee, but no consequence
for that control, and recommends that Article III, Section 3.7(e) be
removed from the CT Plan.\156\
---------------------------------------------------------------------------

    \151\ See Notice, supra note 3, 85 FR at 64568 (Question 11).
    \152\ See RBC Letter, supra note 30, at 9. This commenter
recommends that the CT Plan should make clear that the liability
protection and indemnification provisions apply to non-SRO
representatives acting in their role on the Operating Committee. See
id. at 10. See also infra Section II.C.11 (discussing modification
to the proposed CT Plan to provide indemnity to the Non-SRO Voting
Representatives).
    \153\ See Virtu Letter, supra note 30, at 3.
    \154\ Id.
    \155\ See Data Boiler Letter I, supra note 31, at 24.
    \156\ See id.
---------------------------------------------------------------------------

    In contrast, one commenter states that the liability protections in
Article III, Sections 3.7(b) and (e) are standard protections for the
members of an LLC and are commonly included in LLC agreements.\157\
This commenter further argues that the Non-SRO Voting Representatives
do not need similar protection since they are not members of the
LLC.\158\ Another commenter states that the provisions in Article III
are consistent with Delaware business organization law.\159\ This
commenter also argues that including the principle that no Member of
the CT Plan is liable for the obligations of the CT Plan ``is not an
attempt to avoid appropriate funding for the CT Plan,'' \160\ and
states that the requirements in CT Plan that each Member make capital
contributions for ``reasonable administrative and other reasonable
expenses'' of the CT Plan and that each Member return its pro rata
share of distributions from the CT Plan in the one year period prior to
a default in payment to the Processors or Administrator are evidence of
appropriate funding responsibilities for the CT Plan.\161\
---------------------------------------------------------------------------

    \157\ See NYSE Letter I, supra note 18, at 37. This commenter
points to Section 4.8 of the CAT NMS Plan as precedent for including
the limitation on liability provisions at Section 3.7(b) and (e) and
states that, similar to the proposed CT Plan, the CAT NMS Plan
extends liability protection and indemnification coverage only to
SROs that created the LLC. See id. at 37-38. Another commenter notes
that the OPRA Plan is an LLC with similar limitation on liability
provisions. See Nasdaq Letter I, supra note 20, at 16 n.26.
    \158\ See NYSE Letter I, supra note 18, at 38.
    \159\ See Nasdaq Letter I, supra note 20, at 15 (citing Section
18-303 of the Delaware Act).
    \160\ Id. at 16.
    \161\ Id.
---------------------------------------------------------------------------

    While certain commenters object to the provisions that would
absolve the Members of financial liabilities incurred by the LLC,
arguing that the provisions are too broad and would allow the Members
to act in their own self-interest, contrary to the purpose of the CT
Plan,\162\ after careful consideration of the comments, the Commission
is not modifying these provisions. As the Commission stated above, the
SROs' regulatory obligations pursuant to the CT Plan flow from the
federal securities laws and regulations, and the Commission has, as
noted above, modified the language of the Recitals of the CT Plan to
reiterate that the terms of the CT Plan cannot act to diminish those
obligations.\163\ Further, the language proposed by the SROs for
Section 3.7(b) states that an SRO shall not have liability to the CT
Plan as a Member except as provided in the Agreement or ``Applicable
Law'' (a defined term in the CT Plan), which means that the express
terms of this provision of the LLC agreement do not contemplate
limiting any regulatory obligations SROs might have under the federal
securities laws and regulations with respect to the operation of the CT
Plan. Finally, the Commission does not believe that it is necessary to
extend these provisions to apply to Non-SRO Voting Representatives, as
one commenter suggests,\164\ because while these persons serve on the
Operating Committee, they have no financial obligation under the CT
Plan and thus do not require the protections afforded to the Members in
Article III. Accordingly, the Commission is approving Article III,
Section 3.7 as proposed.
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    \162\ See RBC Letter, supra note 30, at 9; Virtu Letter, supra
note 30, at 3; see also Data Boiler Letter I, supra note 31, at 24.
    \163\ See supra Section II.C.1(b).
    \164\ See NYSE Letter I, supra note 18, at 38.
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    In the Notice, the Commission specifically sought comment on
Article III, Section 3.7(e) of the CT Plan, which absolves Members of
any duty to the

LLC or other Members, and on the provision's potential impact on the CT
Plan's responsibilities for the collection, processing, and
dissemination of equity market data.\165\ Two commenters object to the
provision that relieves Members of a duty (fiduciary or otherwise) to
the CT Plan or each other.\166\ One of these commenters asserts that
the SROs' disclaimer of duty or obligation to the CT Plan appears to be
a ``complete abdication'' of responsibility to ensure that the Plan
carries out its intended function, and that it is ``unclear'' why an
SRO's representative to the CT Plan would not have a fiduciary duty to
the LLC.\167\ This commenter states that the SROs should, at a minimum,
establish a duty in the CT Plan to promote the plan's function of
assuring the widespread availability of equity market data on terms
that are fair and reasonable, consistent with statutory requirements,
or to promote the interests of fair and orderly markets and the
protections of investors and the public interest.\168\ This commenter
encourages the SROs to adopt a fiduciary duty as well as to
affirmatively articulate the duties that are owed to the CT Plan.\169\
Another commenter similarly believes that the SROs should assume
fiduciary duties to the LLC.\170\
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    \165\ See Notice, supra note 3, 85 FR at 64568 (Question 12).
    \166\ See MFA Letter, supra note 30, at 2; RBC Letter, supra
note 30, at 9.
    \167\ MFA Letter, supra note 30, at 2 (also stating that the
SROs cannot both disclaim any duty to the LLC and maintain the
current level of control over the LLC if the CT Plan is to function
properly.).
    \168\ See id.
    \169\ See id.
    \170\ See RBC Letter, supra note 30, at 9.
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    One commenter disagrees that the CT Plan should impose a fiduciary
duty on Members.\171\ This commenter states that, while individuals or
entities that manage a limited liability company may have fiduciary
duties under Delaware law, a member generally does not have fiduciary
duties so long as it does not exercise control over the company.\172\
This commenter argues that under the CT Plan, the Operating Committee,
not the Members, have managerial responsibility for the operations of
the CT Plan and the Members only have limited rights to take
actions.\173\ Further, the commenter explains, no individual Member of
the CT Plan has the ability to control the actions of the CT Plan.\174\
The commenter concludes that ``it is unlikely that under Delaware law
the Members of the CT Plan, when acting in such capacity, would owe
fiduciary duties to the CT Plan or the Members.'' \175\ This commenter
also argues that the proposed language of the CT Plan has no effect on
the SROs' obligations under federal securities laws and that it is
those obligations, rather than the SROs' obligations to the CT Plan and
each other, that will ensure that the SROs comply with their
responsibilities regarding the dissemination of real-time consolidated
equity market data.\176\
---------------------------------------------------------------------------

    \171\ See Nasdaq Letter I, supra note 20, at 16-17.
    \172\ See id.
    \173\ See id.
    \174\ See id.
    \175\ Id.
    \176\ See id. at 16. This commenter further states that ``since
the Plan is a product of federal law, it would be inappropriate to
subject its Members to state fiduciary duties, as this would give
rise to a potential conflict between state and federal law.'' Id.
---------------------------------------------------------------------------

    With respect to providing a disclaimer of fiduciary duty for Non-
SRO Voting Representatives, this commenter states that there would be
some logic in expanding the disclaimer of fiduciary duties to cover
Non-SRO Voting Representatives, but that this would not address the
discrepancy between the federal law obligations of the Members and the
Non-SRO Voting Representatives.\177\ This commenter states that Rule
608 of Regulation NMS ``would require the Members to comply with the
Plan, and enforce compliance by their broker members, but that neither
that rule, nor any other provision of law, imposes corresponding duties
on the Non-SRO Voting Representatives.'' \178\
---------------------------------------------------------------------------

    \177\ See id. at 17.
    \178\ Id. at 17; see also NYSE Letter I, supra note 18, at 7.
---------------------------------------------------------------------------

    The Commission agrees that the proposed language of the CT Plan has
no effect on the SROs' obligations under the federal securities laws,
and that it is those obligations than will ensure compliance with SRO
responsibilities regarding consolidated equity market data. As
discussed above,\179\ any disclaimer of fiduciary duty to the LLC
cannot dilute, diminish, or otherwise alter the Members' regulatory
responsibilities under the federal securities laws and rules because,
as SROs and pursuant to the requirements under the national market
system, the Members are prohibited from acting in contravention of
Commission rules and regulations, which include rules for the
protection of investors to ensure the ``prompt, accurate, reliable, and
fair collection, processing, distribution, and publication of
information with respect to quotations for and transactions in such
securities and the fairness and usefulness of the form and content of
such information.'' \180\ However, the Commission understands the
concerns raised by commenters that the terms of the CT Plan fail to
impose any express duty on the Members to act to promote the purpose of
the Plan and expressly disclaim any such duty.\181\ To address this
concern, as discussed above, the Commission is modifying the terms in
the CT Plan's Recitals to explicitly state that no provision of the CT
Plan shall be construed to limit or diminish the obligations of SRO
Members to the CT Plan that arise pursuant to federal securities laws
and regulations.\182\ The Commission is not, however, modifying the
Plan to include a disclaimer of fiduciary duty for the Non-SRO Voting
Representatives who serve on the Operating Committee, a possibility
raised by one commenter,\183\ because Non-SRO Voting Representatives
will not have the same legal obligations as the SRO Voting
Representatives and because they may also have separate legal duties to
their employers.
---------------------------------------------------------------------------

    \179\ See supra Section II.C.1(b).
    \180\ 15 U.S.C. 78k-1(c)(1)(B).
    \181\ See MFA Letter, supra note 30, at 2; RBC Letter, supra
note 30, at 9.
    \182\ See supra Section II.C.1(b).
    \183\ See Nasdaq Letter I, supra note 20, at 16-17.
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5. Management of the LLC
(a) Duties and Powers of the Operating Committee
    Article IV of the CT Plan establishes the overall governance
structure for the management of the LLC. Article IV, Section 4.1(a)
proposes that the LLC be managed by the Operating Committee.\184\
Article IV, Section 4.1 also provides that the Operating Committee has
the authority to take actions it deems necessary to accomplish the
purposes of the LLC, including: (1) Proposing amendments or
implementing policies and procedures; \185\ (2) selecting, overseeing,
specifying the role and responsibilities of, and evaluating the
performance of the Administrator, the Processor, an auditor, and any
other professional service providers; \186\ (3) developing fair and
reasonable fees for equity market data \187\; (4) reviewing the
performance of the Processor and ensuring public reporting of the
Processors' performance and other metrics and information about the
processors; \188\ (5) assessing the marketplace for equity data
products

and ensuring that the CT Feeds are priced in a manner that is fair and
reasonable, and designed to ensure the widespread availability of CT
Feeds data to investors and market participants \189\; (6) designing a
fair and reasonable formula to be applied by the Administrator for
allocating revenue, and reviewing and revising the formula as needed;
\190\ (7) interpreting the LLC Agreement and its provisions; \191\ and
(8) other specific responsibilities provided for in the LLC
Agreement.\192\
---------------------------------------------------------------------------

    \184\ See Article IV, Section 4.1(a) of the CT Plan.
    \185\ See Article IV, Section 4.1(a)(i) of the CT Plan.
    \186\ See Article IV, Section 4.1(a)(ii) of the CT Plan. This
section further provides that any expenditure for professional
services paid by the Company must be authorized by the Operating
Committee and must be for activities consistent with the CT Plan.
See id.
    \187\ See Article IV, Section 4.1(a)(iii) of the CT Plan.
    \188\ See Article IV, Section 4.1(a)(iv) of the CT Plan. See
also infra Section II.C.6.
    \189\ See Article IV, Section 4.1(a)(v) of the CT Plan.
    \190\ See Article IV, Section 4.1(a)(vi) of the CT Plan.
    \191\ See Article IV, Section 4.1(a)(vii) of the CT Plan.
    \192\ See Article IV, Section 4.1(a)(viii) of the CT Plan.
---------------------------------------------------------------------------

    One commenter expresses general support for the provision of the CT
Plan that states that the responsibilities of the Operating Committee
include interpreting the LLC Agreement and its provisions, with the
caveats that ``the Non-SRO Voting Representatives have the opportunity
to meaningfully participate in the process of interpreting a provision
of the plan'' \193\ and that the CT Plan should provide more detail on
what role the Non-SRO representatives would have with respect to such
decisions.\194\ This commenter also recommends that the Operating
Committee adopt policies and procedures distinguishing operational
interpretations of the CT Plan from amendments required to be submitted
to the Commission under Rule 608 of Regulation NMS.\195\
---------------------------------------------------------------------------

    \193\ Virtu Letter, supra note 30, at 3.
    \194\ See id.
    \195\ See id.
---------------------------------------------------------------------------

    One commenter states that the Operating Committee has ``full and
complete control over the business and affairs of the CT Plan,
including interpretations of the CT Plan.'' \196\ This commenter argues
that any interpretation of the CT Plan would be subject to a discussion
at a meeting of the Operating Committee and that the minutes of such a
meeting would include sufficient detail to inform the public of the
matters under discussion and the views expressed (without
attribution).\197\ Another commenter states that the CT Plan's language
describing the power of the Operating Committee to ``develop[ ] and
maintain[ ] fair and reasonable Fees and consistent terms for the
distribution, transmission, and aggregation of core data'' is confusing
and recommends that ``[i]f the intent of this language is to empower
the Operating Committee to set fees, after public notice and comment,
and subject to Commission approval, it should clearly say as much.''
\198\
---------------------------------------------------------------------------

    \196\ Nasdaq Letter I, supra note 20, at 17 (internal citations
omitted). Another commenter similarly states that interpretation of
the CT Plan is a decision for the SROs to make, not the Commission.
See NYSE Letter I, supra note 18, at 38-39.
    \197\ See Nasdaq Letter I, supra note 20, at 17-18.
    \198\ RBC Letter, supra note 30, at 6.
---------------------------------------------------------------------------

    In response to the comment addressing the Operating Committee's
authority to interpret the provisions of the CT Plan and stating that
the Non-SRO Voting Representatives should participate in any
interpretations,\199\ the Commission notes that the terms of the CT
Plan provide that the Non-SRO Voting Representatives, as members of the
Operating Committee, will be able to participate in any discussions
regarding interpretations and will have a vote on whether to adopt an
interpretation. Further, the Commission believes that, while
operational interpretations in order to implement the CT Plan are
appropriately within the authority of the Operating Committee, any such
interpretations must be consistent with terms of the CT Plan and may
not in any way modify the CT Plan. Any change to a provision of the CT
Plan would require an amendment pursuant to Rule 608 of Regulation
NMS.\200\
---------------------------------------------------------------------------

    \199\ See Virtu Letter, supra note 30, at 3.
    \200\ 17 CFR 242.608(b)(2). As proposed, Article XIII, Section
13.5(b) of the CT Plan, would permit the Members to implement
amendments that relate to the functioning of Company as an LLC. As
discussed below, the Commission is modifying this provision such
that all amendments to the CT Plan must be filed with the
Commission. See supra Section II.C.12(e).
---------------------------------------------------------------------------

    Another commenter argues that the provision granting power to the
Operating Committee to develop and maintain fair and reasonable fees is
confusing and suggests that the provision expressly state that the
Operating Committee has the authority to set fees, after public notice
and comment, and subject to Commission approval.\201\ The Commission
does not believe such a clarification is necessary. Market Data Fees
will be established at a later date as proposed amendments to the CT
Plan.\202\ Rule 608(b) under Regulation NMS sets forth the requirements
for amending an NMS plan,\203\ and includes specific provisions
relating to establishing and amending fees set forth in an NMS plan.
Therefore, the Commission does not believe that this requirement needs
to be restated in the CT Plan.
---------------------------------------------------------------------------

    \201\ See RBC Letter, supra note 30, at 6.
    \202\ See supra Recitals paragraph (d)(ii) (requiring that
within four months of the Effective Date of the CT Plan, the
Operating Committee file proposed fees).
    \203\ 17 CFR 242.608(b)(2).
---------------------------------------------------------------------------

    Finally, one commenter states that the Operating Committee should
function as a legislature, with management to execute the Plan and
``the SIP's public purpose.'' \204\ This commenter further states that
the diversified Operating Committee will be ill-equipped to run daily
operation management functions to the detriment of the LLC.\205\ The
terms of the proposed CT Plan do, however, contemplate that the
Operating Committee will act as a general decision-making body, while
the Administrator and the Processors will be responsible for the day-
to-day operational decisions.
---------------------------------------------------------------------------

    \204\ Data Boiler Letter I, supra note 31, at 26.
    \205\ See id. This commenter further states, ``having members
dominating the Legislative branch and assigning an `observer' to
scrutinize everything the Operating Committee may try to do, [would]
indeed tie the hands of Executive branch.'' Id.
---------------------------------------------------------------------------

    For the reasons stated above, the Commission is approving Article
IV, Section 4.1(a) as proposed.
    Article IV, Section 4.1(b) proposes to permit the Operating
Committee to delegate all or part of its administrative functions to
(1) a subcommittee; (2) one or more of the Members; (3) one or more
Non-SRO Voting Representatives; or (4) any other Persons (including the
Administrator), provided that a delegation would not convey the
authority to take action on behalf of the CT Plan.
    Two commenters state that the CT Plan should clearly state the
scope and nature of an ``administrative function.'' \206\ One commenter
states that it supports allowing administrative functions to be
delegated, as long as the Non-SRO Voting Representatives have an
opportunity to participate in the decision to delegate the matter and
any delegation to an SRO Voting Representative or subcommittee
controlled by SRO Voting Representatives is subject to an augmented
majority vote of the Operating Committee.\207\ This commenter also
expresses concern about delegating undefined administrative functions
solely to SRO Voting Representatives.\208\ The second commenter
expresses similar concerns and suggests that administrative functions
should not be permitted to be delegated to a subcommittee composed only
of either SRO Voting Representatives or Non-SRO Voting Representatives,
and that both groups should be represented on any

subcommittee to which administrative functions are delegated.\209\
---------------------------------------------------------------------------

    \206\ See Virtu Letter, supra note 30, at 5; Data Boiler Letter
I, supra note 31, at 29-30.
    \207\ See Virtu Letter, supra note 30, at 5.
    \208\ See id.
    \209\ See Data Boiler Letter I, supra note 31, at 29-30.
---------------------------------------------------------------------------

    One commenter rejects these concerns, explaining that there would
be no delegation of the Operating Committee's voting authority, but
instead solely a delegation of the authority to implement a decision by
the Operating Committee, to develop a proposal for Operating Committee
consideration, or to perform other ministerial functions on the
Operating Committee's behalf.\210\ This commenter further explains that
an Operating Committee vote is necessary for any delegation of
administrative functions and that this should mitigate concerns about
undue delegation of authority to an SRO Voting Representative or Non-
SRO Voting Representative.\211\ Finally, another commenter states that
decisions relating to the administrative functions are for the SROs
alone to make.\212\
---------------------------------------------------------------------------

    \210\ See Nasdaq Letter I, supra note 20, at 22.
    \211\ See id.
    \212\ See NYSE Letter I, supra note 18, at 38-39.
---------------------------------------------------------------------------

    The Commission agrees with commenters that the concept of
``administrative functions'' of the Operating Committee should be
limited to prohibit certain delegations of authority and is therefore
modifying Section 4.1(b) to exclude from the functions that may be
delegated those administrative functions to be performed by the
independent Administrator pursuant to Section 6.1. The Commission finds
that this modification is appropriate because the functions delegated
to the independent Administrator, particularly those that involve
administering Vendor and Subscribers contracts, performing audits, or
assessing fees, necessarily involve access to sensitive information of
significant commercial or competitive value and therefore raise
heightened concerns about conflicts of interest that can be adequately
addressed only if these functions are performed by the independent
Administrator.
    In response to the comment that suggests that any delegation to an
SRO Voting Representative or subcommittee controlled by SRO Voting
Representatives should be subject to a vote of the Operating
Committee,\213\ the Commission agrees and notes that the terms of the
CT Plan state that delegations of administrative functions under this
provision are subject to a vote of the Operating Committee.
Additionally, in response to the comment that argues that
administrative functions should not be delegated to a subcommittee