[Federal Register Volume 85, Number 93 (Wednesday, May 13, 2020)]
[Notices]
[Pages 28702-28731]
[FR Doc No: 2020-10041]

Vol. 85

Wednesday,

No. 93

May 13, 2020

Part II

 Securities and Exchange Commission

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 Order Directing the Exchanges and the Financial Industry Regulatory
Authority To Submit a New National Market System Plan Regarding
Consolidated Equity Market Data; Notice

Federal Register / Vol. 85 , No. 93 / Wednesday, May 13, 2020 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88827; File No. 4-757]

Order Directing the Exchanges and the Financial Industry
Regulatory Authority To Submit a New National Market System Plan
Regarding Consolidated Equity Market Data

May 6, 2020.
    Notice is hereby given that, pursuant to Section 11A(a)(3)(B) of
the Securities Exchange Act of 1934 (``Act''),\1\ the Securities and
Exchange Commission (``Commission'') orders the Cboe BYX Exchange, Inc.
(``BYX''), Cboe BZX Exchange, Inc. (``BZX''), Cboe EDGA Exchange, Inc.
(``EDGA''), Cboe EDGX Exchange, Inc. (``EDGX''), Cboe Exchange, Inc.
(``Cboe''), Investors Exchange LLC (``IEX''), Long Term Stock Exchange,
Inc. (``LTSE''), MEMX LLC, Nasdaq BX, Inc. (``BX''), Nasdaq ISE, LLC
(``ISE''), Nasdaq PHLX LLC (``PHLX''), Nasdaq Stock Market LLC
(``Nasdaq''), New York Stock Exchange LLC (``NYSE''), NYSE American LLC
(``NYSE American''), NYSE Arca, Inc. (``NYSE Arca''), NYSE Chicago,
Inc. (``NYSE Chicago''), NYSE National, Inc. (``NYSE National''), and
Financial Industry Regulatory Authority, Inc. (``FINRA'') (each a
``Participant'' or a ``Self-Regulatory Organization'' (``SRO'') and,
collectively, the ``Participants'' or ``the SROs'') to act jointly in
developing and filing with the Commission a proposed new single
national market system plan (the ``New Consolidated Data Plan''). This
new plan will replace the three existing national market system plans
(the ``Equity Data Plans'' or ``Plans'') that govern the public
dissemination of real-time, consolidated equity market data for
national market system stocks (``NMS stocks'').\2\ The New Consolidated
Data Plan shall be filed with the Commission pursuant to Rule 608 of
Regulation NMS \3\ no later than August 11, 2020.
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    \1\ 15 U.S.C. 78k-1(a)(3)(B).
    \2\ Generally, NMS stocks include any security, other than an
option, for which transaction reports are collected, processed, and
made available pursuant to an effective transaction reporting plan.
See 17 CFR 242.600(b)(47).
    \3\ 17 CFR 242.608.
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I. Introduction

    On January 8, 2020, the Commission issued for comment a Notice of
Proposed Order Directing the Exchanges and FINRA to Submit a New
National Market System Plan Regarding Consolidated Equity Market Data
(``Proposed Order'').\4\ As the Commission explained in the Proposed
Order, in Section 11A of the Act, Congress directed the Commission to
facilitate the establishment of a national market system for
securities. The public dissemination of consolidated information about
quotes and trade activity is a fundamental component of that system.
Pursuant to its statutory responsibility, therefore, the Commission has
authorized the Equity Data Plans to facilitate the required collection
and dissemination of core data \5\ so that the public has ready access
to a ``comprehensive, accurate, and reliable source of information for
the prices and volume of any NMS stock at any time during the day.''
\6\ In adopting Regulation NMS in 2005,\7\ in order to improve the
transparency and effective operations of the Plans, the Commission
established advisory committees of non-SRO market participants to
advise the Equity Data Plans.\8\ The Commission stated that it was a
useful first step toward improving the responsiveness of Plan
participants to broader non-SRO market participants' concerns and the
efficiency of Plan operations.\9\ The Commission also stated that it
would continue to monitor and evaluate Plan developments to determine
whether any further action is warranted.\10\
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    \4\ Securities Exchange Act Release No. 87906 (Jan. 8, 2020), 85
FR 2164 (Jan. 14, 2020) (File No. 4-757). Comments received in
response to the Proposed Order are available at https://www.sec.gov/comments/4-757/4-757.htm.
    \5\ See, e.g., Section 11A(b) of the Act and Rule 603(b) of
Regulation NMS.
    \6\ Concept Release on Equity Market Structure, Securities
Exchange Act Release No. 61358 (Jan. 14, 2010), 75 FR 3593, 3600
(Jan. 21, 2010) (``Equity Market Structure Concept Release'').
    \7\ Regulation NMS, Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37495 (June 29, 2005) (``Regulation NMS
Release'').
    \8\ See id. at 37503.
    \9\ See id. at 37561.
    \10\ Id.
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    Since that time, 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 discussed in
this Order is a key step in responding to broader concerns about the
consolidated data feeds.\11\
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    \11\ See Proposed Order, supra note 4, 85 FR at 2166, 2168-74
(discussing broader concerns about the Equity Data Plans and the
consolidated data feeds).
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    To that end, in the Proposed Order, the Commission proposed to
direct the exchanges and FINRA to jointly develop and file with the
Commission, as an NMS plan pursuant to Rule 608(a) of Regulation
NMS,\12\ a single New Consolidated Data Plan that consolidates the
three current Equity Data Plans and that includes certain changes to
the governance structure of the Equity Data Plans.\13\
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    \12\ 17 CFR 242.608(a). The New Consolidated Data Plan, or any
amendment thereto, must comply with the requirements of Rule 608 of
Regulation NMS, including the requirement in Rule 608(a) to include
an analysis of the impact on competition. 17 CFR 242.608(a).
    \13\ One commenter suggests that the governance structure in the
Proposed Order be extended to apply to all NMS plans. See Letter
from Ellen Greene, Managing Director, Equity & Options Market
Structure, SIFMA (Feb. 28, 2020), at 6 (``SIFMA Letter''). The
Commission is taking an incremental approach to addressing
governance issues related to NMS plans and is at this time
addressing only the governance of the Equity Data Plans. The
Commission may in the future consider the governance of other NMS
plans.
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II. Discussion

A. Background

    In 1975, Congress, through the enactment of Section 11A of the
Act,\14\ directed the Commission to facilitate the establishment of a
national market system for the trading of securities in accordance with
the Congressional findings and objectives set forth in Section
11A(a)(1) of the Act.\15\ Among the findings and objectives of Section
11A(a)(1) are that new data processing and communications techniques
create the opportunity for more efficient and effective market
operations,\16\ and that it is in the public interest and appropriate
for the protection of investors and the maintenance of fair and orderly
markets to ensure the availability of information with respect to
quotations for and transactions in securities.\17\
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    \14\ 15 U.S.C. 78k-1.
    \15\ 15 U.S.C. 78k-1(a)(1).
    \16\ See 15 U.S.C. 78k-1(a)(1)(B). See also H.R. Rep. No. 94-
229, 94th Cong., 1st Sess. 93 (1975) (House Report noting that the
systems for collecting and distributing consolidated market data
would ``form the heart of the national market system.'').
    \17\ See 15 U.S.C. 78k-1(a)(1)(C).

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    Congress authorized the Commission to prescribe rules 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.'' \18\ In furtherance of
these purposes, the Commission has sought through its rules and
regulations to help ensure that certain ``core data'' \19\ is widely
available for reasonable fees.\20\ The Commission has recognized that
investors must have this core data ``to participate in the U.S. equity
markets.'' \21\
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    \18\ 15 U.S.C. 78k-1(c)(1)(B).
    \19\ See infra note 31 and accompanying text (defining ``core
data'').
    \20\ See 17 CFR 242.603; see also, e.g., Regulation NMS Release,
supra note 7, 70 FR at 37560 (stating that ``[i]n the Proposing
Release, the Commission emphasized that one of its primary goals
with respect to market data is to assure reasonable fees that
promote the wide public availability of consolidated market
data.'').
    \21\ Id. at 37560.
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    Section 11A of the Act also authorizes the Commission, by rule or
order, to authorize or require the SROs to act jointly with respect to
matters as to which they share authority under the Act in planning,
developing, operating, or regulating a facility of the national market
system.\22\ Pursuant to this authority, the Commission adopted
Regulation NMS.\23\ Rule 608 of Regulation NMS authorizes two or more
SROs, acting jointly, to file with the Commission a national market
system plan (``NMS plan'') or a proposed amendment to an effective NMS
plan.\24\ And Rule 603 of Regulation NMS requires the SROs to act
jointly pursuant to NMS plans to ``disseminate consolidated
information, including a national best bid and national best offer, on
quotations for and transactions in NMS stocks.'' \25\ The purpose of
the Equity Data Plans, adopted pursuant to Regulation NMS, is to
facilitate the collection and dissemination of core data so that the
public has ready access to a ``comprehensive, accurate, and reliable
source of information for the prices and volume of any NMS stock at any
time during the trading day.'' \26\ Widespread availability of timely
market data promotes fair and efficient markets and facilitates the
ability of brokers and dealers to provide best execution to their
customers.\27\
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    \22\ See 15 U.S.C. 78k-1(a)(3)(B).
    \23\ 17 CFR 242.600-612; see also Regulation NMS Release, supra
note 7, 70 FR at 37560.
    \24\ See 17 CFR 242.608.
    \25\ 17 CFR 242.603(b).
    \26\ Equity Market Structure Concept Release, supra note 6, 75
FR at 3600.
    \27\ See In the Matter of the Application of Bloomberg L.P.,
Securities Exchange Act Release No. 83755 at 3 (July 31, 2018),
available at https://www.sec.gov/litigation/opinions/2018/34-83755.pdf (``Bloomberg Order''); SEC Concept Release: Regulation of
Market Information Fees and Revenues, Securities Exchange Act
Release No. 44208 (Dec. 9, 1999), 64 FR 70613, 70615 (Dec. 17, 1999)
(stating that the distribution of core data ``is the principal tool
for enhancing the transparency of the buying and selling interest in
a security, for addressing the fragmentation of buying and selling
interest among different market centers, and for facilitating the
best execution of customers' orders by their broker-dealers'').
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    Under Regulation NMS and the Equity Data Plans, the SROs are
required to provide certain quotation \28\ and transaction data \29\
for each NMS stock to an exclusive securities information processor
(``SIP''),\30\ which consolidates this market data and makes it
available to market participants on the consolidated tapes, as
described below. For each NMS stock, the Equity Data Plans provide for
the dissemination of top-of-book (``TOB'') data, generally defining
consolidated market information (or ``core data'') as consisting of:
(1) The price, size, and exchange of the last sale; (2) each exchange's
current highest bid and lowest offer, and the shares available at those
prices; and (3) the national best bid and offer (``NBBO'') (i.e., the
highest bid and lowest offer currently available on any exchange).\31\
In addition to disseminating core data, the SIPs collect, calculate,
and disseminate certain regulatory data--including information required
by the National Market System Plan to Address Extraordinary Market
Volatility (``LULD Plan''),\32\ information relating to regulatory
halts and market-wide circuit breakers, and information regarding the
short-sale price test pursuant to Rule 201 of Regulation SHO.\33\ They
also collect and disseminate other NMS stock data and disseminate
certain administrative messages. Together with core data, the
Commission refers to this broader set of data for purposes of this
Order as ``SIP data.''
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    \28\ See 17 CFR 242.602.
    \29\ See 17 CFR 242.601.
    \30\ See 15 U.S.C. 78c(22)(A) (defining securities information
processor). Rule 603(b) of Regulation NMS requires that every
national securities exchange on which an NMS stock is traded and
national securities association act jointly pursuant to one or more
effective NMS plans to disseminate consolidated information on
quotations for and transactions in NMS stocks, and that such plan or
plans provide for the dissemination of all consolidated information
for an individual NMS stock through a single SIP. See 17 CFR
242.603(b).
    \31\ See Bloomberg Order, supra note 27, at 3; see also
Rescission of Effective-Upon-Filing Procedures for NMS Plan Fee
Amendments, Securities Exchange Act Release No. 87193 (Oct. 1,
2019), 84 FR 54794, 54795 (Oct. 11, 2019) (``Effective-Upon-Filing
Proposing Release'').
    \32\ The LULD Plan is available at http://www.luldplan.com.
    \33\ 17 CFR 242.201(b)(3).
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    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'').\34\ Pursuant to the Equity Data Plans, three
separate networks disseminate consolidated data for equity securities:
(1) Tape A for securities listed on the NYSE; (2) Tape B for securities
listed on exchanges other than NYSE and Nasdaq; and (3) Tape C for
securities listed on Nasdaq. The CTA Plan governs the collection,
consolidation, processing, and dissemination of last sale information
for Tape A and Tape B securities. The CQ Plan governs the collection,
consolidation, processing, and dissemination of quotation information
for Tape A and Tape B securities. And the UTP Plan governs the
collection, consolidation, processing, and dissemination of last sale
and quotation information for Tape C securities.
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    \34\ Each of the Equity Data Plans is an NMS plan under Rule 608
of Regulation NMS. 17 CFR 242.608; see also Securities Exchange Act
Release Nos. 10787 (May 10, 1974), 39 FR 17799 (order approving CTA
Plan); 15009 (July 28, 1978), 43 FR 34851 (Aug. 7, 1978) (order
temporarily approving CQ Plan); 16518 (Jan. 22, 1980), 45 FR 6521
(Jan. 28, 1980) (order permanently approving CQ Plan); and 28146
(June 26, 1990), 55 FR 27917 (July 6, 1990) (order approving UTP
Plan). The Commission notes that the options exchanges are
participants in the Limited Liability Company Agreement of Options
Price Reporting Authority, LLC (``OPRA Plan''), an NMS plan under
Rule 608 of Regulation NMS, which governs the collection,
consolidation, processing, and dissemination of last sale and
quotation information for listed options. See Securities Exchange
Act Release Nos. 17638 (Mar. 18, 1981), 22 SEC. Docket 484 (Mar. 31,
1981); 61367 (Jan. 15, 2010), 75 FR 3765 (Jan. 22, 2010).
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B. The Need for Changes in the Governance Structure of the Equity Data
Plans

    As described in the Proposed Order, the Commission believes that
the current governance structure of the three 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.\35\ Below, the Commission explains the basis for its
action in ordering the Participants to file the New Consolidated Data
Plan, the reasons the Commission believes that the Order reasonably
addresses concerns identified by the Commission, the relationship
between the Commission's Order to create the New Consolidated Data Plan
and the Commission's Infrastructure Proposal,\36\ and the need for a
new, single plan.
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    \35\ See Proposed Order, supra note 4, 85 FR at 2167-68.
    \36\ See Market Data Infrastructure, Securities Exchange Act
Release No. 88216 (Feb. 14, 2020), 85 FR 16726 (Mar. 24, 2020) (File
No. S7-03-20) (Proposed Rule) (``Infrastructure Proposal'').
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1. The Basis of the Commission's Order
    The Equity Data Plans' governance model was established in the
1970s, at a time when trading volume in any given stock was
concentrated on its listing market and when the U.S. equity exchanges
were member owned, not-for-profit organizations. Since then, the
markets have changed dramatically, and technology has fundamentally
changed market operations. Exchanges have demutualized, and they or
their parent companies now trade as public companies on exchanges. In
addition, the three Equity Data Plans are effectively governed by the
same operating committee and the same advisors, yet there are still
three separate NMS plans for equity market data. The Plans--which,
despite changes in the market, still provide sole voting power to the
exchanges and FINRA as members of the operating committee--control the
operations of the SIPs that produce and disseminate core data, as well
as the data products offered and their prices, while most of the
exchanges also offer proprietary data products for sale.
    As discussed in the Proposed Order, the 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.\37\ And these conflicts
bear on the exchanges' incentives to meaningfully improve the provision
of core data.\38\ For certain proprietary data products in particular,
exchanges have deployed cutting edge technology to reduce latency and
made other enhancements to improve content. For example, the exchanges
have developed depth-of-book (``DOB'') products that, relative to the
SIPs, provide greater content at lower latencies. For another segment
of the data market that is less sensitive to latency, exchanges have
also developed proprietary TOB products that provide data that is
generally limited to the highest bid, lowest ask, and last sale price
information at a lower cost to subscribers. Despite the Equity Data
Plans' improvements to certain aspects of the SIPs and related
infrastructure,\39\ these improvements have not been sufficient to meet
the needs of equity market participants, and the SIPs have continued to
meaningfully lag behind the proprietary data products and their related
infrastructure with respect to content and speed.\40\
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    \37\ See Proposed Order, supra note 4, 85 FR at 2168-74
(discussing the basis for the Proposed Order and sources of input).
    \38\ Proprietary data products are significant sources of
revenues for exchanges that offer them. Consequently, the Commission
believes, and market participants have stated, that the exchanges
may not be incentivized to adequately improve the SIPs, including
the content and latency of the SIPs, as making SIP content and
latency comparable to the proprietary feeds could decrease revenues
earned from certain proprietary data products. See, e.g., Clearpool
Group Viewpoints Rethinking the Current Market Structure (Sept.
2019), at 7 (stating, ``Currently, SIP [p]lans are governed by SROs
that have conflicts of interest in the provision of market data
(i.e., the exchanges, excluding FINRA) as they are selling market
data products that directly compete with the SIPs. These SROs
therefore have a disincentive to either invest in the SIPs or to
make SIPs competitive products to their proprietary data products,
and it is unlikely that they would vote to make needed changes to
the SIP Plans.''), available at https://cdn2.hubspot.net/hubfs/1855665/Clearpool%20Group%20Viewpoints%20-%20September%202019%20FINAL.pdf. See also Letter from John Ramsay,
Chief Market Policy Officer, IEX, at 3 (Sept. 24, 2019) (``SIP
governance is still under the control of exchanges that have no
reason to want the SIPs to be competitive with their own lucrative
feeds. Some exchanges even overtly market their own data as a better
alternative to the SIPs. The conflicts of interest are obvious and
acute.'').
    \39\ See Proposed Order, supra note 4, 85 FR at 2171-72
(describing improvements to some aspects of the SIPs and related
infrastructure).
    \40\ See Proposed Order, supra note 4, 85 FR at 2171-72. See,
e.g., Letters from Gregory Babyak, Global Head of Regulatory
Affairs, Bloomberg L.P. (Feb. 28, 2020), at 3 (``Bloomberg
Letter''); Joe Wald, Chief Executive Officer, and Ray Ross, Chief
Technology Officer, Clearpool Group (Feb. 28, 2020), at 2
(``Clearpool Letter''); Tyler Gellasch, Executive Director, Healthy
Markets Association (Feb. 20, 2020), at 6 (``Healthy Markets
Letter''); and SIFMA Letter, supra note 13, at 2.
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    Input received from a diverse array of market participants supports
the Commission's view that the differentials between SIP data and DOB
data feeds has reduced the usefulness of the form and content of SIP
data.\41\ One commenter on the Proposed Order asserts that ``few market
participants can rely on the SIP for order routing because the
necessary improvements to the SIPs have not been made under the current
governance structure.'' \42\ Another commenter similarly states that it
has ``significant concerns regarding whether the consolidated feeds
meet the purposes set out by Congress and by the Commission . . . ''
\43\ And a third commenter asserts that the SIPs are ``facially
inadequate for investors' or brokers' trading strategies--or for
operating a competitive trading venue.'' \44\
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    \41\ See Proposed Order, supra note 4, 85 FR at 2169-70.
    \42\ SIFMA Letter, supra note 13, at 2.
    \43\ Clearpool Letter, supra note 40, at 2.
    \44\ Healthy Markets Letter, supra note 40, at 5.
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    Certain commenters, however, challenge the need for the
Commission's Proposed Order. One commenter states that the Commission's
assertions that the exchanges have failed to invest in improvements to
the dissemination of data through the Equity Data Plans, and that the
Equity Data Plans have not kept pace with the exchanges' proprietary
data products, are ``unsubstantiated,'' ``demonstrably false,'' and
``cannot provide a basis for agency action under the APA
[Administrative Procedure Act].'' \45\ This commenter states that SIP
performance is defined by three factors--availability, latency, and
message throughput--and provides statistics that, it contends,
demonstrate that investments by the Equity Data Plans have
``significantly increased'' the performance of the SIPs with respect to
these three factors.\46\ This commenter further asserts that the
Commission has implied that the exchanges have intentionally slowed
progress on employing a ``distributed SIP'' model, which would reduce
geographic latency, ``to make their own proprietary data products look
better by comparison,'' \47\ and that such an allegation is
``unwarranted'' and reflects a ``failure to grasp the complexity of the
proposal.'' \48\ Another commenter also highlights efforts that have
already been undertaken to increase the speed with which subscribers
can access SIP data.\49\
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    \45\ Letter from Joan C. Conley, Senior Vice President and
Corporate Secretary, Nasdaq (Feb. 28, 2020), at 9 (``Nasdaq
Letter''); see also Nasdaq Letter at 10 (``The Commission must take
these facts into account when analyzing the performance of the SIP
processors, and base the proposal on grounds other than the
verifiably false assertion that the SIP processors have under-
invested in technology.''). On February 28, 2020, Nasdaq filed a (i)
petition for clarification and extension of comment period and (ii)
comment letter in response to the Proposed Order, which restated
portions of the petition. Throughout this Order, the Commission is
citing to the latter.
    \46\ Nasdaq Letter, supra note 45, at 9.
    \47\ Id. at 10.
    \48\ Id. at 11.
    \49\ See Letter from Elizabeth K. King, Chief Regulatory
Officer, ICE, and General Counsel and Corporate Secretary, NYSE
(Feb. 5, 2020), at 6-7 (``NYSE Letter'').

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    The Commission disagrees that recent improvements in SIP
performance obviate the need for the governance changes outlined in
this Order. While we recognize recent efforts by the Equity Data Plans
to improve the performance of the SIPs,\50\ those actions have not
fully mitigated our concerns with SIP performance.\51\ Congress charged
the Commission with ensuring 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.'' \52\ In furtherance of this responsibility, the
Commission seeks through its rules and regulations to help ensure that
certain ``core data'' \53\ is widely available for reasonable fees.\54\
The Commission has recognized that investors must have this core data
``to participate in the U.S. equity markets.'' \55\ And the purpose of
the Equity Data Plans, adopted pursuant to Regulation NMS, is to
facilitate the collection and dissemination of core data so that the
public has ready access to a ``comprehensive, accurate, and reliable
source of information for the prices and volume of any NMS stock at any
time during the trading day.'' \56\
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    \50\ See Proposed Order, supra note 4, 85 FR at 2172.
    \51\ The Commission also notes that some of the recent
improvements made to the SIPs have been responses to significant SIP
outages. For example, in 2013, after a significant SIP outage that
caused operations to cease and a market-wide halt in the trading of
Nasdaq-listed securities (``UTP SIP Outage''), the then-Chair of the
Commission met with the heads of the equities and options exchanges
to address the reliability of market systems. See SEC Chair White
Statement on Meeting With Leaders of Exchanges, September 12, 2013,
available at http://www.sec.gov/News/PressRelease/Detail/PressRelease/1370539804861. In response, the exchanges implemented
some enhancements to the reliability of the SIPs and backup systems.
See Joint Press Release by the Participants, available at https://ir.theice.com/press/news-details/2013/Self-Regulatory-Organizations-Response-to-SEC-for-Strengthening-Critical-Market-Infrastructure/default.aspx. After the UTP SIP Outage, however, several market
participants continued to raise concerns about the adequacy of the
SIP infrastructure. SIFMA, for example, argued that the UTP SIP
Outage was a symptom of the outdated system by which critical market
data is controlled and distributed and stated that the current
system suffers from a lack of transparency and competition,
questions of underfunding, and insulated governance. See Letter from
Theodore R. Lazo, Managing Director and Associate General Counsel,
SIFMA, to Mary Jo White, Chair, Commission (Dec. 5, 2013), available
at https://www.sifma.org/wp-content/uploads/2017/05/sifma-submits-comments-to-the-sec-on-securities-information-processors-and-operational-resiliency.pdf.
    \52\ 15 U.S.C. 78k-1(c)(1)(B).
    \53\ See supra note 31 for definition of core data.
    \54\ See 17 CFR 242.603; see also, e.g., Regulation NMS Release,
supra note 7, 70 FR at 37560 (stating that ``[i]n the Proposing
Release, the Commission emphasized that one of its primary goals
with respect to market data is to assure reasonable fees that
promote the wide public availability of consolidated market
data.'').
    \55\ Id. at 37560.
    \56\ Equity Market Structure Concept Release, supra note 6, 75
FR at 3600.
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    Despite recent efforts to improve SIP performance, disparities
between SIP data and proprietary DOB data feeds with respect to both
speed and content continue to affect the ability of many market
participants to use core data to be competitive in today's markets and
thereby call into question whether the SIPs continue to adequately
serve their regulatory purposes. Moreover, the relevant measure of SIP
performance under Section 11A of the Act is not limited to the three
factors discussed by one commenter--availability, latency, and message
throughput.\57\ The Commission must evaluate whether the collection,
processing, distribution, and publication of equity market data is
``prompt, accurate, reliable, and fair''-- and also, crucially, the
``usefulness of the form and content of such information,'' \58\ which
recent efforts have not sufficiently addressed.
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    \57\ Nasdaq Letter, supra note 45, at 9.
    \58\ 15 U.S.C. 78k-1(c)(1)(B).
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    Nor is the basis of the Commission's action that the Participants
have failed to make any improvements to the SIPs. Rather, changes in
the market, combined with the current governance structure of the
Equity Data Plans, have ``exacerbated the exchanges' lack of incentives
to improve the SIPs.'' \59\ As the Commission explained in the Proposed
Order, addressing these governance concerns is a ``key step'' in
responding to the broader concerns about whether the consolidated data
feeds continue to serve their regulatory purpose.\60\ While the
Commission understands that substantial changes to the SIPs are
complicated undertakings, the Commission believes that the current
governance model of the Equity Data Plans--with its concentration of
voting power in a small number of exchange groups, its lack of voting
power for non-SRO representatives, and the requirement for unanimity in
support of any substantial change to the SIPs--perpetuates
disincentives for the Equity Data Plans to invest in certain
improvements to enhance the distribution of core data or the content of
the core data itself.
---------------------------------------------------------------------------

    \59\ Proposed Order, supra note 4, 85 FR 2173.
    \60\ Proposed Order, supra note 4, 85 FR at 2173.
---------------------------------------------------------------------------

    Finally, one commenter argues that the Commission has relied on
``cherry-picked opinions of self-interested market participants to
justify the Proposed Order--without any of its own independent
analysis'' and that this ``further underscores the arbitrary and
capricious nature of its decision-making.'' \61\ The Commission has
studied market data issues over the course of many years and has
devoted considerable resources to this study and to the analysis of
these issues.\62\ Moreover, the Commission published the Proposed Order
expressly to provide the opportunity for public comment on this
proposal by all interested parties, including the Participants, for the
Commission to consider in its analysis.\63\ Indeed, the Proposed Order
specifically solicited any ``additional insights into the concerns and
issues discussed in the Proposed Order'' from the Participants and
stated that the Commission ``will consider such information and
suggestions, as well as any other comment on the Proposed Order.'' \64\
In addition, the New Consolidated Data Plan submitted in response to
this Order will itself be published for public comment prior to any
Commission decision to disapprove or to approve the plan with any
changes or subject to any conditions the Commission deems necessary or
appropriate after considering public comment.
---------------------------------------------------------------------------

    \61\ NYSE Letter, supra note 49, at 16.
    \62\ See Regulation of Market Information Fees and Revenues,
Securities Exchange Act Release No. 42208 (Dec. 9, 1999), 64 FR
70613 (Dec. 17, 1999); Equity Market Structure Concept Release,
supra note 6; Securities and Exchange Commission, ``SEC Announces
Members of New Equity Market Structure Advisory Committee'' (Jan.
13, 2015), available at https://www.sec.gov/news/pressrelease/2015-5.html; and Securities and Exchange Commission, Equity Market
Structure Roundtables, https://www.sec.gov/spotlight/equity-market-structure-roundtables (last visited Apr. 17, 2020).
    \63\ The Commission also notes that the Proposed Order itself
included a summary of comments raised in the past by this commenter
and others who were opposed to central aspects of the Commission's
proposal, including the limitation on exchange-group voting, see
Proposed Order, supra note 4, 85 FR at 2175-76, and the provision of
votes to non-SROs. See Proposed Order, supra note 4, 85 FR at 2178-
81.
    \64\ Proposed Order, supra note 4, 85 FR at 2165.
---------------------------------------------------------------------------

2. The Efficacy of the Proposed Order
(a) The Proposed Order Reasonably Addresses the Concerns Identified by
the Commission
    One commenter argues that, ``[r]ather than improving the SIPs, the
Proposed Order will instead undermine the SROs' ability to efficiently
improve them for the benefit of investors and the market,'' and that,
therefore, ``[b]ecause the Commission's approach is not reasonably
calculated to address the disparate data feed problem identified by the
Commission, it is arbitrary and

capricious.'' \65\ This commenter also argues that the Proposed Order
relies on the ``unfounded assumption'' that granting non-SROs authority
in the New Consolidated Data Plan would reduce conflicts of
interest,\66\ and that the Commission's ``decision to ignore the likely
impact of the non-SRO's own conflicted interests is a critical
oversight.'' \67\ This commenter further argues that, ``[w]hile failing
to establish how the Proposed Order will reduce the influence of
alleged conflicted interests, the Commission has also failed to
demonstrate how the Proposed Order will otherwise improve SIP
functionality.'' \68\ This commenter concludes that the Proposed Order
will not advance the Commission's stated purpose and therefore ``lacks
the necessary `rational connection' between regulatory means and ends
mandated by the APA [Administrative Procedure Act].'' \69\
---------------------------------------------------------------------------

    \65\ See NYSE Letter, supra note 49, at 12.
    \66\ Id. at 16.
    \67\ Id.
    \68\ Id.
    \69\ Id. at 16-17.
---------------------------------------------------------------------------

    Other commenters assert that the Proposed Order does not go far
enough. One commenter argues that the Proposed Order uses an ``overly
elaborate and conflicted process to potentially implement piecemeal
changes that will not fix the fundamental conflict of interest at the
heart of SIP governance,'' \70\ because the Proposed Order would direct
the for-profit exchanges to draft the terms of the New Consolidated
Data Plan.\71\ The commenter concludes that the Commission should
instead ``exercise its authority to directly assume control over the
equity data plans, and appoint the SROs to . . . an advisory committee
for the provision of the public market data stream,'' \72\ ensure that
filings by the Equity Data Plans meet the applicable regulatory
standards, and adopt its proposed rule to rescind effective-on-filing
procedures for NMS plan amendments.\73\ Another commenter similarly
asserts that the Proposed Order does not directly address the issues
presented by the coexistence of SIPs and proprietary data feeds and
that the Proposed Order would not sufficiently improve the governance
of the Equity Data Plans.\74\ This commenter suggests that the
Commission itself should appoint the members of the SIPs' operating
committees and include a majority of non-SRO members.\75\
---------------------------------------------------------------------------

    \70\ Healthy Markets Letter, supra note 40, at 14; see also
Letter from Dan Jamieson (Mar. 29, 2020) (generally concurring with
the comment letters submitted by Healthy Markets and Council of
Institutional Investors (``CII''), infra note 74).
    \71\ See id. at 8-9, 14; see also id. at 15 (``While we
appreciate the intent of the Proposed Order, it simply doesn't do
enough, and in our view further entrenches the deeply flawed system
for years to come.'').
    \72\ Id. at 14-15.
    \73\ See Effective-Upon-Filing Proposing Release, supra note 31.
    \74\ See Letter from Jeffrey P. Mahoney, General Counsel, CII,
(Feb. 20, 2020), at 2 (``CII Letter''). See also Letters from
Jeffrey T. Brown. Senior Vice President, Legislative and Regulatory
Affairs, Charles Schwab & Company, Inc. (Feb. 28, 2020), at 5
(``Schwab Letter'') (expressing concern that ``the proposed changes
to the voting structure of the operating committees may still yield
only the status quo''); Joseph Kinahan, Managing Director, Client
Advocacy and Market Structure, TD Ameritrade, Inc. (Feb. 24, 2020),
at 5 (``TD Ameritrade Letter'') (asserting that allowing the SROs to
propose amendments to the New Consolidated Data Plan without buy-in
from non-SROs ``may lead to substantially similar circumstances
which exist currently''); Kelvin To, Founder and President, Data
Boiler Technologies, LLC (Feb. 4, 2020), at 2, 4 (asserting that
``spinning off'' the SIPs from the exchanges would be better than
prescribing a particular governance structure).
    \75\ See CII Letter, supra note 74, at 6.
---------------------------------------------------------------------------

    Other commenters, however, support the Commission's view that
improving the governance structure of the SIPs would likely improve the
SIPs. One commenter offers support for the Commission's belief that the
evolution of the exchanges into publicly held companies has created a
conflict with their regulatory objectives in operating the SIPs.\76\
One commenter states that it agrees that ``broader industry
participation in the governance of the NMS Plans would be an effective
tool to address these conflicts of interest and ensure that core data
provided by the SIP[s] continues to improve.'' \77\ Another commenter
states that it believes that the Proposed Order would ``substantially
improve the governance of the SIP, which should enhance both the
operations of the SIP and the quality of SIP data.'' \78\ And another
commenter agrees that ``[i]mproving the governance structure should
help ensure that the SIPs keep up with market data innovations in the
future.'' \79\ Several other commenters also express the view that the
Commission's proposed changes to SIP governance would facilitate
improvements to the SIPs.\80\ One of these commenters states, ``the
decision to give non-SROs voting rights and recognizing exchange
operators as a single entity for purposes of voting is a positive step
in helping to promote useful upgrades of the SIP.'' \81\ Another
commenter observes, ``[w]e anticipate that the proposed changes will
help mitigate the conflicts of interest that are inherent to the
current structure and will establish a solid, new foundation through
which future enhancements to the SIPs, as necessary, can be more
efficiently and fairly made.'' \82\ One commenter agrees that ``reform
of the current governance structure of the Equity Data Plans can better
serve the needs of investors and other market participants.'' \83\
Another commenter anticipates that ``reducing the concentration of
power in large exchange groups makes SIP enhancements more likely.''
\84\ Additionally, one commenter states that, as long as the
Commission's final order ``explicitly directs [the] exchanges to take
specific actions in the new Plan, without allowing them optionality to
craft a different alternative--the current process ought to be
sufficient to ensure substantial progress in this area.'' \85\
---------------------------------------------------------------------------

    \76\ See Letter from Nathaniel N. Evarts, Managing Director,
Head of Trading, Americas, et al., State Street Global Advisors
(Feb. 28, 2020), at 2 (``State Street Letter'').
    \77\ Letter from Lisa Mahon Lynch, Associate Director, Global
Trading, Wellington Management Company LLP (Feb. 28, 2020), at 1
(``Wellington Letter'').
    \78\ Letter from Dorothy Donohue, Deputy General Counsel,
Securities Regulation, Investment Company Institute (Feb. 28, 2020),
at 6 (``ICI Letter'').
    \79\ SIFMA Letter, supra note 13, at 3; see also id. at 2 (``We
support the Commission mandating these governance changes and
recommend finalizing the order as quickly as possible . . . .'').
    \80\ See Letters from Michael Blasi, SVP, Enterprise
Infrastructure, and Krista Ryan, VP, Associate General Counsel,
Fidelity Investments (Feb. 28, 2020), at 2 (``Fidelity Letter'');
Clearpool Letter, supra note 40, at 2; Allison Bishop, President,
Proof Services LLC (Feb. 27, 2020), at 7 (``Proof Letter''); Anders
Franzon, General Counsel, MEMX LLC (Feb. 28, 2020), at 3 (``MEMX
Letter''); see also Letters from Sherry Madera, Chief Industry &
Government Affairs Officer, Refinitiv (Feb. 27, 2020), at 3
(``Refinitiv Letter'') (asserting that the Proposed Order ``will
significantly improve the health of our industry and all the market
to take concrete, reasonable action to improve administrative,
operational and fee-setting processes associated with market data
and market access''); Thomas M. Merritt, Deputy General Counsel,
Virtu Financial, Inc. (Feb. 25, 2020), at 1 (``Virtu Letter'')
(asserting that the Proposed Order ``represents an important step
forward in enhancing the transparency and efficiency of the NMS
[p]lan structure, and in eliminating potential conflicts of interest
associated with the dissemination of consolidated equity market
data''); Schwab Letter, supra note 74, at 4 (``The SEC's proposal to
both consolidate equity market data plans and provide for non-SRO
representation on the operating committees is both a welcome
development and a substantial departure from the status quo of
exchange-run market data plans.'').
    \81\ Clearpool Letter, supra note 40, at 2.
    \82\ Fidelity Letter, supra note 80, at 2.
    \83\ MEMX Letter, supra note 80, at 3.
    \84\ Proof Letter, supra note 80, at 7.
    \85\ Letter from Daniel Keegan, Head of North America Market
Securities Services, Co-Head of Global Equities & Securities
Services, Citigroup Global Markets Inc. (Mar. 2, 2020), at 4 (``Citi
Letter'').
---------------------------------------------------------------------------

    The Commission believes, as it stated in the Proposed Order, that
addressing issues with the current governance structure of the Equity
Data Plans is ``an

important first step in responding to concerns about the consolidated
data feed.'' \86\ And, as the Proposed Order explained, the Commission
believes that the current governance structure of the Equity Data Plans
is inadequate to respond to recent changes in the market and to the
evolving needs of investors and other market participants,\87\ and
that, under the current governance structure, sufficient improvements
to the consolidated market data feeds have not occurred.\88\ Further,
the Commission recognizes that the inadequacies in the governance model
of the Equity Data Plans that it has identified may not be the sole
cause of broader concerns about the consolidated feed. But, based on
its extensive experience overseeing the Equity Data Plans and the
national market system, as well as input received from market
participants through numerous Commission initiatives,\89\ the
Commission believes that the governance structure of the Equity Data
Plans contributes significantly to the broader concerns about the
consolidated data feed.\90\ Thus, the Commission believes that changes
to the governance structure of the SIPs are appropriate to create a
governance structure that will reduce obstacles to ongoing improvement
of the consolidated market data feeds in ways that the current
governance structure of the Equity Data Plans has not. The Commission
recognizes that additional operational changes may also be appropriate
in order to improve SIP functionality, and believes that making these
governance changes will facilitate decision-making regarding
operational changes.\91\
---------------------------------------------------------------------------

    \86\ Proposed Order, supra note 4, 85 FR at 2173.
    \87\ See Proposed Order, supra note 4, 85 FR at 2168.
    \88\ See Proposed Order, supra note 4, 85 FR at 2168.
    \89\ See supra note 62 and accompanying text.
    \90\ See Proposed Order, supra note 4, 85 FR at 2169-73
(discussing the Commission's concerns regarding the Equity Data
Plans' provision of equity market data).
    \91\ Separately, the Commission has proposed to make specific
changes to the operations of the SIPs through the Commission's
market data infrastructure proposal. See Infrastructure Proposal,
supra note 36.
---------------------------------------------------------------------------

    As noted above, certain commenters question whether the
Commission's proposed changes to SIP governance will, in fact, improve
the governance of the SIPs, either because the Commission has not, in
their view, appropriately considered the conflicted interests of the
non-SRO members of the operating committee of the proposed New
Consolidated Data Plan,\92\ or because the Commission has not removed
the conflicted SROs from the process of creating the New Consolidated
Data Plan.\93\ Regarding the conflicts of interests of non-SROs, the
Commission recognizes that each representative of a buyer of market
data would also have an inherent conflict of interest in serving on the
operating committee of the Plans.
---------------------------------------------------------------------------

    \92\ See NYSE Letter, supra note 49.
    \93\ See Healthy Markets Letter, supra note 40; CII Letter,
supra note 74.
---------------------------------------------------------------------------

    With respect to both SROs and non-SRO representatives, it is not
possible to completely eliminate conflicts from the governance
structure of the existing Equity Data Plans or the New Consolidated
Data Plan. But the Commission is attempting to balance the views of the
exchanges, which are subject to inherent conflicts of interest and
which also have dominant voting power on the Equity Data Plans (as well
as on the New Consolidated Data Plan), with the views of non-SROs,
which would also be subject to conflicts of interest.\94\ The
Commission believes that a more diverse set of perspectives from full
voting members of the operating committee of the New Consolidated Data
Plan would improve the governance structure of the SIPs and would help
to ensure that the operating committee benefits from these views before
it takes action or files proposed plan amendments with the Commission.
---------------------------------------------------------------------------

    \94\ See infra Section II.E. The Commission also believes that
many non-SROs, as subscribers to SIP data, would have incentives to
improve the usefulness of SIP offerings.
---------------------------------------------------------------------------

    In addition, the Commission believes that broadening the
perspectives represented on the operating committee by including non-
SROs would be beneficial in providing more meaningful inclusion of key
stakeholders' views in New Consolidated Data Plan decision-making. As
the Plans play an important role in the national market system, and
because the Plans' decisions frequently place financial and operational
burdens on non-SRO market participants, the non-SROs' representation as
voting members, combined with a reallocation of voting power, would
support the goals of the New Consolidated Data Plan by ensuring that a
broader range of relevant opinions and perspectives have voting
representation on the operating committee, which the Commission
believes will help to facilitate enhanced decision-making and
innovation in the provision of equity market data.
    Moreover, the Proposed Order specifically acknowledged that the New
Consolidated Data Plan should also include provisions to address
conflicts of interest of non-SRO representatives on the operating
committee.\95\ As discussed in more detail below, a conflicts-of-
interest policy would apply to non-SRO representatives and would
require disclosures similar to those of SRO representatives.\96\
---------------------------------------------------------------------------

    \95\ Proposed Order, supra note 4, 85 FR at 2185; see also infra
Section II.E.1.
    \96\ See infra Section II.E.1.
---------------------------------------------------------------------------

(b) The Relationship Between the Proposed Order and the Commission's
Infrastructure Proposal
    Two commenters argue that significant unexplained inconsistencies
exist between the Proposed Order and the Commission's Infrastructure
Proposal.\97\ The commenters assert that the Proposed Order would
create a single consolidator for equity market data, while the
Infrastructure Proposal would replace this system with a system of
multiple competing consolidators.\98\ One of the commenters also argues
that the Proposed Order advocates changes in the governance model
because these changes would lead to a distributed SIP model and an
expansion of the categories of data disseminated, and that the
Infrastructure Proposal instead does not mandate distributed data
dissemination by any consolidator and replaces voluntary consideration
of expanded data content with ``government mandated depth-of-book and
auction data.'' \99\ That commenter further argues that the
Infrastructure Proposal would make ``extensive changes in the scope of
authority vested in the operating committee of the New Consolidated
Data Plan''; that the Infrastructure Proposal ``would apparently
nullify, or at least undermine, the authority of the New Consolidated
Data Plan to continue to act as a data consolidator''; and that the
Infrastructure Proposal would ``vest the operating committee with
unprecedented new authority to regulate SRO fees far beyond what is
included in the consolidated feed operated by the New Consolidated Data
Plan.'' \100\ And the commenter states that, while the Proposed Order
does not directly address market structure, the Infrastructure Proposal
would ``significantly impact substantive provisions of Regulation
NMS,'' but that the Commission has not provided an analysis of how
these market structure

changes may affect aspects of the Proposed Order.\101\
---------------------------------------------------------------------------

    \97\ See Nasdaq Letter, supra note 45, at 2-3, 5; Letter from
Elizabeth K. King, Chief Regulatory Officer, ICE, and General
Counsel and Corporate Secretary, NYSE (Apr. 23, 2020), at 3-4
(``NYSE Letter 2'').
    \98\ Nasdaq Letter, supra note 45, at 2; NYSE Letter 2, supra
note 97, at 3.
    \99\ Nasdaq Letter, supra note 45, at 2.
    \100\ Id. at 2; see also id. at 11-12.
    \101\ Id. at 2.
---------------------------------------------------------------------------

    The commenters argue that the alleged inconsistencies between the
Proposed Order and the Infrastructure Proposal work to deny commenters
a meaningful opportunity to comment on either proposal, and that
commenters will therefore be denied procedural rights guaranteed by the
Administrative Procedure Act (``APA'').\102\ One of the commenters
further urges the Commission to extend the comment period for both the
Proposed Order and the Infrastructure Proposal,\103\ and to issue a
statement that articulates how the Proposed Order and the Commission's
Infrastructure Proposal are intended to work together and that
reconciles the conflicts between the two proposals.\104\ The other
commenter argues that the Commission has offered no explanation for why
the Proposed Order remains necessary in light of the Infrastructure
Proposal,\105\ and asks that the Commission withdraw both proposals and
propose a ``single, unified, and well-reasoned rule'' to address the
issues.\106\
---------------------------------------------------------------------------

    \102\ See Nasdaq Letter, supra note 45, at 3-5; NYSE Letter 2,
supra note 97, at 4-5.
    \103\ See Nasdaq Letter, supra note 45, at 3. The Commission
extended the comment period for the Proposed Order from February 28,
2020, to March 20, 2020. See Securities Exchange Act Release No.
88340 (Mar. 6, 2020), 85 FR 14987 (Mar. 16, 2020).
    \104\ See id. at 2-3; see also id. at 2 (asserting that the
Commission has not provided an analysis of how the market structure
changes of the Infrastructure Proposal might affect aspects of the
Proposed Order, such as the mandate to create a single SIP).
    \105\ NYSE Letter 2, supra note 97, at 4.
    \106\ NYSE Letter 2, supra note 97, at 2, 5.
---------------------------------------------------------------------------

    The Commission disagrees with the view that there are
inconsistencies between the Proposed Order and the Infrastructure
Proposal. The two proposals address distinct aspects of the SIPs. The
Proposed Order, as discussed above, addressed only the governance
structure of the Plans that oversee the SIPs, and it did not address
the core operational structure of the SIPs--including the content of
SIP data products and the method by which such NMS stock information is
collected, consolidated, and disseminated--or whether there would
continue to be multiple SIPs for equity market data. Contrary to the
commenter's assertion, the Commission did not propose governance
changes in order to bring about specific operational changes to the
SIPs, such as a distributed SIP model or specified expansion of data
content. Rather, the governance changes are designed to address the
Plans' inefficiencies and the inherent conflicts of interest of the
SROs, which have affected the provision of core data. The Commission
believes that an improved governance structure should foster
improvements to the SIPs; however, in the Proposed Order, it did not
specify what those improvements might be. In contrast, specific
operational changes that the Commission has proposed to the SIPs are
contained within the Infrastructure Proposal.
    Moreover, while the Proposed Order would require that the three
existing Equity Data Plans be replaced by the single New Consolidated
Data Plan, it clearly contemplated that processors--plural--could
continue to exist.\107\ Accordingly, the Commission disagrees with the
argument that the Proposed Order would require the Plans to retain a
processor, but that the Infrastructure Proposal would subsequently
``nullify, or at least undermine the authority of the New Consolidated
Data Plan to continue to act as a data consolidator.'' \108\ For the
same reason, although one commenter argues that the Proposed Order
seeks to mitigate a problem that the Infrastructure Proposal hopes to
eliminate,\109\ this Order addresses governance issues that are not
addressed in the Infrastructure Proposal. Should the Commission adopt
the operational changes contemplated by the Infrastructure Proposal,
the governance structure of the operating committee of the New
Consolidated Data Plan would be applicable to the new operational
structure for the equity market's data collection, consolidation, and
dissemination and any changes would be subject to the augmented
majority voting structure of the new plan, as discussed below.
---------------------------------------------------------------------------

    \107\ See, e.g., Proposed Order, supra note 4, 85 FR at 2182
(``[t]he Commission believes that the New Consolidated Data Plan
operating committee's role should also include selecting,
overseeing, specifying the role and responsibilities of, and
evaluating the performance of . . . plan processors''), 2185 (``the
operating committee of the New Consolidated Data Plan would need to,
among other things, select plan processors'').
    \108\ Nasdaq Letter, supra note 45, at 2.
    \109\ NYSE Letter 2, supra note 97, at 4.
---------------------------------------------------------------------------

    Further, the Commission disagrees with one commenter's view that,
through the Proposed Order and the Infrastructure Proposal, the
Commission proposes to create a ``government-sponsored pricing
consortium.'' \110\ This commenter argues that--because the Proposed
Order requires the operating committee to assess the marketplace for
equity market data and ensure that SIP data is priced in a manner that
is fair and reasonable and not unreasonably discriminatory, and because
the Infrastructure Proposal mandates inclusion of DOB and exchange
auction data--these proposals, taken together, would promote a
framework where fees would be set by a committee of data providers and
consumers. But under the Proposed Order--as under the current Equity
Data Plans--the operating committee of the New Consolidated Data Plan
would file with the Commission proposals to create and set prices for
SIP data products, which would be reviewed consistent with the
requirements of Rule 608 of Regulation NMS. And exchanges would be
able, as they are now, to file with the Commission proposals to create
and set prices for proprietary data products, which would be reviewed
consistent with the requirements of Section 19(b) of the Act and Rule
19b-4 thereunder.\111\ The Commission therefore disagrees that the
changes contemplated in the Proposed Order, even if combined with the
changes contemplated in the Infrastructure Proposal, would create a
pricing consortium.
---------------------------------------------------------------------------

    \110\ Nasdaq Letter, supra note 45, at 11-12.
    \111\ 15 U.S.C. 78s(b); 17 CFR 240.19b-4.
---------------------------------------------------------------------------

    Other commenters also addressed the relationship between the
Commission's Proposed Order and the Commission's Infrastructure
Proposal. One commenter encourages the Commission to combine governance
and infrastructure into a single package of reforms.\112\ Another
commenter states that the Commission should coordinate changes in
governance with changes to the system for disseminating consolidated
data.\113\ And other commenters express the view that changes to market
data infrastructure are necessary in addition to changes to SIP
governance.\114\ As

discussed above, the Commission has proposed to address its concerns
with two aspects of consolidated equity market data--the governance of
the SIPs and the operation of the SIPs--with different remedies. And
while the Commission has proposed to modify the governance and
operations of the SIPs separately with different remedies, each of
these efforts has been undertaken in furtherance of the same, broader
goal: 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,''
consistent with Section 11A of the Act.\115\
---------------------------------------------------------------------------

    \112\ See CII Letter, supra note 74, at 3; see also MEMX Letter,
supra note 80, at 3 (recommending that the Commission consider the
Proposed Order and the Infrastructure Proposal together to ensure
that issues around the content of the SIP and market data in general
are appropriately considered).
    \113\ See Letter from John Ramsay, Chief Market Policy Officer,
Investors Exchange LLC (Mar. 4, 2020), at 1-2 (``IEX Letter'') (``We
believe that progress on both fronts--governance and changing the
system for distributing consolidated data--is critical to addressing
broker, fiduciary, and investor concerns about market data.'').
    \114\ See, e.g., Letter from Hubert De Jesus, Managing Director,
and Joanne Medero, Managing Director, BlackRock, Inc. (Feb. 28,
2020) at 1 (``BlackRock Letter'') (supporting the Commission's
Proposed Order, but noting that ``effective governance only
addresses one dimension of market data regulations'' and that ``more
comprehensive reforms are warranted''); Virtu Letter, supra note 80,
at 4 (``While we strongly support the efforts of the agency to make
enhancements to the NMS [p]lans governing SIP data, we urge the
Commission to take even bolder steps to introduce needed reforms in
the regulatory construct governing market data and market
access.''); Bloomberg Letter, supra note 40, at 1 (encouraging the
Commission to move forward on plan governance issues, as well as
continue the Commission's broader efforts, including the
Infrastructure Proposal). One commenter also expressed support for
enhancements both to the governance structure of the Equity Data
Plans and the content and delivery of market data through the
consolidated tape. See Letter from Patrick Sexton, EVP, General
Counsel & Corporate Secretary, Cboe Global Markets, Inc. (Feb. 28,
2020), at 2 (``Cboe Letter'').
    \115\ 15 U.S.C. 78k-1(c)(1)(B).
---------------------------------------------------------------------------

3. The Commission's Proposals Are Consistent With the Act and Will
Benefit Investors and Support the Regulatory Structure of Regulation
NMS
    One commenter argues that the Proposed Order, combined with the
Infrastructure Proposal, would ``reflect a fundamentally anti-
competitive transformation that will harm investors, particularly Main
Street investors, stifle innovation, and undermine the regulatory
structure established by Regulation NMS.'' \116\ This commenter further
asserts that ``there is no doubt that expanding the breadth and scope
of products offered under the SIP would fundamentally change the
balance between competition and regulation established by Regulation
NMS in 2005,'' which, the commenter argues, ``sought to avoid creation
of a `totally centralized system that loses the benefits of vigorous
competition and innovation among individual markets,' and therefore
`allow[ed] market forces, rather than regulatory requirements, to
determine what, if any, additional quotations outside the NBBO are
displayed to investors.' '' \117\ This commenter argues that, instead
of requiring the SROs to file the New Consolidated Data Plan, the
Commission should review the SIPs to ensure that they only include the
data needed to meet regulatory mandates, which in turn must match the
needs of investors.\118\
---------------------------------------------------------------------------

    \116\ Nasdaq Letter, supra note 45, at 5, 8, 11-12.
    \117\ Id. at 12 (quoting Securities Exchange Act Release No.
51808 (June 9, 2005), 70 FR 37495, 37499 (June 29, 2005)).
    \118\ See id. at 12.
---------------------------------------------------------------------------

    As the Commission stated in the Proposed Order, it believes that
changes to the current SIP governance model are appropriate precisely
because the Equity Data Plans, under the current governance structure,
have not taken sufficient measures to update the SIPs to reflect
innovations in market data in response to evolving markets and the
changing needs of investors.\119\ Given the Congressional mandate that
the Commission 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'' \120\--and the Commission's ongoing monitoring and
evaluation of Equity Data Plan developments \121\--the Commission
believes that the structure governing the provision of SIP data should
be improved to better meet the needs of market participants in light of
changes in the markets since the adoption of Regulation NMS. And the
Commission believes that the governance changes addressed in this Order
will facilitate those improvements.
---------------------------------------------------------------------------

    \119\ See, e.g., Proposed Order, supra note 4, 85 FR at 2168.
    \120\ 15 U.S.C. 78k-1(c)(1)(B).
    \121\ See supra note 10 and accompanying text.
---------------------------------------------------------------------------

4. The Need for a Single New Consolidated Data Plan
    Several commenters oppose the proposed creation of a single New
Consolidated Data Plan.\122\ These commenters assert that the
Commission failed to adequately consider the cost implications of
consolidating the three separate Equity Data Plans.\123\ One of these
commenters states that the Commission both overestimates the costs of
the Equity Data Plans and underestimates the implementation cost
associated with the New Consolidated Data Plan.\124\ This commenter
believes that the Commission is required under Section 3(f) of the Act
to consider ``whether the [proposed rulemaking] will promote
efficiency, competition, and capital formation.'' \125\ To meet this
requirement, this commenter states, ``the Commission must consider the
economic effects of a proposed rule, including the costs of
implementation.'' \126\ This commenter further states that the
Commission ``asserts without support that the current administrative
structure of the [Equity Data Plans] creates `redundancies,
inefficiencies, and inconsistancies' [sic] that necessitates
consolidating the Plans under a single Plan with one [a]dministrator.''
\127\ This commenter argues that, as recognized in the Proposed Order,
the Equity Data Plans ``already largely function as one plan today''
with ``the same distribution formula, legal representation, and other
professional services,'' and that the Participants and advisory
committee ``do not incur additional costs for the three Plans to meet
at the same time, compared to one plan.'' \128\ The commenter also
states that the SIP operating committees and advisory committees each
have identical membership, and their quarterly meetings are held
concurrently.\129\
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    \122\ See, e.g., Cboe Letter, supra note 114, at 12; Nasdaq
Letter, supra note 45, at 4, n.11; NYSE Letter, supra note 49, at
18-19.
    \123\ See, e.g., Cboe Letter, supra note 114, at 12; Nasdaq
Letter, supra note 45, at 4, n.11; NYSE Letter, supra note 49, at
18-19.
    \124\ See NYSE Letter, supra note 49, at 18.
    \125\ See id.; 15 U.S.C. 78c(f). Another commenter states that
it agrees with the commenter above ``to the extent that they focus
on the Commission's clear obligations to assess the economic effects
of its proposed action.'' See Nasdaq Letter, supra note 45, at 4,
n.11.
    \126\ See NYSE Letter, supra note 49, at 18.
    \127\ See id. at 19.
    \128\ See id.
    \129\ See id.
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    This commenter further asserts that the SROs would need to expend
significant resources hiring outside counsel to assist with tasks
related to the creation and adoption of the New Consolidated Data Plan,
including ``negotiating and drafting the New [Consolidated Data] Plan,
drafting contracts with the SIP processors, replacing current contracts
with data recipients, and filing to obtain Commission approval of the
draft new Plan.'' \130\ Additionally, this commenter asserts that
``only the SROs would face the financial burden in Plan consolidation
development'' despite being ``forced to abdicate decision-making to
non-SROs'' under the New Consolidated Data Plan.\131\ Moreover, the
commenter states that the New Consolidated Data Plan would ``not reduce
the costs of the Participants to produce--nor the costs of the
processors to aggregate and distribute--consolidated market data for
Tapes A, B, and C.'' \132\ This commenter concludes that creating a
single New Consolidated Data Plan would not ``provide meaningful cost-
savings that would

support lowering the fees charged for market data products.'' \133\
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    \130\ See id. at 19.
    \131\ See id.
    \132\ See id.
    \133\ See id.
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    The Commission disagrees with this commenter's position for several
reasons. By its terms, Section 3(f) of the Act does not apply to the
Commission's issuance of an order such as this one requiring the
Participants to file a new NMS plan.\134\ Moreover, the particular
costs of implementing the New Consolidated Data Plan will depend on the
specific choices made by the Participants as they consider how to
implement this Order. And when the Participants file the New
Consolidated Data Plan, it will be considered by the Commission under
Rule 608 of Regulation NMS. Among other things, Rule 608 requires every
national market system plan to be accompanied by an analysis of the
impact on competition,\135\ which is then published for comment and
evaluated by the Commission.\136\ In this Order, the Commission
considers the overall scope of the implementation costs as well as the
costs of developing the New Consolidated Data Plan.
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    \134\ ``Whenever pursuant to this chapter the Commission is
engaged in rulemaking, or in the review of a rule of a self-
regulatory organization, and is required to consider or determine
whether an action is necessary or appropriate in the public
interest, the Commission shall also consider, in addition to the
protection of investors, whether the action will promote efficiency,
competition, and capital formation.'' Section 3(f) of the Act, 15
U.S.C. 78c(f).
    \135\ 17 CFR 242.608(a)(4)(ii)(C).
    \136\ 17 CFR 242.608(b).
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    In publishing the Proposed Order for comment, the Commission asked
interested parties to ``submit written presentations of views, data,
and arguments concerning the Proposed Order,'' including comments on
``the likely economic consequences'' of issuing a final order to the
SROs containing the provisions in the Proposed Order.\137\ While
commenters did not provide quantitative data on development or
implementation costs for creating a single New Consolidated Data Plan,
the Commission has considered those costs qualitatively by leveraging
its oversight experience of the Equity Data Plans and examining the
qualitative factors raised by a broad range of market participants.
---------------------------------------------------------------------------

    \137\ See Proposed Order, supra note 4, 85 FR at 2165.
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    The Commission acknowledges certain efforts of the Equity Data
Plans to operate jointly regarding certain administrative
elements.\138\ But the Commission believes that redundancies,
inefficiencies, and inconsistencies remain under the current
administrative structure of the Equity Data Plans that can be
significantly reduced under a single New Consolidated Data Plan. Some
commenters agree with the Commission's view and state that maintaining
three separate Equity Data Plans is inefficient and creates redundant
efforts on the part of the operating and advisory committee members
that unnecessarily burden ongoing improvements to the SIPs and that
contribute to certain duplicative costs.\139\ As one commenter states,
the ``historical reasons that resulted in the three plans for NYSE-
listed, Nasdaq-listed and other exchange-listed stocks no longer exist
today in a post-Regulation NMS world.'' And this commenter opines that
``consolidation is a good first step to reforming the current market
data infrastructure.'' \140\
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    \138\ See id. at 2182. The Commission believes that the current
examples of joint operation of the Plans demonstrates that there are
certain areas of operation for which creating a single New
Consolidated Data Plan would be expected to give rise to minimal, if
any, additional implementation costs.
    \139\ See, e.g., Fidelity Letter, supra note 80, at 3; IEX
Letter, supra note 113, at 3; MEMX Letter, supra note 80, at 2;
Schwab Letter, supra note 74, at 5; SIFMA Letter, supra note 13, at
3; Wellington Letter, supra note 77, at 2. While one commenter
agrees with the Commission's view that creating a single New
Consolidated Data Plan is ``likely to promote efficiency and cost-
savings,'' this commenter believes that ``those efficiencies may be
considerably undermined'' by the Infrastructure Proposal. See Nasdaq
Letter, supra note 45, at 4. See supra Section II.B.2 for a
discussion on the relationship between this Order and the
Infrastructure Proposal.
    \140\ See SIFMA Letter, supra note 13, at 3.
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    One commenter states that a single New Consolidated Data Plan
``will promote efficiencies, especially in terms of streamlining the
operation of the SIP feeds.'' \141\ Another commenter states that
consolidating the Plans would ``lead to greater efficiency in meeting
the purposes of Section 11A of the Act'' and ``reduce confusion for
investors.'' \142\ Another commenter states that the differences
between the Equity Data Plans are ``substantial and create unnecessary
compliance complexity for SIP data users'' in the areas of ``audit
practices and requirements[,] entitlement controls, administrative
usage policies, free trial policy, non-professional usage, [and]
qualifications as non-professional users.'' \143\ Another commenter
states that the needless duplication under the current framework
results in ``two different sets of staff to deal with, two sets of
contracts, two sets of reporting requirements, and two separate audit
teams to manage.'' \144\ The same commenter states that ``there is no
reason for the three distinctive plans to exist,'' and believes that
combining the two administrators along with their policies and staffs
under a single New Consolidated Data Plan would ``significantly
decrease the administrative burden'' that SIP consumers
experience.\145\
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    \141\ See State Street Letter, supra note 76, at 2.
    \142\ See Letter from Jennifer W. Han, Associate General
Counsel, Managed Funds Association, and Adam Jacobs-Dean, Managing
Director, Global Head of Markets Regulation, Alternative Investment
Management Association (Feb. 28, 2020), at 2 (``MFA/AIMA Letter'').
    \143\ See Schwab Letter, supra note 74, at 5-6.
    \144\ See Refinitiv Letter, supra note 80, at 2.
    \145\ See id.
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    The Commission agrees with these commenters' statements for the
reasons discussed below and believes that creating a single New
Consolidated Data Plan with the governance structure discussed below
would simplify the administration of the Equity Data Plans' operations
to facilitate functional improvements to the provision of equity market
data, and would further efforts to ensure that core data meets on a
continuing basis the needs of market participants and furthers the
objectives of Section 11A of the Act.\146\
---------------------------------------------------------------------------

    \146\ See 15 U.S.C. 78k-1(c)(1)(B).
---------------------------------------------------------------------------

    The Commission believes that a single New Consolidated Data Plan
would simplify the Plans' billing structure to require only one
inventory reporting system, one billing method, one reporting
obligation for data subscribers, and one plan administrator payment for
the Participants. The Commission believes that the simplified billing
structure would provide the Plans with a single standardized and
comprehensive view of SIP data costs for subscribers. Additionally, the
Commission expects that, instead of two auditing teams under the Equity
Data Plans, only one auditing team would be necessary for SIP data
usage under the New Consolidated Data Plan. Finally, the Commission
anticipates that the Plans would no longer need to maintain separate
books and records for the Equity Data Plans' businesses (including
separate plan websites and secure web portals for Participants), to
file with the Commission separate (and often duplicative) plan
amendments regarding some aspects of the Equity Data Plans,\147\ or to
devote additional

personnel resources to coordinate and facilitate three separate Equity
Data Plans.\148\
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    \147\ One commenter suggests as an alternative consideration to
the New Consolidated Data Plan that the Commission amend its rules
to allow filings made by the Equity Data Plans to be filed with the
Commission as a single filing for all three Equity Data Plans. See
Cboe Letter, supra note 114, at 12-13. The Commission agrees with
the commenter that the Equity Data Plans' filing process is one
aspect of the many inefficiencies that need to be addressed under
the New Consolidated Data Plan. This commenter also highlights the
inefficiencies of the SRO rule filing process under Section 19(b) of
the Act and Rule 19b-4 thereunder. See Cboe Letter, supra note 114,
at 13, n.24. While the Commission appreciates the views shared by
the commenter on the SRO rule filing process, more generally, we do
not believe that such arguments support keeping three separate
Equity Data Plans, which is the issue addressed in this Order.
Indeed, consolidating NMS plan filings would be facilitated by
creating a single New Consolidated Data Plan.
    \148\ See, e.g., Refinitiv Letter, supra note 80, at 2; Schwab
Letter, supra note 74, at 5-6.
---------------------------------------------------------------------------

    The Commission believes that reducing the existing redundancies,
inefficiencies, and inconsistencies through a single New Consolidated
Data Plan should further the goals of Section 11A of the Act and
provide meaningful cost savings in the long term for SROs and for other
market participants by consolidating the operational costs incurred by
the administration of three separate Equity Data Plans. Whereas market
participants today must navigate their obligations under three separate
Plans, a single New Consolidated Data Plan would remove impediments to
the efficient operation of the national market system by providing the
foundation for the application of consistent policies,\149\ procedures,
terms,\150\ and conditions. This should provide for a more streamlined
approach to the administration and provision of consolidated equity
market data and thereby reduce the costs imposed on other market
participants, including SIP data subscribers.\151\
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    \149\ For example, the Commission understands that there are
currently differences among the Equity Data Plans in the policies
related to, among other things, the following: Consolidated volume,
audit look-back period, entitlement review, entitlement control,
disaster recovery, non-display usage, service facilitator,
administrative usage, quote meter, and controlled versus
uncontrolled products.
    \150\ See supra note 143 (commenter stating that differences
among the qualifications as non-professional users create compliance
complexity for SIP data users). Additionally, exchanges have
acknowledged the administrative burden associated with determining
the professional and non-professional status of broker-dealers'
customers. See, e.g., NYSE Sharing Data-Driven Insights--Stock
Quotes and Trade Data: One Size Doesn't Fit All (Aug. 22, 2019),
available at https://www.nyse.com/equities-insights#20190822 (last
accessed Apr. 20, 2020) (``Subscribers pay different rates for the
product based on whether the individual viewing the data is deemed a
`professional' or `non-professional' user. This is a policy that has
provided steep discounts for Main Street investors, but has created
complex administrative burdens for brokers.''); Nasdaq Total
Markets: A Blueprint for a Better Tomorrow (Apr. 2019), at 4,
available at https://www.nasdaq.com/docs/Nasdaq_TotalMarkets_2019_2.pdf (stating that the distinctions
between ``professional'' and ``non-professional'' users ``have
become arbitrary and more complex than is necessary and create undue
administrative burden to manage. We should modernize the user
definitions to achieve the same general goals while streamlining the
administrative burden.'').
    \151\ See State Street Letter, supra note 76, at 2; TD
Ameritrade Letter, supra note 74, at 2; Virtu Letter, supra note 80,
at 2.
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    In addition, the Commission believes that the economic effects of
creating a single New Consolidated Data Plan are likely to provide
long-term cost-savings for the SROs in the administration of the Plans,
as well. The Commission acknowledges that SROs would incur costs in the
process of creating the New Consolidated Data Plan. One commenter
asserts that, given the significant resources that would need to be
diverted to drafting the New Consolidated Data Plan, the effort would
likely increase rather than decrease inefficiencies.\152\ Three
commenters highlight prior experience in the joint development of an
NMS plan as instructive for the significant amount of time and
resources devoted to the creation a new NMS plan.\153\
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    \152\ See Cboe Letter, supra note 114, at 12.
    \153\ See Cboe Letter, supra note 114, at 12, n.22; Nasdaq
Letter, supra note 45, at 15; NYSE Letter, supra note 49, at 19,
n.46. As discussed below, the Commission acknowledges that there
will be a transition period with additional costs to onboard a new
independent Plan administrator pursuant to this Order. See infra
Section II.D.
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    However, while it is likely that initially, the implementation cost
of combining the Equity Data Plans may exceed the short-term cost
savings from the reduction of existing redundancies, inefficiencies,
and inconsistencies described above, the Commission anticipates that
ongoing cost savings would continue to accrue over the period that the
New Consolidated Data Plan is likely to remain in effect, thereby
providing long-term cost savings. In addition, with respect to the
costs of creating the New Consolidated Data Plan, we note that 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
Consolidated Data Plan. The Commission also believes that the plan
development costs will differ significantly from those incurred in the
development of prior NMS plans. Specifically, the Equity Data Plans
have been in existence for over 30 years. This should provide the
Participants with the requisite experience to limit the scope of the
costs to create the New Consolidated Data Plan.\154\ In addition, the
Participants may incorporate some or all of the current operational
provisions of the existing Equity Data Plans into the New Consolidated
Data Plan.\155\ Furthermore, as contemplated in the Proposed
Order,\156\ the New Consolidated Data Plan could retain the same SIP
processors under the same terms and conditions, thereby eliminating
what otherwise would be a significant burden for the development of the
New Consolidated Data Plan.\157\ Thus, the Commission anticipates that,
at least initially, most of the detailed provisions relating to the
operation of the existing Equity Data Plans could be imported into the
New Consolidated Data Plan without substantial effort or great
cost.\158\
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    \154\ For example, the Commission believes that the
Participants' and the advisory committee members' longstanding
experience in the Plans would reduce the costs for identifying Plan
provisions that could be harmonized or combined under a New
Consolidated Data Plan. In fact, based on information the Commission
obtained through its oversight of the Plans, the Commission is aware
that the Participants and the advisory committee members of the
Equity Data Plans have already engaged in some recent efforts to
facilitate standardization of the policies of the Equity Data Plans.
    \155\ The Commission believes that the New Consolidated Data
Plan submitted by the SROs under this Order should harmonize
inconsistencies among, and combine duplicate provisions in, the
Equity Data Plans that do not unavoidably arise from the existence
of separate and distinct SIPs. See Proposed Order, supra note 4, 85
FR at 2186. The Commission believes that this exercise would be
incorporated into the process of creating a single New Consolidated
Data Plan and provide the administrative benefits described above.
    \156\ See supra note 107 (quoting statements from the Proposed
Order that the existing SIP processors could continue to exist under
the New Consolidated Data Plan).
    \157\ The Commission's requirement to create the New
Consolidated Data Plan does not contemplate changes to the
production, aggregation, or distribution of consolidated market
data. Thus, the Commission does not anticipate that any costs
associated with the production of market data would be affected.
Instead, the direct cost savings envisioned by the Commission are
likely to result from the reduction of existing redundancies,
inefficiencies, and inconsistencies related to the operation of
three separate Equity Data Plans.
    \158\ The Commission does not anticipate that substantial
revisions or re-negotiations of existing SIP subscriber contracts
would be necessary to transition to the New Consolidated Data Plan.
For example, the Commission understands that the SIP contracting
process is automated (i.e., an online form that uses conditional
logic to determine the data licensing requirements of a subscriber),
which should ease the electronic transfer of existing SIP subscriber
requirements to the New Consolidated Data Plan. The Commission did
not receive comments on the level of burden to replace current
contracts with the New Consolidated Data Plan.
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C. Voting Rights on the New Consolidated Data Plan Operating Committee

    In its Proposed Order, the Commission set forth specific governance
provisions and the voting structure to be included in the New
Consolidated Data Plan to help to address certain concerns it
identified relating to the provision of consolidated equity market data
under the existing Equity Data Plans. The proposed

governance provisions include: (i) An allocation of voting rights to
unaffiliated exchanges and exchange groups, along with the possibility
of additional voting power based on market share, (ii) the inclusion of
non-SRO voting members on the operating committee of the New
Consolidated Data Plan, specifying the categories to be represented and
a nomination and selection process, and (iii) the voting requirements
for action under the New Consolidated Data Plan.
1. Voting Rights for SROs
(a) The Need for the Allocation of Voting Power by Exchange Group and
Market Share
    As it stated in the Proposed Order, the Commission believes that
exchange consolidation has altered the relative voting power of SROs
such that exchange groups under common management now have greater
voting power with respect to plan governance. Exchanges that
historically had only one vote on NMS plans have now been consolidated
into exchange groups that can control blocks of four or five
votes.\159\ Consequently, any two exchange groups can now command a
majority of votes,\160\ and the relative voting power of unaffiliated
SROs has been diluted over time. Accordingly, the Commission continues
to believe that changing the current voting structure would be
beneficial and would promote the goals of Section 11A of the Act \161\
with respect to equity market data.
---------------------------------------------------------------------------

    \159\ For example, for years the NYSE held a single exchange
license and therefore had only one vote on the Equity Data Plans'
operating committees, despite having approximately 80 percent of the
trading volume in NYSE-listed securities. Today, the NYSE group of
SROs as a whole has approximately 30 percent market share of trading
in NYSE-listed securities, but because the NYSE group holds five
exchange licenses, it has five votes and significantly more
influence over Equity Data Plans' decisions than before. See Cboe
U.S. Equities Volume Data, available at https://markets.cboe.com/us/equities/market_share/ (last accessed Apr. 17, 2020) (month-to-date
volume summary as of Apr. 17, 2020).
    \160\ Specifically, the three exchange groups currently
represent 14 of the 17 votes on the operating committees of the
Equity Data Plans, and any two exchange groups together command a
minimum of 9 votes.
    \161\ 15 U.S.C. 78k-1.
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    To address the disproportionate influence that the exchange groups
have had on the operation of the existing Equity Data Plans, in its
Proposed Order, the Commission proposed that voting rights in the New
Consolidated Data Plan should be allocated so that each unaffiliated
SRO \162\ and exchange group has one vote on the operating committee,
with a second vote provided if the exchange group or unaffiliated SRO
has a market center or centers that trade more than 15 percent of
consolidated equity market share \163\ for four of the six consecutive
months preceding a vote of the operating committee.
---------------------------------------------------------------------------

    \162\ For purposes of this Order, an ``unaffiliated SRO'' means
an SRO that is not part of the same corporate ownership group as
other SROs. The currently unaffiliated SROs are FINRA, IEX, LTSE,
and MEMX.
    \163\ As defined in the Proposed Order, and for purposes of this
Order, the term ``consolidated equity market share'' means the
average daily dollar equity trading volume of an exchange group or
unaffiliated SRO as a percentage of the average daily dollar equity
trading volume of all of the SROs, as reported by the Equity Data
Plans or the New Consolidated Data Plan. See Proposed Order, supra
note 4, 85 FR at 2175, n.141.
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    A number of commenters share the Commission's concern about the
concentration of voting power in exchange groups and support the
Commission's proposal to rebalance the relative voting power on the New
Consolidated Data Plan's operating committee.\164\ One commenter argues
that the current voting structure of the Equity Data Plans reduces
incentives for SROs to ``agree on changes that could impact the
proprietary interests of one or two exchange groups.'' \165\ Another
commenter ``strongly supports reducing the emphasis on voting based on
individual exchange medallions,'' stating, ``this aspect of the
proposed order is key to addressing the inherent conflicts of interest
that exist relating to SIP governance.'' \166\ A third commenter
supports the proposed voting allocation structure by noting that the
proposal ``would modernize the voting structure . . . while
facilitating the fair representation of all participants on the
operating committee.'' \167\ One commenter agrees, stating that the
proposal ``importantly removes some of the perverse incentives for
exchange groups to acquire or `light up' new exchange medallions.''
\168\ Another commenter adds that the proposal would ``reward exchanges
with market share while balancing potential fluctuations in market
share and preventing further consolidation of voting power.'' \169\
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    \164\ See, e.g., Citi Letter, supra note 85, at 3; Clearpool
Letter, supra note 40, at 3-4; Fidelity Letter, supra note 80, at 4;
ICI Letter, supra note 78, at 4-5; IEX Letter, supra note 113, at 2;
MFA/AIMA Letter, supra note 142, at 3; Letter from Christopher
Solgan, VP, Senior Counsel, MIAX Exchange Group (Mar. 3, 2020), at 2
(``MIAX Letter''); MEMX Letter, supra note 80, at 3; SIFMA Letter,
supra note 13, at 4; Refinitiv Letter, supra note 80, at 2; Letter
from Mehmet Kinak, Vice President & Global Head of Systematic
Trading & Market Structure, and Jonathan D. Siegel, Vice President &
Senior Legal Counsel, T. Rowe Price Associates, Inc. (Feb. 24,
2020), at 2 (``T. Rowe Price Letter''); Virtu Letter, supra note 80,
at 2.
    \165\ IEX Letter, supra note 113, at 2.
    \166\ MEMX Letter, supra note 80, at 4.
    \167\ MIAX Letter, supra note 164, at 2.
    \168\ Citi Letter, supra note 85, at 3.
    \169\ SIFMA Letter, supra note 13, at 4.
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    Several commenters, however, oppose the Commission's proposal.\170\
Specifically, these commenters argue that the Commission's proposal is
inconsistent with the APA \171\ and with the Commission's historical
treatment of the exchanges, in which affiliated exchanges have been
treated individually for regulatory purposes.\172\ One of these
commenters states that the Commission's proposal ``disenfranchises
individual exchanges,'' arguing that, ``[t]he concept of `exchange
group' is found nowhere in the statute or SEC rules, but operates to
deprive SROs of the votes that they would otherwise have.'' \173\ This
commenter further asserts that ``one can easily see a scenario in which
a proposal could be adopted even though a majority of SEC licensed SROs
disapproved of the proposal.'' \174\ Another commenter states that the
Commission ``fails . . . to explain why the unified votes of multiple,
independent SROs are less deserving or meaningful than the votes of
unaffiliated SROs.'' \175\ This commenter similarly argues that,
``[e]ach SRO participating in the proposed New [Consolidated Data] Plan
would have independent obligations under the Exchange Act and the Plan
with respect to administering SIPs, irrespective of whether the SRO is
affiliated with an exchange group. Yet the impact of the Proposed Order
would be to curtail the independence of affiliated SROs by, in effect,
requiring that they vote as a bloc.'' \176\ This commenter further
states that the proposal would result in ``otherwise equal and
independent SROs . . . [having] unequal voting power based on their
corporate affiliations. And it assumes that the degree of voting power
inequity should increase or decrease based on the SRO-affiliate group
sizes.'' \177\
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    \170\ See, e.g., Cboe Letter, supra note 114; Nasdaq Letter,
supra note 45; NYSE Letter, supra note 49.
    \171\ See NYSE Letter, supra note 49, at 17-18 (arguing that the
Commission's proposal lacks a reasonable basis and is therefore
arbitrary and capricious).
    \172\ See Cboe Letter, supra note 114, at 9-10; Nasdaq Letter,
supra note 45, at 6-7; NYSE Letter, supra note 49, at 17-18; but see
ICI Letter, supra note 78, at 4.
    \173\ Nasdaq Letter, supra note 45, at 7.
    \174\ Id. (providing as an example, ``a proposal supported by
four unaffiliated SROs and one exchange group would garner a
majority of the permitted SROs votes (six to four in favor) but
would not be supported by a majority of SROs (nine to seven
against).'').
    \175\ NYSE Letter, supra note 49, at 17.
    \176\ Id.
    \177\ Id. at 18.

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    The Commission disagrees. The Commission continues to believe that
there is a need to rebalance voting power in Plan governance to address
the disproportionate influence of affiliated exchange groups.\178\ The
Proposed Order described in detail the effects on Plan governance of
the exchange groups' conflicts of interest arising from their sale of
proprietary data products. The current governance structure provides
voting power based on each exchange license and thereby concentrates
voting power in a small number of exchange group stakeholders, which
also have inherent conflicts of interest with respect to the operation
of the Plans. The Commission believes that this has perpetuated
disincentives for the Equity Data Plans to make improvements to the SIP
data products. The Commission continues to believe that modernizing
plan governance by reallocating votes by exchange group should help to
ensure the prompt, accurate, reliable, and fair collection, processing,
distribution, and publication of information with respect to quotations
for and transactions in NMS stocks and the fairness and usefulness of
the form and content of that information.
---------------------------------------------------------------------------

    \178\ One commenter noted the relatively recent acquisition by
NYSE's parent company of two exchanges that typically account for
less than 3 percent of trading volume, yet represent 12 percent of
voting power on the Equity Data Plans, allowing the NYSE to
``command 29% of the operating committees vote . . . [rather than]
the 18% voting power they had prior to acquiring these exchanges.''
ICI Letter, supra note 78, at 5.
---------------------------------------------------------------------------

    As the exchange group commenters accurately point out, however, the
Commission has treated affiliated exchanges as separate entities for
regulatory purposes in the past. The Commission believes, nonetheless,
that a meaningful legal distinction exists between, on one hand, each
SRO's individual responsibility pursuant to Sections 6, 15A, 17, and 19
of the Act \179\ to comply with the statutory and regulatory
requirements that apply to its operation and self-regulation of its
market center, including the requirement that its rules ``not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of [the Act]'' \180\--and, on the other hand, the
responsibility of the SROs to jointly operate the NMS plans pursuant to
Section 11A of the Act \181\ and to disseminate consolidated market
data to which different SROs may contribute in varying degrees. The
Commission believes that this legal distinction justifies treating
affiliated exchanges under common management and control as one
exchange group limited to one, or at most two, vote(s) in the context
of NMS plan governance. And, as a practical matter, the Commission, in
its oversight of the Equity Data Plans, is unaware of an individual
affiliated exchange member of an exchange group having cast its vote
differently than the votes cast by its affiliated exchanges. The
Commission further believes that its authority under Section 11A of the
Act \182\ is broad and is not limited with respect to a determination
as to the allocation of voting power to exchanges, either individually
or in groups, based on common management or control.
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    \179\ 15 U.S.C. 78f, 15 U.S.C. 78o-3, 15 U.S.C. 78q, and 15.
U.S.C. 78s.
    \180\ Section 6(b)(8) and Section 15A(b)(9) of the Act, 15
U.S.C. 78f(b)(8) and 15 U.S.C. 78o-3(b)(9).
    \181\ 15 U.S.C. 78k-1.
    \182\ Section 11A of the Act, 15 U.S.C. 78k-1 (``having due
regard for the public interest, the protection of investors, and the
maintenance of fair and orderly markets, to use its authority under
this [Act] to facilitate . . . a national market system for
securities . . . in accordance with the findings and to carry out
the objectives set forth in paragraph (1) of [Section 11A(a)].'').
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    Moreover, the Commission believes that treating affiliated SROs
differently from non-affiliated SROs is justified in this context from
a policy perspective because of the disproportionate influence
affiliated exchange groups currently exercise in Plan matters by voting
as a block and diluting the voting power of other Participants. Indeed,
the Commission agrees with the commenter that points out that the
augmented majority vote could result in a scenario in which a proposal
is adopted with the support of a supermajority of votes on the
operating committee and a majority of SRO votes, but without the
support of a majority of the individual exchanges.\183\ This is
precisely the outcome that this Order is intended to achieve--plan
action supported by a supermajority of the New Consolidated Data Plan's
operating committee, which would include a majority of SRO votes along
with sufficient non-SRO votes to achieve the supermajority, that is not
constrained by the votes of one or two exchange groups under common
management and control that currently command a majority of the votes
on the Equity Data Plans. Similarly, while one commenter argues that
the Commission's proposal would ``curtail the ability of independent
SROs to act independently in service of their own obligations,'' \184\
another commenter questions the independence of the affiliated
exchanges, noting the lack of evidence that affiliated exchanges vote
separately and observing that an exchange group commented in a unified
voice on behalf of all affiliated exchanges.\185\ Similarly, one
commenter asserts that the Proposed Order assumes that ``the degree of
voting power inequity should increase or decrease based on the SRO-
affiliate group sizes.'' \186\ In the Commission's view, this assertion
is incorrect, in that a second vote would be granted only on the basis
of the exchange group's consolidated equity market share, not the size
or number of exchange licenses of the affiliate group.
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    \183\ See Nasdaq Letter, supra note 45 and accompanying text.
    \184\ NYSE Letter, supra note 49, at 17.
    \185\ ICI Letter, supra note 78, at 4 (emphasis in original).
    \186\ NYSE Letter, supra note 49, at 18.
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    In addition, the fact that, as one commenter argues, the concept of
an exchange group is not created by statute or rule does not, in the
Commission's view, preclude the Commission from recognizing that
affiliated exchanges act in some contexts as a collective organization.
Instead, the Commission notes that, unlike the SROs' individual
regulatory obligations, the one-vote-per-exchange governance model for
NMS plans is not compelled by statute or regulation. Further, because
of the inherent conflicts of interest that certain exchanges face in
their operation of the existing Equity Data Plans, as detailed in the
Proposed Order and discussed above, the Commission does not believe
that permitting exchange SROs under common ownership to exercise
disproportionate influence through block voting over New Consolidated
Data Plan decisions, including fees and technology updates, supports
the reliability and affordability of consolidated market data.
    Two commenters state that the Commission provides no adequate
rationale for the decision to cap at two votes the number of votes that
affiliated SROs would be granted.\187\ One of these commenters
questions why there could not be a third vote and advocates adding
tiers so that the proposal would ``align the number of votes allocated
to exchange groups or unaffiliated SROs with meaningful market share to
their overall significance in the market.'' \188\ Several other
commenters argue to the contrary that currently each exchange license
obtained by an exchange group provides another vote on the Equity Data
Plan's operating committee with ``little incremental overhead expenses.
Capping the number of SRO votes at two per exchange group removes this

incentive.'' \189\ Another commenter that generally supports the
proposed voting structure suggests that the threshold for a second vote
should be 10 percent of consolidated equity market share, as
recommended by the Commission's Equity Market Structure Advisory
Committee, rather than the 15 percent threshold proposed by the
Commission.\190\ This commenter argues that, ``in the current
fragmented market structure, 10 percent represents a very significant
threshold that we believe would justify a slightly stronger voice in
governance.'' \191\
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    \187\ Id.; Cboe Letter, supra note 114, at 10.
    \188\ Cboe Letter, supra note 114, at 10 (advocating that
instead there should be one vote for up to 5 percent consolidated
market share, two votes for 5 percent to 15 percent consolidated
market share, and three votes for more than 15 percent consolidated
market share).
    \189\ Citi Letter, supra note 85, at 3; see also IEX Letter,
supra note 113, at 2; ICI Letter, supra note 78, at 5; Letter from
RBC Capital Markets, LLC, Rich Steiner, Head of Client Advocacy and
Market Innovation (Feb. 28, 2020), at 2 (``Royal Bank of Canada
Letter''); T. Rowe Price Letter, supra note 164, at 2.
    \190\ See IEX Letter, supra note 113, at 2.
    \191\ Id.; but see MEMX Letter, supra note 80, at 4; Clearpool
Letter, supra note 40, at 4 (stating it would not support lowering
the 15 percent threshold).
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    The Commission continues to believe that it is appropriate to limit
an SRO or affiliated exchange group to no more than two votes because
providing more than two votes to any one SRO or affiliated exchange
group would perpetuate the ability of two exchange groups to command a
majority of votes on the operating committee, which would perpetuate
the status quo. The Commission believes that this outcome would not
address the disproportionate influence that the exchange groups have on
the governance of the Equity Data Plans. Moreover, the Commission
agrees with another commenter's assertion that the two-vote cap would
serve to deter actions, such as establishing a new exchange or further
consolidation of existing exchanges into groups, taken for the sole
purpose of gaining additional voting power on the operating
committee.\192\
---------------------------------------------------------------------------

    \192\ See ICI Letter, supra note 78, at 5.
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    In addition, the Commission continues to believe that the voting
allocation set forth in the Proposed Order, which would provide a
second vote only where an unaffiliated SRO or exchange group has a
consolidated equity market share of more than 15 percent over a
specified period of time, is appropriate. A 15 percent threshold
signifies the importance to the national market system of those
exchanges that, in their roles as SROs, therefore oversee trading
activity that generates a significant amount of equity market data and,
as noted below, each exchange group would have an additional vote.
While one commenter argues instead for a 10 percent threshold and
another advocates for a tiered approach, with the possibility of a
third vote, the Commission, as discussed below, continues to believe
that the 15 percent threshold is appropriate.
    The Commission disagrees that 10 percent consolidated equity market
share is sufficiently significant to warrant a second vote,
particularly given the trend toward exchange consolidation. The
consolidated equity market share of the largest exchange groups is
already well above 10 percent and continues to range from 17 percent to
22 percent.\193\ Setting the threshold for a second vote at 10 percent
consolidated equity market share would create the expectation that
exchange groups should receive a third vote at the same interval
threshold above 10 percent (e.g., 20 percent). However, the Commission
is not permitting the exchange groups, regardless of their consolidated
equity market share, to have a third vote as this would lead to a
continuing concentration of voting power. For the same reason, the
Commission is concerned that a 10 percent threshold may be too easy to
achieve through consolidation, which would result in too low a
threshold for obtaining an additional vote and could lead to a
continuing concentration of voting power. Conversely, as discussed
above, the Commission believes that it is appropriate to provide an
extra vote for exchanges or exchange groups with a greater consolidated
equity market share.
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    \193\ See Cboe U.S. Equities Volume Data, available at https://markets.cboe.com/us/equities/market_share/ (last accessed Apr. 20,
2020) (month-to-date volume summary as of Apr. 20, 2020).
Specifically, the consolidated market shares for the Cboe, Nasdaq,
and NYSE exchange groups were 16.63 percent, 17.84 percent, and
22.65 percent, respectively. Id.
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    With respect to the proposed ``look-back period'' of four of the
six consecutive months preceding a vote of the operating committee, the
Commission notes that several commenters expressly supported the
specified period, while none objected to it.\194\ The Commission
believes that using a look-back period of at least four of the six
calendar months preceding a vote of the operating committee for
determining whether an exchange group or an unaffiliated exchange has
met the threshold for a second vote would allow the voting structure of
the New Consolidated Data Plan to adapt over time to potential
fluctuations in trading volume among exchanges, while avoiding frequent
changes in vote allocations resulting from short-term changes in
trading activity.
---------------------------------------------------------------------------

    \194\ See, e.g., SIFMA Letter, supra note 13, at 4; Clearpool
Letter, supra note 40, at 4; MEMX Letter, supra note 80, at 4.
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(b) Prohibiting Voting by Nonoperational Equity Trading Venues
    The Commission proposed that the New Consolidated Data Plan should
provide that if an exchange ceases operation as an equity trading
venue, or has yet to commence operation as an equity trading venue,
that exchange should not have a vote on Plan matters.\195\ The
Commission proposed this provision to ensure that only those SROs that
are contributing to the generation or collection of the core data
disseminated by the New Consolidated Data Plan have a vote on New
Consolidated Data Plan decisions, and several commenters expressed
their support for the Commission's view.\196\ The Commission continues
to believe that exchanges should have voting rights for New
Consolidated Data Plan matters only if those exchanges actively operate
equity market trading venues, and no commenters disagreed with this
view. Accordingly, this Order requires that the New Consolidated Data
Plan provide that if an exchange ceases operation as an equity trading
venue, or has yet to commence operation as an equity trading
venue,\197\ that exchange will not be permitted to have a vote on Plan
matters.
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    \195\ Both ISE and Cboe have been inactive as equities exchanges
for several years but continue to retain full voting rights on the
Equity Data Plans. ISE ceased trading equities on December 23, 2008.
See Securities Exchange Act Release No. 80873 (June 4, 2017), 82 FR
27094 (June 13, 2017). Cboe stopped trading equities on April 30,
2014. See Securities Exchange Act Release No. 71880 (Apr. 4, 2014),
79 FR 19950 (Apr. 10, 2014).
    \196\ See Clearpool Letter, supra note 40, at 4; ICI Letter,
supra note 78, at 5; MEMX Letter, supra note 80, at 4.
    \197\ For purposes of this Order, operating a trading venue
means trading NMS stocks on the venue as opposed to maintaining
status as a national securities exchange without actually trading.
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2. The Need for Non-SRO Participation in Plan Governance
    A key provision in the Proposed Order was providing voting
representation to non-SROs on the New Consolidated Data Plan's
operating committee. Commenters express opinions on a range of issues
relating to non-SRO voting, including the Commission's statutory
authority, the categories of non-SROs proposed to have representation
on the operating committee, the process for selecting non-SRO members,
as well as the number of terms and term length each non-SRO member
should be permitted to serve.

(a) The Commission Has Statutory Authority to Require Non-SRO Voting
Power on the Operating Committee
    The Commission believes that an operating committee that takes into
account views from non-SRO members that are charged with carrying out
the objectives of the New Consolidated Data Plan will have an overall
improved governance structure that better supports 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,'' \198\ because it will reflect a
more diverse set of perspectives from a range of market participants,
including significant subscribers of SIP core data products.
---------------------------------------------------------------------------

    \198\ 15 U.S.C. 78k-1(c)(1)(B).
---------------------------------------------------------------------------

    Some commenters, however, question the Commission's statutory
authority to require an NMS plan to provide voting power to non-
SROs.\199\ These commenters state that Section 11A of the Act does not
authorize the Commission to require the SROs to work with non-SROs in
developing or administering NMS plans, and instead obligates SROs only
to ``act jointly'' with other SROs to operate the national market
system.\200\ These exchange group commenters state that, because the
statute does not directly provide for non-SRO participation, the
Commission does not have the authority to require the SROs to
coordinate with them in developing and maintaining an NMS plan.\201\
One of these commenters argues that ``because Congress only granted the
Commission authority to empower SROs to develop and maintain the
operation of the national market system, the Commission could not grant
non-SROs voting authority over the SIPs under Section 11A even if the
SROs wish the Commission to do so.'' \202\ Another commenter states,
``[w]here a statute or regulation contains express language limited
only to a particular group, the negative implication is that other
groups are not covered by the provision.'' \203\ Thus, while it
supports voting rights for non-SROs on the New Consolidated Data Plan's
operating committee, this commenter believes that Section 11A of the
Act \204\ and Rule 608 of Regulation NMS \205\ currently do not allow
for non-SRO voting power on an NMS plan and this statute and regulation
would need to be amended to permit such voting power on an NMS
plan.\206\
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    \199\ See NYSE Letter, supra note 49, at 14-15; Nasdaq Letter,
supra note 45, at 5-6.
    \200\ See NYSE Letter, supra note 49, at 14; Nasdaq Letter,
supra note 45, at 5-6; see also Cboe Letter, supra note 114, at 7,
n.13 (stating that it supports greater participation for non-SROs,
but that the Commission should ``ensure that any steps it takes to
further this participation are within its statutory authority'').
This commenter also suggests that non-SRO members of the operating
committee be entities regulated by the Commission, rather than
individual employees of the entities, and therefore, subject to the
same obligations and responsibilities as SRO members. Id. at 7. For
a full discussion of this comment, see infra Section II.E.1.
    \201\ See NYSE Letter, supra note 49, at 14-15; Nasdaq Letter,
supra note 45, at 5-6.
    \202\ NYSE Letter, supra note 49, at 14 (emphasis in original).
    \203\ Nasdaq Letter, supra note 45, at 6.
    \204\ 15 U.S.C. 78k-1.
    \205\ 17 CFR 242.608.
    \206\ See Nasdaq Letter, supra note 45, at 5-6.
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    The Commission disagrees. Section 11A of the Act \207\ directs the
Commission to ``use its authority under this title''--including all of
our authority over SROs --to facilitate the establishment of the
national market system and further the objectives set forth in that
section.\208\ And Section 11A(a)(3)(B) of the Act provides the
Commission the authority to require the SROs ``to act jointly . . . in
planning, developing, operating, or regulating a national market system
(or a subsystem thereof).'' \209\ Thus, while Section 11A affirmatively
authorizes the Commission to allow or require the SROs to act jointly,
it does not prohibit non-SRO participation in developing and
administering NMS plans. Rather, it is silent on this issue. And, as
explained by the Commission in the Proposed Order, permitting non-SRO
views to be more directly heard regarding Plan matters (while
preserving joint SRO control of the New Consolidated Data Plan provided
for by the plan voting structure discussed below) \210\ would neither
impede the SROs' ability to act jointly nor interfere with their
ability to operate the national market system. Thus, pursuant to its
authority over the national market system, the Commission is ordering
the Participants to the New Consolidated Data Plan, as they act
jointly, to include in the Plan voting rights for non-SROs.
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    \207\ 15 U.S.C. 78k-1.
    \208\ 15 U.S.C. 78k-1(a)(2).
    \209\ 15 U.S.C. 78k-1(a)(3)(B).
    \210\ See infra Section II.C.2.
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    The Commission disagrees with the commenter that believes that
because the language of a statute or regulation expressly refers to a
particular group, the negative implication is that other groups are not
covered by the provision. To the contrary, in the context of a statute
delegating rulemaking to an agency, statutory silence leaves discretion
with the agency.\211\ In this instance, the Commission believes it is
appropriate to exercise that discretion to give non-SROs a vote on the
New Consolidated Data Plan's operating committee.
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    \211\ See NAM v. SEC, 748 F.3d 359, 368 (D.C. Cir. 2014);
Catawba Cty, N.C. v. EPA, 571 F.3d 20, 36 (D.C. Cir. 2009).
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    While two commenters argue that the plain language of the statute
provides that the Commission may do no more than authorize the non-SROs
to act as advisory committees to the Equity Data Plans,\212\ these
arguments misconstrue the statutory language. The statute is silent on
the use of advisory committees with respect to the planning,
developing, operating, or regulating of a national market system.\213\
Even though the language of Section 11A(a)(3)(A) of the Act does not
expressly address the creation of advisory committees to an NMS plan or
the participation of non-SROs in Plan matters, the Commission has
previously exercised its authority to provide non-SROs a role on the
Equity Data Plans as advisors.\214\ With this Order, the Commission is
similarly exercising its statutory authority to require that the role
of the non-SROs be expanded to include voting power on the operating
committee of the New Consolidated Data Plan.\215\ Notably, however, as
discussed in greater detail below, the Commission is not granting the
non-SRO members sufficient voting power to compel plan action or to
block action agreed upon by a supermajority of the operating committee
that includes a majority of the SROs.\216\
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    \212\ See Nasdaq Letter, supra note 45, at 5-6; NYSE Letter,
supra note 49, at 13-14.
    \213\ While Section 11A(a)(3)(A) of the Act does refer to
advisory committees, that provision provides for the creation by the
Commission of committees pursuant to the Federal Advisory Committee
Act to advise the Commission itself on the development of the
national market system. See 15 U.S.C. 78k-1(a)(3)(A).
    \214\ See Regulation NMS Release, supra note 7, 70 FR at 37561.
    \215\ As discussed above, the Commission believes that changes
in the markets over the last two decades (e.g., conversion from
member-owned exchanges to for-profit exchanges, consolidation of
exchange voting power, and exchanges offering for sale proprietary
data products) have heightened these inherent conflict of interests
between certain exchanges' commercial interests and their regulatory
obligations under the Act and rules, as well as pursuant to the
effective Equity Data Plans to produce and provide equity market
data. The Commission believes that providing voting power on the New
Consolidated Data Plan to non-SROs, including to individuals
representing entities that have previously served in an advisory
capacity to the operating committees of the Equity Data Plans, will
serve to mitigate these conflicts and will result in improved
governance over equity market data matters.
    \216\ See infra Section II.C.3.
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    Moreover, several commenters agree that the Commission has the
authority

under Section 11A of the Act to provide for non-SRO participation on
the New Consolidated Data Plan's operating committee as voting
members.\217\ One commenter, for example, states that an interpretation
of Section 11A that concludes the SEC lacks authority under Section 11A
to force the SROs to act jointly with non-SROs in the operation of NMS
plans is too narrow. The commenter states that Congress granted the SEC
authority in Section 11A(c)(1) to prescribe rules and regulations as
necessary or appropriate in the public interest to assure the prompt,