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.\218\
---------------------------------------------------------------------------

    \217\ See Royal Bank of Canada Letter, supra note 189, at 3
(``One of the SROs has already provided comments arguing that this
voting construct violates Section 11A because it would afford voting
rights to entities not expressly identified in the law. We do not
believe they are correct in this argument, and that the law is so
limiting.''); ICI Letter, supra note 78, at 2-4; Fidelity Letter,
supra note 80, at 5-6 (stating, ``[t]he Commission has plenary
authority to prescribe rules governing the collection and
dissemination of equity market data.''); Schwab Letter, supra note
74, at 4-5; SIFMA Letter, supra note 13, at 5 (``SIFMA believes that
the SEC has the broad authority to instruct the SROs to take action
to consolidate the existing Plans into a single new Plan and to
incorporate its non-SRO representation and voting structure.'').
    \218\ Schwab Letter, supra note 74, at 4-5.
---------------------------------------------------------------------------

    Some commenters also question the wisdom of granting votes to non-
SROs, citing the conflicts of interests that non-SROs would bring to
the operation of the New Consolidated Data Plan, as well as potential
inefficiencies.\219\ One commenter states that the non-SRO and SRO
members of the New Consolidated Data Plan's operating committee may
face challenges in working together for the benefit of the SIP
data.\220\ This commenter further opines that it does not believe there
would be ``many areas of likely agreement, and there may also be areas
wherein there is agreement--but that agreement may be in a direction
that is contrary to the timely provision of essential market data at a
reasonable cost through the public market data stream.'' \221\ The
Commission does not share these concerns.
---------------------------------------------------------------------------

    \219\ See NYSE Letter, supra note 49, at 16-17; Cboe Letter,
supra note 114, at 7-9; Nasdaq Letter, supra note 45, at 9; Healthy
Markets Letter, supra note 40, at 11-13.
    \220\ See Healthy Markets Letter, supra note 40, at 12-13.
    \221\ Id.
---------------------------------------------------------------------------

    Broader representation on the New Consolidated Data Plan's
operating committee, along with the Commission's continued oversight
and supervision and the strengthened conflict of interest and
confidentiality policies,\222\ should help to ensure that plan
governance facilitates the provision of consolidated market data
consistent with Congressional goals. The Commission believes that
including representatives from non-SROs alongside the SROs on the
operating committee will enhance the ability of all relevant
constituencies to work together to facilitate the goals of Section 11A
of the Act. Although non-SROs members of the operating committee will
themselves have conflicts of interests based on the type of business
and constituency they represent, the Commission believes that the views
of the non-SRO members, as data customers, will provide some balance
with respect to the views of the exchanges, as data providers.\223\
Further, the non-SRO members of the New Consolidated Data Plan's
operating committee will be subject to the same conflict of interest
policy as the SROs, which, as discussed below, will require disclosure
of all material facts necessary for market participants and the public
to understand any potential conflicts of interest and will require
recusal in certain defined instances.\224\ In addition, the New
Consolidated Data Plan will include a confidentiality policy applicable
to the non-SRO members that addresses sharing of information and data,
which will also serve to manage conflicts of interest.\225\
---------------------------------------------------------------------------

    \222\ See Conflicts of Interest Approval Orders, infra note 325,
and Confidentiality Policy Approval Order, infra note 340 (both
stating that the policies, as modified, further the goals set forth
by Congress).
    \223\ See infra Section II.C.3 regarding the augmented voting
requirement. See also Royal Bank of Canada Letter, supra note 189,
at 2 (stating, ``This conflict can be mitigated by granting voting
rights to other market participants, rather than exclusively to the
exchanges . . . .).
    \224\ See infra Section II.E.1 and Conflicts of Interest
Approval Orders, infra note 326.
    \225\ See infra Section II.E.2
---------------------------------------------------------------------------

    One commenter suggests that any non-SRO member on the operating
committee should be a Commission-regulated entity and subject to the
same obligations and responsibilities as SRO members.\226\ This
commenter believes that having a Commission-regulated entity
participate on the operating committee would reduce individual
conflicts of interests, treat non-SRO members similarly to SROs, and
facilitate the Commission's ability to exercise its oversight of the
operating committee.\227\
---------------------------------------------------------------------------

    \226\ See Cboe Letter, supra note 114, at 8-9.
    \227\ See id. at 7-9.
---------------------------------------------------------------------------

    The Commission is now requiring a broader representation of market
participants in the governance of the New Consolidated Data Plan by
including non-SROs as voting members on the operating committee of the
New Consolidated Data Plan. The Commission does not believe that it is
necessary to require that non-SRO members of the operating committee be
associated with a regulated entity in order for the Commission to be
able to exercise its oversight of the operating committee.\228\ As
discussed below,\229\ the Commission believes that the SROs should, by
themselves, maintain sufficient voting power at all times to act
jointly on behalf of the New Consolidated Data Plan, thus providing
them with the ability to ensure that the New Consolidated Data Plan
meets the requirements of Section 11A of the Act \230\ and Rule 608 of
Regulation NMS.\231\ Further, any substantive amendment of the New
Consolidated Data Plan would require Commission approval, and the
Commission would be able, if it deemed it appropriate, to amend the
terms of the New Consolidated Data Plan pursuant to Rule 608 of
Regulation NMS.\232\ Thus, the Commission does not believe that the
inclusion of non-SRO members on the operating committee, with
insufficient votes to block plan action by themselves, would interfere
with the Commission's ability to exercise its oversight over the New
Consolidated Data Plan.
---------------------------------------------------------------------------

    \228\ Non-SRO members will be individuals that hold positions
with firms or entities that satisfy a category of non-SRO members
(e.g., a broker-dealer with a predominantly retail customer base).
    \229\ See infra Section II.C.3 (describing the voting structure
of the New Consolidated Data Plan).
    \230\ 15 U.S.C. 78k-1.
    \231\ 17 CFR 242.608.
    \232\ 17 CFR 242.608.
---------------------------------------------------------------------------

    Nor does the Commission believe that potential disagreements
between these members and the SROs will result in overall
inefficiencies. The existence of different perspectives that result in
additional discussion does not equate to inefficiency, but rather helps
to ensure that more options for addressing an issue are considered by
the operating committee. Adding non-SRO views to the discussions of the
operating committee could therefore add to the range of solutions
presented on issues and could, in fact, result in an ultimate
resolution that is more beneficial to the market. In addition, as
described below, the voting structure for the New Consolidated Data
Plan will not require a unanimous vote for plan action. Therefore, even
if all members of the operating committee do not agree on a matter, the
operating committee can

move forward with an augmented majority vote in favor of an
action.\233\
---------------------------------------------------------------------------

    \233\ See infra Section II.C.3. An augmented majority vote is a
supermajority vote of the New Consolidated Data Plan's operating
committee, along with a majority vote of the SRO members of the
operating committee. Id.
---------------------------------------------------------------------------

(b) Categories of Non-SRO Members
    As noted above, in the Proposed Order, the Commission proposed to
require a broader representation of market participants in the
governance of the New Consolidated Data Plan by including as voting
members on the operating committee of the New Consolidated Data Plan a
number of non-SRO market participants. The categories of non-SRO
representatives proposed by the Commission included an institutional
investor (e.g., an asset management firm), a broker-dealer with a
predominantly retail investor customer base, a broker-dealer with a
predominantly institutional investor customer base, a securities market
data vendor, an issuer of NMS stock, and a retail investor, provided
that the representatives of the securities market vendor, the issuer,
and the retail investor, respectively, may not be affiliated with an
SRO, a broker-dealer, or an institutional investor.
    A number of commenters suggest modifications to the Commission's
proposed categories of non-SRO voting representatives to the New
Consolidated Data Plan's operating committee. Two commenters recommend
the addition of a broker-dealer with a substantial wholesale customer
base.\234\ One of these commenters states that the vast majority of
retail orders are routed to wholesale broker-dealers, and therefore
these broker-dealers play a role in protecting investors through price
and liquidity enhancement. The commenter believes that these firms have
knowledge regarding market structure that would benefit the New
Consolidated Data Plan.\235\ Another commenter suggests that either a
wholesale broker-dealer or a market-making broker-dealer would be a
better representative of issues facing the industry than an issuer
representative.\236\
---------------------------------------------------------------------------

    \234\ See Schwab Letter, supra note 74, at 5; TD Ameritrade
Letter, supra note 74, at 4.
    \235\ See TD Ameritrade Letter, supra note 74, at 4.
    \236\ See Schwab Letter, supra note 74, at 5. This commenter
argues that issuer representatives have a strong interest in how
well their securities trade, but ``lack the operational knowledge
relevant to operating committee discussions.'' Id.
---------------------------------------------------------------------------

    The Commission disagrees with these commenters' suggestion. The
Commission believes that the perspective and knowledge base of such a
broker-dealer sufficiently overlaps with a broker-dealer that has a
predominantly retail customer business as both have familiarity with
the price and liquidity issues associated with retail trading. Further,
the Commission believes that the interests of the constituencies that
would be served by these representatives would be aligned, as
ultimately they are both servicing the same end-user base, retail
customers. Therefore, the Commission does not believe it is necessary
to add a broker-dealer with a substantial wholesale customer base to
the operating committee. The Commission believes that the same is true
for a market-making broker-dealer. The Commission believes that the
interests specifically of market-making broker-dealers are sufficiently
aligned with those of retail broker-dealers that adding a separate
representative to the operating committee is warranted.
    One commenter recommends including a representative of an
alternative trading system (``ATS'') as a voting member of the
operating committee.\237\ This commenter acknowledges that the views of
ATSs could be represented by a broker-dealer with a predominantly
institutional customer base, but notes that not all institutional
broker-dealers operate an ATS and some ATSs exist that are not
affiliated with large institutional broker-dealers, and therefore the
commenter argues that ATSs should have separate representation on the
operating committee.\238\
---------------------------------------------------------------------------

    \237\ See SIFMA Letter, supra note 13, at 4.
    \238\ Id.
---------------------------------------------------------------------------

    The Commission disagrees with this commenter. In the Proposed
Order, the Commission stated that ``ATSs and institutional broker-
dealers serve similar roles in the markets, as both operate as over-
the-counter trading venues'' and concluded that ``the New Consolidated
Data Plan operating committee should not include a designated ATS
representative.'' \239\ The Commission continues to hold this view. The
Commission does not believe that it is necessary for an ATS to be
operated by an institutional broker-dealer in order for these two
market participants to share opinions and perspectives on market data
issues. Regardless of whether an institutional broker-dealer operates
an ATS or an ATS is an affiliate of institutional broker-dealer, their
business models are sufficiently aligned with respect to market data
issues that the Commission continues to believe that an institutional
broker-dealer representative on the operating committee is adequate to
represent the interests of ATSs.
---------------------------------------------------------------------------

    \239\ Proposed Order, supra note 4, 85 FR at 2179-80.
---------------------------------------------------------------------------

    The Commission also disagrees with the commenter's suggestion to
add an investment technology provider supporting the buy-side as a
representative on the operating committee. While the Commission
believes that input from technology providers on matters the operating
committee will consider with respect to market data and its collection,
consolidation, and dissemination will be valuable, there will be a
market data vendor representative on the operating committee who should
be able to provide input and guidance for New Consolidated Data Plan
decision-making from a technological perspective.
    The Proposed Order also provided for one representative of an
institutional investor (e.g., an asset management firm) on the
operating committee. One commenter argues that there should be at least
two representatives from institutional investors, including at least
one representative from a public pension plan.\240\ However, because
adding additional non-SRO members to the operating committee would
dilute the votes of the other non-SROs members, and because the
operating committee of the New Consolidated Data Plan would already
include a representative for institutional investors, the Commission
does not believe it is necessary to provide an additional slot on the
operating committee exclusively for the representative of an
institutional investor.
---------------------------------------------------------------------------

    \240\ See CII Letter, supra note 74, at 6.
---------------------------------------------------------------------------

    In the Proposed Order, the Commission also included a retail
investor among the non-SRO members on the operating committee of the
New Consolidated Data Plan to ensure that the interests of Main Street
investors were represented in discussions regarding the equity data
feeds. The interests of retail investors are central to the
Commission's mission, and the Commission believes it is important that
the operating committee of the New Consolidated Data Plan have a non-
SRO member who can effectively represent the interests of individual
investors with regard to the issues considered by the operating
committee of the New Consolidated Data Plan. In particular, the
Commission is ordering that the member of the operating committee
representing retail investors shall have experience working with or on
behalf of retail investors and have the requisite background and
professional experience to understand the interests of retail
investors, the work of the operating

committee of the New Consolidated Data Plan, and the role of market
data in the U.S. equity market. The Commission believes it is less
important that this person simply be a ``retail investor'' and more
important that this position be filled by a person with a combination
of the background and experience described above so that he or she can
effectively represent the interests of retail investors as a ``retail
representative.'' Accordingly, the Commission is modifying the language
in the proposal to replace ``retail investor'' with ``a person who
represents the interests of retail investors (`retail
representative').''
    As proposed, the retail investor representative could not be
affiliated with an SRO, broker-dealer, or institutional investor.
However, as discussed above, the Commission is expanding the available
group from which the ``retail representative'' could be chosen to a
``person who represents the interests of retail investors.'' Because
many retail investors gain exposure to the equities markets through
various types of institutional investors, the Commission believes it is
appropriate to permit (but not require) the ``retail representative''
to be associated with an institutional investor, provided that this
person otherwise meets the requirements as set forth in this Order. The
retail representative may not be affiliated with an SRO or broker-
dealer, however, because, in the Commission's view, both SROs and
broker-dealers will have adequate representation on the New
Consolidated Data Plan's operating committee, including a broker-dealer
with a predominantly retail customer base. Thus, the Commission
believes that prohibiting duplicative representation in this regard
will help ensure that the non-SRO members reflect a diversity of
perspectives.
    Another commenter proposes adding voting representatives of a
custodial bank, arguing that such a representative has unique insights
into the needs of large institutional broker-dealers and has an
interest in ensuring cost-effective access to market data.\241\ This
commenter also recommends adding an agency broker-dealer focused on
institutional investors, and an investment technology provider
supporting the buy-side to serve as additional voices representative of
the ``financial markets ecosystem.'' \242\ The Commission disagrees
with adding to the operating committee these additional non-SRO members
that purport to represent the views or needs of institutional broker-
dealers. The Order currently provides for an operating committee member
that represents a broker-dealer with a predominantly institutional
investor customer base. The Commission believes that the views of
institutional broker-dealers will be adequately represented without the
addition of a custodial bank or a designated agency broker.
---------------------------------------------------------------------------

    \241\ See State Street Letter, supra note 76, at 3.
    \242\ Id. at 5.
---------------------------------------------------------------------------

    Two commenters question the usefulness of an issuer as a voting
member of the operating committee.\243\ One of these commenters asserts
that an issuer representative should not be eligible to serve under
another non-SRO category,\244\ while another commenter suggests that
the Commission provide ``certain objective requirements'' to make sure
that such representatives understand the technical aspects of equity
market structure.\245\ In addition, one commenter argues that the
Commission's final order should specify that non-SRO members, to
maintain their neutrality, should not be permitted to be
representatives of an entity that ``has an ownership interest in an SRO
or its holding company beyond a specified level.'' \246\
---------------------------------------------------------------------------

    \243\ See Schwab Letter, supra note 74, at 5; TD Ameritrade
Letter, supra note 74, at 4.
    \244\ See TD Ameritrade Letter, supra note 74, at 4. The
Commission notes that this Order is not intended to dictate all of
the specific terms of the New Consolidated Data Plan, which the
Commission will notice for public comment and consider when
submitted by the SROs.
    \245\ See SIFMA Letter, supra note 13, at 4.
    \246\ IEX Letter, supra note 113, at 3.
---------------------------------------------------------------------------

    The Commission disagrees with the commenters that believe a
representative of an issuer should not have a vote on the operating
committee. The Commission believes that an issuer representative has
unique knowledge about a segment of the industry--the corporations that
issue the stocks traded--that is not represented by the other
representatives and should have a voice on matters relating to market
data. However, the Commission agrees with a commenter that it is
appropriate that the issuer representative should not also be eligible
to serve as a representative of another category on the operating
committee.\247\ The Commission believes the representative who will
serve as the issuer representative on the operating committee should
serve to represent primarily the point of view of issuers, as views
that support other categories of non-SRO members will have their own
dedicated representative. If an issuer representative were also
eligible to serve as another category of representative, questions
could be raised as to whether the issuer representative is solely
wearing his or her issuer ``hat'' in operating committee discussions or
if he or she is actually advocating for views that are more aligned
with another category on the operating committee. The Commission
believes that it is important to ensure that the representative for the
issuer constituency does not have business interests that significantly
overlap with the interests of other non-SRO members on the operating
committee such that the issuer representative's interests would be
duplicative of other non-SRO members. To address these concerns, the
Commission is ordering that the representative for the issuer category
not be affiliated or associated with an SRO, a broker-dealer, or an
investment adviser with third-party clients.
---------------------------------------------------------------------------

    \247\ See TD Ameritrade Letter, supra note 74, at 4.
---------------------------------------------------------------------------

    Another commenter objects to the restriction in the Proposed Order
that vendors, issuers, and retail investors \248\ may not be affiliated
with an SRO, a broker-dealer, or an institutional investor. This
commenter argues that the restriction could prevent otherwise qualified
candidates with relevant industry experience or knowledge from serving
on the operating committee.\249\ The Commission anticipates that--
notwithstanding the Order's restriction on affiliations for securities
market data vendors and issuers with SROs, broker-dealers, and
institutional investors, and the Order's restriction on a retail
representative's affiliations with SROs and broker-dealers--the
operating committee of the New Consolidated Data Plan will be able to
attract knowledgeable representatives of securities market data vendors
and issuers as the New Consolidated Data Plan will address issues and
make important decisions that will impact these constituencies. The
Commission believes that the opportunity to have a voice on the
operating committee of a Plan responsible for issues related to market
data will be highly coveted and there will be qualified nominees
willing to serve as representatives from organizations that are not
affiliated with SROs, broker-dealers, or institutional investors.
---------------------------------------------------------------------------

    \248\ As discussed above, the Commission has modified the
requirements relating to the retail investor category of non-SRO
member.
    \249\ See BlackRock Letter, supra note 114, at 2.
---------------------------------------------------------------------------

(c) Process for Selecting Non-SRO Members and Term Limits
    The Commission proposed that the non-SRO members of the New
Consolidated Data Plan's operating committee should be selected solely
by

non-SROs and that the operating committee should provide for a process
to publicly solicit, and make available for public comment, nominations
for non-SRO members. Further, the Proposed Order would require that the
initial non-SRO operating committee members be selected by the current
members of the Equity Data Plans' advisory committees, excluding
advisory committee members selected by a Participant to be its
representative, and that subsequent non-SRO members be selected
collectively by the then-serving non-SRO members of the New
Consolidated Data Plan's operating committee. In addition, to
facilitate continuity of membership of the Equity Data Plan's advisory
committees (excluding exchange representatives) through the transition
to the New Consolidated Data Plan, the Commission proposed, to the
extent possible, that the SROs should renew the expiring terms of all
members of the Equity Data Plans' advisory committees (other than those
selected to represent an SRO) who remain willing to serve in that role.
    A number of commenters support the Commission's proposal to have
the current advisory committee members, excluding exchange
representatives, select the initial non-SRO members of the New
Consolidated Data Plan's operating committee.\250\ One commenter
states, ``[t]o help promote independence of views, we agree that the
Plan Participants should not select non-SRO members of the [o]perating
[c]ommittee.'' \251\ Several of these commenters also emphasize the
importance of an independent and transparent nomination and selection
process for non-SRO members of the New Consolidated Data Plan's
operating committee.\252\ These commenters agree that the operating
committee should provide for a process to publicly solicit, and make
available for public comment, nominations for non-SRO members.\253\
Additionally, as discussed above, one commenter suggests that the
Commission appoint the members of the operating committee.\254\
---------------------------------------------------------------------------

    \250\ See Fidelity Letter, supra note 80, at 5; IEX Letter,
supra note 113, at 3; Royal Bank of Canada Letter, supra note 189,
at 3; SIFMA Letter, supra note 13, at 4.
    \251\ Fidelity Letter, supra note 80, at 5.
    \252\ See Fidelity Letter, supra note 80, at 5; IEX Letter,
supra note 113, at 3; SIFMA Letter, supra note 13, at 4.
    \253\ See Fidelity Letter, supra note 80, at 5; IEX Letter,
supra note 113, at 3; SIFMA Letter, supra note 13, at 4.
    \254\ See CII Letter, supra note 74, at 6.
---------------------------------------------------------------------------

    One commenter objects to the proposed mechanism by which the non-
SRO representatives would be selected for service on the Plan stating
that is clearly inconsistent with Section 11A of the Act and Rule 608
of Regulation NMS, as it would bar SROs from having any role in the
selection of those representatives.\255\ This commenter argues that
such restriction cannot be reconciled with the clear requirement of the
statute and rule that NMS plans be governed by the joint action of
SROs.\256\
---------------------------------------------------------------------------

    \255\ See Nasdaq Letter, supra note 45, at 7-8.
    \256\ Id. at 8 (stating, ``[q]uite simply, an NMS plan in which
SROs play no part at all in important aspects of plan governance is
not an NMS plan at all.'').
---------------------------------------------------------------------------

    The Commission disagrees with this commenter's position. As
discussed above, Section 11A of the Act \257\ affirmatively authorizes
the Commission to allow or require the SROs to act jointly to further
the statutory objectives of a national market system, but it does not
prohibit non-SRO participation in developing and administering NMS
plans. Pursuant to its statutory authority ``to facilitate the
establishment of a national market system,'' \258\ the Commission
believes that permitting non-SROs solely to select the non-SRO members
of the New Consolidated Data Plan's operating committee will facilitate
the governance of this Plan in that it will help ensure the
independence of these members.
---------------------------------------------------------------------------

    \257\ 15 U.S.C. 78k-1.
    \258\ 15 U.S.C. 78k-1(a)(2).
---------------------------------------------------------------------------

    As the Commission discussed in the Proposed Order, the SROs
currently select the members of the advisory committee, including both
members representing specific categories of market participants and
members chosen by individual exchanges to serve on the committee. The
Commission believes that this may deter advisory committee members from
expressing views that might contradict the views of the exchanges. The
Commission's decision to prohibit the SROs from having a role in
selecting the non-SRO members who will serve on the operating committee
is designed to address this concern. Non-SRO members must be wholly
independent from the SROs in order to represent their constituency free
from interference. The ability of SROs to fully participate in, and
ultimately act jointly to control decisions made by the operating
committee,\259\ will not be compromised simply because they are not
involved in the selection of certain other members of the operating
committee. The Commission therefore continues to believes that, as
proposed, the existing advisory committee members of the Equity Data
Plans (excluding the exchange-selected representatives), rather than
the SROs or the Commission, should select the initial group of non-SRO
members of the New Consolidated Data Plan's operating committee and
subsequent non-SRO members should be selected solely by the then-
serving non-SRO members of the New Consolidated Data Plan's operating
committee in order to help ensure the independence of the non-SRO
members.
---------------------------------------------------------------------------

    \259\ See infra Section II.C.3.
---------------------------------------------------------------------------

    The Commission further believes that the current Equity Data Plans'
advisory committee members' experience with the operation of the Equity
Data Plans will assist in the selection of the initial non-SRO
operating committee members and will thus support the stable transition
of operations from the Equity Data Plans to the New Consolidated Data
Plan. Therefore, until the initial non-SRO members have been selected,
the Commission believes that it is important to maintain the current
membership of the Equity Data Plans' advisory committees, to the extent
possible when excluding exchange-selected representatives, through the
transition to the New Consolidated Data Plan. Accordingly, to
facilitate continuity, the Commission is ordering the SROs to renew the
expiring terms of all members of the Equity Data Plans' advisory
committees (other than those members selected by an individual SRO) who
remain willing to serve in that role.
    In the Proposed Order, the Commission also proposed that non-SRO
members of the operating committee would serve for a term of two years
and that the New Consolidated Data Plan should establish reasonable
term limits. The Commission noted that advisory committee members of
the Equity Data Plan currently serve two-year terms and stated its
belief that a two-year term would enhance the ability of non-SRO
members to obtain sufficient experience with the operation of the New
Consolidated Data Plan, and to make informed contributions as members
of the operating committee.
    Several commenters, expressing concern about individual members
becoming ``de facto permanent members'' of the operating committee,
specifically recommend term limits as an antidote to non-SRO member
inertia.\260\ Other commenters agree, stating that the benefits of
limiting the number of terms a non-SRO representative could serve on
the operating committee would include

obtaining diverse perspectives.\261\ Two commenters support a two-year
term for non-SRO members, as proposed by the Commission, and these
commenters recommend a two-term limit for representation on the
operating committee.\262\
---------------------------------------------------------------------------

    \260\ See Fidelity Letter, supra note 80, at 5; IEX Letter,
supra note 113, at 3; SIFMA Letter, supra note 13, at 4.
    \261\ See Royal Bank of Canada Letter, supra note 189, at 3; T.
Rowe Price Letter, supra note 164, at 2.
    \262\ See MFA/AIMA Letter, supra note 142, at 2; SIFMA Letter,
supra note 13, at 3.
---------------------------------------------------------------------------

    Certain other commenters, however, suggest alternative terms and
term limits for non-SRO members' tenure on the New Consolidated Data
Plan's operating committee. For example, a number of commenters
recommend that the non-SRO members serve on the operating committee for
a three-year term with a two-term limit.\263\ Another commenter
suggests one four-year term, but argues that ``the need for
institutional knowledge specific to the New Plan and the need for new
perspectives . . . can be accomplished by rotating out one half of the
members every two years.'' \264\ Finally, one commenter argues that the
Commission should have the opportunity to object to the slate of
nominees.\265\
---------------------------------------------------------------------------

    \263\ See Fidelity Letter, supra note 80, at 5; Schwab Letter,
supra note 74, at 5; State Street Letter, supra note 76, at 3; T.
Rowe Price Letter, supra note 164, at 2.
    \264\ TD Ameritrade Letter, supra note 74, at 5; see also Royal
Bank of Canada Letter, supra note 189, at 3.
    \265\ See Royal Bank of Canada Letter, supra note 189, at 3.
---------------------------------------------------------------------------

    With respect to terms of service and term limits for non-SRO
members, the Commission believes that it is appropriate that the New
Consolidated Data Plan balance the advantages of institutional
knowledge with the potential benefits to be derived from new
perspectives on Plan governance. Moreover, the Commission notes that
the commenters' varied suggestions highlight the diversity of views
with respect to the appropriate term and term limits to achieve this
goal. The Commission believes a term of two years will provide non-SRO
members with sufficient time to become familiar with the operations and
issues affecting the New Consolidated Data Plan and to make informed
contributions. The Commission believes that a term less than two years
could result in a member being removed from the operating committee
before he or she had an adequate opportunity to get familiar with the
issues before the operating committee at that time and could result in
a significant amount of disruptive turnover, resulting in
inefficiencies on the operating committee. However, the Commission
believes that a term of two years, with the potential for additional
terms to be determined in the New Consolidated Data Plan, would provide
sufficient time for a member to become familiar with the issues dealt
with by the operating committee.\266\
---------------------------------------------------------------------------

    \266\ See supra note 262.
---------------------------------------------------------------------------

    The Commission further believes that the New Consolidated Data Plan
should provide a maximum term limit for non-SRO members to ensure that
new and diverse viewpoints are reflected among the non-SRO members of
the operating committee. The Commission is not dictating in this Order
what the maximum term limit must be. The Commission believes that the
SROs, as current members of numerous NMS plan operating committees, may
have useful insights into balancing the value of having long-standing
members on an operating committee with the potential detriment of
allowing a membership to become stale and no longer useful or engaged
and are thus well positioned to propose what the maximum term limit
should be in the first instance. Accordingly, as proposed, the
Commission is ordering that the New Consolidated Data Plan provide that
non-SRO members of the operating committee serve for a term of two
years and that the New Consolidated Data Plan set forth a maximum term
limit for non-SRO members.
    One commenter raises concerns that the non-SRO members on the New
Consolidated Data Plan's operating committee would not ``adequately and
fairly'' represent the views of the constituencies that the member was
selected to represent.\267\ This commenter further asserts that the
nomination process outlined by the Commission is inadequate to address
these concerns.\268\
---------------------------------------------------------------------------

    \267\ See Healthy Markets Letter, supra note 40, at 13.
    \268\ Id.
---------------------------------------------------------------------------

    To the contrary, the Commission believes that the requirement that
the non-SRO members of the operating committee will collectively select
replacement non-SRO members will help to ensure that the individuals
selected will represent their constituencies' views on important market
data issues, and will help to ensure that the most effective and
knowledgeable advocates for their views serve on the operating
committee. Further, because the then-serving non-SRO members, and not
the SROs, will select non-SRO members, the Commission does not believe
that individuals may be blocked from serving on the New Consolidated
Data Plan's operating committee because they are perceived by the
Participants as ``anti-exchange,'' \269\ as the commenter suggests.
---------------------------------------------------------------------------

    \269\ Id.
---------------------------------------------------------------------------

    In addition, the New Consolidated Data Plan will require that the
process for soliciting nominations for non-SRO members to serve on the
operating committee be transparent. The Commission is requiring in this
Order that the New Consolidated Data Plan must specifically include a
process for publicly soliciting and making available for public comment
nominations for non-SRO members and the public will be permitted to
submit nominees for consideration and to provide comment on the pool of
nominees.\270\ Therefore, if the non-SRO members select a new member to
serve on the operating committee who is less qualified than other
nominees to represent a particular constituency, the decision will face
public scrutiny.
---------------------------------------------------------------------------

    \270\ See Proposed Order, supra note 4, 85 FR at 2180 (``The
Commission believes that the operating committee should provide for
a process to publicly solicit, and make available for public
comment, nominations for non-SRO members.'').
---------------------------------------------------------------------------

    Finally, the Commission also disagrees that providing some
discretion to the SROs to propose a transparent nomination process and
reasonable term limits for non-SRO member service renders its proposal
``facially inadequate.'' Instead, the Commission believes that the
requirements set forth in this Order, coupled with the Rule 608 process
under which the New Consolidated Data Plan will be considered by the
Commission, which includes public notice and comment, should help to
assure that the nomination and selection process is fair, transparent,
and public.
3. Voting Structure Under the New Consolidated Data Plan
    In its Proposed Order, the Commission proposed that the New
Consolidated Data Plan provide the SROs in aggregate with two-thirds of
the voting power on the operating committee--and non-SRO members of the
operating committee in aggregate with one-third of the voting power--
with proportionate fractional votes allocated to non-SRO members of the
operating committee as necessary to preserve this ratio at all times.
Further, the Commission proposed that action by the operating committee
of the New Consolidated Data Plan on all matters, including amendments
to the New Consolidated Data Plan, should require an ``augmented
majority vote,'' meaning a two-thirds majority of all votes on the
operating committee, provided that this vote also includes a majority
of the SRO

votes. The requirement for an augmented majority vote was intended to
ensure that at all times the SROs have sufficient voting power to act
jointly on behalf of the plan pursuant to the requirements of Section
11A of the Act \271\ and Rule 608 of Regulation NMS.\272\
---------------------------------------------------------------------------

    \271\ 15 U.S.C. 78k-1.
    \272\ 17 CFR 242.608.
---------------------------------------------------------------------------

    Commenters express opinions on several aspects of the Proposed
Order's voting structure. Notably, several commenters support that the
Proposed Order does not permit a requirement for a unanimous vote for
plan action, as is currently required for certain actions of the Equity
Data Plans.\273\ As one commenter points out, unanimous voting is not a
requirement for NMS plans and, in fact, the most-recently approved NMS
plan required by Rule 613 of Regulation NMS (``CAT NMS Plan'') requires
the affirmative vote of a two-thirds supermajority of all members of
the operating committee for plan amendments.\274\ Another commenter,
however, states that unanimous voting ``can help protect individual SRO
participants that may have divergent structures or interests from
otherwise dominant SROs.'' \275\ This commenter recommends that, if
unanimous voting requirements in the SIP plan governance structure are
eliminated, plan participants should be ``permitted and encouraged'' by
the Commission to communicate dissenting views and concerns to the
Commission about New Consolidated Data Plan actions that they believe
may be ``discriminatory, contrary to the public interest or improperly
influenced by commercial interests.'' \276\
---------------------------------------------------------------------------

    \273\ See NYSE Letter, supra note 49, at 10 (``Adopting such a
structure here would eliminate the ability of any single SRO to
impose roadblocks to innovation, and would further encourage
collaboration among the participants to the Plans.''); SIFMA Letter,
supra note 13, at 4-5; IEX Letter, supra note 113, at 4; MEMX
Letter, supra note 80, at 4; Royal Bank of Canada Letter, supra note
189, at 2-3; Clearpool Letter, supra note 40, at 4; Fidelity Letter,
supra note 80, at 5; Virtu Letter, supra note 80, at 2; Refinitiv
Letter, supra note 80, at 2.
    \274\ See NYSE Letter, supra note 49, at 10.
    \275\ Letter from Robert Colby, Executive Vice-President & Chief
Legal Officer, FINRA (May 1, 2020) (``FINRA Letter'').
    \276\ Id.
---------------------------------------------------------------------------

    The Commission agrees with commenters who support not including a
unanimous voting requirement in the new plan and believes that the New
Consolidated Data Plan should provide that plan action, including
amendments to the plan, will be approved by less than a unanimous vote.
Further, the Commission believes that expanding the voting membership
of the operating committee of the New Consolidated Data Plan, limiting
the voting power of exchange groups, and providing for augmented
majority voting--coupled with the existing requirement that NMS plan
amendments must be published for comment and (except those put into
effect upon filing) subject to approval by the Commission to become
effective--should help to address concerns that the views of individual
SRO participants will not be given adequate consideration.
Additionally, consistent with its decision to expand the membership of
the operating committee governing the SIPs, the Commission encourages
open debate of issues within the operating committee and the
communication of dissenting views to the Commission.
    A number of commenters express support for the Commission's
proposal to require an augmented majority vote for action of the New
Consolidated Data Plan.\277\ Other commenters, however, suggest
variations on the voting requirements. One commenter suggests imposing
a supermajority requirement for plan amendments and a majority vote for
all other actions, similar to the requirements of the CAT NMS
Plan.\278\ Another commenter expresses concern that the augmented
majority vote proposal would require that ``a majority of SROs must
support any proposal before it can be adopted.'' \279\ This commenter
suggests that the Commission's proposal for the augmented majority
vote, designed to address the SROs' statutory and regulatory
obligations under the Act, should be limited to apply only to ``those
decisions tied to statutory SRO responsibilities.'' \280\ Another
commenter argues that the definition of augmented majority vote should
be ``expanded to include, at a minimum, a required one-third total vote
of the non-SRO members in support of any amendment,'' noting that this
would recognize the needs of those subject to regulatory requirements
to display consolidated market data.\281\ A number of commenters state
that non-SRO members of the New Consolidated Data Plan's operating
committee should have greater voting power than that proposed by the
Commission.\282\ Some commenters advocate for an even distribution of
voting power between SROs and non-SROs,\283\ while one argues for non-
SRO members of the operating committee to have majority voting power,
noting that independent directors outnumber other directors on SRO
boards today.\284\
---------------------------------------------------------------------------

    \277\ See, e.g., SIFMA Letter, supra note 13, at 4-5; IEX
Letter, supra note 113, at 4; MEMX Letter, supra note 80, at 4;
Royal Bank of Canada Letter, supra note 189, at 2-3; Clearpool
Letter, supra note 40, at 4; Fidelity Letter, supra note 80, at 5;
Virtu Letter, supra note 80 at 2; Refinitiv Letter, supra note 80,
at 2.
    \278\ See NYSE Letter, supra note 49, at 10.
    \279\ Royal Bank of Canada Letter, supra note 189, at 3.
    \280\ Id.
    \281\ TD Ameritrade Letter, supra note 74, at 6.
    \282\ See, e.g., IEX Letter, supra note 113, at 3; CII Letter,
supra note 74, at 6; State Street Letter, supra note 76, at 3; SIFMA
Letter, supra note 13, at 4; BlackRock Letter, supra note 114, at 2.
    \283\ See IEX Letter, supra note 113, at 3; Schwab Letter, supra
note 74, at 5; SIFMA Letter, supra note 13, at 4; State Street
Letter, supra note 76, at 3.
    \284\ See CII Letter, supra note 74, at 6. In addition, CII
advocates that all actions of the New Consolidated Data Plan be
approved by a simple majority vote. Id.
---------------------------------------------------------------------------

    The Commission disagrees with these variations on the voting
requirements. First, rather than adopting, as one commenter suggests,
the particular voting requirements established in the CAT NMS Plan, the
Commission has elected to require an ``augmented majority vote,'' which
requires a supermajority vote of the operating committee, as well as a
majority vote of the SRO members of the operating committee.\285\ The
Commission notes that, among other distinctions between the two
plans,\286\ here the Commission has determined that it is appropriate
to include non-SRO members on the New Consolidated Data Plan's
operating committee. Because all votes on the CAT NMS Plan are
allocated to SROs, the concern about whether SROs retain sufficient
voting power is not present for the CAT NMS Plan.
---------------------------------------------------------------------------

    \285\ All plan action, including amendments to the New
Consolidated Data Plan, will require an augmented majority vote,
with two exceptions. First, the selection of non-SRO members will
require a majority vote of non-SROs. Second, the decision to enter
into an executive session, discussed below, will require a majority
vote of the SRO members.
    \286\ Other differences between the two plans include, among
other things, their distinct purposes and different impact on market
participants.
---------------------------------------------------------------------------

    Second, the Commission disagrees with the commenter's suggestion
that the augmented majority vote should apply only to decisions of the
New Consolidated Data Plan relating to the SROs' statutory
responsibilities. While the Commission acknowledges the commenter's
concern about requiring a majority of SRO votes, the Commission
believes that any attempt to identify and separate statutory-related
items to come before the operating committee would likely require more
of the operating committee's time and attention than the potential
benefits could justify. In addition, the Commission believes non-SRO
members would offer informed views on statutory-related matters given
their expertise.

    Finally, the Commission does not agree that the proposed definition
of augmented majority should be modified to require, in addition to the
two-thirds majority of the operating committee and the majority of SRO
votes, the vote of one-third of all non-SRO members eligible to vote,
as suggested by a commenter. While this approach would further help to
ensure that no proposed amendments to the New Consolidated Data Plan
could be filed with the Commission without some level of non-SRO member
concurrence, the Commission believes that creating a governance
structure that would not, at a minimum, provide the SROs alone with the
voting power necessary to effectuate action by the New Consolidated
Data Plan \287\ does not appropriately recognize the SROs' regulatory
responsibilities to act jointly to operate the Plan.
---------------------------------------------------------------------------

    \287\ The augmented majority vote would allow a measure to pass
with support of only the SRO votes on the operating committee, which
would satisfy the requirements of a supermajority vote of the
operating committee and a majority of the SRO votes.
---------------------------------------------------------------------------

    For the same reason, the Commission does not agree that non-SRO
members should have greater voting power than that proposed by the
Commission. The Commission continues to believe that broader
representation than currently exists on the Equity Data Plans would
help to ensure that decisions relating to operations facilitate the
regulatory goals of the New Consolidated Data Plan, and the Commission
believes that providing non-SROs a vote for the first time furthers
this goal. Increased representation, however, must be balanced against
the SROs' statutory regulatory responsibilities under the Act and Rule
608 of Regulation NMS with respect to operation of the Plans. The
Commission believes that the distribution of voting power, as proposed,
appropriately strikes this balance by providing for meaningful input
from a broad range of stakeholders while also ensuring that the SROs
retain sufficient voting power to act jointly on behalf of the plan
pursuant to their regulatory responsibilities.\288\ Therefore, the
Commission disagrees with the commenters' calls for greater non-SRO
voting power than that proposed.
---------------------------------------------------------------------------

    \288\ 15 U.S.C. 78k-1 and 17 CFR 242.608.
---------------------------------------------------------------------------

    Nonetheless, the Commission believes that permitting non-SRO
stakeholders to have voting power on the New Consolidated Data Plan
should facilitate discussion and encourage the SROs to more carefully
consider the anticipated effects of plan action. Moreover, in the
Commission's view, this approach represents a logical step in the
evolution of NMS plan governance.\289\ As noted in the Proposed Order,
the Commission explained in Regulation NMS that the creation of
advisory committees to the Equity Data Plans was ``a useful first step
toward improving the responsiveness of Plan participants and the
efficiency of Plan operations.''\290\ And in adopting Regulation NMS,
the Commission stated that it would ``continue to monitor and evaluate
Plan developments to determine whether any further action is
warranted.'' \291\ The Commission believes that further action, in the
form of the governance measures discussed in this Order, including the
exchange group voting allocation, the provision of voting power to non-
SROs, and the augmented majority voting requirement, is warranted at
this time and should help to ensure that New Consolidated Data Plan
decisions and action relating to consolidated market data result in
improved governance that will benefit the equity markets as a whole.
---------------------------------------------------------------------------

    \289\ See Regulation NMS Release, supra note 7.
    \290\ Id., 70 FR at 37561.
    \291\ Id.
---------------------------------------------------------------------------

D. The Need for an Independent Plan Administrator

    In the Proposed Order, the Commission included a requirement that
the New Consolidated Data Plan use an independent plan administrator
that could not be owned or controlled by a corporate entity that offers
for sale its own proprietary market data product, either directly or
via another subsidiary.\292\ Commenters reflecting a broad range of
market participants (including one exchange) express support for the
Commission's requirement of an independent plan administrator.\293\ In
contrast, two commenters question the rationale for requiring an
independent plan administrator and express concern with the potential
burdens imposed by changing the existing framework, in which plan
administrators are SRO-affiliated.\294\ One commenter states that the
Proposed Order failed to identify ``any shortcomings or problems'' in
the current approach and highlights the existence of information
control policies and procedures that are designed to safeguard the
confidential information handled by the plan administrator.\295\
Another commenter requests clarification on the scope of activity that
would disqualify an entity from acting as the independent plan
administrator.\296\ This commenter believes that the prohibition on an
entity offering its own proprietary market data products should be
``expressly limited to data products that compete with the SIP--in
other words, data with content that includes NMS stock quotations or
transactions.'' \297\
---------------------------------------------------------------------------

    \292\ See Proposed Order, supra note 4, 85 FR at 2187. NYSE and
Nasdaq currently act as administrators of the Equity Data Plans.
Under the independence provision, NYSE and Nasdaq would be excluded
from operating as plan administrators, although they would not be
excluded from continuing to act as SIPs.
    \293\ See, e.g., T. Rowe Price Letter, supra note 164, at 2;
Refinitiv Letter, supra note 80, at 2; ICI Letter, supra note 78, at
5; Wellington Letter, supra note 77, at 2; MFA/AIMA Letter, supra
note 142, at 5; Bloomberg Letter, supra note 40, at 2; State Street
Letter, supra note 76, at 2; Fidelity Letter, supra note 80, at 3;
Schwab Letter, supra note 74 at 6; Royal Bank of Canada Letter,
supra note 189, at 4; MEMX Letter, supra note 80, at 5; Clearpool
Letter, supra note 40, at 5; Citi Letter, supra note 85, at 4; IEX
Letter, supra note 113, at 3. One commenter recommends that the
independence requirement also apply to the SIP processors for all
the same reasons. See Schwab Letter, supra note 74, at 6. The
Commission acknowledges that independence of the plan processors may
mitigate some concerns regarding conflicts of interest. In this
regard, the Proposed Order, as recognized by this commenter,
requires the operating committee to review the performance of the
plan processors and ensure the public reporting of plan processor's
performance and other metrics and information about the plan
processors. Furthermore, as discussed above, the Commission has
proposed rule amendments related to the SIP processors in the
Infrastructure Proposal. See supra Section II.B.2(b).
    \294\ See Nasdaq Letter, supra note 45, at 13; NYSE Letter,
supra note 49, at 20. Nasdaq also expresses support for a single
administrator and processor for the SIPs. See Nasdaq Letter, supra
note 45, at 13. Nasdaq believes that the Commission should consider
a single consolidated tape for all exchange-listed equities. See id.
As discussed above, this Order is taking an incremental approach to
the governance issues related to the Equity Data Plans and is at
this time not addressing the production, aggregation, or
distribution of consolidated market data.
    \295\ See NYSE Letter, supra note 49, at 20. Similarly, Nasdaq
states that the Commission cited ``no actual evidence as
justification for impairing the functioning of the administrator,
only `concerns.''' See Nasdaq Letter, supra note 45, at 13.
    \296\ See FINRA Letter, supra note 275.
    \297\ Id.
---------------------------------------------------------------------------

    The Commission continues to believe that, as stated in the Proposed
Order, an entity that acts as the administrator while also offering for
sale its own proprietary data products faces a substantial, inherent
conflict of interest, because it would have access to sensitive SIP
customer information of significant commercial value.\298\ As discussed
further below, the Commission has separately approved amendments to the
Equity Data Plans establishing policies, as modified by the Commission,
designed to address conflicts of interest and protect confidential
information from misuse.\299\ The Commission continues

to believe that the conflicts of interest faced by a non-independent
administrator are so great that these conflicts cannot be sufficiently
mitigated. Unlike the exchanges, an independent plan administrator
would not have as a competing objective maximizing the profitability of
its own proprietary data products.\300\ The Commission agrees that, as
one commenter states, ``[t]rue separation or independence is necessary
to mitigate the conflicts of controlling the SIP data products while
selling proprietary products.'' \301\ Similarly, another commenter
states that an independent administrator ``would eliminate any
potential conflict of interest and allow the administrator to focus
efforts on improved technology and reduced latency.'' \302\ The
Commission agrees, as the independence requirement would separate the
independent administrator from an exchange's commercial interests and
allow it to focus on the regulatory objectives of Section 11A of the
Act. Additionally, because the relevant conflict of interest for an
administrator would arise from administration of the SIPs while selling
overlapping proprietary data products, the Commission believes that the
independence requirement for the administrator must prohibit an entity
from serving as administrator of the New Consolidated Data Plan if it
is owned or controlled by a corporate entity that, either directly or
via another subsidiary, offers for sale its own proprietary market data
products for NMS stocks.
---------------------------------------------------------------------------

    \298\ See Proposed Order, supra note 4, 85 FR at 2183.
    \299\ See infra Section II.E.1 and 2. The new conflicts of
interest policy will require the administrators of the Equity Data
Plans to disclose any employment or affiliation with an SRO and a
narrative description of functions performed. See Conflicts of
Interest Approval Orders, infra note 326. After the Participants
have transitioned to the New Consolidated Data Plan and adopted a
conflicts of interest policy as outlined in the Conflicts of
Interest Approval Orders, the Commission believes that the
administrator's disclosure requirements would continue to provide
transparency with respect to the independence of the plan
administrator.
    \300\ See, e.g., Clearpool Letter, supra note 40, at 5; ICI
Letter, supra note 78, at 5; IEX Letter, supra note 113, at 5;
Fidelity Letter, supra note 80, at 3; MFA/AIMA Letter, supra note
142, at 5; Schwab Letter, supra note 74, at 6; State Street Letter,
supra note 76, at 2; T. Rowe Price Letter, supra note 164, at 2.
    \301\ Schwab Letter, supra note 74, at 6.
    \302\ Refinitiv Letter, supra note 80, at 2.
---------------------------------------------------------------------------

    As stated in the Proposed Order, Participants and Participant
representatives have been privy to confidential information of
substantial commercial or competitive value, including, among other
things, information about core data usage, the SIPs' customer lists,
financial information, and subscriber audit results.\303\ A particular
area of heightened sensitivity with an exchange-affiliated
administrator relates to the audit function. As one commenter points
out, ``the audit function creates special conflicts when it is managed
by an affiliate of a Participant (which is presently the case for all
the [Equity Data] Plans) because it is directly involved in raising
revenue for the [P]lans, which benefits the affiliated Participants
directly through distributions of Plan revenue (almost all revenue
collected is distributed to Participants).'' \304\ This commenter
further states that ``there is the potential for the audit function to
be used to advance the business objectives of one or more Participants,
in cases where they compete in one or more businesses with an entity
that is the subject of an audit.'' \305\ The Commission believes that
the proposed independent plan administrator requirement would address
concerns regarding the potential use of SIP subscriber audit data to
pursue commercial interests outside of the New Consolidated Data Plan.
---------------------------------------------------------------------------

    \303\ See Proposed Order, supra note 4, 85 FR at 2185.
    \304\ IEX Letter, supra note 113, at 4-5.
    \305\ IEX Letter, supra note 113, at 5. This commenter
recommends that the Commission specify that the New Consolidated
Data Plan ``require strict independence of the audit function.'' See
id. Under the terms of the proposal, the independent plan
administrator would help to ensure that the audit process is fair
and reasonable. Another commenter states that confidential
information received by exchanges under the Equity Data Plans may
have been used to further the exchanges' commercial interests. See
Healthy Markets Letter, supra note 40, at 20.
---------------------------------------------------------------------------

    However, two commenters state that employing an independent
administrator would disrupt the administration of the Plans.\306\ One
commenter states that the independence requirement ``may impair the
eventual functioning of the administrator as having separate firms
responsible for administration and processing may slow coordination and
response time during a possible market event. ''\307\ Another commenter
emphasizes that the current SRO-affiliated administrators have
specialized experience, established relationships with SIP customers,
and familiarity with the practices and systems of the SIP.\308\ This
commenter states that the SROs would incur costs in the process of
identifying, negotiating with, and hiring a new administrator.\309\
This commenter also states that ``[a]ll of that experience and shared
institutional knowledge would be lost in a transition to an
unaffiliated [a]dministrator, and SIP customers would have to shoulder
the burden of familiarizing the new Administrator with their practices
and systems.'' \310\ The commenter further states that the Proposed
Order ``failed to consider substantial benefits enjoyed by SIP
customers as a result of the Administrators' affiliation with SROs [and
that] . . . [c]ustomers generally appreciate that administrators can
concurrently audit the customer's use of the SRO's proprietary data
feeds when auditing the customer's SIP usage . . . . '' \311\ Finally,
this commenter asserts that under the independent plan administrator
framework, each SIP customer that is also a customer of NYSE and Nasdaq
proprietary data feeds would be audited three times--by the new
independent plan administrator, by NYSE, and Nasdaq--instead of only by
NYSE and Nasdaq.\312\
---------------------------------------------------------------------------

    \306\ See Nasdaq Letter, supra note 45, at 13; NYSE Letter,
supra note 49, at 20. One commenter states that the Commission
failed to consider in the Proposed Order the potential disruption to
the administration of the Equity Data Plans by switching to an
independent administrator. See NYSE Letter, supra note 49, at 20.
    \307\ Nasdaq Letter, supra note 45, at 13.
    \308\ See NYSE Letter, supra note 49, at 20.
    \309\ See id. at 19.
    \310\ Id. at 20.
    \311\ Id.
    \312\ See id.
---------------------------------------------------------------------------

    The Commission acknowledges that the current plan administrators'
significant experience and familiarity with the SIPs' practices and
systems facilitate the continuity of the administration of the SIPs,
and that there will be a transition period with additional costs to
onboard the new independent plan administrator, including system
infrastructure (e.g., network connectivity to exchanges, hosting, and
database upgrades) and human capital (e.g., contract management, hiring
personnel, service support, and consolidating policies). In addition,
depending on the level of experience and knowledge in the operation of
the SIPs, the Commission anticipates that there will be a transition
period for the new independent administrator, as would be anticipated
in any new role involving the New Consolidated Data Plan. On balance,
however, the Commission believes that eliminating the conflict of
interest justifies the requirement. Other NMS plans, moreover, have the
roles of administrator and processor performed by different
entities.\313\ The Commission also disagrees with one commenter's
statement that employing separate firms responsible for administration
and processing would slow coordination and response time to market
events

because the roles of administrator and processor are functionally
different, as prescribed by the Plans, and operate independently of one
another (e.g., do not share the same personnel, shared systems,
monitoring systems or databases).
---------------------------------------------------------------------------

    \313\ Under the OPRA Plan, for example, Cboe Exchange, Inc.
serves as the plan administrator and the Securities Industry
Automation Corporation (``SIAC''), an NYSE affiliate, serves as the
processor.
---------------------------------------------------------------------------

    The Commission acknowledges commenters' concerns regarding the
transition to an independent administrator, including the burden of
familiarizing the new administrator with subscriber practices and
systems. With respect to one commenter's statement regarding the
benefits of established relationships and familiarity with SIP
customers and their systems, the Commission understands that
administrators receive confidential and competitively sensitive
information from broker-dealers about their products, systems, and
operations, when engaging in the contracting process. This access to
information and familiarity of SIP customers is the exact concern
raised by commenters, some representing those same SIP customers,
regarding conflicts of interest in the current administrator
framework.\314\ For example, the Commission understands that the
administrators have significant latitude with respect to the
information they may request during contract approval process for use
of SIP market data, some of which may be highly sensitive.
---------------------------------------------------------------------------

    \314\ See supra notes 304-305 and accompanying discussion.
---------------------------------------------------------------------------

    With respect to concerns regarding loss of expertise and shared
institutional knowledge, the Commission believes this expertise would
be leveraged in a different manner under the New Consolidated Data Plan
because the Participants currently acting as administrators would
continue to be active members of the operating committee and could
advise and facilitate the onboarding process of the new administrator.
As stated in the Proposed Order, the New Consolidated Data Plan shall
provide for the orderly transition of functions and responsibilities
from the three existing Equity Data Plans, which generally would
include administrator functions, thereby helping to ameliorate the risk
for disruption to the SIP administration process. Furthermore, the
Commission highlights that any industry experience loss would be
specific to the previous administrative policies and procedures under
the Equity Data Plans instead of the New Consolidated Data Plan (e.g.,
two auditing teams under the Equity Data Plans instead of only one team
under the New Consolidated Data Plan).
    The Commission disagrees with the commenter's assertion that SIP
customers generally appreciate that administrators can concurrently
audit the customer's use of the SRO's proprietary data feeds when
auditing the customer's SIP usage. In 2018, during the Commission's
Division of Trading and Markets Roundtable on Market Data and Market
Access (``Market Data Roundtable''), panelists stated there are
substantial burdens associated with the Equity Data Plans' audits of
their firms' subscriber data usage and fee payment.\315\ The Commission
also understands that firms must engage in a burdensome approval
process with the administrators each time the firms add a new market
data product and also upon the request of an administrator at any
time.\316\ The Commission believes that such burdens identified by
these commenters reflect the sort of concerns about the fairness and
reasonableness of the audit and contract administration process that
the new independent plan administrator is intended to address by
completely separating the New Consolidated Data Plan's audit function
from the commercial interests of members of the operating committee and
their employers and affiliates. Additionally, as discussed above, a
single New Consolidated Data Plan would provide the foundation for the
application of consistent policies and procedures, which generally
would include the audit function.\317\ Furthermore, the Commission
acknowledges the commenter's example that a joint SIP and NYSE/Nasdaq
proprietary data feed customer would be audited three times under the
proposal; however, the Commission believes that a consolidated SIP
audit under one independent administrator would promote independence of
the audit staff of the New Consolidated Data Plan from exchange
personnel and directly address concerns related to cross-selling
exchange proprietary data products for NMS stocks to the same market
participants that are SIP subscribers.
---------------------------------------------------------------------------

    \315\ See, e.g., Transcript of Day One, Market Data Roundtable,
at 112:21-24 and 114:2-9 (statements of Matt Billings, TD
Ameritrade) (``The plans regularly audit brokers for compliance with
their overly complex rules, which are not harmonized across the CTA
and UTP Plans, and are a cause for misinterpretation. . . . The
question ultimately becomes, at what point does a retail broker move
away from the NMS plans . . . to avoid . . . the audit risk
liability that currently exists under the plans.''); Transcript of
Day Two, Market Data Roundtable, at 196:20-197:7 (statement of Marcy
Pike, Fidelity Investments) (``Most large brokerage firms or asset
managers that are consuming this data have significant staffs that
are counting and reporting the usage of this data . . . . There is a
whole group of folks that have entered into the industry to help
facilitate audits for the exchanges. . . .'').
    \316\ For example, an administrator may view something on a
firm's website and seek further explanation from the firm.
    \317\ See supra Section II.B.4 (describing the need for a single
New Consolidated Data Plan).
---------------------------------------------------------------------------

    The Commission believes that, despite the implementation costs of
selecting an independent administrator, it is a necessary step to
ensure that the Plans further the objectives of Section 11A. Further,
based on its oversight experience and as described by commenters, the
Commission believes that these costs are justified because the inherent
conflicts of interest identified by the Commission, whereby an entity
acts as a plan administrator while also offering its own competing
products to the SIPs, either directly or via a subsidiary, raises
significant concerns regarding access to confidential subscriber
information. Access to such confidential subscriber information and its
use for purposes outside the scope of the Plans by an SRO-affiliated
administrator undermines the fair administration of equity market data
in the public interest.
    Additionally, two commenters argue that the independent plan
administrator requirement would constrain the administrator selection
process.\318\ One of these commenters asserts that the independence
requirement would eliminate all firms that have experience in managing
a SIP and ``necessarily diminish the quality of the competition among
potential administrators.'' \319\ Rather than adopt the independence
requirement, this commenter states that the operating committee tasked
with selecting an administrator is in the best position to weigh the
conflicts of interest issues against the risk of hiring an
administrator without experience.\320\
---------------------------------------------------------------------------

    \318\ See Nasdaq Letter, supra note 45, at 13; NYSE Letter,
supra note 49, at 20.
    \319\ Nasdaq Letter, supra note 45, at 13.
    \320\ See id.
---------------------------------------------------------------------------

    The Commission disagrees with commenters' concerns that the
independence requirement will prevent the New Consolidated Data Plan
from employing an administrator capable of managing the SIPs and
inappropriately constrain the selection process.\321\ The Commission
believes that there is a broad range of financial service firms,
unaffiliated with an SRO, with specialized capabilities to oversee
market data administrative functions, such as licensing, billing,
contract administration and client relationship management, and record
keeping. Finally, the Commission disagrees with

one commenter's statement that the operating committee is currently in
the best position to weigh administrator conflicts of interest issues
in selecting an administrator because members of the operating
committee would face their own conflict of interest concerns related to
any affiliated bidders. Rather, the Commission believes that the
independence requirement will ameliorate the burden on the operating
committee of deliberating over administrator's conflicts of interest
concerns by eliminating conflicted parties at the outset.
---------------------------------------------------------------------------

    \321\ See Nasdaq Letter, supra note 45, at 13; NYSE Letter,
supra note 49, at 20.
---------------------------------------------------------------------------

    One commenter also argues that the termination of contracts of the
existing Equity Data Plans' administrators as a result of the
transition to a single New Consolidated Data Plan would result in an
unconstitutional taking in violation of the Fifth Amendment of the U.S.
Constitution.\322\ This commenter believes that the Commission should
mandate in the Proposed Order that ``no action may be taken that alters
the administrators' or processors' rights under current contractual
provisions.'' \323\
---------------------------------------------------------------------------

    \322\ See Nasdaq Letter, supra note 45, at 13-14.
    \323\ Id. at 14.
---------------------------------------------------------------------------

    The Commission disagrees with the commenter's argument that the
Commission's proposal would constitute a Fifth Amendment ``taking.'' As
discussed in the Proposed Order, the New Consolidated Data Plan's terms
should provide for the orderly and predictable transition of functions
and responsibilities from the three existing Equity Data Plans to the
New Consolidated Data Plan. The commenter fails to explain how that
legally authorized transition in this highly regulated field could
upset a protected property interest for purposes of the Fifth
Amendment's takings clause. Moreover, the operation of the Equity Data
Plans is a fundamental component of the national market system, and
Congress has given the Commission broad authority to regulate that
system. Indeed, the role of administrator exists solely in response to
the regulatory requirements of Section 11A of the Act and Regulation
NMS. Here, the Commission has determined that it is appropriate, in
response to changes in the market, to alter the existing regulatory
structure pursuant to this authority. In a highly regulated industry
such as the national market system for securities, the Commission does
not believe that such a change impermissibly interferes with an
administrator's reasonable investment-backed expectations.\324\
---------------------------------------------------------------------------

    \324\ See, e.g., Ruckleshaus v. Monsanto Co., 467 U.S. 986, 1005
(1984); District Intown Properties Ltd. P'ship v. District of
Columbia, 198 F.3d 874, 884 (D.C. Cir. 1999).
---------------------------------------------------------------------------

E. New Consolidated Data Plan Policies and Procedures

1. Conflicts of Interest Policy
    The Proposed Order provided that the New Consolidated Data Plan
shall include provisions designed to address the conflicts of interest
of SRO members and non-SRO members. On January 8, 2020, the Commission
issued for notice and comment the Participants' proposal to amend the
Equity Data Plans to make mandatory the current voluntary conflicts-of-
interest disclosure regime.\325\ Simultaneously with this Order, the
Commission is approving the Conflicts of Interest Amendments to the
Plans, as modified by the Commission.\326\
---------------------------------------------------------------------------

    \325\ See Securities Exchange Act Release Nos. 87907 (Jan. 8,
2020), 85 FR 2193 (Jan. 14, 2020) and 87908 (Jan. 8, 2020), 85 FR
2202 (Jan. 14, 2020) (together, the ``Conflicts of Interest
Amendments'').
    \326\ See Securities Exchange Act Release Nos. 88823, 88824 (May
6, 2020) (``Conflicts of Interest Approval Orders'').
---------------------------------------------------------------------------

    The Commission received a number of comments in response to the
Proposed Order that address the appropriate scope of conflicts-of-
interest policies for the New Consolidated Data Plan, including some
comments directly referring to the Conflicts of Interest Amendments.
Most commenters acknowledge the conflicts that exchanges face between
their regulatory obligations to produce and provide core data and their
commercial interests, and support including a robust conflicts-of-
interest policy in the New Consolidated Data Plan.\327\ However, one
commenter states that it believes that the Conflicts of Interest
Amendments reduce or eliminate many of the concerns that the Commission
raised in the Proposed Order about the governance of the Equity Data
Plans, and, in particular, potential conflicts of interests.\328\
---------------------------------------------------------------------------

    \327\ See CII Letter, supra note 74, at 6; T. Rowe Price Letter,
supra note 164, at 2; Refinitiv Letter, supra note 80, at 3; MEMX
Letter, supra note 80, at 6; MFA/AIMA Letter, supra note 142, at 5;
SIFMA Letter, supra note, 13 at 6; Citi Letter, supra note 85, at 4;
Clearpool Letter, supra note 40, at 5; IEX Letter, supra note 113,
at 4-5.
    \328\ See NYSE Letter, supra note 49, at 10. See also Cboe
Letter, supra note 114, at 4 (stating that the Conflicts of Interest
Amendments would constitute meaningful improvements to Equity Data
Plan governance).
---------------------------------------------------------------------------

    The Commission agrees with the commenters that the Conflicts of
Interest Amendments, as proposed, attempt to address some of the
conflicts inherent in the current market data structure where exchanges
can offer proprietary market data products while also sharing
responsibility for the public SIP data stream. In fact, the Commission
believes that full disclosure of all material facts necessary for
market participants and the public to understand the potential
conflicts of interest is one important approach to dealing with those
potential conflicts. As the Commission states today in its separate
approval order, detailed, clear, and meaningful disclosures that
provide insight into otherwise non-transparent structures and
operations can raise awareness of potential conflicts of interest
inherent in the current equity market data structure and increased
access to information can facilitate public confidence in Plan
operations.\329\ However, the Commission believes that broader market
developments, such as exchanges converting from being mutually owned to
demutualized entities that serve their shareholders, and the emergence
of exchange groups, have heightened the potential for competing
interests to affect the governance of the Equity Data Plans to a degree
that simply cannot be addressed solely by enhanced disclosures.\330\ As
such, the Commission believes that the Conflicts of Interest Amendments
are by themselves insufficient to address these issues.
---------------------------------------------------------------------------

    \329\ See Conflicts of Interest Approval Orders, supra note 326,
at 6.
    \330\ See Proposed Order, supra note 4, 85 FR at 2173-75.
---------------------------------------------------------------------------

    Some of the exchange groups raise concerns that non-SRO members of
the New Consolidated Data Plan's operating committee would favor their
own business interests, and that the Proposed Order included neither
obligations on non-SRO members nor a mechanism to enforce compliance
with the terms of the New Consolidated Data Plan.\331\ Another
commenter states it would not object to a provision in the New
Consolidated Data Plan explicitly providing that non-SRO members have a
duty to act in good faith and in the public interest in furtherance of
the purposes of Section 11A of the Act.\332\
---------------------------------------------------------------------------

    \331\ See NYSE Letter, supra note 49, at 15; Nasdaq Letter,
supra note 45, at 8-9 (arguing that the Proposed Order does not
impose any obligations on non-SRO members of the New Consolidated
Data Plan, nor even a clear means to enforce their compliance with
the terms of the New Consolidated Data Plan); Cboe Letter, supra
note 114, at 7-9 (stating that it is critical that the Commission
take steps to ensure that it can exercise appropriate oversight over
any non-SRO members).
    \332\ See ICI Letter, supra note 78, at 4.
---------------------------------------------------------------------------

    The Commission recognizes that non-SRO members also face conflicts
of interest as both voting members of the operating committee and
employees of

businesses that utilize core data or proprietary data feeds. Thus, the
Commission believes that the New Consolidated Data Plan should include
conflicts-of-interest provisions for both SRO and non-SRO
representatives of the operating committee, and as approved, the
Conflicts of Interest Amendments will apply equally to SRO and non-SRO
representatives. The Commission believes that each of the disclosing
parties will be required to disclose conflicts of interest, and will be
guided by the goals of the New Consolidated Data Plan 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.'' \333\ Additionally,
because the recusal process outlined in the Conflicts of Interest
Amendments as approved is applicable not only to non-SRO members, but
to all disclosing parties, it is designed to address these conflicts-
of-interest concerns as well.
---------------------------------------------------------------------------

    \333\ 15 U.S.C. 78k-1.
---------------------------------------------------------------------------

    As stated in the Conflicts of Interest Approval Orders, the
Commission believes that those policies, as approved, will enhance the
governance of the existing Equity Data Plans and would similarly help
the New Consolidated Data Plan address the conflicts of interest that
its expanded set of operating committee members would face. The
Commission therefore orders the SROs to incorporate into the New
Consolidated Data Plan provisions consistent with the Conflicts of
Interest Amendments as modified by the Commission.
2. Confidentiality Policy
    The Proposed Order provided that the New Consolidated Data Plan
shall include provisions designed to protect confidential and
proprietary information from misuse. On January 8, 2020, the Commission
issued the notice of the Equity Data Plans' proposal to adopt a
confidentiality policy to provide guidelines for the operating
committee and the advisory committee of the Plans, and all
subcommittees thereof, regarding the confidentiality of any data or
information generated, accessed, or transmitted to the operating
committee, as well as discussions occurring at a meeting of the
operating committee or any subcommittee.\334\
---------------------------------------------------------------------------

    \334\ See Securities Exchange Act Release Nos. 87909 (Jan. 8,
2020), 85 FR 2207 (Jan. 14, 2020) and 87910 (Jan. 8, 2020), 85 FR
2212 (Jan. 14, 2020) (together, the ``Confidentiality Policy
Amendments'').
---------------------------------------------------------------------------

    The Commission received a number of comments in response to the
Proposed Order that address the appropriate confidentiality policy for
the New Consolidated Data Plan, including comments that addressed the
Confidentiality Policy Amendments submitted by the Participants to the
Equity Data Plans. Most commenters support a robust confidentiality
policy in the New Consolidated Data Plan that would apply to both SRO
and non-SRO members of the operating committee.\335\ One commenter
believes that the Confidentiality Policy Amendments reduced or
eliminated many of the concerns expressed in the Proposed Order.\336\
Another commenter states that the proposed Confidentiality Policy
Amendments would improve the handling of confidential information and
are designed to both protect confidential information from misuse and
facilitate the sharing of confidential information with the advisory
committee.\337\
---------------------------------------------------------------------------

    \335\ See Refinitiv Letter, supra note 80, at 3; Wellington
Management Letter, supra note 77, at 2; MEMX Letter, supra note 80,
at 6; MFA/AIMA Letter, supra note 142 at 5; SIFMA Letter, supra note
13, at 6; Royal Bank of Canada Letter, supra note 189, at 4;
Clearpool Letter, supra note 40, at 5; Citi Letter, supra note 85,
at 4.
    \336\ See NYSE Letter, supra note 49, at 10.
    \337\ See Cboe Letter, supra note 114, at 5.
---------------------------------------------------------------------------

    In the Proposed Order, the Commission stated its concerns about the
possibility of an exchange or its representative obtaining confidential
data subscriber information of potentially significant commercial
value, as they are privy to information about core data usage, the
SIPs' customer lists, financial information, and subscriber audit
results via their position on the operating committee.\338\ The
conflicts resulting from such access could influence decisions as to
the Equity Data Plans' operations and thereby impede their ability to
achieve the goals of the Plans 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.'' Thus, the Commission agrees with the commenters
that the Confidentiality Policy Amendments, as initially proposed, are
a necessary first step towards implementing a policy to address the
commercial use of confidential or proprietary information.
---------------------------------------------------------------------------

    \338\ See Proposed Order, supra note 4, 85 FR at 2185.
---------------------------------------------------------------------------

    Another commenter recommends that any adopted confidentiality
policy included in the New Consolidated Data Plan be sufficiently
robust and implemented in a manner to ensure that topics in any
executive session are appropriately handled in a secure manner by SRO
members, so that non-SRO members may participate in executive
sessions.\339\
---------------------------------------------------------------------------

    \339\ See TD Ameritrade Letter, supra note 74, at 7-8.
---------------------------------------------------------------------------

    Simultaneously with the issuance of this Order, the Commission is
approving the Confidentiality Policy Amendments to the Equity Data
Plans, as modified by the Commission.\340\ In approving the
Confidentiality Policy Amendments, the Commission modified a provision
so that classification of information would be based on the content and
sensitivity of the information, rather than on whether it is shared in
an executive session, resulting in a more vigorous confidentiality
policy.\341\
---------------------------------------------------------------------------

    \340\ See Securities Exchange Act Release Nos. 88825, 88826 (May
6, 2020) (``Confidentiality Policy Approval Orders'').
    \341\ See Confidentiality Policy Approval Order, supra note 340.
---------------------------------------------------------------------------

    The Commission believes that the Confidentiality Policy Amendments,
as approved by the Commission, will enhance the governance of the
existing Equity Data Plans and would similarly help the New
Consolidated Data Plan appropriately identify and treat confidential
information. The Commission therefore orders the SROs to incorporate
into the New Consolidated Data Plan, provisions consistent with the
Confidentiality Policy Amendments as modified by the Commission.
3. Executive Session Policy
    The Proposed Order provided that the New Consolidated Data Plan
should include an executive session policy that permits the SROs to
hold executive sessions only in circumstances when it is appropriate to
exclude non-SRO members.\342\ The Commission further proposed that a
request to enter into an executive session be included on the written
agenda along with a clearly stated rationale for each matter to be
discussed and subsequently approved by a majority vote of the SRO
members of the operating committee.\343\
---------------------------------------------------------------------------

    \342\ See Proposed Order, supra note 4, 85 FR at 2184-85.
    \343\ See id. at 2185.
---------------------------------------------------------------------------

    The Commission received several comments regarding the proposed
executive session policy.\344\ Most

commenters were supportive of the Commission's proposal, reiterating
that executive sessions should be severely limited to certain
circumstances.\345\ However, one commenter believes that the executive
session policy should be limited to ``necessary'' circumstances, and
not merely ``appropriate'' as proposed by the Commission, and states
that coupled with the Confidentiality Policy Amendments, the need for
executive sessions should be minimal.\346\ The exchange groups contend
that the Equity Data Plans' operating committee had already limited the
use of executive sessions and implemented a process of disclosing
potential topics for executive sessions in advance and voting on them
in the presence of the advisory committee.\347\
---------------------------------------------------------------------------

    \344\ See NYSE Letter, supra note 49; TD Ameritrade Letter,
supra note 74; Virtu Letter, supra note 80; Refinitiv Letter, supra
note 80; MEMX Letter, supra note 80; Cboe Letter, supra note 114;
Royal Bank of Canada Letter, supra note 189; Clearpool Letter, supra
note 40.
    \345\ See TD Ameritrade Letter, supra note 74, at 7; Virtu
Letter, supra note 80, at 2; MEMX Letter, supra note 80, at 7;
Clearpool Letter, supra note 40, at 5; Refintiv Letter, supra note
80, at 3.
    \346\ See Royal Bank of Canada Letter, supra note 189, at 3.
    \347\ See NYSE Letter, supra note 49, at 8; Cboe Letter, supra
note 114, at 5.
---------------------------------------------------------------------------

    One commenter suggests that, instead of approving an executive
session by a majority vote of the SRO members, an executive session
request should be approved by the augmented majority voting procedures
(as discussed above) and the votes should be reflected in the meeting
minutes.\348\ Specifically, the commenter is concerned that limiting
non-SRO members' voting rights, in determining whether to move into
executive session or not, could potentially cause topics outside the
stated policy to be approved for executive session. The commenter
further recommends that the policy should provide a process by which
decisions to close meetings can be challenged by any operating
committee member with cause.\349\ Another commenter proposes that non-
SRO members should be able to participate, but not vote, in executive
sessions, arguing that non-SRO participation would still allow SROs to
effect solely SRO business, while providing non-SRO members with the
necessary context to inform their positions.\350\ Regarding non-SRO
member participation in executive sessions, the commenter further
suggests that one non-SRO member voted on by peers be permitted to
participate without a vote in the executive session, or, alternatively,
that a non-conflicted legal counsel be in attendance.\351\
---------------------------------------------------------------------------

    \348\ See TD Ameritrade Letter, supra note 74, at 7.
    \349\ See id. at 8.
    \350\ See TD Ameritrade Letter, supra note 74, at 8.
    \351\ Id.
---------------------------------------------------------------------------

    As reflected in the Proposed Order,\352\ the Commission recognizes
that there may be circumstances in which deliberations by the SROs
alone may be appropriate. Because this Order provides that the New
Consolidated Data Plan shall confine executive sessions to
circumstances in which it is appropriate to exclude non-SRO members--
such as, for example, discussions regarding matters that exclusively
affect the SROs with respect to the Commission's oversight of the New
Consolidated Data Plan (including attorney-client communications
relating to such matters)--the Commission believes that it is
appropriate that the request to enter into an executive session require
a majority vote of the SRO members of the operating committee. The
Commission further believes that requiring only a majority vote of the
SROs is balanced by the requirement that a request to enter into an
executive session be included on a written agenda, along with a clearly
stated rationale for each matter to be discussed.\353\ Non-SROs, as
voting members of the operating committee, would have access to this
agenda and be present for the vote to enter into executive session,
providing an opportunity to discuss or inquire about the basis for the
requested session.
---------------------------------------------------------------------------

    \352\ See Proposed Order, supra note 4, 85 FR at 2184-85.
    \353\ See id. at 2185.
---------------------------------------------------------------------------

4. Responsibilities of the Operating Committee
    The Proposed Order set forth several responsibilities of the
operating committee under the New Consolidated Data Plan.\354\ The
Commission received several comments regarding the role of the
operating committee, with most commenters supporting the enunciated
functions.\355\ One commenter agrees that the New Consolidated Data
Plan should make explicit that the operating committee is responsible
for taking action to meet the statutory goals of assuring the ``prompt,
accurate, reliable, and fair collection, processing, distribution,
publication of information with respect to quotations for and
transactions in NMS stock and the fairness and usefulness of the form
and content of that information.'' \356\
---------------------------------------------------------------------------

    \354\ See id. at 2186-87.
    \355\ See Clearpool Letter, supra note 40, at 5; Letter from
John L. Thornton, Co-Chair, Hal S. Scott, President, and R. Glenn
Hubbard, Co-Chair, Committee on Capital Markets Regulation (Feb. 28,
2020), at 6 (``Capital Markets Letter''); IEX Letter, supra note
113, at 3-4; Virtu Letter, supra note 80, at 2; MEMX Letter, supra
note 80, at 5-6; TD Ameritrade Letter, supra note 74, at 6-7;
Bloomberg Letter, supra note 40, at 3-5; MFA/AIMA Letter, supra note
142, at 4-5.
    \356\ See IEX Letter, supra note 113, at 3. See also Virtu
Letter, supra note 80, at 2 (supporting implementation of governance
reforms and mandating new policies and procedures to ensure
transparency and accountability for actions taken by the operating
committee); TD Ameritrade Letter, supra note 74, at 8 (supporting
adoption and inclusion of all other provisions of the Equity Data
Plans necessary for the operation and oversight of the SIPs under
the New Consolidated Data Plan).
---------------------------------------------------------------------------

    Several commenters support the operating committee's responsibility
to select, oversee, specify the role and responsibilities of, and
evaluate the performance of, an independent plan administrator, plan
processors, and auditor, and other professional service providers.\357\
Commenters also express support for the operating committee's role to
review the performance of the plan processors, and ensure the public
reporting of plan processors' performance and other metrics and
information about the plan processors and believed it would allow
industry participants to provide meaningful input to the operating
committee and the Commission.\358\
---------------------------------------------------------------------------

    \357\ See Clearpool Letter, supra note 40, at 5; MEMX Letter,
supra note 80, at 5-6.
    \358\ See Capital Markets Letter, supra note 355, at 6;
Clearpool Letter, supra note 40, at 5; MEMX Letter, supra note 80,
at 6.
---------------------------------------------------------------------------

    However, one commenter contends that the Equity Data Plan
administrators and processors operate pursuant to service contracts and
that terminating the contracts without regard to the administrators' or
processors' rights would violate the Fifth Amendment prohibition
against takings without just compensation. The commenter asserts that
the Commission should mandate that the operating committee not take any
action that would alter the administrators' or processors' rights under
their current contractual provisions.\359\
---------------------------------------------------------------------------

    \359\ See Nasdaq Letter, supra note 45, at 14.
---------------------------------------------------------------------------

    The Commission does not agree that the Proposed Order would mandate
the termination of the current contract with the processors, because
the Proposed Order contemplated that the New Consolidated Data Plan may
incorporate the current operational provisions of the Equity Data Plans
and that therefore the existing processors for the Equity Data Plans
would become the processors for the New Consolidated Data Plan. Thus,
the Proposed Order would not impermissibly interfere with a protected
property interest and does not represent a ``taking'' within the
meaning of the Fifth Amendment. Indeed, the Proposed Order should not
result in any economic harm to the processors. Currently under the
Equity Data Plans, the SIAC is the

exclusive processor for Tapes A and B and Nasdaq is the exclusive
processor for Tape C. While the Commission is ordering a single New
Consolidated Data Plan, it is not imposing requirements or taking a
position as to whether the three Tapes will continue to exist. Upon
commencement of the New Consolidated Data Plan, the operating committee
may determine to select new processors, however, such selection will be
subject to the augmented voting structure and subsequent review,
pursuant to Rule 608, by the Commission.
    In any event, even if contractual arrangements with processors
would have to be altered, no commenter has presented any identifiable
and protected property interest. Nor has any commenter explained how
such arrangements would alter any reasonable investment-backed
expectations in this highly regulated field.
    The Commission also received comments regarding the proposed
requirement about terms and fees for the distribution, transmission,
and aggregation of core data.\360\ Some commenters recommend that the
operating committee clarify the terms ``fair and reasonable.'' \361\
Commenters alternatively suggest that the Commission use its rulemaking
authority to codify its ``Staff Guidance on SRO Rule Filings Relating
to Fees'' to assist in the review of prices or that the Commission
introduce additional rulemaking to include clear and specific cost-
based requirements to support SIP data fees.\362\ One commenter argues
that the current SIP fees have already gone through the required
regulatory review process and as such, should remain in place unless
the new operating committee determines to change them.\363\
---------------------------------------------------------------------------

    \360\ See Capital Markets Letter, supra note 355, at 6 (stating
that cost transparency is crucial to ensuring that consolidated
market data fees are ``not unreasonably discriminatory'' and ``fair
and reasonable''); MFA/AIMA Letter, supra note 142, at 4 (stating
that the New Consolidated Data Plan should make clear that fees
should be related to the cost of production, aggregation and
distribution, rather than to user value).
    \361\ See TD Ameritrade Letter, supra note 74, at 6; Bloomberg
Letter, supra note 40, at 4-5; NYSE Letter, supra note 49, at 11.
    \362\ See TD Ameritrade Letter, supra note 74, at 6-7; NYSE
Letter, supra note 49, at 11.
    \363\ See Cboe Letter, supra note 114, at 11.
---------------------------------------------------------------------------

    As the Commission stated in the Proposed Order, the existing Equity
Data Plans will continue to be responsible for the consolidation and
dissemination of SIP data and the fees for SIP data will continue to be
governed by the provisions of the Equity Data Plans, until the New
Consolidated Data Plan is ready to assume responsibility for the
dissemination of SIP data and fees of the New Consolidated Data Plan
have become effective.\364\ Thus, the Equity Data Plans will continue
to function, with their existing fees, until those Plans are
decommissioned and are no longer responsible for the consolidation and
dissemination of equity market data. This Order creates a new NMS plan
for equity market data, and the Commission believes that any new SIP
data fees, including consideration of what would be ``fair and
reasonable,'' should be discussed among and developed by the new
operating committee and would need to be voted and approved by an
augmented vote pursuant to the terms of the New Consolidated Data Plan.
Consistent with the requirements of Rule 608, all of the terms of the
New Consolidated Data Plan, both those filed as part of the initial
plan itself, or those submitted as later amendments to address products
or fees, would be subject to public notice and comment and Commission
review.
---------------------------------------------------------------------------

    \364\ See Proposed Order, supra note 4, 85 FR at 2186.
---------------------------------------------------------------------------

    The Commission also received comments regarding the operating
committee's responsibility to design a fair and reasonable revenue
allocation formula for allocating plan revenues to be applied by the
independent plan administrator, and overseeing, reviewing, and revising
that formula as needed.\365\ One commenter recommends that the
Commission revisit the current revenue allocation formula now, with the
goal of arriving at a new formula that better rewards displayed
liquidity resulting in price discovery.\366\ Another commenter concurs,
stating that the revenue allocation formula should be modified to
reward displayed quotes where investors receive an execution.\367\
---------------------------------------------------------------------------

    \365\ See NYSE Letter, supra note 49, at 11; MEMX Letter, supra
note 80, at 6.
    \366\ See NYSE Letter, supra note 49, at 11.
    \367\ See Nasdaq Letter, supra note 45, at 4-5.
---------------------------------------------------------------------------

    The Commission believes that the SROs as operators of the SIPs are
well suited to determine how the revenues are distributed among the
SROs. Consistent with any other plan actions, once the operating
committee determines a fair and reasonable allocation and files a
proposed amendment with the Commission, the Commission will publish
such an amendment for notice and comment pursuant to Rule 608, and will
have an opportunity to review the provisions, consider the operating
committee's rationale, and at that time make a determination as to
whether the proposal is fair and reasonable.

F. Transition From Equity Data Plans to New Consolidated Data Plan

    The Proposed Order stated that the New Consolidated Data Plan shall
provide for the orderly transition of functions and responsibilities
from the three existing Equity Data Plans and shall provide that the
dissemination of, and fees for, SIP data continue to be governed by the
provisions of the Equity Data Plans until the New Consolidated Data
Plan is ready to assume responsibility for the dissemination of SIP
data and fees of the New Consolidated Data Plan has been approved.\368\
The Commission received several comments on the proposed transition to
the New Consolidated Data Plan.\369\
---------------------------------------------------------------------------

    \368\ See Proposed Order, supra note 4, 85 FR at 2186.
    \369\ See ICI Letter, supra note 78; Nasdaq Letter, supra note
45; TD Ameritrade Letter, supra note 74; Royal Bank of Canada
Letter, supra note 189; Fidelity Letter, supra note 80; SIMFA
Letter, supra note 13; State Street Letter, supra note 76; IEX
Letter, supra note 113.
---------------------------------------------------------------------------

    One commenter argues that the proposed allocation of 90 days for
the SROs to file the New Consolidated Data Plan with the Commission was
unreasonable, stating that the current operating committee would have
to resolve numerous issues, such as (1) developing comprehensive
conflicts-of-interest provisions for both SRO and non-SRO
representatives of the operating committee, (2) reconciling
inconsistencies between the Equity Data Plans, (3) designing processes
for selection and evaluation of an independent plan administrator,
auditor, and other professional service providers, and (4) setting
parameters for a revision to the revenue allocation formula.\370\
Alternatively, this commenter suggests a 180-day deadline for an
initial progress report, followed by progress reports every 90 days
until completion.\371\
---------------------------------------------------------------------------

    \370\ See Nasdaq Letter, supra note 45, at 14-15.
    \371\ See id. at 15.
---------------------------------------------------------------------------

    Conversely, another commenter asserts that a shorter period of
time, for example 45 days after the Order is issued, would be
sufficient for the SROs to file the New Consolidated Data Plan with the
Commission, and suggests that the Commission be more prescriptive in
providing the terms for the New Consolidated Data Plan to avoid
implementation delay.\372\
---------------------------------------------------------------------------

    \372\ See IEX Letter, supra note 113, at 2.
---------------------------------------------------------------------------

    The Commission continues to believe that it is appropriate and in
the public

interest for the Participants to submit the New Consolidated Data Plan
to the Commission within 90 days to ensure timely implementation of the
enhanced governance structure. As discussed above, the Participants
have significant experience to draw upon in developing the New
Consolidated Data Plan. And the Commission anticipates that the
Participants may incorporate many, if not most, of the operational
provisions of the Equity Data Plans into the New Consolidated Data Plan
filed with the Commission, substantially reducing the work required to
prepare and file the New Consolidated Data Plan. Further, through this
Order, the Commission is prescribing, in substantial detail, most of
the governance provisions that would differ between the Equity Data
Plans and the New Consolidated Data Plan, further reducing the work
required of the Participants to prepare the new plan. In addition, as
stated above, the Commission is simultaneously issuing the Conflicts of
Interest Approval Orders and the Confidentiality Policy Approval
Orders, and the conflicts of interest and confidentiality policies, as
approved by the Commission, can be incorporated into the New
Consolidated Data Plan.
    Notwithstanding the above, the Commission understands the
challenges associated with the current global pandemic. As the impact
of the pandemic unfolds, the Commission continues to monitor market
developments, including as they may relate to this initiative.
    Commenters also express concerns that SROs may unnecessarily delay
implementing the New Consolidated Data Plan and recommend that the
Commission prescribe specific milestones, and establish timetables for
the completion of such milestones to compel an expedient transition to
the New Consolidated Data Plan.\373\ Specifically, one commenter
suggests that the New Consolidated Data Plan be implemented and the new
independent administrator be selected within 180 days of the date of
the Order, with the ability for the Commission to grant an
extension.\374\ Another commenter recommends that the Order either
impose immediate reforms on the SROs or alternatively require that the
New Consolidated Data Plan have a rolling implementation schedule
specifying that some reforms take effect immediately, such as including
non-SRO members on the operating committee, implementing the augmented
voting structure, and adopting the Conflicts of Interest and
Confidentiality Amendments.\375\ Separately, several commenters suggest
penalizing the SROs for any unwarranted delays or failures to meet a
milestone deadline.\376\ Commenters also recommend that the Commission
impose a fine on SROs for delays or prohibit the SROs from receiving
market data revenues from the SIP data fees for a certain period of
time to incentivize timely implementation.\377\
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    \373\ See ICI Letter, supra note 78, at 6; Fidelity Letter,
supra note 80, at 6; TD Ameritrade Letter, supra note 74, at 8;
Royal Bank of Canada Letter, supra note 189, at 2; SIFMA Letter,
supra note 13, at 5-6; State Street Letter, supra note 76, at 4.
    \374\ See TD Ameritrade Letter, supra note 74, at 8.
    \375\ See Royal Bank of Canada Letter, supra note 189, at 2.
    \376\ See ICI Letter, supra note 78, at 6; Fidelity Letter,
supra note 80, at 6; SIFMA Letter, supra note 13, at 5-6.
    \377\ See ICI Letter, supra note 78, at 6; Fidelity Letter,
supra note 80, at 6.
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    For the reasons discussed above, the Commission continues to
believe that 90 days is an appropriate amount of time for the SROs to
file the New Consolidated Data Plan. The Commission is not imposing,
beyond the 90-day requirement to file the New Consolidated Data Plan,
specific timetables, milestones or implementation schedules because the
Commission expects that the SROs will be able to act expeditiously
based on their experience as operators of the SIP, coupled with their
statutory requirement 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.'' \378\
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    \378\ 15 U.S.C. 78k-1(c)(b).
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G. Other Comments

    Comment letters also addressed financial disclosures regarding New
Consolidated Data Plan operations,\379\ the calculation of SIP
fees,\380\ the timing of financial disclosures,\381\ the information
such disclosures should include,\382\ and concerns raised by high speed
trading.\383\ Ultimately, however, this Order focuses on certain
critical aspects of the governance structure of the Plans. These
additional topics fall outside the scope of this Order.
---------------------------------------------------------------------------

    \379\ See Bloomberg Letter, supra note 40, at 3-4; Capital
Markets Letter, supra note 355, at 6; IEX Letter, supra note 113, at
5; Schwab Letter, supra note 74, at 6-7; Virtu Letter, supra note
80, at 5; TD Ameritrade Letter, supra note 74, at 6 (suggesting that
the Commission codify explicit requirements regarding what is ``fair
and reasonable.'').
    \380\ See MFA/AIMA Letter, supra note 142, at 4.
    \381\ See Bloomberg Letter, supra note 40, at 3-4; Schwab
Letter, supra note 74, at 6-7; IEX Letter, supra note 113, at 5;
Virtu Letter, supra note 80, at 5.
    \382\ See Bloomberg Letter, supra note 40, at 3-4; IEX Letter,
supra note 113, at 5; Virtu Letter, supra note 80, at 5; Schwab
Letter, supra note 74, at 6-7.
    \383\ See Letter from Kermit R. Kubitz, Individual Consumer, San
Francisco, CA (Mar. 20, 2020).
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* * * * *
    As noted above, Section 11A(a)(2) of the Act \384\ directs the
Commission, having due regard for the public interest, the protection
of investors, and the maintenance of fair and orderly markets, to
facilitate the establishment of a national market system for
securities. Section 11A(a)(3)(B) of the Act provides the Commission the
authority to require the SROs, by order, ``to act jointly . . . in
planning, developing, operating, or regulating a national market system
(or a subsystem thereof).'' \385\
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    \384\ 15 U.S.C. 78k-1(a)(2).
    \385\ 15 U.S.C. 78k-1(a)(3)(B).
---------------------------------------------------------------------------

    For the reasons discussed above, the Commission believes that it is
in the public interest to require the Participants in the Equity Data
Plans to jointly develop and file with the Commission a New
Consolidated Data Plan as an NMS plan pursuant to Rule 608(a) of
Regulation NMS.\386\
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    \386\ 17 CFR 242.608(a).
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III. The New Consolidated Data Plan

    The Commission hereby orders the Participants in the Equity Data
Plans to jointly develop and file with the Commission, as an NMS plan
pursuant to Rule 608(a) of Regulation NMS,\387\ a single New
Consolidated Data Plan that replaces the three current Equity Data
Plans and that includes, at a minimum, the following terms and
conditions:
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    \387\ 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).
---------------------------------------------------------------------------

     The New Consolidated Data Plan shall provide for the
orderly transition of functions and responsibilities from the three
existing Equity Data Plans and shall provide that dissemination of, and
fees for, SIP data will continue to be governed by the provisions of
the Equity Data Plans until the New Consolidated Data Plan is ready to
assume responsibility for the dissemination of SIP data and fees of the
New Consolidated Data Plan have become effective.
     The New Consolidated Data Plan shall provide that each
exchange group and unaffiliated SRO will be entitled to name a member
of the operating committee (``SRO member''), who will be authorized to
cast one vote on all

operating committee matters pertaining to the operation and
administration of the New Consolidated Data Plan, provided that an SRO
member representing an exchange group or an unaffiliated SRO whose
market center(s) have consolidated equity market share of more than 15
percent during four of the six calendar months preceding a vote of the
operating committee will be authorized to cast two votes, and provided
that an SRO member representing an exchange that has ceased operations
as an equity trading venue, or has yet to commence operation as an
equity trading venue, will not be permitted to cast a vote on New
Consolidated Data Plan matters.
     The New Consolidated Data Plan shall provide that the
operating committee will include, for a term of two years, and for a
maximum term to be set forth in the New Consolidated Data Plan,
individuals representing each of the following categories: An
institutional investor, a broker-dealer with a predominantly retail
investor customer base, a broker-dealer with a predominantly
institutional investor customer base, a securities market data vendor,
an issuer of NMS stock, and a person who represents the interests of
retail investors (``retail representative'') (collectively, ``Non-SRO
Members''), provided that the representatives of the securities market
data vendor and the issuer are not permitted to be affiliated or
associated with an SRO, a broker-dealer, or an investment adviser with
third-party clients. The retail representative shall have experience
working with or on behalf of retail investors and have the requisite
background and professional experience to understand the interests of
retail investors, the work of the operating committee of the New
Consolidated Data Plan, and the role of market data in the U.S. equity
market. The retail representative shall not be affiliated with an SRO
or a broker-dealer.
     The New Consolidated Data Plan shall provide that the
initial Non-SRO Members will be selected by a majority vote of those
current members of the Equity Data Plans' advisory committees,
excluding advisory committee members who were selected by a Participant
to be its representative, and that subsequent Non-SRO Members be
selected solely by the then-serving Non-SRO Members of the New
Consolidated Data Plan's operating committee, and, further, that until
the initial Non-SRO Members have been selected, the Participants shall
renew the expiring terms of all members of the Equity Data Plans'
advisory committee (other than those selected to represent a
Participant) who remain willing to serve in that role.
     The New Consolidated Data Plan shall provide for a fair,
transparent, and public nomination process for Non-SRO Members and
shall specify a process for publicly soliciting and making available
for public comment nominations for Non-SRO Members.
     The New Consolidated Data Plan shall provide that the
aggregate number of votes provided to Non-SRO Members will, at all
times, be one half of the aggregate number of SRO member votes and the
number of Non-SRO Member votes will increase or decrease as necessary
to ensure that the ratio between the number of SRO member votes and the
number of Non-SRO Member votes is maintained, with Non-SRO Member votes
equally allocated, by fractional shares of a vote as necessary, among
the Non-SRO Members authorized and eligible to vote.
     The New Consolidated Data Plan shall include provisions to
address circumstances in which a member is unable to attend an
operating committee meeting or to cast a vote on a matter.
     The New Consolidated Data Plan shall provide that all
actions under the terms of the New Consolidated Data Plan, except the
selection of Non-SRO Members and decisions to enter into an SRO-only
executive session, will be required to be authorized by an augmented
majority vote, i.e., a supermajority vote of the New Consolidated Data
Plan's operating committee, along with a majority vote of the SRO
members of the operating committee.
     The New Consolidated Data Plan shall provide that the
responsibilities of the operating committee will include:
    [cir] Proposing amendments to the New Consolidated Data Plan or
implementing other policies and procedures as necessary to ensure
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;
    [cir] selecting, overseeing, specifying the role and
responsibilities of, and evaluating the performance of, an independent
plan administrator, plan processors, an auditor, and other professional
service providers, provided that any expenditures for professional
services that are paid for from New Consolidated Data Plan revenues
must be for activities consistent with the terms of the New
Consolidated Data Plan and must be authorized by the operating
committee;
    [cir] developing and maintaining fair and reasonable fees and
consistent terms for the distribution, transmission, and aggregation of
core data;
    [cir] reviewing the performance of the plan processors; and
ensuring the public reporting of plan processors' performance and other
metrics and information about the plan processors;
    [cir] assessing the marketplace for equity market data products and
ensuring that SIP data offerings are priced in a manner that is fair
and reasonable, and designed to ensure the widespread availability of
SIP data to investors and market participants; and
    [cir] designing a fair and reasonable revenue allocation formula
for allocating plan revenues to be applied by the independent plan
administrator, and overseeing, reviewing and revising that formula as
needed.
     The New Consolidated Data Plan shall provide that the
independent plan administrator will not be owned or controlled by a
corporate entity that, either directly or via another subsidiary,
offers for sale its own proprietary market data product for NMS stocks.
     The New Consolidated Data Plan shall include provisions
designed to address the conflicts of interest of SRO members and Non-
SRO Members as outlined in the Conflicts of Interest Approval Orders.
     The New Consolidated Data Plan shall include provisions
designed to protect confidential and proprietary information from
misuse as outlined in the Confidentiality Policy Approval Orders.
     The New Consolidated Data Plan shall identify the
circumstances in which SRO members may meet in executive session and
shall confine executive sessions to circumstances in which it is
appropriate to exclude Non-SRO Members, such as, for example,
discussions regarding matters that exclusively affect the SROs with
respect to the Commission's oversight of the New Consolidated Data Plan
(including attorney-client communications relating to such matters).
     The New Consolidated Data Plan shall provide that requests