[Federal Register Volume 82, Number 171 (Wednesday, September 6, 2017)]
[Notices]
[Pages 42168-42180]
[FR Doc No: 2017-18793]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81499; File Nos. SR-BatsBZX-2017-37; SR-BatsEDGX-2017-
23; SR-BOX-2017-17; SR-C2-2017-018; SR-CBOE-2017-041; SR-FINRA-2017-
013; SR-ISE-2017-46; SR-IEX-2017-18; SR-MIAX-2017-20; SR-PEARL-2017-23;
SR-NASDAQ-2017-055; SR-BX-2017-027; SR-Phlx-2017-43; SR-NYSE-2017-23;
SR-NYSEArca-2017-57; SR-NYSEArca-2017-59; SR-NYSEMKT-2017-29; SR-
NYSEMKT-2017-30]

Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Bats EDGX
Exchange, Inc.; BOX Options Exchange LLC; C2 Options Exchange,
Incorporated; Chicago Board Options Exchange, Incorporated; Financial
Industry Regulatory Authority, Inc.; International Securities Exchange,
LLC; Investors Exchange LLC; Miami International Securities Exchange
LLC; MIAX PEARL, LLC; The NASDAQ Stock Market LLC; NASDAQ BX, Inc.;
NASDAQ PHLX LLC; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT
LLC; Notice of Filing of Amendment No. 1 by Bats BZX Exchange, Inc.;
Bats EDGX Exchange, Inc.; BOX Options Exchange LLC; C2 Options
Exchange, Incorporated; Chicago Board Options Exchange, Incorporated;
Financial Industry Regulatory Authority, Inc.; Investors Exchange LLC;
New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC, of
Amendment Nos. 1 and 2 by International Securities Exchange, LLC; The
NASDAQ Stock Market LLC; NASDAQ BX, Inc.; and NASDAQ PHLX LLC, of
Amendment No. 2 by MIAX PEARL, LLC, and of Amendment No. 3 by Miami
International Securities Exchange LLC; Order Instituting Proceedings To
Determine Whether To Approve or Disapprove the Proposed Rule Changes,
as Modified by Amendments Thereto, To Eliminate Requirements That Will
Be Duplicative of CAT

August 30, 2017.

I. Introduction

    On May 15, 2017, Bats BZX Exchange, Inc. (``Bats BZX''); Bats EDGX
Exchange, Inc. (``Bats EDGX''); BOX Options Exchange LLC (``BOX''); C2
Options Exchange, Incorporated (``C2''); Chicago Board Options
Exchange, Incorporated (``CBOE''); Financial Industry Regulatory
Authority, Inc. (``FINRA''); International Securities Exchange, LLC
(``ISE''); Investors Exchange LLC (``IEX''); Miami International
Securities Exchange LLC (``MIAX''); MIAX PEARL, LLC (``PEARL''); NYSE
Arca, Inc. (``NYSE Arca''); and NYSE MKT LLC (``NYSE MKT'') (n/k/a NYSE
American LLC) \1\ filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\
proposed rule changes to eliminate or modify certain rules that require
the collection or reporting of information that is duplicative of the
information that will be collected by the Consolidated Audit Trail
(``CAT'') established pursuant to the National Market System Plan
contemplated by Rule 613 of Regulation NMS.\4\ On May 22, 2017, the New
York Stock Exchange LLC (``NYSE'') filed with the Commission a proposed
rule change for the same purpose, and each of NYSE Arca \5\ and NYSE
MKT filed an additional proposed rule change for the same purpose. On
May 26, 2017, the NASDAQ Stock Market LLC (``NASDAQ'') and NASDAQ PHLX
LLC (``Phlx'') filed with the Commission proposed rule changes for the
same purpose.\6\ On May 30, 2017, NASDAQ BX, Inc. (``BX'') filed with
the Commission a proposed rule change for the same purpose.\7\ In this
notice and order, all of these proposed rule changes are referred to
collectively as the ``Systems Retirement Proposals.'' Bats BZX, Bats
EDGX, BOX, BX, C2, CBOE, ISE, IEX, MIAX, PEARL, NASDAQ, NYSE, NYSE
Arca, NYSE MKT, and Phlx are collectively referred to as the
``Exchanges,'' and, together with FINRA, are referred to as the
``SROs.''
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    \1\ See Securities Exchange Act Release No. 80283 (March 21,
2017), 82 FR 15244 (March 27, 2017) (SR-NYSEMKT-2017-14). The name
change was not yet effective when NYSE MKT filed SR-NYSEMKT-2017-29
and SR-NYSEMKT-2017-30.
    \2\ 15 U.S.C. 78s(b)(1).
    \3\ 17 CFR 240.19b-4.
    \4\ 17 CFR 242.613.
    \5\ Effective August 17, 2017, NYSE Arca amended, among other
things, certain rules of the Exchange to create a single rulebook.
See Securities Exchange Act Release No. 81419 (August 17, 2017) (SR-
NYSEArca-2017-40) (the ``Arca Merger Filing''). NYSE Arca rule text
references in this notice and order reflect rule numbering changes
as a result of the Arca Merger Filing.
    \6\ Nasdaq and Phlx initially filed proposed rule changes on May
15, 2017 (SR-NASDAQ-2017-050 and SR-PHLX-2017-38). On May 26, 2017,
Nasdaq and Phlx withdrew these filings and submitted new proposed
rule changes (SR-NASDAQ-2017-055 and SR-PHLX-2017-43).
    \7\ BX initially filed a proposed rule change on May 15, 2017
(SR-BX-2017-025). On May 30, 2017, BX withdrew that initial filing
and submitted a new proposed rule change (SR-BX-2017-027).
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    On June 1, 2017, the proposed rule changes submitted by Bats BZX,
Bats EDGX, BOX, C2, CBOE, FINRA, IEX, ISE, MIAX, and PEARL; both
proposed rule changes submitted by NYSE MKT; and one of the proposed
rule changes submitted by NYSE Arca were published for comment in the
Federal Register.\8\ On June 2, 2017, the proposed rule change
submitted by NYSE and the other proposed rule change submitted by NYSE
Arca were published for comment in the Federal Register.\9\ On June 5,
2017, the proposed rule changes submitted by NASDAQ, BX, and Phlx were
published for comment in the Federal Register.\10\
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    \8\ See Securities Exchange Act Release No. 80796 (May 26,
2017), 82 FR 25374 (SR-BatsBZX-2017-37) (``Bats BZX Notice'');
Securities Exchange Act Release No. 80795 (May 26, 2017), 82 FR
25358 (SR-BatsEDGX-2017-23) (``Bats EDGX Notice''); Securities
Exchange Act Release No. 80789 (May 26, 2017), 82 FR 25492 (SR-BOX-
2017-17) (``BOX Notice''); Securities Exchange Act Release No. 80798
(May 26, 2017), 82 FR 25385 (SR-C2-2017-018) (``C2 Notice'');
Securities Exchange Act Release No. 80797 (May 26, 2017), 82 FR
25429 (SR-CBOE-2017-041) (``CBOE Notice''); Securities Exchange Act
Release No. 80783 (May 26, 2017), 82 FR 25423 (SR-FINRA-2017-013)
(``FINRA Notice''); Securities Exchange Act Release No. 80788 (May
26, 2017), 82 FR 25400 (SR-IEX-2017-18) (``IEX Notice''); Securities
Exchange Act Release No. 80787 (May 26, 2017), 82 FR 25469 (SR-ISE-
2017-46) (``ISE Notice''); Securities Exchange Act Release No. 80790
(May 26, 2017), 82 FR 25366 (SR-MIAX-2017-20) (``MIAX Notice'');
Securities Exchange Act Release No. 80792 (May 26, 2017), 82 FR
25436 (SR-PEARL-2017-23) (``PEARL Notice''); Securities Exchange Act
Release No. 80791 (May 26, 2017), 82 FR 25362 (SR-NYSEArca-2017-59)
(``NYSE Arca Notice 1''); Securities Exchange Act Release No. 80793
(May 26, 2017), 82 FR 25443 (SR-NYSEMKT-2017-29) (``NYSE MKT Notice
1''); Securities Exchange Act Release No. 80794 (May 26, 2017), 82
FR 25439 (SR-NYSEMKT-2017-30) (``NYSE MKT Notice 2'').
    \9\ See Securities Exchange Act Release No. 80799 (May 26,
2017), 82 FR 25635 (SR-NYSE-2017-23) (``NYSE Notice''); Securities
Exchange Act Release No. 80800 (May 26, 2017), 82 FR 25639 (SR-
NYSEArca-2017-57) (``NYSE Arca Notice 2'').
    \10\ See Securities Exchange Act Release No. 80813 (May 30,
2017), 82 FR 25820 (SR-NASDAQ-2017-055) (``NASDAQ Notice'');
Securities Exchange Act Release No. 80814 (May 30, 2017), 82 FR
25872 (SR-BX-2017-027) (``BX Notice''); Securities Exchange Act
Release No. 80811 (May 30, 2017), 82 FR 25863 (SR-Phlx-2017-43)
(``Phlx Notice'').
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    Four comments were submitted to File Number SR-FINRA-2017-013.\11\
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    \11\ See letters from William H. Herbert, Managing Director,
Financial Information Forum, dated June 22, 2017 (``FIF Letter'');
Manisha Kimmel, Chief Regulatory Officer, Wealth Management, Thomson
Reuters, dated June 22, 2017 (``Thomson Reuters Letter''); Marc R.
Bryant, Senior Vice President, Deputy General Counsel, Fidelity
Investments, dated June 22, 2017 (``Fidelity Letter''); and Ellen
Greene, Managing Director and Theodore R. Lazo, Managing Director
and Associate General Counsel, SIFMA, dated June 23, 2017 (``SIFMA
Letter'').
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    On June 22, 2017, each of NASDAQ, BX, ISE, and Phlx filed an
amendment

to its proposed rule change.\12\ On July 14, 2017, the Commission
extended the time period for Commission action on all of the Systems
Retirement Proposals to August 30, 2017.\13\
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    \12\ These amendments modified Section 2 of the Form 19b-4
submitted by each of NASDAQ, BX, ISE, and Phlx to state that on June
1, 2017, the exchange obtained the necessary approval from its Board
of Directors for the proposed rule change. When NASDAQ, BX, ISE, and
Phlx each filed Amendment No. 1 to their respective proposals with
the Commission, they also submitted the Amendment No. 1 to the
public comment file for each of their respective proposals.
    \13\ See Securities Exchange Act Release No. 81145, 82 FR 33533
(July 20, 2017).
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    On August 24, 2017, BOX submitted Amendment No. 1 to its proposed
rule filing,\14\ IEX submitted Amendment No. 1 to its proposed rule
filing,\15\ PEARL submitted Amendment No. 2 to its proposed rule
filing,\16\ and MIAX submitted Amendment No. 3 to its proposed rule
filing.\17\ On August 25, 2017, Bats BZX submitted Amendment No. 1 to
its proposed rule filing,\18\ Bats EDGX submitted Amendment No. 1 to
its proposed rule filing,\19\ BX submitted Amendment No. 1 to its
proposed rule filing,\20\ C2 submitted Amendment No. 1 to its proposed
rule filing,\21\ CBOE submitted Amendment No. 1 to its proposed rule
filing,\22\ FINRA submitted Amendment No. 1 to its proposed rule
filing,\23\ ISE submitted Amendment No. 2 to its proposed rule
filing,\24\ NASDAQ submitted Amendment No. 2 to its proposed rule
filing,\25\ NYSE submitted

Amendment No. 1 to its proposed rule filing,\26\ NYSE Arca submitted
Amendment No. 1 to each of its proposed rule filings,\27\ NYSE MKT
submitted Amendment No. 1 to each of its proposed rule filings,\28\ and
Phlx submitted Amendment No. 2 to its proposed rule filing.\29\
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    \14\ This amendment: (1) Added introductory language to BOX's
COATS-related rules to clarify that the rules will be amended upon
announcement by BOX that the CAT has achieved a sufficient level of
accuracy and reliability; (2) modified rule text language for BOX's
EBS rule and the rule regarding securities accounts and orders of
market makers to clarify that BOX will not request trade data or
information, and members will not be required to provide trade data
or information, pursuant to the rule for trades reported to the CAT
after BOX announces that it has determined that the accuracy and
reliability of the CAT are sufficient to replace requests pursuant
to these rules; and (3) clarified that the accuracy and reliability
standards discussed in its Systems Retirement Proposal apply to all
of the rules discussed therein. When BOX filed Amendment No. 1 to
its proposal with the Commission, it also submitted Amendment No. 1
to the public comment file for its proposal.
    \15\ This amendment: (1) Added introductory language to IEX's
OATS rule series to clarify that the rules will be deleted upon
announcement by IEX that the CAT has achieved a level of accuracy
and reliability sufficient to replace OATS; (2) modified IEX's EBS
rule text language to clarify that IEX (or FINRA on behalf of IEX)
will not request trade data or information, and members will not be
required to provide trade data or information, pursuant to the EBS
rule for trades reported to the CAT after IEX announces that it has
determined that the accuracy and reliability of the CAT are
sufficient to replace requests pursuant to the EBS rule; and (3)
made two clarifying revisions to the Purpose section of its
proposal. When IEX filed Amendment No. 1 to its proposal with the
Commission, it also submitted Amendment No. 1 to the public comment
file for its proposal.
    \16\ PEARL filed Amendment No. 1 to its proposed rule change on
August 22, 2017. On August 24, 2017, PEARL withdrew Amendment No. 1
and replaced it with Amendment No. 2. Amendment No. 2 modified the
rule text for PEARL's EBS rule (which is incorporated by reference
from the MIAX rulebook) and its rule regarding market maker order
and account information to clarify that PEARL will not request trade
data or information, and members will not be required to provide
trade data or information, pursuant to such rule for trades reported
to the CAT after PEARL announces that it has determined that the
accuracy and reliability of the CAT are sufficient to replace
requests pursuant to these rules. When PEARL filed Amendment No. 2
to its proposal with the Commission, it also submitted Amendment No.
2 to the public comment file for its proposal.
    \17\ MIAX filed Amendment No. 1 to its proposed rule change on
August 22, 2017 and withdrew and replaced it with Amendment No. 2 on
the same day. On August 24, 2017, MIAX withdrew Amendment No. 2 and
replaced it with Amendment No. 3. Amendment No. 3 modified the rule
text for MIAX's EBS rule and its rule regarding market maker order
and account information to clarify that MIAX will not request trade
data or information, and members will not be required to provide
trade data or information, pursuant to such rule for trades reported
to the CAT after MIAX announces that it has determined that the
accuracy and reliability of the CAT are sufficient to replace
requests pursuant to these rules. When MIAX filed Amendment No. 3 to
its proposal with the Commission, it also submitted Amendment No. 3
to the public comment file for its proposal.
    \18\ This amendment: (1) Added introductory language to BZX's
rule regarding securities accounts and orders of market makers to
clarify that the rules will be amended upon announcement by BZX that
the CAT has achieved a sufficient level of accuracy and reliability;
and (2) modified rule text language for BZX's EBS rule and the rule
regarding furnishing of records to clarify that BZX will not request
trade data or information, and members will not be required to
provide trade data or information, pursuant to the rule for trades
reported to the CAT after BZX announces that it has determined that
the accuracy and reliability of the CAT are sufficient to replace
requests pursuant to these rules. When BZX filed Amendment No. 1 to
its proposal with the Commission, it also submitted Amendment No. 1
to the public comment file for its proposal.
    \19\ This amendment: (1) Added introductory language to Bats
EDGX's rule regarding securities accounts and orders of market
makers to clarify that the rule will be amended upon announcement by
Bats EDGX that the CAT has achieved a sufficient level of accuracy
and reliability; and (2) modified rule text language for Bats EDGX's
EBS rule and the rule regarding furnishing of records to clarify
that Bats EDGX will not request trade data or information, and
members will not be required to provide trade data or information,
pursuant to the rule for trades reported to the CAT after Bats EDGX
announces that it has determined that the accuracy and reliability
of the CAT are sufficient to replace requests pursuant to these
rules. When Bats EDGX filed Amendment No. 1 to its proposal with the
Commission, it also submitted Amendment No. 1 to the public comment
file for its proposal.
    \20\ This amendment: (1) Added introductory language to BX's
OATS rule series to clarify that the rules will be deleted upon
announcement by BX that the CAT has achieved a level of accuracy and
reliability sufficient to replace OATS; (2) added introductory
language to BX's COATS-related rules to clarify that the rules will
be amended upon announcement by BX that the CAT has achieved a level
of accuracy and reliability sufficient to replace COATS; and (3)
modified BX's EBS rule text and the language of Chapter VII, Section
7, to clarify that BX will not request trade data or information,
and members will not be required to provide trade data or
information, pursuant to EBS Rules or Chapter VII, Section 7, for
trades reported to the CAT after BX announces that it has determined
that the accuracy and reliability of the CAT are sufficient to
replace requests pursuant to these rules. When BX filed Amendment
No. 2 to its proposal with the Commission, it also submitted
Amendment No. 2 to the public comment file for its proposal.
    \21\ This amendment added introductory language to C2's rule
regarding securities accounts and orders of market makers to clarify
that the rule will be amended upon announcement by C2 that the CAT
has achieved a sufficient level of accuracy and reliability. When C2
filed Amendment No. 1 to its proposal with the Commission, it also
submitted Amendment No. 1 to the public comment file for its
proposal.
    \22\ This amendment: (1) Added introductory language to CBOE's
COATS-related rules and rule regarding securities accounts and
orders of market makers to clarify that the rules will be amended
upon announcement by CBOE that the CAT has achieved a sufficient
level of accuracy and reliability; and (2) modified rule text
language for CBOE's EBS rule and the rule regarding complaints and
investigations to clarify that CBOE will not request trade data or
information, and members will not be required to provide trade data
or information, pursuant to the rule for trades reported to the CAT
after CBOE announces that it has determined that the accuracy and
reliability of the CAT are sufficient to replace requests pursuant
to these rules. When CBOE filed Amendment No. 1 to its proposal with
the Commission, it also submitted Amendment No. 1 to the public
comment file for its proposal.
    \23\ This amendment: (1) Added introductory language to FINRA's
OATS rule series to clarify that the rules will be deleted upon
announcement by FINRA that the CAT has achieved a level of accuracy
and reliability sufficient to replace OATS; and (2) modified FINRA's
EBS rule text to clarify that FINRA will not request trade data or
information, and members will not be required to provide trade data
or information, pursuant to its EBS rules for trades reported to the
CAT after FINRA announces that it has determined that the accuracy
and reliability of the CAT are sufficient to replace requests
pursuant to these rules. When FINRA filed Amendment No. 1 to its
proposal with the Commission, it also submitted Amendment No. 1 to
the public comment file for its proposal.
    \24\ This amendment modified ISE's EBS rule text language to
clarify that ISE will not request trade data or information, and
members will not be required to provide trade data or information,
pursuant to ISE's Rule 1404 for trades reported to the CAT after ISE
announces that it has determined that the accuracy and reliability
of the CAT are sufficient to replace requests pursuant to the rule.
When ISE filed Amendment No. 2 to its proposal with the Commission,
it also submitted Amendment No. 2 to the public comment file for its
proposal.
    \25\ This amendment: (1) Added introductory language to NASDAQ's
OATS rule series to clarify that the rules will be deleted upon
announcement by NASDAQ that the CAT has achieved a level of accuracy
and reliability sufficient to replace OATS; (2) added introductory
language to NASDAQ's COATS-related rules to clarify that these rules
will be amended upon announcement by NASDAQ that the CAT has
achieved a level of accuracy and reliability sufficient to replace
COATS; and (3) modified NASDAQ's EBS rule text and the language of
Chapter VII, Section 7, to clarify that NASDAQ will not request
trade data or information, and members will not be required to
provide trade data or information, pursuant to the EBS Rules or
Chapter VII, Section 7, for trades reported to the CAT after NASDAQ
announces that it has determined that the accuracy and reliability
of the CAT are sufficient to replace requests pursuant to these
rules. When NASDAQ filed Amendment No. 2 to its proposal with the
Commission, it also submitted Amendment No. 2 to the public comment
file for its proposal.
    \26\ This amendment: (1) Added introductory language to NYSE's
OATS rules to clarify that they will be deleted upon announcement by
FINRA that the CAT has achieved a level of accuracy and reliability
sufficient to replace OATS; and (2) modified NYSE's EBS rule text to
clarify that NYSE will not request trade data or information, and
member organizations will not be required to provide trade data or
information, pursuant to the rule for trades reported to the CAT
after FINRA announces that it has determined that the accuracy and
reliability of the CAT are sufficient to replace requests pursuant
to FINRA's EBS rules. When NYSE filed Amendment No. 1 to its
proposal with the Commission, it also submitted Amendment No. 1 to
the public comment file for its proposal.
    \27\ Amendment No. 1 to SR-NYSEArca-2017-59: (1) Added
introductory language to NYSE Arca's OATS rules to clarify that the
OATS rules will be deleted upon announcement by FINRA that the CAT
has achieved a level of accuracy and reliability sufficient to
replace OATS; and (2) modified NYSE Arca's EBS rule text to clarify
that NYSE Arca will not request trade data or information, and ETP
Holders, OTP Holders, OTP Firms, and associated persons of ETP
Holders and OTP Firms (as defined in NYSE Arca's rulebook) will not
be required to provide trade data or information, pursuant to the
rule for trades reported to the CAT after FINRA announces that it
has determined that the accuracy and reliability of the CAT are
sufficient to replace requests pursuant to FINRA's EBS rules.
Amendment No. 1 to SR-NYSEArca-2017-57 added introductory language
to NYSE Arca's COATS-related rules to clarify that these rules will
be amended upon announcement by NYSE Arca, in conjunction with the
other options exchanges, that CAT has achieved a level of accuracy
and reliability sufficient to replace COATS. When NYSE Arca filed
Amendment No. 1 to each of its proposed rule changes with the
Commission, it also submitted Amendment No. 1 to the public comment
file for each respective proposed rule change.
    \28\ Amendment No. 1 to SR-NYSEMKT-2017-30: (1) Added
introductory language to NYSE MKT's OATS rules to clarify that they
will be deleted upon announcement by FINRA that the CAT has achieved
a level of accuracy and reliability sufficient to replace OATS; and
(2) modified NYSE MKT's EBS rule text to clarify that NYSE MKT will
not request trade data or information, and member organizations and
ATP Holders (as defined in NYSE MKT's rulebook) will not be required
to provide trade data or information, pursuant to the rule for
trades reported to the CAT after FINRA announces that it has
determined that the accuracy and reliability of the CAT are
sufficient to replace requests pursuant to FINRA's EBS rules.
Amendment No. 1 to SR-NYSEMKT-2017-29 added introductory language to
NYSE MKT's COATS-related rules to clarify that the COATS-related
rules will be amended upon announcement by NYSE MKT, in conjunction
with the other options exchanges, that CAT has achieved a level of
accuracy and reliability sufficient to replace COATS. When NYSE MKT
filed Amendment No. 1 to each of its proposed rule changes with the
Commission, it also submitted Amendment No. 1 to the public comment
file for each respective proposed rule change.
    \29\ This amendment: (1) Added introductory language to Phlx
OATS rule series to clarify that the rules will be deleted upon
announcement by Phlx that the CAT has achieved a level of accuracy
and reliability sufficient to replace OATS; (2) added introductory
language to Phlx's COATS-related rules to clarify that the rules
will be amended upon announcement by Phlx that the CAT has achieved
a level of accuracy and reliability sufficient to replace COATS; (3)
modified Phlx's EBS rule text and language in Phlx Rule 1022 to
clarify that Phlx will not request trade data or information, and
members will not be required to provide trade data or information,
pursuant to the EBS Rule or Rule 1022 for trades reported to the CAT
after Phlx announces that is has determined that the accuracy and
reliability of the CAT are sufficient to replace requests pursuant
to these rules; and (4) made a conforming change to Phlx Option
Floor Procedure Advices and Order and Decorum Regulations C-2 to
delete rule text that corresponds to rule text that Phlx previously
proposed to delete in Rule 1063. When Phlx filed Amendment No. 2 to
its proposal with the Commission, it also submitted Amendment No. 2
to the public comment file for its proposal.
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    The Commission is publishing this notice and order to solicit
comments on the proposed rule changes, as modified by the respective
amendments thereto, from interested persons and to institute
proceedings pursuant to Section 19(b)(2)(B) of the Act \30\ to
determine whether to approve or disapprove the proposed rule changes,
as modified by the respective amendments thereto.\31\
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    \30\ 15 U.S.C. 78s(b)(2)(B).
    \31\ For purposes of this notice and order, capitalized terms
are defined as set forth in the Notices or in the CAT NMS Plan
unless otherwise specified.
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II. Description of the Proposals, as Modified by Amendments Thereto

    As required by the CAT NMS Plan, the Systems Retirement Proposals
discuss: (1) The specific standards that will govern when SRO rules and
related systems that are duplicative of CAT--including the Order Audit
Trail System (``OATS''), the Consolidated Options Audit Trail System
(``COATS''), and the Electronic Blue Sheets system (``EBS'')--will be
modified or eliminated; (2) whether the availability of data from Small
Industry Members in November of 2018 would facilitate duplicative
systems retirement; and (3) the feasibility of granting exemptions from
reporting to duplicative systems to individual Industry Members whose
CAT reporting meets certain accuracy and reliability thresholds.

A. Specific Accuracy and Reliability Standards

1. OATS
    FINRA's OATS rules require certain FINRA members to report a
variety of data regarding transactions in OTC equity securities and NMS
stocks to the system on a daily basis.\32\ Several other SROs have
their own OATS rules that mirror FINRA's rule or incorporate it by
reference.\33\ FINRA and the other SROs with OATS rules (the ``OATS
SROs'') have proposed to delete their OATS rules from their respective
rulebooks. As described in more detail below, these deletions will be
implemented once CAT Data achieves certain pre- and post-correction
error rates and certain qualitative criteria have been met.
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    \32\ See FINRA Rule 7400.
    \33\ See BX Rule 6950, IEX Rule 11.420, NASDAQ Rule 7000A
Series, NYSE Rule 7400 Series, NYSE Arca Rule 6-E, and NYSE MKT Rule
7400--Equities Series, Phlx Rule 3400 series.
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    In its Systems Retirement Proposal, FINRA stated that it believes
that relevant error rates are the primary, but not the sole, metric by
which to determine the CAT's accuracy and reliability and will serve as
the baseline requirement needed before OATS can be retired to account
for information being available in the CAT.\34\
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    \34\ See FINRA Notice, 82 FR at 25424.
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    FINRA noted that the Participants established an initial Error
Rate, as defined in the Plan, of 5% on initially submitted data (i.e.,
data as submitted by a CAT Reporter before any required corrections are
performed).\35\ The Participants noted in the Plan their expectation
that ``error rates after reprocessing of error corrections will be de
minimis.'' \36\ The Participants based this Error Rate on their
consideration of ``current and historical OATS Error Rates, the
magnitude of new reporting requirements on the CAT Reporters and the
fact that many CAT Reporters may have never been obligated to report
data to an audit trail.'' \37\
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    \35\ See CAT NMS Plan, Appendix B, Section A.3(b).
    \36\ CAT NMS Plan, Appendix C, Section A.3(b), at n. 102.
    \37\ CAT NMS Plan, Appendix C, Section A.3(b).
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    In its Systems Retirement Proposal, FINRA expressed agreement with
the Participants' conclusion that a 5% pre-correction threshold
``strikes the balance of adapting to a new reporting regime, while
ensuring that the data provided to regulators will be capable of being
used to conduct surveillance and market reconstruction, as well as
having a sufficient level of accuracy to facilitate the retirement of
existing regulatory reports and systems where possible.'' \38\ However,
FINRA believed that, when assessing the accuracy and reliability of the
data for the purposes of retiring OATS, the error thresholds should be
measured in more granular ways and should also include minimum error
rates of post-correction data, which

represents the data most likely to be used by FINRA to conduct
surveillance. Although FINRA is proposing to measure the appropriate
error rates in the aggregate rather than firm-by-firm, FINRA expressed
the belief that the error rates for equity securities should be
measured separately from options since options orders are not currently
reported regularly or included in OATS.\39\
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    \38\ Id. See also FINRA Notice, 82 FR at 25424.
    \39\ See FINRA Notice, 82 FR at 25424.
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    FINRA has proposed that, before OATS could be retired, the CAT
would generally need to achieve a sustained error rate for Industry
Member reporting in each of the categories below:
     Rejection Rates and Data Validations. Data validations for
the CAT, while not expected to be designed the same as OATS, must be
functionally equivalent to OATS in accordance with the CAT NMS Plan
(i.e., the same types of basic data validations must be performed by
the Plan Processor to comply with the CAT NMS Plan requirements).
Appendix D of the Plan, for example, requires that certain file
validations\40\ and syntax and context checks be performed on all
submitted records.\41\ If a record does not pass these basic data
validations, it must be rejected and returned to the CAT Reporter to be
corrected and resubmitted.\42\ The specific validations can be
determined only after the Plan Processor has finalized the Industry
Member Technical Specifications; however, the Plan also requires the
Plan Processor to provide daily statistics on rejection rates after the
data has been processed, including the number of files rejected and
accepted, the number of order events accepted and rejected, and the
number of each type of report rejected.\43\ FINRA is proposing that,
over the 180-day period, aggregate rejection rates (measured separately
for equities and options) must be no more than 5% pre-correction or 2%
post-correction across all CAT Reporters.
---------------------------------------------------------------------------

    \40\ See CAT NMS Plan, Appendix D, Section 7.2. The Plan
requires the Plan Processor to confirm that file transmission and
receipt are in the correct formats, including validation of header
and trailers on the submitted report, confirmation of a valid SRO-
Assigned Market Participant Identifier, and verification of the
number of records in the file. See id.
    \41\ See id. The Plan notes that syntax and context checks would
include format checks (i.e., that data is entered in the specified
format); data type checks (i.e., that the data type of each
attribute conforms to the specifications); consistency checks (i.e.,
that all attributes for a record of a specified type are
consistent); range/logic checks (i.e., that each attribute for every
record has a value within specified limits and the values provided
are associated with the event type they represent); data validity
checks (i.e., that each attribute for every record has an acceptable
value); completeness checks (i.e., that each mandatory attribute for
every record is not null); and timeliness checks (i.e., that the
records were submitted within the submission timelines). See id.
    \42\ See id.
    \43\ See id.
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     Intra-Firm Linkages. The Plan requires that ``the Plan
Processor must be able to link all related order events from all CAT
Reporters involved in the lifecycle of an order.'' \44\ At a minimum,
this requirement includes the creation of an order lifecycle between
``[a]ll order events handled within an individual CAT Reporter,
including orders routed to internal desks or departments with different
functions (e.g., an internal ATS).'' \45\ FINRA is proposing that
aggregate intra-firm linkage rates across all Industry Member Reporters
must be at least 95% pre-correction and 98% post-correction.
---------------------------------------------------------------------------

    \44\ CAT NMS Plan, Appendix D, Section 3.
    \45\ Id.
---------------------------------------------------------------------------

     Inter-Firm Linkages. The order linkage requirements in the
Plan also require that the Plan Processor be able to create the
lifecycle between orders routed between broker-dealers.\46\ FINRA is
proposing that at least a 95% pre-correction and 98% post-correction
aggregate match rate be achieved for orders routed between two Industry
Member Reporters.
---------------------------------------------------------------------------

    \46\ See id.
---------------------------------------------------------------------------

     Order Linkage Rates. In addition to creating linkages
within and between broker-dealers, the Plan also includes requirements
that the Plan Processor be able to create lifecycles to link various
pieces of related orders.\47\ For example, the Plan requires linkages
between customer orders and ``representative'' orders created in firm
accounts for the purpose of facilitating a customer order, various legs
of option/equity complex orders, riskless principal orders, and orders
worked through average price accounts.\48\ FINRA is proposing that
there be at least a 95% pre-correction and 98% post-correction linkage
rate for multi-legged orders (e.g., related equity/options orders, VWAP
orders, riskless principal transactions).
---------------------------------------------------------------------------

    \47\ See id.
    \48\ See id.
---------------------------------------------------------------------------

     Exchange and TRF/ORF Match Rates. The Plan requires that
an order lifecycle be created to link ``[o]rders routed from broker-
dealers to exchanges'' and ``[e]xecuted orders and trade reports.''
\49\ FINRA is proposing at least a 95% pre-correction and 98% post-
correction aggregate match rate to each equity exchange for orders
routed from Industry Members to an exchange and, for over-the-counter
executions, the same match rate for orders linked to trade reports.
---------------------------------------------------------------------------

    \49\ Id.
---------------------------------------------------------------------------

    FINRA believes that an error rate of 5% or lower, measured on a
pre-correction or as-submitted basis, and 2% or lower on a post-
correction basis (measured at T+5),\50\ should be attained across a
180-day period before retiring OATS. FINRA believes that this time
period is necessary to reveal any errors that could manifest themselves
only after surveillance patterns and other queries have been run and to
confirm that the Plan Processor is meeting its obligations and
performing its functions adequately. FINRA would not require a maximum
5% pre-correction error rate and 2% post-correction error rate each day
for 180 consecutive days. FINRA's Systems Retirement Proposal also
provides that, during the 180-day period over which the thresholds are
calculated, FINRA's use of the data in the CAT must confirm that (i)
usage over that time period has not revealed material issues that have
not been corrected, (ii) the CAT includes all data necessary to allow
FINRA to continue to meet its surveillance obligations, and (iii) the
Plan Processor is sufficiently meeting all of its obligations under the
Plan.
---------------------------------------------------------------------------

    \50\ The Plan requires the Plan Processor to ensure that
regulators have access to corrected and linked order and Customer
data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, Appendix C,
Section A.2(a).
---------------------------------------------------------------------------

    Finally, FINRA notes that it will implement the deletion of its
OATS rules on a date to be announced in a Regulatory Notice once FINRA
concludes the thresholds for accuracy and reliability described above
have been met.\51\ In addition, FINRA added proposed introductory
language to its OATS rules in its Amendment No. 1 that clarified that,
if approved, the OATS rules will be deleted from its rulebook upon
announcement by FINRA that the CAT has achieved a level of accuracy and
reliability sufficient to replace OATS.
---------------------------------------------------------------------------

    \51\ See FINRA Notice, 82 FR at 25426.
---------------------------------------------------------------------------

    In their Systems Retirement Proposals, some of the OATS SROs \52\
proposed to assess when to eliminate their respective OATS rules based
on the same accuracy and reliability standards as proposed by FINRA,
and to announce the implementation date of the elimination of their
OATS rules via regulatory notice once each has concluded that these
standards have

been met.\53\ Other OATS SROs \54\ proposed to implement the
elimination of their OATS rules via regulatory notice once FINRA has
determined that the accuracy and reliability standards proposed by
FINRA had been met, and FINRA publishes a notice announcing the date it
will retire its OATS rules.\55\
---------------------------------------------------------------------------

    \52\ BX, IEX, NASDAQ, and Phlx.
    \53\ See BX Notice, 82 FR at 25873-74; IEX Notice, 82 FR at
25401-02; NASDAQ Notice, 82 FR at 25821-22; Phlx Notice, 82 FR at
25864. Similar to FINRA, each of these Exchanges also added proposed
introductory language to its OATS rules to clarify that, if
approved, the OATS rules will be deleted from its rulebook upon
announcement by the Exchange that CAT has achieved a level of
accuracy and reliability sufficient to replace OATS. See Amendment
No. 1 to IEX Notice and Amendment No. 2 to BX Notice, NASDAQ Notice,
and Phlx Notice.
    \54\ NYSE, NYSE Arca, and NYSE MKT.
    \55\ See NYSE Notice, 82 FR at 25636-37; NYSE Arca Notice 1, 82
FR at 25363-64; NYSE MKT Notice 2, 82 FR at 25440. Similar to FINRA,
each of NYSE, NYSE Arca, and NYSE MKT also added proposed
introductory language to its OATS rules to clarify that, if
approved, the OATS rules will be deleted from its rulebook upon
announcement by FINRA that the CAT has achieved a level of accuracy
and reliability sufficient to replace OATS. See Amendment No. 1 to
NYSE Notice, NYSE Arca Notice 1, and NYSE MKT Notice 2.
---------------------------------------------------------------------------

2. COATS
    Bats BZX, Bats EDGX, BX, BOX, CBOE, C2, NASDAQ, NYSE Arca, NYSE
MKT, and Phlx (collectively, the ``COATS SROs'') utilize COATS to
collect and review data regarding orders, quotes, and transactions in
listed options.\56\ In their Systems Retirement Proposals, the COATS
SROs noted that the Participants have provided COATS technical
specifications to the CAT Plan Processor for use in developing the
Technical Specifications for the CAT, and that the Participants are
working with the Plan Processor to include the necessary COATS data
elements in the CAT Technical Specifications.\57\ Accordingly, the
COATS SROs have proposed to eliminate COATS once CAT is operational and
CAT Data is sufficiently accurate and reliable for the COATS SROs to
perform the regulatory functions that they now perform via COATS. The
COATS SROs also have proposed to eliminate certain provisions of their
rules that reference COATS or implement COATS requirements \58\ and/or
to replace certain provisions that implement COATS requirements with
others that provide for compliance with CAT requirements.\59\
---------------------------------------------------------------------------

    \56\ COATS was developed to comply with an order of the
Commission requiring CBOE, in coordination with other exchanges, to
design and implement a consolidated audit trail to ``enable the
options exchanges to reconstruct markets promptly, effectively
surveil them and enforce order handling, firm quote, trade reporting
and other rules.'' Securities Exchange Act Release No. 43268,
Section IV.B.e.(v) (September 11, 2000) (Administrative Proceeding
File No. 3-10282) (Order Instituting Public Administrative
Proceedings Pursuant to Sections 19(h)(1) of the Act, Making
Findings and Imposing Remedial Sanctions).
    \57\ See Bats BZX Notice, 82 FR at 25375; Bats EDGX Notice, 82
FR at 25359; BOX Notice, 82 FR at 25492; BX Notice, 82 FR at 25876;
C2 Notice, 82 FR at 25386; CBOE Notice, 82 FR at 25430; NYSE Arca
Notice 2, 82 FR at 25640; NYSE MKT Notice 1, 82 FR at 25444; NASDAQ
Notice, 82 FR at 25824; Phlx Notice, 82 FR at 25868.
    \58\ See CBOE Notice, 82 FR at 25430 (proposing to eliminate,
from CBOE Rule 6.24, references to and background on COATS as well
as COATS requirements regarding the reporting of the time of receipt
of an execution report); NYSE Arca Notice 2, 82 FR at 25640
(proposing to eliminate the COATS-related clock synchronization
requirements of NYSE Arca Rule 6.20-O).
    \59\ See BX Notice, 82 FR at 25876 (proposing to eliminate the
COATS-based information reporting requirements of BX Chapter V,
Section 7, and to replace them with a requirement that BX members
maintain order records consisting of the elements required by BX's
CAT Compliance Rule); Amendment No. 1 to BOX Notice (proposing to
eliminate the COATS-based data requirements of BOX Rule 7120(b) and
to replace them with a requirement that order tickets consist of the
elements required by BOX's CAT Compliance Rule); CBOE Notice, 82 FR
at 25430 (proposing to amend various interpretations and policies of
CBOE Rule 6.24 to require that certain systems and data reports
comply with the functionality and format requirements of CAT rather
than COATS); Nasdaq Notice, 82 FR at 25824 (proposing to eliminate
the COATS-based information reporting requirements of Nasdaq Chapter
V, Section 7, and to replace them with a requirement that Nasdaq
members maintain order records consisting of the elements required
by Nasdaq's CAT Compliance Rule); NYSE Arca Notice 2, 82 FR at 25640
(proposing to amend NYSE Arca Rule 6.68-O to require order records
to include the elements required by NYSE Arca's CAT Compliance Rule
rather than the elements required under COATS); NYSE MKT Notice 1,
82 FR at 25444 (proposing to amend NYSE MKT Rule 956NY to require
order records to include the elements required by NYSE MKT's CAT
Compliance Rule rather than the elements required under COATS); Phlx
Notice, 82 FR at 25868 and Amendment No. 2 to Phlx Notice (proposing
to amend Phlx Rule 1063, which implements certain reporting
requirements related to COATS, and Option Floor Procedure Advices
and Order and Decorum Regulation C-2, which repeats these
requirements and imposes a schedule of fines for violating them, by
replacing the COATS requirements with provisions stating that order
records must include the elements enumerated in Phlx's CAT
Compliance Rule). See also Bats EDGX Notice, 82 FR at 25359; BZX
Notice, 82 FR at 25375; C2 Notice, 82 FR at 25386 (noting that BZX,
EDGX, and C2 do not have any specific rules or requirements related
to COATS but refer to the retirement of COATS in their filings to be
consistent with the other options exchanges).
---------------------------------------------------------------------------

    Similar to the standards described in the Systems Retirement
Proposals that discuss eliminating OATS-related rules, the COATS SROs
believe that, before COATS can be retired and the proposed
modifications to COATS-related rules can be implemented, the CAT would
need to achieve an aggregate average error rate of 5% or lower measured
on a pre-correction or as-submitted basis, and 2% or lower on a post-
correction basis (measured at T+5).\60\ The 5% and 2% error rates would
be measured across a 180-day period. For purposes of COATS retirement,
the COATS SROs have proposed to measure the error rates for CAT records
relating only to listed options and not to equities, as only options
orders and transactions are currently subject to COATS reporting. As
with the proposals to retire OATS, the COATS SROs believe that, during
the minimum 180-day period during which the error thresholds are
calculated, their use of CAT Data must confirm that (1) there are no
material issues that have not been corrected, (2) the CAT includes all
data necessary to allow the COATS SROs to continue to meet their
surveillance obligations, and (3) the Plan Processor is sufficiently
meeting all of its obligations under the CAT NMS Plan. Each COATS SRO
also noted that, if the Commission approves its proposed rule change,
it would announce the date for modification or elimination, as
applicable, of reporting requirements and the implementation date of
the proposed rule changes via regulatory notices or circulars that
would be published once the thresholds for accuracy and reliability
described above have been met and the Plan Processor is sufficiently
meeting all of its obligations under the Plan.\61\ In amendments to
their respective filings, each COATS SRO also added introductory
language to each of the rules that it has proposed to modify in
connection with the retirement of COATS specifying that the rule will
be amended upon announcement by the SRO that the CAT has achieved a
sufficient level of accuracy and reliability.\62\
---------------------------------------------------------------------------

    \60\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360-61; BOX Notice, 82 FR at 25493-94; BX Notice, 82 FR at
25877; C2 Notice, 82 FR at 25387-88; CBOE Notice, 82 FR at 25432;
NYSE Arca Notice 2, 82 FR at 25641; NYSE MKT Notice 1, 82 FR at
25445; NASDAQ Notice, 82 FR at 25825; Phlx Notice, 82 FR at 25869.
    \61\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
at FR 25361; CBOE Notice, 82 FR at 25432; C2 Notice, 82 FR at 25388
(all stating that the proposed modifications will be implemented
``once the Exchange (and other options exchanges with respect to
COATS and EBS) determines that the thresholds for accuracy and
reliability described above have been met and that the Plan
Processor is sufficiently meeting all of its obligations under the
CAT NMS Plan''); BX Notice, 82 FR at 25877, NASDAQ Notice, 82 FR at
25826, and Phlx Notice, 82 FR at 25869 (all stating that the
proposed modifications will be implemented ``once [the Exchange]
concludes the thresholds for accuracy and reliability described
above have been met and that the Plan Processor is sufficiently
meeting all of its obligations under the CAT NMS Plan''); BOX
Notice, 82 FR at 25494, NYSE Arca Notice 2, 82 FR at 25640, and NYSE
MKT Notice 1, 82 FR at 25444 (all stating that the proposed
modifications will be implemented ``once the options exchanges
determine that the thresholds for accuracy and reliability described
. . . have been met and that the Plan Processor is sufficiently
meeting all of its obligations under the CAT NMS Plan'').
    \62\ See Amendment No. 1 to Bats BZX Notice, Bats EDGX Notice,
BOX Notice, C2 Notice, CBOE Notice, NYSE Arca Notice 2, NYSE MKT
Notice 1; and Amendment No. 2 to BX Notice, NASDAQ Notice, and Phlx
Notice.

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

3. EBS
    Each of Bats BZX, Bats EDGX, BX, BOX, CBOE, C2, FINRA, IEX, ISE,
MIAX, PEARL, Phlx, NASDAQ, NYSE, NYSE Arca, and NYSE MKT (each an ``EBS
SRO'') has a rule requiring a member, upon request by the SRO, to
provide trading information using the electronic blue sheets (``EBS'')
system in such format as may be prescribed by the SRO.\63\
---------------------------------------------------------------------------

    \63\ See Bats BZX Rule 24.4; Bats EDGX Rule 24.4; BOX Rule
10040; BX Equity Rule 8211; BX Options Rule Chapter IX, Section 4;
C2 Chapter 15 (incorporating CBOE Rule 15.7 by reference); CBOE Rule
15.7; IEX Rule 8.220; ISE Rule 1404; FINRA Rules 8211 and 8213; MIAX
Rule 804; Nasdaq Equity Rule 8211; Nasdaq Options Rule Chapter IX,
Section 4; NYSE Rule 8211; NYSE Arca Rule 10.2(e); NYSE MKT Rule
8211; Phlx Rule 785; PEARL Rule 804. PEARL notes that PEARL Rule 804
is incorporated by reference from the rules in MIAX rulebook Chapter
VIII. See PEARL Notice, 82 FR at 25437, n. 14.
---------------------------------------------------------------------------

    According to the EBS SROs, after broker-dealer reporting to the CAT
begins, CAT will contain much of the data with respect to transactions
in CAT-Eligible Securities that an SRO could otherwise have requested
via the EBS system.\64\ Consequently, the EBS SROs would no longer need
to request information pursuant to the EBS Rules for transactions in
CAT-Eligible Securities after such time as appropriate thresholds for
accuracy and reliability, including for customer and account
information, are achieved. However, the EBS SROs do not believe that
the EBS rules can be completely removed from their rulebooks and the
EBS system completely retired, because EBS requests might have to be
made to obtain information about transactions occurring before CAT has
attained an appropriate threshold for accuracy and reliability. Some of
the EBS SROs \65\ also noted that their EBS rules apply to transactions
in non-CAT-Eligible Securities, such as fixed-income securities. Thus,
the rules would have to remain in effect with respect to those
transactions.
---------------------------------------------------------------------------

    \64\ See Bats BZX Notice, 82 FR at 25375; Bats EDGX Notice, 82
FR at 25359; BOX Notice, 82 FR at 25493; BX Notice, 82 FR at 25875;
C2 Notice, 82 FR at 25386; CBOE Notice, 82 FR at 25431; FINRA
Notice, 82 FR at 25426; IEX Notice, 82 FR at 25403; ISE Notice, 82
FR at 25470; MIAX Notice, 82 FR at 25367; NYSE Notice, 82 FR at
25637; NYSE Arca Notice 1, 82 FR at 25364; NYSE MKT Notice 2, 82 FR
at 25442; NASDAQ Notice, 82 FR at 25823; PEARL Notice, 82 FR at
25437; Phlx Notice, 82 FR at 25866.
    \65\ See Bats BZX Notice, 82 FR at 25375; Bats EDGX Notice, 82
FR at 25359-60; BX Notice, 82 FR at 25875; CBOE Notice, 82 FR at
25431; C2 Notice, 82 FR at 25386-87; FINRA Notice, 82 FR at 25426;
Phlx Notice, 82 FR at 25867 ; NASDAQ Notice, 82 FR at 25823; NYSE
Notice, 82 FR at 25637; NYSE Arca Notice 1, 82 FR at 25365; and NYSE
MKT Notice 2, 82 FR at 25442.
---------------------------------------------------------------------------

    Each of the EBS SROs proposed to add new language to its EBS rule
to clarify how it will request data under these rules after members are
reporting to the CAT.\66\ Specifically, the proposed new language notes
that the SRO will not request trade data or information under the rule,
and members will not be required to provide trade data or information
under the rule, for trades reported to the CAT after the SRO (or, in
some cases, FINRA) announces that it has determined that the accuracy
and reliability of the CAT are sufficient to replace requests pursuant
to the EBS rule.\67\
---------------------------------------------------------------------------

    \66\ See Amendment No. 1 to Bats BZX Notice, Bats EDGX Notice,
BOX Notice; C2 Notice, CBOE Notice, FINRA Notice, IEX Notice, NYSE
Notice, NYSE Arca Notice 1, and NYSE MKT Notice 2; Amendment No. 2
to BX Notice, ISE Notice, NASDAQ Notice, PEARL Notice, and Phlx
Notice; and Amendment No. 3 to MIAX Notice.
    \67\ See proposed revisions to Bats BZX Rule 24.4, as modified
by Amendment No. 1; proposed revisions to Bats EDGX Rule 24.4, as
modified by Amendment No. 1; proposed Supplementary Material to BX
Equity Rule 8211, as modified by Amendment No. 2; proposed
Supplementary Material to BX Options Rule Chapter IX, Section 4, as
modified by Amendment No. 2; proposed Interpretive Material to BOX
Rule 10040, as modified by Amendment No. 1; C2 Chapter 15
(incorporating by reference the proposed revisions to CBOE Rule
15.7); proposed revisions to CBOE Rule 15.7, as modified by
Amendment No. 1; proposed Supplementary Material to FINRA Rules 8211
and 8213, as modified by Amendment No. 1; proposed Supplementary
Material .01 to IEX Rule 8.220, as modified by Amendment No. 1;
proposed Supplementary Material to ISE Rule 1404, as modified by
Amendment No. 2; proposed Interpretation and Policy .01 to MIAX Rule
804, as modified by Amendment No. 3; proposed Supplementary Material
to Phlx Rule 785, as modified by Amendment No. 2; proposed
Supplementary Material to Nasdaq Equity Rule 8211, as modified by
Amendment No. 2; proposed Supplementary Material to Nasdaq Options
Rule Chapter IX Section 4, as modified by Amendment No. 2; proposed
Supplementary Material .01 to NYSE Rule 8211, as modified by
Amendment No. 1; proposed Commentary .01(E) to NYSE Arca Rule 10.2,
as modified by Amendment No. 1; proposed Supplementary Material .01
to NYSE MKT Rule 8211, as modified by Amendment No. 1; proposed
Interpretation and Policy .01 to PEARL Rule 804, as modified by
Amendment No. 2.
---------------------------------------------------------------------------

    As noted above, the EBS SROs believe (or reiterate FINRA's belief)
that the CAT must meet certain minimum accuracy and reliability
standards before it, or FINRA, could rely on the CAT Data to replace
existing regulatory tools, including EBS. Therefore, the EBS SROs
propose to implement the new rule text related to their EBS rules only
after CAT achieves certain accuracy thresholds. The EBS SROs proposed
similar standards to those for eliminating OATS-related rules set forth
above, as well as specific accuracy standards for customer and account
information.\68\ In addition, each of the EBS SROs states that it (or,
in some cases, FINRA) can rely on CAT Data to replace EBS requests only
after it has determined that its usage of the CAT Data over a 180-day
period has not revealed material issues that have not been corrected,
confirmed that the CAT includes all data necessary to allow it or FINRA
to continue to meet its surveillance obligations, and confirmed that
the Plan Processor is fulfilling its obligations under the Plan.\69\
---------------------------------------------------------------------------

    \68\ See BX Notice, 82 FR at 25876; Bats BZX Notice, 82 FR at
25375; Bats EDGX Notice, 82 FR at 25359; BOX Notice, 82 FR at 25493;
C2 Notice, 82 FR at 25386; CBOE Notice, 82 FR at 25431; IEX Notice,
82 FR at 25403; ISE Notice, 82 FR at 25470-71; MIAX Notice, 82 FR at
25367-68; NASDAQ Notice, 82 FR at 25823-24; PEARL Notice, 82 FR at
25437-38; and Phlx Notice, 82 FR at 25866-68, respectively (stating
that each SRO will assess whether ``an acceptable accuracy rate for
customer and account information'' has been reached); FINRA Notice,
82 FR at 25426; NYSE Notice, 82 FR at 25638; NYSE Arca Notice 1, 82
FR at 25365; and NYSE MKT Notice 2, 82 FR at 25442, respectively
(stating that FINRA will assess whether ``an accuracy rate for
customer and account information of 95% for pre-corrected data and
98% for post-correction data'' has been reached).
    \69\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360-61; BOX Notice, 82 FR at 25494; BX Notice, 82 FR at
25876; C2 Notice, 82 FR at 25387; CBOE Notice, 82 FR at 25432; FINRA
Notice, 82 FR at 25426; IEX Notice, 82 FR at 25403; ISE Notice, 82
FR at 25471; MIAX Notice, 82 FR at 25368; NYSE Notice, 82 FR at
25636; NYSE Arca Notice 1, 82 FR at 25365; NYSE MKT Notice 2, 82 FR
at 25442; NASDAQ Notice, 82 FR at 25824; PEARL Notice, 82 FR at
25438; Phlx Notice, 82 FR at 25868. NYSE, NYSE Arca, and NYSE MKT
will implement this change by regulatory notice once FINRA publishes
a notice announcing a date that it will retire its EBS Rules and
thus will rely on FINRA's conclusion that the described accuracy and
reliability thresholds have been met and the CAT Plan Processor is
sufficiently meeting all of its obligations under the CAT NMS Plan.
See NYSE Notice, 82 FR at 25636; NYSE Arca Notice 1, 82 FR at 25365;
NYSE MKT Notice 2, 82 FR at 25442.
---------------------------------------------------------------------------

4. Other Rules
    Certain Exchanges proposed to amend other reporting rules that they
have determined are duplicative of CAT requirements. BatsBZX, BatsEDGX,
BOX, BX, C2, CBOE, MIAX, PEARL, Phlx, and NASDAQ currently have rules
requiring certain market participants (e.g., specialists and market
makers) to report certain account or order information for accounts
over which the market participant engages in trading activities or
exercises investment discretion.\70\ These Exchanges stated

that, once broker-dealers are reporting to CAT, CAT will contain some
of the data the Exchanges would otherwise have requested under these
rules.\71\ Similar to the proposed revisions to the EBS rules, some of
the Exchanges have proposed to add new text to these order and account
identification rules stating that the Exchange will not request
information under the rule, and members will not be required to provide
information under the rule, for trades reported to CAT after the
Exchange announces that it has determined that the accuracy and
reliability of the CAT are sufficient to replace requests pursuant to
the rule.\72\ Other Exchanges have proposed to revise these rules by
deleting specific reporting requirements that are duplicative of CAT
while retaining their position reporting requirements, which are not
duplicative of CAT.\73\ In their respective amendments, these Exchanges
proposed to add introductory language to these rules to clarify that
the rules will be amended upon announcement by the Exchange that the
CAT has achieved a sufficient level of accuracy and reliability.\74\
---------------------------------------------------------------------------

    \70\ See Bats BZX Rule 22.7 and Interpretation and Policy .01 to
Bats BZX Rule 22.7 (requiring market makers to identify accounts and
report orders, and specifying requirements for joint accounts); Bats
EDGX Rule 22.7 and Interpretation and Policy .01 to Bats EDGX Rule
22.7 (requiring market makers to identify accounts and report
orders, and specifying requirements for joint accounts); BOX Rule
8060 (requiring market makers to identify accounts and report
orders, and specifying requirements for joint accounts); BX Options
Rule Chapter VII, Section 7 and Commentary .01 to BX Options Rule
Chapter VII, Section 7 (requiring market makers to identify accounts
and report orders, and specifying requirements for joint accounts);
C2 Rule 8.7 (requiring market makers to identify accounts and report
orders, and specifying requirements for joint accounts); CBOE Rule
8.9 and Interpretation and Policy .07 to CBOE Rule 8.9 (requiring
market makers to identify accounts and report orders, and specifying
requirements for joint accounts); MIAX Rule 607 (requiring market
makers to identify accounts and report orders, and specifying
requirements for joint accounts); Nasdaq Options Rule Chapter VII,
Section 7 and Commentary .01 to Nasdaq Options Rule Chapter VII,
Section 7 (requiring market makers to identify accounts and report
orders, and specifying requirements for joint accounts); PEARL Rule
606 and Interpretation and Policy .01 to PEARL Rule 606 (requiring
market makers to identify accounts and report orders, and specifying
requirements for joint accounts); Phlx Options Rule 1022 and
Commentary .01 and .02 to Phlx Options Rule 1022 (requiring
specialists and market makers to identify accounts and, with respect
to options in a foreign currency, make available books and records
concerning transactions).
    \71\ See Bats BZX Notice, 82 FR at 25375; Bats EDGX Notice, 82
FR at 25359; BOX Notice, 82 FR at 25492; BX Notice at 25875; C2
Notice, 82 FR at 25386; CBOE Notice, 82 FR at 25431; MIAX Notice, 82
FR at 25367; NASDAQ Notice, 82 FR at 25823; PEARL Notice, 82 FR at
25437; Phlx Notice, 82 FR at 25866.
    \72\ See proposed Interpretive Material 8060-1 to BOX Rule 8060,
as modified by Amendment No. 1; proposed Commentary .02 to BX
Options Rule Chapter VII, Section 7, as modified by Amendment No. 2;
proposed Interpretation and Policy .01 to MIAX Rule 607, as modified
by Amendment No. 3; proposed Commentary .02 to Nasdaq Options Rule
Chapter VII, Section 7, as modified by Amendment No. 2; proposed
Interpretation and Policy .02 to PEARL Rule 606, as modified by
Amendment No. 2; proposed Commentary .03 to Phlx Options Rule 1022,
as modified by Amendment No. 2. In addition, BZX, CBOE, and EDGX
proposed language for other rules that require the furnishing of
data similar to the proposed revisions to the EBS rules--that is,
that they will not request information for trades reported to the
CAT after each has announced that it has determined that CAT is
sufficiently accurate and reliable. See Amendment No. 1 to BZX
Notice (proposing to add such language to Interpretation and Policy
.02 to BZX Rule 4.2); Amendment No. 1 to EDGX Notice (proposing to
add such language to Interpretation and Policy .02 to EDGX Rule
4.2); Amendment No. 1 to CBOE Notice (proposing to add such language
to Interpretation and Policy .04 to CBOE Rule 17.2).
    \73\ See proposed revisions to Bats BZX Rule 22.7(b) and
Interpretation and Policy .01 to Bats BZX Rule 22.7 (proposing to
replace requirement that market makers report orders with
requirement that market makers report positions and eliminate
required elements of report pertaining to orders); proposed
revisions to Bats EDGX Rule 22.7(b) and Interpretation and Policy
.01 to Bats EDGX Rule 22.7 (proposing to replace requirement that
market makers report orders with requirement that market makers
report positions and eliminate required elements of report
pertaining to orders); proposed revisions to C2 Rule 8.7(b)
(proposing to replace requirement that market makers report orders
with requirement that market makers report positions and eliminate
required elements of report pertaining to orders); proposed
revisions to CBOE Rule 8.9(b) and Interpretation and Policy .07 to
CBOE Rule 8.9 (proposing to replace requirement that market makers
report orders with requirement that market makers report positions
and eliminate required elements of report pertaining to orders).
    \74\ See Amendment No. 1 to each of Bats BZX Notice, Bats EDGX
Notice, C2 Notice, and CBOE Notice.
---------------------------------------------------------------------------

    In addition, CBOE and EDGX currently require members to submit to
the Exchange stock transaction information for each Qualified
Contingent Cross order executed at the Exchange.\75\ CAT will require
exchange members to report stock transaction information. Therefore,
CBOE and EDGX intend to eliminate this reporting requirement in
accordance with the proposed timeline and standards below.
---------------------------------------------------------------------------

    \75\ See CBOE Notice, 82 FR at 25431; EDGX Notice, 82 FR at
25360.
---------------------------------------------------------------------------

    These Exchanges proposed standards for when the proposed
modifications to these reporting rules will be implemented that are
similar to those for eliminating OATS-related rules set forth above.
Accordingly, these Exchanges proposed that CAT would need to achieve a
sustained error rate for a period of at least 180 days of 5% or lower
measured on a pre-correction or as-submitted basis, and 2% or lower on
a post-correction basis (measured at T+5).\76\ These Exchanges have
proposed to measure the 5% pre-correction and 2% post-correction
thresholds by averaging the error rate across the period, not requiring
a 5% pre-correction and 2% post-correction maximum each day for 180
consecutive days. In addition, each of these Exchanges stated that it
can rely on CAT Data to replace information required to be reported
under duplicative rules only after it has determined that its usage of
the CAT Data over a 180-day period has not revealed material issues
that have not been corrected, confirmed that the CAT includes all data
necessary to allow it to continue to meet its surveillance obligations,
and confirmed that the CAT Plan Processor is fulfilling its obligations
under the CAT NMS Plan.\77\
---------------------------------------------------------------------------

    \76\ The Plan requires the Plan Processor to ensure that
regulators have access to corrected and linked order and Customer
data by 8:00 a.m. Eastern Time on T+5. See CAT NMS Plan, at C-15.
    \77\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360-61; BX Notice, 82 FR at 25876; BOX Notice, 82 FR at
25494; C2 Notice, 82 FR at 25387; CBOE Notice, 82 FR at 25432; MIAX
Notice, 82 FR at 25368; NASDAQ Notice, 82 FR at 25824; PEARL Notice,
82 FR at 25438; Phlx Notice, 82 FR at 25867-68.
---------------------------------------------------------------------------

B. Small Industry Member Data Availability

    As noted above, the CAT NMS Plan requires the SROs, in their
Systems Retirement Proposals, to address ``whether the availability of
certain data from Small Industry Members two years after the Effective
Date would facilitate a more expeditious retirement of duplicative
systems.'' \78\
---------------------------------------------------------------------------

    \78\ CAT NMS Plan, Appendix C, Section C.9.
---------------------------------------------------------------------------

    In its Systems Retirement Proposal, FINRA stated its view that
there is no effective way to retire OATS until all current OATS
reporters are reporting to the CAT and that having data from Small
Industry Members currently reporting to OATS available two years after
the Effective Date rather than three would ``substantially facilitate a
more expeditious retirement of OATS.'' \79\ Therefore, FINRA supports
an amendment to the Plan that would require current OATS reporters that
are Small Industry Members to report to CAT two years after the
Effective Date (instead of three) and stated that it intends to work
with the other SROs to propose such an amendment to the Plan.\80\
---------------------------------------------------------------------------

    \79\ FINRA Notice, 82 FR at 25425.
    \80\ FINRA notes that the 180-day timeframes discussed above
with respect to usage of the data and calculation of error rates
would apply to data reported to the CAT by Small Industry Members
that are reporting to OATS. If an amendment to the Plan to
accelerate the reporting requirement for those firms is not
approved, the retirement of OATS could not be accomplished until at
least 180 days after Small Industry Members begin reporting, which
is currently scheduled to begin in November 2019. See FINRA Notice,
82 FR at 25425.
---------------------------------------------------------------------------

    FINRA has identified approximately 300 member firms that currently
report to OATS and meet the definition of ``Small Industry Member.''
According to FINRA, only ten of these firms submit information to OATS
on their own behalf, and eight of those ten firms report very few
records to OATS.\81\ The

vast majority of these 300 firms use third parties to fulfill their
reporting obligations, and many of these third parties will begin
reporting to CAT in November 2018. Consequently, FINRA believes that
the burden on current OATS reporters that are Small Industry Members
would not be significant if those firms are required to report to CAT
beginning in November 2018 rather than November 2019. FINRA does not
believe that it is necessary or appropriate to accelerate CAT reporting
for Small Industry Members that are not currently reporting to
OATS.\82\
---------------------------------------------------------------------------

    \81\ See FINRA Notice, 82 FR at 25425 (noting that in one recent
month eight of the ten firms submitted fewer than 100 reports during
the month, with four firms submitting fewer than 50).
    \82\ See id.
---------------------------------------------------------------------------

    The Systems Retirement Proposals of BX, IEX, NYSE, NYSE Arca, NYSE
MKT, NASDAQ, and Phlx contain the same analysis as FINRA (or summarize
FINRA's analysis) in connection with whether the earlier availability
of data from Small Industry Members would facilitate the retirement of
their own respective OATS rules, and these Exchanges expressed support
for the Plan amendment described by FINRA.\83\
---------------------------------------------------------------------------

    \83\ See BX Notice, 82 FR at 25874-75; IEX Notice, 82 FR at
25402; NYSE Notice, 82 FR at 25636; NYSE Arca Notice 1, 82 FR at
25364; NYSE MKT Notice 2, 82 FR at 25441; NASDAQ Notice, 82 FR at
25822-23; Phlx Notice, 82 FR at 25866. See also FINRA Notice, 82 FR
at 25427-28.
---------------------------------------------------------------------------

    Some of the Systems Retirement Filings also discussed how earlier
availability of data from Small Industry Members might affect the
retirement of systems other than OATS. The COATS SROs expressed the
view that COATS should not be retired until all Participants and
Industry Members that report data to COATS are reporting comparable
data to the CAT.\84\ They noted that, while the early submission of
options data to the CAT by Small Industry Members could expedite the
retirement of COATS, they believe it premature to consider such a
change, and that additional analysis would be necessary to determine
whether such early reporting by Small Industry Members would be
feasible. Some of the EBS SROs made statements similar to the COATS
SROs with respect to whether earlier availability of data from Small
Industry Members would facilitate EBS retirement,\85\ while other EBS
SROs stated that the submission of data to the CAT by Small Industry
Members a year earlier than is required in the CAT NMS Plan, at the
same time as the other Industry Members, would expedite the replacement
of EBS data with CAT Data because CAT would then have all necessary
data from Industry Members to enable these SROs to perform the
regulatory surveillance that currently is performed via EBS.\86\
---------------------------------------------------------------------------

    \84\ See Bats BZX Notice, 82 FR at 25375-76; Bats EDGX Notice,
82 FR at 25360; BOX Notice, 82 FR at 25493; BX Notice, 82 FR at
25877; C2 Notice at, 82 FR at 25387; CBOE Notice, 82 FR at 25431;
NYSE Arca Notice 2, 82 FR at 25640; NYSE MKT Notice 1, 82 FR at
25444; NASDAQ Notice, 82 FR at 25825; Phlx Notice, 82 FR at 25868.
    \85\ See MIAX Notice, 82 FR at 25368; PEARL Notice at 25437-38.
MIAX and PEARL also make similar statements with respect to whether
earlier availability of data from Small Industry Members would
facilitate the retirement of MIAX Rule 607 and PEARL Rule 606, which
require certain account and order information to be reported. See
MIAX Notice, 82 FR at 25368; PEARL Notice at 25437-38.
    \86\ See BX Notice, 82 FR at 25876; ISE Notice, 82 FR at 25470;
NASDAQ Notice, 82 FR at 25824; Phlx Notice, 82 FR at 25867.
---------------------------------------------------------------------------

C. Individual Industry Member Exemptions

    As noted above, the CAT NMS Plan also requires the SROs, in their
Systems Retirement Proposals, to address ``whether individual Industry
Members can be exempted from reporting to duplicative systems once
their CAT reporting meets specified accuracy and reliability standards,
including, but not limited to, ways in which establishing cross-system
regulatory functionality or integrating data from existing systems and
the CAT would facilitate such Individual Industry Member exemptions.''
\87\
---------------------------------------------------------------------------

    \87\ CAT NMS Plan, Appendix C, Section C.9.
---------------------------------------------------------------------------

    All of the SROs stated (or reiterated FINRA's statement) that a
single ``cut-over'' from existing systems to CAT is preferable to
elimination of OATS reporting requirements on a firm-by-firm basis.\88\
Some of the SROs stated that providing individual exemptions to
Industry Members would be inefficient, more costly, and less reliable
than the single cut-over.\89\ These SROs further stated that providing
individual exemptions would require the temporary creation of a cross-
system regulatory function and the integration of data from existing
systems and the CAT to avoid creating any regulatory gaps as a result
of such exemptions. These SROs believed that such a function would be
costly to create and would give rise to a greater likelihood of data
errors or other issues. These SROs stated that, given the limited time
in which such exemptions would be necessary, they did not believe that
such exemptions would be an appropriate use of limited resources. Some
of the SROs also noted that, if an amendment to require Small Industry
Members who currently report to OATS to begin reporting to CAT in
November of 2018 were approved by the Commission, there would be no
need to exempt members from OATS requirements on a firm-by-firm
basis.\90\
---------------------------------------------------------------------------

    \88\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360; BOX Notice, 82 FR at 25493; BX Notice, 82 FR at 25875-
77; C2 Notice, 82 FR at 25387; CBOE Notice, 82 FR at 25431-32; FINRA
Notice, 82 FR at 25425; IEX Notice, 82 FR at 25402; ISE Notice, 82
FR at 25470; MIAX Notice, 82 FR at 25368; NYSE Notice, 82 FR at
25637; NYSE Arca Notice 1, 82 FR at 25364; NYSE Arca Notice 2, 82 FR
at 25640; NYSE MKT Notice 1, 82 FR at 25445; NYSE MKT Notice 2, 82
FR at 25441; NASDAQ Notice, 82 FR at 25823-25; PEARL Notice, 82 FR
at 25438; Phlx Notice, 82 FR at 25866-68.
    \89\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360; BOX Notice, 82 FR at 25493; BX Notice, 82 FR at 25876-
77; C2 Notice, 82 FR at 25387; CBOE Notice, 82 FR at 25431-32; ISE
Notice, 82 FR at 25470; MIAX Notice, 82 FR at 25368; NYSE Arca
Notice 2, 82 FR at 25640; NYSE MKT Notice 1, 82 FR at 25445; NASDAQ
Notice, 82 FR at 25824-25; PEARL Notice, 82 FR at 25438; Phlx
Notice, 82 FR at 25867-68.
    \90\ See BX Notice, 82 FR at 25875; FINRA Notice, 82 FR at
25426; NYSE Notice, 82 FR at 25637; NYSE Arca Notice 1, 82 FR at
25364; NYSE MKT Notice 2, 82 FR at 25441; NASDAQ Notice, 82 FR at
25823; Phlx Notice, 82 FR at 25866.
---------------------------------------------------------------------------

    FINRA argued that the primary beneficiary of its proposed approach
would be the investing public.\91\ FINRA noted that firm-by-firm
retirement of OATS would require merging OATS and CAT data, and that
such an approach would be ``technologically costly and difficult and
could introduce errors into the data being surveilled that did not
exist prior to integration.'' \92\ FINRA further stated that conducting
its surveillance using a single source ``increases the efficiency and
effectiveness of the process and improves the integrity of the
markets.'' \93\ FINRA noted that the potential costs of this approach
would be borne by those firms that would have met an individual
threshold sooner and that the approach could disincentivize individual
firms from meeting the minimum error rate thresholds, which could, at
the margin, extend the period of duplicative reporting for all
firms.\94\ However, FINRA noted this disincentive would be small for
firms with significant reporting burdens, as they would want to end
duplicative reporting quickly, and that firms that otherwise delay in
meeting their error rates could incur higher costs through enforcement
actions.\95\
---------------------------------------------------------------------------

    \91\ See FINRA Notice, 82 FR at 25427.
    \92\ Id.
    \93\ Id.
    \94\ See id.
    \95\ See id.
---------------------------------------------------------------------------

III. Summary of Comments

    The Commission received four comments that were submitted to File
Number SR-FINRA-2017-13.\96\ Two of the commenters noted that their
comments applied to the similar

proposals made by the other SROs.\97\ While the commenters supported
certain aspects of the Systems Retirement Proposals, there were
others--noted below--where the commenters did not agree and believed
that the SROs had not provided adequate justification.
---------------------------------------------------------------------------

    \96\ See supra note 11.
    \97\ See FIF Letter at 1; Thomson Reuters Letter at 1.
---------------------------------------------------------------------------

A. Possibility of Firm-by-Firm Retirement

    All four of the commenters disagreed with the SROs' proposed
approach of applying a single cut-over from existing systems to CAT.
Two of the commenters argued that individual firms that achieve the
quality criteria--even if the industry as a whole has not--should be
granted exemptions from reporting to existing systems until those
systems can be retired. In the commenters' view, the SROs' proposed
approach would penalize firms that quickly and consistently meet or
exceed quality standards for CAT reporting.\98\ A third commenter
argued that the single cut-over approach provides little incentive for
an individual firm to reduce its error rate, because the retirement of
OATS will be based on an industry-wide error rate that is beyond its
control.\99\
---------------------------------------------------------------------------

    \98\ See FIF Letter at 3; SIFMA Letter at 3-4 (noting that the
inaccurate reporting of the ``slowest'' broker-dealers, in the
absence of individual firm exemptions, could force the whole
industry to engage in duplicative reporting for an extended period).
    \99\ See Fidelity Letter at 4. This commenter also suggested
that FINRA could ``consider migrating firms in tranches, or phases,
based on priority of those firms that first met the proposed error
rates'' if FINRA does not agree that a firm-by-firm transition is
appropriate. Id.
---------------------------------------------------------------------------

    Two commenters took the view that FINRA had not provided sufficient
cost/benefit analysis to justify its position and emphasized the
significant costs of duplicative reporting to broker-dealers.\100\ One
of these commenters noted that broker-dealers who do not outsource
their regulatory reporting (approximately 126 firms) spend on average
$725,615 per month on their regulatory reporting obligations (which
include OATS, EBS, large trader reporting, and other reporting).\101\
This commenter estimated that duplicative OATS and EBS reporting for
these 126 broker-dealer firms would cost more than $20 million per
month and stated that this approach would severely penalize broker-
dealer firms that rapidly and consistently met reporting
standards.\102\ Another commenter cited the same average monthly cost
of $725,615 and argued that the benefits of individual Industry Member
exemptions outweigh the ``generalized and unsubstantiated
justifications against such an approach'' outlined by the SROs.\103\
---------------------------------------------------------------------------

    \100\ See FIF Letter at 3; Thomson Reuters Letter at 3.
    \101\ See FIF Letter at 3.
    \102\ See id.
    \103\ SIFMA Letter at 3-4.
---------------------------------------------------------------------------

    One commenter stated that FINRA has not provided sufficient
technological rationale to explain its opposition to individual firm
exemptions, and disagreed with FINRA's conclusion that the technology
to merge OATS and CAT would be costly and could introduce errors.\104\
The commenter argued that there are ``multiple possible approaches that
could be used to integrate CAT and OATS data allowing FINRA to
effectively surveil the market, especially if FINRA and the Plan
Processor work jointly on a cooperative solution.'' \105\ In addition,
the commenter noted that, because the EBS retirement plan proposes to
extract any data available in CAT before requesting historical data or
data for asset classes not covered by CAT, the SROs can effectively
merge CAT data and existing EBS data to meet their surveillance
obligations.\106\ Similarly, another commenter noted that the
Participants have committed to include the relevant fields required for
the decommissioning of OATS in the initial phase of CAT and recommended
that FINRA utilize data from CAT to obtain what it would otherwise
receive from OATS.\107\
---------------------------------------------------------------------------

    \104\ See FIF Letter at 3.
    \105\ Id. (also stating that the Plan Processor could, for
example, route all CAT reports and errors corrections from exempted
firms to FINRA for conversion and input into OATS, and that more
sophisticated data merge solutions are possible with a reasonable
investment by FINRA and the Plan Processor).
    \106\ See id. at 4.
    \107\ See SIFMA Letter at 3-4 (``once a broker-dealer meets
accuracy thresholds in CAT, and the surveillance logic is recreated
with the Central Repository, FINRA should utilize a subset of data
from the CAT, and format it so that it effectively mimics what it
would have received from OATS'').
---------------------------------------------------------------------------

    Another commenter recommended that the SROs include a cost-benefit
analysis of a ``CAT-to-OATS converter'' that would allow firms that
meet the error rates to cease sending data to OATS directly.\108\
Instead, the Plan Processor would convert the CAT reports of the firm
into an OATS-eligible format and report that firm's audit trail
information to OATS. The commenter believed that this approach is
technically possible based on comments made by the Plan Processor, and
``that CAT Industry Member Specifications could incorporate this
concept.'' \109\
---------------------------------------------------------------------------

    \108\ See Thomson Reuters Letter at 3.
    \109\ Id.
---------------------------------------------------------------------------

B. Assessment Criteria

    All four of the commenters generally maintained that only data
required by OATS or EBS rules today should be included in the accuracy
and reliability metrics for system retirement, and that CAT data
elements or other aspects of CAT that are not required by existing
systems should be outside the scope for assessment.\110\ One commenter
argued, for example, that CAT error rates related to customer
information and options activity should not have any bearing on the
retirement of OATS, as FINRA does not rely on OATS for that
information.\111\ Another commenter posed a number of clarifying
questions regarding the standards, including whether the proposed
accuracy and reliability metrics apply to Participants as well as
Industry Members, whether the proposed accuracy and reliability metrics
for the OATS retirement plan apply only to equities data, whether
customer and account information accuracy standards are excluded from
the OATS retirement plan, whether the inter-firm linkage quality metric
is calculated as an aggregate measurement across all Industry Members,
and whether the 2% post-correction error rate is an average error rate
over the period calculated as the number of erroneous records, as
measured on T+5 divided by the total number of records received.\112\
This commenter also recommended that FINRA consider that the average
pre-correction error rate across the five categories (i.e., rejection
rates, intra-firm linkages, inter-firm linkages, order linkage rates,
exchange and TRF/ORF match rates) must achieve 5%, but no single
category could exceed 7% for the pre-correction error rate.\113\ This
commenter further recommended that corrections should be calculated
under CAT in the same timeframes as under existing audit trail systems
(i.e., T+6 for OATS and T+10 for EBS rather than T+5, as
proposed).\114\
---------------------------------------------------------------------------

    \110\ See FIF Letter at 4; SIFMA Letter at 2; Thomson Reuters
Letter at 2-3; Fidelity Letter at 3.
    \111\ See SIFMA Letter at 2. See also Fidelity Letter at 3.
    \112\ See FIF Letter at 4-5.
    \113\ See id. Similarly, the commenter recommended that ``the
average post-correction error rate across the five categories must
achieve 2% but no single category could exceed a 3% post-correction
error rate.'' Id. at 5.
    \114\ See id.
---------------------------------------------------------------------------

    Three commenters raised concerns about the broader, qualitative
factors proposed by the SROs--that during the 180-day evaluation period
material issues are not revealed, that the CAT includes all data
necessary to allow FINRA to continue to meet its surveillance
obligations, and that the

Plan Processor is sufficiently meeting all of its obligations under the
Plan.\115\ Two commenters suggested that the Systems Retirement
Proposals should require these conditions to be met before CAT goes
live and acknowledge that evaluation of all of these issues will begin
with CAT Participant reporting.\116\ Another commenter opined that
these additional standards do not provide enough clarity regarding when
FINRA will retire OATS and provide too much discretion to FINRA.\117\
---------------------------------------------------------------------------

    \115\ See Fidelity Letter at 2-3; FIF Letter at 5; Thomson
Reuters Letter at 4-5.
    \116\ See FIF Letter at 5; Thomson Reuters Letter at 4-5.
    \117\ See Fidelity Letter at 2-3.
---------------------------------------------------------------------------

C. Assessment Length and Other Considerations Relating to the
Assessment Period

    One commenter recommended that the SROs should consider shortening
the trial period if all criteria have been met before the 180th
day.\118\ This commenter also recommended that the 180-day trial period
be a ``rolling metric''--i.e., if the industry does not meet the
quality criteria by the end of the first 180 days, the most recent 180
days should be recalculated each day thereafter.\119\ The same
commenter urged FINRA to ``take a daily accounting of the
measurements'' and to ``communicate both the aggregate measurements and
the individual Industry Member measurements so that all parties are
regularly updated'' regarding the status of the various error rates and
can make necessary corrections.\120\
---------------------------------------------------------------------------

    \118\ See FIF Letter at 2.
    \119\ See id.
    \120\ Id. at 2. See also Thomson Reuters Letter at 2 (noting
that these daily metrics should be issued during the planned testing
phase that begins no later than three months before CAT reporting
and that the actual date of OATS and EBS retirement will remain
uncertain without access to these metrics).
---------------------------------------------------------------------------

    Two commenters argued that the early phases of CAT compliance
should be viewed as a ``trial period'' and that there should be no CAT
penalties or regulatory inquiries associated with CAT reporting before
the end of the trial period.\121\ One of these commenters suggested
``that CAT not go-live until the 95% uncorrected and 98% post-
correction thresholds have been met for two weeks during the testing
period.'' \122\ Similarly, another commenter stated that the SROs
``should establish a test period to gather information prior to
production reporting'' to ``enable CAT to go into production at a
confidence level that allows its reporting systems to serve as many
existing regulatory requirements and accompanying surveillance programs
as possible.'' \123\
---------------------------------------------------------------------------

    \121\ See FIF Letter at 2; Thomson Reuters at 2.
    \122\ Thomson Reuters Letter at 2-3.
    \123\ SIFMA Letter at 2.
---------------------------------------------------------------------------

D. Additional Plan Amendments

    All of the commenters supported requiring reporting for current
OATS reporters 24 months after the CAT effective date. Of those, two
commenters supported the proposal to amend the CAT NMS Plan to
accelerate CAT reporting for Small Industry Members who currently
report to OATS from 36 to 24 months after the CAT Effective Date.\124\
Two other commenters instead recommended that all current OATS
reporters--regardless of size--should begin reporting to CAT in
November of 2018 and all non-OATS reporters should be allowed to begin
reporting to CAT in November of 2019.\125\ One of these commenters
noted that many large broker-dealers do not report to OATS and argued
that ``requiring such firms to implement the systems and reporting
mechanisms for the CAT on a shortened timeframe simply due to their
designation as a `Large Industry Member' may result in significant
technological and operational challenges.'' \126\ Accordingly, the
commenter urged some mechanism to allow such Large Industry Members to
begin reporting 36 rather than 24 months after the CAT Effective
Date.\127\ The other commenter noted that, if the first phase of
Industry Member reporting were limited to current OATS reporting firms,
FINRA would still have all of the data that it currently has from OATS
today.\128\
---------------------------------------------------------------------------

    \124\ See FIF Letter at 2; Thomson Reuters Letter at 2
(commending the SROs for ``their willingness to move all OATS
reporters to the same timeline''). One of these commenters noted
that accelerating the compliance date might ``place additional
burden on the Small Industry Members who are OATS reporters, even
for those members that will likely use third party providers for
their CAT reporting obligations, because these reporters ultimately
bear supervisory responsibility for the OATS and CAT regulatory
reporting.'' FIF Letter at 2. The commenter concluded, however, that
``the economic trade-off of a significantly earlier date for OATS
retirement for the entire industry'' justifies the proposal. Id.
    \125\ See SIFMA Letter at 2-3; Fidelity Letter at 3.
    \126\ SIFMA Letter at 2. See also Fidelity Letter at 3 (arguing
that phasing in CAT reporting based on current OATS-reporting status
would give non-OATS reporting firms additional time to comply with
CAT requirements).
    \127\ See SIFMA Letter at 2-3.
    \128\ See Fidelity Letter at 3.
---------------------------------------------------------------------------

E. Other Comments

    Three commenters requested that the CAT NMS Plan be clarified to
specify that prime broker transactions are included in the CAT
reporting requirements.\129\ One commenter stated that ``this will
enable a more complete set of transactions in the CAT audit trail and
allow CAT to replace EBS as a more complete reporting source for this
data.'' \130\ Similarly, another commenter noted that prime broker
transactions are missing from the CAT NMS Plan, which ``may prevent the
regulators from utilizing CAT data as envisioned.'' \131\
---------------------------------------------------------------------------

    \129\ See FIF Letter at 5; SIFMA Letter at 4; Thomson Reuters
Letter at 4.
    \130\ FIF Letter at 5.
    \131\ SIFMA Letter at 4.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Approve or Disapprove the
Systems Retirement Proposals, as Modified by Amendments Thereto

    The Commission hereby institutes proceedings pursuant to Section
19(b)(2) of the Act \132\ to determine whether the Systems Retirement
Proposals of Bats BZX, Bats EDGX, BOX, BX, C2, CBOE, FINRA, IEX, ISE,
MIAX, NASDAQ, PEARL, NYSE, NYSE Arca, NYSE MKT, and Phlx, as modified
by their respective amendments, should be approved or disapproved.
Further, pursuant to Section 19(b)(2)(B) of the Act,\133\ the
Commission is hereby providing notice of the grounds for disapproval
under consideration. The Commission believes that it is appropriate to
institute proceedings at this time in view of the legal and policy
issues raised by the proposals. Institution of proceedings does not
indicate, however, that the Commission has reached any conclusions with
respect to any of the issues involved.
---------------------------------------------------------------------------

    \132\ 15 U.S.C. 78s(b)(2).
    \133\ 15 U.S.C. 78s(b)(2)(B). Section 19(b)(2)(B) of the Act
also provides that proceedings to determine whether to disapprove a
proposed rule change must be concluded within 180 days of the date
of publication of notice of the filing of the proposed rule change.
See id. The time for conclusion of the proceedings may be extended
for up to 60 days if the Commission finds good cause for such
extension and publishes its reasons for so finding, or if the
exchange consents to the longer period. See id.
---------------------------------------------------------------------------

    In particular, the Commission is instituting proceedings to allow
for additional analysis for consistency with: (1) Section 6(b)(5) of
the Act,\134\ with respect to the Exchanges' Systems Retirement
Proposals, and Section 15A(b)(6) of the Act,\135\ with respect to
FINRA's Systems Retirement Proposal, both of which sections require,
among other things, that the rules of a national securities exchange or
registered securities association be designed ``to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, . . . to remove impediments to and perfect the

mechanism of a free and open market and a national market system, and,
in general, to protect investors and the public interest;'' and (2)
Section 6(b)(8) of the Act,\136\ with respect to the Exchanges' Systems
Retirement Proposals, and Section 15A(b)(9) of the Act,\137\ with
respect to FINRA's Systems Retirement Proposal, both of which sections
require that the rules of a national securities exchange or registered
securities association ``not impose any burden on competition not
necessary or appropriate in furtherance of the purposes of [the Act].''
---------------------------------------------------------------------------

    \134\ 15 U.S.C. 78f(b)(5).
    \135\ 15 U.S.C. 78o-3(b)(6).
    \136\ 15 U.S.C. 78f(b)(8).
    \137\ 15 U.S.C. 78o-3(b)(9).
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    In addition, the Commission is instituting proceedings to allow for
additional analysis of whether the Systems Retirement Proposals are
consistent with Section 11A of the Act \138\ and Rules 608(c) and 613
of Regulation NMS thereunder.\139\ Section 11A of the Act directs the
Commission, with due regard for the public interest, the protection of
investors, and the maintenance of fair and orderly markets, to use its
authority to facilitate the establishment of a national market system
for securities, including by authorizing or requiring SROs to act
jointly to plan, develop, operate, or regulate a national market
system. Rule 608(c) requires each SRO to comply with the terms of any
effective NMS plan of which it is a sponsor or participant. Rule 613
requires the CAT NMS Plan to include a ``plan to eliminate existing
rules and systems . . . that will be rendered duplicative by the
consolidated audit trail.'' \140\ The Plan, in turn, required the SROs
to file proposed rule changes, within six months of the Commission's
approval of the Plan, to eliminate or modify their duplicative
rules.\141\ The Plan further stated that the rule change proposals to
eliminate or modify duplicative rules and systems should be ``effective
at such time as CAT Data meets minimum standards of accuracy and
reliability.'' \142\ As discussed above, the Plan also requires these
proposals to discuss the specific accuracy and reliability standards
that would determine when duplicative systems would be retired, whether
the availability of certain data from Small Industry Members in
November 2018 would facilitate a more expeditious retirement of
duplicative systems, and whether individual Industry Members could be
exempted from reporting to duplicative systems once their CAT reporting
meets specified accuracy and reliability standards.\143\ Accordingly,
the SROs filed the Systems Retirement Proposals to indicate which
duplicative rules and systems would be eliminated once CAT is
sufficiently accurate and reliable and to explain how they intend to
assess CAT's accuracy and reliability. The Commission is therefore
considering whether the Systems Retirement Proposals are consistent
with the SROs' regulatory obligations under Rule 608(c), Rule 613, and
the Plan, and are otherwise consistent Section 11A of the Act and the
rules and regulations thereunder.
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    \138\ 15 U.S.C. 78k-1.
    \139\ 17 CFR 242.608(c) and 242.613.
    \140\ 17 CFR 242.613(a)(9).
    \141\ See CAT NMS Plan, Appendix C, Section C.9.
    \142\ Id.
    \143\ See id.
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    As noted above, the CAT NMS Plan required the SROs' proposals to
retire duplicative audit trail systems to consider whether ``individual
Industry Members can be exempted from reporting to duplicative systems
once their CAT reporting meets specified accuracy and reliability
standards, including, but not limited to, ways in which establishing
cross-system regulatory functionality or integrating data from existing
systems and the CAT would facilitate such Individual Industry Member
exemptions.'' \144\ In addition, in the CAT Approval Order, the
Commission noted ``that FINRA is considering whether it can integrate
CAT Data with OATS data in such a way that `ensures no interruption in
FINRA's surveillance capabilities,' and that FINRA will consider
`exempting firms from the OATS Rules provided they report data to the
Central Repository pursuant to the CAT NMS Plan and any implementing
rules.' '' \145\ The Commission also ``encourage[d] the other
Participants to consider similar measures to exempt firms from
reporting to existing systems once they are accurately reporting
comparable data to the CAT and to enable the usage of CAT Data to
conduct their regulatory activities.'' \146\ As described above, the
SROs considered individual firm exemptions but believe that a single
cut-over from existing systems to CAT is preferable to a firm-by-firm
approach. Several of the SROs assert that providing firm-by-firm
exemptions would be inefficient, more costly, and less reliable than
the single cut-over.\147\ However, commenters disagreed with this
aspect of the SROs' proposals, and questioned whether FINRA had
adequately analyzed the costs and benefits of allowing firms to
discontinue OATS reporting on an individual basis. Commenters also
noted the high costs of duplicative reporting. Accordingly, the
Commission is considering whether the Systems Retirement Proposals
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act, including the potential
competitive burdens that may be created by an extended period of
duplicative reporting for certain firms.
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    \144\ See CAT NMS Plan, Appendix C, Section C.9.
    \145\ CAT Approval Order, 81 FR at 84771.
    \146\ Id.
    \147\ See Bats BZX Notice, 82 FR at 25376; Bats EDGX Notice, 82
FR at 25360; BOX Notice, 82 FR at 25493; BX Notice, 82 FR at 25876-
77; C2 Notice, 82 FR at 25387; CBOE Notice, 82 FR at 25431-32; ISE
Notice, 82 FR at 25470; MIAX Notice, 82 FR at 25368; NYSE Arca
Notice 2, 82 FR at 25640; NYSE MKT Notice 1, 82 FR at 25445; NASDAQ
Notice, 82 FR at 25824-25; PEARL Notice, 82 FR at 25438; Phlx
Notice, 82 FR at 25867-68.
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    As discussed in more detail above, the SROs also proposed certain
accuracy and reliability standards that CAT Data must meet before
existing systems can be retired. These standards include both
quantitative and qualitative metrics. Commenters raised questions about
the scope of these metrics, in particular data elements and
functionalities that were not included in current audit trail systems,
and asked for clarification regarding a number of metrics. In addition,
several commenters raised concerns about the broader, qualitative
factors proposed by the SROs. Accordingly, the Commission is
considering the accuracy and reliability standards set forth in the
Systems Retirement Proposals.
    In addition, the Commission is considering whether the Systems
Retirement Proposals are designed to prevent fraudulent and
manipulative acts and practices and, in particular, whether the Systems
Retirement Proposals would help to ensure that the SROs can effectively
conduct their surveillance and oversight functions. The Commission is
also considering whether the Systems Retirement Proposals remove
impediments to and perfect the mechanism of a free and open market and
a national market system and whether they adequately balance the
duplicative reporting costs incurred by broker-dealers and the risks to
effective surveillance and oversight, which may impact investor
protection.

V. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns that they may
have with any of the Systems Retirement Proposals. In particular, the
Commission invites the

written views of interested persons concerning whether the Systems
Retirement Proposals, as modified by the amendments thereto, are
consistent with Sections 6(b)(5), 6(b)(8), 15A(b)(6), 15A(b)(9), or any
other provision of the Act, and the rules and regulations thereunder.
Although there do not appear to be any issues relevant to approval or
disapproval that would be facilitated by an oral presentation of views,
data, and arguments, the Commission will consider, pursuant to Rule
19b-4, any request for an opportunity to make an oral
presentation.\148\
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    \148\ Section 19(b)(2) of the Act, as amended by the Securities
Act Amendments of 1975, Pub. L. 94-29 (June 4, 1975), grants the
Commission flexibility to determine what type of proceeding--either
oral or notice and opportunity for written comments--is appropriate
for consideration of a particular proposal by a self-regulatory
organization. See Securities Act Amendments of 1975, Senate Comm. on
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st
Sess. 30 (1975).
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    Such comments should be submitted by September 27, 2017. Rebuttal
comments should be submitted by October 11, 2017. The Commission asks
that commenters address the sufficiency and merit of the SROs'
statements in support of their respective Systems Retirement Proposals,
in addition to any other comments that commenters may wish to submit
about any of the proposed rule changes. The Commission also asks the
SROs to respond to the issues raised in the four comment letters
received to date, including the commenters' cost estimates. In
addition, the Commission seeks comment, including, where relevant, any
specific data, statistics, or studies, on the following:
    1. What would be the monetary costs of constructing a CAT-to-OATS
``converter'' or developing an alternative mechanism for linking CAT
Data to OATS that would provide continuity of the OATS SROs'
surveillance capabilities? To the extent possible, please provide
specific data, analyses, or studies for support for your answer.
    2. What technological challenges would have to be addressed to make
a converter or other mechanism feasible? When could work begin on a
converter or alternative mechanism? For example, could work begin
before technical specifications for Industry Member reporting to CAT
have been finalized? Could work begin before the Plan Processor had
begun accepting CAT reports from Industry Members and making those
reports available to regulators? How long would it take to construct a
converter or other mechanism? To the extent possible, please provide
specific data, analyses, or studies for support for your answer.
    3. Are there any entities that would be capable of constructing a
converter? Please explain who they are and why you believe they have
the ability to construct a converter. To the extent possible, please
provide specific data, analyses, or studies for support for your
answer.
    4. If the costs of the converter would be passed on to Industry
Members, would the benefits of a converter be undermined? To the extent
possible please provide specific data, analyses, or studies for support
for your answer.
    5. Please estimate, to the extent possible, the percentage of
Industry Members' CAT reports that would qualify for an individual
exemption from OATS reporting for each month after Industry Members
begin reporting in November 2018. Do you believe that the costs and/or
benefits of a converter would be affected by the number of Industry
Members that can be expected to meet the threshold error rates for CAT
reporting (weighted by their percentage of total CAT reports submitted
by OATS-reporting Industry Members) before full OATS retirement, thus
qualifying for an individual exemption from OATS and to have their CAT
reports converted to OATS? To the extent possible, please provide
specific data, analyses, or studies for support for your answer.
    6. Do you believe that the Systems Retirement Proposals would
result in any burden on competition and, if so, please analyze whether
any such burden would be necessary or appropriate in furtherance of the
purposes of the Act. If there are burdens, how would they compare to
the burdens that would be imposed by the converter approach? To the
extent possible, please provide specific data, analyses, or studies for
support of your answer.
    7. What impact would a converter have on the SROs' ability to
conduct their surveillance and oversight? Specifically, do you believe
that there are risks that a converter might not be able to successfully
integrate CAT reports into OATS? If so, what is the likelihood of
failures and what would be the magnitude of the costs resulting from
any such failures? What costs might be incurred by SROs to detect and
address any regulatory gaps created by a converter? For example, would
an OATS SRO have to design additional surveillances to address that
possibility? If so, what sort of additional surveillances might be
necessary and how would you estimate the cost for an SRO to develop
them? To the extent possible, please provide specific data, analyses,
or studies for support.
    8. How long do you believe it will take before CAT reaches the
accuracy and reliability thresholds proposed by the SROs before
retiring OATS and other systems for all firms? Also, how long do you
think it would take to make an effective converter available and how
long would the converter be used for those firms who individually have
met the thresholds while CAT overall has not? Does the length of this
period affect your cost/benefit analysis for the converter approach? If
so, how?
    9. Regarding the converter approach and firm-by-firm exemptions
from OATS reporting, what criteria should the OATS SROs consider for
releasing a firm from its OATS requirements? To the extent possible
please provide specific data, analyses, or studies for support. Would
you still support a firm-by-firm approach if it also incorporated an
assessment of whether the Plan Processor is sufficiently meeting all of
its obligations under the Plan?
    10. Please describe any opportunity costs associated with the
converter approach. For example, would the development of the converter
and any new processes and procedures at the SRO level to accommodate
the converter divert resources that otherwise would be devoted to CAT
implementation? If so, please describe the nature and extent of such
effects.
    11. Do you agree with the estimated costs of duplicative reporting
described by two of the commenters? \149\ Are there any additional
opportunity costs faced by Industry Members that would result from
duplicative reporting? How would the length of the duplicative
reporting period affect the opportunity costs? To the extent possible,
please provide specific data, analyses, or studies for support.
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    \149\ See supra notes 101-103 and accompanying text.
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    12. Do you agree with the proposed quantitative metrics for the
pre- and post-correction error rates that would have to be attained by
CAT before the SROs would retire duplicative systems? Do you agree with
the proposed categories for the assessment? Why or why not? Are these
categories sufficiently clear? If you believe that different thresholds
or alternative areas for consideration would be more appropriate,
please describe. What are the costs and benefits of the proposed
approach versus any alternative approach that you would recommend?
    13. Do you agree with the SROs' proposed qualitative standards for
retirement of duplicative systems, i.e.,

that retirement could not be permitted to occur until it is confirmed
that (1) there are no material issues in CAT that have not been
corrected, (2) the CAT includes all data necessary to allow the SROs to
continue to meet their surveillance obligations, and (3) the Plan
Processor is sufficiently meeting all of its obligations under the CAT
NMS Plan? Why or why not? What are the costs and benefits of the
proposed approach versus an alternative approach, which may include not
having any additional qualitative considerations?
    14. To what extent should the SROs consider CAT performance
regarding functions and data elements not present within existing audit
trail systems when determining when to allow retirement of those
existing systems? What are the costs and benefits of the proposed
approach versus any alternative approach that you would recommend? Do
you believe that the Systems Retirement Proposals will promote
efficiency, competition, and capital formation? Please submit any data
or information that would assist the Commission in considering these
issues.
    15. Do you agree with the length of the assessment period proposed
by the SROs? Why or why not? If not, what alternative do you believe
would be more appropriate and why? What are the costs and benefits of
the proposed approach versus any alternative approach that you would
recommend? To the extent possible, please provide specific data,
analyses, or studies for support.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include any
of File Numbers SR-BatsBZX-2017-37, SR-BatsEDGX-2017-23, SR-BOX-2017-
17, SR-BX-2017-027, SR-C2-2017-018, SR-CBOE-2017-041, SR-FINRA-2017-
013, SR-IEX-2017-18, SR-ISE-2017-46, SR-MIAX-2017-20, SR-NASDAQ-2017-
055, SR-PEARL-2017-23, SR-NYSE-2017-23, SR-NYSEArca-2017-57, SR-
NYSEArca-2017-59, SR-NYSEMKT-2017-29, SR-NYSEMKT-2017-30, or SR-Phlx-
2017-43, as appropriate, on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.
    All submissions should refer to any of: File Numbers SR-BatsBZX-
2017-37, SR-BatsEDGX-2017-23, SR-BOX-2017-17, SR-BX-2017-027, SR-C2-
2017-018, SR-CBOE-2017-041, SR-FINRA-2017-013, SR-IEX-2017-18, SR-ISE-
2017-46, SR-MIAX-2017-20, SR-NASDAQ-2017-055, SR-PEARL-2017-23, SR-
NYSE-2017-23, SR-NYSEArca-2017-57, SR-NYSEArca-2017-59, SR-NYSEMKT-
2017-29, SR-NYSEMKT-2017-30, or SR-Phlx-2017-43, as appropriate. The
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available
for inspection and copying at the principal office of the SRO. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly.
    All submissions should refer to any of File Numbers SR-BatsBZX-
2017-37, SR-BatsEDGX-2017-23, SR-BOX-2017-17, SR-BX-2017-027, SR-C2-
2017-018, SR-CBOE-2017-041, SR-FINRA-2017-013, SR-IEX-2017-18, SR-ISE-
2017-46, SR-MIAX-2017-20, SR-NASDAQ-2017-055, SR-PEARL-2017-23, SR-
NYSE-2017-23, SR-NYSEArca-2017-57, SR-NYSEArca-2017-59, SR-NYSEMKT-
2017-29, SR-NYSEMKT-2017-30, or SR-Phlx-2017-43, as appropriate, and
should be submitted by September 27, 2017. Rebuttal comments should be
submitted by October 11, 2017.
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    \150\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\150\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-18793 Filed 9-5-17; 8:45 am]
 BILLING CODE 8011-01-P