[Federal Register Volume 85, Number 200 (Thursday, October 15, 2020)]
[Rules and Regulations]
[Pages 65470-65498]
[FR Doc No: 2020-18572]

Vol. 85

Thursday,

No. 200

October 15, 2020

Part II

Securities and Exchange Commission

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17 CFR Parts 200, 201, 240, et al.

Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee
Amendments and Modified Procedures for Proposed NMS Plans and Plan
Amendments; Final Rule

Federal Register / Vol. 85 , No. 200 / Thursday, October 15, 2020 /
Rules and Regulations

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 200, 201, 240, and 242

[Release No. 34-89618; File No. S7-15-19]
RIN 3235-AM56

Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee
Amendments and Modified Procedures for Proposed NMS Plans and Plan
Amendments

AGENCY: Securities and Exchange Commission.

ACTION: Final rule.

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SUMMARY: The Securities and Exchange Commission (``Commission'' or
``SEC'') is amending Regulation NMS under the Securities Exchange Act
of 1934 (``Exchange Act'') to rescind a provision that allows a
proposed amendment to a national market system plan (``NMS plan'') to
become effective upon filing if the proposed amendment establishes or
changes a fee or other charge. As a result of rescinding the provision,
such a proposed amendment instead will be subject to the procedures
under which there must be an opportunity for public comment and
Commission approval by order prior to effectiveness. The Commission
also is amending its regulations to require that proposed NMS plans and
proposed amendments to existing NMS plans be filed with the Commission
by email, and is amending its regulations to modify the procedures
applicable to the Commission's handling of proposed NMS plans and plan
amendments, including fee amendments. Finally, the Commission is
adopting amendments to its rules of practice regarding disapproval
proceedings and its delegations of authority to the Director of the
Division of Trading and Markets (``Division'').

DATES: Effective November 16, 2020.

FOR FURTHER INFORMATION CONTACT: Michael Bradley, Special Counsel, at
(202) 551-5594, Andrew Sherman, Special Counsel, at<PHONE_NUMBER>,
Liliana Burnett, Special Counsel, at<PHONE_NUMBER>, Division,
Securities and Exchange Commission, 100 F Street NE, Washington, DC
20549.

SUPPLEMENTARY INFORMATION: The Commission is: (1) Rescinding and
reserving paragraph (b)(3)(i) of 17 CFR 242.608 (Rule 608 of Regulation
NMS) under the Exchange Act, and thereby eliminating the effective-
upon-filing exception for proposed NMS plan amendments to establish or
change a fee or other charge collected on behalf of all the plan
participants in connection with access to, or use of, any facility
contemplated by the plan or amendment (including changes in any
provision with respect to distribution of any net proceeds from such
fees or other charges to the participants) (``NMS plan fee
amendment''); (2) adopting amendments to 17 CFR 242.608(a)(1) (Rule
608(a)(1)) to require that proposed NMS plans and plan amendments be
filed with the Commission by email; (3) adopting amendments to 17 CFR
242.608(b)(1) and (2) (Rule 608(b)(1) and (2)) to modify the procedure
applicable to Commission action on a proposed NMS plan or plan
amendment; (4) adopting modifications in 17 CFR 201.700 and 701
(Commission Rules of Practice 700 and 701); (5) adopting an updated
cross-reference in 17 CFR 240.19b-4(g) (Rule 19b-4(g)); (6) amending 17
CFR 200.30-3 (Rule 30-3) to delegate authority to the Division Director
to publish notice of the filing of a proposed NMS plan amendment, to
notify plan participants that a proposed NMS plan or plan amendment
does not comply with 17 CFR 242.608(a) (Rule 608(a)) or plan filing
requirements in other sections of Regulation NMS and 17 CFR 240,
subpart A, to determine that a proposed NMS plan or plan amendment is
unusually lengthy and complex or raises novel regulatory issues and
inform the NMS plan participants of such determination, to institute
proceedings to determine whether a proposed NMS plan or plan amendment
should be disapproved, to provide the NMS plan participants notice of
the grounds for disapproval under consideration, to extend for a period
not exceeding 240 days from the date of publication of notice of the
filing of a proposed NMS plan or plan amendment the period during which
the Commission must issue an order approving or disapproving the
proposed NMS plan or plan amendment and determine whether such longer
period is appropriate and publish the reasons for such determination;
(7) amending Rule 30-3 to remove delegated authority from the Division
Director to approve a proposed NMS plan amendment and to extend a time
period that will no longer exist under Rule 608(b) as amended; and (8)
amending Rule 30-3 to relocate within the rule existing delegations of
authority to the Division Director to summarily abrogate a proposed NMS
plan amendment put into effect upon filing with the Commission and
require that such amendment be refiled in accordance with paragraph
(a)(1) of Rule 608 and reviewed in accordance with paragraph (b)(2) of
Rule 608, and to put a proposed plan amendment into effect summarily
upon publication of notice and on a temporary basis not to exceed 120
days.

Table of Contents

I. Introduction
II. Rule Amendments
    A. Rescission of the Fee Exception
    B. Modified Procedure for Proposed NMS Plans and Plan Amendments
    1. Amendments to Rule 608
    a. Procedure for Notice Publication Under Rule 608(b)(1) As
Amended
    b. Procedure for Commission Action Subsequent to Notice
Publication Under Rule 608(b)(2) As Amended
    c. Filing of NMS Plans and Amendments Thereto Under Rule
608(a)(1) as Amended
    d. Additional Aspects of Amended Rule 608
    2. Amendments to Rules of Practice 700 and 701
    3. Amendments to Delegations of Authority in Rule 30-3
    4. Administrative Matters Common to Amendments to Rules of
Practice and Delegations of Authority
III. Paperwork Reduction Act
IV. Economic Analysis
    A. Introduction
    B. Baseline
    1. NMS Plan Fee Amendments
    2. Procedures and Timeframes for NMS Plans and NMS Plan
Amendments Filed Under Rule 608(b)(1) and (2)
    3. Procedures and Timeframes for SRO Rule Changes Filed Under
Section 19(b)(2)
    4. Market for Core and Aggregated Market Data Products
    5. Current Structure of the Market for Trading Services in NMS
Securities
    C. Economic Effects
    1. Benefits
    a. Rescission of the Fee Exception
    b. Modified Procedures for Proposed New NMS Plans and Plan
Amendments
    2. Costs
    a. Rescission of the Fee Exception
    b. Modified Procedures for Proposed New NMS Plans and Plan
Amendments
    3. Impact on Efficiency, Competition, and Capital Formation
    a. Efficiency
    b. Competition
    c. Capital Formation
    D. Reasonable Alternative
V. Regulatory Flexibility Certification
VI. Other Matters
VII. Statutory Authority

I. Introduction

    On October 1, 2019, the Commission proposed to amend Rule 608 under
Regulation NMS to rescind paragraph (b)(3)(i) and thereby eliminate the
effective-upon-filing exception for NMS plan fee amendments.\1\ Rule
608 under Regulation NMS sets forth requirements for the filing and
amendment of NMS plans. Rule 608(a) provides that any two

or more self-regulatory organizations (``SROs''), acting jointly, may
file a new proposed NMS plan or a proposed amendment to an existing NMS
plan by submitting to the Secretary of the Commission the text of the
plan or amendment along with extensive supporting information.\2\ Rule
608(b) addresses the effectiveness of proposed NMS plans and plan
amendments, and sets forth a procedure for Commission action in
paragraphs (b)(1) and (b)(2). Among other things, this procedure
precludes a proposed NMS plan amendment from becoming effective until
after an opportunity for public comment and Commission approval by
order.
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    \1\ Securities Exchange Act Release No. 87193, 84 FR 54794 (Oct.
11, 2019) (``Proposing Release'' or ``Proposal'').
    \2\ As discussed in the Proposal, Section 11A of the Exchange
Act directs the Commission to facilitate the creation of a national
market system for qualified securities. 15 U.S.C. 78k-1(a).
Proposing Release, supra note 1, at 54794.
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    Paragraph (b)(3)(i) of Rule 608, however, has provided for NMS plan
fee amendments an exception to the standard procedure since Rule 608
was adopted in 1981 (the ``Fee Exception'').\3\ Under the Fee
Exception, a NMS plan fee amendment could be put into effect upon
filing with the Commission, before comments could be submitted and
without Commission approval.\4\ Consequently, the Fee Exception allowed
the SROs, as NMS plan participants that constitute the NMS plan
operating committees and vote to approve plan amendments, to begin
charging new or altered NMS plan fees to a wide range of market
participants prior to an opportunity for public comment and without
Commission action.\5\
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    \3\ Proposing Release, supra note 1, at 54796-97. Paragraph
(b)(3)(iii) of Rule 608 provides that the Commission may summarily
abrogate an immediately effective amendment within 60 days after
filing and require it to be refiled as not immediately effective if
it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors,
or the maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a national market
system, or otherwise in furtherance of the purposes of the Exchange
Act.
    \4\ While a NMS plan fee amendment was deemed effective upon
filing, the required substance of the fee amendment is the same as
what is required for a proposed NMS plan amendment that is not
immediately effective. See Rule 608(a).
    \5\ The Fee Exception has been available for NMS plans that
charge or intend to charge fees. Currently, these are: (i) The NMS
plans that govern the facilities through which registered securities
information processors (``SIPs'') collect, consolidate, and
distribute real-time market information (also known as ``core
data''); and (ii) the plan that governs the consolidated audit trail
(``CAT''). The participants in these plans are all SROs. The
Proposing Release sets forth additional background concerning the
core data plans and the CAT plan, those plans' fee-setting process,
Rule 608 of Regulation NMS and the Fee Exception, and pre-Proposal
comments and petitions regarding the Fee Exception. See Proposing
Release, supra note 1, at 54795-99.
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    After considering the comments received on the Proposal to rescind
the Fee Exception,\6\ the Commission has determined that the Fee
Exception is no longer appropriate for today's national market system
and should be rescinded. As a result, NMS plan fee amendments will be
subject to the procedure set forth in Rule 608(b)(1) and (2), and there
must be an opportunity for public comment and Commission approval by
order before the fees can become effective. The Commission also has
decided to amend Rule 608(a)(1) to require that proposed new NMS plans
and plan amendments be filed with the Commission by email, and to
modify the procedure set forth in Rule 608(b)(1) and (2) for the
Commission's handling of proposed new NMS plans and proposed amendments
to existing NMS plans, including NMS plan fee amendments. As discussed
below, the modified procedure sets forth a new process and timeframes
for Commission publication of notice and for subsequent Commission
action. In addition, the Commission is adopting amendments to
Commission rules of practice and delegations of authority.
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    \6\ Comments received on the Proposal are available on the
Commission's website, available at https://www.sec.gov/comments/s7-15-19/s71519.htm.
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II. Rule Amendments

A. Rescission of the Fee Exception

    The Commission proposed to rescind the Fee Exception based on
several factors, many of which were echoed by commenters. As discussed
in the Proposal and by commenters, NMS plan fees have a broad effect on
a wide range of market participants, and the total revenues derived
from NMS plans' fees are substantial.\7\ In addition, non-SRO market
participants, including investors, broker-dealers, data vendors and
others, are required to pay the fees charged by NMS plans to obtain
core data, as well as critical market information that is not available
from sources other than the core data NMS plans, such as regulatory
data required by the National Market System Plan to Address
Extraordinary Market Volatility (``LULD'' plan) and administrative
messages.\8\ Further, the exchange SROs have demutualized in the time
since Rule 608 (and the Fee Exception) was adopted in 1981, resulting
in less opportunity for SRO members to influence a NMS plan fee
amendment before it is filed with the Commission.\9\ There also are
potential conflicts of interest for exchange SROs in setting NMS plan
fees for core data,\10\ and for SRO participants in the CAT plan in
setting fees that industry members must pay for the costs of the CAT
system.\11\ Moreover, even if the

Commission ultimately abrogates a NMS plan fee amendment, the Fee
Exception allows the new or altered fee to be effective during the time
between its filing and abrogation.\12\
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    \7\ Proposing Release, supra note 1, at 54798; Letter from
Dennis M. Kelleher, President and CEO, and Lev Bagramian, Senior
Securities Policy Advisor, Better Markets Inc., to Vanessa
Countryman, Secretary, Commission, dated December 10, 2019 (``Better
Markets Letter''), at 3; Letter from Greg Babyak, Global Head of
Regulatory Affairs, Bloomberg L.P., to Vanessa Countryman,
Secretary, Commission, dated December 10, 2019 (``Bloomberg
Letter''), at 2; Letter from Jeffrey P. Mahoney, General Counsel,
Council of Institutional Investors, to Vanessa Countryman,
Secretary, Commission, dated December 5, 2019 (``CII Letter''), at
2-3; Letter from Dorothy M. Donohue, Deputy General Counsel,
Securities Regulation, Investment Company Institute, to Vanessa
Countryman, Secretary, Commission, dated December 10, 2019 (``ICI
Letter''), at 1-2; Letter from Rich Steiner, Head of Client Advocacy
and Market Innovation, RBC Capital Markets, to Vanessa Countryman,
Secretary, Commission, dated December 10, 2019 (``RBC Capital
Markets Letter''), at 3. As noted in the Proposal, the total
revenues generated by fees charged by the core data plans totaled
more than $500 million in 2017. Proposing Release, supra note 1, at
54798. The total revenues generated by fees charged by the core data
plans totaled more than $500 million in 2018 as well. Both the 2017
and 2018 amounts are derived from audited financial statements for
the CTA/CQ and Nasdaq/UTP plans, and from summary financial
information for the OPRA plan.
    \8\ Proposing Release, supra note 1, at 54798-99; Better Markets
Letter at 2-3; Bloomberg Letter at 2-3, 5; Letter from Ray Ross,
Chief Technology Officer, Clearpool Group, to Vanessa Countryman,
Secretary, Commission, dated December 10, 2019 (``Clearpool
Letter''), at 3; Letter from Joanna Mallers, Secretary, FIA
Principal Trading Group, to Vanessa Countryman, Secretary,
Commission, dated December 10, 2019 (``FIA Principal Traders
Letter''), at 1; Letter from Derrick Chan, Head of Equities Trading
and Sales, Fidelity Capital Markets, to Vanessa Countryman,
Secretary, Commission, dated December 10, 2019 (``Fidelity
Letter''), at 2 and n. 3; ICI Letter at 1; Letter from Theodore D.
Lazo, Managing Director, Associate General Counsel, SIFMA, to
Vanessa Countryman, Secretary, Commission, dated December 6, 2019
(``SIFMA Letter''), at 1-2. Commenters also stated that the core
data plans are monopolistic providers of market-wide services and
there is no market competition that can be relied upon to set
competitive prices. Better Markets Letter at 3; Bloomberg Letter at
2, 5; CII Letter at 2, 3; Clearpool Letter at 3; Fidelity Letter at
3; Letter from Mark D. Epley, Executive Vice President and Managing
Director, General Counsel, and Jennifer W. Han, Associate General
Counsel, Managed Funds Association, to Vanessa Countryman,
Secretary, Commission, dated December 6, 2019 (``MFA Letter''), at
3; RBC Capital Markets Letter at 2.
    \9\ Proposing Release, supra note 1, at 54799; Letter from Tyler
Gellasch, Executive Director, Healthy Markets Association, to
Vanessa Countryman, Secretary, Commission, dated December 12, 2019
(``Healthy Markets Letter''), at 10.
    \10\ Proposing Release, supra note 1, at 54799-802; Better
Markets Letter at 3-4; Bloomberg Letter at 5; CII Letter at 3-4;
Clearpool Letter at 3; Fidelity Letter at 3; Healthy Markets Letter
at 1, 4-5; RBC Capital Markets Letter at 2.
    \11\ Proposing Release, supra note 1, at 54798; FIA Principal
Traders Letter at 1-2; Fidelity Letter at 3. On August 29, 2019, the
operating committee for CAT NMS, LLC filed an immediately effective
NMS plan amendment that created a new Delaware limited liability
company, named Consolidated Audit Trail, LLC, for the purposes of
conducting activities related to the CAT plan. See Securities
Exchange Act Release No. 87149 (Sept. 27, 2019), 84 FR 52905 (Oct.
3, 2019). The CAT plan currently allows the operating committee of
Consolidated Audit Trail, LLC to establish funding for Consolidated
Audit Trail, LLC, including establishing an allocation of its
related costs among SRO participants and SRO members that is
consistent with the Exchange Act. See Proposing Release, supra note
1, at 54796 and n. 17, 54798.
    \12\ Proposing Release, supra note 1, at 54799; Bloomberg Letter
at 3; Fidelity Letter at 4; RBC Capital Markets Letter at 4. One
commenter stated that this can cause disruption and attendant costs.
RBC Capital Markets Letter at 4.
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    Commenters that supported the Proposal also criticized the Fee
Exception, stating that it does not facilitate informed and meaningful
public comment,\13\ discourages market participants from submitting
comments on NMS plan fee amendments,\14\ provides too much autonomy to
SIP operators,\15\ and provides an inadequate opportunity for investors
and market participants to prepare for a new or altered NMS plan fee
before it is charged.\16\ Commenters stated that, instead, NMS plan fee
amendments should become effective only after public notice, an
opportunity for comment, and Commission approval.\17\ They stated that
this procedure will: (i) Create a more meaningful comment process; \18\
(ii) impose the financial and operational costs of fee changes only
after notice, comment, and an affirmative Commission disposition, which
will help mitigate the risk of unwarranted fee changes, avoid
complications with refunds should an application be withdrawn or
subsequently denied, and more appropriately place the cost of delay in
imposing a new fee on the filer; \19\ (iii) more properly allocate
administrative burdens such that agency action is necessary to approve,
rather than abrogate, a NMS plan fee amendment; \20\ (iv) provide
greater assurance that NMS plan fees are fair and reasonable before
they go into effect; \21\ and (v) provide advanced notice and time to
plan for a fee change,\22\ which should help facilitate more fair,
orderly and efficient markets.\23\
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    \13\ Better Markets Letter at 1-3; Bloomberg Letter at 4, 7;
Clearpool Letter at 2; Healthy Markets Letter at 8. Two commenters
stated that the effective-upon-filing process has made it difficult
for the Commission to evaluate if proposed NMS plan fee amendments
comply with the Exchange Act and Commission rules. Better Markets
Letter at 2-3; Healthy Markets Letter at 7.
    \14\ Better Markets Letter at 3; MFA Letter at 2-3; RBC Capital
Markets Letter at 3. One commenter stated that market participants
are discouraged from commenting on NMS plan fee amendments because,
given the Commission's history of abrogating less than one out of
ten fee amendments, they have little confidence that their after-
the-fact feedback will persuade the Commission to abrogate the fee
amendment and assess whether the fees are necessary or appropriate
in the public interest. Better Markets Letter at 3. Another
commenter stated that market participants are likely to perceive NMS
plan fee amendments that are subject to an effective-upon-filing
procedure as a fait accompli, and be less willing to spend time to
submit comments or raise concerns. MFA Letter at 2-3.
    \15\ Bloomberg Letter at 4; ICI Letter at 2.
    \16\ Bloomberg Letter at 3; Clearpool Letter at 2; Fidelity
Letter at 3-4; Healthy Markets Letter at 10; RBC Capital Markets
Letter at 4.
    \17\ Better Markets Letter at 3; Bloomberg Letter at 1-3, 6; CII
Letter at 2-3; Clearpool Letter at 1-2; FIA Principal Traders Letter
at 1; Fidelity Letter at 2; Healthy Markets Letter at 7-9; ICI
Letter at 2; MFA Letter at 2; RBC Capital Markets Letter at 2-4;
SIFMA Letter at 1.
    \18\ Better Markets Letter at 3; Bloomberg Letter at 2, 5;
Clearpool Letter at 2; FIA Principal Traders Letter at 1; Fidelity
Letter at 3; Healthy Markets Letter at 8; MFA Letter at 2-3; RBC
Capital Markets Letter at 3-4; SIFMA Letter at 1.
    \19\ RBC Capital Markets Letter at 3-4.
    \20\ Bloomberg Letter at 3-6.
    \21\ Bloomberg Letter at 5; CII Letter at 2; ICI Letter at 2;
MFA Letter at 1-3; RBC Capital Markets Letter at 3.
    \22\ Bloomberg Letter at 3; ICI Letter at 2; RBC Capital Markets
Letter at 3-4.
    \23\ RBC Capital Markets Letter at 4. Some commenters made
suggestions regarding NMS plan governance and transparency that are
outside the scope of this rulemaking. See Better Markets Letter at
5-6; Bloomberg Letter at 7-8; Clearpool Letter at 3 n. 6; Fidelity
Letter at 4; Healthy Markets Letter at 5-6; ICI Letter at 2-3. In
addition, some commenters made suggestions regarding what
substantive information should be set forth in NMS plan fee
amendments, and guidance that the Commission should provide in that
regard. See MFA Letter at 3-4; Healthy Markets Letter at 11. The
Commission is not adopting amendments to the required substance of
proposed NMS plan amendments. As discussed in the Proposal, the
rescission of the Fee Exception does not change any requirements
regarding the substantive information that must be set forth in NMS
plan fee amendments pursuant to paragraph (a) of Rule 608 and the
relevant provisions of the Exchange Act. Proposing Release, supra
note 1, at 54798.
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    The Commission continues to believe that a NMS plan fee amendment
should not become effective--and SRO plan participants should not be
able to charge new or altered fees to investors, broker-dealers, and
others--until after the public has had an opportunity to comment on the
NMS plan fee amendment. By changing the timing of effectiveness,
commenters will have an opportunity to provide their views about a NMS
plan fee amendment prior to the time they are charged a new or altered
NMS plan fee, and the Commission will have an opportunity to consider
commenters' views before a NMS plan fee amendment becomes effective.
The Commission believes that this is an appropriate adjustment to the
comment process for NMS plan fee amendments in light of how broadly NMS
plan fees affect market participants.
    In response to a request for comment in the Proposal, commenters
addressed a potential alternative approach where the Commission could
modify Rule 608(b)(3) such that a NMS plan fee amendment is not
effective immediately upon filing, but becomes effective automatically
some time period (e.g., 60 or 90 days) after filing if the Commission
does not abrogate the filing.\24\ Several commenters criticized this
alternative approach as suffering from the same defects as the
effective-upon-filing procedure.\25\ Another commenter believed the
alternative would be inappropriate because Commission review and
approval by order should be required before a NMS plan fee is
effective, given the lack of competition for NMS plan fees.\26\ One
commenter stated that the alternative would be acceptable and would
achieve substantially the same goals as the Proposal.\27\
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    \24\ See Proposing Release, supra note 1, at 54799, 54804-05;
see also Bloomberg Letter at 4 n. 8; Clearpool Letter at 2-3 n. 5;
Healthy Markets Letter at 8-9; MFA Letter at 3; RBC Capital Markets
Letter at 4-5; Fidelity Letter at 4; Letter from Joan C. Conley,
Senior Vice President and Corporate Secretary, The Nasdaq Stock
Market LLC, to Vanessa Countryman, Secretary, Commission, dated
December 10, 2019 (``Nasdaq Letter''), at 2, 4-5.
    \25\ Bloomberg Letter at 4 n. 8; Clearpool Letter at 2-3 n. 5;
Healthy Markets Letter at 8-9; MFA Letter at 3; RBC Capital Markets
Letter at 4-5.
    \26\ Fidelity Letter at 4.
    \27\ Nasdaq Letter at 2, 4-5.
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    The Commission is not adopting this alternative approach. While the
alternative approach included a comment period and Commission
abrogation, if necessary, prior to the effectiveness of a NMS plan fee
amendment, the Commission has decided to rescind the Fee Exception and
to adopt the requirement of Commission approval by order before a NMS
plan fee amendment can become effective. The Commission does not
believe that any proposed NMS plan fee should be imposed on the public
without an affirmative Commission determination that the fee meets the
relevant requirements of the Exchange Act and rules thereunder. This is
what will occur under the procedure set forth in Rule 608(b)(1) and
(2), as amended, which is being modified from the Proposal as discussed
below.

B. Modified Procedure for Proposed NMS Plans and Plan Amendments

1. Amendments to Rule 608
    In the Proposing Release, the Commission requested comment on
whether the existing procedure for notice, comment and Commission

action in Rule 608(b)(1) and (2) would be appropriate for NMS plan fee
amendments if the Fee Exception were rescinded.\28\ The Commission also
asked whether the time periods in Rule 608 for Commission action should
be longer or shorter for NMS plan fee amendments, whether any other
aspects of the Rule 608 procedure should be modified for NMS plan fee
amendments, and what issues or improvements relating to Rule 608
procedures commenters would recommend that the Commission address or
undertake to ensure that NMS plan fee amendments are not unduly
delayed.\29\
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    \28\ Proposing Release, supra note 1, at 54799.
    \29\ Id. at 54799-800.
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    Two commenters recommended that the Commission incorporate into
Rule 608 procedures for Commission action on proposed NMS plan
amendments that mirror the procedures for individual SRO rule filings
under Section 19(b) of the Exchange Act.\30\ They stated that, under
these Section 19(b) procedures, a SRO rule filing is ``deemed
approved'' if the Commission does not act within the specified
timeframe for final action.\31\ These commenters also stated that it is
particularly important to add a deadline for the Commission to publish
notice of a proposed NMS plan amendment, and provided examples of
proposed NMS plan amendments that were not published until several
months after their submission to the Commission or had not yet been
published several months after submission.\32\ They also criticized the
Commission's estimate that the median time for processing a proposed
NMS plan amendment is 70.5 days, stating that median times are less
affected than mean times by outlier cases when the Commission's
processing of amendments has been significantly delayed.\33\ These
commenters believed that explicit deadlines for Commission action on
proposed NMS plan amendments would result in a more transparent and
expeditious process.\34\
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    \30\ Letter from Howard Kramer and James Dombach, Murphy &
McGonigle, Robert B. Wilcox, Jr. and Chris L. Bollinger, Schiff
Hardin LLP, on behalf of the Operating Committees of the CTA Plan,
CQ Plan, UTP Plan, and OPRA Plan, and the Plans' Participants and
Members, to Vanessa Countryman, Secretary, Commission, dated
December 9, 2019 (``Operating Committees Letter''); Nasdaq Letter.
The Nasdaq Letter stated that it did not object to the Proposal
provided that its recommended modifications are implemented. Nasdaq
Letter at 2-4.
    \31\ Operating Committees Letter at 1, 7; Nasdaq Letter at 1-3
(concurring with the Operating Committees Letter).
    \32\ Operating Committees Letter at 3-4; Nasdaq Letter at 2-3.
The Operating Committees also suggested that the Division be granted
delegated authority to publish notice of proposed NMS plan
amendments, stating that the Division already has delegated
authority to approve or extend the time to approve proposed NMS plan
amendments, but not to publish notice when proposed NMS plan
amendments are filed. Operating Committees Letter at 4-5.
    \33\ Operating Committees Letter at 3-4; Nasdaq Letter at 3. See
Proposing Release, supra note 1, at 54799-801. As discussed infra,
the Commission agrees with these commenters and, for completeness,
the Commission is revising its analysis to present estimates of both
the average and median times related to NMS plan fee amendments. See
infra note 117.
    \34\ Operating Committees Letter at 2-5; Nasdaq Letter at 3.
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    One commenter opposed incorporating a deemed approved provision
into Rule 608.\35\ This commenter believed that Commission inaction
resulting in a proposed NMS plan amendment being deemed approved would
be inconsistent with judicial precedent and public policy, and stated
that Section 11A of the Exchange Act does not explicitly authorize the
deemed approved provision found in Section 19(b).\36\ Similarly,
another commenter stated that it would not be appropriate for NMS plan
fee amendments to become automatically effective if the Commission does
not take specific action, and that Commission approval by order should
be required before a NMS plan fee amendment can become effective.\37\
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    \35\ Healthy Markets Letter at 9.
    \36\ Id.
    \37\ Fidelity Letter at 4 and n. 6.
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    The Commission has decided to adopt a modified procedure for
Commission action on all proposed new NMS plans and plan amendments,
including NMS plan fee amendments.\38\ This procedure is largely
patterned on the current statutory requirements in Section 19(b) for
Commission review of SRO proposed rule changes, but with modifications
that reflect the particular nature of proposed new NMS plans and plan
amendments. As discussed in the Proposal, Section 11A(a)(3)(B) of the
Exchange Act, which governs Rule 608 and NMS plans, does not mandate
any specific procedures for Commission action.\39\ It instead broadly
authorizes the Commission to require SROs to act jointly with respect
to matters relating to the national market system.\40\ Pursuant to that
authority, the Commission may adopt (and has adopted in the past)
procedures in Rule 608 that are appropriate for handling proposed NMS
plans and plan amendments,\41\ and the Commission may determine what,
if any, elements of the Section 19(b) process for SRO rule filings are
appropriate to incorporate into the Rule 608 procedures for proposed
NMS plans and plan amendments.\42\
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    \38\ As discussed infra, proposed plan amendments that are
solely administrative, technical or ministerial remain effective-
upon-filing pursuant to Rule 608(b)(3)(ii) and (iii), but they are
subject to the modified notice publication process.
    \39\ See Proposing Release, supra note 1, at 54796-97.
Commenters agreed with the Commission's analysis that Congress did
not intend Section 19(b) to cover NMS plan fees or to treat NMS
plans as analogous to individual SRO rules. Better Markets Letter at
4-5; Bloomberg Letter at 6-7 n. 14.
    \40\ See 15 U.S.C. 78k-1(a)(3)(B).
    \41\ See Proposing Release, supra note 1, at 54796; see also
Securities Exchange Act Release No. 17580 (Feb. 26, 1981), 46 FR
15866 (Mar. 10, 1981) (adopting Rule 11Aa3-2, the predecessor to
Rule 608) (``Rule 11Aa3-2 Adopting Release'').
    \42\ As discussed in the Proposing Release, when the Commission
adopted Rule 11Aa3-2 (the predecessor to Rule 608) in 1981, it
rejected the argument of some commenters that the procedures for NMS
plan amendments under Section 11A should incorporate the same
procedures specified in Section 19 for rule changes by individual
SROs. See Proposing Release, supra note 1, at 54797; Rule 11Aa3-2
Adopting Release, supra note 41, at 15868 (noting that the
legislative history ``indicates that Congress viewed the
Commission's authority in Section 11A(a)(3)(B) as distinct from its
authority contained in Section 19 or any other provision of the
Act.''). Although Congress did not mandate procedures for NMS plan
amendments, Rule 11Aa3-2, as adopted in 1981, included all three of
the effective-upon-filing exceptions that currently are in Rule 608
and that were similar to the effective-upon-filing exceptions in
Section 19 in effect at that time. See Proposing Release, supra note
1, at 54797; Rule 11Aa3-2 Adopting Release, supra note 41.
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    The current timeframes in Rule 608(b) for Commission action begin
to run on the date of publication of notice of the filing of a national
market system plan or an amendment to an effective national market
system plan. In other words, after plan participants file a proposed
NMS plan or plan amendment with the Commission, the Commission must
thereafter publish notice of the filing in the Federal Register in
order for the current time periods in Rule 608(b) to begin.\43\ But, as
commenters pointed out, Rule 608(b) currently does not set forth a
timeframe for the Commission to publish notice after it has received a
filing, and therefore there is no specified date when the time periods
that are included in current Rule 608(b) are to begin. In addition,
Rule 608(b) currently does not include a requirement for the Commission
to issue an order disapproving a proposed NMS plan or plan amendment
for which the Commission does not make the finding necessary for
approval.
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    \43\ This effectively means that ``starting the clock'' on the
Commission's time to act on a proposed NMS plan or plan amendment
does not occur until the Commission publishes notice of the filed
plan or amendment.
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    In Section 19(b) of the Exchange Act, Congress enacted a procedure
for Commission publication of notice of and action on individual SRO
rule

filings that has proved workable in that context. In the past ten
years, the Commission has received and processed thousands of SRO rule
filings that were subject to the notice publication (and rejection)
procedure in Section 19(b).\44\ In addition, Section 19(b) sets forth
certain requirements for SRO rule filings that, if applied to proposed
NMS plans and plan amendments, would modify the above-noted aspects of
the Rule 608(b) procedure. Importantly, and as pointed out by
commenters, the Section 19(b) process ensures that the ``clock'' will
begin to run on the Commission's time to act on a SRO rule filing and
provides for certainty of approval or disapproval of a SRO rule filing
within a specified timeframe that is lacking in Rule 608(b). This is
because Section 19(b) of the Exchange Act sets forth a deadline for the
Commission to publish notice of a SRO rule filing, with a default
notice publication date if the Commission fails to meet that
deadline,\45\ and requires that the Commission issue a disapproval
order if it does not make the finding necessary to approve a SRO rule
filing.\46\ Section 19(b) also authorizes the Commission to institute
proceedings on a SRO rule filing, which is a useful intermediate
procedural step by which the Commission can highlight issues and seek
additional public comment that focuses on those issues. Neither Section
11A of the Exchange Act nor current Rule 608(b) sets out a process to
institute proceedings or procedural detail like that set forth in
Section 19(b) of the Exchange Act.
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    \44\ See 15 U.S.C. 78s(b)(2)(E) and 78s(b)(10)(B). SRO rule
filings become subject to the notice publication procedure in
Section 19(b) upon filing with the Commission, but the Commission
does not publish notice of filings that are rejected under Section
19(b)(10)(B) or withdrawn by the SRO prior to the noticing deadline
in Section 19(b)(2)(E).
    \45\ See 15 U.S.C. 78s(b)(2)(E).
    \46\ See 15 U.S.C. 78s(b)(2)(A)(i), (b)(2)(B)(ii), and
(b)(2)(C)(ii).
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    The Commission believes that a modified procedure for proposed new
NMS plans and plan amendments that incorporates these aspects of
Section 19(b) would be workable and beneficial. On average, roughly one
proposed new NMS plan is filed with the Commission every five years,
and roughly 13 proposed plan amendments are filed with the Commission
per year \47\--a small fraction of the number of SRO rule filings that
are filed with the Commission. Thus, the Commission expects the volume
of proposed NMS plans and plan amendments under Rule 608(b) as amended
to be manageable. In addition, ensuring that the ``clock'' begins on
the Commission's time to act and requiring that the Commission
disapprove, by order, a proposed NMS plan or plan amendment that it
cannot approve will result in a more transparent and efficient process
for handling proposed NMS plans and plan amendments. It will enable
plan participants to more accurately project, at the time of filing,
the maximum time by which they will receive affirmative Commission
approval or disapproval of a proposed NMS plan or plan amendment. It
will also help assure all market participants that the Commission will
act within a specified timeframe. As a result, plan participants and
other market participants should be better able to prepare for
potential new NMS plans or changes in existing plan requirements.
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    \47\ These proposed plan amendments include amendments that are
solely administrative, technical or ministerial, which remain
effective-upon-filing under Rule 608(b)(3)(ii) and (iii). See supra
note 38 and infra Section II.B.1.a and note 63. The Commission
estimates that, on average, roughly eight to nine proposed plan
amendments that are not effective-upon-filing, including fee
amendments, will be filed each year.
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    Moreover, adopting a process for instituting proceedings, which
could include seeking additional public comment, would facilitate
Commission review of a complex proposed NMS plan or plan amendment and
consideration of particular issues relevant to the Commission's
determination whether to approve to disapprove such proposed plan or
amendment. Further, as a result of the Commission's rescission of the
Fee Exception,\48\ proposed fee amendments will be subject to the
procedural modifications that the Commission is incorporating into Rule
608(b)(1) and (2). These modifications are based on Section 19(b).
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    \48\ See supra Section II.A.
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    While commenters suggested applying the Section 19(b) procedures
only to proposed plan amendments,\49\ the Commission believes that it
is appropriate to incorporate into amended Rule 608(b) similar
requirements for both proposed new NMS plans and plan amendments. The
Commission believes improved transparency and efficiency are important
for both proposed new NMS plans and proposed plan amendments.
Paragraphs (1) and (2) of current Rule 608(b) set forth the same
procedural requirements for proposed NMS plans and plan amendments that
are not effective upon filing, and the Commission believes it is also
important to enhance the Commission's procedure for handling proposed
new NMS plans.
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    \49\ Operating Committees Letter; Nasdaq Letter.
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    Accordingly, as described in more detail below, the Commission is
adopting amendments to Rule 608(b) to incorporate elements of the
Section 19(b) process that will enhance the Commission's procedure for
handling both proposed NMS plans and plan amendments. In light of
differences between SRO rule filings and proposed NMS plans and plan
amendments, the Commission is not incorporating every aspect of the
Section 19(b) procedure into amended Rule 608(b), and the Commission is
adopting certain timeframes for Commission action under amended Rule
608(b) that differ from what is required by Section 19(b).
a. Procedure for Notice Publication Under Rule 608(b)(1) as Amended
    A new procedure for Commission publication of notice of the filing
of proposed NMS plans and plan amendments is set forth in amendments to
paragraph (b)(1) of Rule 608. New paragraphs (b)(1)(i) and (ii) of Rule
608 provide the time periods for the Commission to send notice of the
filing of a proposed new NMS plan and a proposed plan amendment,
respectively, to the Federal Register.
    Specifically, under Rule 608(b)(1)(i), the Commission must send the
notice of the filing of a proposed NMS plan to the Federal Register
within 90 days of the business day on which such plan was filed with
the Commission pursuant to paragraph (a) of Rule 608. If the Commission
fails to send the notice to the Federal Register within such 90-day
period, then the date of publication shall be deemed to be the last day
of such 90-day period. Rule 608(b)(1)(i) therefore specifies a
timeframe for the publication of notice of a new NMS plan and a default
notice publication date if the Commission fails to act by the deadline.
In so doing, Rule 608(b)(1)(i), unlike current Rule 608(b)(1), ensures
for all NMS plans filed with the Commission that notice will be
published in a specified timeframe.
    The timeframe and default publication date differ, however, from
what is set forth in Section 19(b) for SRO proposed rule changes. Under
Section 19(b), if, after filing a proposed rule change with the
Commission, the SRO publishes notice of the proposed rule change,
together with the substantive terms of such proposed rule change, on a
publicly accessible website, the Commission is required to send the
notice to the Federal Register within 15 days of the date on which such
website publication was made. If the Commission fails to send the
notice for publication within such 15-day period, then the date of
publication is

deemed to be the date on which such website publication was made.\50\
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    \50\ See 15 U.S.C. 78s(b)(2)(E).
---------------------------------------------------------------------------

    In the context of a proposed new NMS plan, while the Commission
believes that the concept of a notice publication deadline and default
publication date in the event of Commission failure to meet the
deadline are beneficial, the Commission does not believe that a 15-day
deadline, or the default to a website publication date if that deadline
is missed, are workable. In order to send notice of a SRO rule filing
to the Federal Register within the 15-day deadline mandated by Section
19(b), the Commission generally reproduces the proposed rule change
filed by the SRO in a Federal Register-compliant format without
including observations, questions, and requests for comment, in
addition to what the SRO has filed. The publication of notice of a new
NMS plan, in contrast, may require more time because new plans present
more substance for review and typically raise a greater number of
issues than would be the case for a SRO rule filing or a proposed
amendment to an existing plan. As a result, the Commission may want to
add material to the notice of a proposed new plan that is designed to
facilitate informed public comment on the proposal, which is an
integral aspect of the Commission's review of a new NMS plan. For
example, the Commission added detailed requests for comment to the
notice of the proposed NMS plan to implement a tick size pilot
program.\51\ The Commission anticipates it would need more than 15 days
to prepare such additional material before sending notice of a proposed
new NMS plan to the Federal Register. The Commission believes that 90
days both gives a sufficient amount of time for the Commission to
complete such efforts and improves the current Rule 608(b) process for
proposed new NMS plans by providing certainty and transparency
regarding timeframes for Commission action. In addition, the 90-day
timeframe for the Commission to send notice of a new NMS plan to the
Federal Register will result in faster publication of the notice in the
Federal Register than the average publication time under the current
rule.\52\
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    \51\ See Securities Exchange Act Release No. 73511 (Nov. 3,
2014), 79 FR 66423 (Nov. 7, 2014).
    \52\ See infra Section IV.B.2, where the Commission estimates
that the average and median time it currently takes to publish
notice of proposed new NMS plans in the Federal Register are 163.8
days and 76.5 days, respectively.
---------------------------------------------------------------------------

    A default notice publication date based on the date of plan
participants' website posting, as in Section 19(b), would not be
appropriate for proposed new NMS plans. Rule 608(a)(8) currently does
not require website posting of a new NMS plan until after the plan has
been approved and becomes effective. The Commission does not believe it
would be appropriate to require website posting of a proposed new NMS
plan prior to that time, as it could require the creation of a website
for a proposed plan that is not yet and may never become effective,
which could confuse market participants as to which NMS plans actually
are effective at any given time.\53\ The Commission believes, however,
that it is important to provide certainty and transparency regarding
the date on which the time periods for Commission action subsequent to
notice publication will begin to run. Therefore, the Commission has
adopted the default notice publication provision in paragraph (b)(1)(i)
of amended Rule 608(b), pursuant to which the publication of notice of
a new NMS plan is deemed to have occurred on the last day of the 90-day
notice period if the Commission fails to send the notice to the Federal
Register by the end of that period.
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    \53\ While an existing SRO's proposed rule changes are required
to be posted on the SRO's website within two business days of filing
and are typically website posted on the same day as filing (see Rule
19b-4(l)), there is no such requirement for applications to become a
new SRO, such as a Form 1 application to become a registered
national securities exchange.
---------------------------------------------------------------------------

    Similar to what will occur under Rule 608(b)(1)(i) for proposed new
NMS plans, Rule 608(b)(1)(ii) will ensure for all proposed plan
amendments filed with the Commission that notice will be published in a
specified timeframe and that the time periods for Commission action
subsequent to notice publication will be triggered. However, the
noticing deadline and default notice publication date in paragraph
(b)(1)(ii) differ from paragraph (b)(1)(i) by more closely following
the requirements set forth in Section 19(b) for SRO rule filings.
Specifically, under Rule 608(b)(1)(ii), the Commission must send the
notice of the filing of a proposed NMS plan amendment to the Federal
Register within 15 days of the business day on which such proposed
amendment was posted on a plan website or a website designated by plan
participants after being filed with the Commission. If the Commission
fails to send the notice to the Federal Register within such 15-day
period, then the date of publication shall be deemed to be the business
day on which the plan participants posted notice of the proposed plan
amendment on a plan website or a website designated by plan
participants. These notice publication procedures in Rule 608(b)(1)(ii)
apply to all proposed plan amendments, including solely administrative,
technical, or ministerial plan amendments that remain effective-upon-
filing under Rule 608(b)(3)(ii) and (iii).
    Unlike for proposed new NMS plans, the noticing deadline for
proposed NMS plan amendments in paragraph (b)(1)(ii) is measured from
the date of website posting. Paragraph (b)(1)(ii) also defaults the
notice publication date to the business day of such website posting if
the Commission does not send the notice of the filing of the proposed
plan amendment to the Federal Register within the deadline in paragraph
(b)(1)(ii). Since website posting of proposed plan amendments within
two business days of their filing is an existing requirement under Rule
608(a)(ii), these provisions impose no new burdens on plan participants
and are not likely to confuse other market participants already
familiar with the fact that plan participants post proposed plan
amendments on their websites prior to the amendments becoming
effective. Moreover, a similar framework exists, and has been workable,
in the SRO rule filing context: SROs are required to post rule filings
on their websites within two business days after their filing,\54\ such
website posting is a condition to triggering the 15-day noticing
deadline for SRO rule filings,\55\ and the notice publication date
defaults to the business day of website posting if the Commission does
not send notice of the SRO rule filing to the Federal Register within
the 15-day deadline.\56\ This framework was requested by
commenters,\57\ and would be workable and familiar to plan participants
and market participants in the context of proposed plan amendments; the
Commission believes that it is appropriate to adopt it in this context.
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    \54\ See Rule 19b-4(l). Such website posting typically occurs on
the same day as filing and SROs must inform the Commission if that
does not occur. Id. As discussed infra in Section II.B.1.d, the
Commission is amending Rule 608(a)(8)(ii) to add a similar
requirement that plan participants inform the Commission if website
posting of a proposed plan amendment does not occur on the same
business day as filing.
    \55\ See Section 19(b)(2)(E).
    \56\ Id.
    \57\ Operating Committees Letter at 6; Nasdaq Letter.
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    In addition, unlike in the context of proposed new NMS plans, the
Commission believes that a 15-day notice deadline is workable in the
context of proposed plan amendments because the process of publishing
notice of proposed plan amendments generally need not go beyond
reproducing materials provided by the plan

participants, similar to publishing notice of SRO rule filings. As
discussed above, the Commission believes that proposed amendments to
existing plans typically are more limited in substance than proposed
new plans and therefore typically do not require the Commission to add
statements to facilitate public comment.\58\ A 15-day noticing time
period would be substantially shorter than the current average and
median timeframes in which the Commission publishes notice of proposed
plan amendments.\59\ Commenters requested a 15-day time period, and the
Commission believes that it will be able to publish notice of proposed
plan amendments within the requested 15-day time period. The 15-day
noticing time period will provide market participants faster notice,
via the Federal Register, of a proposed plan amendment that has been
filed with the Commission, and will cause the ``clock'' to start on the
Commission's time to act more promptly after such filing.
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    \58\ The Commission could issue a supplemental request for
comment after publishing notice of the proposed plan amendment. In
addition, the Commission will have the ability to institute
proceedings on a proposed plan amendment under Rule 608(b) as
modified, which provides an opportunity for the Commission to seek
additional comment. See Rule 608(b)(2)(i).
    \59\ See infra Section IV.B.2, where the Commission estimates
that the average and median time it takes to publish notice in the
Federal Register of non-immediately effective proposed NMS plan
amendments are 65.5 days and 38 days, respectively.
---------------------------------------------------------------------------

    The Commission also is adopting new paragraphs (b)(1)(iii) and
(b)(1)(iv) under Rule 608. Paragraph (b)(1)(iii) is generally based on
Section 19(b)(10) for Commission review of SRO rule filings, and
provides that a proposed NMS plan or plan amendment that does not
comply with relevant filing requirements has not been filed with the
Commission for purposes of Rule 608(b)(1).\60\ Specifically, if the
Commission informs the plan participants within seven business days of
the business day of receipt by the Commission of a proposed NMS plan or
plan amendment that the plan or amendment does not comply with
paragraph (a) of Rule 608 or plan filing requirements in other sections
of Regulation NMS and 17 CFR 240, subpart A, the plan or amendment is
deemed not filed with the Commission.\61\ The seven-business-day
rejection period is extended to 21 days if the Commission informs the
plan participants that the proposed NMS plan or plan amendment is
unusually lengthy and is complex or raises novel regulatory issues. If
the filing is deemed not made due to such rejection, the time period
for the Commission to publish notice does not begin again until a new
proposed NMS plan or plan amendment is filed pursuant to paragraph (a)
and is not rejected.\62\ New paragraph (b)(1)(iv) under Rule 608
mirrors relevant portions of Rule 19b-4(b)(2) and (k), and defines
``business day'' and when a filing has been received by the Commission
or website posting has occurred on a given business day for purposes of
Rule 608.
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    \60\ See also 17 CFR 240.0-3(a) (``[t]he date on which papers
are actually received by the Commission shall be the date of filing
thereof if all of the requirements with respect to the filing have
been complied with . . . .'').
    \61\ Paragraph (a) of Rule 608 sets forth the information that
must accompany and be described in all proposed NMS plans or plan
amendments filed with the Commission. Paragraph (a)(7) of Rule 608
requires compliance with plan filing requirements contained in any
other section of Regulation NMS and 17 CFR 240, subpart A. For
example, proposed amendments to transaction reporting plans must
comply with Rule 601 of Regulation NMS, in addition to Rule 608(a).
    \62\ As discussed supra, the noticing time period for a proposed
NMS plan amendment that is filed with the Commission is measured
from the business day of website posting by the plan participants.
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b. Procedure for Commission Action Subsequent to Notice Publication
Under Rule 608(b)(2) as Amended
    A modified procedure for Commission action following publication of
notice of the filing of proposed NMS plans and plan amendments that are
not immediately effective is set forth in amendments to paragraph
(b)(2) of Rule 608.\63\ Under new paragraph (b)(2)(i) of Rule 608,
within 90 days of the date of notice publication, or within such longer
period as to which the plan participants consent, the Commission shall,
by order, approve or disapprove the proposed NMS plan or plan
amendment, or institute proceedings to determine whether the proposed
NMS plan or plan amendment should be disapproved. Such proceedings will
be conducted pursuant to 17 CFR 201.700 and 701,\64\ and shall include
notice of the grounds for disapproval under consideration and
opportunity for hearing and shall be concluded within 180 days of
notice publication. At the conclusion of such proceedings the
Commission shall, by order, approve or disapprove the proposed NMS plan
or plan amendment.\65\ The time for conclusion of such proceedings may
be extended for up to 60 days (thus allowing proceedings to conclude up
to 240 days from the date of notice publication) if the Commission
determines that a longer period is appropriate and publishes the
reasons for such determination or the plan participants consent to the
longer period. In addition, under new paragraph (b)(2)(ii) of Rule 608,
the time for conclusion of proceedings may be extended for an
additional period of up to 60 days beyond the 240-day period set forth
in paragraph (b)(2)(i) (thus allowing proceedings to conclude up to 300
days total from the date of notice publication) if the Commission
determines that a longer period is appropriate and publishes the
reasons for such determination or the plan participants consent to the
longer period.\66\
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    \63\ Solely administrative, technical, or ministerial plan
amendments remain effective-upon-filing under Rule 608(b)(ii) and
(iii) and are not subject to Rule 608(b)(2), as amended, unless they
are abrogated.
    \64\ As discussed infra in Section II.B.2, the Commission is
modifying Rules 700 and 701 to incorporate proposed NMS plans and
plan amendments into those rules.
    \65\ Though in a proceeding to determine whether to disapprove a
proposed NMS plan or plan amendment the Commission is required to
publish notice of its grounds for disapproval under consideration,
the Commission can ultimately either disapprove or approve the
proposed NMS plan or plan amendment following conclusion of the
proceedings. See Securities Exchange Act Release No. 63723 (Jan. 14,
2011), 76 FR 4066, 4067 n. 17 (Jan. 24, 2011).
    \66\ As discussed infra in Section II.B.3, the Division Director
will have delegated authority to extend the time for conclusion of
such proceedings from 180 days to a period not exceeding 240 days
from the date of publication of notice of the filing of a proposed
NMS plan or plan amendment, as set forth in paragraph (b)(2)(i) of
Rule 608. The Division Director will not have delegated authority to
further extend the time for conclusion of such proceedings for an
additional 60 days to a period not exceeding 300 days from the date
of publication of notice of the filing of a proposed NMS plan or
plan amendment, as set forth in paragraph (b)(2)(ii) of Rule 608.
---------------------------------------------------------------------------

    Paragraph (b)(2)(i) adopts certain elements from Section 19(b),
namely, requiring that the Commission approve or disapprove a proposed
new NMS plan or plan amendment, by order, within a specified timeframe,
and enabling the Commission to institute proceedings and to extend the
time for the conclusion of those proceedings. These are modifications
to the existing Rule 608(b) procedure. By requiring disapproval by
order if the Commission cannot make the finding necessary to approve,
which is currently not required by Rule 608(b), the amended rule will
provide more certainty regarding when final Commission action--whether
approval or disapproval--must occur. And by authorizing the institution
of proceedings, which currently is not provided for under Rule 608(b),
the amended rule gives the Commission a way to seek additional public
input that could help the Commission determine whether proposed NMS
plans and plan amendments should be approved or disapproved. In
addition, the 180-day

period from the date of notice publication for such proceedings, and
the availability of an extension of that period up to 240 days from the
date of notice publication, as requested by commenters, are the same as
what is set forth in Section 19(b) for SRO rule filings. The Commission
believes these time periods would be appropriate for proposed NMS plans
and plan amendments based on the Commission's experience with SRO rule
filings, where 180 days has generally provided a sufficient amount of
time to conclude proceedings and 240 days has been appropriate in more
complex cases.
    The 90-day time period for initial Commission action, and the
availability of the additional extension of the time to conclude
proceedings up to 300 days from the date of notice publication, are
different from what is set forth in Section 19(b). Commenters suggested
that, consistent with the Section 19(b) process for SRO rule filings,
initial Commission action with regard to NMS plan amendments occur
within 45 days of notice publication with the availability of a 45-day
extension (for a total of 90 days).\67\ In addition, under Section
19(b), the Commission cannot take longer than 240 days from the date of
notice publication to approve or disapprove a SRO rule filing.\68\ The
Commission, however, anticipates needing more than 45 days following
notice publication to act initially, and potentially needing more than
240 days following notice publication to act finally, on proposed new
NMS plans and plan amendments because they can be complex and have far-
reaching effects on a wide range of market participants, many of which
are not SRO members. Whereas a SRO rule filing applies to a single
SRO's rules, a proposed new NMS plan or plan amendment involves all
SROs that are plan participants and implicates the manner in which they
collectively act with regard to the national market system, in which
many non-SRO members, such as retail investors, participate.
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    \67\ Operating Committees Letter; Nasdaq Letter.
    \68\ See 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    The Commission believes that providing 90 days after notice
publication for initial Commission action (i.e., approval, disapproval,
or institution of proceedings) is more appropriate than the Section
19(b) approach as well as other potential timeframes for initial
Commission action, such as the pre-existing 120-day timeframe in Rule
608(b). The 90-day timeframe is the same timeframe that applies when
the initial 45-day deadline is extended by 45 days under the Section
19(b) approach requested by commenters, and it provides enhanced
efficiency and conservation of Commission resources by eliminating the
discretionary procedural step of extending a 45-day period to 90 days.
The Commission believes that, if it instead were to adopt timeframes
identical to those in Section 19(b), it would need to take such a
procedural step routinely for proposed NMS plans and plan amendments.
Nevertheless, the Commission believes that it typically would be
possible to take initial action on proposed NMS plans and plan
amendments following notice publication sooner than the 120-day
deadline currently set forth in Rule 608(b), and the Commission expects
that 90 days from notice publication typically will be an appropriate
amount of time for such action. By requiring initial Commission action
within 90 days instead of 120 days, the Commission believes that Rule
608(b)(2), as amended, will more effectively balance the Commission's
need to allocate sufficient time for it to consider and initially act
upon a proposed NMS plan or plan amendment with commenters' request for
a backstop for such action of 90 days from notice publication.
    The Commission likewise believes that allowing an additional
extension to the Commission's final deadline to approve or disapprove,
of up to 60 days, for a total of up to 300 days from the date of notice
publication, is an appropriate way to balance the Commission's
expectation that it will potentially need more time for its final
disposition of a proposed NMS plan or plan amendment than the
corresponding 240-day timeframe for SRO rule filings in Section 19(b)
with commenters' request that Section 19(b)'s 240-day timeframe be
incorporated into Rule 608(b). The Commission believes that up to 60
days is a reasonable amount for a potential extension for final
Commission action because it will provide the Commission with
flexibility when it needs more time to fully consider complex and
significant proposed NMS plans and plan amendments. In addition, while
the Commission's estimates are lower than 300 days for the average
length of time that currently passes from the date of notice
publication to Commission approval of a proposed plan or plan
amendment,\69\ the lack of a specified time period in current Rule
608(b) for publishing notice provided an opportunity for plan
participants to address issues in a proposed plan or plan amendment
before notice publication and thereby reduced the amount of time
subsequent to notice publication that the Commission needed to
determine whether to approve a proposed plan or amendment. The new
noticing deadlines under amended Rule 608(b)(1) may largely prevent
such an opportunity.
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    \69\ See infra Section IV.B.2, where the Commission estimates
that the average and median time it currently takes to approve
proposed NMS plan amendments that are not immediately effective are
62.0 days and 44.5 days, respectively, from the date of their
publication in the Federal Register, and the average and median time
it currently takes to approve proposed new NMS plans are 204.8 days
and 181 days, respectively, from the date of their publication in
the Federal Register. Notably, these figures are average and median
times that encompass all proposed new NMS plans and plan amendments
within a particular period. In determining the Rule 608 timeframes
by which Commission action is required, however, the Commission must
consider the time it will need to appropriately review the most
complex proposals that are likely to generate significant public
comment.
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    Moreover, while 300 days is a longer period from notice publication
than the 180-day period currently set forth in Rule 608(b), this
difference will be mitigated by the fact that, under the current rules,
there is no requirement that notice publication, and hence the start of
the 180-day ``clock,'' occur within a specified amount of time after a
proposed NMS plan or plan amendment is filed with the Commission, as
commenters pointed out.\70\ As a result, the time from filing (as
distinguished from notice publication) to final Commission action may
be unpredictable under the current rule, and might be significantly
longer than 180 days, depending on the date on which the Commission
publishes notice.\71\ This can occur because, in addition to not
specifying timeframes for the Commission to publish notice, Rule 608(b)
currently does not deem notice to be published in the absence of
Commission publication within a specified timeframe. This will change,
however, under Rule 608(b) as amended. In conjunction with the new
notice publication deadlines and default notice publication provisions
in amended Rule 608(b)(1), the outside deadline of up to 300 days from
notice publication for Commission approval or

disapproval may result in faster final Commission action as measured
from the time of filing than the current process in some cases,\72\ and
in all cases will provide a more transparent and definite timeframe for
final Commission action.
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    \70\ See Operating Committees Letter at 3-4; Nasdaq Letter at 1-
2.
    \71\ See infra Section IV.B.2, where the Commission estimates
that the average and median total time it currently takes to approve
proposed new NMS plans are 368.5 days and 338 days, respectively,
from the date they are filed with the Commission, and the average
and median total time it currently takes to approve proposed NMS
plan amendments that are not immediately effective are 127.6 days
and 86 days, respectively, from the date they are filed with the
Commission.
    \72\ Id.
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    The Commission does not believe that it would be appropriate to add
a provision to Rule 608 that would result in a proposed NMS plan or
plan amendment being deemed approved in the absence of affirmative
Commission action, particularly given that, contrary to SRO proposed
rule filings, Congress has not mandated such treatment of proposed NMS
plans or plan amendments. The Commission expects to approve or
disapprove, by order, all proposed NMS plans and plan amendments within
the new timeframes specified in amended Rule 608(b). As discussed
above, NMS plans and plan amendments are different from an individual
SRO rule filing because they implicate the manner in which SRO plan
participants collectively act with regard to matters concerning the
entire national market system whereas a SRO rule filing applies to a
single SRO's rules. Accordingly, the Commission is not adopting a
``deemed approved'' provision similar to that in Section 19(b).\73\
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    \73\ See Section 19(b)(2)(D).
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c. Filing of NMS Plans and Amendments Thereto Under Rule 608(a)(1) as
Amended
    Rule 608(a)(1) currently states that any two or more self-
regulatory organizations, acting jointly, may file a national market
system plan or may propose an amendment to an effective national market
system plan by submitting the text of the plan or amendment to the
Secretary of the Commission, together with a statement of the purpose
of such plan or amendment and, to the extent applicable, the documents
and information required by paragraphs (a)(4) and (5) of Rule 608. NMS
plan participants typically satisfied the Rule 608(a)(1) filing
requirement through paper submission to the Secretary of the
Commission.
    The Commission is amending Rule 608(a)(1) to replace the current
requirement that proposed NMS plans and plan amendments be filed with
the Secretary of the Commission with a new requirement that they be
filed with the Commission by email. Specifically, the amended rule
requires plan participants to file by email the text of the proposed
NMS plan or plan amendment and the other information required by Rule
608(a) directly to an email address used solely for the purpose of
filing plans and plan amendments that is monitored by Division staff
responsible for handling NMS plan filings. Only filings made by email
will satisfy the amended Rule 608(a) filing requirement; paper filings
will no longer be permitted. For purposes of satisfying the filing
requirement, all filings must be emailed to the Commission in a format
compatible with a commonly used word processing program. The required
email address will be provided on the Commission's website at
www.sec.gov. Requiring filing with the Commission by email will modify
the current filing process to promote more efficient filing by plan
participants, as well as the receipt and handling of filed materials by
Division staff. Email filing particularly will facilitate Division
staff's timely preparation of the notice of proposed plan amendments in
order to meet the 15-day noticing deadline.
d. Additional Aspects of Amended Rule 608
    The Commission is not modifying the finding set forth in Rule
608(b)(2) that the Commission must make to approve a new proposed NMS
plan or any proposed NMS plan amendment, including any NMS plan fee
amendment. To account for potential Commission disapproval of proposed
NMS plans or plan amendments, however, the Commission is modifying Rule
608(b)(2) to provide that the Commission shall disapprove a proposed
NMS plan or plan amendment if the Commission does not make the finding
that is required for approval, and that such disapproval shall be by
Commission order. This language is based on Exchange Act Section
19(b)(2)(C). The Commission also is modifying Rule 608(a)(8)(ii), which
addresses website posting of proposed NMS plan amendments, to account
for potential Commission rejection or disapproval of such amendments.
This modification to Rule 608(a)(8)(ii), along with the previously
existing provision relating to the withdrawal of a proposed NMS plan
amendment, means that a proposed plan amendment that is withdrawn,
rejected or disapproved must be removed from the plan website or
designated website.
    In addition, the Commission is amending Rule 608(a)(8)(ii) to
mirror Rule 19b-4(l) for SRO rule filings in requiring that plan
participants inform the Commission of the business day on which they
posted to the appropriate website a proposed plan amendment if such
website posting does not occur on the same business day as filing.\74\
Put another way, unless the Commission is informed otherwise by the
plan participants, the website posting is calculated as having occurred
on the same business day as filing for purposes of determining when the
15-day noticing time period expires.\75\
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    \74\ As noted supra in Section II.B.1.a, Rule 608(a)(8)(ii)
already requires that plan participants ensure that any proposed
plan amendments are posted on a plan website or a designated website
no later than two business days after their filing with the
Commission. Rule 19b-4(l) contains an identical requirement for SRO
rule filings.
    \75\ The Commission also is amending Rule 608(a)(8)(i) and
(a)(8)(ii) to replace the term ``website'' with ``website.''
---------------------------------------------------------------------------

    Further, the Commission is not removing from Rule 608(b)(2)
language that states that the Commission may approve a NMS plan or
proposed NMS plan amendment ``with such changes or subject to such
conditions as the Commission may deem necessary or appropriate.''
According to one commenter, this language should be removed because it
would contravene the Administrative Procedure Act (``APA'') \76\ for
the Commission to act consistent with this language without first
undertaking notice and comment rulemaking.\77\ The Commission does not,
however, believe that such Commission action pursuant to Rule 608(b)(2)
is inconsistent with the APA. First, this provision has been part of
Rule 608 since Rule 608 was first proposed in 1979 and adopted in 1981,
and was itself adopted pursuant to notice-and-comment rulemaking.\78\
Moreover, any amendments initiated by the Commission to an effective
NMS plan pursuant to Rule 608 are made through notice and comment
rulemaking.\79\ And the Commission's approval of a NMS plan amendment
initiated by plan participants with changes or conditions as specified
in Rule 608(b)(2) is subject to the procedural protections governing
the approval process. Among other things, the proposed NMS plan
amendment itself--along with any questions or issues that the
Commission may choose to raise in the notice of the proposal--is
subject to notice and comment.
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    \76\ 5 U.S.C. 551 et seq.
    \77\ Nasdaq Letter at 2-4.
    \78\ See Securities Exchange Act Release No. 16410 (Dec. 7,
1979), 44 FR 72606 (Dec. 14, 1979) (proposing Rule 11Aa3-2, the
predecessor to Rule 608); Rule 11Aa3-2 Adopting Release, supra note
41.
    \79\ Rule 608(a)(2) continues to provide that the Commission may
propose an amendment to any effective NMS plan, and Rule 608(b)(2)
continues to provide that promulgation of an amendment to a NMS plan
initiated by the Commission shall be by rule.

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2. Amendments to Rules of Practice 700 and 701
    Commission Rule of Practice 700 currently sets forth procedures for
conducting proceedings that are instituted for individual SRO proposed
rule changes pursuant to Section 19(b) and Rule 19b-4, and Rule of
Practice 701 addresses the issuance of a Commission order after
proceedings for individual SRO proposed rule changes have been
initiated.\80\ The Commission is adopting amendments to these rules to
set forth the procedures for conducting proceedings that have been
initiated for proposed NMS plans or plan amendments under new paragraph
(b)(2)(i) of Rule 608. The procedures that apply to proceedings for
individual SRO proposed rule changes under Rules 700 and 701 are not
being changed, although the organization of the Rules is changing.\81\
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    \80\ 17 CFR 201.700 and 701.
    \81\ Because existing Rule 701 explicitly references individual
SRO proposed rule changes, the Commission has amended Rule 701 to
add a new paragraph that replicates the language of the existing
rule except that the new paragraph applies to proposed NMS plans and
plan amendments.
---------------------------------------------------------------------------

    Where Rule 700 explicitly references individual SRO proposed rule
changes, the Commission has added references to proposed NMS plans or
plan amendments in those paragraphs or added new paragraphs that
replicate the existing substantive language to make them applicable to
proposed NMS plans or plan amendments. Specifically, the Commission has
amended Rule 700(b)(1) to state that, if the Commission initiates
proceedings to determine whether a proposed NMS plan or plan amendment
(which are collectively defined as a ``NMS plan filing'' for purpose of
Rule 700) should be disapproved, it shall provide notice to the NMS
plan participants, as well as other interested parties, by publication
in the Federal Register of the grounds for disapproval under
consideration. Similarly, the Commission has amended Rule
700(b)(1)(iii) to state that the Commission shall serve a copy of the
grounds for disapproval under consideration to the NMS plan
participants by serving notice to the contact person for the NMS plan.
    Likewise, the Commission has amended Rule 700(b)(2) to state that
the grounds for disapproval under consideration shall include a brief
statement of the matters of fact and law on which the Commission has
instituted proceedings, including areas in which the Commission may
have questions or may need to solicit additional information on the NMS
plan filing. The Commission also has amended Rule 700(b)(3) to add a
new paragraph (ii) stating that the burden to demonstrate that a NMS
plan filing is consistent with the Exchange Act and rules and
regulations thereunder is on the plan participants that filed the NMS
plan filing. This language does not create any new burden for NMS plan
participants, but rather sets forth the existing burden that applies to
NMS plan participants under Rule 608(a), which provides that two or
more SRO plan participants, acting jointly, may file a NMS plan or
propose an amendment to an effective NMS plan. The burden also is
substantively the same as that currently set forth in Rule 700(b)(3)
for a SRO in the context of a SRO's proposed rule change, which is
being relocated without substantive modifications to new paragraph (i)
of Rule 700(b)(3) as a result of the amendment to the rule to
incorporate NMS plan filings.
    The Commission also has amended the following provisions in Rule
700 in order to replicate for NMS plan filing proceedings the
procedures applicable to SRO proposed rule change proceedings: (i) Rule
700(c)(1), by referencing NMS plan filings in paragraph (c)(1) and
adding new paragraph (ii) regarding the conduct of hearings and
opportunity to submit written statements; (ii) Rule 700(c)(3), by
adding new paragraph (ii) regarding rebutting any comments received
during proceedings; (iii) Rule 700(c)(4), by adding new paragraph (ii)
regarding a failure to respond to any comment received; and (iv) Rule
700(d), by referencing NMS plan filings in paragraph (d)(1) regarding
the filing of papers with the Commission and paragraph (d)(2) regarding
the public availability of materials received, and by adding new
paragraph (d)(3)(ii) regarding the record before the Commission.\82\
---------------------------------------------------------------------------

    \82\ In connection with these amendments, where the Commission
added new paragraphs (ii) to incorporate NMS plan filings, the
Commission relocated without changes existing text regarding SRO
proposed rule changes to new paragraphs (i).
---------------------------------------------------------------------------

    Where paragraphs of Rule 700 do not explicitly reference individual
SRO proposed rule changes (such as paragraph (b)(2), among others), as
a result of other amendments being made to Rule 608(b)(2)(i),\83\ the
language in those paragraphs of Rule 700 applies to NMS plan filings as
well as individual SRO proposed rule changes without the need to add
explicit references to each type of proposal.\84\
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    \83\ Rule 608(b)(2)(i) states, among other things, that
proceedings to determine whether a NMS plan fee amendment should be
disapproved will be conducted pursuant to Rules 700 and 701.
    \84\ The Commission also is amending the title of Rule 700,
which currently references the initiation of proceedings for SRO
proposed rule changes, so that it also references proposed NMS plans
and plan amendments. Relatedly, the Commission is making a
conforming amendment to Rule 19b-4(g), which cross-references the
current title of Rule 700 in a parenthetical, to add proposed NMS
plans and plan amendments to the cross reference.
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3. Amendments to Delegations of Authority in Rule 30-3
    The Commission is revising the delegations of authority to the
Division Director in conjunction with the modifications that the
Commission is adopting to Rule 608.\85\ These revisions are intended to
conserve Commission resources and increase the effectiveness and
efficiency of the Commission's process for handling proposed NMS plans
and plan amendments. Congress has authorized such delegation by Public
Law 87-592, 76 Stat. 394, 15 U.S.C. 78d-1(a), which provides that the
Commission ``shall have the authority to delegate, by published order
or rule, any of its functions to . . . an employee or employee board,
including functions with respect to hearing, determining, ordering,
certifying, reporting, or otherwise acting as to any work, business or
matter.''
---------------------------------------------------------------------------

    \85\ 17 CFR 200.30-3.
---------------------------------------------------------------------------

    Accordingly, the Commission is amending its rules, by adding new
paragraph (a)(85) to Rule 30-3, to delegate authority to the Division
Director to perform certain procedural steps up to but not including
approval or disapproval. Under this delegation, the Division Director
(or, under his or her direction, such persons as might be designated
from time to time by the Chairman of the Commission) is authorized to
perform the following actions: (1) To publish notice of the filing of a
proposed amendment to an effective NMS plan; (2) to notify NMS plan
participants that a proposed NMS plan or plan amendment does not comply
with paragraph (a) of Rule 608 or plan filing requirements in other
sections of Regulation NMS and 17 CFR 240, subpart A, and to determine
that a proposed NMS plan or plan amendment is unusually lengthy and
complex or raises novel regulatory issues and to inform the NMS plan
participants of such determination; (3) to institute proceedings to
determine whether a proposed NMS plan or plan amendment should be
disapproved; (4) to provide the NMS plan participants notice of the
grounds for disapproval under consideration; and (5) to extend for a
period not exceeding 240 days from the date of publication of notice of
the filing

of a proposed NMS plan or plan amendment the period during which the
Commission must issue an order approving or disapproving the proposed
NMS plan or plan amendment and determine whether such longer period is
appropriate and publish the reasons for such determination.\86\ In
addition, new paragraph (a)(85) retains the delegations of authority to
the Division Director: (i) To summarily abrogate, pursuant to Rule
608(b)(3)(iii), a proposed NMS plan amendment put into effect upon
filing with the Commission (i.e., a solely administrative, technical or
ministerial plan amendment that remains effective-upon-filing under
Rule 608(b)(3)) and require that such amendment be refiled in
accordance with Rule 608(a)(1) and reviewed in accordance with Rule
608(b)(2); and (ii) pursuant to Rule 608(b)(4), to put a proposed plan
amendment into effect summarily upon publication of notice and on a
temporary basis not to exceed 120 days.\87\ Notwithstanding these
delegations, the Division Director may submit any matter he or she
believes appropriate to the Commission. Furthermore, any action taken
by the Division Director pursuant to delegated authority would be
subject to Commission review as provided by Rules 430 and 431 of the
Commission's Rules of Practice, 17 CFR 201.430-201.431 and 15 U.S.C.
78d-1(b).
---------------------------------------------------------------------------

    \86\ These delegations of authority to the Division Director do
not include the authority to publish notice of filing of a proposed
new NMS plan pursuant to paragraph (b)(1)(i) of Rule 608 or to
further extend the time for the conclusion of proceedings up to an
additional 60 days--for a period not exceeding 300 days from the
date of publication of notice of filing of a proposed NMS plan or
plan amendment--as set forth in paragraph (b)(2)(ii) of Rule 608.
Any publication of notice of a proposed new NMS plan pursuant to
paragraph (b)(1)(i) of Rule 608 and any extension of the time for
the conclusion of proceedings pursuant to paragraph (b)(2)(ii) of
Rule 608 must be done by the Commission itself and not by staff via
delegated authority.
    \87\ These are not new delegations of authority--they are
currently encompassed by paragraph (a)(29) of Rule 30-3. The
Commission is retaining these delegations of authority, and in light
of the deletion of paragraph (a)(29) as discussed infra, the
Commission has relocated them to and made them explicit in new
paragraph (a)(85).
---------------------------------------------------------------------------

    In addition, the Commission is rescinding the existing delegations
of authority to the Division Director to approve proposed NMS plan
amendments set forth in paragraphs (a)(27) and (29) of Rule 30-3 by
deleting and reserving those paragraphs.\88\ Further, the Commission is
deleting language from paragraph (a)(42) of Rule 30-3 that currently
provides delegated authority to the Division Director to extend to 180
days from the date of notice publication the Commission's time to
consider a proposed NMS plan or plan amendment, as this 180-day
extension has been replaced by the modified timeframes and extensions
set forth in Rule 608(b) as amended.\89\
---------------------------------------------------------------------------

    \88\ Paragraph (a)(27) of Rule 30-3 also currently contains a
delegation of authority to grant exemptions pursuant to Rule 601
that is now obsolete and being deleted.
    \89\ Paragraph (a)(42) of Rule 30-3 also currently delegates
authority to the Division Director to grant or deny exemptions from
Rule 608, and that delegation is being retained.
---------------------------------------------------------------------------

4. Administrative Matters Common to Amendments to Rules of Practice and
Delegations of Authority
    The Commission finds, in accordance with the APA,\90\ that the
amendments to Rules of Practice 700 and 701 and to the Commission's
delegations of authority in Rule 30-3 relate solely to agency
organization, procedures or practices. Accordingly, these rule
amendments are not subject to the provisions of the APA requiring
notice, opportunity for public comment, and publication. The Regulatory
Flexibility Act,\91\ therefore, does not apply. Similarly, because
these rules relate to ``agency organization, procedure or practice that
does not substantially affect the rights or obligations of non-agency
parties,'' analysis of major status under the Small Business Regulatory
Enforcement Fairness Act is not required.\92\ The rule amendments also
do not contain any new collection of information requirements as
defined by the Paperwork Reduction Act of 1995, as amended
(``PRA'').\93\ Rather, the amendments to Rules 700 and 701 govern
procedures for conducting proceedings that are instituted for a
proposed NMS plan or plan amendment, and the amendments to Rule 30-3
govern internal Commission procedures regarding whether Commission
staff has the authority to act on behalf of the Commission with respect
to proposed NMS plans and plan amendments. The required scope of
information that NMS plan participants must file is established in Rule
608(a), other sections of Regulation NMS, and 17 CFR 240, subpart A,
and it is not being amended. The rule amendments do not contain any
additional collection of information requirements beyond what is
already required.
---------------------------------------------------------------------------

    \90\ 5 U.S.C. 553(b)(3)(A).
    \91\ 5 U.S.C. 601 et seq.
    \92\ 5 U.S.C. 804(3)(C).
    \93\ 44 U.S.C. 3501 et seq.
---------------------------------------------------------------------------

III. Paperwork Reduction Act

    The Commission continues to believe that the rescission of the Fee
Exception would not impose any new, or revise any existing, collection
of information requirement as defined by the PRA.\94\ No commenter
addressed whether or not the rescission of the Fee Exception would
impose any new, or revise any existing, collection of information
requirement as defined by the PRA. Further, the Commission believes
that the amendments to Rule 608(a)(1) to require email filing for the
estimated 13 annual filings is a non-material change to the current PRA
estimate for Rule 608. Any future change in the estimated PRA burden
will be reflected in the next three-year update. Further, the modified
procedures for Commission action on proposed NMS plans and plan
amendments under Rule 608(b)(1) and (2) also do not impose any new, or
revise any existing, collection of information requirement as defined
by the PRA.\95\ Accordingly, the Commission is not submitting this
amendment to the Office of Management and Budget for review under the
PRA.\96\
---------------------------------------------------------------------------

    \94\ 44 U.S.C. 3501 et seq. See also Proposing Release, supra
note 1, at 54800.
    \95\ As stated supra in Section II.B.4, the required scope of
information that NMS plan participants must file is established in
Rule 608(a), other sections of Regulation NMS, and 17 CFR 240,
subpart A, and it is not being amended. The amendments to Rule
608(b) do not contain any additional collection of information
requirements beyond what is already required.
    \96\ 44 U.S.C. 3507(d) and 5 CFR 1320.11.
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IV. Economic Analysis

A. Introduction

    Section 3(f) of the Exchange Act requires the Commission, whenever
it engages in rulemaking and is required to consider or determine
whether an action is necessary or appropriate in the public interest,
to consider, in addition to the protection of investors, whether the
action would promote efficiency, competition, and capital
formation.\97\ In addition, Section 23(a)(2) of the Exchange Act
requires the Commission, when making rules under the Exchange Act, to
consider the impact such rules would have on competition.\98\ Exchange
Act Section 23(a)(2) prohibits the Commission from adopting any rule
that would impose a burden on competition not necessary or appropriate
in furtherance of the purposes of the Exchange Act. The discussion
below addresses the likely economic effects of the rule, including the
likely effects of the rule on efficiency, competition, and capital
formation.
---------------------------------------------------------------------------

    \97\ 15 U.S.C. 78c(f).
    \98\ 15 U.S.C. 78w(a)(2).
---------------------------------------------------------------------------

    As discussed above, the Commission is adopting amendments that
rescind the Fee Exception and subjects NMS

plan fee amendments to the standard procedure of Rule 608(b)(1) and
(2), which requires public notice, an opportunity for public comment,
and Commission action by order before a NMS plan fee amendment can
become effective.\99\ The Commission is also amending Rule 608(a)(1) to
require that proposed new NMS plans and plan amendments be filed with
the Commission by email, instead of with the Office of the Secretary,
typically using a paper-based filing process.\100\ Additionally, the
amendments modify the procedures and timeframes set forth in Rule
608(b)(1) and (2) for Commission publication of notice and subsequent
Commission actions for proposed new NMS plans and proposed amendments
to existing NMS plans.
---------------------------------------------------------------------------

    \99\ See supra Section II.A and Section II.B.1.
    \100\ See supra Section II.B.1.c.
---------------------------------------------------------------------------

    As discussed below, the Commission believes rescinding the Fee
Exception will benefit market participants by eliminating a potential
disincentive for persons to provide comments on NMS plan fee
amendments, which could make additional information available that
could help the Commission evaluate whether a NMS plan fee amendment
complies with the Exchange Act. Even if rescinding the Fee Exception
does not improve the robustness of the comment process, the Commission
believes it will help protect market participants from having to pay
fees that the Commission may later determine do not comply with the
Exchange Act, since fees will not become effective unless approved by
the Commission. Additionally, the Commission believes rescinding the
Fee Exception will benefit SRO members and subscribers of SIP data by
providing them with earlier notice and more time to plan and prepare
before they are subject to a new or altered NMS plan fee. However, the
Commission also believes that rescinding the Fee Exception will impose
costs on SROs if the process delays the implementation of a NMS plan
fee increase because SROs will no longer receive the incremental
revenue they would have earned if NMS plan fee amendments were
immediately effective. Similarly, there may be costs on SRO members and
subscribers of SIP data if the process delays the implementation of a
NMS plan fee decrease because they would no longer benefit from the
incremental cost savings.
    Furthermore, the Commission believes that the modifications to the
procedures and timeframes for Commission publication of notice and
subsequent Commission actions for proposed new NMS plans and plan
amendments will increase the transparency and improve the efficiency of
the process for handling proposed new NMS plans and proposed amendments
to existing NMS plans by decreasing the time it takes for them to be
published in the Federal Register, as well as the average total time it
takes for the Commission to act on them relative to the date they are
initially filed.\101\ The Commission acknowledges that increasing the
maximum timeframe for the Commission to act after publication in the
Federal Register might have a negative impact on efficiency for some
proposed new NMS plans or plan amendments, but does not believe that
this effect will be significant.
---------------------------------------------------------------------------

    \101\ The Commission estimates that the average total amount of
time it takes the Commission to act on a proposed new NMS plan or
plan amendment, relative to the time it is initially filed, may
decrease. See infra note 203 and accompanying text. However, the
Commission acknowledges that the total time it takes for the
Commission to act on some individual proposed new NMS plans or plan
amendments may increase.
---------------------------------------------------------------------------

    The Commission is making changes to the economic analysis it made
in the Proposing Release.\102\ These changes address the Commission's
modifications to the procedures and timeframes for Commission
publication and action for proposed new NMS plans and proposed
amendments to existing NMS plans as well as comments related to the
Commission's economic analysis in the Proposing Release.\103\
---------------------------------------------------------------------------

    \102\ See Proposing Release, supra note 1, at 54800.
    \103\ See supra Section II.B.
---------------------------------------------------------------------------

    Wherever possible, the Commission has quantified the likely
economic effects of the amendments. However, most of the costs,
benefits, and other economic effects discussed are inherently difficult
to quantify. Therefore, much of our discussion is qualitative in
nature. Our inability to quantify certain costs, benefits, and effects
does not imply that such costs, benefits, or effects are less
significant.

B. Baseline

    The Commission has assessed the likely economic effects of the
amendments, including benefits, costs, and effects on efficiency,
competition, and capital formation, against a baseline that consists of
the existing regulatory process for NMS plan fee amendments in
practice, the existing procedure and timeframes for proposed new NMS
plans and plan amendments that are filed under Rule 608(b)(1) and (2)
and are not immediately effective upon filing, the regulatory
procedures and timeframes for SRO rule filings that are not immediately
effective under Section 19(b)(2) of the Exchange Act, the structure of
the market for core data and aggregated market data products, and the
structure of the market for trading services in NMS securities.
1. NMS Plan Fee Amendments
    There are currently a total of five NMS plans that either charge
fees or could charge fees and have filed NMS plan fee amendments under
the Fee Exception. These consist of the CAT Plan along with four NMS
plans that govern the collection and dissemination of core data: The
CTA Plan, the CQ Plan, the Nasdaq/UTP Plan, and the OPRA Plan.\104\
---------------------------------------------------------------------------

    \104\ See Proposing Release, supra note 1, at 54795-96. On May
6, 2020, the Commission issued an order directing the SROs to file a
new, single NMS plan with a new governance structure that would
govern the collection and dissemination of core data for NMS stocks
(``New Consolidated Data Plan''). See Securities Exchange Act
Release No. 88827 (May 6, 2020), 85 FR 28702 (May 13, 2020)
(``Governance Order''). This would replace the three existing NMS
plans that currently govern the collection and dissemination of core
data for NMS stocks: The CTA Plan, the CQ Plan, and the NASDAQ/UTP
Plan. The Governance Order states that the CTA Plan, the CQ Plan,
and the Nasdaq/UTP Plan will continue to be responsible for the
consolidation and dissemination of core data for NMS stocks and that
the fees for core data will continue to be governed by the
provisions of these plans, until the New Consolidated Data Plan is
ready to assume responsibility for the dissemination of core data
for NMS stocks and fees of the New Consolidated Data Plan have
become effective.

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

    The SROs approve all NMS plan fee amendments.\105\ This can create
potential conflicts of interest for the SROs, because their duties
administering NMS plans that either charge or could charge fees could
potentially come into conflict with other products the SROs sell or
costs they incur as part of their businesses.\106\ The exchange SROs
have a potential conflict of interest with respect to the
administration of the four NMS plans that set fees for core data
because they vote to set SIPs' fees and also own and control the
dissemination of all equity and option market data and also
individually set the prices of some of the proprietary data products
certain market participants may in some circumstances use as
substitutes for SIP data.\107\ Additionally, the SROs have potential
conflicts of interest with respect to allocating costs related to the
CAT Plan because both SRO participants and Industry Members are
responsible for paying fees related to the CAT Plan; however, the CAT
Operating Committee, whose voting participants are all SROs, decides
how these fees should be split.\108\
---------------------------------------------------------------------------

    \105\ See Proposing Release, supra note 1, at 54796.
    \106\ See Proposing Release, supra note 1, at 54798-99 and infra
Section IV.B.4. Some commenters agreed with this assessment. See
Better Markets Letter at 1, 3-4; Bloomberg Letter at 2; CII Letter
at 4; Clearpool Letter at 1; FIA Letter at 1-2; Fidelity Letter at
2, 3; Healthy Markets Letter at 1, 5; ICI Letter at 3; RBC Capital
Markets Letter at 2.
    \107\ See infra Section IV.B.4. Some commenters agreed that the
exchange SROs have a potential conflict of interest with respect to
the administration of the four NMS plans that set fees for core
data. See Better Markets Letter at 1, 3-4; Bloomberg Letter at 2;
Clearpool Letter at 1; Fidelity Letter at 3; Healthy Markets Letter
at 1.
    \108\ See Proposing Release, supra note 1, at 54796. Two
commenters agreed that the SROs have potential conflicts of interest
with respect to allocating costs related to the CAT Plan. See FIA
Letter at 1-2; Fidelity Letter at 3. One commenter stated that
Industry Members under the CAT Plan have no alternative but to pay
the required fees. See MFA Letter at 4.
---------------------------------------------------------------------------

    The Commission's notice and comment process is one of the only ways
market participants have to express their views on NMS plan fee
amendments.\109\ However, under the current process, market
participants do not have the opportunity to comment before NMS plan fee
amendments become effective.\110\
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    \109\ Industry members and other market participants also sit on
the Advisory Committees to NMS plans and can express their views
during Operating Committee meetings. However, they cannot vote on
NMS plan fee amendments. See Proposing Release, supra note 1, at
54796. Non-SRO members would serve as voting members on the
Operating Committee of the New Consolidated Data Plan. See supra
note 104. One commenter agreed that the comment process is one of
the only ways market participants have to express their views on NMS
plan fee amendments. See Clearpool Letter at 2.
    \110\ See Proposing Release, supra note 1, at 54798-99.
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    Because NMS plan fee amendments are effective upon filing, fees in
connection with a NMS plan can be charged immediately upon filing with
the Commission.\111\ In some cases, SRO members or subscribers to core
data plans may not be given adequate time to plan for a new or altered
fee before it is implemented.\112\ Some commenters agreed that market
participants may not receive adequate notice about NMS plan fee
increases before they are charged.\113\ Additionally, one commenter
argued that NMS plan fee amendments being effective upon filing can
lead to unclear rules that need clarification after the fact.\114\
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    \111\ SRO participants must post a proposed amendment to a NMS
plan on their website no later than two business days after the
filing of the proposed amendment with the Commission. See Rule
608(a)(8)(ii).
    \112\ The Commission estimates the average and median time it
takes NMS plans to begin charging new fees pursuant to NMS plan fee
amendments are 66.3 days and 62.5 days, respectively, after filing
with the Commission. See infra note 120 and accompanying text.
However, a few NMS plan fee amendments give significantly less
notice before beginning to charge new fees. See, e.g., Securities
Exchange Act Release Nos. 69157 (Mar. 18, 2013), 78 FR 17946 (Mar.
25, 2013) and 69361 (Apr. 10, 2013), 78 FR 22588 (Apr. 16, 2013).
Comments submitted in response to NMS plan fee amendments and in
connection with the Roundtable on Market Data and Market Access
(``Roundtable'') that was hosted by SEC staff in October 2018 stated
that in some instances market participants did not receive enough
notice regarding NMS plan fee changes. See, e.g., Letter from Peter
Moss, Managing Director, Trading, Financial and Risk, Thomson
Reuters (May 7, 2013) at 1-2, available at https://www.sec.gov/comments/s7-24-89/s72489-34.pdf (``Moss Letter'') (commenting on the
need to ``make necessary changes to billing systems and to notify
clients of the changes''); Letter from Kimberly Unger, Esq., CEO and
Executive Director, The Security Traders Association of New York,
Inc., New York, New York (Apr. 10, 2013) at 2, available at https://www.sec.gov/comments/sr-ctacq-2013-01/ctacq201301-2.pdf (``Unger
Letter''); Letter from Ira D. Hammerman, Senior Managing Director &
General Counsel, SIFMA (Mar. 28, 2013) at 6-7, available at https://www.sec.gov/comments/s7-24-89/s72489-31.pdf (``Hammerman Letter'')
(commenting on the need of ``professionals and their firms, as well
as market data vendors, to alter their systems and business
plans''); Letter from Marcy Pike, SVP, Enterprise Infrastructure,
Krista Ryan, VP, Associate General Counsel, Fidelity Investments
(Oct. 26, 2018) at 6, available at https://www.sec.gov/comments/4-729/4729-4566044-176136.pdf (``Fidelity Letter II'').
    \113\ See Bloomberg Letter at 3; Clearpool Letter at 2; Fidelity
Letter at 4; Healthy Markets Letter at 10; RBC Capital Markets
Letter at 4.
    \114\ See Bloomberg Letter at 7.
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    At any time within 60 days of the filing of a NMS plan fee
amendment, the Commission may summarily abrogate the amendment and
require that the amendment be re-filed pursuant to the standard
procedure of Rule 608(b)(1) and (2).\115\ However, because NMS plan fee
amendments are immediately effective-upon-filing, market participants
can be charged a new or altered fee before comments can be submitted
and before the Commission can evaluate whether to abrogate a NMS plan
fee amendment.\116\
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    \115\ See Proposing Release, supra note 1, at 54796.
    \116\ The input of commenters is an important part of the
Commission's review of NMS plan fee amendments, and the Commission
generally does not abrogate a NMS plan fee amendment prior to
reviewing the comments. See Proposing Release, supra note 1, at
54798.
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    Table 1 shows information on the number of NMS plan fee amendments
filed under Rule 608(b)(3)(i) since 2010 for each of the NMS plans that
either charge fees or could charge fees.\117\ Since 2010, the
Commission estimates an average of 3.8 NMS plan fee amendments have
been filed each year. The Commission estimates the average and median
time it takes the Commission to notice a NMS plan fee amendment on its
website are 57.0 days and 25.5 days, respectively, from the time it is
filed.\118\ The Commission estimates that the average and median time
it takes to publish notice of a NMS plan fee amendment in the Federal
Register are 62.9 days and 31.5 days, respectively.\119\ The Commission
estimates the average and median time it takes a NMS plan to begin
charging new fees pursuant to NMS plan fee

amendments are 66.3 days and 62.5 days, respectively, after filing with
the Commission.\120\ Table 1 also contains information on how many of
the NMS plan fee amendments were abrogated by the Commission or
withdrawn by the NMS plan after receiving comments from market
participants. For cases in which the Commission abrogates a NMS plan
fee amendment, the Commission estimates the average and median time the
NMS plan fee amendment is effective before the Commission abrogates the
NMS plan fee amendment are 57.7 days and 57 days, respectively.\121\ No
NMS plan fee amendments that have been abrogated by the Commission have
been refiled under the standard procedure.\122\ For cases in which a
NMS plan withdraws a NMS plan fee amendment, the Commission estimates
the average and median time that the NMS plan fee amendment is
effective before the NMS plan withdraws the filing are 47.3 days and
46.5 days, respectively.\123\ The Commission estimates the average and
median time it takes the Commission to notice the withdrawal of a NMS
plan fee amendment are 40.0 days and 34 days, respectively.\124\ When a
NMS plan refiles a withdrawn NMS plan fee amendment, it is refiled on
an immediately effective basis. The Commission estimates the average
and median time it takes a NMS plan to refile a withdrawn NMS plan fee
amendment are 143.3 days and 175 days, respectively, from the time the
initial NMS plan fee amendment was withdrawn.\125\
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    \117\ In the Proposing Release, the Commission stated that it
preliminarily believes that the median value was the most
appropriate measure to estimate times related to NMS plan fee
amendments because the average was not an informative estimate for
these measures since the sample size was small and contained extreme
outliers. See Proposing Release, supra note 1, at 54801, n. 71. Two
commenters stated that estimates based on median values may not be
fully reflective of the anticipated times to process a NMS plan
amendment under the Proposal because the estimate does not account
for the cases where the Commission's processing of certain
amendments had been significantly delayed. See Operating Committees
Letter at 4; Nasdaq Letter at 3. The Commission agrees that the
median value does not provide information on the times where the
Commission's processing of certain NMS plan fee amendments have been
significantly delayed. For completeness, the Commission is revising
its analysis to present estimates of both the average and median
times related to NMS plan fee amendments.
    \118\ Statistics on the number of days it takes the Commission
to notice a NMS plan fee amendment and the number of days it takes
the Commission to notice a withdrawn NMS plan fee amendment were
determined from NMS plan fee filing amendments to the CAT Plan, the
CTA Plan, the CQ Plan, the Nasdaq/UTP Plan, and the OPRA Plan filed
under Rule 608(b)(3)(i) between 2014 and 2019. The Commission chose
this five-year lookback time-period to calculate these measures
because it reflects a current snapshot of the timeframes under which
the Commission provides notices of NMS plan fee amendments and
withdrawn NMS plan fee amendments. NMS plan amendments are available
at https://www.sec.gov/rules/sro/nms.htm.
    \119\ See supra note 118.
    \120\ Statistics on the number of days it takes a NMS plan to
begin charging a new fee are based on dates determined from NMS plan
fee filing amendments to the CTA Plan, the CQ Plan, the Nasdaq/UTP
Plan, and the OPRA Plan filed under Rule 608(b)(3)(i) between 2010
and 2019. NMS plan fee amendments that contained policy changes and
did not alter or impose a fee or fee cap were not included in this
calculation. These statistics do not include NMS plan fee amendments
to the CAT Plan. NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \121\ Statistics on the number of days it takes the Commission
to abrogate a NMS plan fee filing were determined from NMS plan fee
filing amendments to the CAT Plan, the CTA Plan, the CQ Plan, the
Nasdaq/UTP Plan, and the OPRA Plan filed under Rule 608(b)(3)(i)
between 2010 and 2019. NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \122\ See Proposing Release, supra note 1, at 54796.
    \123\ Statistics on the number of days it takes a NMS plan to
withdraw a NMS plan fee amendment were determined from NMS plan fee
filing amendments to the CAT Plan, the CTA Plan, the CQ Plan, the
Nasdaq/UTP Plan, and the OPRA Plan filed under Rule 608(b)(3)(i)
between 2010 and 2019. Note these statistics do not include the
Twenty-fourth amendment to the CTA Plan and the Fifteenth amendment
to the CQ Plan. See Securities Exchange Act Release No. 84194 (Sept.
18, 2018), 83 FR 48356 (Sept. 24, 2018). These amendments withdraw
fee changes from the Twenty-second amendment to the CTA Plan and the
Thirteenth amendment to the CQ Plan, which was challenged by
Bloomberg and stayed by the Commission on July 31, 2018. See In the
Matter of the Application of Bloomberg L.P., Securities Exchange Act
Release No. 83755 at 3 (July 31, 2018), available at https://www.sec.gov/litigation/opinions/2018/34-83755.pdf (``Bloomberg
Order''). NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \124\ See supra note 118.
    \125\ Some refiled NMS plan fee amendments were modified but
remained substantially similar to the withdrawn fee changes. See,
e.g., Securities Exchange Act Release No. 82071 (Nov. 14, 2017), 82
FR 55130 (Nov. 20, 2017). Other refiled NMS plan fee amendments were
modified in response to comments. See, e.g., Securities Exchange Act
Release No. 70953 (Nov. 27, 2013), 78 FR 72932 (Dec. 4, 2013).

                                                             Table 1--Information on NMS Plan Fee Amendments Under Rule 608(b)(3)(i)
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                             Number filed                              Number abrogated                            Number withdrawn
                                                             -----------------------------------------------------------------------------------------------------------------------------------
                            Year                                          NASDAQ/                                     NASDAQ/                                     NASDAQ/
                                                                CTA/CQ      UTP        OPRA       CAT       CTA/CQ      UTP        OPRA       CAT       CTA/CQ      UTP        OPRA       CAT
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2010........................................................          2          0          1  .........          0          0          0  .........          0          0          0  .........
2011........................................................          0          2          4  .........          0          0          0  .........          0          0          0  .........
2012........................................................          0          0          2  .........          0          0          0  .........          0          0          0  .........
2013........................................................          3          3          1  .........          0          0          0  .........          2          2          0  .........
2014........................................................          2          1          2  .........          0          0          0  .........          0          0          0  .........
2015........................................................          0          0          0  .........          0          0          0  .........          0          0          0  .........
2016........................................................          0          0          5          0          0          0          0          0          0          0          0          0
2017........................................................          2          1          2          1          0          0          0          1          2          0          0          0
2018........................................................          1          2          0          1          1          1          0          0          0          0          0          1
2019........................................................          0          0          0          0          0          0          0          0          0          0          0          0
                                                             -----------------------------------------------------------------------------------------------------------------------------------
    Total...................................................         10          9         17          2          1          1          0          1          4          2          0          1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
This table shows the number of NMS plan fee amendments filed under Rule 608(b)(3)(i) of Regulation NMS, the number of NMS plan fee amendments that were abrogated by the Commission, and the
  number of NMS plan fee amendments that were withdrawn by the NMS plan each year from 2010-2019 for the following NMS plans: The CTA and CQ Plans, the NASDAQ/UTP Plan, the OPRA Plan, and the
  CAT Plan. NMS plan fee amendments to the CTA and CQ Plans are included in one category because fee changes to both NMS plans are included in the same filing. Source: This table was compiled
  from NMS plan rule filings available at https://www.sec.gov/rules/sro/nms.htm.

    Since 2010, the four NMS plans that govern core data have filed a
total of 36 NMS plan fee amendments under Rule 608(b)(3)(i). Two of
these filings were abrogated by the Commission and six were withdrawn
by the SRO participants.
    Since 2017, the CAT Plan has filed two NMS plan fee amendments
under Rule 608(b)(3)(i) to establish the allocation of funding for the
CAT. One of these fee filings was abrogated by the Commission and one
was withdrawn by the SRO participants.
2. Procedures and Timeframes for NMS Plans and NMS Plan Amendments
Filed Under Rule 608(b)(1) and (2)
    As discussed in detail above, the Commission has modified the
procedures and timeframes under Rule 608(b)(1) and (2) for Commission
actions on proposed new NMS plans and proposed amendments to existing
NMS plans.\126\ As a result of this change, the Commission has updated
its economic baseline to discuss and provide statistics on the
timeframes for Commission actions for proposed new NMS plans and plan
amendments that are not immediately effective upon filing and filed
under the existing procedures of Rule 608(b)(1) and (2).
---------------------------------------------------------------------------

    \126\ See supra Section II.B.1.
---------------------------------------------------------------------------

    SROs, as plan participants, file proposed new NMS plans and
proposed amendments to NMS plans, including NMS plan fee amendments,
with the Secretary of the Commission, typically using a paper-based
filing process.\127\ As discussed in detail in the Electronic 19b-4
Adopting Release, the Commission believes that paper-based filing
process can be less efficient and more costly than electronic
filing.\128\ For example, a paper-based filing requires

filers to devote time and incur costs related to printing, copying, and
mailing filed materials.
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    \127\ See supra Section II.B.1.c.
    \128\ See Securities Exchange Act Release No. 50486 (Oct. 4,
2004), 69 FR 60287, 60297 (Oct. 8, 2004) (File No. S7-18-04)
(``Electronic 19b-4 Adopting Release'').
---------------------------------------------------------------------------

    Rule 608(b)(1) requires the Commission to publish notice of the
filing of any NMS plan, or any proposed amendment to any effective NMS
plan, and provide interested persons an opportunity to submit written
comments.\129\ However, it does not specify a timeframe in which the
Commission is required to publish notice of the filing.\130\ The
Commission estimates that the average and median time it takes to
publish notice of proposed NMS plan amendments in the Federal Register
that are filed under Rule 608(b)(1) and are not immediately effective
are 65.5 days and 38 days, respectively.\131\ The Commission estimates
that the average and median time it takes to publish notice of proposed
new NMS plans in the Federal Register are 163.8 days and 76.5 days,
respectively. However, the Commission acknowledges that it can take
significantly longer to publish notice of some proposed new NMS plans
and plan amendments.\132\
---------------------------------------------------------------------------

    \129\ Rule 608(b)(1) also states that no NMS plan, or NMS plan
amendment, shall become effective unless approved by the Commission.
See Rule 608(b)(1). An exception currently exists under Rule
608(b)(3) for NMS plan fee amendments and other types of NMS plan
amendments that are immediately effective upon filing with the
Commission. See Proposing Release, supra note 1, at 54796.
    \130\ See supra Section II.B.1.
    \131\ Statistics on the number of days it takes to publish
notice of proposed new NMS plans and plan amendments in the Federal
Register that are not immediately effective and filed under Rule
608(b)(1) are based on proposed new NMS plans and proposed
amendments to effective NMS plans filed between 2010 and 2020. NMS
plans and NMS plan amendments are available at https://www.sec.gov/rules/sro/nms.htm.
    \132\ See, e.g., Securities Exchange Act Release Nos. 72820
(Aug. 12, 2014), 79 FR 48779 (Aug. 18, 2014) and 77123 (Feb. 11,
2016), 81 FR 8264 (Feb. 18, 2016), which took 301 days and 178,
respectively, to be published in the Federal Register.
---------------------------------------------------------------------------

    Rule 608(b)(2) specifies a 120 day timeframe from the date of
publication of notice in the Federal Register for the Commission to
approve a proposed new NMS plan or plan amendment.\133\ The Commission
may extend this timeframe an additional 60 days, up to 180 days from
the date of publication, if it finds such a longer review period to be
appropriate and publishes its reasons for so finding, or if the
sponsors of the proposal consent to a longer review period. The
Commission estimates that the average and median time it takes to
approve proposed NMS plan amendments that are not immediately effective
are 62.0 days and 44.5 days, respectively, from the date of their
publication in the Federal Register.\134\ The average and median time
it takes to approve proposed new NMS plans are 204.8 days and 181 days,
respectively, from the date of their publication in the Federal
Register.\135\ The Commission estimates that 95 percent of proposed NMS
plan amendments and 25 percent of proposed new NMS plans were approved
within 120 days of being published in the Federal Register. The
Commission estimates that the average and median total time it takes to