information it reasonably determines requires confidential
treatment. See Section IV.B.2, supra. The Commission does not
believe this amendment would change the hourly burden or external
cost imposed on Participants for management of the Central
Repository.
    \3244\ See id. at Section 4.3(a)(i).
    \3245\ See id. at Section 4.3(a)(v).
---------------------------------------------------------------------------

    Additionally, in managing the Central Repository, the Operating
Committee would have the responsibility and authority, as appropriate,
to: (1) Direct the LLC to enter into one or more agreements with the
Plan Processor obligating the Plan Processor to perform the functions
and duties contemplated by the Plan to be performed by the Plan
Processor, as well as such other functions and duties the Operating
Committee deems necessary or appropriate; \3246\ (2) appoint as an
Officer of the Company the individual who has direct management
responsibility for the Plan Processor's performance of its obligations
with respect to the CAT; \3247\ (3) approve policies, procedures, and
control structures related to the CAT System that are consistent with
Rule 613(e)(4), Appendix C and Appendix D of the CAT NMS Plan that have
been developed and will be implemented by the Plan Processor; \3248\
(4) approve any policy, procedure or standard (and any material
modification or amendment thereto) applicable primarily to the
performance of the Plan Processor's duties as the Plan Processor;
\3249\ (5) for both the CCO and CISO, render their annual performance
reviews and review and approve their compensation; \3250\ (6) review
the Plan Processor's performance under the Plan at least once each
year, or more often than once each year upon the request of two or more
Participants that are not Affiliated Participants; \3251\ (7) in
conjunction with the Plan Processor, approve and regularly review (and
update as necessary) SLAs governing the performance of the Central
Repository; \3252\ (8) maintain a Compliance Subcommittee for the
purpose of aiding the CCO as necessary; \3253\ and (9) designate by
resolution one or more Subcommittees it deems necessary or desirable in
furtherance of the management of the business and affairs of the
Company.\3254\
---------------------------------------------------------------------------

    \3246\ See id. at Section 6.1(a).
    \3247\ See id. at Section 4.6(b).
    \3248\ See id. at Section 6.1(c).
    \3249\ See id. at Section 6.1(e).
    \3250\ See id. at Section 6.2(a)(iv), (b)(iv).
    \3251\ See id. at Section 6.1(n).
    \3252\ See id. at Section 6.1(h).
    \3253\ See id. at Section 4.12(b).
    \3254\ See id. at Section 4.12(a).
---------------------------------------------------------------------------

    The CAT NMS Plan will also establish a Selection Committee
comprised of one Voting Senior Officer from each

Participant,\3255\ which is tasked with the review and evaluation of
Bids and the selection of the Initial Plan Processor.\3256\ The
Selection Committee would determine, by Majority Vote, whether
Shortlisted Bidders will have the opportunity to revise their
Bids.\3257\ The Selection Committee would review and evaluate all
Shortlisted Bids, including any permitted revisions submitted by
Shortlisted Bidders, and in doing so, may consult with the Advisory
Committee (or the DAG until the Advisory Committee is formed) and such
other Persons as the Selection Committee deems appropriate.\3258\ After
receipt of any permitted revisions, the Selection Committee would
select the Initial Plan Processor from the Shortlisted Bids in two
rounds of voting where each Participant has one vote via its Voting
Senior Officer in each round.\3259\ Following the selection of the
Initial Plan Processor, the Participants would file with the Commission
a statement identifying the Initial Plan Processor and including the
information required by Rule 608.\3260\
---------------------------------------------------------------------------

    \3255\ See id. at Section 5.1(a).
    \3256\ See id. at Section 5.1.
    \3257\ See id. at Section 5.2(d)(i).
    \3258\ See id. at Section 5.2(d)(ii).
    \3259\ See id. at Section 5.1(e).
    \3260\ See id. at Section 6.7(a)(i).
---------------------------------------------------------------------------

    For its initial and ongoing internal burden and cost estimates
associated with the management of the Central Repository, the
Commission is relying on estimates provided in the CAT NMS Plan for the
development of the CAT NMS Plan, which the Participants ``have accrued,
and will continue to accrue,'' \3261\ and have described in the CAT NMS
Plan as ``reasonably associated with creating, implementing, and
maintaining the CAT upon the Commission's adoption of the CAT NMS
Plan.'' \3262\
---------------------------------------------------------------------------

    \3261\ See id. at Appendix C, Section B.7(b)(iii).
    \3262\ See id.
---------------------------------------------------------------------------

    The Commission believes that the activities of the Operating
Committee and the Selection Committee overlap with those undertaken by
the Participants to develop the CAT NMS Plan. The CAT NMS Plan
describes the costs incurred by the Participants to develop the CAT NMS
Plan as including ``staff time contributed by each Participant to,
among other things, determine the technological requirements for the
Central Repository, develop the RFP, evaluate Bids received, design and
collect the data necessary to evaluate costs and other economic
impacts, meet with Industry Members to solicit feedback, and complete
the CAT NMS Plan submitted to the Commission for consideration.''
\3263\ For the building and management of the Central Repository, the
Selection Committee and the Operating Committee would have comparable
responsibilities. The Selection Committee would be required to review
and evaluate all Shortlisted Bids, including any permitted revisions
submitted by Shortlisted Bidders, and then to select the Initial Plan
Processor from those Bids. As part of its overall management of the
Central Repository, the Operating Committee would have responsibility
for decisions associated with the technical requirements of the Central
Repository.\3264\ Furthermore, the Operating Committee would be
required to establish a Selection Committee to evaluate Bids received
to select a successor Plan Processor,\3265\ and would also be required
to authorize the selection of the members of the Advisory
Committee,\3266\ comprising members of the industry, to advise the
Participants on the implementation, operation, and administration of
the Central Repository.\3267\ Because the responsibilities of the
Operating Committee and the Selection Committee are similar to those
described in the CAT NMS Plan for the development of the CAT NMS Plan
itself, the Commission believes that it is reasonable to use the CAT
NMS Plan estimates as the basis for its burden and cost estimates for
the initial and ongoing management of the Central Repository.
---------------------------------------------------------------------------

    \3263\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii).
    \3264\ For example, the Operating Committee would be required to
authorize the following actions of the LLC: Entering into, modifying
or terminating any Material Contract (see id. at Section
4.3(b)(iv)); making any Material Systems Change (see id. at Section
4.3(b)(v)); amending the Technical Specifications on its own motion
(see id. at Section 4.3(b)(vii)); and approving the initial
Technical Specifications or any Material Amendment to the Technical
Specifications proposed by the Plan Processor (see id. at Section
4.3(b)(vi)). Further, the Operating Committee would be able to
approve policies, procedures, and control structures related to the
CAT System that are consistent with Rule 613(e)(4), Appendix C and
Appendix D of the CAT NMS Plan that have been developed and will be
implemented by the Plan Processor (see id. at Section 6.1(c)); and
in conjunction with the Plan Processor, approve and regularly review
(and update as necessary) SLAs governing the performance of the
Central Repository (see id. at Section 6.1(h)).
    \3265\ See id. at Section 4.3(b)(i).
    \3266\ See id. at Section 4.3(a)(ii).
    \3267\ See id. at Section 4.13(d).
---------------------------------------------------------------------------

(1) Initial Burden and Costs To Build the Central Repository
    Each Participant would contribute an employee and a substitute for
the employee to serve on the Operating Committee that would oversee the
Central Repository.\3268\ Additionally, each Participant would select a
Voting Senior Officer to represent the Participant as a member of the
Selection Committee responsible for the selection of the Plan Processor
of the Central Repository.\3269\
---------------------------------------------------------------------------

    \3268\ In the case of Affiliated Participants, one individual
may be the primary representative for all or some of the Affiliated
Participants, and another individual may be the substitute for all
or some of the Affiliated Participants. See id. at Section 4.2(a).
    \3269\ In the case of Affiliated Participants, one individual
may be (but is not required to be) the Voting Senior Officer for
more than one or all of the Affiliated Participants. Where one
individual serves as the Voting Senior Officer for more than one
Affiliated Participant, such individual will have the right to vote
on behalf of each such Affiliated Participant. See id. at Section
5.1(a).
---------------------------------------------------------------------------

A. Notice Estimates--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that, over
the 12-month period after the effectiveness of the CAT NMS Plan within
which the Participants would be required to select an Initial Plan
Processor \3270\ and begin reporting to the Central Repository,\3271\
each Participant would incur an initial internal burden of 720 burden
hours associated with the management of the creation of the Central
Repository and the selection of the Plan Processor (including filing
with the Commission the statement identifying the Initial Plan
Processor and including the information required by Rule 608), for an
aggregate initial estimate of 14,407 burden hours.\3272\
---------------------------------------------------------------------------

    \3270\ Rule 613(a)(3)(i) requires the selection of the Plan
Processor within 2 months after effectiveness of the CAT NMS Plan.
See 17 CFR 242.613(a)(3)(i).
    \3271\ Rule 613(a)(3)(iii) requires the Participants to provide
to the Central Repository the data required by Rule 613(c) within
one year after effectiveness of the CAT NMS Plan. See 17 CFR
242.613(a)(3)(iii).
    \3272\ The Commission based this estimate on the internal burden
estimate provided in the CAT NMS Plan related to the development of
the CAT NMS Plan. See CAT NMS Plan, supra note 5, at Appendix C,
Section B.7(b)(iii) (stating ``. . . the Participants have accrued,
and will continue to accrue, direct costs associated with the
development of the CAT NMS Plan. These costs include staff time
contributed by each Participant to, among other things, determine
the technological requirements for the Central Repository, develop
the RFP, evaluate Bids received, design and collect the data
necessary to evaluate costs and other economic impacts, meet with
Industry Members to solicit feedback, and complete the CAT NMS Plan
submitted to the Commission for consideration. The Participants
estimated that they have collectively contributed 20 FTEs in the
first 30 months of the CAT NMS Plan development process''). The
Commission believed the staff time incurred for the development of
the CAT NMS Plan would be comparable to the staff time incurred for
the activities required of the Operating Committee and the Selection
Committee for the creation and management of the Central Repository
once the Plan is effective. (20 FTEs/30 months) = 0.667 FTEs per
month for all of the Participants to develop the CAT NMS Plan.
Converting this into burden hours, (0.667 FTEs) x (12 months) x
(1,800 burden hours per year) = 14,407 initial burden hours for all
of the Participants to develop the CAT NMS Plan. (14,407 burden
hours for all Participants/20 Participants) = 720 initial burden
hours for each Participant to develop the CAT NMS Plan.

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

    Additionally, the Commission preliminarily estimated that the
Participants would collectively spend $2,400,000 on external public
relations, legal and consulting costs associated with building the
Central Repository and the selection of the Plan Processor for the
Central Repository, or $120,000 per Participant.\3273\ The Commission
based this estimate on the estimate provided in the CAT NMS Plan for
public relations, legal and consulting costs incurred in preparation of
the CAT NMS Plan. Because the Participants described such costs as
``reasonably associated with creating, implementing and maintaining the
CAT,'' \3274\ the Commission preliminarily believed these external cost
estimates should also be applied to the creation and implementation of
the Central Repository.
---------------------------------------------------------------------------

    \3273\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii) (stating ``the Participants have incurred public
relations, legal and consulting costs in preparation of the CAT NMS
Plan. The Participants estimated the costs of these services to be
$8,800,000''). $2,400,000 for all Participants over 12 months =
($8,800,000/44 months between the adoption of Rule 613 and the
filing of the CAT NMS Plan) x (12 months). ($2,400,000/20
Participants) = $120,000 per Participant over 12 months.
    \3274\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii).
---------------------------------------------------------------------------

    Using the estimates in the CAT NMS Plan, which are based on the
Bids of the six Shortlisted Bidders,\3275\ the Commission preliminarily
estimated that the initial one-time cost to develop the Central
Repository would be an aggregate initial external cost to the
Participants of $91.6 million,\3276\ or $4.6 million per
Participant.\3277\ The Commission preliminarily estimated that each
Participant would incur initial one-time external costs of $7 million
\3278\ to build the Central Repository, or an aggregate initial one-
time external cost across all Participants of $140 million.\3279\ The
estimates in the CAT NMS Plan, as well as the Commission's preliminary
estimate includes internal technological, operational, administrative
and ``any other material costs.'' \3280\
---------------------------------------------------------------------------

    \3275\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(B). See also id. at Appendix C, Section B.7(b)(iv)(A)(1).
The Commission noted that the cost associated with the build and
maintenance of the Central Repository includes compliance with the
requirement in Rule 613(e)(8) that the Central Repository retain
information collected pursuant to Rule 613(c)(7) and (e)(7) in a
convenient and usable standard electronic data format that is
directly available and searchable electronically without any manual
intervention for a period of not less than five years. See id. at
Section 6.1(d)(i) (requiring the Plan Processor to comply with the
recordkeeping requirements of Rule 613(e)(8)). See also id. at
Appendix C, Section D.12(l) (stating that Rule 613(e)(8) requires
data to be available and searchable for a period of not less than
five years, that broker-dealers are currently required to retain
data for six years under Rule 17a-4(a), and that the Participants
are requiring CAT Data to be kept online in an easily accessible
format for regulators for six years, though this may increase the
cost to run the CAT). The Commission notes that changes in
technology between the time the Bids were submitted and the time the
Central Repository is built could result in changes to the costs to
build and operate the Central Repository.
    \3276\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(B) (describing the minimum, median, mean and maximum
Bidder estimates for the build and maintenance costs of the Central
Repository).
    \3277\ Id. The Bidders provided a range of estimates. For
purposes of this Paperwork Burden Act analysis, the Commission used
the build cost of the maximum Bidder estimate. $4,580,000 =
$91,600,000/20 SROs.
    \3278\ $7 million for each Participant to build the Central
Repository = ($4.6 million per Participant in initial one-time costs
to compensate the Plan Processor to build the Central Repository) +
($2.4 million per Participant in initial one-time public relations,
legal and consulting costs associated with the building of the
Central Repository and the selection of the Initial Plan Processor).
    \3279\ $140 million for all of the Participants to build the
Central Repository = $7 million per Participant to build the Central
Repository) x (20 Participants). Id.
    \3280\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(B).
---------------------------------------------------------------------------

B. Order Estimates--Initial Burden and Costs
    Subsequent to the publication of the Notice, the Participants
submitted revised Central Repository cost estimates to reflect the
proposed development and maintenance costs of the final three
Shortlisted Bidders.\3281\ In addition, with the registration of IEX as
a national securities exchange in June 2016,\3282\ the expected number
of Participants has increased from 20 to 21. As a result, the
Commission is modifying its estimates of the initial burden and costs
of the Central Repository.
---------------------------------------------------------------------------

    \3281\ See Response Letter III at 14-15.
    \3282\ IEX became a registered national securities exchange on
June 17, 2016. See Securities Exchange Act Release No. 78101 (June
17, 2016), 81 FR 41142 (June 23, 2016).
---------------------------------------------------------------------------

    After incorporating the revisions to the Central Repository cost
estimates and the increase in the number of Participants, the
Commission now estimates that, over the 12-month period after the
effectiveness of the CAT NMS Plan within which the Participants would
be required to select an Initial Plan Processor \3283\ and begin
reporting to the Central Repository,\3284\ each Participant would incur
an initial internal burden of 686.05 burden hours associated with the
management of the creation of the Central Repository and the selection
of the Plan Processor (including filing with the Commission the
statement identifying the Initial Plan Processor and including the
information required by Rule 608), for an aggregate initial estimate of
14,407 burden hours.\3285\
---------------------------------------------------------------------------

    \3283\ Rule 613(a)(3)(i) requires the selection of the Plan
Processor within 2 months after effectiveness of the CAT NMS Plan.
See 17 CFR 242.613(a)(3)(i).
    \3284\ Rule 613(a)(3)(iii) requires the Participants to provide
to the Central Repository the data required by Rule 613(c) within
one year after effectiveness of the CAT NMS Plan. See 17 CFR
242.613(a)(3)(iii).
    \3285\ The Commission based this estimate on the internal burden
estimate provided in the CAT NMS Plan related to the development of
the CAT NMS Plan. See CAT NMS Plan, supra note 5, at Appendix C,
Section B.7(b)(iii) (stating ``. . . the Participants have accrued,
and will continue to accrue, direct costs associated with the
development of the CAT NMS Plan. These costs include staff time
contributed by each Participant to, among other things, determine
the technological requirements for the Central Repository, develop
the RFP, evaluate Bids received, design and collect the data
necessary to evaluate costs and other economic impacts, meet with
Industry Members to solicit feedback, and complete the CAT NMS Plan
submitted to the Commission for consideration. The Participants
estimated that they have collectively contributed 20 FTEs in the
first 30 months of the CAT NMS Plan development process''). The
Commission believed the staff time incurred for the development of
the CAT NMS Plan would be comparable to the staff time incurred for
the activities required of the Operating Committee and the Selection
Committee for the creation and management of the Central Repository
once the Plan is effective). (20 FTEs/30 months) = 0.667 FTEs per
month for all of the Participants to develop the CAT NMS Plan.
Converting this into burden hours, (0.667 FTEs) x (12 months) x
(1,800 burden hours per year) = 14,407 initial burden hours for all
of the Participants to develop the CAT NMS Plan. (14,407 burden
hours for all Participants/21 Participants) = 686.05 initial burden
hours for each Participant associated with the management of the
creation of the Central Repository and the selection of the Plan
Processor.
---------------------------------------------------------------------------

    The Commission has not changed its estimate that the Participants
will collectively spend $2,400,000 on external public relations, legal
and consulting costs associated with the building of the Central
Repository. However, the individual Participant cost estimate has
decreased from $120,000 per Participant (as the Commission
preliminarily estimated in the Notice \3286\) to $114,285.71 per
Participant, due to the increase in the number of Participants.\3287\
As noted in

the Notice, the Commission is basing this estimate on the estimate
provided in the CAT NMS Plan for public relations, legal and consulting
costs incurred in preparation of the CAT NMS Plan. Because the
Participants described such costs as ``reasonably associated with
creating, implementing and maintaining the CAT,'' \3288\ the Commission
believes these external cost estimates should also be applied to the
creation and implementation of the Central Repository.
---------------------------------------------------------------------------

    \3286\ See Notice, supra note 5, at Section V.D.l.a(1).
    \3287\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii) (stating ``the Participants have incurred public
relations, legal and consulting costs in preparation of the CAT NMS
Plan. The Participants estimate the costs of these services to be
$8,800,000''). $2,400,000 for all Participants over 12 months =
($8,800,000/44 months between the adoption of Rule 613 and the
filing of the CAT NMS Plan) x (12 months). ($2,400,000/21
Participants) = $114,285.71 per Participant over 12 months.
    \3288\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii).
---------------------------------------------------------------------------

    As noted above, the Participants updated the Central Repository
estimates to reflect the estimates of the final three Shortlisted
Bidders.\3289\ Using the revised estimates, the Commission estimates
that the initial one-time cost to develop the Central Repository would
be an aggregate initial external cost to the Participants of $65
million,\3290\ or $3,095,238.09 per Participant.\3291\ Therefore, the
Commission now estimates that each Participant would incur initial one-
time external costs of $3,209,523.80 \3292\ to build the Central
Repository, or an aggregate initial one-time external cost across all
Participants of $67,399,999.80.\3293\
---------------------------------------------------------------------------

    \3289\ See Response Letter III at 14-15.
    \3290\ See id.
    \3291\ Id. The Participants provided a range of Bidder
estimates. For purposes of this Paperwork Burden Act analysis, the
Commission is using the build cost of the maximum estimate.
$3,095,238.09 = $65,000,000/21 Participants.
    \3292\ $3,209,523.80 for each Participant to build the Central
Repository = ($3,095,238.09 per Participant in initial one-time
costs to compensate the Plan Processor to build the Central
Repository) + ($114,285.71 per Participant in initial one-time
public relations, legal and consulting costs associated with the
building of the Central Repository and the selection of the Initial
Plan Processor).
    Commission staff notes that the Notice for the CAT NMS Plan
contained an erroneous estimate of the initial one-time external
costs to the Participants to build the Central Repository,
estimating that each Participant would incur a cost of $7 million.
The correct estimate was $4,476,190.47 per Participant. However, the
Commission has subsequently revised its estimated costs to account
for updated estimates provided by the Participants. See supra note
3289.
    \3293\ $67,399,999.80 for all of the Participants to build the
Central Repository = ($3,209,523.80 per Participant to build the
Central Repository) x (21 Participants).
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and Costs for the Central Repository
    After the Central Repository has been developed and implemented,
there would be ongoing costs for operating and maintaining the Central
Repository, including the cost of systems and connectivity upgrades or
changes necessary to receive and consolidate the reported order and
execution information from Participants and their members; the cost to
store data, and make it available to regulators, in a uniform
electronic format, and in a form in which all events pertaining to the
same originating order are linked together in a manner that ensures
timely and accurate retrieval of the information; the cost of
collecting and maintaining the NBBO and transaction data in a format
compatible with the order and event information collected pursuant to
the Rule; the cost of monitoring the required validation parameters,
which would allow the Central Repository to automatically check the
accuracy and completeness of the data submitted and reject data not
conforming to these parameters consistent with the requirements of the
Rule; and the cost of paying the CCO and CISO. The CAT NMS Plan
provides that the Plan Processor would be responsible for the ongoing
operations of the Central Repository.\3294\ The Operating Committee
would continue to be responsible for the management of the Central
Repository. In addition, the CAT NMS Plan states that the Participants
would incur costs for public relations, legal, and consulting costs
associated with maintaining the CAT upon approval of the CAT NMS
Plan.\3295\
---------------------------------------------------------------------------

    \3294\ See CAT NMS Plan, supra note 5, at Section 6.1.
    \3295\ See id. at Appendix C, Section B.7(b)(iii).
---------------------------------------------------------------------------

A. Notice Estimates--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily estimated that each
Participant would incur an ongoing annual internal burden of 720 burden
hours associated with the continued management of the Central
Repository, for an aggregate annual estimate of 14,407 burden hours
across the Participants.\3296\
---------------------------------------------------------------------------

    \3296\ The Commission based this estimate on the internal burden
estimate provided in the CAT NMS Plan for the development of the CAT
NMS Plan. The Commission noted that the CAT NMS Plan describes the
internal burden estimate for the development of the CAT NMS Plan as
a cost the Participants will continue to accrue; therefore, the
Commission preliminarily believed that it is reasonable to use this
burden estimate as the basis for its ongoing internal burden
estimate for the maintenance of the Central Repository, particularly
as the Commission believed the reasons for the staff time incurred
for the development of the CAT NMS Plan would be comparable to those
of the staff time to be incurred by the Operating Committee and the
Selection Committee for the continued management of the Central
Repository. See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii) (stating ``. . . the Participants have accrued, and will
continue to accrue, direct costs associated with the development of
the CAT NMS Plan. These costs include staff time contributed by each
Participant to, among other things, determine the technological
requirements for the Central Repository, develop the RFP, evaluate
Bids received, design and collect the data necessary to evaluate
costs and other economic impacts, meet with Industry Members to
solicit feedback, and complete the CAT NMS Plan submitted to the
Commission for consideration. The Participants estimate that they
have collectively contributed 20 FTEs in the first 30 months of the
CAT NMS Plan development process''). (20 FTEs/30 months) = 0.667
FTEs per month for all of the Participants to continue management of
the Central Repository. Converting this into burden hours, (0.667
FTEs) x (12 months) x (1,800 burden hours per year) = 14,407 ongoing
annual burden hours for all of the Participants to continue
management of the Central Repository. (14,407 ongoing annual burden
hours for all Participants/20 Participants) = 720 ongoing annual
burden hours for each Participant to continue management of the
Central Repository.
---------------------------------------------------------------------------

    Additionally, the Commission preliminarily estimated that the
Participants would collectively spend $800,000 annually on external
public relations, legal and consulting costs associated with the
continued management of the Central Repository, or $40,000 per
Participant.\3297\
---------------------------------------------------------------------------

    \3297\ The Commission based this external cost estimate on the
public relations, legal and consulting external cost estimate
provided in the CAT NMS Plan associated with the preparation of the
CAT NMS Plan (which the Participants consider ``reasonably
associated with creating, implementing, and maintaining the CAT upon
the Commission's adoption of the CAT NMS Plan''). See CAT NMS Plan,
supra note 5, at Appendix C, Section B.7(b)(iii) (stating ``the
Participants have incurred public relations, legal and consulting
costs in preparation of the CAT NMS Plan. The Participants estimated
the costs of these services to be $8,800,000''). $2,400,000 for all
Participants over 12 months = ($8,800,000/44 months between the
adoption of Rule 613 and the filing of the CAT NMS Plan) x (12
months). Because the Central Repository will have already been
created, the Commission believed it is reasonable to assume that the
Participants will have a lesser need for public relations, legal and
consulting services. The Commission estimated that the Participants
will incur one-third of the external cost associated with
development and implementation of the Central Repository to maintain
the Central Repository. $800,000 = (0.333) x ($2,400,000).
($800,000/20 Participants) = $40,000 per Participant over 12 months.
---------------------------------------------------------------------------

    The CAT NMS Plan includes the estimates the six Shortlisted Bidders
provided for the annual ongoing costs to the Participants to operate
the Central Repository.\3298\ The CAT NMS Plan did not categorize the
costs included in the ongoing costs, but the Commission believed they
would comprise external technological, operational and administrative
costs, as the Participants described the costs included in the initial
one-time external cost to build the Central Repository.\3299\ Using
these estimates, the Commission preliminarily

estimated that the annual ongoing cost to the Participants \3300\ to
compensate the Plan Processor for building, operating and maintaining
the Central Repository would be an aggregate ongoing external cost of
$93 million,\3301\ or approximately $4.7 million per Participant.\3302\
Therefore, the Commission preliminarily estimated that each Participant
would incur ongoing annual external costs of $4,740,000 \3303\ to
maintain the Central Repository, or aggregate ongoing annual external
costs across all Participants of $94,800,000.\3304\
---------------------------------------------------------------------------

    \3298\ See Section V.F.1.a, supra, for a discussion of the total
five-year operating costs for the Central Repository presented in
the CAT NMS Plan. See also CAT NMS Plan, supra note 5, at Appendix
C, Section B.7(b)(i)(B).
    \3299\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(B).
    \3300\ See supra note 3276.
    \3301\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(B).
    \3302\ The Bidders provided a range of estimates. For purposes
of this Paperwork Burden Act analysis, the Commission preliminarily
used the maximum operation and maintenance cost estimate. $4,650,000
= $93,000,000/20 Participants. See also Section V.F.1.a, supra. The
Commission noted several uncertainties that may affect the Central
Repository cost estimates, including (1) that the Participants have
not yet selected a Plan Processor and the Shortlisted Bidders have
submitted a wide range of cost estimates for building and operating
the Central Repository; (2) the Bids submitted by the Shortlisted
Bidders may not be final because they may be revised before the
final selection of the CAT Processor; and (3) neither the Bidders
nor the Commission can anticipate the evolution of technology and
market activity with precision, as improvements in available
technology may allow the Central Repository to be built and operated
at a lower cost than is currently anticipated, but if levels of
anticipated market activity are materially underestimated, the
capacity of the Central Repository may need to be increased,
resulting in an increase in costs.
    \3303\ $4,740,000 for each Participant to build the Central
Repository = ($4.7 million per Participant in ongoing annual costs
to build the Central Repository) + ($40,000 per Participant in
ongoing annual public relations, legal and consulting costs
associated with the maintenance of the Central Repository).
    \3304\ $94,800,000 for all of the Participants to maintain the
Central Repository = ($4,740,000 per Participant to compensate the
Plan Processor and for external public relations, legal and
consulting costs associated with the maintenance of the Central
Repository) x (20 Participants).
---------------------------------------------------------------------------

B. Comments/Responses on Ongoing Costs
    One commenter provided an alternate estimate for Central Repository
ongoing costs of $28 million-$36 million.\3305\ The commenter did not
provide additional information or analysis to support this estimate,
but the Commission notes that the commenter cited a study of the costs
of the Volcker Rule in support of estimates for costs to Industry
Members.\3306\ If the commenter is basing its estimates on the costs
expected from the Volcker Rule, the Commission notes that the
requirements of Rule 613 are significantly different than the
requirements of the Volcker Rule. The Commission also notes that the
estimates provided in the Notice are the result of a competitive
bidding process specific to the CAT and the Commission deems them
credible.
---------------------------------------------------------------------------

    \3305\ Data Boiler Letter at 15.
    \3306\ Data Boiler Letter at 15.
---------------------------------------------------------------------------

C. Order Estimates--Ongoing Burden and Costs
    As noted above, subsequent to the publication of the Notice, the
Participants submitted revised Central Repository cost estimates to
reflect the proposed development and maintenance costs of the final
three Shortlisted Bidders.\3307\ In addition, with the registration of
IEX as a national securities exchange in June 2016,\3308\ the expected
number of Participants has increased from 20 to 21. As a result, the
Commission is modifying its estimates of the ongoing burden and costs
of the Central Repository.
---------------------------------------------------------------------------

    \3307\ See Response Letter III at 14-15. The Commission
continues to believe that estimating Central Repository costs using
estimates from the Bids is reliable and is therefore updating its
cost estimates to reflect the updates provided by the Participants.
    \3308\ See supra note 3282.
---------------------------------------------------------------------------

    After incorporating the revisions to the Central Repository cost
estimates and the increase in the number of Participants, the
Commission now estimates that each Participant would incur an ongoing
annual internal burden of 686.05 burden hours associated with the
continued management of the Central Repository, for an aggregate annual
estimate of 14,407 burden hours across the Participants.\3309\
---------------------------------------------------------------------------

    \3309\ The Commission is basing this estimate on the internal
burden estimate provided in the CAT NMS Plan for the development of
the CAT NMS Plan. The Commission notes that the CAT NMS Plan
describes the internal burden estimate for the development of the
CAT NMS Plan as a cost the Participants will continue to accrue;
therefore, the Commission believes that it is reasonable to use this
burden estimate as the basis for its ongoing internal burden
estimate for the maintenance of the Central Repository, particularly
as the Commission believes the reasons for the staff time incurred
for the development of the CAT NMS Plan would be comparable to those
of the staff time to be incurred by the Operating Committee and the
Selection Committee for the continued management of the Central
Repository. See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii) (stating ``. . . the Participants have accrued, and will
continue to accrue, direct costs associated with the development of
the CAT NMS Plan. These costs include staff time contributed by each
Participant to, among other things, determine the technological
requirements for the Central Repository, develop the RFP, evaluate
Bids received, design and collect the data necessary to evaluate
costs and other economic impacts, meet with Industry Members to
solicit feedback, and complete the CAT NMS Plan submitted to the
Commission for consideration. The Participants estimate that they
have collectively contributed 20 FTEs in the first 30 months of the
CAT NMS Plan development process''). (20 FTEs/30 months) = 0.667
FTEs per month for all of the Participants to continue management of
the Central Repository. Converting this into burden hours, (0.667
FTEs) x (12 months) x (1,800 burden hours per year) = 14,407 ongoing
annual burden hours for all of the Participants to continue
management of the Central Repository. (14,407 ongoing annual burden
hours for all Participants/21 Participants) = 686.05 ongoing annual
burden hours for each Participant to continue management of the
Central Repository.
---------------------------------------------------------------------------

    The Commission has not changed its estimate that the Participants
would collectively spend $800,000 annually on external public
relations, legal and consulting costs associated with the continued
management of the Central Repository. However, the individual
Participant cost estimate has decreased from $40,000 per Participant
(as the Commission preliminarily estimated in the Notice \3310\) to
$38,095.24 per Participant \3311\ due to the increase in the number of
Participants.\3312\
---------------------------------------------------------------------------

    \3310\ See Notice, supra note 5, at Section V.D.l.a(1).
    \3311\ The Commission is basing this external cost estimate on
the public relations, legal and consulting external cost estimate
provided in the CAT NMS Plan associated with the preparation of the
CAT NMS Plan (which the Participants consider ``reasonably
associated with creating, implementing, and maintaining the CAT upon
the Commission's adoption of the CAT NMS Plan''). See CAT NMS Plan,
supra note 5, at Appendix C, Section B.7(b)(iii) (stating ``the
Participants have incurred public relations, legal and consulting
costs in preparation of the CAT NMS Plan. The Participants estimate
the costs of these services to be $8,800,000''). $2,400,000 for all
Participants over 12 months = ($8,800,000/44 months between the
adoption of Rule 613 and the filing of the CAT NMS Plan) x (12
months). Because the Central Repository will have already been
created, the Commission believes it is reasonable to assume that the
Participants will have a lesser need for public relations, legal and
consulting services. The Commission is estimating that the
Participants will incur one-third of the external cost associated
with development and implementation of the Central Repository to
maintain the Central Repository. $800,000 = (0.333) x ($2,400,000).
($800,000/21 Participants) = $38,095.24 per Participant over 12
months.
    \3312\ See supra note 3282.
---------------------------------------------------------------------------

    As noted above, the Participants updated the Central Repository
estimates to reflect the estimates of the final three Shortlisted
Bidders.\3313\ Using the revised estimates, the Commission now
estimates that the annual ongoing cost to the Participants to
compensate the Plan Processor for building, operating and maintaining
the Central Repository would be an aggregate ongoing external cost of
$55 million,\3314\ or $2,619,047.62 per Participant.\3315\ Therefore,
the

Commission estimates that each Participant would incur ongoing annual
external costs of $2,657,142.86 \3316\ to maintain the Central
Repository, or aggregate ongoing annual external costs across all
Participants of $55,800,000.06.\3317\
---------------------------------------------------------------------------

    \3313\ See Response Letter III at 14-15.
    \3314\ Id.
    \3315\ The Participants provided a range of Bidder estimates.
See id. For purposes of this Paperwork Burden Act analysis, the
Commission is using the maximum operation and maintenance cost
estimate. $2,619,047.62 = $55,000,000/21 Participants. The
Commission noted several uncertainties that may affect the Central
Repository cost estimates, including (1) that the Participants have
not yet selected a Plan Processor and the Shortlisted Bidders have
submitted a wide range of cost estimates for building and operating
the Central Repository; (2) the Bids submitted by the Shortlisted
Bidders may not be final because they may be revised before the
final selection of the CAT Processor; and (3) neither the Bidders
nor the Commission can anticipate the evolution of technology and
market activity with precision, as improvements in available
technology may allow the Central Repository to be built and operated
at a lower cost than is currently anticipated, but if levels of
anticipated market activity are materially underestimated, the
capacity of the Central Repository may need to be increased,
resulting in an increase in costs.
    \3316\ $2,657,142.86 for each Participant to maintain the
Central Repository = ($2,619,047.62 per Participant in ongoing
annual costs to maintain the Central Repository) + ($38,095.24 per
Participant in ongoing annual public relations, legal and consulting
costs associated with the maintenance of the Central Repository).
    \3317\ $55,800,000.06 for all of the Participants to maintain
the Central Repository = ($2,657,142.86 per Participant to
compensate the Plan Processor and for external public relations,
legal and consulting costs associated with the maintenance of the
Central Repository) x (21 Participants).
---------------------------------------------------------------------------

b. Data Collection and Reporting
    Rule 613(c)(1) requires the CAT NMS Plan to provide for an
accurate, time-sequenced record of orders beginning with the receipt or
origination of an order by a Participant, and further to document the
life of the order through the process of routing, modification,
cancellation and execution (in whole or in part) of the order. Rule
613(c) requires the CAT NMS Plan to impose requirements on Participants
to record and report CAT information to the Central Repository in
accordance with specified timelines.
    Rule 613(c) would require the collection and reporting of some
information that Participants already collect to operate their business
and are required to maintain in compliance with Section 17(a) of the
Exchange Act and Rule 17a-1 thereunder.\3318\ For instance, the
Commission believes that the national securities exchanges keep records
pursuant to Section 17(a) of the Exchange Act and Rule 17a-1 thereunder
in electronic form, of the receipt of all orders entered into their
systems, as well as records of the routing, modification, cancellation,
and execution of those orders. However, Rule 613 requires the
Participants to collect and report additional and more detailed
information, and to report the information to the Central Repository in
a uniform electronic format, or in a manner that would allow the
Central Repository to convert the data to a uniform electronic format
for consolidation and storage.
---------------------------------------------------------------------------

    \3318\ 15 U.S.C. 78q(a); 17 CFR 240.17a-1.
---------------------------------------------------------------------------

    For its estimates of the Participants' costs to report CAT Data,
the Commission is relying on the cost data provided by the Participants
in the CAT NMS Plan. The Commission believes that such reliance is
appropriate because the estimates in the CAT NMS Plan are based on
Participants' responses to the Participants Study undertaken to
estimate CAT-related costs for hardware and software, FTE costs, and
third-party providers, if the Commission approves the CAT NMS
Plan.\3319\ The Commission is providing below its paperwork burden
estimates for the initial burden hours and external costs, and ongoing,
annual burden hours and external costs to be incurred by the
Participants to comply with the data reporting requirements of Rule
613.\3320\
---------------------------------------------------------------------------

    \3319\ Third-party provider costs are generally legal and
consulting costs, but may include other outsourcing. The template
used by respondents is available at http://catnmsplan.com/PastEvents/ under the Section titled ``6/23/14'' at the ``Cost Study
Working Template'' link.
    \3320\ The Commission notes that throughout this Paperwork
Reduction Act analysis, it is categorizing the FTE cost estimates
for the Participants, as well as the broker-dealer respondents, that
were provided in the CAT NMS Plan as an internal burden. To convert
the FTE cost estimates into internal burden hours, the Commission:
(1) Divided the FTE cost estimates by a divisor of $424,350, which
is the Commission's estimated average salary for a full-time
equivalent employee in the securities industry in a job category
associated with regulatory data reporting; and then (2) multiplied
the quotient by 1,800 (the number of hours a full-time equivalent
employee is estimated to work per year). See CAT NMS Plan, supra
note 5, at Appendix C, Section B.7(b)(ii)(C), n.192. The
Participants represented that the cost per FTE is $401,440. The
$401,440 figure used in the CAT NMS Plan was based on a Programmer
Analyst's salary ($193 per hour) from SIFMA's Management &
Professional Earnings in the Securities Industry 2008, multiplied by
40 hours per week, then multiplied by 52 weeks per year. The
Commission has updated this number to include recent salary data for
other job categories associated with regulatory data reporting in
the securities industry, using the hour and multiple methodology
used by the Commission in its paperwork burden analyses. The
Commission is using $424,350 as its annual cost per FTE for purposes
of its cost estimates. The $424,350 FTE cost = 25% Compliance
Manager + 75% Programmer Analyst (0.25) x ($283 per hour x 1,800
working hours per year) + (0.75) x ($220 per hour x 1,800 working
hours per year). The $283 per hour figure for a Compliance Manager
and the $220 per hour figure for a Programmer Analyst are from
SIFMA's Management & Professional Earnings in the Securities
Industry 2013, modified by the Commission to account for an 1,800-
hour work-year and multiplied by 5.35 to account for bonuses, firm
size, employee benefits and overhead.
---------------------------------------------------------------------------

(1) Initial Burden Hours and External Cost
    The CAT NMS Plan provides the following average costs that the
Participants would expect to incur to adopt the systems changes needed
to comply with the data reporting requirements of the CAT: $10,300,000
in aggregate FTE costs for internal operational, technical/development,
and compliance functions; $770,000 in aggregate third party legal and
consulting costs; and $17,900,000 in aggregate total costs.\3321\
---------------------------------------------------------------------------

    \3321\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(B)(2). Of the $17,900,000 in aggregate total costs,
$11,070,000 is identified (subtotal of FTE costs and outsourcing),
but the remaining $6,830,000 is not identified in the CAT NMS Plan.
The Commission believes that the $6,830,000 may be attributed to
hardware costs because the Participants have not provided any
hardware costs associated with data reporting elsewhere and the
Commission believes that the Participants will likely incur external
costs to purchase upgraded hardware to report data to the Central
Repository.
---------------------------------------------------------------------------

A. Notice Estimates--Initial Burden and Costs
    In the Notice, based on estimates provided in the CAT NMS Plan, the
Commission preliminarily estimated that the initial internal burden
hours to develop and implement the needed systems changes to capture
the required information and transmit it to the Central Repository in
compliance with the Rule for each Participant would be approximately
2,185 burden hours.\3322\ The Commission also preliminarily estimated
that each Participant would, on average, incur approximately $38,500 in
initial third party legal and consulting costs \3323\ for a total of
$380,000 in initial external costs.\3324\ Therefore, the Commission
preliminarily estimated that, for all Participants, the estimated
aggregate one-time burden would be 43,690 hours \3325\ and the
estimated aggregate

initial external cost would be $7,600,000.\3326\
---------------------------------------------------------------------------

    \3322\ ($10,300,000 anticipated initial FTE costs)/(20 SROs) =
$515,000 in anticipated initial FTE costs per Participant. ($515,000
in anticipated initial FTE costs per Participant)/($424,350 FTE
costs per Participant) = 1.214 anticipated FTEs per Participant for
the implementation of data reporting. (1.214 FTEs) x (1,800 working
hours per year) = 2,184.5 initial burden hours per Participant to
implement CAT Data reporting.
    \3323\ ($770,000 anticipated initial third party costs)/(20
Participants) = $38,500 in initial anticipated third party costs per
Participant.
    \3324\ To determine the total initial external cost per
Participant, the Commission subtracted the anticipated initial FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate initial costs to the Participants and divided the
remainder by 20 Participants. ($17,900,000 total aggregate initial
cost to Participants) - ($10,300,000 initial FTE cost to
Participants) = $7,600,000. ($7,600,000)/20 Participants = $380,000
in initial external costs per Participant. See CAT NMS Plan, supra
note 5, at Appendix C, Section B.7(b)(iii)(B)(1) for the
Participants' anticipated costs associated with the implementation
of regulatory reporting to the Central Repository.
    \3325\ 43,690 initial burden hours = (20 Participants) x
(2,184.5 initial burden hours).
    \3326\ $7,600,000 = ($380,000 in initial external costs) x (20
Participants).
---------------------------------------------------------------------------

B. Comments/Responses on Initial Costs
    One commenter believed that estimates of current data reporting
costs to Participants were ``grossly underestimated,'' \3327\ and
stated that the implementation cost estimate of $17.9 million for
Participants was ``not too far off,'' but felt the Participants'
estimated costs for legal and consulting services and additional
employees were not reliable.\3328\
---------------------------------------------------------------------------

    \3327\ Data Boiler Letter at 35.
    \3328\ Data Boiler Letter at 35.
---------------------------------------------------------------------------

    The Commission has considered the comment and continues to believe
that the Participant cost estimates presented in the Plan are credible
and is thus not changing its cost estimates of Participants' Data
Recording and Reporting in response to the commenter. All 19
Participants \3329\ responded to the Participants Study that served as
the basis of the estimates, and most Participants have experience
collecting audit trail data as well as expertise in the requirements of
the CAT and in their business practices. The commenter did not provide
an explanation for why the Participants were unable to reasonably
estimate their own current data reporting costs.
---------------------------------------------------------------------------

    \3329\ There were 19 Participants at the time the Participants
conducted the study.
---------------------------------------------------------------------------

C. Order Estimates--Initial Burden and Costs
    As noted earlier, subsequent to the publication of the Notice, the
expected number of Participants has increased from 20 to 21.\3330\ As a
result, the Commission is modifying its estimates of the initial burden
and costs of Participants' data collection and reporting. After
incorporating the increase in the number of Participants, the
Commission now estimates that the initial internal burden hours to
develop and implement the needed systems changes to capture the
required information and transmit it to the Central Repository in
compliance with the Rule for each Participant would be approximately
2,080.80 burden hours.\3331\ The Commission also now estimates that
each Participant would, on average, incur approximately $36,666.67 in
initial third party legal and consulting costs \3332\ for a total of
$361,904.76 in initial external costs.\3333\ Therefore, the Commission
now estimates that, for all Participants, the estimated aggregate one-
time burden would be 43,696.80 hours \3334\ and the estimated aggregate
initial external cost would be approximately $7,600,000.\3335\
---------------------------------------------------------------------------

    \3330\ See supra note 3282.
    \3331\ ($10,300,000 anticipated initial FTE costs)/(21
Participants) = $490,476.19 in anticipated initial FTE costs per
Participant. ($490,476.19 in anticipated initial FTE costs per
Participant)/($424,350 FTE costs per Participant) = 1.156
anticipated FTEs per Participant for the implementation of data
reporting. (1.156 FTEs) x (1,800 working hours per year) = 2,080.8
initial burden hours per Participant to implement CAT Data
reporting.
    \3332\ ($770,000 anticipated initial third party costs)/(21
Participants) = $36,666.67 in initial anticipated third party costs
per Participant.
    \3333\ To determine the total initial external cost per
Participant, the Commission subtracted the anticipated initial FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate initial costs to the Participants and divided the
remainder by 21 Participants. ($17,900,000 total aggregate initial
cost to Participants) - ($10,300,000 initial FTE cost to
Participants) = $7,600,000. ($7,600,000)/21 Participants =
$361,904.76 in initial external costs per Participant. See CAT NMS
Plan, supra note 5, at Appendix C, Section B.7(b)(iii)(B)(1) for the
Participants' anticipated costs associated with the implementation
of regulatory reporting to the Central Repository.
    \3334\ 43,696.80 initial burden hours = (21 Participants) x
(2,080.80 initial burden hours).
    \3335\ $7,599,999.96 = ($361,904.76 in initial external costs) x
(21 Participants).
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and External Cost
    Once a Participant has established the appropriate systems and
processes required for collection and transmission of the required
information to the Central Repository, the Commission estimates that
Rule 613 would impose on each Participant ongoing annual burdens
associated with, among other things, personnel time to monitor each
Participant's reporting of the required data and the maintenance of the
systems to report the required data; and implementing changes to
trading systems that might result in additional reports to the Central
Repository. The CAT NMS Plan provides the following average aggregate
costs that the Participants would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $7,300,000 in
anticipated annual FTE costs for operational, technical/development,
and compliance functions related to data reporting; $720,000 in annual
third party legal, consulting, and other costs; \3336\ and $14,700,000
total annual costs.\3337\
---------------------------------------------------------------------------

    \3336\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(B)(2). The CAT NMS Plan did not identify the other
costs.
    \3337\ Of the $14,700,000 in aggregate total annual costs,
$8,020,000 is identified (subtotal of FTE costs and outsourcing),
but the remaining $6,680,000 is not identified in the CAT NMS Plan.
The Commission believes that this amount may be attributed to
hardware costs because the Participants have not provided any
hardware costs associated with data reporting elsewhere and the
Commission believes that the Participants will likely incur costs to
upgrade their hardware to report data to the Central Repository.
---------------------------------------------------------------------------

A. Notice Estimates--Ongoing Burden and Costs
    In the Notice, based on estimates provided in the CAT NMS Plan, the
Commission believed that it would take each Participant 1,548 ongoing
burden hours per year \3338\ to continue compliance with Rule 613. The
Commission preliminarily estimated that it would cost, on average,
approximately $36,000 in ongoing third party legal and consulting and
other costs \3339\ and $370,000 in total ongoing external costs per
Participant.\3340\ Therefore, the Commission preliminarily estimated
that the estimated aggregate ongoing burden for all Participants would
be approximately 30,966 hours \3341\ and an estimated aggregate ongoing
external cost of $7,400,000.\3342\
---------------------------------------------------------------------------

    \3338\ ($7,300,000 in anticipated Participant annual FTE costs)/
(20 Participants) = $365,000 in anticipated per Participant annual
FTE costs. ($365,000 in anticipated per Participant FTE costs)/
($424,350 FTE cost per Participant) = 0.86 anticipated FTEs per
Participant. (0.86 FTEs) x (1,800 working hours per year) = 1,548.3
burden hours per Participant to maintain CAT Data reporting.
    \3339\ ($720,000 in annual third party costs)/(20 Participants)
= $36,000 per Participant in anticipated annual third party costs.
    \3340\ To determine the total external annual cost per
Participant, the Commission subtracted the anticipated annual FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate annual costs to the Participants and divided the
remainder by 20 Participants. ($14,700,000 total aggregate annual
cost to Participants) - ($7,300,000 annual FTE cost to Participants)
= $7,400,000. ($7,400,000)/20 Participants = $370,000 in annual
external costs per Participant. See CAT NMS Plan, supra note 5, at
Appendix C, Section B.7(b)(iii)(B)(1) for the Participants'
anticipated maintenance costs associated with regulatory reporting
to the Central Repository.
    \3341\ 30,966 annual burden hours = (20 Participants) x (1,548.3
annual burden hours).
    \3342\ $7,400,000 = ($370,000 in total annual external costs) x
(20 Participants).
---------------------------------------------------------------------------

B. Comments/Responses on Ongoing Costs
    One commenter noted that the Participants' ongoing data reporting
cost estimates do not include a ``per-message toll charge in the CAT
funding model.'' \3343\ The Commission considered this comment, but
notes that the Participants are not charged for message traffic
according to the Plan's funding model.
---------------------------------------------------------------------------

    \3343\ Data Boiler Letter at 35.
---------------------------------------------------------------------------

    One commenter noted that the Participants' ongoing data reporting
cost estimates do not include a ``per-message toll charge in the CAT
funding model.'' \3344\ The Commission

considered this comment, but notes that the Participants are not
charged for message traffic according to the Plan's funding model.
---------------------------------------------------------------------------

    \3344\ Data Boiler Letter at 35.
---------------------------------------------------------------------------

C. Order Estimates--Ongoing Burden and Costs
    As noted earlier, subsequent to the publication of the Notice, the
expected number of Participants has increased from 20 to 21.\3345\ As a
result, the Commission is modifying its estimates of the ongoing burden
and costs of Participants' data reporting. After incorporating the
increase in the number of Participants, the Commission now estimates
that it would take each Participant 1,474.20 ongoing burden hours per
year \3346\ to continue compliance with Rule 613. The Commission now
estimates that it would cost, on average, approximately $34,285.71 in
ongoing third party legal and consulting and other costs \3347\ and
$352,380.95 in total ongoing external costs per Participant.\3348\
Therefore, the Commission now estimates that the estimated aggregate
ongoing burden for all Participants would be approximately 30,958.20
hours \3349\ and an estimated aggregate ongoing external cost of
approximately $7,400,000.\3350\
---------------------------------------------------------------------------

    \3345\ See supra note 3282.
    \3346\ ($7,300,000 in anticipated Participant annual FTE costs)/
(21 Participants) = $347,619.08 in anticipated per Participant
annual FTE costs. ($347,619.05 in anticipated per Participant FTE
costs)/($424,350 FTE cost per Participant) = 0.819 anticipated FTEs
per Participant. (0.819 FTEs) x (1,800 working hours per year) =
1,474.20 burden hours per Participant to maintain CAT Data
reporting.
    \3347\ ($720,000 in annual third party costs)/(21 Participants)
= $34,285.71 per Participant in anticipated annual third party
costs.
    \3348\ To determine the total external annual cost per
Participant, the Commission subtracted the anticipated annual FTE
cost estimates for the Participants as provided in the Plan from the
total aggregate annual costs to the Participants and divided the
remainder by 21 Participants. ($14,700,000 total aggregate annual
cost to Participants) - ($7,300,000 annual FTE cost to Participants)
= $7,400,000. ($7,400,000)/21 Participants = $352,380.95 in annual
external costs per Participant. See CAT NMS Plan, supra note 5, at
Appendix C, Section B.7(b)(iii)(B)(1) for the Participants'
anticipated maintenance costs associated with regulatory reporting
to the Central Repository.
    \3349\ 30,958.20 annual burden hours = (21 Participants) x
(1,474.20 annual burden hours).
    \3350\ $7,399,999.95 = ($352,380.95 in total annual external
costs) x (21 Participants).
---------------------------------------------------------------------------

c. Collection and Retention of NBBO, Last Sale Data and Transaction
Reports
    Rule 613(e)(7) provides that the CAT NMS Plan must require the
Central Repository to collect and retain on a current and continuous
basis NBBO information for each NMS security, transaction reports
reported pursuant to an effective transaction reporting plan, and Last
Sale Reports reported pursuant to the OPRA Plan.\3351\ Additionally,
the CAT NMS Plan must require the Central Repository to maintain this
data in a format compatible with the order and event information
consolidated and stored pursuant to Rule 613(c)(7).\3352\ Further, the
CAT NMS Plan must require the Central Repository to retain the
information collected pursuant to paragraphs (c)(7) and (e)(7) of Rule
613 for a period of not less than five years in a convenient and usable
uniform electronic format that is directly available and searchable
electronically without any manual intervention.\3353\ The Commission
notes that the CAT NMS Plan includes these data as ``SIP Data'' to be
collected by the Central Repository.\3354\ As it concluded in the
Notice Paperwork Reduction Act analysis,\3355\ the Commission believes
the burden associated with SIP Data is included in the burden to the
Participants associated with the implementation and maintenance of the
Central Repository.
---------------------------------------------------------------------------

    \3351\ See 17 CFR 242.613(e)(7).
    \3352\ Id.
    \3353\ See 17 CFR 242.613(e)(8).
    \3354\ See CAT NMS Plan, supra note 5, at Section 6.5(a)(ii).
    \3355\ See Notice, supra note 5, at Section V.D.1.c.
---------------------------------------------------------------------------

d. Surveillance
    Rule 613(f) provides that the CAT NMS Plan must require that every
national securities exchange and national securities association
develop and implement a surveillance system, or enhance existing
surveillance systems, reasonably designed to make use of the
consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the
surveillance systems be implemented within fourteen months after
effectiveness of the CAT NMS Plan.
(1) Initial Burden Hours and External Cost
    The CAT NMS Plan states that the estimated total cost to the
Participants to implement surveillance programs within the Central
Repository is $23,200,000.\3356\ This amount includes legal,
consulting, and other costs of $560,000, as well as $17,500,000 in FTE
costs for operational, technical/development, and compliance staff to
be engaged in the creation of surveillance programs.\3357\
---------------------------------------------------------------------------

    \3356\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \3357\ Id. The Commission also notes that based upon the data
provided by the Participants, the source of the remaining $5,140,000
in initial costs to implement new or enhanced surveillance systems
is unspecified. The Commission believes that this amount may be
attributed to hardware costs because the Participants have not
provided any hardware costs associated with surveillance elsewhere
and the Commission believes that the Participants will likely incur
costs to implement new or enhanced surveillance systems reasonably
designed to make use of the consolidated audit trail data.
---------------------------------------------------------------------------

A. Notice Estimates--Initial Burden and Costs
    In the Notice, based on the estimates provided in the CAT NMS Plan,
the Commission preliminarily estimated that the initial internal burden
hours to implement new or enhanced surveillance systems reasonably
designed to make use of the consolidated audit trail data for each
Participant would be approximately 3,711.6 burden hours,\3358\ for an
aggregate initial burden hour amount of 74,232 burden hours.\3359\ The
Commission also preliminarily estimated that each Participant would, on
average, incur an initial external cost of approximately $28,000 \3360\
for outsourced legal, consulting and other costs in order to implement
new or enhanced surveillance systems, for a total of $285,000 in
initial external costs,\3361\ for an aggregate one-time initial
external cost of $5,700,000 to implement new or enhanced surveillance
systems.\3362\
---------------------------------------------------------------------------

    \3358\ ($17,500,000 in anticipated initial FTE costs)/(20
Participants) = $875,000 in anticipated FTE costs per Participant.
($875,000 in anticipated initial FTE costs per Participant)/
($424,350 FTE cost per Participant) = 2.06 anticipated initial FTEs
per Participant. (2.06 FTEs) x (1,800 working hours per year) =
3,711.6 initial burden hours per Participant to implement new or
enhanced surveillance systems.
    \3359\ (3,711.6 initial burden hours per Participant to
implement new or enhanced surveillance systems) x (20 Participants)
= 74,232 aggregate initial burden hours.
    \3360\ $28,000 = $560,000/20 Participants.
    \3361\ $285,000 = ($23,200,000 in total initial surveillance
costs -$17,500,000 in FTE costs)/(20 Participants).
    \3362\ $5,700,000 = $285,000 x 20 Participants.
---------------------------------------------------------------------------

B. Comments/Responses on Initial Burden and Costs
    One commenter implied that savings on surveillance were unlikely,
and stated that the lack of an analytical framework did not facilitate
the identification of suspicious activities.\3363\ Another commenter
noted that uncertainties in the manner in which regulators will access
data in the Central Repository create significant cost
uncertainties.\3364\ On the other hand, the commenter asserted that the
CAT could permit more efficient market surveillance activity by the
Participants, which would allow for cost savings.\3365\
---------------------------------------------------------------------------

    \3363\ Data Boiler Letter at 33.
    \3364\ SIFMA Letter at 33.
    \3365\ SIFMA Letter at 18.

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

    The Commission has considered these comments and continues to
believe that Participant cost estimates presented in the Plan are
credible. As noted above, all 19 Participants \3366\ responded to the
Participants Study, and most Participants have experience collecting
audit trail data as well as expertise in the requirements of CAT as
well as in their business practices. Regarding the comment about the
inclusion of an analytical framework in surveillance cost estimates in
the Plan, the Plan does incorporate an analytical framework; \3367\
therefore, the Commission believes that Participant cost estimates
already account for such a framework.
---------------------------------------------------------------------------

    \3366\ There were 19 Participants at the time the Participants
conducted the study.
    \3367\ See Section V.E.2.c(1), supra.
---------------------------------------------------------------------------

C. Order Estimates--Initial Burden and Costs
    As noted earlier, subsequent to the publication of the CAT NMS Plan
Notice, the expected number of Participants has increased from 20 to
21.\3368\ As a result, the Commission is modifying its estimates of the
initial burden and costs to implement new or enhanced surveillance
systems reasonably designed to make use of the consolidated audit trail
data. After incorporating the increase in the number of Participants,
the Commission now estimates that the initial internal burden hours to
implement new or enhanced surveillance systems for each Participant
would be approximately 3,535.20 burden hours,\3369\ for an aggregate
initial burden hour amount of 74,239.20 burden hours.\3370\ The
Commission also now estimates that each Participant would, on average,
incur an initial external cost of approximately $26,666.67 \3371\ for
outsourced legal, consulting and other costs in order to implement new
or enhanced surveillance systems, for a total of $271,428.57 in initial
external costs,\3372\ for an aggregate one-time initial external cost
of approximately $5,700,000 to implement new or enhanced surveillance
systems.\3373\
---------------------------------------------------------------------------

    \3368\ See supra note 3282.
    \3369\ ($17,500,000 in anticipated initial FTE costs)/(21
Participants) = $833,333.33 in anticipated FTE costs per
Participant. ($833,333.33 in anticipated initial FTE costs per
Participant)/($424,350 FTE cost per Participant) = 1.964 anticipated
initial FTEs per Participant. (1.964 FTEs) x (1,800 working hours
per year) = 3,535.20 initial burden hours per Participant to
implement new or enhanced surveillance systems.
    \3370\ (3,535.20 initial burden hours per Participant to
implement new or enhanced surveillance systems) x (21 Participants)
= 74,239.20 aggregate initial burden hours.
    \3371\ $26,666.67 = $560,000/21 Participants.
    \3372\ $271,428.57 = ($23,200,000 in total initial surveillance
costs - $17,500,000 in FTE costs)/(21 Participants).
    \3373\ $5,699,999.97 = ($271,428.57 in initial external costs) x
(21 Participants).
---------------------------------------------------------------------------

(2) Ongoing, Annual Burden Hours and External Cost
    The CAT NMS Plan states that the estimated total annual cost
associated with the maintenance of surveillance programs for the
Participants is $87,700,000.\3374\ This amount includes annual legal,
consulting, and other costs of $1,000,000, as well as $66,700,000 in
annual FTE costs for internal operational, technical/development, and
compliance staff to be engaged in the maintenance of surveillance
programs.\3375\
---------------------------------------------------------------------------

    \3374\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \3375\ Id. The Commission also notes that based upon the data
provided by the Participants, the source of the remaining
$21,000,000 in ongoing costs to maintain the new or enhanced
surveillance systems is unspecified. The Commission believes that
this amount may be attributed to hardware costs because the
Participants have not provided any hardware costs associated with
surveillance elsewhere and the Commission believes that the
Participants would likely incur costs associated with maintaining
the new or enhanced surveillance systems.
---------------------------------------------------------------------------

A. Notice Estimates--Ongoing Burden and Costs
    In the Notice, based on the estimates provided in the CAT NMS
Plan,\3376\ the Commission preliminarily estimated that the ongoing
internal burden hours to maintain the new or enhanced surveillance
systems reasonably designed to make use of the consolidated audit trail
data for each Participant would be approximately 14,146 annual burden
hours,\3377\ for an aggregate annual burden hour amount of 282,920
burden hours.\3378\ The Commission also preliminarily estimated that
each Participant would, on average, incur an annual external cost of
approximately $50,000 \3379\ for outsourced legal, consulting and other
costs in order to maintain the new or enhanced surveillance systems,
for a total estimated ongoing external cost of $1,050,000,\3380\ for an
estimated aggregate ongoing external cost of $21,000,000 to maintain
the surveillance systems.\3381\
---------------------------------------------------------------------------

    \3376\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(B)(2).
    \3377\ ($66,700,000 in anticipated ongoing FTE costs)/(20
Participants) = $3,335,000 in anticipated ongoing FTE costs per
Participant. ($3,335,000 in anticipated ongoing FTE costs per
Participant)/($424,350 FTE cost per Participant) = 7.86 anticipated
FTEs per Participant. (7.86 FTEs) x (1,800 working hours per year) =
14,146 ongoing burden hours per Participant to maintain the new or
enhanced surveillance systems.
    \3378\ (14,146 annual burden hours per Participant to maintain
new or enhanced surveillance systems) x (20 Participants) = 282,920
aggregate annual burden hours.
    \3379\ $50,000 = $1,000,000 for ongoing legal, consulting and
other costs associated with maintenance of surveillance programs/20
Participants.
    \3380\ $1,050,000 = ($87,700,000 in total ongoing surveillance
costs - $66,700,000 in ongoing FTE costs)/20 Participants
    \3381\ $21,000,000 = $1,050,000 x 20 Participants.
---------------------------------------------------------------------------

B. Order Estimates--Ongoing Burden and Costs
    As noted earlier, subsequent to the publication of the Notice, the
expected number of Participants has increased from 20 to 21.\3382\ As a
result, the Commission is modifying its estimates of the ongoing burden
and costs to maintain the new or enhanced surveillance systems
reasonably designed to make use of the consolidated audit trail data.
After incorporating the increase in the number of Participants, the
Commission now estimates that the ongoing internal burden hours for
each Participant would be approximately 13,473 annual burden
hours,\3383\ for an aggregate annual burden hour amount of 282,933
burden hours.\3384\ The Commission also now estimates that each
Participant would, on average, incur an annual external cost of
approximately $47,619.05 \3385\ for outsourced legal, consulting and
other costs in order to maintain the new or enhanced surveillance
systems, for a total estimated ongoing external cost of
$1,000,000,\3386\ for an estimated aggregate ongoing external cost of
$21,000,000 across the 21 Participants to maintain the surveillance
systems.\3387\
---------------------------------------------------------------------------

    \3382\ See supra note 3282.
    \3383\ ($66,700,000 in anticipated ongoing FTE costs)/(21
Participants) = $3,176,190.48 in anticipated ongoing FTE costs per
Participant. ($3,176,190.48 in anticipated ongoing FTE costs per
Participant)/($424,350 FTE cost per Participant) = 7.485 anticipated
FTEs per Participant. (7.485 FTEs) x (1,800 working hours per year)
= 13,473 ongoing burden hours per Participant to maintain the new or
enhanced surveillance systems.
    \3384\ (13,473 annual burden hours per Participant to maintain
new or enhanced surveillance systems) x (21 Participants) = 282,933
aggregate annual burden hours.
    \3385\ $47,619.05 = ($1,000,000 for ongoing legal, consulting
and other costs associated with maintenance of surveillance
programs)/(21 Participants).
    \3386\ $1,000,000 = ($87,700,000 in total ongoing surveillance
costs - $66,700,000 in ongoing FTE costs)/(21 Participants).
    \3387\ $21,000,000 = ($1,000,000) x (21 Participants).
---------------------------------------------------------------------------

e. Document on Expansion to Other Securities
    Rule 613(i) provides that the CAT NMS Plan must require the
Participants to jointly provide to the Commission, within six months
after the CAT NMS

Plan is effective, a document outlining how the Participants could
incorporate into the CAT information regarding: (1) Equity securities
that are not NMS securities; \3388\ (2) debt securities; and (3)
primary market transactions in equity securities that are not NMS
securities and debt securities.\3389\ The document must also detail the
order and Reportable Event data that each market participant may be
required to provide, which market participants may be required to
provide such data, an implementation timeline, and a cost estimate.
Thus, the Participants must, among other things, undertake an analysis
of technological and computer system acquisitions and upgrades that
would be required to achieve such an expansion.
---------------------------------------------------------------------------

    \3388\ As noted above, the CAT NMS Plan would require the
inclusion of OTC Equity Securities, while Rule 613 does not include
such a requirement. See supra note 439.
    \3389\ See 17 CFR 242.613(i).
---------------------------------------------------------------------------

A. Notice Estimates--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that it would
take each Participant approximately 180 burden hours of internal legal,
compliance, business operations and information technology staff time
to create a document addressing expansion of the consolidated audit
trail to additional securities as required by Rule 613(i).\3390\ The
Commission preliminarily estimated that on average, each Participant
would outsource 25 hours of external legal time to create the document,
for an aggregate one-time external cost of approximately $10,000.\3391\
Therefore, the Commission preliminarily estimated that the one-time
initial burden of drafting the document required by Rule 613 would be
180 initial burden hours plus $10,000 in initial external costs for
outsourced legal counsel per Participant, for an estimated aggregate
initial burden of 3,600 hours and an estimated aggregate initial
external cost of $200,000.\3392\
---------------------------------------------------------------------------

    \3390\ The Commission based this estimate on the internal burden
provided in the CAT NMS Plan related to the development of the CAT
NMS Plan. See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii) (stating ``[t]he Participants estimate that they have
collectively contributed 20 FTEs in the first 30 months of the CAT
NMS Plan development process''). Because this document is much more
limited in scope than the CAT NMS Plan, and because the Commission
assumes that in drafting the CAT NMS Plan, the Participants have
already contributed time toward considering how the CAT can be
expected to be expanded in accordance with Rule 613(i), the
Commission applied the CAT NMS Plan development internal burden over
a 6-month period (Rule 613(i) requires this document to be submitted
to the Commission within six months after effectiveness of the CAT
NMS Plan), divided by half. 0.667 FTEs required for all Participants
per month to develop the CAT NMS Plan = (20 FTEs/30 months). 0.667
FTEs x 6 months = 4 FTEs. 4 FTEs/2 = 2 FTEs needed for all of the
Participants to create and submit the document. 2 FTEs x 1,800
working hours per year = 3,600 burden hours. 3,600 burden hours/20
Participants = 180 burden hours per Participant to create and file
the document.
    \3391\ $10,000 = (25 hours of outsourced legal time per
Participant) x ($400 per hour rate for outside legal services). The
Commission derived the total estimated cost for outsourced legal
counsel based on the assumption that the report required by Rule 613
would require approximately fifteen percent of the Commission's
approximated burden of drafting and filing the CAT NMS Plan. This
assumption is based on the Participants leveraging their knowledge
gained from their drafting and filing of the CAT NMS Plan and
applying it to efficiently preparing the report required by Rule 613
with respect to other securities' order and Reportable Events,
implementation timeline and cost estimates.
    \3392\ The initial burden hour estimate is based on: (20
Participants) x (180 initial burden hours to draft the report). The
initial external cost estimate is based on: (20 Participants) x
($10,000 for outsourced legal counsel).
---------------------------------------------------------------------------

B. Order Estimates--Initial Burden and Costs
    As noted earlier, subsequent to the publication of the Notice, the
expected number of Participants has increased from 20 to 21.\3393\ As a
result, the Commission is modifying its estimates of the initial burden
and costs of the document on expansion to additional securities. After
incorporating the increase in the number of Participants, the
Commission now estimates that it would take each Participant
approximately 171.43 burden hours of internal legal, compliance,
business operations and information technology staff time to create a
document addressing expansion of the CAT to additional securities as
required by Rule 613(i).\3394\ The Commission now estimates that on
average, each Participant would outsource 25 hours of external legal
time to create the document, for an aggregate one-time external cost of
approximately $10,000.\3395\ Therefore, the Commission now estimates
that the one-time initial burden of drafting the document required by
Rule 613 would be 171.43 initial burden hours plus $10,000 in initial
external costs for outsourced legal counsel per Participant, for an
estimated aggregate initial burden of 3,600.3 hours and an estimated
aggregate initial external cost of $210,000.\3396\
---------------------------------------------------------------------------

    \3393\ See supra note 3282.
    \3394\ The Commission is basing this estimate on the internal
burden provided in the CAT NMS Plan related to the development of
the CAT NMS Plan. See CAT NMS Plan, supra note 5, at Appendix C,
Section B.7(b)(iii) (stating ``[t]he Participants estimate that they
have collectively contributed 20 FTEs in the first 30 months of the
CAT NMS Plan development process''). Because the expansion document
is much more limited in scope than the CAT NMS Plan, and because the
Commission assumes that in drafting the CAT NMS Plan, the
Participants have already contributed time toward considering how
the CAT can be expected to be expanded in accordance with Rule
613(i), the Commission is applying the CAT NMS Plan development
internal burden over a 6-month period (Rule 613(i) requires this
document to be submitted to the Commission within six months after
effectiveness of the CAT NMS Plan), divided by half. 0.667 FTEs
required for all Participants per month to develop the CAT NMS Plan
= (20 FTEs/30 months). 0.667 FTEs x 6 months = 4 FTEs. 4 FTEs/2 = 2
FTEs needed for all of the Participants to create and submit the
document. 2 FTEs x 1,800 working hours per year = 3,600 burden
hours. (3,600 burden hours)/(21 Participants) = 171.43 burden hours
per Participant to create and file the document.
    \3395\ $10,000 = (25 hours of outsourced legal time per
Participant) x ($400 per hour rate for outside legal services). The
Commission derived the total estimated cost for outsourced legal
counsel based on the assumption that the report required by Rule 613
would require approximately fifteen percent of the Commission's
approximated burden of drafting and filing the CAT NMS Plan. This
assumption is based on the Participants leveraging their knowledge
gained from their drafting and filing of the CAT NMS Plan and
applying it to efficiently preparing the report required by Rule 613
with respect to other securities' order and Reportable Events,
implementation timeline and cost estimates.
    \3396\ The initial burden hour estimate is based on: (21
Participants) x (171.43 initial burden hours to draft the report).
The initial external cost estimate is based on: (21 Participants) x
($10,000 for outsourced legal counsel).
---------------------------------------------------------------------------

f. Written Assessment of Operation of the Consolidated Audit Trail
    Rule 613(b)(6) provides that the CAT NMS Plan must require the
Participants to provide the Commission a written assessment of the
CAT's operation at least every two years, once the CAT NMS Plan is
effective.\3397\ The assessment must address, at a minimum, with
respect to the CAT: (i) An evaluation of its performance; (ii) a
detailed plan for any potential improvements to its performance; (iii)
an estimate of the costs associated with any such potential
improvements; and (iv) an estimated implementation timeline for any
such potential improvements, if applicable.\3398\ Thus, the
Participants must, among other things, undertake an analysis of the
CAT's technological and computer system performance.
---------------------------------------------------------------------------

    \3397\ 17 CFR 242.613(b)(6); see also Notice, supra note 5, at
30700.
    \3398\ See 17 CFR 242.613(b)(6).
---------------------------------------------------------------------------

    The CAT NMS Plan states that the CCO would oversee the assessment
required by Rule 613(b)(6), and would allow the Participants to review
and comment on the assessment before it is submitted to the
Commission.\3399\ The CCO would be an employee of the Plan Processor
and would be compensated by the Plan Processor.\3400\ The Commission

assumes that the overall cost and associated burden on the Participants
to implement and maintain the Central Repository includes both the
compensation for the Plan Processor as well as its employees for the
implementation and maintenance of the Central Repository.
---------------------------------------------------------------------------

    \3399\ See CAT NMS Plan, supra note 5, at Section 6.6.
    \3400\ Id. at Section 6.2(a).
---------------------------------------------------------------------------

A. Notice Estimates--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily estimated that it would
take each Participant approximately 45 annual burden hours of internal
legal, compliance, business operations, and information technology
staff time to review and comment on the assessment prepared by the CCO
of the operation of the consolidated audit trail as required by Rule
613(b)(6).\3401\ The Commission preliminarily estimated that on
average, each Participant would outsource 1.25 hours of legal time
annually to assist in the review of the assessment, for an ongoing
annual external cost of approximately $500.\3402\ Therefore, the
Commission preliminarily estimated that the ongoing annual burden of
submitting a written assessment at least every two years, as required
by Rule 613(b)(6), would be 45 ongoing burden hours per SRO plus $500
of external costs for outsourced legal counsel per Participant per
year, for an estimated aggregate annual ongoing burden of 900 hours
\3403\ and an estimated aggregate ongoing external cost of
$10,000.\3404\
---------------------------------------------------------------------------

    \3401\ The Commission calculated the total estimated burden
hours based on a similar formulation used for calculating the total
estimated burden hours of Rule 613(i)'s requirement for a document
addressing expansion of the CAT to other securities. See Notice,
supra note 5, at Section V.D.1.f. The Commission assumed that the
review and potential revision of the written assessment required by
Rule 613(b)(6) would be approximately one-half as burdensome as the
document required by Rule 613(i) as the Participants are delegating
the responsibility to prepare the written assessment required by
Rule 613(b)(6) to the CCO and the Participants would only need to
review the written assessment and revise it as necessary. As noted
in note 3394, supra, to estimate the Rule 613(i) burden, the
Commission is applying the internal burden estimate provided in the
CAT NMS Plan for Plan development over a 6-month period, and
dividing the result in half. See CAT NMS Plan, supra note 5, at
Appendix C, Section B.7(b)(iii). To estimate the Rule 613(b)(6)
written assessment burden, the Commission is dividing the result
further by half. 0.667 FTEs required for all Participants per month
to develop the CAT NMS Plan = (20 FTEs/30 months). 0.667 FTEs x 6
months = 4 FTEs. 4 FTEs/2 = 2 FTEs needed for all of the
Participants to create and submit the Rule 613(i) document. 2 FTEs/2
= 1 FTE needed for all of the Participants to review and comment on
the written assessment. (1 FTE x 1,800 working hours per year) =
1,800 ongoing annual burden hours per year for all of the
Participants to review and comment on the written assessment. (1,800
burden hours/20 Participants) = 90 ongoing annual burden hours per
Participant to review and comment on the written assessment prepared
by the CCO. The Commission noted that this assessment must be filed
with the Commission every two years and is providing an annualized
estimate of the burden associated with the assessment as required
for its Paperwork Reduction Act analysis. To provide an estimate of
the annual burden associated with the assessment as required for its
Paperwork Reduction Act analysis, Commission divided the 90 ongoing
burden hours in half (over two years) = 45 ongoing annual burden
hours per Participant to review and comment on the written
assessment prepared by the CCO.
    \3402\ $500 = ($400 per hour rate for outside legal services) x
(1.25 hours). Because the written assessment was a biennial
requirement, the Commission divided the cost of the written
assessment in half (over two years) to estimate the annual ongoing
external cost per Participant for outside legal services to review
and comment on the written assessment prepared by the CCO.
    \3403\ 900 ongoing annual burden hours = (45 ongoing annual
burden hours) x (20 Participants).
    \3404\ $10,000 = 20 Participants x ($400 per hour rate for
outside legal services) x (1.25 hours).
---------------------------------------------------------------------------

B. Order Estimates--Ongoing Burden and Costs
    As noted above,\3405\ the Commission has subsequently amended this
requirement as imposed by the CAT NMS Plan to change the reporting
frequency from every two years to annual, to require that the benefits
of potential improvements, and their impact on investor protection, be
discussed, as well as to provide additional specificity regarding the
content of the report.\3406\ As amended, the content of the report must
include the following: (i) An evaluation of the information security
program of the CAT to ensure that the program is consistent with the
highest industry standards for protection of data; (ii) an evaluation
of potential technological upgrades based upon a review of
technological advancements over the preceding year, drawing on
technological expertise, whether internal or external; (iii) an
evaluation of the time necessary to restore and recover CAT Data at a
back-up site; (iv) an evaluation of how the Plan Processor and
Participants are monitoring Error Rates and addressing the application
of Error Rates based on product, data element or other criteria; (v) a
copy of the evaluation required by the CAT NMS Plan in Section 6.8(c)
that the Plan Processor evaluate whether industry standards have
evolved such that: (1) The synchronization standard in Section 6.8(a)
of the CAT NMS Plan should be shortened; or (2) the required timestamp
in Section 6.8(b) of the CAT NMS Plan should be in finer increments.
---------------------------------------------------------------------------

    \3405\ See Section VI.A.7., supra.
    \3406\ See Section IV.H., supra.
---------------------------------------------------------------------------

    The CAT NMS Plan states that the CCO would oversee the assessment
required by Rule 613(b)(6), and would allow the Participants to review
and comment on the assessment before it is submitted to the
Commission.\3407\ The Commission believes the responsibility to oversee
the assessment as amended should continue to belong to the CCO and is
not amending the CAT NMS Plan to require a different process.
---------------------------------------------------------------------------

    \3407\ See CAT NMS Plan, supra note 5, at Section 6.6.
---------------------------------------------------------------------------

    As a result, the Commission is modifying its estimates of the
ongoing burden and costs related to the written assessment of the
operation of the CAT, as well as to account for an increase in the
expected number of Participants from 20 to 21, subsequent to the
publication of the Notice.\3408\ The Commission now estimates that it
would take each Participant approximately 171.43 annual burden hours of
internal legal, compliance, business operations, and information
technology staff time to review and comment on the assessment prepared
by the CCO of the operation of the CAT.\3409\ The Commission now
estimates that on average, each Participant would outsource 2.5 hours
of legal time annually to assist in the review of the assessment, for
an ongoing annual external cost of approximately $1,000.\3410\
Therefore, the Commission

now estimates that the ongoing annual burden of submitting a written
assessment annually would be 171.43 ongoing burden hours per SRO plus
$1,000 of external costs for outsourced legal counsel per Participant
per year, for an estimated aggregate annual ongoing burden of
approximately 3,600.03 hours \3411\ and an estimated aggregate ongoing
external cost of $21,000.\3412\
---------------------------------------------------------------------------

    \3408\ See supra note 3282.
    \3409\ As it did when making its preliminary estimate, the
Commission calculated the total estimated burden hours based on a
similar formulation used for calculating the total estimated burden
hours of Rule 613(i)'s requirement for a document addressing
expansion of the CAT to other securities. See Section VI.D.1.e.,
supra. Specifically, as noted above, the Commission assumed that the
review and potential revision of the written assessment would be
approximately one-half as burdensome as the document required by
Rule 613(i) when making its preliminary estimate. The Commission
then further divided the burden by half because this report is
required to be furnished every two years.
    The Commission has amended the CAT NMS Plan to add more
specificity to the requirement to provide the written assessment. As
a result, the Commission now estimates that the written assessment
would now be as burdensome (instead of half as burdensome) as the
document addressing expansion required by Rule 613(i). 2 FTEs needed
for all of the Participants to create and submit the document
required by Rule 613(i) (and now for all of the Participants to
review and comment on the written assessment). (2 FTEs) x (1,800
working hours per year) = 3,600 ongoing annual burden hours per year
for all of the Participants to review and comment on the written
assessment. (3,600 burden hours per year)/(21 Participants) = 171.43
ongoing annual burden hours per Participant to review and comment on
the written assessment prepared by the CCO.
    The Commission also has amended the CAT NMS Plan to require this
assessment to be provided annually instead of once every two years.
To account for this change, the Commission is no longer dividing the
ongoing burden hours for providing the written assessment in half to
determine the annualized estimate of the burden.
    \3410\ $1,000 = ($400 per hour rate for outside legal services)
x (2.5 hours). The Commission has amended the CAT NMS Plan to add
more specificity to the requirement to provide the written
assessment and is now requiring this assessment to be provided
annually instead of once every two years. Because the written
assessment is no longer a biennial requirement, the Commission is no
longer dividing the cost of the written assessment in half (over two
years) to estimate the annual ongoing external cost per Participant
for outside legal services to review and comment on the written
assessment prepared by the CCO.
    \3411\ 3,600.03 ongoing annual burden hours = (171.43 ongoing
annual burden hours) x (21 Participants).
    \3412\ $21,000 = (21 Participants) x ($400 per hour rate for
outside legal services) x (2.5 hours).
---------------------------------------------------------------------------

2. Burden on Members of National Securities Exchanges and National
Securities Associations
a. Data Collection and Reporting
    Rule 613(c)(1) requires the CAT NMS Plan to provide for an
accurate, time-sequenced record of orders beginning with the receipt or
origination of an order by a broker-dealer member of a Participant, and
further documenting the life of the order through the process of
routing, modification, cancellation and execution (in whole or in part)
of the order. Rule 613(c) requires the CAT NMS Plan to impose
requirements on broker-dealer members to record and report CAT Data to
the Central Repository in accordance with specified timelines.
    In calculating the burden on members of national securities
exchanges and national securities associations, the Commission
categorized broker-dealer firms by whether they insource or outsource,
or are likely to insource or outsource, CAT Data reporting
obligations.\3413\ The Commission believes that firms that currently
report high numbers of OATS ROEs strategically would decide to either
self-report their CAT Data or outsource their CAT Data reporting
functions (Insourcers), while the firms with the lowest levels of
activity would be unlikely to have the infrastructure and specialized
employees necessary to insource CAT Data reporting and would almost
certainly outsource their CAT Data reporting functions
(Outsourcers).\3414\ The Commission recognizes that more active firms
that will likely be CAT Reporters and insource regulatory data
reporting functions may not have current OATS reporting obligations
because they either are not FINRA members, or because they do not trade
in NMS equity securities.\3415\
---------------------------------------------------------------------------

    \3413\ The Commission acknowledges the inherent difficulty in
establishing precise burden estimates because the Commission does
not know the exact method of data reporting the Participants would
decide for broker-dealers. For these estimates, the Commission is
relying, in part, on the cost data provided by the Participants in
the CAT NMS Plan, and, as noted earlier, on its own estimates of the
costs that broker-dealers are likely to face for CAT implementation
and ongoing reporting in compliance with Rule 613. See CAT NMS Plan,
supra note 5, at Appendix C, Section B.7(b); see Section
V.F.1.c.(2)B., supra.
    \3414\ See Notice, supra note 5, at 30718.
    \3415\ The Commission also recognizes as discussed above that
some broker-dealer firms may strategically choose to outsource
despite the Plan's working assumption that these broker-dealers
would insource their regulatory data reporting functions.
---------------------------------------------------------------------------

    The Commission estimates that there are 126 OATS-reporting
Insourcers and 45 non-OATS reporting Insourcers (14 ELPs and 31 Options
Market Makers).\3416\ The Commission's estimation categorizes the
remaining 1,629 broker-dealers that the Plan anticipates would have CAT
Data reporting obligations as Outsourcers.\3417\
---------------------------------------------------------------------------

    \3416\ See Section V.F.1.c(2)B., supra.
    \3417\ Id.
---------------------------------------------------------------------------

(1) Notice Estimates
A. Insourcers
i. Large Non-OATS-Reporting Broker-Dealers
    In the CAT NMS Plan, the Participants, based on the Reporters
Study's large broker-dealer cost estimates, estimated the following
average initial external cost and FTE count figures that a large non-
OATS reporting broker-dealer would expect to incur to adopt the systems
changes needed to comply with the data reporting requirements of Rule
613 under Approach 1: $450,000 in external hardware and software costs;
8.05 internal FTEs; \3418\ and $9,500 in external third party/
outsourcing costs.\3419\ The Participants also estimated the following
average ongoing external cost and internal FTE count figures that a
large non-OATS reporting broker-dealer would expect to incur to
maintain data reporting systems to be in compliance with Rule 613:
$80,000 in external hardware and software costs; 7.41 internal FTEs;
\3420\ and $1,300 in external third party/outsourcing costs.\3421\
---------------------------------------------------------------------------

    \3418\ Approach 1 also provided $3,200,000 in initial internal
FTE costs. The Commission believed the $3,200,000 in internal FTE
costs is the Participants' estimated cost of the 8.05 FTEs. (8.05
FTEs) x ($401,440 Participants' assumed annual cost per FTE provided
in the CAT NMS Plan) = $3,231,592. See CAT NMS Plan, supra note 5,
at n. 192. See also supra note 3320.
    \3419\ See CAT NMS Plan, supra note 5, at Section
B.7(b)(iii)(c)(2)(a). The Commission believed that the third party/
outsourcing costs may be attributed to the use of service bureaus
(potentially), technology consulting, and legal services.
    \3420\ Approach 1 also provided $3,000,000 in internal FTE costs
related to maintenance. The Commission believes the $3,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants' assumed annual
cost per FTE provided in the CAT NMS Plan) = $2,974,670. See CAT NMS
Plan, supra note 5, at n.192.
    \3421\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not break down these
third party costs into categories.
---------------------------------------------------------------------------

    In the Notice, the Commission discussed the Participants' estimates
and explained that the Commission also relied on the Reporters Study's
large broker-dealer cost estimates in estimating costs for large
broker-dealers that can practicably decide between insourcing or
outsourcing their regulatory data reporting functions. In the Notice,
the Commission preliminarily estimated that there are 14 large broker-
dealers that are not OATS reporters currently in the business of
electronic liquidity provision that would be classified as
Insourcers.\3422\ Additionally, the Commission estimated that there are
31 broker-dealers that may transact in options but not in equities that
can be classified as Insourcers.\3423\ The Commission assumed the 31
Options Market Makers and 14 ELPs would be typical of the Reporters
Study's large, non-OATS reporting firms; for these firms, the
Commission relied on the cost estimates provided under Approach 1\3424\
for large, non-OATS reporting firms in the CAT NMS Plan.
---------------------------------------------------------------------------

    \3422\ These broker-dealers are not FINRA members and thus have
no regular OATS reporting obligations. See supra note 2560.
    \3423\ See supra note 2562.
    \3424\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(i)(A)(2). The Reporters Study requested broker-dealer
respondents to provide estimates to report to the Central Repository
under two approaches. Approach 1 assumes CAT Reporters would submit
CAT Data using their choice of industry protocols. Approach 2
assumes CAT Reporters would submit data using a pre-specified
format. Approach 1's aggregate costs are higher than those for
Approach 2 for all market participants except in one case where
service bureaus have lower Approach 1 costs. See supra note 2568.
For purposes of this Paperwork Reduction Act analysis, the
Commission did not rely on the cost estimates for Approach 2 because
overall the Approach 1 aggregate estimates represent the higher of
the proposed approaches. The Commission believed it would be more
comprehensive to use the higher of the two estimates for its
Paperwork Reduction Act analysis estimates.
---------------------------------------------------------------------------

    The Notice explained that once a large non-OATS reporting broker-
dealer has established the appropriate systems and processes required
for collection and

transmission of the required information to the Central Repository,
such broker-dealers would be subject to ongoing annual burdens
associated with, among other things, personnel time to monitor each
large non-OATS reporting broker-dealer's reporting of the required data
and the maintenance of the systems to report the required data; and
implementing changes to trading systems that might result in additional
reports to the Central Repository.
(a) Large, Non-OATS Reporting Broker-Dealers--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that the
average initial burden associated with implementing regulatory data
reporting to capture the required information and transmit it to the
Central Repository in compliance with the Rule for each large, non-OATS
reporting broker-dealer would be approximately 14,490 initial burden
hours.\3425\
---------------------------------------------------------------------------

    \3425\ 14,490 initial burden hours = (8.05 FTEs for implementing
CAT Data reporting systems) x (1,800 working hours per year).
---------------------------------------------------------------------------

    The Commission also preliminarily estimated that these broker-
dealers would, on average, would incur approximately $450,000 in
initial costs for hardware and software to implement the systems
changes needed to capture the required information and transmit it to
the Central Repository, and an additional $9,500 in initial third
party/outsourcing costs.\3426\
---------------------------------------------------------------------------

    \3426\ See supra note 3421.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
one-time initial burden per ELP and Options Market Maker would be
14,490 internal burden hours and external costs of $459,500,\3427\ for
an estimated aggregate initial burden of 652,050 hours \3428\ and an
estimated aggregate initial external cost of $20,677,500.\3429\
---------------------------------------------------------------------------

    \3427\ ($450,000 in initial hardware and software costs) +
($9,500 initial third party/outsourcing costs) = $459,500 in initial
external costs to implement data reporting systems.
    \3428\ The Commission preliminarily estimates that 45 large non-
OATS reporting broker-dealers would be impacted by this information
collection. (45 large non-OATS reporting broker-dealers) x (14,490
burden hours) = 652,050 initial burden hours to implement data
reporting systems.
    \3429\ ($450,000 in hardware and software costs) + ($9,500 third
party/outsourcing costs) x 45 large, non-OATS reporting broker-
dealers = $20,677,500 in initial external costs to implement data
reporting systems.
---------------------------------------------------------------------------

(b) Large, Non-OATS Reporting Broker-Dealers--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily estimated that it would
take a large non-OATS reporting broker-dealer 13,338 burden hours per
year \3430\ to continue to comply with the Rule. The Commission also
preliminarily estimated that it would cost, on average, approximately
$80,000 per year per large non-OATS reporting broker-dealer to maintain
systems connectivity to the Central Repository and purchase any
necessary hardware, software, and other materials, and an additional
$1,300 in third party/outsourcing costs.\3431\
---------------------------------------------------------------------------

    \3430\ 13,338 ongoing burden hours = (7.41 ongoing FTEs to
maintain CAT data reporting systems) x (1,800 working hours per
year).
    \3431\ See supra note 3421.
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
ongoing annual burden per large non-OATS reporting broker-dealer would
be approximately 13,338 hours, plus $81,300 in external costs \3432\ to
maintain the systems necessary to collect and transmit information to
the Central Repository, for an estimated aggregate ongoing burden of
600,210 hours \3433\ and an estimated aggregate ongoing external cost
of $3,658,500.\3434\
---------------------------------------------------------------------------

    \3432\ ($80,000 in ongoing external hardware and software costs)
+ ($1,300 ongoing external third party/outsourcing costs) = $81,300
in ongoing external costs per large non-OATS reporting broker-
dealer.
    \3433\ The Commission estimated that 45 large non-OATS reporting
broker-dealers would be impacted by this information collection. (45
large non-OATS reporting broker-dealers) x (13,338 burden hours) =
600,210 aggregate ongoing burden hours.
    \3434\ ($80,000 in ongoing external hardware and software costs)
+ ($1,300 ongoing external third party/outsourcing costs) x (45
large non-OATS reporting broker-dealers) = $3,658,500 in aggregate
ongoing external costs.
---------------------------------------------------------------------------

ii. Large OATS-Reporting Broker-Dealers
    In the CAT NMS Plan, the Participants, based on the Reporters
Study's large broker-dealer cost estimates, estimated the following
average initial external cost and internal FTE count figures that a
large OATS-reporting broker-dealer would expect to incur as a result of
the implementation of the consolidated audit trail under Approach 1:
$750,000 in hardware and software costs; 14.92 internal FTEs; \3435\
and $150,000 in external third party/outsourcing costs.\3436\ The
Participants also estimated the following average ongoing external cost
and internal FTE count figures that a large OATS-reporting broker-
dealer would expect to incur to maintain data reporting systems to be
in compliance with Rule 613: $380,000 in ongoing external hardware and
software costs; 10.03 internal FTEs; \3437\ and $120,000 in ongoing
external third party/outsourcing costs.\3438\
---------------------------------------------------------------------------

    \3435\ Approach 1 also provided $6,000,000 in initial internal
FTE costs. The Commission believes the $6,000,000 in initial
internal FTE costs is the Participants' estimated cost of the 14.92
FTEs. (14.92 FTEs) x ($401,440 Participants' assumed annual cost per
FTE provided in the CAT NMS Plan) = $5,989,485. See CAT NMS Plan,
supra note 5, at Appendix C, Section B.7(b)(ii)(C), n.192; see also
supra note 3320.
    \3436\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(a). The CAT NMS Plan did not break down these
third party costs into categories. The Commission believes that
these costs may be attributed to the use of service bureaus,
technology consulting, and legal services.
    \3437\ Approach 1 also provided $4,000,000 in internal FTE costs
related to maintenance. The Commission believes the $4,000,000 in
ongoing internal FTE costs is the Participants' estimated cost of
the 10.03 FTEs. (10.03 FTEs) x ($401,440 Participants' assumed
annual cost per FTE provided in the CAT NMS Plan) = $4,026,443. See
CAT NMS Plan, supra note 5, at Appendix C, Section B.7(b)(ii)(C),
n.192; see also supra note 3320.
    \3438\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b). The CAT NMS Plan did not categorize these
third party costs. The Commission believes that these costs may be
attributed to the use of service bureaus, technology consulting, and
legal services.
---------------------------------------------------------------------------

    In the Notice, the Commission discussed the Participants' estimates
and explained that the Commission also relied on the Reporters Study's
large broker-dealer cost estimates in estimating costs for large
broker-dealers that can practicably decide between insourcing or
outsourcing their regulatory reporting functions. In the Notice, based
on the Commission's analysis of data provided by FINRA and discussions
with market participants, the Commission estimated that 126 broker-
dealers, which reported more than 350,000 OATS ROEs between June 15 and
July 10, 2015, would strategically decide to either self-report CAT
Data or outsource their CAT data reporting functions.\3439\
---------------------------------------------------------------------------

    \3439\ See Notice, supra note 5, at 30718; see also id., at
n.901 (stating that the Commission believes that broker-dealers that
report fewer than 350,000 OATS ROEs per month are unlikely to be
large enough to support the infrastructure required for insourcing
data reporting activities).
---------------------------------------------------------------------------

    The Notice explained that once a large OATS-reporting broker-dealer
has established the appropriate systems and processes required for
collection and transmission of the required information to the Central
Repository, such broker-dealers would be subject to ongoing annual
burdens and costs associated with, among other things, personnel time
to monitor each broker-dealer's reporting of the required data and the
maintenance of the systems to report the required data; and
implementing changes to trading systems which might result in
additional reports to the Central Repository.
(a) Large OATS-Reporting Broker-Dealers--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that the
average initial burden to develop and

implement the needed systems changes to capture the required
information and transmit it to the Central Repository in compliance
with the Rule for large OATS-reporting broker-dealers would be
approximately 26,856 internal burden hours.\3440\
---------------------------------------------------------------------------

    \3440\ 26,856 initial burden hours per large OATS-reporting
broker-dealer = (14.92 FTEs for implementation of CAT data reporting
systems) x (1,800 working hours per year).
---------------------------------------------------------------------------

    The Commission also preliminarily estimated that these large OATS-
reporting broker-dealers would, on average, incur approximately
$750,000 in initial external costs for hardware and software to
implement the systems changes needed to capture the required
information and transmit it to the Central Repository, and an
additional $150,000 in initial external third party/outsourcing
costs.\3441\
---------------------------------------------------------------------------

    \3441\ See CAT NMS Plan, supra note 5, at Section
B.7(b)(iii)(C)(2)(a).
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
one-time initial burden per large OATS-reporting broker-dealer would be
26,856 burden hours and external costs of $900,000,\3442\ for an
estimated aggregate initial burden of 3,383,856 hours \3443\ and an
estimated aggregate initial external cost of $113,400,000.\3444\
---------------------------------------------------------------------------

    \3442\ ($750,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) =
$900,000 in initial external costs per large OATS-reporting broker-
dealer to implement CAT data reporting systems.
    \3443\ The Commission preliminarily estimates that 126 large
OATS-reporting broker-dealers would be impacted by this information
collection. 126 large OATS-reporting broker-dealers x 26,856 burden
hours = 3,383,856 initial burden hours to implement data reporting
systems.
    \3444\ ($750,000 in initial external hardware and software
costs) + ($150,000 initial external third party/outsourcing costs) x
126 large OATS-reporting broker-dealers = $113,400,000 in initial
external costs to implement data reporting systems.
---------------------------------------------------------------------------

(b) Large OATS-Reporting Broker-Dealers--Ongoing Burden and Costs
    In the Notice, the Commission preliminarily estimated that it would
take a large OATS-reporting broker-dealer 18,054 ongoing burden hours
per year \3445\ to continue compliance with the Rule. The Commission
preliminarily estimated that it would cost, on average, approximately
$380,000 per year per large OATS-reporting broker-dealer to maintain
systems connectivity to the Central Repository and purchase any
necessary hardware, software, and other materials, and an additional
$120,000 in external ongoing third party/outsourcing costs.\3446\
---------------------------------------------------------------------------

    \3445\ 18,054 ongoing burden hours = (10.03 ongoing FTEs for
maintenance of CAT data reporting systems) x (1,800 working hours
per year).
    \3446\ See CAT NMS Plan, supra note 5, at Appendix C, Section
B.7(b)(iii)(C)(2)(b).
---------------------------------------------------------------------------

    Therefore, the Commission preliminarily estimated that the average
ongoing annual burden per large OATS-reporting broker-dealer would be
approximately 18,054 burden hours, plus $500,000 in external costs
\3447\ to maintain the systems necessary to collect and transmit
information to the Central Repository, for an estimated aggregate
burden of 2,274,804 hours \3448\ and an estimated aggregate ongoing
external cost of $63,000,000.\3449\
---------------------------------------------------------------------------

    \3447\ ($380,000 in ongoing external hardware and software costs
+ $120,000 in ongoing external third party/outsourcing costs) =
$500,000 in ongoing external costs per large OATS-reporting broker-
dealer.
    \3448\ The Commission preliminarily estimates that 126 large
OATS-reporting broker-dealers would be impacted by this information
collection. (126 large OATS-reporting broker-dealers) x (18,054
burden hours) = 2,274,804 aggregate ongoing burden hours.
    \3449\ ($380,000 in ongoing external hardware and software costs
+ $120,000 in ongoing external third party/outsourcing costs) x 126
large OATS-reporting broker-dealers = $63,000,000 in aggregate
ongoing external costs.
---------------------------------------------------------------------------

B. Outsourcers
i. Small OATS-Reporting Broker-Dealers
    Based on data provided by FINRA, the Commission estimates that
there are 806 broker-dealers that report fewer than 350,000 OATS ROEs
monthly. The Commission believes that these broker-dealers generally
outsource their regulatory reporting obligations because during the
period June 15-July 10, 2015, approximately 88.9% of their 350,000 OATS
ROEs were reported through service bureaus, with 730 of these broker-
dealers reporting more than 99% of their OATS ROEs through one or more
service bureaus.\3450\ The Commission estimates that these firms
currently spend an aggregate of $100.1 million on annual outsourcing
costs.\3451\ The Commission estimates these 806 broker-dealers would
spend $100.2 million in aggregate to outsource their regulatory data
reporting to service bureaus to report in accordance with Rule
613,\3452\ or $124,373 per broker-dealer.\3453\ These external
outsourcing cost estimates are calculated using the information from
staff discussions with service bureaus and other market participants,
as applied to data provided by FINRA.\3454\
---------------------------------------------------------------------------

    \3450\ See Notice, supra note 5, at 30718. Because of the
extensive use of service bureaus in these categories of broker-
dealers, the Commission assumes that these broker-dealers are likely
to use service bureaus to accomplish their CAT data reporting.
    \3451\ The average broker-dealer in this category reported
15,185 OATS ROEs from June 15-July 10, 2015; the median reported
1,251 OATS ROEs. Of these broker-dealers, 39 reported more than
100,000 OATS ROEs during the sample period. See Section
V.F.1.c.(2)B., supra.
    \3452\ Id.
    \3453\ $124,373 = $100,200,000/806 broker-dealers. This amount
is the average estimated annual outsourcing cost to firms that
currently report fewer than 350,000 OATS ROEs per month. Id.
    \3454\ See Section V.F.1.c.(2)B., supra.
---------------------------------------------------------------------------

    Firms that outsource their regulatory data reporting would still
face internal staffing burdens associated with this activity. These
employees would perform activities such as answering inquiries from
their service bureaus, and investigating reporting exceptions. Based on
conversations with market participants, the Commission estimates that
these firms currently have 0.5 full-time employees devoted to these
activities.\3455\ The Commission estimates that these firms would need
to hire one additional full-time employee for one year to implement CAT
reporting requirements.\3456\
---------------------------------------------------------------------------

    \3455\ Id.
    \3456\ Id.
---------------------------------------------------------------------------

    Small OATS-reporting broker-dealers that outsource their regulatory
data reporting would likely face internal staffing burdens and external
costs associated with ongoing activity, such as maintaining any systems
that transmit data to their service providers. Based on conversations
with market participants, the Commission estimates these firms would
need 0.75 FTEs on an ongoing basis to perform or monitor CAT
reporting.\3457\
---------------------------------------------------------------------------

    \3457\ See Section IV.F.1.c.(2)B., supra.
---------------------------------------------------------------------------

(a) Small OATS-Reporting Broker-Dealers--Initial Burden and Costs
    In the Notice, the Commission preliminarily estimated that the
average initial burden to implement the needed systems changes to