Joint Industry Plan; Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail Regarding Cost Savings Measures

I. Introduction

On March 27, 2024, the Consolidated Audit Trail, LLC (“CAT LLC”), on behalf of the following parties to the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”): BOX Exchange LLC; Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc., Investors Exchange LLC, Long-Term Stock Exchange, Inc., MEMX, LLC, Miami International Securities Exchange LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, Nasdaq BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Chicago, Inc., and NYSE National, Inc. (collectively, the “Participants,” “self-regulatory organizations,” or “SROs”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934 (“Exchange Act”), and Rule 608 thereunder, a proposed amendment to the CAT NMS Plan to amend existing requirements for the consolidated audit trail (“CAT”) regarding costs saving measures for operating the CAT (the “Cost Savings Amendments”). Set forth in Section II is the statement of purpose and summary of the amendment, along with information required by Rules 608(a)(4) and 608(a)(5) under the Exchange Act, and Exhibit A, which contains the proposed revisions to the CAT NMS Plan, all substantially as prepared and submitted by the Participants to the Commission. The Commission is publishing this notice to solicit comments from interested persons on the amendment.

II. Description of the Plan

As described further below, the Cost Savings Amendments are expected to result in approximately $23.0 million in new annual cost savings in the first year with limited impact on the regulatory function of the CAT. Specifically, the Cost Savings Amendment would:

(1) optimize processing and storage requirements for Options Market Maker quotes in Listed Options (“Options Market Maker Quotes”), without eliminating them entirely from the CAT;

(2) permit the Plan Processor to move raw unprocessed data and interim operational copies of CAT Data older than 15 days to a more cost-effective storage tier; and

(3) permit the Plan Processor to provide an interim CAT-Order-ID on an “as requested” basis rather than each day.

In addition, the Cost Savings Amendments would incorporate into the CAT NMS Plan the Commission's recent exemptive order providing that data from industry testing for both Industry Members and Participants may be deleted after three months, which is estimated to result in additional cost savings of approximately $1 million per year, and would extend such relief to include test data related to the customer account and information system.

The proposed changes to the CAT NMS Plan to implement the Cost Savings Amendments are set forth in Exhibit A to this filing. CAT LLC continues to explore further changes to the CAT NMS Plan and expects to file future amendments that would result in additional cost savings without compromising the regulatory goals of the CAT.

Requirements Pursuant to Rule 608(a)

A. Description of the Proposed Amendments to the CAT NMS Plan

1. Optimize Processing and Storage Requirements for Options Market Maker Quotes

(a) Overview

Options Market Maker Quotes are the single largest data source for the CAT, comprising approximately 98% of all options exchange events and approximately 75% of all transaction volume stored in the CAT. Under the CAT NMS Plan, Options Exchanges are required to report Options Market Maker Quotes to the CAT, and such quotes must be processed and assembled to create a complete order lifecycle. The number of quotes that result in an execution is extremely low; as a result, the vast majority of Options Market Maker Quote lifecycles consist of just two events—the quote and its subsequent cancellation.

The costs associated with processing and storing Options Market Maker Quotes under the CAT NMS Plan are significant—approximately $30 million in 2023. CAT LLC has been focused on reducing these costs. In November 2023, the Commission granted exemptive relief that would allow the Plan Processor to create options quote lifecycles only once; this options quotes “single pass” proposal is expected to result in annual savings of approximately $5.4 million upon implementation in April 2024. Even with these savings, the costs related to Options Market Maker Quotes continue to far outweigh the regulatory benefit.

Under the proposed amendments, Options Market Maker Quotes in Listed Options and related Reportable Events will be subject to ingestion only and will not be subject to any linkage requirements. These changes would result in approximately $20.0 million in additional annual savings, without eliminating Options Market Maker Quotes entirely from the CAT. Options Exchanges will continue to report Options Market Maker Quotes in the same manner they do today, but the Plan Processor will only ingest and store them. Options Market Maker Quotes will no longer be subject to validation, feedback, linkage and lifecycle processing, or Plan Processor enrichments ( e.g., next event timestamp, lifecycle sequence number, CAT-Lifecycle-ID). The elimination of linkage and feedback processes will remove Options Market Maker Quotes from Options Market Replay, OLA Viewer, and All-Related Lifecycle Event queries. Executions that result from Options Market Maker Quotes will identify the quoteId of the quote that resulted in an execution, but will appear as orphaned lifecycle events. Options Market Maker Quotes will no longer be accessible via DIVER, but will remain accessible through BDSQL and Direct Read interfaces.

These changes would significantly reduce the costs of the CAT with limited impact on the regulatory function of the CAT. As noted, the vast majority of Options Market Maker Quote lifecycles do not involve any execution or allocation and usage data demonstrates that such data is very rarely accessed by regulators. Under the proposed amendments, regulators will still have access to unlinked Options Market Maker Quotes data by T+1 at 12:00 p.m. ET. All necessary information for the eliminated enrichments would be available to regulators, but regulators would need to derive the enrichments themselves; upon request, the Plan Processor would provide regulators with the code required in order to do so. As a result of these changes, the cost impact of Options Market Maker Quotes on the CAT would be reduced from approximately $24.4 million (inclusive of anticipated savings resulting from the implementation of the options quotes “single pass” proposal referenced above) to approximately $4.0 million annually.

The Participants believe that the anticipated savings associated with this proposal substantially outweigh the limited regulatory impact on the CAT.

(b) Current CAT NMS Plan Requirements

The CAT NMS Plan contains broad requirements relating to the current reporting of, linkage and lifecycle processing of, and regulator access to Options Market Maker Quotes and related Reportable Events.

First, Section 6.3(d) of the CAT NMS Plan requires each Participant to record and electronically report to the Central Repository details for each order and each Reportable Event, including all Options Market Maker Quotes and related Reportable Events. Under Section 6.4(d)(iii) of the CAT NMS Plan, “[w]ith respect to the reporting obligations of an Options Market Maker with regard to its quotes in Listed Options, Reportable Events required pursuant to Section 6.3(d)(ii) and (iv) shall be reported to the Central Repository by an Options Exchange in lieu of the reporting of such information by the Options Market Maker.” Section 6.4(d)(iii) also requires that, pursuant to the Compliance Rules of the Options Exchanges, Options Market Makers are required to report to the Options Exchange the time at which a quote in a Listed Option is sent to the Options Exchange (and, if applicable, any subsequent quote modifications and/or cancellation time when such modification or cancellation is originated by the Options Market Maker). Such time information shall be reported to the Central Repository by the Options Exchange in lieu of reporting by the Options Market Maker.

Second, CAT NMS Plan broadly requires all CAT Data reported to the Central Repository to be processed and assembled to create the complete lifecycle of each Reportable Event. The Plan Processor uses a “daisy chain approach” to link all Reportable Events and create a complete lifecycle of each order. Under this approach, “a series of unique order identifiers assigned to all order events handled by CAT Reporters are linked together by the Central Repository and assigned a single CAT-generated CAT-Order-ID that is associated with each individual order event and used to create the complete lifecycle of an order.” Data processing timelines are described in Section 6.1 and Section 6.2 of Appendix D of the CAT NMS Plan.

Finally, the CAT NMS Plan provides that regulators will have access to processed CAT Data through an online-targeted query tool and user-defined direct queries and bulk extracts. These requirements are described in Section 8.1 and Section 8.2 of Appendix D of the CAT NMS Plan.

(c) Estimated Cost Savings

As described above, the proposed changes would result in approximately $20.0 million in annual cost savings in the first year with limited impact on the regulatory function of the CAT. Given that the vast majority of Options Market Maker Quotes do not involve any execution or allocation and are used for limited regulatory purposes, the current cost associated with processing and storing such quotes—approximately $30 million in 2023—far outweighs the regulatory value. Although they will no longer be subject to validation, feedback, linkage and lifecycle processing, or Plan Processor enrichments ( e.g., next event timestamp, lifecycle sequence number, CAT-Lifecycle-ID), Options Market Maker Quotes will continue to be reported and ingested in the same manner they are today, and unlinked data will remain accessible to regulators by T+1 at 12:00 p.m. through BDSQL and Direct Read interfaces.

(d) Proposed Revisions to CAT NMS Plan

Given the scope of requirements relating directly or indirectly to the current reporting of, linkage and lifecycle processing of, and regulator access to Options Market Maker Quotes and related Reportable Events that currently appear throughout the CAT NMS Plan, CAT LLC proposes to add a general provision to Appendix D that would expressly override any inconsistency with respect to Options Market Maker Quotes. The effect of this provision will be to override any requirements that generally apply to Reportable Events in the specific circumstance of Options Market Maker Quotes.

New Section 3.4 of Appendix D would be entitled “Requirements for Options Market Maker Quotes in Listed Options” and would state the following:

“3.4 Requirements for Options Market Maker Quotes in Listed Options

The provisions of this section shall govern the processing and storage of Options Market Maker Quotes in Listed Options and related Reportable Events and shall override any conflicting provisions in the CAT NMS Plan, this Appendix D, or Exchange Act Rule 17a-1.

Options Market Maker Quotes in Listed Options must be reported to the Central Repository as provided under Section 6.4(d)(iii) of the CAT NMS Plan. This data will undergo ingestion only and such unlinked data will be made available to regulators by T+1 at 12:00 p.m. Eastern Time. Options Market Maker Quotes in Listed Options will not be subject to any requirement to link and create an order lifecycle, and will not undergo any validation, feedback, linkage, or enrichment processing. Options Market Maker Quotes in Listed Options will be accessible through BDSQL and Direct Read interfaces only and will not be accessible through the online targeted query tool.”

In addition, CAT LLC proposes to amend certain provisions of Appendix D to include cross-references to new Section 3.4. First, CAT LLC proposes to amend Section 3 of Appendix D of the CAT NMS Plan to add the following statement: “As described in Section 3.4 of Appendix D, Options Market Maker Quotes in Listed Options and related Reportable Events will be subject to ingestion only and will not be subject to any linkage requirements.” Second, CAT LLC proposes to amend Section 6.1 of Appendix D of the CAT NMS Plan to add the following statement: “For the avoidance of doubt, processing and storage of Options Market Maker Quotes in Listed Options and related Reportable Events shall be governed by Section 3.4 of Appendix D.” Finally, CAT LLC proposes to amend Section 8.1.1 of Appendix D of the CAT NMS Plan to add the following statement: “As described in Section 3.4 of Appendix D, Options Market Maker Quotes in Listed Options and related Reportable Events will be accessible through BDSQL and Direct Read interfaces only and will not be accessible through the online targeted query tool.”

2. Move Raw Unprocessed Data and Interim Operational Copies of CAT Data Older Than 15 Days to a More Cost-Effective Storage Tier

(a) Overview

Under the current CAT NMS Plan, CAT Data must be “directly available and searchable electronically without manual intervention for at least six years,” and within certain query tool response times. This requirement applies not only to the final corrected data version that is delivered to regulators by T+5 at 8 a.m. ET, but also to raw unprocessed data and the various types of interim operational data that do not provide any value to CAT Reporters or to regulators after T+5, as well as copies of all submission and feedback files provided to CAT Reporters as part of the correction process (collectively, “Operational Data”).

Specifically, interim operational data includes all processed, validated and unlinked data made available to regulators by T+1 at 12:00 p.m. ET, and all iterations of processed data made available to regulators between T+1 and T+5 ( i.e., the interim data version available at T+1 at 9:00 p.m. ET). Under the CAT NMS Plan, the Plan Processor is required to make such data directly available and searchable electronically by regulators without any manual intervention. When a regulator queries CAT data, the CAT provides the latest, most current version to the user. Interim operational data is supplanted in all CAT query tools by the final version of corrected data that is made available at T+5 at 8:00 a.m. ET, but remains available to regulators after T+5 “without manual intervention” in accordance with the CAT NMS Plan via the use of CAT data management APIs. Regulators generally access the latest, corrected version of CAT data; accordingly, interim operational data generally does not provide any regulatory value after the final corrected data version is delivered by T+5 at 8 a.m. ET. After four years of operation, the Plan Processor has not seen any regulatory usage of this interim operational data.

Subject to the Commission's approval, significant cost savings could be achieved by archiving Operational Data older than 15 days to a more cost-effective storage tier that is optimized for infrequent access. Operational Data not older than 15 days, as well as all final, corrected data, would remain accessible “without manual intervention” within required query tool response times.

In each case, it would require some “manual intervention” by the Plan Processor to obtain such archived data for regulators. Under Section 10.3 of Appendix D of the CAT NMS Plan, the Plan Processor maintains a CAT Help Desk to, among other things, assist Participants' regulatory staff and the SEC with questions and issues regarding obtaining and using CAT Data for regulatory purposes. Upon request by the SEC or one of the Participants to the CAT Help Desk, archived data would be restored by the Plan Processor to an accessible storage tier, at which point it would be available and searchable electronically by regulatory users in the same manner it is today. The Plan Processor will develop policies and procedures to ensure the confidentiality of any regulator requests to obtain Operational Data. Archived data will be restored generally within several hours or business days of a request, depending on the volume and size of the date range of the requested data restore. For example, a request to restore a single day of data may take less than 24 hours, whereas a request to restore a year's worth of data may take several days. To put this in context, when the Commission adopted the CAT NMS Plan, it noted that “[m]ost current data sources do not provide direct access to most regulators, and data requests can take as long as weeks or even months to process.”

Accordingly, the Participants believe that the anticipated savings associated with optimizing storage costs as described herein substantially outweigh the minimal impact on regulatory access to CAT Data.

(b) Current CAT NMS Plan Requirements

Generally, Section 1.4 of Appendix D of the CAT NMS Plan provides that the Plan Processor must “[m]ake data directly available and searchable electronically without manual intervention for at least six years.” Section 6.5(b)(i) of the CAT NMS Plan provides that, “[c]onsistent with Appendix D, Data Retention Requirements, the Central Repository shall retain the information collected pursuant to paragraphs (c)(7) and (e)(7) of SEC Rule 613 in a convenient and usable standard electronic data format that is directly available and searchable electronically without any manual intervention by the Plan Processor for a period of not less than six (6) years.”

In addition, with respect to raw unprocessed data and interim operational copies of data created between T+1 and T+5, Section 6.2 of Appendix D of the CAT NMS Plan provides that, “[p]rior to 12:00 p.m. Eastern Time on T+1, raw unprocessed data that has been ingested by the Plan Processor must be available to Participants' regulatory staff and the SEC,” and “[b]etween 12:00 p.m. Eastern Time on T+1 and T+5, access to all iterations of processed data must be available to Participants' regulatory staff and the SEC.”

Under the current CAT NMS Plan, CAT Data must be accessible to regulatory users without “manual intervention.” Obtaining data from archive storage initially would require some manual intervention by the Plan Processor ( i.e., via request to the FINRA CAT Help Desk). Upon request, data would be restored by the Plan Processor to an accessible storage tier, at which point it would be available and searchable electronically by regulatory users in the same manner it is today.

In addition, Section 8.1.2 of Appendix D of the CAT NMS Plan sets forth certain performance requirements for the OTQT, including timeframes in which results must be returned for various types of queries.

(c) Estimated Cost Savings

Based on current data volumes, archiving Operational Data older than 15 days is expected to result in approximate annual cost savings of approximately $1.0 million. CAT LLC believes that these cost savings substantially outweigh the minimal impact on regulatory access to CAT Data.

(d) Proposed Revisions to CAT NMS Plan

CAT LLC proposes to amend the CAT NMS Plan to permit the Plan Processor to move Operational Data older than 15 days to a more cost-effective storage tier. Specifically, CAT LLC proposes to add new Section 6.3 to Appendix D of the CAT NMS Plan. New Section 6.3 would be entitled “Exceptions to Data Availability Requirements” and would state the following:

“6.3 Exceptions to Data Availability Requirements

Notwithstanding any other provision of the CAT NMS Plan, this Appendix D, or Exchange Act Rule 17a-1, the following types of data may be retained in an archive storage tier, in which case they will be made available upon request by Participant regulatory staff or the SEC to the CAT Help Desk. Archived data is not directly available and searchable electronically without manual intervention and will not be subject to any query tool performance requirements until it is restored to an accessible storage tier.

• All raw unprocessed data ( i.e., as submitted data) and interim operational data older than 15 days. Interim operational data includes all processed, validated and unlinked data made available to regulators by T+1 at 12:00 p.m. ET, and all iterations of processed data made available to regulators between T+1 and T+5, but excludes the final version of corrected data that is made available at T+5 at 8:00 a.m. ET.

• All submission and feedback files older than 15 days.

In addition, CAT LLC proposes to add references to new Section 6.3 of Appendix D throughout the CAT NMS Plan. Specifically, CAT LLC proposes to add the phrase “subject to the exceptions in Section 6.3 of Appendix D” to Section 6.5(d)(i) and Section 1.4 of Appendix D.

3. Provide an Interim CAT-Order-ID on an “As Requested” Basis

(a) Overview

CAT LLC proposes to amend the CAT NMS Plan to provide for delivery of an interim CAT-Order-ID on an “as requested” basis, rather than on a regular ongoing basis. Specifically, where there is an immediate regulatory need (for example, in the case of a major market event), upon request of a senior officer of the Division of Trading and Markets, the Division of Enforcement, or the Division of Examinations to CAT LLC, the Plan Processor would be directed create an interim CAT-Order-ID and make it available to regulators by T+1 at 9 p.m. ET if the request is received prior to T+1 at 8 a.m. ET, or generally within 14 hours of receiving the request if such request was received after T+1 at 8 a.m. ET. This would preserve the SEC's ability to obtain an interim CAT-Order-ID on an as needed basis, while avoiding the substantial cost of delivering an interim CAT-Order-ID on a regular ongoing basis.

Subject to the proposals described above with respect to Options Market Maker Quotes, there would be no change to any other aspect of the CAT NMS Plan requirements for the processing of data, error feedback, and final delivery of data to regulators by T+5 at 8 a.m. ET, and no impact to Industry Members. Consistent with current CAT NMS Plan requirements, prior to 12:00 p.m. ET on T+1, regulators will continue to have access to raw unprocessed data that has been ingested by the Plan Processor, and between 12:00 p.m. on T+1 and T+5, regulators will continue to have access to all iterations of unlinked, processed data.

This change is estimated to result in approximately $2 million in annual compute savings, with minimal regulatory impact. Based on current data volumes, the estimated cost of an ad hoc interim CAT-Order-ID delivery is approximately $10,000 to $12,000 per request. CAT LLC would add a separate line item to its budget to reflect costs related to any SEC requests to generate an interim CAT-Order-ID.

The Participants believe that the anticipated savings associated with this change substantially outweigh the minimal regulatory impact.

(b) Current CAT NMS Plan Requirements

Appendix D, Section 6.1 of the CAT NMS Plan states that “Noon Eastern Time T+1 (transaction date + one day)” is the deadline for “initial data validation, lifecycle linkages and communication of errors to CAT Reporters.” The CAT NMS Plan further explains that the Plan Processor must “link and create the order lifecycle” using a “daisy chain approach,” in which, “a series of unique order identifiers assigned to all order events handled by CAT Reporters are linked together by the Central Repository and assigned a single CAT-generated CAT-Order-ID that is associated with each individual order event and used to create the complete lifecycle of an order.”

Pursuant to a Commission exemptive order, the Plan Processor assigns an interim CAT-Order-ID by T+1 at 9 p.m. ET, rather than by the T+1 at noon Eastern Time deadline set forth in the CAT NMS Plan. The Plan Processor subsequently provides a final CAT-Order-ID at T+5 at 8 a.m. ET, pursuant to the following timeline:

T+1 @8 a.m. ET: Initial submissions due

T+1 @12 p.m. ET: Initial data validation, communication of errors to CAT Reporters; unlinked data available to regulators

T+1 @9 p.m. ET: Interim CAT-Order-ID available

T+3 @8 a.m. ET: Resubmission of corrected data

T+4 @8 a.m. ET: Final lifecycle assembly begins, reprocessing of late submissions and corrections

T+5 @8 a.m. ET: Corrected data available to Participant regulatory staff and the SEC

CAT LLC proposes to clarify that the Plan does not require assignment of interim CAT-Order-IDs on a regular ongoing basis; rather, interim CAT-Order-IDs shall be provided on an “as requested” basis. Specifically, upon request of a senior officer of the Division of Trading and Markets, the Division of Enforcement, or the Division of Examinations to CAT LLC, the Plan Processor would be directed create an interim CAT-Order-ID and make it available to regulators by T+1 at 9 p.m. ET if the request is received prior to T+1 at 8 a.m. ET, or generally within 14 hours of receiving the request if such request was received after T+1 at 8 a.m. ET. There would be no change to any other aspect of the processing timeline.

(c) Estimated Cost Savings

Based on current data volumes, providing for delivery of an interim CAT-Order-ID on an “as requested” basis, rather than on a regular ongoing basis, is estimated to result in approximately $2 million in annual savings. CAT LLC believes that these cost savings are readily justified given the minimal impact on regulatory access to CAT Data.

Based on current data volumes, the estimated cost of an ad hoc interim CAT-Order-ID delivery is approximately $10,000 to $12,000 per request. CAT LLC would add a separate line item to its budget to reflect costs related to any SEC requests to generate an interim CAT-Order-ID.

While CAT LLC believes it would be reasonable and appropriate to incur such cost to address a pressing regulatory need on an as needed basis, such as in the event of a market event, the substantial cost of delivering an interim CAT-Order-ID on a continuous basis outweighs any regulatory benefit.

(d) Proposed Revisions to CAT NMS Plan

CAT LLC proposes to amend the CAT NMS Plan to eliminate the requirement to provide an interim CAT-Order-ID on a regular ongoing basis. Specifically, CAT LLC proposes to delete the phrase “lifecycle linkages” from the following bullet in Section 6.1 of Appendix D of the CAT NMS Plan: “Noon Eastern Time T+1 (transaction date + one day)—Initial data validation, lifecycle linkages and communication of errors to CAT Reporters.” Similarly, CAT LLC proposes to delete the phrase “Life Cycle Linkage” from the second box in Figure A in Section 6.1 of Appendix D of the CAT NMS Plan. The box currently states the following: “12:00 p.m. ET T+1 Initial Validation, Life Cycle Linkage, Communication of Errors.” With the change, this box would state “12:00 p.m. ET T+1 Initial Validation, Communication of Errors.”

CAT LLC also proposes to amend the CAT NMS Plan to require CAT LLC to provide an interim CAT-Order-ID on an “as requested” basis. Specifically, CAT LLC proposes to add the following provision to Section 6.1 of Appendix D of the CAT NMS Plan: “Where there is an immediate regulatory need (for example, in the case of a major market event), upon request of a senior officer of the Division of Trading and Markets, the Division of Enforcement, or the Division of Examinations to CAT LLC, the Plan Processor shall be directed to create an interim CAT-Order-ID and make it available to regulators by T+1 at 9 p.m. ET if the request is received prior to T+1 at 8 a.m. ET, or generally within 14 hours of receiving the request if such request was received after T+1 at 8 a.m. ET.”

4. Incorporate Exemptive Relief Permitting Deletion of Industry Test Data Older Than Three Months and Include CAIS Data

(a) Overview; Prior Commission Exemptive Order

CAT Reporters engage in testing related to the reporting of order and transaction data to the CAT, both pursuant to required testing and on a voluntary basis. In connection with this testing, CAT LLC, through the Plan Processor, retains the test data submitted by Industry Members and Participants, feedback files related to such data, and output files that hold the detailed transactions, referred to herein as “Industry Test Data”.

On June 2, 2023, CAT LLC requested exemptive relief from Rule 17a-1 under the Exchange Act and certain provisions of the CAT NMS Plan relating to the retention of Industry Test Data beyond three months. On November 27, 2023, the Commission granted the requested relief. The exemptive request and the Commission's order apply only to Industry Test Data related to the CAT order and transaction system, not to the customer account and information system (“CAIS”).

CAT LLC is now proposing to incorporate the exemptive relief into the CAT NMS Plan to clarify that data from industry testing for both Industry Members and Participants may be deleted after three months. In addition, the amendments would apply to Industry Test Data related to both transaction system and CAIS data.

(b) Current CAT NMS Plan Requirements; Exchange Act Rule 17a-1

Appendix D of the CAT NMS Plan specifically requires the retention of Industry Test Data for three months only. Specifically, Appendix D of the CAT NMS Plan states that “[d]ata from industry testing must be saved for three months.” Separate from this specific three-month retention requirement in Appendix D of the CAT NMS Plan, Rule 17a-1 under the Exchange Act and other more general recordkeeping provisions of the CAT NMS Plan set forth lengthier record retention periods of five and six years, respectively. Rule 17a-1 under the Exchange Act requires every national securities exchange and national securities association “to keep and preserve at least one copy of all documents, including all correspondence, memoranda, papers, books, notices, accounts, and other such records as shall be made or received by it in the course of its business as such and in the conduct of its self-regulatory activity,” and to keep all such documents “for a period of not less than five years, the first two years in an easily accessible place, subject to the destruction and disposition provisions of Rule 17a-6.” The CAT is a facility of each of the Participants to the CAT NMS Plan. In addition, Section 9.1 of the CAT NMS Plan, the general recordkeeping provision for the CAT NMS Plan, incorporates by reference the requirements of Rule 17a-1 under the Exchange Act. Specifically, Section 9.1 of the CAT NMS Plan states, in relevant part, that “[t]he Company shall maintain complete and accurate books and records of the Company in accordance with SEC Rule 17a-1.”

(c) Estimated Cost Savings

Prior to the Commission's exemptive order, the Plan Processor had been retaining Industry Test Data beyond the three-month period prescribed by Appendix D of the CAT NMS Plan; eliminating Industry Test Data older than three months as permitted by the exemptive order is expected to achieve approximately $1 million per year in savings. The proposed amendments would not generate additional cost savings beyond those achievable pursuant to the exemptive order, but would incorporate the exemptive relief into the CAT NMS Plan itself.

Proposed Revisions to CAT NMS Plan

CAT LLC proposes to amend the CAT NMS Plan to clarify that Industry Test Data related to both the CAT order and transaction system and to CAIS may be deleted after three months. Specifically, CAT LLC proposes to revise the following bullet in Section 1.2 of Appendix D of the CAT NMS Plan: “Data from industry testing must be saved for three months. Operational metrics associated with industry testing (including but not limited to testing results, firms who participated, and amount of data reported and linked) must be stored for the same duration as the CAT production data.” CAT LLC proposes to add the following as the second sentence of the bullet: “Notwithstanding any other provision of the CAT NMS Plan, this Appendix D, or Exchange Act Rule 17a-1, such test data (whether related to the CAT order and transaction system or the customer account and information system) may be deleted by the Plan Processor after three months.” With this phrase, the bullet would state: “Data from industry testing must be saved for three months. Notwithstanding any other provision of the CAT NMS Plan, this Appendix D, or Exchange Act Rule 17a-1, such test data (whether related to the CAT order and transaction system or the customer account and information system) may be deleted by the Plan Processor after three months. Operational metrics associated with industry testing (including but not limited to testing results, firms who participated, and amount of data reported and linked) must be stored for the same duration as the CAT production data.”

B. Governing or Constituent Documents

Not applicable.

C. Implementation of Amendment

The Participants propose to implement the proposal upon approval of the proposed amendment to the CAT NMS Plan.

D. Development and Implementation Phases

Not applicable.

E. Analysis of Impact on Competition

CAT LLC does not believe that the proposed amendment would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Exchange Act. Indeed, CAT LLC believes that the proposed amendments will have a positive impact on competition, efficiency and capital formation. The proposed amendments will provide substantial savings in CAT costs while providing minimal impact on the regulatory use of CAT Data. Such substantial savings would inure to the benefit of all participants in the markets for NMS Securities and OTC Equity Securities, including Participants, Industry Members, and most importantly, the investors.

F. Written Understanding or Agreements Relating To Interpretation of, or Participation in Plan

Not applicable.

G. Approval by Plan Sponsors in Accordance With Plan

Section 12.3 of the CAT NMS Plan states that, subject to certain exceptions, the CAT NMS Plan may be amended from time to time only by a written amendment, authorized by the affirmative vote of not less than two-thirds of all of the Participants, that has been approved by the SEC pursuant to Rule 608 of Regulation NMS under the Exchange Act or has otherwise become effective under Rule 608 of Regulation NMS under the Exchange Act. In addition, the proposed amendment was discussed during Operating Committee meetings. The Participants, by a vote of the Operating Committee taken on March 26, 2024, have authorized the filing of this proposed amendment with the SEC in accordance with the CAT NMS Plan.

H. Description of Operation of Facility Contemplated by the Proposed Amendment

Not applicable.

I. Terms and Conditions of Access

Not applicable.

J. Method of Determination and Imposition, and Amount of, Fees and Charges

Not applicable.

K. Method and Frequency of Processor Evaluation

Not applicable.

L. Dispute Resolution

Not applicable.

Exhibit A

Proposed Revisions to CAT NMS Plan

Additions underlined; deletions [bracketed]

III. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the foregoing, including whether the amendment is consistent with the Exchange Act. Comments may be submitted by any of the following methods:

Electronic Comments

• Use the Commission's internet comment form ( https://www.sec.gov/rules/sro.shtml ); or

• Send an email to rule-comments@sec.gov. Please include file number 4-698 on the subject line.

Paper Comments

• Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to file number 4-698. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website ( https://www.sec.gov/rules/sro.shtml ). Copies of the submission, all subsequent amendments, all written statements with respect to the proposed amendment that are filed with the Commission, and all written communications relating to the proposed amendment between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal offices of the Participants. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number 4-698 and should be submitted on or before May 7, 2024.