3235-0509 Supporting Statement (2023 Proposed Partial Revision)

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for Regulation
of Alternative Trading Systems – Rule 301
(OMB Control No. 3235-0509)
Proposed Partial Revision
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

JUSTIFICATION
1.

Necessity of Information Collection

In 1998, the Commission adopted Regulation ATS, which established a new regulatory
framework for alternative trading systems (“ATS”), which allows entities that meet the definition
of “exchange” under Section 3(a)(1) of the Securities Exchange Act of 1934 (“Exchange Act”)
and Exchange Act Rule 3b-16(a) thereunder to choose between registering as a national
securities exchange or registering as a broker-dealer and complying with Regulation ATS. 1 An
organization, association, or group of persons that chooses to operate as an ATS pursuant to the
exemption provided by Exchange Act Rule 3a1-1(a)(2) must comply with Regulation ATS,
including registering as a broker-dealer.
Regulation ATS is composed of Rules 300, 2 301, 3 302, 4 303, 5 and 304. 6 Rule 300
defines terms. Rule 301 sets forth the conditions that an ATS must meet to be exempt under
Rule 3a1-1(a)(2), including the requirement that an ATS be registered as a broker-dealer. Rule
301 contains certain notice and reporting requirements, as well as additional obligations that only
apply to ATSs with significant volume. 7 Rule 302 establishes a set of records relating to trading
1

See 17 CFR 240.3b-16. See generally Securities Exchange Act Release No. 40760
(December 8, 1998), 63 FR 70844, 70863 (December 22, 1998) (Regulation of
Exchanges and Alternative Trading Systems); see also Securities Exchange Act Release
No. 83663 (July 18, 2018), 83 FR 38768 (August 7, 2018) (“NMS Stock ATS Adopting
Release”); Securities Exchange Act Release No. 76474 (November 18, 2015), 80 FR
80998, 81004 (December 28, 2015) (“NMS Stock ATS Proposing Release”).

2

Rule 300 does not include a collection of information.

3

See OMB Control No. 3235-0509.

4

See OMB Control No. 3235-0510.

5

See OMB Control No. 3235-0505.

6

See OMB Control No. 3235-0763.

7

In November 2014, the Commission adopted Regulation Systems Compliance and
Integrity (“Regulation SCI”) to require certain key market participants to, among other
things: (1) have comprehensive policies and procedures in place to help ensure the
robustness and resiliency of their technological systems, and also that their technological
systems operate in compliance with the federal securities laws and with their own rules;

activity that the ATS must make. Rule 303 establishes requirements for the preservation of
certain records that ATSs must make. 8
The equity markets have evolved substantially since the adoption of Regulation ATS, and
the Commission has adopted amendments to Regulation ATS to improve the operational
transparency of ATSs that trade in NMS stocks (“NMS Stock ATSs”). 9 The majority of
substantive changes in the new amendments to Regulation ATS are in Rule 304 and Form ATSN. Rule 304 establishes new conditions for NMS Stock ATSs seeking to rely on the exemption
from the definition of “exchange” provided by Rule 3a1-1(a) of the Exchange Act. 10 Form ATSN requires NMS Stock ATSs to publicly disclose, among other things, information about the
broker-dealer operator, the NMS Stock ATS’s manner of operations, and the ATS-related
activities of the broker-dealer operator and its affiliates. 11 The collection of information in Rule
304 and Form ATS-N are discussed in the Supporting Statement for OMB No. 3235-0763.
Thus, NMS Stock ATSs would no longer comply with the filing requirements of Rule 301(b)(2).
Instead, NMS Stock ATSs must file Form ATS-N pursuant to Rule 304 of Regulation ATS.
In the NMS Stock ATS Adopting Release, we adopted related amendments to existing

and (2) provide certain notices and reports to the Commission to improve Commission
oversight of securities market infrastructure. Regulation SCI was adopted to update,
formalize, and expand the Commission’s ARP Inspection Program, and, with respect to
SCI entities, to supersede and replace the Commission’s ARP Policy Statements, as well
as certain rules regarding systems capacity, integrity, and security in Rule 301(b)(6) of
Regulation ATS that relate to ATSs that trade NMS stocks and equity securities that are
not NMS stocks. See Securities and Exchange Act Release No. 73639 (November 19,
2014), 79 FR 72251 (December 5, 2014). Given the inclusion of ATSs that trade NMS
stocks and equity securities that are not NMS stocks within the scope of Regulation SCI,
the Commission amended Rule 301(b)(6) of Regulation ATS so that it will no longer
apply to ATSs that trade NMS stocks and equities securities that are not NMS stocks.
8

The Commission is submitting separate information collections for Rules 301, 303, and
304 of Regulation ATS because we consider this method to be the most practical and
efficient manner in which to organize the collections. The collections associated with
each rule serve different purposes: the collection in Rule 301 relates in large part to Form
ATS; Rule 304 relates primarily to Form ATS-N; and Rule 303 is the associated record
preservation requirements.

9

See NMS Stock ATS Adopting Release, supra note Error! Bookmark not defined..

10

We have adopted conforming amendments to Rule 300 of Regulation ATS and Exchange
Act Rule 3a1-1(a).

11

Form ATS-N expands on the information contained in Form ATS and is made public. The
Commission continues to collect information for Form ATS for non-NMS Stock ATSs and
Form ATS-R. Both Form ATS and Form ATS-R remain confidential. Although an ATS
may voluntarily publish its Form ATS and Form ATS-R, these forms are otherwise available
only to the examination of the Commission staff, state securities authorities, and selfregulatory organizations (“SROs”).

Rule 301 of Regulation ATS. Specifically, we amended Rule 301(b)(10) of Regulation ATS 12 to
require every ATS to memorialize in writing its safeguards and procedures to protect
subscribers’ confidential trading information. Such safeguards and procedures were already
mandated under Rule 301(b)(10); however, the rule did not require that the safeguards and
procedures be memorialized in writing. We believe that the requirement (which will apply to all
ATSs and not just NMS Stock ATSs) to memorialize in writing the safeguards and procedures to
protect subscribers’ confidential trading information help assist ATSs in more effectively
complying with their existing legal requirements under Regulation ATS; in particular, the
requirements to protect the confidentiality of subscribers’ trading information under Rule
301(b)(10) of Regulation ATS.
2022 Proposed Rulemaking Affecting this OMB Control Number
In January 2022, the Commission proposed amendments to Regulation ATS and
Exchange Act Rule 3b-16, which defines certain terms in the definition of “exchange” under
section 3(a)(1) of the Exchange Act. 13 In April 2023, the Commission provided supplemental
information and reopened the comment period for the 2022 Reg ATS Proposing Release. 14
These proposed amendments would increase the number of respondents for the collections of
information in several rules, including this one. This revision also increases certain hour burdens
related to proposed changes to Forms ATS and ATS-R, as described below.
The Commission assumed in both the 2022 Reg ATS Proposing and 2023 Reg ATS
Reopening Releases that, under the proposed amendments, systems that would be newly
captured under the proposed definition of “exchange” will choose to register as broker-dealers
and comply with the conditions of Regulation ATS rather than register as a national securities
exchange, because of the lighter regulatory requirements imposed on ATSs, as compared to
registered exchanges. 15 Accordingly, this proposed revision to the PRA analysis for Rule 301
increases the estimated number of respondents, in light of the 2022 Reg ATS Proposing and
2023 Reg ATS Reopening Releases, to include both (1) Government Securities ATSs that were
12

See 17 CFR 242.301(b)(10).

13

See Securities Exchange Act Release No. 94062 (Jan. 26, 2022), 87 FR 15496 (Mar. 18,
2022) (“2022 Reg ATS Proposing Release”). The Commission proposed to, among other
things: (1) amend Rule 3b-16 under the Exchange Act to, among other things, include
within the definition of “exchange” systems that offer the use of non-firm trading interest
and provide non-discretionary protocols to bring together buyers and sellers of securities;
(2) eliminate the exemption from compliance with Regulation ATS for ATSs that trade
government securities as defined under Section 3(a)(42) of the Exchange Act
(“government securities”) or repurchase and reverse repurchase agreements on
government securities (“Government Securities ATSs”).

14

See Securities Exchange Act Release No. 97309 (Apr. 14, 2023), 88 FR 29448 (May 5,
2023) (“2023 Reg ATS Reopening Release”). The Commission reopened the comment
period for the 2022 Reg ATS Proposing Release and provided supplemental information
and economic analysis regarding trading systems that trade crypto asset securities that
would be newly included in the definition of “exchange” under the proposal.

15

See 2022 Reg ATS Proposing Release, supra note 13, at 15618 n.1056 and accompanying
text.

formerly not required to comply with Regulation ATS under the 17 CFR 240.3a1-1(a)(3)
(Exchange Act Rule 3a1-1(a)(3)) exemption and (2) systems that would be newly captured under
the proposed definition of “exchange” and choose to register as broker-dealers and comply with
the conditions of Regulation ATS rather than register as national securities exchanges.
Additionally, this proposed revision would also increase certain hour burdens related to proposed
changes to Forms ATS and ATS-R, as described below, which would apply to new and existing
respondents.
2.

Purpose and Use of the Information Collection

Rule 301 of Regulation ATS sets forth the conditions that an ATS must comply with to
be exempt pursuant to Exchange Act Rule 3a1-1(a)(2). Rule 301 requires an ATS to register as a
broker-dealer. Rule 301 further requires all ATSs that wish to comply with Regulation ATS to
file an initial operation report on Form ATS. The initial operation report requires information
regarding operation of the system including the method of operation, access criteria, and the
types of securities traded. ATSs are also required to amend Form ATS to the Commission,
describing material changes to the system.
In addition, Regulation ATS requires ATSs to provide quarterly transaction reports on
Form ATS-R. ATSs are also required to file cessation of operations reports on Form ATS. The
gathering of such information permits the Commission to oversee the operation of such systems
and track the growth of their role in the securities markets.
ATSs with significant volume in certain categories of securities are required to comply
with requirements for fair access and systems capacity, integrity and security pursuant to Rule
301(b)(5) (“Fair Access Rule”) and Rule 301(b)(6) ("Systems Capacity, and Integrity Rule”) of
Regulation ATS, respectively. An ATS subject to the Fair Access Rule is required to establish
standards for granting access to trading on the system and keep records of all grants of access
including, for all subscribers, the reasons for granting such access, and all denials or limitations of
access, and the reasons for each applicant for denying or limiting access. In addition, upon a
decision to deny or limit a subscriber’s access to the system, an ATS is required to provide notice
to the subscriber of the denial or limitation and their right to an appeal to the Commission. An
ATS subject to the System Capacity, and Integrity Rule is required to preserve any records made
in the process of complying with the systems capacity, integrity, and security requirements. In
addition, such ATSs are required to notify Commission staff of material systems outages and
significant systems changes.
We use the information provided pursuant to Rule 301 to comprehensively monitor the
growth and development of ATSs to confirm that investors effecting trades through the systems
are adequately protected, and that the systems do not impede the maintenance of fair and orderly
securities markets or otherwise operate in a manner that is inconsistent with the federal securities
laws. In particular, the information collected and reported to us by ATSs enables us to evaluate
the operation of ATSs with regard to national market system goals, and monitor the competitive
effects of these systems to ascertain whether the regulatory framework remains appropriate to the
operation of such systems.
Without the information provided on Forms ATS and ATS-R, the Commission would not
have readily available information on a regular basis in a format that will allow it to determine
whether such systems have adequate safeguards. Further, in the absence of the Rule, the

Commission would not regularly obtain uniform trading data to identify areas where surveillance
by SROs may be more appropriately tailored to the detection of fraudulent, deceptive and
manipulative practices that may be peculiar to an automated trading environment. In sum,
without the data required by Rule 301, the Commission would be limited in its ability to comply
with its statutory obligations, provide for the protection of investors, and promote the
maintenance of fair and orderly markets.
Furthermore, in connection with the NMS Stock ATS Adopting Release, the requirement
for an ATS to reduce to writing those safeguards and procedures under Rule 301(b)(10) helps
Commission staff, and the staff of the SRO of which an ATS’s broker-dealer operator is a
member, evaluate whether an ATS has established such procedures and safeguards, whether the
ATS has implemented and is abiding by them, and whether they comply with the requirements of
Rule 301(b)(10). This enables the Commission and the applicable SRO(s) to exercise more
effective oversight of ATSs regarding the ATSs’ compliance with Rule 301(b)(10) and other
federal securities laws, rules, and regulations.
3.

Consideration Given to Information Technology

Currently, ATSs are required to submit paper submissions of Forms ATS and ATS-R to
the Commission.16 In the 2022 Reg ATS Proposing Release, the Commission proposed to revise
the instructions to Form ATS and Form ATS-R to require that they be submitted electronically
via the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”). 17 The
Commission believes that, among other benefits, the electronic filing of Forms ATS and ATS-R
would increase efficiencies and decrease filing costs for ATSs (i.e., ATSs would no longer be
required to print and mail paper filings) and for the Commission staff when undertaking a review
of these forms.
4.

Duplication

Because most ATSs would maintain much of the information required by Rule 301, no
duplication occurs with respect to such information. To the extent that Rule 301 establishes new
collections of information, there is no similar information available that could replace the information
required.
The Commission has adopted Rule 301(b)(2)(viii) of Regulation ATS to provide that an
NMS Stock ATS shall file the reports and amendments required by Rule 304 of Regulation ATS and
would not be subject to the requirements of Rule 301(b)(2). Existing Rule 301(b)(2) requires an
ATS to file with the Commission a Form ATS initial operation report, amendments to the Form ATS
initial operation report, and cessation of operations reports on Form ATS, all of which are “deemed
confidential when filed.” 18 Because the Commission has adopted rules to govern the content and
manner in which an NMS Stock ATS would be required to disclose information to the public on
Form ATS-N, existing Rule 301(b)(2) would be duplicative of the amendments and is no longer
required for NMS Stock ATSs.
16

See 17 CFR 242.301(b)(2)(vii).

17

See 2022 Reg ATS Proposing Release, supra note Error! Bookmark not defined.,
Section V.B.

18

See 17 CFR 242.301(b)(2).

Because Regulation SCI would duplicate the requirements under Rule 301(b)(6) of
Regulation ATS as applied to ATSs that trade NMS stocks and equity securities that are not NMS
stocks, the Commission amended Rule 301(b)(6) so that it will no longer apply to ATSs that trade
NMS stocks and equity securities that are not NMS stocks.
5.

Effect on Small Entities

Rule 301 is one of general applicability that mostly does not depend on the size of the
system. Fair access reporting requirements and system capacity, integrity and security requirements
apply only to ATSs that have significant volume. The filing requirements on Forms ATS and ATSR, however, apply to all ATSs regardless of size. Therefore, the Rule could apply to small
businesses. Pursuant to 17 CFR 240.0-10(c), the term “small business” or “small organization”
when used in reference to a broker-dealer means a broker-dealer that has total capital (net worth plus
subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which its
audited financial statements were prepared pursuant to 17 CFR 240.17a-5(d) or, if not required to
file such statements, a broker-dealer that had total capital of less than $500,000 on the last business
day of the preceding fiscal year (or in the time that it has been in business); and is not affiliated with
any person (other than a natural person) that is not a small business or small organization as defined
in 17 CFR 240.0-10. We estimate that 16 ATSs that would register as broker-dealers are small
entities as currently defined by the Exchange Act that would be subject to the filing requirements of
Form ATS. We further estimate that 17 ATSs are small entities that would be subject to the filing
requirements of Form ATS-R.19
The amendment to Rule 301(b)(10) would apply to 17 small entities that are ATSs
(including NMS Stock ATSs and non-NMS Stock ATSs), but we believe that there would be no
significant economic impact on these entities because, to the extent they do not have these
safeguards and procedures in writing, any resulting burden is minimal because the ATS would
only be memorializing its existing safeguards and procedures.
Because the risks that the Commission monitors in the operation of an ATS occur in any
size business, we have determined that the Rule must apply in the same manner to small as well as
large entities. Hence, the Rule does not contain an exemption for small entities. However, we note
that Regulation ATS imposes additional duties on ATSs that have large volumes, which are not
likely to be such small entities.
6.

Consequences of Not Conducting Collection

Without the information provided on Forms ATS and ATS-R, we would not have readily
available information on a regular basis in a format that will allow us to determine whether such
systems have adequate safeguards. Further, in the absence of the amendments to Regulation
ATS adopted in the NMS Stock ATS Adopting Release, we would not regularly obtain uniform
trading data to identify areas where surveillance by SROs may be more appropriately tailored to
the detection of fraudulent, deceptive, and manipulative practices that may be peculiar to an
automated trading environment. In sum, without the data required by Rule 301, we would be
limited in our ability to comply with our statutory obligations to provide for the protection of
19

We estimate that 1 of the estimated 17 small entities is an NMS Stock ATS that would
not be subject to the filing requirements of Form ATS (and instead comply with Rule
304).

investors and promote the maintenance of fair and orderly markets.
Additionally, requiring ATSs to reduce to writing the safeguards and procedures required
by Rule 301(b)(10) of Regulation ATS, as well as its oversight procedures to ensure that such
safeguards and procedures are followed, strengthens the effectiveness of the ATS’s safeguards
and procedures and will better enable the ATS to protect confidential subscriber trading
information and implement and monitor the adequacy of, and the ATS’s compliance with, its
safeguards and procedures.
7.

Inconsistencies with Guidelines in 5 CFR 1320.5(d)(2)

There are no special circumstances. This collection is consistent with the guidelines in 5
CFR 1320.5(d)(2).
8.

Consultations Outside the Agency

In the 2022 Reg ATS Proposing Release, the Commission solicited comment on the
accuracy of the burden of the proposed revisions to the seven collections of information
contained in the proposal. 20 The Commission did not receive comments specifically relating to
the collection of information for this OMB Control Number, but it did receive general comments
questioning whether the Commission had underestimated the number of newly-designated ATSs,
particularly systems that trade crypto asset securities and systems commenters characterize as
decentralized finance or “DeFi,” 21 which would, in turn, affect the number of estimated
respondents for this collection of information. In the 2023 Reg ATS Reopening Release, the
Commission increased the estimated number of respondents for this collection of information
specifically to account for the types of systems raised by commenters, as detailed below. The
Commission has not yet received specific comments related to the PRA analysis contained in the
2023 Reg ATS Reopening Release. The Commission will consider all comments received
before adoption of a final rule.
9.

Payment or Gift

The respondents receive no payments or gifts.

20
21

See 2022 Reg ATS Proposing Release, supra note 13, at 15593.
See Letter from Robert Toomey, Managing Director, Associate General Counsel,
SIFMA, dated Jun. 13 2022, at 5-6; Letter from Gus Coldebella and Gregory Xethalis,
dated Apr. 19, 2022, at 4-5; Letter from Sheila Warren, Chief Executive Officer, Crypto
Council for Innovation, dated Apr. 18, 2022, at 4; Letter from Kristin Smith, Executive
Director, and Jake Chervinsk, Head of Policy, Blockchain Association, dated Apr. 18,
2022, at 7-8; Letter from Renata K. Szkoda, Chair, Global Digital Asset &
Cryptocurrency Association, dated Apr. 18, 2022, at 6; Letter from LeXpunK, dated Apr.
18, 2022, at 11; Letter from Miller Whitehouse-Levine, Policy Director, DeFi Education
Fund, dated Apr. 18, 2022, at 16-17; Letter from Paul Grewal, Chief Legal Officer,
Coinbase, dated Apr. 18, 2022, at 6; Letter from Teana Baker-Taylor, Chief Policy
Officer, Chamber of Digital Commerce, et al., dated Mar. 24, 2022, at 5; all available at
https://www.sec.gov/comments/s7-02-22/s70222.htm.

10.

Confidentiality

Form ATS and Form ATS-R are available only for the examination of the Commission
staff, state securities authorities, and the SROs. Subject to the provisions of the Freedom of
Information Act, 5 U.S.C. § 522 (“FOIA”), and the SEC’s rules thereunder (17 CFR
200.80(b)(4)(iii)), the Commission does not generally publish or make available information
contained in any reports, summaries, analyses, letters, or memoranda arising out of, in
anticipation of, or in connection with an examination or inspection of the books and records of
any person or any other investigation.
11.

Sensitive Questions

The information collection collects basic personally identifiable information that includes
name, job title, telephone number, and fax number. However, the agency has determined that the
information does not constitute a system of records for purposes of the Privacy Act. Information
is not retrieved by a personal identifier.
12.

Burden of Information Collection
a. Form ATS – Initial Operations Report

An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption must file an
Initial Operations Report on Form ATS prior to commencing operations. We continue to estimate
that approximately 49 respondents22 will file an Initial Operations Report on Form ATS each year,
and that the average compliance burden for each respondent would be approximately 20.5 hours,
comprised of 13 hours of in-house attorney work and 7.5 hours for a compliance clerk. 23 Thus, the
total time burden per year is approximately 1,004.5 hours (49 responses x 20.5 hours = 1,004.5
hours).
b. Form ATS – Periodic Amendments to Update Information
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption must file
amendments to the Initial Operations Report on Form ATS to provide notice of material systems
changes and reflect other changes. We continue to estimate that each ATS that files Form ATS
22

The Commission’s tally of such reports filed in 2019 and 2020 was 17. The Commission
estimates 96 additional respondents in the 2022 Reg ATS Proposing and 2023 Reg ATS
Reopening Releases. See 2022 Reg ATS Proposing Release, supra note 13, at 15588-89
(estimating 59 existing respondents that would continue to file on Form ATS); 2023 Reg
ATS Reopening Release, supra note 14, at 29466-67 estimating 37 newly-designated
ATSs required to file on Form ATS). Annualized over 3 years, this number would be 32
(96 respondents / 3 years). Accordingly, the total number of respondents per year would
be 49 (17 + 32).

23

The Commission is proposing amendments to Part I of Form ATS, which would add an
additional burden of 0.5 hours per filing using the modernized form (Compliance Clerk at
0.5 hours), an increase of 0.5 hours from the currently approved baseline burden of 20
hours for average initial compliance. See 2022 Reg ATS Proposing Release, supra note
13, at 15588 n.759 and accompanying text.

will file 2 amendments yearly. We estimate that the average compliance burden for each
response would be approximately 2.5 hours, comprised of 1.5 hours for an in-house attorney and
1 hour for a compliance clerk, for a yearly burden of 5 hours per respondent (2 responses x 2.5
hours). 24 The Commission estimates in the 2022 Reg ATS Proposing and 2023 Reg ATS
Reopening Releases that in addition to the approximately 60 current Form ATS filers that would
be required to continue filing on Form ATS, 25 there would be 37 new Form ATS respondents, 26
for a total of 97 respondents. Thus, the total time burden per year is approximately 485 hours (97
responses x 5 hours = 485 hours).
c. Form ATS-R – Quarterly Reports
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption (both NMS
Stock ATS and non-NMS Stock ATS) must file quarterly reports on Form ATS-R. Each of the
estimated 147 respondents -- approximately 94 existing ATSs 27 and 53 additional respondents
estimated in the 2022 Reg ATS Proposing and 2023 Reg ATS Reopening Releases 28 -- will file 4
quarterly reports per year for 588 responses (147 x 4). We estimate that the average time burden for
each response would be approximately 4.75 hours, comprised of 3 hours for an in-house attorney,
.25 hours for a compliance manager, and 1.5 hours for a compliance clerk. 29 This would result in a
total time burden per year of approximately 2,793 hours (4.75 hours x 588 responses).
Under Rule 304 of Regulation ATS, 2 ATSs that trade in NMS stocks and non-NMS
stocks are required to file four additional quarterly reports for their NMS stock trading activity.
Although we do not believe that those ATSs will incur any additional burden to collect the
required information because they currently assemble that information when preparing their
current Form ATS-R filings, we believe that they will incur an additional 0.5 hour burden to
24

The Commission is proposing amendments to Part I of Form ATS, which would add an
additional burden of 1 hour per filing using the modernized form (Compliance Clerk at
0.5 hours x 2 responses a year), an increase of 1 hour from the currently approved
baseline burden of 4 hours for average ongoing compliance. See 2022 Reg ATS
Proposing Release, supra note 13, at 15588 n.760 and accompanying text.

25

See 2022 Reg ATS Proposing Release, supra note 13, at 15588-89.

26

See 2023 Reg ATS Reopening Release, supra note 14, at 29466-67 (estimating 37 newlydesignated ATSs).

27

This is based on the number of ATSs as of September 30, 2021.

28

See 2022 Reg ATS Proposing Release, supra note 13, at 15589-90 (estimating 7
Government Securities ATSs currently exempted from the requirements of Regulation
ATS); 2023 Reg ATS Reopening Release, supra note 14, at 29467 (estimating 46 newlydesignated ATSs).

29

The Commission is proposing amendments to Form ATS-R, which would add an
additional burden of 0.75 hours per filing (Compliance Manager at 0.25 hours +
Compliance Clerk at 0.5 hours), and therefore the average compliance burden for each
Form ATS-R filing would be 4.75 hours., an increase of 0.75 hours from the currently
approved baseline burden of 4 hours for average initial compliance. See 2022 Reg ATS
Proposing Release, supra note 13, at 15590 n.768 and accompanying text.

divide their trading statistics between two forms and file each form separately. Consequently,
we estimate that the aggregate annual burden of filing Forms ATS-R should be increased by 4
hours to account for the increased filings by those ATSs that effect transactions in both NMS
stocks and non-NMS stocks (2 NMS Stock ATSs x 4 filings annually x 0.5 hours = 4 hours). 30
Thus, the total time burden per year for Form ATS-R is approximately 2,816 hours (2,812 hours
+ 4 hours). 31
d. Form ATS - Cessation of Operations Report
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption must file a
Cessation of Operations report on Form ATS to notice that it has ceased operations. We estimate
that 6 ATSs will be required to file a cessation of operations report each year, and that the average
time burden for each response would be 2 hours, comprised of 1.5 hours for an in-house attorney
and 0.5 hours for a compliance clerk. Thus, the total time burden per year is approximately 12
hours (6 responses x 2 hours = 12 hours).
e. Fair Access Standards Recordkeeping
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption that exceeds a
certain volume threshold in a certain category of security and is subject to Rule 301(b)(5) (fair
access requirements) must establish standards for granting access on its trading system. Such ATSs
are required to make and keep such criteria, so such a requirement creates a recordkeeping burden
for ATSs. We continue to estimate that 2 existing ATSs that register as broker-dealers and comply
with Regulation ATS would meet the volume thresholds that trigger fair access obligations annually.
We estimate in the 2022 Reg ATS Proposing and 2023 Reg ATS Reopening Releases that an
additional 6 ATSs annually would be subject to Fair Access standards,32 for a total of 8 respondents
(2 + 6). We continue to estimate that the average time burden for each response would be
approximately 5 hours of in-house professional work. Thus, the total time burden per year is
approximately 95 hours (8 responses x 5 hours = 40 hours).
f. Fair Access Notices
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption that are subject
to the requirements of Rule 301(b)(5) (fair access requirements) must report on Form ATS-R33 any
decision to grant, deny or limit the user’s access to the system. We continue to estimate that 2
existing ATSs that register as broker-dealers and comply with Regulation ATS would meet the
volume thresholds that trigger fair access obligations annually. We estimate a one-time addition of 6
30

((Attorney at .25 hour + Compliance Clerk at .25 hour) x (4 filings annually)) x 2 NMS
Stock ATSs = 4 aggregate burden hours.

31

The total responses on Form ATS-R are 384 (376 + 8 = 384 responses).

32

The Regulation ATS proposals estimate an additional 17 respondents. See 2022 Reg
ATS Proposing Release, supra note 13, at 15589 (estimating 7 Government Securities
ATSs); 2023 Reg ATS Reopening Release, supra note 14, at 29467 (estimating 10 newlydesignated ATSs). Annualized over 3 years, the estimate is 6 new respondents (17 / 3 =
5.67, rounded up to 6).

33

Forms ATS-R are filed with the Commission on a confidential basis.

respondents annually in the 2022 Reg ATS Proposing and 2023 Reg ATS Reopening Releases, for a
total number of 8 new respondents annually for the three-year period following adoption of the
amendments in those releases.34 We continue to estimate that these ATSs would have to
grant/deny/limit a user’s access to the system approximately 27 times per year, and the average time
burden for each response would be 1 hour of in-house professional work. Thus, the total time
burden per year is approximately 216 hours (8 respondents x 27 responses each x 1 hour = 216
hours).
g. Systems Capacity, Integrity and Security Recordkeeping
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption that exceeds a
certain volume threshold in a certain category of security is subject to Rule 301(b)(6) must make
records relating to any steps taken to comply with systems capacity, integrity and security
requirements under Rule 301. 35 We continue to estimate that 1 ATS that is operating pursuant to
the Exchange Act Rule 3a1-1(a)(2) exemption would trigger this requirement annually. We
estimate a one-time addition of 1 respondent annually in the 2022 Reg ATS Proposing and 2023 Reg
ATS Reopening Releases, for a total number of 2 new respondents annually for the three-year period
following adoption of the amendments in those releases. 36 We continue to estimate that the average
time burden for each response would be approximately 10 hours of in-house professional work.
Thus, the total time burden per year is approximately 20 hours (2 respondents x 10 hours = 20
hours).
h. Systems Outage Notices
An ATS operating pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption that exceeds
certain volume thresholds and is subject to Rule 301(b)(6) must provide a notice to the
Commission to report any systems’ outages. We continue to estimate that 1 ATS that operates
pursuant to the Exchange Act Rule 3a1-1(a)(2) exemption would meet the volume thresholds that
trigger systems’ outage notice obligations annually. We estimate a one-time addition of 1
respondent annually in the 2022 Reg ATS Proposing and 2023 Reg ATS Reopening Releases, for
a total number of 2 new respondents annually for the three-year period following adoption of the

34

The Regulation ATS proposals estimate an additional 17 respondents. See 2022 Reg
ATS Proposing Release, supra note 13, at 15589 (estimating 7 Government Securities
ATSs); 2023 Reg ATS Reopening Release, supra note 14, at 29467 (estimating 10 newlydesignated ATSs). Annualized over 3 years, this number would be 6 (17 / 3 = 5.67,
rounded up to 6). Accordingly, the total number of respondents per year would be 8 (2 +
6).

35

See supra note 7 (explaining that ATSs that trade NMS stock and equity securities that
are not NMS stock are not required to comply with Rule 301(b)(6) pursuant to Regulation
SCI).

36

The 2022 Reg ATS Proposing Release estimates an additional 2 respondents. See 2022
Reg ATS Proposing Release, supra note 13, at 15589. Annualized over 3 years, this
number would be 1 (1 / 3 = 0.67, rounded up to 1). Accordingly, the total number of
respondents per year would be 2 (1 + 1).

amendments in those releases.37 We continue to estimate that such respondents would meet the
necessary volume thresholds approximately 5 times a year, and that the average compliance
burden for each response would be .25 hours of in-house professional work, for an individual
burden of 1.25 hours a year. Thus, the total time burden per year is approximately 2.5 hour (2
respondents x 1.25 hours = 2.5). 38
i. Written Safeguards and Procedures – Ongoing Burden
All existing ATSs, NMS Stock ATSs and non-NMS Stock ATSs, are required to update and
preserve written safeguards and written procedures to protect subscribers’ confidential trading
information. We continue to estimate that the average annual, ongoing time burden per ATS to
update and preserve written safeguards and written procedures to protect subscribers’ confidential
trading information, as well as to update and preserve the written standards controlling employees of
the ATS trading for their own account and the written oversight procedures, would be
approximately 4 hours. We estimate approximately 94 existing ATSs annually39 and 18 additional
respondents annually in the 2022 Reg ATS Proposing and 2023 Reg ATS Reopening Releases,40
for a total of 112 respondents. As a result, we estimate that the total ongoing time burden per year
for all ATSs would be approximately 448 hours. 41
j. Written Safeguards and Procedures – Initial Burden
In addition to filing an initial operations report prior to commencing operations, every
new ATS must memorialize in writing its safeguards and procedures to protect subscribers’
confidential trading information. We continue to estimate that an ATS’s initial, one-time burden
to put in writing its safeguards and procedures to protect subscribers’ confidential trading
information and the oversight procedures to ensure such safeguards and procedures are followed
would be approximately 8 hours. As indicated in 12(a) above, we estimate that there would be
approximately 17 new respondents per year in each of the next 3 years that would file an initial
operations report and thus become subject to this written safeguards and procedures requirement.
We estimate a one-time addition of 18 respondents annually in the 2022 Reg ATS Proposing and
2023 Reg ATS Reopening Releases, for a total number of 35 new respondents annually for the
three-year period following adoption of the amendments in those releases.42 The total annual time
37

See id.

38

Only ATSs that trade corporate bonds or municipal securities can be subject to 301(b)(6).

39

This is based on the number of ATSs as of September 30, 2021.

40

See 2022 Reg ATS Proposing Release, supra note 13, at 15590 (estimating 7 Government
Securities ATSs currently exempted from the requirements of Regulation ATS); 2023
Reg ATS Reopening Release, supra note 14, at 29467 (estimating 46 newly-designated
ATSs). Annualized over 3 years, this number would be 18 (53 respondents / 3 years =
17.67, rounded up to 18). Accordingly, the total number of respondents per year would
be 112 (94 + 18).

41

(Attorney at 2 hours + Compliance Clerk at 2 hours) x 112 ATSs = 448 burden hours.

42

See 2022 Reg ATS Proposing Release, supra note 13, at 15590 (estimating 7 Government
Securities ATSs currently exempted from the requirements of Regulation ATS); 2023

burden associated with this requirement would thus be approximately 280 hours per year. 43
k. Aggregate Respondent Reporting Burdens
The estimated average annual aggregate burden for ATSs to comply with Rule 301 of
Regulation ATS would be approximately 5,305 hours per year. This estimate is broken down as
follows:
Rule

Burden Type

Number of
respondents

Number of
annual
responses per
respondent

Time per
response
(hours)

Total burden
per burden
type

Rule
301(b)(2) –
Initial
Operations
Report

Reporting

49

1

20.5

1,004.5 hours

Rule
301(b)(2) –
Form ATS
amendment

Reporting

97

2

2.5

485 hours

Rule
301(b)(9) –
Quarterly
Reports

Reporting

147

4

4.75

2,793 hours

Rule
301(b)(9) –
Quarterly
Reports for
both ATSs
with NMS
and non-NMS
volume

Reporting

2

4

0.5

4 hours

Rule
301(b)(2) –
Cessation of

Reporting

6

1

2

12 hours

Reg ATS Reopening Release, supra note 14, at 29467 (estimating 46 newly-designated
ATSs). Annualized over 3 years, this number would be 18 (53 respondents / 3 years =
17.67, rounded up to 18). Accordingly, the total number of respondents per year would
be 35 (17 + 18).
43

(Attorney at 7 hours + Compliance Clerk at 1 hour) x 35 ATSs = 280 burden hours.

Operations
Report
Rule
301(b)(5) –
Fair Access
standards
recordkeeping

Record
Keeping

8

1

5

40 hours

Rule
301(b)(5) –
Fair Access
Notices

Reporting

8

27

1

216 hours

Rule
301(b)(6) –
Systems
Capacity,
Integrity and
Security
recordkeeping

Record
Keeping

2

1

10

20 hours

Rule
301(b)(6) –
System
Outages
Notice

Record
Keeping

2

5

0.25

2.5 hours

Rule
301(b)(10) –
Updating
Written
Safeguards
and
Procedures
(Ongoing)

Record
Keeping

112

1

4

448 hours

Rule
301(b)(10) –
Written
Safeguards
and
Procedures
(Initial)

Record
Keeping

35

1

8

280 hours

Total
Aggregate
Burden

5,305 hours

13.

Costs to Respondents

None. There are no capital and start-up costs or operation and maintenance costs.
14.

Cost to Federal Government

None.
15.

Changes in Burden

As compared to the time burdens identified in the Commission’s 2021 PRA Submission,
the estimated time burdens associated with Rule 301 of Regulation ATS have increased 2,618
hours from 2,687 to 5,305 hours. This is primarily as a result of an increase in the number of
respondents estimated in the 2022 Reg ATS Proposing and 2023 Reopening Releases, as detailed
above, but also a result of an increase in the hourly burden associated with filing on modernized
Forms ATS and ATS-R due to proposed changes to those forms. This increase is broken down
as follows:
Proposed
Annual
Industry
Burden
1,004.5 hours

Annual
Industry Burden Change in
Reason for Change
Previously
Burden
Approved
340 hours

664.50
hours

Increase in number of
respondents from 17 to
49 and individual
burden from 20 hours
to 20.5 hours due to
proposed rulemaking.

Rule 301(b)(2) –
Form ATS
amendment

485 hours

240 hours

245 hours

Increase in number of
respondents from 60 to
97 and individual
burden from 2 hours to
2.5 hours due to
proposed rulemaking.

Rule 301(b)(9) –
Quarterly Reports

2,793 hours

1,504 hours

1,289
hours

Increase in number of
respondents from 94 to
147 and individual
burden from 4 hours to
4.75 hours due to
proposed rulemaking.

Rule 301(b)(5) –
Fair Access
standards
recordkeeping

40 hours

10 hours

30 hours

Increase in number of
respondents from 2 to
8 due to proposed
rulemaking.

Information
Collection
Requirement
Rule 301(b)(2) –
Initial Operations
Report

Rule 301(b)(5) –
Fair Access
Notices

216 hours

54 hours

162 hours

Rule 301(b)(6) –
Systems Capacity,
Integrity and
Security
recordkeeping
Rule 301(b)(6) –
System Outages
Notice

20 hours

10 hours

10 hours

2.5 hours

1 hours

1.5 hours

Rule 301(b)(10) –
Updating Written
Safeguards and
Procedures
(Ongoing)
Rule 301(b)(10) –
Written Safeguards
and Procedures
(Initial)

448 hours

376 hours

72 hours

280 hours

136 hours

144 hours

TOTAL
CHANGE IN
BURDEN
16.

Increase in number of
respondents from 2 to
8 due to proposed
rulemaking.
Increase in number of
respondents from 1 to
2 due to proposed
rulemaking.
Increase in number of
respondents from 1 to
2 due to proposed
rulemaking.
Increase in number of
respondents from 94 to
112 due to proposed
rulemaking.
Increase in number of
respondents from 17 to
35 due to proposed
rulemaking.

2,618
hours

Information Collection Planned for Statistical Purposes

Not applicable. The information collections above are not planned for statistical
purposes.
17.

Approval to Omit OMB Expiration Date

The Commission is not seeking approval to omit the expiration date.
18.

Exceptions to Certification for Paperwork Reduction Act Submissions

This collection complies with the requirements in 5 CFR 1320.9.
B.

COLLECTIONS OF INFORMATION EMPLOYING STATISTICAL METHODS
This collection does not involve statistical methods.