3235-0763-- 2023 Rule 304 revised Supporting Statement re ATS proposal

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for Regulation of
NMS Stock Alternative Trading Systems – Rule 304
(OMB Control No. 3235-0763)
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 (“ATSs”), 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 to choose between registering as a
national securities exchange or registering as a broker-dealer and complying with Regulation
ATS.
Since the adoption of Regulation ATS, the equity markets have evolved substantially and
ATSs have become a significant source of liquidity in NMS stocks. ATSs that trade NMS stocks
(“NMS Stock ATSs”) generally operate with complexity and sophistication similar to registered
national securities exchanges, which, pursuant to applicable laws and regulations, are required to
publish their rules. 1 Prior to the adoption of the amendments to Regulation ATS for NMS Stock
ATSs and adoption of Form ATS-N, the Commission was concerned that the regulatory
requirements relating to operational transparency for NMS Stock ATSs no longer fully met the
goals of furthering the public interest and protecting investors. Accordingly, in 2018, the
Commission adopted amendments to Regulation ATS (including new Rule 304) and adopted
Form ATS-N to require NMS Stock ATSs to provide information to the public about their
manner of operations, the broker-dealer operator, and the ATS-related activities of the brokerdealer operator of the NMS Stock ATS (“broker-dealer operator”) and its affiliates. 2
Rule 304 of Regulation ATS provides 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, including to file a Form ATS-N, and for that Form ATS-N to become effective. 3 Form
ATS-N requires NMS Stock ATSs to provide information about their manner of operations, the
broker-dealer operator, and the ATS-related activities of the broker-dealer operator and its
1

15 U.S.C. 78s(b)(1).

2

See Securities Exchange Act Release No. 83663 (July 18, 2018), 83 FR 38769 (August 7,
2018) (“NMS Stock ATS Adopting Release”).

3

The Commission also adopted conforming amendments to Rule 300 of Regulation ATS
and Exchange Act Rule 3a1-1(a). See id.

affiliates. The amendments to Regulation ATS also provide a process for the Commission to
review Form ATS-N filings and, after notice and opportunity for hearing, declare an NMS Stock
ATS’s Form ATS-N ineffective. Additionally, as amended, Regulation ATS requires public
posting of Form ATS-N filings on the Commission’s website, which is accomplished through the
Commission’s Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”), and
requires each NMS Stock ATS that has a website to post on its website a direct URL hyperlink to
the Commission’s website.
Form ATS-N promotes more efficient and effective market operations by providing more
transparency to market participants to assess the operations of NMS Stock ATSs and the
potential conflicts of interest of the controlling broker-dealer operator and its affiliates.
Operational transparency rules, including Form ATS-N, are designed to increase competition
among trading centers in regard to order routing and execution quality.
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. 4 In April 2023, the Commission provided supplemental
information and reopened the comment period for the 2022 Reg ATS Proposing Release. 5 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 Form ATS-N, 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
4

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”); and (3) amend Form ATS-N for
NMS Stock ATSs and Government Securities ATSs.

5

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.
2

registered exchanges. 6 Accordingly, this revision to the PRA analysis for Rule 304 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 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
revision also increases certain hour burdens related to proposed changes to Form ATS-N, as
described below, which would apply to new and existing respondents.
2.

Purpose and Use of the Information Collection

Rule 304 of Regulation ATS states that no exemption from the definition of “exchange”
is available to an NMS Stock ATS, or a Government Securities ATS, as proposed, pursuant to §
240.3a1-1(a)(2) unless the NMS Stock ATS, or a Government Securities ATS, as proposed, files
with the Commission an initial Form ATS-N, in accordance with the instructions therein, and the
initial Form ATS-N is effective. Form ATS-N requires NMS Stock ATSs, and Government
Securities ATSs, as proposed, to provide information to the public about the broker-dealer
operator of the ATS and the ATS-related activities of the broker-dealer operator and its affiliates.
Form ATS-N also requires NMS Stock ATSs, and Government Securities ATSs, as proposed, to
provide certain information about the manner of operations of the ATS and the ATS’s contact
information.
Form ATS-N is designed to provide the public with greater transparency around the
operations of NMS Stock ATSs, and Government Securities ATSs, as proposed, and potential
conflicts of interest that may arise involving the broker-dealer operator and its affiliates. Among
other things, these enhanced, public disclosures also are designed to limit the potential that a
broker-dealer operator of an ATS could provide certain subscribers with greater disclosure about
the operations and system functionalities of the ATS than it provides to other market
participants.
We believe that the information required on Form ATS-N about the operations of NMS
Stock ATSs, and Government Securities ATSs, as proposed, and the ATS-related activities of the
broker-dealer operators and the broker-dealer operators’ affiliates helps market participants
evaluate whether to do business with an ATS and make more informed decisions about where to
route their orders. We also believe that the transparency about the operations of NMS Stock
ATSs, and Government Securities ATSs, as proposed, that Form ATS-N provides may aid
market participants in their assessment of these trading venues as potential destination of their
orders. In addition, we believe that Form ATS-N may also help customers of broker-dealers,
whose orders are routed to an NMS Stock ATS, or a Government Securities ATS, as proposed,
for possible execution in the ATS, evaluate whether their broker-dealers fulfilled their duty of
best execution.
6

See 2022 Reg ATS Proposing Release, supra note 4, at 15618 n.1056 and accompanying
text.
3

The information provided pursuant to Rule 304 also helps the Commission monitor NMS
Stock ATSs, and Government Securities ATSs, as proposed, for the purpose of protecting
investors.
3.

Consideration Given to Information Technology

Form ATS-N is filed electronically in a structured format through EDGAR. By filing in
EDGAR, NMS Stock ATSs, and Government Securities ATSs, as proposed, are given the option
of filing using a web-fillable Form ATS-N which will render into XML in EDGAR, or to file
directly in XML using the XML schema for NMS Stock ATSs, and Government Securities
ATSs, as proposed, as published on the Commission’s website. With both options, we receive
the Form ATS-N information in XML format. ATSs that would prefer to manually key in all of
their Form ATS-N responses can do so using the Commission’s web-fillable Form ATS-N,
which will render into XML in EDGAR. The Commission’s XML schema and the
Commission’s web-fillable Form ATS-N both reflect the same set of custom XML tags and
XML restrictions designed by the Commission to submit the disclosures in Form ATS-N. Based
on the widespread use and availability of the Internet, we believe that filing Form ATS-N in an
electronic format is an efficient filing process.
Form ATS-N requires NMS Stock ATSs, and Government Securities ATSs, as proposed,
to file the form electronically via EDGAR with a typed signature. This requirement is intended
to provide a uniform manner in which we receive—and the broker-dealer operator files—the
Form ATS-N pursuant to Rule 304 of Regulation ATS. We believe that the XML format allows
the Commission and the public to better gather, analyze, aggregate, compare, and use the Form
ATS-N data. Requiring XML should result in the Form ATS-N data being provided in a
consistent, structured format. This consistent structure can be automatically recognized and
processed by a variety of software applications such as databases, financial reporting systems,
and spreadsheets, and then made immediately available to the end user to search, aggregate,
compare, and analyze.
4.

Duplication

If the broker-dealer operator operates ATSs that trade both NMS stocks (and government
securities, as proposed) and non-NMS stocks (and non-government securities, as proposed),
certain information the NMS Stock ATS (or the Government Securities ATS, as proposed)
provides on its Form ATS-N may be found on Form ATS. We do not consider this information
duplicative because the Form ATS is not required to be made public. In addition, Form ATS
discloses only limited aspects of an ATS’s operations, and we believe that even where an ATS
has voluntarily made public its Form ATS, 7 market participants might not be able to obtain as
complete an understanding of how the ATS operates.
5.

7

Effect on Small Entities

We note that some ATSs have chosen to make Form ATS filings publicly available.
4

Under the Regulatory Flexibility Act (“RFA”) 8 a small entity includes a broker or dealer
that: (1) 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
Rule 17a-5(d) under the Exchange Act, 9 or, if not required to file such statements, a brokerdealer with total capital (net worth plus subordinated liabilities) of less than $500,000 on the last
day of the preceding fiscal year (or in the time that it has been in business, if shorter); and (2) is
not affiliated with any person (other than a natural person) that is not a small business or small
organization. 10
We examined recent Financial and Operational Combined Uniform Single (“FOCUS”)
data for the 34 broker-dealer operators for NMS Stock ATSs that have an effective Form ATS-N
on file and concluded that no more than 1 of the broker-dealer operators of NMS Stock ATSs
had total capital of less than $500,000 on the last day of the preceding fiscal year (or in the time
that it has been in business, if shorter) and were not affiliated with any person that is not a small
business or small organization. We do not believe that Rule 304, including the requirement for
NMS Stock ATSs to file Form ATS-N amendments, will represent a significant economic impact
on this entity.
In addition, we examined recent FOCUS data for the 17 broker-dealers that currently
operate ATSs that trade government securities and repurchase and reverse repurchase
agreements on government securities (“repo”) and are operating as of the effective date of any
final rule, regardless of whether the ATSs are oparting pursuant to an intial operation report on
Form ATS on file with the Commission (“Legacy Government Securities ATSs”). We
concluded that one of the broker-dealer operators of these ATSs had total capital of less than
$500,000 on the last day of Fiscal Year 2021 (or in the time that it has been in business, if
shorter). We note that this broker-dealer operator has never reported any volume in any
government security or repo to the Commission on Form ATS-R. Given that this ATS has never
reported any transaction volume in government securities to the Commission, we believe that
this ATS is unlikely to submit a Form ATS-N if the proposed amendments to Regulation ATS
are adopted. We examined recent FOCUS data for 4 broker-dealers that we estimate are
(“Currently Exempted Government Securities ATSs”) and concluded that none of the brokerdealer operators of ATSs that currently trade government securities had total capital of less than
$500,000 on the last day of Fiscal Year 2021 (or in the time that it has been in business, if
shorter). We also recently examined FOCUS data for 7 systems that we estimate are trading
8

Although Section 601(b) of the RFA defines the term “small entity,” the statute permits
agencies to formulate their own definitions. We have adopted definitions for the term
“small entity” for the purposes of Commission rulemaking in accordance with the RFA.
Those definitions, as relevant to this rulemaking, are set forth in Rule 0-10 under the
Exchange Act, 17 CFR 240.0-10. See Securities Exchange Act Release No. 18451
(January 28, 1982), 47 FR 5215 (February 4, 1982) (File No. AS-305).

9

17 CFR 240.17a-5(d).

10

See 17 CFR 240.0-10(c).
5

systems that meet the criteria of Exchange Act Rule 3b-16(a), as proposed to be amended (“New
Rule 3b-16(a) Systems”) 11 operated by broker-dealers or affiliates of broker-dealers and trade
various securities asset classes including, among others, government securities. We concluded
that none of these broker-dealer operators of ATSs had total capital of less than $500,000 on the
last day of the Fiscal Year 2021 (or in the time that it has been in business, if shorter).
Consequently, we believe the proposed amendments to Rule 304 would not, if adopted, have a
significant economic impact on a substantial number of small entities.
6.

Consequences of Not Conducting Collection

Without the information required by Rule 304, we would not have readily available
information on a regular basis in a format that would allow 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 data required by Form ATS-N, the public would have less information
concerning NMS Stock ATSs, or Government Securities ATSs, as proposed, available to them
when selecting a trading venue.
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. 12 The Commission received 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,” 13 which would, in turn, affect the number of estimated respondents for the collections
11

Such systems were referred to as “Communication Protocol Systems” in the 2022 Reg
ATS Proposing Release.

12

See 2022 Reg ATS Proposing Release, supra note 4, at 15593.

13

See Letter from Gregory Babyak and Gary Stone, Regulatory Affairs, Bloomberg L.P.,
dated Sept. 21, 2022 (“Bloomberg Letter”), at 2; 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 WhitehouseLevine, Policy Director, DeFi Education Fund, dated Apr. 18, 2022, at 16-17; Letter from

6

of information in this OMB Control Number. 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 received specific comments on the burden estimate for Rule 304. One commenter
stated that the costs of Part III of Form ATS-N, as proposed to be revised, will be different
depending upon the platform, and that the cost would be per platform rather than per entity,
because entities probably have different dedicated engineering teams and product managers per
platform. 14
The Commission has also solicited comment on the revised PRA analysis in the 2023
Reg ATS Reopening Release, 15 but has not yet received specific comments on that topic. The
Commission will consider all comments received before adoption of a final rule.
9.

Payment or Gift

Not applicable.
10.

Confidentiality

The following will be publicly posted on the Commission’s website: (i) order of ineffective
Form ATS-N; (ii) effective initial Form ATS-N, as amended; (iii) Form ATS-N amendment to an
effective Form ATS-N; (iv) order of ineffective Form ATS-N amendment; (vi) notice of cessation;
and (vii) order suspending, limiting, or revoking the exemption from the definition of an “exchange”
pursuant to Exchange Act Rule 3a1-1(a)(2).
11.

Sensitive Questions

The information collection collects basic personally identifiable information that may
include name, and work contact information. However, the agency has determined that the
information collection does not constitute a system of record for purposes of the Privacy Act.
Information is not retrieved by a personal identifier. The information collection is covered by the
EDGAR PIA.
12.

Burden of Information Collection

The total annual burden associated with Rule 304 is approximately 5,162.5 hours, as
calculated and described below.
a. Initial Form ATS-N

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.
14

See Bloomberg Letter, supra note 13, at 4, 7-8.

15

See 2023 Reg ATS Proposing Release, supra note 6, at 29469.
7

An NMS Stock ATS must file an initial Form ATS-N on EDGAR, 16 and the initial Form
ATS-N must be effective in order to operate pursuant to the Exchange Act Rule 3a1-1(a)(2)
exemption. We estimate that filing Form ATS-N, on average, requires an estimated 136.4 burden
hours.17 This would result in a total one-time burden of approximately 1,227.6 hours for all new
NMS Stock ATSs or approximately 409 hours per year.18 The amendments to Form ATS-N
proposed in the 2022 Reg ATS Proposing would add a one-time annualized burden of 1,501.5 total
hours for 33 proposed new respondents on Form ATS-N19 for a total burden of 1,910.5 hours (409
16

For a Form ATS-N filer to gain access to make filings on EDGAR, the filer must submit
a Form ID as required by Regulation S-T Rule 10(b) and submit the Form ID following
the processes detailed in Volume I of the EDGAR Filer Manual. We estimate that the
burden associated with receiving access to EDGAR by submitting a Form ID is 0.15
burden hours per response, which is consistent with the currently approved burden
estimate for Form ID (OMB No. 3235-0328).

17

(Current Baseline to complete an initial Form ATS at 20 hours) + (Part I at 0.5 hour) +
(Part II at an average of 29 hours) + (Part III at an average of 78.75 hours) + (Access to
EDGAR at 0.15 hours) = 128.4 burden hours. The aggregate totals by professional,
including the baseline, are estimated to be approximately 54.6 hours for an Attorney, 0.5
hours for a Chief Compliance Manager, 34.55 hours for a Compliance Manager, 30.25
hours for a Senior Systems Analyst, 1 hour for a Senior Marketing Manager, and 7.5
hours for a Compliance Clerk. This estimated burden for a Form ATS-N includes the
hour burden associated with completing Part III, Items 24 and 25 of Form ATS-N. We
believe that the majority of NMS Stock ATSs and Government Securities ATSs would
not be required to complete those items of the form. The Commission has proposed
amendments to Form ATS-N, see 2022 Reg ATS Proposing Release, supra note 4,
Section IV.D, that it estimates would add an additional burden of 6 hours per filing
(Attorney at 2.5 hours, Compliance Manager at 1.5 hours, Senior Systems Analyst at 1.5
hours, and Compliance Clerk at 0.5 hours), and therefore the average compliance burden
for each new Form ATS–N filer would be 136.4 hours. See id. at 15591 n.781 and
accompanying text.

18

As of September 20, 2021, there are 34 NMS Stock ATSs that have Form ATS-N on file
with the Commission. Based on the number of NMS Stock ATSs that filed initial Form
ATS-N with the Commission in 2020 and 2021, we estimate that there will be 3 new
NMS Stock ATSs each year. We therefore estimate that 9 entities would be required to
complete initial Form ATS-N over the next three years. The annual one-time burden of
136.4 hours when annualized over a three-year period results in an annual per-ATS
burden of 45.47 hours and an industry-wide aggregate burden of 409 burden hours (9
respondents x 45.47 hours = 409.23 hours, rounded down to 409 hours).

19

The Commission estimates 33 respondents that would be required to newly file on Form
ATS-N. See 2022 Reg ATS Proposing Release, supra note 4, at 15592 (estimating 24
Government Securities ATSs); 2023 Reg ATS Reopening Release, supra note 5, at 29468

8

+ 1,501.5). The proposed amendments would also create a new one-time annualized burden of 91
total hours for all 34 existing Form ATS-N filers. 20
b. Form ATS-N Amendments
Rule 304 also includes a process for NMS Stock ATSs to file amendments to Form ATS-N
to provide the public notice of changes to their operations and the ATS-related activities of the
broker-dealer operator of the NMS Stock ATS and its affiliates. Rule 304(a)(2) of Regulation
ATS contain four general categories of required amendments for Form ATS-N. 21 In the NMS
Stock ATS Adopting Release, we estimated that NMS Stock ATSs would submit 3 amendments, on
average, each year.22 As discussed above, there are 34 current Form ATS-N respondents and 33
new respondents estimated to be added by the 2022 Reg ATS Proposing and 2023 Reg ATS
Reopening Releases, for a total of 67 respondents. Based on our experience with NMS Stock ATSs
filing Form ATS-N amendments, we now estimate that the 67 respondents23 would file 5 Form
ATS-N amendments each year,24 for an estimated total of 335 Form ATS-N amendments.25

(estimating 9 newly-designated ATSs). Accordingly, the total annualized one-time
burden is 1,501 burden hours (33 respondents x 45.47 hours = 1,500.51 hours, rounded
down to 1,501.5 hours).
20

The Commission estimates the proposal would impose upon the 34 current Form ATS–N
filers a one-time burden of 8 hours: the marginal burden of 6 hours to respond to the
revised items in the form proposed in the 2022 Reg ATS Proposing Release (see supra
note 12) + 2 hours for a Compliance Clerk to reorganize their current Form ATS
disclosures to respond to revised Form ATS–N. See also 2022 Reg ATS Proposing
Release, supra note 4, at 15591 n.783 and accompanying text. The 8-hour burden
annualized over three years is 2.67 hours per respondent. Accordingly, the annualized
one-time burden is 91 hours (34 respondents x 2.67 hours = 90.78 hours, rounded up to
91 hours).

21

In the 2022 Reg ATS Proposing Release, we proposed a new fee amendment type. See
2022 Reg ATS Proposing Release, supra note 4, section VI.A.

22

See NMS Stock ATS Adopting Release, supra note 2, at Section IX.D.2.b.ii.B.

23

We estimate that there will be 3 new NMS Stock ATSs each year, and that 3 respondents
will file a cessation of operation report on Form ATS-N each year. See infra Section A.12.c.
Accordingly, we estimate that 67 entities would be required to Form ATS-N
amendments.

24

In the fiscal year of 2020, NMS Stock ATSs filed 185 Form ATS-N amendments, or an
average of 5 amendments per ATS.

25

67 respondents x 5 Form ATS-N amendments per year = 335 Form ATS-N amendments
per year.
9

We estimate that the current hour burden related to an amendment to Form ATS-N is
approximately 9.4 hours per amendment.26 This would result in an aggregate annual burden for all
NMS Stock ATSs of approximately 3,149 hours.27
c. Notice of Cessation on Form ATS-N
From April 2019 through June 2021, there have been an average of 3 NMS Stock ATSs that
ceased operations each year. Although it is unclear how many NMS Stock ATSs (or Government
Securities ATSs) might cease operations each year going forward, for purposes of providing a PRA
burden estimate, we are estimating that this average would generally remain the same for NMS
Stock ATSs (or Government Securities ATSs) as economic conditions, business reasons, and other
factors may cause some ATSs to cease operations. Accordingly, we estimate that 3 respondents
may file a cessation of operation report on Form ATS-N each year.
For Form ATS-N, the requirement is to check the appropriate box indicating that the ATS is
ceasing operations and to provide the date the ATS expects to cease operating. We estimate that the
average compliance burden for each respondent will be approximately 2 hours.28 This will result in
a total annual burden of approximately 6 hours for all NMS Stock ATSs and Government Securities
ATSs, as proposed, that choose to cease operations and submit a cessation of operation report on
Form ATS-N.29
d. Public Posting on ATS’s Website
Rule 304(b)(3) will require each NMS Stock ATS or Government Securities ATS, as
proposed, to make public via posting on the ATS’s website, a direct URL hyperlink to the
Commission’s website that contains the documents enumerated in Rule 304(b)(2). We estimate
that each new NMS Stock ATS, or Government Securities ATS, as proposed, will incur an
initial, one-time burden to program and configure its website to post the required direct URL
hyperlink pursuant to Rule 304(b)(3). We estimate that this initial, one-time burden would be
approximately 2 hours for each new ATS or approximately 0.67 hours per new NMS Stock ATS
when annualized over three years, in part because many broker-dealer operators currently
maintain a website for their ATSs. 30 We estimate that nine new NMS Stock ATSs over three
years would incur this initial, one-time burden each year for a total initial one-time burden of

26

Attorney at 5.5 hours + Compliance Manager at 2 hours + Compliance Clerk at 1.9 hours
= 9.4 burden hours. This burden was not modified by the 2022 Reg ATS Proposing and
2023 Reg ATS Reopening Releases.

27

335 amendments per year x 9.4 hours = 3,149 aggregate burden hours.

28

Attorney at 1.5 hours + Compliance Clerk at 0.5 hours = 2 burden hours.

29

2 burden hours x 3 NMS Stock ATSs = 6 aggregate annual burden hours.

30

Senior Systems Analyst at 2 burden hours.
10

approximately 18 hours or 6 hours per year when annualized over three years. 31
e. Aggregate Respondent Reporting Burdens
The estimated average annual aggregate burden for alternative trading systems to comply
with Rule 304 would be approximately 5,162.5 hours. This estimate is broken down as follows:
Initial
Burden
per
Entity

Initial
Burden
Annualized
per Entity

Ongoing
Burden
per
Entity

Annual
Burden
Per
Entity
per
Response

Total
Annual
Burden
Per
Entity

Total
Annual
Industry
Burden

Name of
Information
Collection

Type of
Burden

# Entities
Impacted

Annual
Responses
per Entity

Form ATS-N
Initial
Operation
Report (Rule
304)

Reporting

42

1

136.40

45.47

0.00

45.47

45.47

1,910.5

Form ATS-N
Initial
Operation
Report (Rule
304) – onetime updates
for existing
filers

Reporting

34

1

8

2.67

0.00

2.67

2.67

91

Form ATS-N
Amendments
(Rule 304)

Reporting

67

5

0.00

0.00

47.00

9.40

47.00

3,149

Form ATS-N
Cessation of
Operations
Report (Rule
304)

Reporting

3

1

0.00

0.00

2.00

2.00

2.00

6

Public
Posting on
NMS Stock
ATS’s
Website
(Rule 304)

Reporting

9

1

2.00

0.67

0.00

0.67

0.67

6

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

97.81

5,162.5

31

Senior Systems Analyst at 2 hours x 3 new NMS Stock ATSs x 3 years = 18 burden
hours. This burden is annualized over a three-year period for an annual burden of 2
burden hours per ATS, and an aggregate industry-wide burden of 6 burden hours.
11

13.

Costs to Respondents

Not applicable. We do not anticipate that respondents will have to incur any capital or startup costs, nor any additional operational or maintenance costs (other than as provided in Item 12), to
comply with the collection of information requirements associated with Rule 304 and Form ATS-N.
14.

Cost to Federal Government

Not applicable. The amendments to Regulation ATS as well as Rule 304 and Form ATSN will not result in any costs to the federal government beyond normal full-time employee labor
costs, nor does the rule require the Commission to hire any new employees or reallocate existing
employees to ensure compliance with the rule.
15.

Changes in Burden

As compared to the time burdens identified in the Commission’s previous PRA Submission,
the estimated time burdens associated with Rule 304 of Regulation ATS have increased 3,120.5
hours from 2,042 to 5,162.5 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 Form ATS-N
due to proposed changes to that form. This increase is broken down as follows:
Information
Collection
Requirement

Annual Industry
Proposed
Burden
Change in
Annual Industry
Reason for Change
Previously
Burden
Burden
Approved

Form ATS-N Initial 1,910.5 hours
Operation Report
(Rule 304)

385 hours

1,525.5
hours

Increase in number of
respondents from 9 to 42
and individual burden
from 42.80 hours to 45.47
hours due to proposed
rulemaking.

Form ATS-N Initial 91 hours
Operation Report
(Rule 304) – onetime update for
existing filers

N/A

91 hours

New one-time burden due
to proposed rulemaking.

1,645 hours

1,504 hours Increase in number of
respondents from 34 to 67
due to proposed
rulemaking.

Form ATS-N
Amendments (Rule
304)

3,149 hours

3,120.5

TOTAL CHANGE

12

IN BURDEN
16.

hours
Information Collection Planned for Statistical Purposes

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

OMB Expiration Date Display Approval

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.

13