Supporting Statement A

Status: Original and derived artifacts are available for this document.

Download: pdf

SUPPORTING STATEMENT
for the Paperwork Reduction Act Information Collection Submission for
the Consolidated Audit Trail NMS Plan (NMS Plan Required to be Filed under
Commission Rule 613)
(OMB Control No. 3235-0671)
A.

Justification

This submission is being made pursuant to the Paperwork Reduction Act of 1995,
44 U.S.C. Section 3501 et seq. The collection of information is in connection with a
National Market System (NMS) Plan required to be filed with the Commission under
Rule 613.
1.

Necessity of Information Collection

The Securities and Exchange Act of 1934 (the “Exchange Act”), as amended, 1
tasks the Commission with overseeing the U.S. securities markets, including supervising
certain market participants such as broker-dealers, clearing agencies, and national
securities exchanges. 2 The Exchange Act further provides that specified entities,
including national securities exchanges and registered national securities associations, fall
within the definition of a self-regulatory organization (“SRO”). 3 As an SRO, each
national securities exchange and national securities association must comply, and enforce
the compliance by its members and associated persons, with the Exchange Act, the
Commission’s rules and regulations thereunder, and the SRO’s own rules. 4
Effective market oversight by the Commission and SROs relies on, among other
things, access by regulatory users at the Commission and the SROs to accurate and
timely market data. Because the vast majority of securities transactions in modern
markets occur electronically, at high speeds and volumes and across trading venues,
cross-market audit trails like the Consolidated Audit Trail (the “CAT”) have come to play
an important role in the oversight of securities markets. The CAT aids regulators in
1

15 U.S.C. 78a et seq.

2

See, e.g., 15 U.S.C. 78b, 78f, 78i, 78j, 78k, 78k-1, 78o, 78o-3, and 78s.

3

15 U.S.C. 78c(a)(26). The national securities exchange and registered national securities
association SROs, also referred to herein as “the Participants,” include 24X National Exchange,
BOX Exchange LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange,
Inc., Cboe EDGA Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, Inc. (“Cboe”),
Financial Industry Regulatory Authority, Inc. (“FINRA”), Investors Exchange LLC, Long-Term
Stock Exchange, Inc., MEMX LLC, Miami International Securities Exchange LLC, MIAX
Emerald, LLC, MIAX PEARL, LLC, MIAX Sapphire, LLC, Nasdaq GEMX, LLC, Nasdaq ISE,
LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The Nasdaq Stock Market LLC (“Nasdaq”),
Nasdaq Texas, LLC, New York Stock Exchange LLC (“NYSE”), NYSE American LLC, NYSE
Arca, Inc., NYSE National, Inc., and NYSE Texas, Inc.

4

15 U.S.C. 78f(b)(1); 15 U.S.C. 78o-3(b)(2); 15 U.S.C. 78s(g)(1). FINRA currently is the only
national securities association. As a national securities association, FINRA is also responsible for
enforcing compliance by its members and associated persons with the rules of the Municipal
Securities Rulemaking Board (“MSRB”).

conducting robust cross-market surveillances, investigations, enforcement activities, and
engaging in cross-market reconstructions and analyses, as appropriate.
Prior to the introduction of the CAT, the Commission and the SROs relied on
other audit trails and related data sources but had no comprehensive cross-market audit
trails. For several decades, broker-dealers furnished information to the Commission and
the SROs through questionnaires known as “blue sheets” due to the color on which the
forms were printed. In the late 1980s, as the volume of trading and securities transactions
dramatically increased, the Commission and the SROs worked together to develop and
implement a request-and-response system with a universal electronic format, commonly
known as the “electronic blue sheet” or “EBS” system, to replace the paper-based
process. 5 The Commission and the SROs also obtained data through other methods—
including manual requests to market participants, daily reports produced by clearing
agencies that provide aggregated information to the SROs and the Commission, marketspecific matching engines and/or order book feeds, market-specific audit trails, trade
reporting facilities, proprietary data feeds made available by SROs and/or off-exchange
trading venues, and publicly-available consolidated data feeds provided by securities
information processors. 6
Regulators also obtained data through audit trails. For example, in 1996, the
National Association of Securities Dealers (n/k/a FINRA) was required, pursuant to a
settled order, to design and implement an audit trail to provide an accurate, timesequenced record of orders and transactions on Nasdaq-listed equities, which came to be
known as the Order Audit Trail System (“OATS”). 7 OATS was later expanded to
include over-the-counter equity securities 8 and all NMS stocks. 9 FINRA also created an
internal process by which it augmented the data it collected via OATS with order and
trade execution data collected from other SROs with which it had regulatory services
5

See Securities Exchange Act Release No. 44494 (June 29, 2001), 66 FR 35836 (July 9, 2001).

6

See 15 U.S.C. 78c(a)(22)(A) (“The term ‘securities information processor’ means any person
engaged in the business of (i) collecting, processing, or preparing for distribution or publication, or
assisting, participating in, or coordinating the distribution or publication of, information with
respect to transactions in or quotations for any security (other than an exempted security) or (ii)
distributing or publishing (whether by means of a ticker tape, a communications network, a
terminal display device, or otherwise) on a current and continuing basis, information with respect
to such transactions or quotations.”).

7

In the Matter of National Association of Securities Dealers, Inc., Administrative Proceeding File
No. 3-9056, Securities Exchange Act Release No. 37358 (Aug. 8, 1996), available at
https://www.sec.gov/files/litigation/admin/3437538.txt.

8

See Securities Exchange Act Release No. 67457 (July 18, 2012), 77 FR 45722, 45728 (Aug. 1,
2012) (“Adopting Release”); see also Securities Exchange Act Release No. 62174 (May 26, 2010),
75 FR 32556, 32558-59 (June 8, 2010) (“Proposing Release”).

9

To avoid duplicative reporting requirements after OATS expansion to all NMS stocks, NYSEaffiliated exchanges replaced their market-specific audit trail requirements for members that were
also members of either FINRA or Nasdaq—and therefore already reporting to OATS—with rules
that allowed these members to satisfy their reporting obligations by meeting the new OATS
reporting requirements in 2011. See, e.g., Adopting Release, supra note 8, at 45728; 17 CFR
242.600(65) (defining “NMS stock” as “any NMS security other than an option”).

2

agreements. 10 Similarly, in 2000, a group of options exchanges was required, pursuant to
a settled order, to design and implement an audit trail to provide an accurate, timesequenced record of orders, quotations, and transactions on those options exchanges. 11
That audit trail became known as the Consolidated Options Audit Trail System
(“COATS”) and was later expanded to incorporate reporting for activity on additional
options exchanges. 12
Although these audit trails and related data sources were useful, they did not
produce a comprehensive cross-market audit trail. Even with augmented OATS data,
assembling a consolidated audit trail from the various data sources described above was a
cumbersome, complex, and time-consuming process that was prone to error. 13
Recognizing these shortcomings, on July 11, 2012, the Commission adopted
Rule 613 of Regulation NMS under the Exchange Act. 14 Rule 613 required the
Participants to submit an NMS plan to create, implement, and maintain the CAT that
would capture customer and order event information for orders in NMS securities, across
all markets, from the time of order inception through routing, cancellation, modification,
or execution in a single, consolidated data source (the “CAT NMS Plan” or “Plan”). 15 In
proposing and adopting Rule 613, the Commission stated that the increasingly highspeed, electronic, and widely dispersed markets had given rise to a need for efficient
access to a more robust and comprehensive, cross-market audit trail, explaining that

10

See, e.g., Adopting Release, supra note 8, at 45729.

11

See In the Matter of Certain Activities of Options Exchanges, Administrative Proceeding File No.
3-10282, Securities Exchange Act Release No. 43268 (Sept. 11, 2000), available at
https://www.sec.gov/enforcement-litigation/administrative-proceedings/34-43268.

12

See Staff Paper on Cross-Market Regulatory Coordination, available at
https://www.sec.gov/about/divisions-offices/division-trading-markets/staff-paper-cross-marketregulatory-coordination.

13

See, e.g., Adopting Release, supra note 8, at 45728 (“Although these developments with respect to
the scope of FINRA’s OATS rules reduce the number of audit trails with disparate requirements,
they still do not result in a comprehensive audit trail that provides regulators with accurate,
complete, accessible, and timely data on the overall markets for which regulators have oversight
responsibilities.”); see also, e.g., Securities Exchange Act Release No. 77724 (Apr. 27, 2016), 81
FR 30614, 30670 (May 17, 2016) (“Regardless of whether order lifecycle reports are reflected in
the same or different data sources, the process of linking lifecycle events is complex and can
create inaccuracies. Merging different data sources often involves translating the data sources into
the same format, which can be a complex process that is prone to error. Linking records within or
across data sources also requires the sources to share ‘key fields’ that facilitate linkage, along with
a successful linking algorithm. Regulators may be unable to link some data source combinations
accurately because the data sources do not have key fields in common or the key fields are not
sufficiently granular. . . . The inability to link all records affects the accuracy of the resulting data
and can force an inefficient manual linkage process that would delay the completion of the data
collection and analysis portion of the examination, investigation, or reconstruction.” (citations
omitted)).

14

See note 8 supra.

15

See 17 CFR 242.613(a)(1), (c)(1), (c)(7).

3

existing audit trails and/or data sources were otherwise limited in their scope and
effectiveness. 16
On February 27, 2015, the Participants submitted the CAT NMS Plan. 17 On April
27, 2016, the Commission published a notice soliciting comments from the public (“CAT
NMS Plan Notice”). 18 On November 15, 2016, the Commission approved the CAT NMS
Plan (“CAT NMS Plan Order”), including the information collections proposed in the
CAT NMS Plan Notice and certain additional information collections that were the
subject of a supplemental information collections submission.19 The CAT NMS Plan
Order information collections that were first noticed in the CAT NMS Plan Notice were
approved by OMB on March 9, 2017. 20 The supplemental submission information
collections were approved by OMB on July 10, 2017. This instant information
collections submission incorporates both the information collections that were first
noticed in the CAT NMS Plan Notice and approved by OMB on March 9, 2017, with the
supplemental submission information collections that were approved by OMB on July 10,
2017.

16

See, e.g., Adopting Release, supra note 8, at 45722-23.

17

See Letter from Participants to Brent J. Fields, Secretary, Commission, dated February 27, 2015.
The Participants filed the CAT NMS Plan on September 30, 2014. See Letter from the
Participants, to Brent J. Fields, Secretary, Commission, dated September 30, 2014. The CAT
NMS Plan filed on February 27, 2015, was an amendment to and replacement of the Initial CAT
NMS Plan (the “Amended and Restated CAT NMS Plan”). On December 24, 2015, the
Participants submitted an Amendment to the Amended and Restated CAT NMS Plan. See Letter
from Participants to Brent J. Fields, Secretary, Commission, dated December 23, 2015 (the
“Amendment”). On February 9, 2016, the Participants filed with the Commission an identical, but
unmarked, version of the Amended and Restated CAT NMS Plan, dated February 27, 2015, as
modified by the Amendment. Unless the context otherwise requires, the “CAT NMS Plan” shall
refer to the Amended and Restated CAT NMS Plan, as modified by the Amendment.

18

See Securities Exchange Act Release No. 77724 (April 27, 2016), 81 FR 30613 (May 17, 2016).
The burdens associated with the CAT NMS Plan Notice were submitted under OMB number
3235-0671 which relates to the NMS Plan required to be filed under Rule 613.

19

See Securities Exchange Act Release No. 79318 (November 15, 2016), 81 FR 84696 (November
23, 2016). The supplemental information collections burdens associated with the CAT NMS Plan
Order were submitted under OMB number 3235-0671 which relates to the NMS Plan required to
be filed under Rule 613. The Commission further acknowledged that the CAT NMS Plan filed by
the Participants contains provisions in addition to those required by the Commission in Rule 613.
These additional requirements include the inclusion of OTC Equity Securities, the availability of
historical data for not less than six years in a manner that is directly available and searchable
without manual intervention from the Plan Processor, a complete symbology database to be
maintained by the Plan Processor, including the historical symbology, as well as issue symbol
information and data using the listing exchange symbology format. See CAT NMS Plan, supra
note 17, at Sections 1.1 and 6.5(b)(I); Appendix C, Section A.1(a); Appendix D, Section 2.

20

The CAT NMS Plan published for comment reflects exemptive relief granted by the Commission
that provided the flexibility for the Participants to propose, in the CAT NMS Plan, alternative
approaches to certain requirements of Rule 613. See Securities Exchange Act Release No. 77265
(March 1, 2016), 81 FR 11856 (March 7, 2016) (“Exemption Order”).

4

Since 2017 the Commission has approved several amendments to the CAT NMS
Plan and issued exemptive relief from its requirements. Some of these amendments
and/or exemptive relief orders have resulted in data being removed from the CAT. For
instance, the Commission has issued exemptive relief from and approved amendments to
the CAT NMS Plan to enable the SROs to remove customer and account-level
information from the CAT. 21 The Commission has also issued exemptive relief from and
approved amendments to the CAT NMS Plan to enable the SROs to shorten the retention
period for the data collected by the CAT. 22
The instant information collections submission incorporates these changes. On
July 15, 2024, the SROs represented to the Commission that the CAT had been fully
implemented. 23
2.

Purposes and Use of the Information Collection

The CAT NMS Plan, which governs the CAT, improves the quality of the data
available to regulators in four areas that affect the ultimate effectiveness of core
regulatory efforts—completeness, accuracy, accessibility and timeliness. 24 The
improvements in these data qualities substantially improve regulators’ ability to perform
analysis and reconstruction of market events, and market analysis and research to inform
policy decisions, as well as perform regulatory activities, in particular market
surveillance, examinations, investigations, and other enforcement functions.
21

See, e.g., Securities Exchange Act Release No. 88393 (Mar. 17, 2020), 85 FR 16152 (Mar. 20,
2020) (the “2020 PII Exemptive Relief Order”) (providing conditional exemptive relief from CAT
NMS Plan requirements obligating the SROs to collect social security numbers (“SSNs”) and/or
individual tax payer identification numbers (“ITINs”), dates of birth, and account numbers
associated with natural persons); Securities Exchange Act Release No. 102386 (Feb. 10, 2025), 90
FR 9642, 9643 (Feb. 14, 2025) (the “2025 PII Exemptive Relief Order”) (providing conditional
exemptive relief from CAT NMS Plan requirements obligating the SROs to collect names,
addresses, and years of birth for U.S. natural persons); Securities Exchange Act Release No.
104586 (Jan. 13, 2026), 91 FR 2164 (Jan. 16, 2026) (the “CAIS Order”) (codifying the 2020 PII
Exemptive Relief Order and the 2025 PII Exemptive Relief Order and, among other things,
enabling the SROs to eliminate: (1) historical customer and account-level data, including, among
other things, names, addresses, and years of birth, (2) names, addresses, and years of birth (where
applicable) for foreign natural persons, for legal entities, and for authorized traders, and (3)
employer identification numbers).

22

See, e.g., Securities Exchange Act Release No. 104144 (Sept. 30, 2025), FR 90 47853, 47854-55
(Oct. 2, 2025) (providing exemptive relief from certain requirements related to data storage and
retention); Securities Exchange Act Release No. 105107 (Mar. 27, 2026), 91 FR 16284, 16307
(Apr. 1, 2026) (approving amendments to the CAT NMS Plan that permit the SROs to: (1) delete
all CAT Data older than three years; (2) delete options market maker quotes on Listed Options
older than six months; (3) delete Interim Operational Data older than 15 days; and (4) delete
Options SIP Data older than six months).

23

See CAT Q2 & Q3 2024 Quarterly Progress Report (July 29, 2024), available at
https://catnmsplan.com/sites/default/files/2024-07/CAT_Q2-and-Q3-2024-QPR.pdf.

24

See Adopting Release, supra note 8, at 45727 (discussing four “qualities” of trade and order data
that impact the effectiveness of core Participant and Commission regulatory efforts: accuracy,
completeness, accessibility, and timeliness).

5

A. Central Repository
Rule 613 states that the CAT NMS Plan shall provide for the creation and
maintenance of a Central Repository. 25 The Central Repository is required to receive,
consolidate and retain the data required to be submitted by the Participants and their
broker-dealer members. 26 Participant and Commission regulatory staff have access to the
data for regulatory purposes. 27
B. Data Collection and Reporting
The data collected and reported to the Central Repository pursuant to the
requirements of the CAT NMS Plan (as required by Rule 613) is used by regulators to
monitor and surveil the securities markets and detect and investigate activity, whether on
one market or across markets. The data collected and reported to the Central Repository
is also used by regulators for the evaluation of tips and complaints and for complex
enforcement inquiries or investigations, as well as inspections and examinations. Further,
regulators use the data collected and reported to the Central Repository to conduct timely
and accurate analysis of market activity for reconstruction of broad-based market events
in support of regulatory decisions.
C. Collection and Retention of National Best Bid and National
Best Offer Information, Last Sale Data and Transaction
Reports
The CAT NMS Plan must require the Central Repository to collect and retain
National Best Bid and National Best Offer (“NBBO”) information, transaction reports,
and Last Sale Reports in a format compatible with the order and event information
collected pursuant to Rule 613(c)(7). 28 Participant and Commission regulatory staff can
use this data to easily search across order, NBBO, and transaction databases. Having the
NBBO information in a uniform electronic format compatible with order and event
information assists the Commission and Participants in enforcing compliance with federal
securities laws, rules, and regulations, as well as their own rules. 29 A CAT NMS Plan
requiring the Central Repository to collect and retain the transaction reports and Last Sale

25

See 17 CFR 242.613(e)(1).

26

Id. The Commission notes that the CAT NMS Plan refers to a member of a national securities
exchange or of a national securities association as an “Industry Member.” See CAT NMS Plan,
supra note 17, at Section 1.1.

27

See 17 CFR 242.613(e)(2).

28

See 17 CFR 242.613(e)(7).

29

The Commission and Participants use the NBBO to, among other things, evaluate members for
compliance with numerous regulatory requirements, such as the duty of best execution or Rule
611 of Regulation NMS. See 17 CFR 242.611; see also, e.g., ISE Rule Options 5, Section 2 and
Phlx Rule 1084.

6

Reports in a format compatible with the order execution information also aids regulators
in monitoring for certain market manipulations. 30
D. Surveillance
The CAT NMS Plan (as required by Rule 613(f)) contains a requirement that the
Participants develop and implement a surveillance system, or enhance existing
surveillance systems, reasonably designed to make use of the consolidated information in
the CAT. 31 This requirement is intended to position regulators to make full use of the
CAT data in order to carry out their regulatory obligations. In addition, because trading
and potentially manipulative activities could take place across multiple markets, and the
CAT data would trace the entire lifecycle of an order from origination to execution or
cancellation, new or enhanced surveillance systems may also enable regulators to
investigate potentially illegal activity that spans multiple markets more efficiently.
E. Written Assessment of Operation of the Consolidated Audit
Trail
Rule 613(b)(6) requires the CAT NMS Plan to require the Participants to provide
the Commission a written assessment of the CAT’s operation at least every two years,
once the CAT NMS Plan is effective. 32 The CAT NMS Plan states that the Chief
Compliance Officer shall oversee the assessment. 33 These assessments aid Participant
and Commission regulatory staff in understanding and evaluating any deficiencies in the
operation of the CAT and to propose potential improvements to the CAT NMS Plan. The
written assessments allow Participants and Commission regulatory staff to periodically
assess whether such potential improvements would enhance market oversight. Moreover,
these assessments help inform the Commission regarding the likely feasibility, costs, and
impact of, and the Participants’ approach to, the CAT evolving over time. The
assessments focus the Plan Processor and Participants on critical technological and other
developments, and help ensure that CAT technology is up-to-date, resilient and secure,
and provides accurate CAT Data.
30

Rules 613(e)(7)(ii) and (iii) require that transaction reports reported pursuant to an effective
transaction reporting plan and Last Sale Reports reported pursuant to the OPRA Plan be reported
to the Central Repository. This requirement allows regulators to evaluate certain trading activity.
For example, trading patterns of reported and unreported trades may cause Participant or
Commission regulatory staff to make further inquiries into the nature of the trading to ensure that
the public was receiving accurate and timely information regarding executions and that market
participants were continuing to comply with trade reporting obligations under Participant rules.
Similarly, patterns in the transactions that are reported and unreported to the consolidated tape
could be indicia of market abuse, including failure to obtain best execution for customer orders or
possible market manipulation. Regulators are able to review information on trades not reported to
the tape to determine whether they should have been reported, whether Section 31 fees should
have been paid, and/or whether the trades are part of a manipulative scheme.

31

See CAT NMS Plan, supra note 17, at Section 6.10(a). See also 17 CFR 242.613(f).

32

17 CFR 242.613(b)(6). As discussed in Section 12.A.e., infra, Section 6.6 of the Plan changed the
frequency of the assessment contemplated by Rule 613(b)(6) from biannual to annual.

33

See CAT NMS Plan, supra note 17, at Section 6.6(a)(ii). See also id. at Section 6.6(a)(i).

7

F. Independent Audit of Expenses Incurred Prior to Effective
Date
Section 6.6(a)(i) of the CAT NMS Plan requires the Participants to provide to the
Commission, and make public, an independent audit of fees, costs and expenses incurred
by the Participants on behalf of the Company, prior to the Effective Date of the CAT
NMS Plan, in connection with the creation and implementation of the CAT, at least one
month prior to submitting any rule filing to establish initial fees to the Commission.
Because the Company made such audited financial statements available on August 5,
2021, 34 this collection is now complete and no further burden is expected.
G. Assessment of Industry Member Bulk Access to Reported Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits and risks of allowing an Industry
Member to bulk download the Raw Data 35 it submitted to the Central Repository, within
24 months of effectiveness of the Plan. Because the time frame set forth in Section
6.6(a)(iv) has passed and any one-time costs and/or burdens related to the preparation of
this report already would have been incurred and included in previous PRA submissions,
the Commission considers this collection complete and is not calculating any additional
costs or burdens related thereto.
H. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of the nature and extent of errors in the Customer information
submitted to the Central Repository and whether the correction of certain data fields
should be prioritized, within 36 months of effectiveness of the Plan. However, as noted
above, the Commission has issued exemptive relief from and approved amendments to
the CAT NMS Plan to enable the SROs to remove certain Customer information from the
CAT. 36 Moreover, the time frame set forth in Section 6.6(a)(v) passed before Customer
information was reported to the CAT and any one-time costs and/or burdens related to the
preparation of this report already would have been incurred and included in previous
PRA submissions. The Commission therefore considers this collection complete and is
not calculating any additional costs or burdens related thereto.
I. Report on Impact of Tiered Fees on Market Liquidity

34

See https://www.catnmsplan.com/audited-financial-statements.

35

Raw data is defined as “Participant Data and Industry Member Data that has not been through any
validation or otherwise checked by the CAT System.” See CAT NMS Plan, supra note 17, at
Section 1.1.

36

See note 21 supra.

8

Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report on the impact of tiered-fees on market liquidity, including an analysis of
the impact of the tiered-fee structure originally required by the CAT NMS Plan on
Industry Members provision of liquidity, within 36 months of effectiveness of the Plan.
However, the Commission recently approved amendments to the CAT NMS Plan that
impose a different fee structure. 37 Moreover, the time frame set forth in Section
6.6(a)(vi) has passed and any one-time costs and/or burdens related to the preparation of
this report already would have been incurred and included in previous PRA submissions.
The Commission therefore considers this collection complete and is not calculating any
additional costs or burdens related thereto.
J. Assessment of Material Systems Change on Error Rate
The CAT NMS Plan requires the Participants to provide the Commission a
written assessment of the projected impact of any Material Systems Change on the
Maximum Error Rate, prior to the implementation of any Material Systems Change.
Material Systems Changes either could result in new challenges for CAT Reporters or
simplify the means for reporting data. In either case, the appropriateness of the
Maximum Error Rate could be impacted, and thus warrant a change. Accordingly, it is
appropriate to require the Participants to provide the Commission an assessment of the
projected impact on the Maximum Error Rate, including any recommended changes
thereto, prior to the implementation of any Material Systems Change.
K. Financial Statements
Section 9.2 of the CAT NMS Plan requires that the financials of the Consolidated
Audit Trail, LLC (“CAT LLC”) be (i) in compliance with GAAP, (ii) be audited by an
independent public accounting firm, and (iii) be made publicly available. 38 This
requirement promotes greater accuracy and greater transparency with respect to the
Company’s financial accounting.
L. Background Checks
Section 6.1(g) of the CAT NMS Plan requires that each Participant conduct
background checks for its employees and contractors that will use the CAT System. This
requirement ensures that only authorized and qualified persons are using the CAT
System.
37

See Securities Exchange Act Release No. 105003 (Mar. 16, 2026), 91 FR 13410 (Mar. 19, 2026).

38

The Participants conduct the activities of the CAT through the CAT LLC, a jointly owned limited
liability company formed under Delaware state law. The CAT LLC is charged with creating,
implementing and maintaining the CAT. The Participants previously formed a Delaware Limited
Liability company named CAT NMS, LLC for the purpose of conducting activities related to the
consolidated audit trail, but formed Consolidated Audit Trail, LLC to replace and serve as the
CAT NMS Plan on August 29, 2019. See Securities Exchange Act Release No. 87149 (September
27, 2019), 84 FR 52905 (October 3, 2019). The LLC through which Participants conduct the
activities of CAT is referred to as “CAT LLC” in this Supporting Statement.

9

3.

Consideration Given to Information Technology

Several of the information collections associated with the CAT NMS Plan involve
the use of electronic information collection techniques. Rule 613 states that the CAT
NMS Plan shall provide for the creation and maintenance of the Central Repository, 39
which is required to receive, consolidate, and retain the data required to be submitted
electronically by the Participants and their members. 40 The CAT NMS Plan requires
CAT Reporters to report data to the Central Repository either in a uniform electronic
format, or in a manner that would allow the Central Repository to convert the data to a
uniform electronic format. 41 The CAT NMS Plan also requires the Central Repository to
collect and retain on a current and continuing basis, in a format compatible with the
Participant and member data, all data including NBBO information, transaction reports,
and Last Sale Reports. 42 Additionally, the CAT NMS Plan (as required by Rule 613(f))
also requires that the Participants develop and implement a surveillance system, or
enhance existing surveillance systems, reasonably designed to make use of the
consolidated information in the consolidated audit trail. 43
Electronic submission of the information required by Rule 613 ensures that the
CAT can capture in a timely, accurate and accessible manner all of the information
necessary to efficiently and effectively monitor cross-market trading activity in today’s
highly automated and dispersed markets. As part of operating their businesses, the
Participants are already accustomed to handling large volumes of data and may already
have in place electronic trading, routing and reporting systems. Participants maintain
audit trails, either directly or through Regulatory Service Agreements, that contain the
trade and order data that they obtain from their members and each equity and options
exchange keeps an audit trail of orders and trades that occur on its market. To improve
upon the previously prevailing status quo, the CAT imposes electronic information
collection and reporting requirements. The CAT NMS Plan states, “… each equities and
options exchange is built on its own unique platform, utilizes unique entry protocols and
requirements and thus creates uniquely formatted audit trails. The existence of multiple
non-integrated audit trails has direct consequences on the accuracy and efficiency of
regulatory oversight.” 44 As trading venues have become more automated, and trading
systems have become computerized, trading volumes have increased significantly and
trading has become more dispersed across more trading centers and therefore more
difficult to monitor and trace. Audit trail data for securities that are traded on multiple
venues is fragmented across multiple data sources, with each regulator generally having
direct access only to data generated on the trading venues it regulates. The CAT NMS
39

See 17 CFR 242.613(e)(1).

40

Id.

41

See CAT NMS Plan, supra note 17, at Appendix C, Section A.1(b).

42

See id. at Section 6.5(a)(ii). See also 17 CFR 242.613(e)(7), (e)(8).

43

See CAT NMS Plan, supra note 17, at Section 6.10(a). See also 17 CFR 242.613(f).

44

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(ii)(A).

10

Plan brings audit trail data related to trading of equities and options on all venues into the
Central Repository where it can be accessed by the Commission and the SROs.
The collection of information requirement “Background Checks” would involve
the use of electronic submission and collection techniques. These would be background
checks using fingerprints that would be submitted either in hard copy or electronically to
the Attorney General of the United States for identification and processing.
The Commission does not believe that improvements in information technology
would have any impact on the burdens associated with the CAT NMS Plan (in fact,
improvements in information technology may reduce any burdens associated with the
Plan), nor that any obstacles exist to reducing such burdens.
4.

Duplication

With respect to the “Data Collection and Reporting” collection of information, the
CAT NMS Plan requires the collection and reporting of certain information that national
securities exchanges and national securities associations, as well as their members,
already collect and report pursuant to both Federal Rules and the rules of those exchanges
and associations. For instance, national securities exchanges and national securities
associations keep documents, including all correspondence, memoranda, papers, books,
notices, accounts and other such records pursuant to Section 17(a) of the Exchange Act
and Rule 17a-1 thereunder of the receipt of all orders entered into their systems, as well
as records of the routing, modification, cancellation, and execution of those orders.
However, Rule 613 requires the CAT NMS Plan to require the Participants to collect and
report additional and more detailed information, and to report the information to the
Central Repository in a uniform electronic format, or in a manner that would allow the
Central Repository to convert the data to a uniform electronic format for consolidation
and storage.
Rule 17a-25 provides the Commission with the ability to request from brokerdealers some of the information that is also collected by the CAT through the EBS
system, and the SROs maintain similar rules for their members. However, the EBS
system does not duplicate the information collection enabled by Rule 613 in substance,
functionality, or utility.
The CAT functions as a database that collects on a daily basis and centrally stores
data from SROs and broker-dealers. The EBS system, by contrast, does not collect data
or store it in a database; instead, it provides regulators with a means of requesting
specified data sets from broker-dealers. The type of data collected by the CAT is also
different than the type of data that can be requested through the EBS system. EBS data,
for example, is limited to executed trades and does not provide information on orders or
quotes. The EBS system thus does not provide access to information on order routes,
modifications, and cancellations. Such information is available through the CAT and is
used to investigate various forms of potential market manipulation like layering and
spoofing. The EBS system, on the other hand, provides regulators with access to

11

customer and account-level information that is no longer required to be reported to the
CAT, 45 and to information that is older than the data required to be stored by the CAT. 46
While there is some information in the CAT that can also be requested through the EBS
system, the way that CAT information is used by regulators differs because the scope of
the data and the functionality of the CAT supports different types of analyses than the
EBS system.
In an effort to ensure identification and avoidance of unnecessary duplicative
rules and requirements, Rule 613 requires the CAT NMS Plan to discuss a plan to
eliminate existing rules and systems (or components thereof) that will be rendered
duplicative by the CAT, including identification of such rules and systems (or
components thereof). 47 To the extent that any existing rules or systems related to
monitoring quotes, orders, and executions provide information that is not rendered
duplicative by the CAT, Rule 613 requires an analysis of: (A) whether the collection of
such information remains appropriate; 48 (B) if still appropriate, whether such information
should continue to be separately collected or should instead be incorporated into the
CAT; 49 and (C) if no longer appropriate, how the collection of such information could be
efficiently terminated; the steps the plan sponsors propose to take to seek Commission
approval for the elimination of such rules and systems (or components thereof); and a
timetable for such elimination, including a description of how the plan sponsors propose
to phase in the CAT and phase out such existing rules and systems (or components
thereof). 50
In accordance with Rule 613, the CAT NMS Plan provides information regarding
when the Participants intend to initiate and conclude identification of: duplicative rules
and systems, partially duplicative rules and systems, non-duplicative rules or systems
related to monitoring quotes, orders and executions, and the timing of Participant rule and
system changes due to any elimination or modification of Commission rules as a result of
the implementation of CAT. 51 Further, the Plan discusses when the Participants will file
proposed rule changes to implement the rule modifications or deletions and elimination
of the relevant rules and systems. 52
45

See note 21 supra.

46

See note 22 supra.

47

See Rule 613(a)(1)(ix).

48

See Rule 613(a)(1)(ix)(A).

49

See Rule 613(a)(1)(ix)(B).

50

See Rule 613(a)(1)(ix)(C).

51

See CAT NMS Plan, supra note 17, at Appendix C, Section C.9.

52

Id. On August 14, 2020, FINRA filed with the Commission a proposed rule change to delete the
OATS Rules once members were effectively reporting to the CAT. Securities Exchange Act
Release No. 89679 (Aug. 26, 2020), 85 FR 54661 (Sept. 1, 2020). On November 30, 2020, the
Commission approved the proposed rule change, as amended by Amendment No. 1. Securities
Exchange Act Release No. 90535, 85 FR 78395 (Dec. 4, 2020). On June 23, 2021, FINRA filed
with the Commission a proposed rule change and notice of immediate effectiveness setting forth

12

Furthermore, the Commission is engaged in a comprehensive review of the CAT,
in which it is considering, among other things, whether there are audit trails and/or
related data sources that contain partially duplicative information to the CAT, such that
overlapping requirements should partially duplicative information collections can be
eliminated, modified, or replaced. 53
With respect to the “Background Checks” collection of information, Section
6.1(g) of the CAT NMS Plan requires each Participant to conduct background checks of
its employees and contractors that will use the CAT System. While Section 6.1(g) may
result in a duplication of requirement because other rules currently require Participants to
conduct fingerprint-based background checks, 54 there will be no duplication of effort
because if an employee or contractor of a Participant who will be a CAT user is already
subject to a Participant’s existing background check requirements, we anticipate that
those requirements would satisfy the background checks requirements of the CAT NMS
Plan. Further, if such Participant believes that its employees and contractors should be
subject to a more stringent or different background check requirement to be a CAT user
than currently required by the Participant, then there will be no duplication of effort
because the proposed background check requirements would be more rigorous or
different and thus differ from the Participant’s existing background check requirements.
5.

Effect on Small Entities

The CAT NMS Plan has an effect on small entities. The CAT NMS Plan requires
Participants to enforce compliance by their members with the provisions of Rule 613 and
the Plan through SRO rules that require their members to comply with the requirements
of Rule 613 and the CAT NMS Plan. 55 These rules apply to all broker-dealers—
including those that are small entities. Commission rules generally define a broker-dealer
as a small entity for purposes of the Exchange Act and the Regulatory Flexibility Act if
the broker-dealer had a total capital of less than $500,000 on the date in the prior fiscal
year as of which its audited financial statements were prepared, and it is not affiliated
with any person (other than a natural person that is not a small entity).
the basis for its determination that the accuracy and reliability of the CAT met the standards
approved by the Commission for purposes of eliminating the OATS Rules. Securities Exchange
Act Release No. 92239 (June 23, 2021), 86 FR 34293 (June 29, 2021). Effective September 1,
2021, FINRA retired the OATS system. References to firms with or without OATS reporting
obligations therefore are the firms’ status as an OATS reporter prior to September 1, 2021.
53

See Securities Exchange Act Release No. 105251 (Apr. 16, 2026), 91 FR 20945 (Apr. 20, 2026).

54

See, e.g., 17 CFR 240.17f-2(a) (OMB Control Number 3235-0029); 17 CFR 240.17f-2(c) (OMB
Control Number 3235-0034). Additionally, most Participants currently have rules that permit
them to conduct fingerprint-based background checks of contractors. See, e.g., BOX Rule 10080;
CBOE Rule 7.10; ISE Rule Options 6E, Section 8; Nasdaq Rule General 2, Section 13; NYSE
Rule 28; and IEX Rule 1.180.

55

The CAT NMS Plan states that the Participants will endeavor to promulgate consistent rules
requiring compliance by their members with the provisions of Rule 613 and the Plan. See id. at
Section 3.11. See also 17 CFR 242.613(g)(2).

13

Thus, small broker-dealers are responsible for complying with the CAT NMS
Plan’s requirements for regularly reporting to the Central Repository the required order
and transaction data, and either report through existing order handling and trading
systems or rely on outside vendors to provide a functionality that would provide
information to the Central Repository. The Commission estimates, based on FOCUS
filings with the Commission, that as of the first quarter of 2026, there were approximately
618 Commission-registered broker-dealers that would be considered small entities for
purposes of the statute. Each of these brokers-dealers, assuming that they are subject to
CAT reporting obligations, are required to comply with the CAT NMS Plan required
under Rule 613. 56
6.

Consequences of Not Conducting Collections

The collections improve the completeness, accuracy, accessibility and timeliness
of data available to regulators and therefore improve regulators’ ability to perform
regulatory activities, in particular market surveillance, examinations, investigations, and
other enforcement functions, as well as analysis and reconstruction of market events, and
market analysis and research to inform policy decisions. Regulators depend on data for
many of these activities and the improvements in the data qualities provided by the CAT
improve the efficiency and effectiveness of such regulatory activities.
The Plan imposes certain information collections burdens. First, the Plan requires
that the Participants provide the Commission, and make public, at least one month prior
to submitting any rule filing to establish initial fees for CAT Reporters, an independent
audit of the fees, costs, and expenses incurred by the Participants on behalf of the
Company prior to the Effective Date of the Plan. Participants made independent audit
statements for CAT LLC and its predecessor CAT NMS LLC for the period prior to the
Effective Date available on August 5, 2021. 57 Because this collection is now complete,
the Commission assumes no further burden will be associated with the collection.
Second, because the relevant time frame has passed and any one-time costs and/or
burdens related to the preparation of some reports already would have been incurred and
included in previous PRA submissions, the following collections are complete and the
Commission is not calculating any additional costs or burdens related to the requirement
to submit: (i) a written report, within 24 months of effectiveness of the Plan, discussing
the feasibility, benefits, and risks of allowing an Industry Member to bulk download the
Raw Data that it has submitted to the Central Repository; (ii) a written assessment, within
36 months of effectiveness of the Plan, of the nature and extent of errors in the Customer
information submitted to the Central Repository and whether the correction of certain
data fields over others should be prioritized; and (iii) a written report, 36 months after
56

The Commission understands that some registered broker-dealers either trade in asset classes not
currently included in the definition of Eligible Security or do not trade at all (e.g., broker-dealers
for the purposes of underwriting, advising, private placements).

57

See https://www.catnmsplan.com/audited-financial-statements.

14

effectiveness of the Plan, on the impact of tiered fees on market liquidity, including an
analysis of the impact of the tiered-fee structure on Industry Members’ provision of
liquidity.
Third, the Plan requires the Participants to provide the Commission a written
assessment of the projected impact of any Material Systems Change on the Maximum
Error Rate, prior to the implementation of any Material Systems Change. The
Commission believes that Material Systems Changes either could result in new
challenges for CAT Reporters or simplify the means for reporting data. In either case,
the appropriateness of the Maximum Error Rate could be impacted, and thus warrant a
change. Without this assessment, the Participants and the Commission may lack a
thorough understanding of how a particular Material Systems Change would impact Error
Rates and whether to temporarily adjust the Error Rates around that Material Systems
Change.
Fourth, the Plan requires that the CAT LLC’s financials be (i) in compliance with
GAAP, (ii) be audited by an independent public accounting firm, and (iii) be made
publicly available. This requirement promotes greater transparency with respect to the
Company’s financial accounting. Without this requirement, that purpose will not be
achieved.
Finally, the Plan requires that each Participant conduct background checks for its
employees and contractors that will use the CAT System. This requirement is
appropriate to ensure that only authorized and qualified persons are using the CAT
System. Without this requirement, that purpose would not be achieved.
7.

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

The information collection “Data Collection and Reporting” requires respondents
to record and report information to the Central Repository information more frequently
than quarterly; 58 specifically, certain information must be recorded contemporaneously
with a Reportable Event and reported to the Central Repository by 8:00 a.m. ET on the
trading day following the day such information has been recorded by a Participant or
broker-dealer industry member, 59 and other information must be reported by 8:00 a.m.
ET on the trading day following the day a broker-dealer member receives such
information. 60
In addition, the “Data Collection and Reporting” information collection requires
respondents to submit confidential information to the Central Repository, such as the

58

The CAT NMS Plan did not provide an estimated frequency of reporting for Participants and
broker-dealers.

59

See 17 CFR 242.613(c)(3); see also CAT NMS Plan, supra note 17, at Section 6.3(b), Section
6.4(b).

60

See 17 CFR 242.613(c)(4); see also CAT NMS Plan, supra note 17, at Section 6.4(b).

15

terms of an order. 61 Relatedly, the information collection requirement that the
Participants develop and implement new surveillance systems, or enhance existing
surveillance systems, reasonably designed to make use of consolidated audit trail
information 62 is intended to enable Participants to better monitor trading through use of
this confidential information. As described in Item 10 below, Rule 613 includes
requirements that the CAT NMS Plan must contain to protect the confidentiality of this
information 63 and these requirements are detailed in the CAT NMS Plan. 64
The information collection “Written Assessment of the Operation of the
Consolidated Audit Trail” likely contains confidential information concerning any
deficiencies of the Consolidated Audit Trail and a plan for improvements. The CAT
NMS Plan requires the Participants to submit to the Commission the written assessment
annually. 65 To the extent that the Commission receives confidential information pursuant
to the CAT NMS Plan, such information will be kept confidential, subject to the
provisions of applicable law.
The information collections “Assessment of Material Systems Changes on Error
Rates” and “Background Checks” potentially requires the Participants to report and
disclose information more frequently than quarterly. In addition, the information
collection “Assessment of Material Systems Changes on Error Rates” may require the
Participants to submit confidential information to the Commission. To the extent the
Commission receives confidential information pursuant to the CAT NMS Plan, such
information will be kept confidential, subject to the provisions of applicable law.
8.

Consultations Outside the Agency

The required Federal Register notice with a 60-day comment period soliciting
comments on this collection of information was published. No public comments were
received.
9.

Payment or Gift

Not applicable. The Commission has not provided any payment or gift to the
respondents.
10.

Confidentiality

61

See 17 CFR 242.613(c)(7); see also CAT NMS Plan, supra note 17, at Section 6.3(d), Section
6.4(d). Other types of confidential information related to customer account information and other
customer identifying information is no longer required to be submitted to the Central Repository.
See supra note 21.

62

See 17 CFR 242.613(f).

63

See 17 CFR 242.613(a)(1)(iv), 613(b)(6), 613(e)(4)(i), 613(e)(4)(i)(A).

64

See CAT NMS Plan, supra note 17, at Section 6.1(b), Section 6.2(b), Section 6.5(f)(i), Section
6.5(iv), Section 6.9, Section 6.12, Appendix D, Section 4.

65

See CAT NMS Plan, supra note 17, at Section 6.6(a)(i).

16

The CAT NMS Plan does require the collection and reporting of confidential
information.
The CAT NMS Plan contains several provisions that provide respondents with
assurances that confidential information would be protected.
Rule 613 requires the CAT NMS Plan to contain several provisions relating to the
security of the information. Specifically, Rule 613(a)(1)(iv) requires the Participants to
discuss the security and confidentiality of the information reported to the Central
Repository in the Plan. 66 Rule 613(b)(6) provides that the Plan must include a provision
requiring the Participants to provide to the Commission, at least every two years after
effectiveness of the national market system plan, a written assessment of the operation of
the consolidated audit trail, which would include an evaluation of the performance of the
consolidated audit trail’s system security. 67 Rule 613(e)(4)(i) also requires that the Plan
include policies and procedures, including standards, to be used by the CAT Plan
Processor to ensure the security and confidentiality of all information reported to the
Central Repository. 68 The plan sponsors, and employees of the plan sponsors and Central
Repository, would be required to agree to use appropriate safeguards to ensure the
confidentiality of such data. 69 Further, Rule 613 requires that the CAT NMS Plan require
that audit trail data may not be used by the Participants other than for surveillance or
other regulatory purposes. 70
The CAT NMS Plan provides that the CAT Plan Processor is responsible for the
security and confidentiality of all CAT Data received and reported to the Central
Repository, including during all communications between CAT Reporters and the Plan
Processor, data extraction, data manipulation and transformation, loading to and from the
Central Repository, and data maintenance by the Central Repository. 71 The Plan
Processor must, among other things, require that individuals with access to the Central
Repository agree to use CAT Data only for appropriate surveillance and regulatory
activities and to employ safeguards to protect the confidentiality of CAT Data. 72
In addition, the Plan Processor must develop a comprehensive information
security program, as well as a training program that addresses the security and
confidentiality of all information accessible from the consolidated audit trail and the

66

17 CFR 242.613(a)(1)(iv).

67

17 CFR 242.613(b)(6).

68

17 CFR 242.613(e)(4)(i).

69

17 CFR 242.613(e)(4)(i)(A).

70

Id.

71

See CAT NMS Plan, supra note 17, at Section 6.5(f)(i), (iv).

72

Id. at Section 6.5(f)(i).

17

operational risks associated with accessing the Central Repository. 73 The Plan Processor
must also designate one of its employees as the Chief Information Security Officer;
among other things, the Chief Information Security Officer is responsible for creating and
enforcing appropriate policies, procedures, and control structures regarding data
security. 74 The Technical Specifications, which the Plan Processor must publish, must
include a detailed description of the data security standards for the consolidated audit
trail. 75
Appendix D of the CAT NMS Plan sets forth minimum data security
requirements for CAT that the Plan Processor must meet. 76 For example, Appendix D
enumerates various connectivity, data transfer, and encryption requirements, such as that
the CAT System must have encrypted internet connectivity, CAT Reporters must connect
to CAT infrastructure using secure methods such as private lines or virtual private
network connections over public lines, CAT Data must be encrypted at-rest and in-flight
using industry standard best practices. 77 Additional requirements regarding data storage,
data access and breach management are also specified in Appendix D. 78 Further, the
Participants must establish and enforce policies and procedures that ensure the
confidentiality of the CAT Data obtained from the Central Repository, limit the use of
CAT Data obtained from the Central Repository solely for surveillance and regulatory
purposes, 79 implement effective information barriers between each Participant’s
regulatory and non-regulatory staff with regard to CAT Data, and limit access to CAT
Data to designated persons. 80 However, a Participant may use the Raw Data it reports to
the Central Repository for “commercial or other” purposes if not prohibited by applicable
law, rule or regulation. 81
The Participants do not submit the Background Check information to the
Commission and the Commission is not collecting this information; however, if the
Commission receives any confidential information pursuant to the CAT NMS Plan, such
information will be kept confidential, subject to the provisions of applicable law.
To the extent that the Commission receives confidential information pursuant to
the CAT NMS Plan, such information will be kept confidential, subject to the provisions
of applicable law.
73

Id. at Sections 6.1(m), 6.12.

74

Id. at Section 6.2(b).

75

Id. at Section 6.9.

76

Id. at Appendix D, Section 4.

77

Id. at Appendix D, Section 4.1.2.

78

Id. at Appendix D, Section 4.1.3–4.1.6.

79

The Commission notes that regulatory purposes includes, among other things, market surveillance,
examinations, investigations, and other enforcement functions, analysis and reconstruction of
market events, and market analysis and research to inform policy decisions.

80

See CAT NMS Plan, supra note 17, at Section 6.5(f)(ii), (g).

81

Id. at Section 6.5(f)(i).

18

11.

Sensitive Questions

Because the information required to be collected under Rule 613 is collected by
the CAT NMS Plan Processor (FINRA CAT), which is managed by SROs (national
securities exchanges and FINRA) and not by the Commission, a Privacy Impact
Assessment, System of Records Notice, and Privacy Act Statement has not previously
been and is not now required.
12.

Burden of Information Collection

The Commission estimates that the information collection requirements of Rule
613 will apply to 1,199 respondents who will incur an average aggregate total of
approximately 4,122,488 burden hours per year to comply with the requirements. The
hour burden is calculated as discussed below.
Rule 613 applies to the 27 Participants (the 26 national securities exchanges and
the one national securities association (FINRA)) currently registered with the
Commission. 82 This is an increase of 2 Participants from the previous Paperwork
Reduction Act Analysis. The Commission also estimates that Rule 613 applies to 1,172
broker-dealers. 83
82

The Participants are: 24X National Exchange, 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, MIAX Sapphire, LLC, Nasdaq
GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock
Market LLC, Nasdaq Texas, LLC, New York Stock Exchange LLC, NYSE American LLC,
NYSE Arca, Inc., NYSE National, Inc., and NYSE Texas, Inc. The Commission has adjusted its
estimates pertaining to the Participants due to the addition of two new Participants (from 25
Participants in 2023 Paperwork Reduction Act analysis to 27 Participants in the instant Paperwork
Reduction Act analysis).

83

The Commission understands that there are approximately 3,253 broker-dealers, as of March
2026; however, not all broker-dealers are expected to have CAT reporting obligations. The
Participants previously reported that approximately 1,500 broker-dealers quoted or executed
transactions in NMS Securities, Listed Options or OTC Equity Securities and would likely have
CAT reporting obligations. The Commission previously revised this estimate to 1,350 as of 2023,
and now revises that estimate to 1,172 broker-dealers quoting or executing transactions in NMS
Securities, Listed Options or OTC Equity Securities, and would likely have CAT reporting
obligations. The Commission believes that this is consistent with the reduced number of brokerdealers overall (from 4,138 to approximately 3,734 in 2020, to 3,510 in 2023, to now 3,253
broker-dealers). This determination is based on experience and knowledge gained in discussions
with Participants and the Plan Processor during the development of the CAT. The Commission
further believes that this reduction is a reduction in the number of small OATS-reporting brokerdealers, which was previously calculated by identifying all other categories of CAT reporting
broker-dealers and determining that the remaining number of the estimated 1,172 broker-dealers
were small OATS-reporting broker-dealers. The Commission understands that the approximately
2,081 remaining registered broker-dealers either trade in asset classes not currently included in the
definition of Eligible Security or do not trade at all (e.g., broker-dealers for the purposes of
underwriting, advising, private placements).

19

A. Burden on National Securities Exchanges and National Securities
Associations
Central Repository
Rule 613 requires the Participants to jointly establish a Central Repository tasked
with the receipt, consolidation, and retention of the reported order and execution
information. The Participants previously issued a request for proposal soliciting Bids
from entities to act as the CAT’s Plan Processor, and selected Thesys Technologies, LLC
on January 17, 2017. 84 On February 27, 2019, the Participants announced that FINRA
has been selected as Plan Processor, replacing Thesys Technologies, LLC. 85 The Plan
Processor is responsible for building, operating, administering and maintaining the
Central Repository.
The Plan’s Operating Committee, which consists of one voting representative of
each Participant, 86 is responsible for the management of CAT LLC, 87 including the
Central Repository, acting by majority or Supermajority Vote, depending on the issue. In
managing the Central Repository, among other things, the Operating Committee has the
responsibility to authorize the following actions of the CAT LLC: (1) interpreting the
Plan; 88 (2) determining appropriate funding-related policies, procedures and practices
consistent with Article XI of the CAT NMS Plan; 89 (3) terminating the Plan Processor;
(4) selecting a successor Plan Processor (including establishing a Plan Processor
Selection Subcommittee to evaluate and review Bids and make a recommendation to the
Operating Committee with respect to the selection of the successor Plan Processor); 90 (5)
entering into, modifying or terminating any Material Contract; 91 (6) making any Material
Systems Change; 92 (7) approving the initial Technical Specifications or any Material
Amendment to the Technical Specifications proposed by the Plan Processor; 93 (8)

84

See “SROs Select Thesys Technologies, LLC as Consolidated Audit Trail Plan Processor,”
https://www.prnewswire.com/news-releases/sros-select-thesys-technologies-llc-as-consolidatedaudit-trail-plan-processor-300392226.html.

85

See “CAT NMS Selects FINRA as Consolidated Audit Trail Plan Processor” available at:
https://www.catnmsplan.com/wpcontent/uploads/2019/02/CAT_FINRA_Press_Release_FINAL.pdf.

86

See id. at Section 4.2(a).

87

See supra note 38.

88

See CAT NMS Plan, supra note 17, at Section 4.3(a)(iii).

89

See id. at Section 4.3(a)(vi).

90

See id. at Section 4.3(b)(i).

91

See id. at Section 4.3(b)(iv).

92

See id. at Section 4.3(b)(v).

93

See id. at Section 4.3(b)(vi).

20

amending the Technical Specifications on its own motion; 94 (9) approving the Plan
Processor’s appointment or removal of the CCO, CISO, or any Independent Auditor in
accordance with Section 6.1(b) of the CAT NMS Plan; 95 (10) approving any
recommendation by the CCO pursuant to Section 6.2(a)(v)(A) of the CAT NMS Plan; 96
(11) selecting the members of the Advisory Committee; 97 (12) selecting the Operating
Committee chair; 98 and (13) determining to hold an Executive Session of the Operating
Committee. 99
Additionally, in managing the Central Repository, the Operating Committee has
the responsibility and authority, as appropriate, to: (1) direct the CAT LLC to enter into
one or more agreements with the Plan Processor obligating the Plan Processor to perform
the functions and duties contemplated by the Plan to be performed by the Plan Processor,
as well as such other functions and duties the Operating Committee deems necessary or
appropriate; 100 (2) appoint as an Officer of the Company the individual who has direct
management responsibility for the Plan Processor’s performance of its obligations with
respect to the CAT; 101 (3) approve policies, procedures, and control structures related to
the CAT System that are consistent with Rule 613(e)(4), Appendix C and Appendix D of
the CAT NMS Plan that have been developed and will be implemented by the Plan
Processor; 102 (4) approve any policy, procedure or standard (and any material
modification or amendment thereto) applicable primarily to the performance of the Plan
Processor’s duties as the Plan Processor; 103 (5) for both the CCO and CISO, render their
annual performance reviews and review and approve their compensation; 104 (6) review
the Plan Processor’s performance under the Plan at least once each year, or more often
than once each year upon the request of two Participants that are not Affiliated
Participants; 105 (7) in conjunction with the Plan Processor, approve and regularly review
(and update as necessary) SLAs governing the performance of the Central Repository; 106
(8) maintain a Compliance Subcommittee for the purpose of aiding the CCO as
necessary; 107 and (9) designate by resolution one or more Subcommittees it deems
94

See id. at Section 4.3(b)(vii).

95

See id. at Section 4.3(b)(iii).

96

See id. at Section 4.3(a)(iv).

97

See id. at Section 4.3(a)(ii).

98

See id. at Section 4.3(a)(i).

99

See id. at Section 4.3(a)(v).

100

See id. at Section 6.1(a).

101

See id. at Section 4.6(b).

102

See id. at Section 6.1(c).

103

See id. at Section 6.1(e).

104

See id. at Section 6.2(a)(iv) and Section 6.2(b)(iv).

105

See id. at Section 6.1(n).

106

See id. at Section 6.1(h).

107

See id. at Section 4.12(b).

21

necessary or desirable in furtherance of the management of the business and affairs of the
Company. 108
The Commission previously estimated the initial burden over the 12-month period
after the effectiveness of the CAT NMS Plan within which the Participants would be
required to select an initial Plan Processor 109 and begin reporting to the Central
Repository. 110 The Participants have subsequently selected a Plan Processor and have
begun reporting to the Central Repository, so the Commission deems the initial burden of
this information collection is completed. 111
For its ongoing time burden associated with the management of the Central
Repository, the Commission is relying on estimates provided in the CAT NMS Plan for
the development of the CAT NMS Plan, which the Participants “have accrued, and will
continue to accrue,” 112 and have described in the CAT NMS Plan as “reasonably
associated with creating, implementing, and maintaining the CAT upon the
Commission’s adoption of the CAT NMS Plan.” 113 Ongoing cost estimates associated
with the management of the Central Repository are based on financial information
provided by CAT LLC, as discussed in greater detail below.
The activities of the Operating Committee overlap with those undertaken by the
Participants to develop the CAT NMS Plan. The CAT NMS Plan describes the costs
incurred by the Participants to develop the CAT NMS Plan as including “staff time
contributed by each Participant to, among other things, determine the technological
requirements for the Central Repository, develop the RFP, evaluate Bids received, design
and collect the data necessary to evaluate costs and other economic impacts, meet with
Industry Members to solicit feedback, and complete the CAT NMS Plan submitted to the
Commission for consideration.” 114 For the management of the Central Repository, the
Operating Committee has comparable responsibilities. As part of its overall management
of the Central Repository, the Operating Committee has responsibility for decisions
associated with the technical requirements of the Central Repository. 115 Furthermore, the
108

See id. at Section 4.12(a).

109

Rule 613(a)(3)(i) requires the selection of the Plan Processor within 2 months after effectiveness
of the CAT NMS Plan. See 17 CFR 242.613(a)(3)(i).

110

Rule 613(a)(3)(iii) requires the Participants to provide to the Central Repository the data required
by Rule 613(c) within one year after effectiveness of the CAT NMS Plan. See 17 CFR
242.613(a)(3)(iii).

111

See “CAT NMS Announces Initiation of Reporting to the Consolidated Audit Trail,” CAT NMS,
LLC (Nov. 16, 2018), available at: https://www.catnmsplan.com/wpcontent/uploads/2018/11/Press-Release-CAT-Launch-final.pdf.

112

See id. at Appendix C, Section B.7(b)(iii).

113

See id.

114

See id.

115

For example, the Operating Committee would be required to authorize the following actions of the
CAT LLC: entering into, modifying or terminating any Material Contract (see id. at Section

22

Operating Committee is required to authorize the selection of the members of the
Advisory Committee, 116 comprising members of the Industry, to advise the Participants
on the implementation, operation, and administration of the Central Repository. 117
Because the responsibilities of the Operating Committee are similar to those described in
the CAT NMS Plan for the development of the CAT NMS Plan itself, CAT NMS Plan
estimates are used as the basis for the Commission’s burden and cost estimates for the
ongoing management of the Central Repository.
Each Participant contributes an employee and a substitute for the employee to
serve on the Operating Committee that oversees the Central Repository.
The Operating Committee will continue to be responsible for the management of
the Central Repository. The Commission estimates that each of the Participants would
incur an average ongoing annual time burden of 533.33 burden hours associated with the
continued management of the Central Repository, for an aggregate annual estimate of
14,400 burden hours across the Participants (533.33 x 27). 118

4.3(b)(iv)); making any Material Systems Change (see id. at Section 4.3(b)(v)); amending the
Technical Specifications on its own motion (see id. at Section 4.3(b)(vii)); and approving the
initial Technical Specifications or any Material Amendment to the Technical Specifications
proposed by the Plan Processor (see id. at Section 4.3(b)(vi)). Further, the Operating Committee
would be able to approve policies, procedures, and control structures related to the CAT System
that are consistent with Rule 613(e)(4), Appendix C and Appendix D of the CAT NMS Plan that
have been developed and will be implemented by the Plan Processor (see id. at Section 6.1(c));
and in conjunction with the Plan Processor, approve and regularly review (and update as
necessary) SLAs governing the performance of the Central Repository (see id. at Section 6.1(h)).
116

See id. at Section 4.3(a)(ii).

117

See id. at Section 4.13(d).

118

The Commission is basing this estimate on the hour burden estimate provided in the CAT NMS
Plan for the development of the CAT NMS Plan. The Commission notes that the CAT NMS Plan
describes the hour burden estimate for the development of the CAT NMS Plan as a burden the
Participants will continue to accrue; therefore, the Commission believes that it is reasonable to use
this burden estimate as the basis for its ongoing hour burden estimate for the maintenance of the
Central Repository, particularly as the Commission believes the reasons for the staff time incurred
for the development of the CAT NMS Plan would be comparable to those of the staff time to be
incurred by the Operating Committee for the continued management of the Central Repository.
See id. (stating “…the Participants have accrued, and will continue to accrue, direct costs
associated with the development of the CAT NMS Plan. These costs include staff time
contributed by each Participant to, among other things, determine the technological requirements
for the Central Repository, develop the RFP, evaluate Bids received, design and collect the data
necessary to evaluate costs and other economic impacts, meet with Industry Members to solicit
feedback, and complete the CAT NMS Plan submitted to the Commission for consideration. The
Participants estimate that they have collectively contributed 20 FTEs in the first 30 months of the
CAT NMS Plan development process”). (20 FTEs / 30 months) = 2/3 FTEs per month for all of
the Participants to continue management of the Central Repository. Converting this into burden
hours, (2/3 FTEs) x (12 months) x (1,800 burden hours per year) = 14,400.72 ongoing annual
burden hours for all of the Participants to continue management of the Central Repository.
(14,400 ongoing annual burden hours for all Participants / 27 Participants) = 533.33 ongoing
annual burden hours for each Participant to continue management of the Central Repository.

23

Data Collection and Reporting (Participants)
Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
Participant, and further to document the life of the order through the process of routing,
modification, cancellation and execution (in whole or in part) of the order. 119 Rule
613(c) requires the CAT NMS Plan to impose requirements on Participants to record and
report CAT information to the Central Repository in accordance with specified
timelines. 120
Rule 613(c) requires the CAT NMS Plan to require the collection and reporting of
some information that Participants already collect to operate their business and are
required to maintain in compliance with Section 17(a) of the Exchange Act and Rule 17a1 thereunder. 121 For instance, national securities exchanges and national securities
associations keep documents, including all correspondence, memoranda, papers, books,
notices, accounts and other such records pursuant to Section 17(a) of the Exchange Act
and Rule 17a-1 thereunder, of the receipt of all orders entered into their systems, as well
as records of the routing, modification, cancellation, and execution of those orders.
However, Rule 613 requires the CAT NMS Plan to require the Participants to collect and
report additional and more detailed information, and to report the information to the
Central Repository in a uniform electronic format, or in a manner that would allow the
Central Repository to convert the data to a uniform electronic format for consolidation
and storage.
The CAT NMS Plan provides estimated costs for hardware, software, third-party
providers, and Participants’ full-time employees (FTE’s) to be incurred by the
Participants to report CAT Data. 122 For these estimates, the Commission is relying on the
estimates provided by the Participants because it believes that the Plan’s estimates for
Participants to report CAT Data are reliable since all of the Participants provided
estimates, and most Participants have experience collecting audit trail data, as well as
knowledge of both the requirements of Rule 613 as well as their current business
practices. The Commission notes that the Participants provided these numbers based on a
study (the “Participants Study”) that was distributed to 19 Participants on August 11,
2014. The Commission has divided certain numbers provided by the Participants Study
by 19 in order to calculate estimates of burdens and/or costs per Participant, where

119

17 CFR 242.613(c)(1). See also CAT NMS Plan, supra note 17, at Section 6.3.

120

17 CFR 242.613(c). See also CAT NMS Plan, supra note 17, at Section 6.3.

121

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

122

Third-party provider costs are generally legal and consulting costs, but may include other
outsourcing costs. The template used by respondents is available at
http://catnmsplan.com/PastEvents/ under the Section titled “6/23/14” at the “Cost Study Working
Template” link.

24

appropriate, and further adjusted calculations to account for the increased number of
Participants (27). 123
The Commission notes that throughout this Paperwork Reduction Act analysis, it
is categorizing the FTE cost estimates for the Participants, as well as the broker-dealer
respondents, that were provided in the CAT NMS Plan as an internal compliance cost not
an actual Item 13 cost. The Commission: (1) divided the FTE cost estimates by a divisor
of $514,350, which is the Commission’s estimated average salary for a full-time
equivalent employee in the securities industry in a job category associated with
regulatory data reporting; 124 and then (2) multiplied the quotient by 1,800 (the number of
hours a full-time equivalent employee is estimated to work per year). The Commission
continues to rely on estimated costs and figures provided by the Plan Participants in the
CAT NMS Plan.
The Commission previously estimated initial burden hours to develop and
implement the needed systems changes to capture the required information and transmit it
to the Central Repository in compliance with the Rule for each Participant. As noted
above, the Participants have begun reporting to the CAT and thus this information
collection requirement is complete for the Participants. 125
However, the Commission estimates that Rule 613 would impose on each
Participant ongoing annual burdens associated with, among other things, personnel time
to monitor each Participant’s reporting of the required data and the maintenance of the
systems to report the required data; and implementing changes to trading systems that
might result in additional reports to the Central Repository. The CAT NMS Plan
provided the following average aggregate FTE internal compliance cost that the
Participants were expecting to incur to maintain data reporting systems to be in
compliance with Rule 613: $7,300,000 in anticipated annual FTE costs for operational,
123

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(i)(A)(1). Specifically,
estimates relating to Data Collection and Reporting (Participants) and Surveillance, as described
below, have been modified based on this approach.

124

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(ii)(C), at n.192. The
Participants represented that the cost per FTE is $401,440. The $401,440 figure used in the CAT
NMS plan was based on a Programmer Analyst’s salary ($193 per hour) from SIFMA’s
Management & Professional Earnings in the Securities Industry 2008, multiplied by 40 hours per
week, then multiplied by 52 weeks per year. The Commission updated this number to include
recent salary data for other job categories associated with regulatory data reporting in the
securities industry, using the hour and multiple methodology used by the Commission in its
paperwork burden analyses. The Commission has used $514,350 as its annual cost per FTE for
purposes of its hourly burden estimates. The $514,350 FTE cost = 25% General and Operations
Manager + 75% Computer Programmer (0.25) x ($339 per hour x 1,800 working hours per year) +
(0.75) x ($268 per hour x 1,800 working hours per year). The $339 per hour figure for a General
and Operations Manager and the $268 per hour figure for a Computer Programmer are from the
occupational mean hourly wage data from the OEWS program of BLS, modified by the
Commission to account for an 1,800-hour work-year and multiplied by 5.35 to account for
bonuses, firm size, employee benefits and overhead.

125

See, supra, note 111.

25

technical/development, and compliance functions related to data reporting. 126 Based on
this estimate provided in the CAT NMS Plan, it would take each Participant 1,344.60
ongoing burden hours per year 127 to continue compliance with Rule 613. Therefore, the
Commission estimates that the estimated aggregate ongoing burden for all
Participants would be approximately 36,304.20 hours. 128 Based on the anticipated
burden hours and the revised estimated salary per FTE, the aggregate internal cost of
compliance to Participants would be approximately $10,373.925.15 per year. 129 This
estimated burden has changed because the Commission is now applying this estimation to
27 Participants. 130
Collection and Retention of NBBO, Last Sale Data and
Transaction Reports
Rule 613(e)(7) provides that the CAT NMS Plan must require the Central
Repository to collect and retain on a current and continuous basis NBBO information for
each NMS security, transaction reports reported pursuant to an effective transaction
reporting plan, and Last Sale Reports reported pursuant to the Options Price Reporting
Authority (“OPRA”) Plan. 131
Additionally, the CAT NMS Plan must require the Central Repository to maintain
this data in a format compatible with the order and event information consolidated and
stored pursuant to Rule 613(c)(7). 132 The Commission notes that the CAT NMS Plan
includes these data as “SIP Data” to be collected by the Central Repository. 133 Pursuant
126

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(2).

127

($7,300,000 in anticipated Participant annual FTE costs) / (19 Participants) = $384,210.53 in
anticipated per Participant annual FTE costs. ($384,210.53 in anticipated per Participant FTE
costs) / ($514,350 FTE cost per Participant) = 0.747 anticipated FTEs per Participant. (0.747
FTEs) x (1,800 working hours per year) = 1,344.60 burden hours per Participant to maintain CAT
Data reporting. The Commission is using the approximate salary for a FTE at the time the
Participants provided the estimate to calculate burden hours, because the $7,300,000 estimated
costs were based on that approximate salary. Because the estimated salary has risen, the aggregate
cost per participant has also risen, although the individual Participant burden hours have remained
steady.

128

36,304.20 annual burden hours = (27 Participants) x (1,344.60 annual burden hours).

129

The Commission is using $514,350 as its annual cost per FTE for purposes of its cost estimates.
514,350 FTE cost = 25% General and Operations Manager + 75% Computer Programmer (0.25) x
($339 per hour x 1,800 working hours per year) + (0.75) x ($268 per hour x 1,800 working hours
per year). The $339 per hour figure for a General and Operations Manager and the $268 per hour
figure for a Computer Programmer are from the OEWS program of BLS, modified to account for
inflation as of December 2025. These numbers are further modified by the Commission to
account for an 1,800-hour work-year and multiplied by 5.35 to account for bonuses, firm size,
employee benefits and overhead. 0.747 anticipated FTEs per Participant x 514,350 per FTE=
$384,219.45 per Participant per year. $384,219.45 x 27 Participants = $10,373.925.15.

130

See supra notes 82 and 83, and accompanying text.

131

See 17 CFR 242.613(e)(7).

132

Id.

133

See CAT NMS Plan, supra note 17, at Section 6.5(a)(ii).

26

to amendments to the CAT NMS Plan recently approved by the Commission, the Central
Repository must retain the information collected pursuant to paragraphs (c)(7) and (e)(7)
for a period of not less than three years in a convenient and usable standard electronic
data format that is directly available and searchable electronically without any manual
intervention by the Plan Processor, 134 except that Options SIP Data older than six months
may be deleted from the Central Repository. 135Accordingly, the burden associated with
SIP Data is included in the burden to the Participants associated with the implementation
and maintenance of the Central Repository, as discussed above.
d.

Surveillance

Rule 613(f) provides that the CAT NMS Plan must require that every national
securities exchange and national securities association develop and implement a
surveillance system, or enhance existing surveillance systems, reasonably designed to
make use of the consolidated information contained in the CAT. Rule 613(a)(3)(iv)
provides that the CAT NMS Plan must require that the surveillance systems be
implemented within fourteen months after effectiveness of the CAT NMS Plan.
The CAT NMS Plan states that the estimated total initial FTE internal compliance
cost to the Participants to implement surveillance programs within the Central Repository
is $17,500,000 for operational, technical/development, and compliance staff to be
engaged in the creation of surveillance programs. 136 Because it has been several years
since the CAT NMS Plan became effective, the Commission assumes that these costs
have already been incurred and are no longer applicable for purposes of future estimates.
The CAT NMS Plan states that the estimated total annual FTE internal
compliance cost associated with the ongoing maintenance of surveillance programs for
the Participants would be $66,700,000 for internal operational, technical/development,
and compliance staff to be engaged in the maintenance of surveillance programs. 137
Based on the estimates provided in the CAT NMS Plan, the Commission estimates that
the ongoing annual internal hour burden to maintain the new or enhanced surveillance
systems reasonably designed to make use of the consolidated audit trail data for each
Participant would be approximately 12,285 hours, 138 for an aggregate annual burden of
134

See id. at Section 6.5(b)(i).

135

Id. at Appendix D, Section 6.4 (defining “Options SIP Data” as “quote and NBBO data included
in the SIP Data from the OPRA Plan or any successor SIP for Listed Options”).

136

See id. at Appendix C, Section B.7(b)(iii)(B)(2).

137

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(2). This number is not
adjusted for inflation, and is therefore lower than the costs would be based on costs today. The
aggregate annual cost to Participants today would be approximately $94,781,846.25, accounting
for both inflation and the 2 additional Participants.

138

($66,700,000 in anticipated ongoing FTE costs) / (19 Participants) = $3,510,526.31 in anticipated
ongoing FTE costs per Participant. ($3,510,526.31 in anticipated ongoing FTE costs per
Participant) / ($514,350 FTE cost per Participant) = 6.825 anticipated FTEs per Participant.
(6.825 FTEs) x (1,800 working hours per year) = 12,285 ongoing burden hours per Participant to

27

331,695 burden hours.139 This estimated burden has changed because the Commission
is now applying this estimation to 27 Participants, and because the Commission has
adjusted the method in which it estimates the per-Participant burden, by using the
estimation provided in the Participants Study, adjusted by the number of Participants that
contributed to the relevant CAT NMS Plan estimation (19). 140
e. Written Assessment of Operation of the Consolidated Audit
Trail
Rule 613(b)(6) provides that the CAT NMS Plan must require the Participants to
provide the Commission a written assessment of the consolidated audit trail’s operation at
least every two years, once the CAT NMS Plan is effective. 141 The assessment must
address, at a minimum, with respect to the consolidated audit trail: (i) an evaluation of its
performance; (ii) a detailed plan for any potential improvements to its performance;
(iii) an estimate of the costs associated with any such potential improvements; and (iv) an
estimated implementation timeline for any such potential improvements, if applicable. 142
Thus, the Participants must, among other things, undertake an analysis of the CAT’s
technological and computer system performance.
Section 6.6 of the CAT NMS Plan, as approved by the Commission, requires the
assessment contemplated by Rule 613(b)(6) to be submitted on an annual basis. Section
6.6 of the Plan also requires the Participants to provide an estimate of the costs associated
with any potential improvements to the performance of the CAT, including an assessment
of the potential impact on competition, efficiency and capital formation. Section 6.6 of
the Plan also requires the annual assessment to consider the benefits of potential
improvements to the CAT, including to investor protection. 143
maintain the new or enhanced surveillance systems. The Commission used the estimated cost of
a FTE without adjustment for inflation because the anticipated ongoing costs were similarly not
adjusted for inflation.
139

(12,285 annual burden hours per Participant to maintain new or enhanced surveillance systems) x
(27 Participants) = 331,695 aggregate annual burden hours. Using the revised cost per FTE supra
note 129, the approximate annual cost per Participant is $3,510,438.75 (514,350 x 6.825 FTEs).
The aggregate annual cost to Participants would therefore be $94,781,846.25.

140

See supra notes 122 and 123 and accompanying text.

141

17 CFR 242.613(b)(6).

142

Id.

143

The Participants’ annual written assessment must also include: (1) an evaluation of the
information security program of the CAT to ensure that the program is consistent with the highest
industry standards for protection of data; (2) an evaluation of potential technological upgrades
based upon a review of technological developments over the preceding year, drawing on necessary
technological expertise, whether internal or external; (3) an assessment of efforts to reduce the
time to restore and recover CAT Data at a back-up site; (4) an assessment of how the Plan
Processor and SROs are monitoring Error Rates and addresses the application of Error Rates based
on product, data element or other criteria; (5) a copy of the evaluation required by Section 6.8(c)
of the Plan as to whether industry standards have evolved such that: (i) the clock synchronization
standard in Section 6.8(a) should be shortened; or (ii) the required timestamp in Section 6.8(b)

28

The CAT NMS Plan also states that the CCO will oversee the assessment required
by Rule 613(b)(6), and would allow the Participants to review and comment on the
assessment before it is submitted to the Commission. 144 The CCO is an employee of the
Plan Processor and would be compensated by the Plan Processor. 145 The Commission
assumes that the overall cost and associated burden on the Participants to implement and
maintain the Central Repository includes both the compensation for the Plan Processor as
well as its employees for the implementation and maintenance of the Central Repository.
The Commission estimates that it would take each Participant approximately 150
annual burden hours of internal legal, compliance, business operations, and information
technology staff time to review and comment on the assessment prepared by the CCO of
the operation of the CAT. Therefore, the Commission estimates that the ongoing annual
burden of submitting a written assessment each year would be 150 ongoing burden hours
per Participant, for an estimated aggregate annual ongoing burden of 4,050 hours. 146
The Commission estimates that it would take the Participants a total of
approximately 4,050 hours per year to review, comment on, and submit the written
assessment to the Commission [(150 ongoing burden hours) x (27 Participants)].
f. Assessment of Industry Member Bulk Access to Reported
Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits, and risks of allowing an Industry
Member to bulk download the Raw Data it submitted to the Central Repository, within 24
months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(iv) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been
incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related
thereto.
g. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of errors in the customer information submitted to the Central
should be in finer increments; and (6) an assessment of whether any data elements should be
added, deleted or changed. See CAT NMS Plan Order, supra note 19, at Section IV.H.
144

See CAT NMS Plan, supra note 17, at Section 6.6.

145

Id. at Section 6.2(a).

146

4,050 ongoing annual burden hours = (150 ongoing annual burden hours) x (27 Participants).

29

Repository and whether to prioritize the correction of certain data fields over others,
within 36 months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(v) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been
incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related
thereto.
h. Report on Impact of Tiered Fees on Market Liquidity
Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report to study the impact of tiered-fees on market liquidity, including an analysis
of the impact of the tiered-fee structure on Industry Members provision of liquidity,
within 36 months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(vi) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been
incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related
thereto.
i. Assessment of Material Systems Change on Error Rate
Section 6.6(a)(vii) of the CAT NMS Plan requires a written assessment of the
projected impact of any Material Systems Change on the Maximum Error Rate, prior to
the implementation of any Material Systems Change.
The Commission estimates that the CAT may have one Material Systems Change
per year. This estimate is lower than in prior years because the SROs have represented to
the Commission that the CAT is now fully implemented and the Commission does not
anticipate that there will be numerous Material Systems Changes per year on a going
forward basis. Based on this estimate, the Commission estimates that collectively, the
Participants would incur approximately 150 burden hours to prepare and submit an
assessment, or approximately 5.56 annual burden hours per year per Participant (150
hours / 27 Participants). 147
j. Background Checks
Section 6.1(g) of the CAT NMS Plan requires each Participant to conduct
background checks of its employees and contractors that will use the CAT System. The
Commission estimates that this requirement will impact approximately 1,917 users. 148
147

The Commission estimates that there would be one Material System Changes per year. (150
burden hours per report) x (1 report per year) = 150 annual burden hours per year.

148

Previously, the Commission estimated that approximately 1,771 users would be impacted, based
on conversations with Participants, when there were only 25 Participants in the CAT NMS Plan.
The Commission is revising this estimate to account for 2 additional Participants.

30

Because the CAT is operational, the Commission assumes that the initial burden for
background checks has been completed, and the only applicable burden is the ongoing
one as new employees may be onboarded.
The Commission estimates that the ongoing internal burden hours for each
Participant would be approximately 4.24 annual burden hours, 149 for an aggregate annual
burden hour amount of approximately 115 burden hours. 150 This burden has changed
due to the elimination of the one-time initial burden and an increase in the number of
Participants (27 Participants instead of 25).
B.

Burden on Broker-Dealer Members

The Commission’s original burden estimates for broker-dealers relied on OATS data to
determine whether firms were likely to insource or outsource CAT Data reporting
obligations and/or whether those firms were large or small entities. OATS was retired in
2021, but the Commission believes that these estimates continue to reflect the number
and type of broker-dealers that insource or outsource their CAT Data reporting
obligations. For the sake of maintaining consistency, and thereby enabling commenters
to better compare and understand the estimates contained herein, the Commission has
maintained references to OATS and estimates that rely on OATS data.
a. Data Collection and Reporting
Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
broker-dealer member of a Participant, and further documenting the life of the order
through the process of routing, modification, cancellation and execution (in whole or in
part) of the order. Rule 613(c) requires the CAT NMS Plan to impose requirements on
broker-dealer members to record and report CAT information to the Central Repository
in accordance with specified timelines.
The Commission’s estimates delineate broker-dealer firms by whether they
insource or outsource, or are likely to insource or outsource, CAT Data reporting
obligations. The Commission believes that firms that reported high numbers of
Reportable Order Events (“ROEs”) strategically would decide to either self-report their
CAT Data or outsource their CAT Data reporting functions, while the firms with the
149

The Commission assumes that the finance industry has a rate of 23.87% turnover per year, based
on a monthly rate for both employment separations and hires of 1.8% for the finance and
insurance industry in September 2016. See http://www.bls.gov/news.release/pdf/jolts.pdf (news
release from the Bureau of Labor Statistics, dated November 8, 2016). The Commission estimates
that the Participants will have to annually conduct background checks of 23.87% of the 1,917
users, or 457.59 users per year. (457.59 users) / (27 Participants) = 16.95 users that will need to be
subject to background checks on an annual basis. Based on this estimate, the Commission
estimates that each Participant would incur a burden of 4.24 ongoing annual burden hours =
(General and Operations Manager at 15 minutes) x (16.95 users).

150

115 annual ongoing burden hours = (4.24 ongoing annual burden hours per Participant) x (27
Participants) rounded up.

31

lowest levels of activity would be unlikely to have the infrastructure and specialized
employees necessary to insource CAT Data reporting and would almost certainly
outsource their CAT Data reporting functions.
The Commission estimates that there were, prior to FINRA’s OATS retirement,
126 OATS-reporting Insourcers and 45 non-OATS reporting Insourcers. 151 The
Commission’s estimation categorizes the remaining 1,001 broker-dealers that the Plan
anticipates would have CAT Data reporting obligations as Outsourcers. 152
The Commission notes that the CAT NMS Plan currently implements reporting
deadlines that have already passed. The Commission believes that it is appropriate to
eliminate consideration of the initial one-time burdens of development required from
broker-dealers. These estimates will, unless otherwise noted, therefore reflect only the
anticipated ongoing costs to comply.
Insourcers
A.

Large Non-OATS-Reporting Broker-Dealers

The Commission relies on the Plan’s large broker-dealer FTE estimates in
estimating burden hours for large broker-dealers that can practicably decide between
insourcing or outsourcing their regulatory data reporting functions. 153 The Commission
estimates that there are 9 large broker-dealers that were not OATS reporters currently in
the business of electronic liquidity provision (“ELP Firms”) that would be classified as
Insourcer firms. 154
Additionally, the Commission estimates that there are 6 Options Market Maker
broker-dealers (“OMM Firms”) that may transact in options but not in equities that can be
classified as Insourcer firms. 155 These firms may have customer orders and other activity
off-exchange that would cause them to incur a CAT reporting obligation. The
Commission assumes the 6 OMM Firms and 9 ELP Firms would be typical of the Plan’s
large non-OATS-reporting firms; for these firms, the Commission relies on the burden
151

These were 126 OATS reporters that reported more than 350,000 OATS ROEs per month; 31
Options Market Making firms; and 14 electronic liquidity providers (“ELPs”).

152

These broker-dealers are assumed to already outsource data reporting services. This estimate is
based on the assumption that there is only a reduction to the number of broker-dealers that would
have CAT Data reporting obligations as Outsourcers.

153

See CAT NMS Plan, supra note 17, at Appendix C, Section A.6(c).

154

These broker-dealers are not FINRA members and thus had no regular OATS reporting
obligations. The category of Insourcers that did not report OATS data includes firms that have
multiple SRO memberships that exclude FINRA. This category includes Options Market Makers
and at least 14 ELPs; these are firms that carry no customer accounts and directly route proprietary
orders to Alternative Trading Systems.

155

These 6 firms are likely to include some ELPs. This methodology implicitly assumes that there are
no Options Market Makers that are not members of the CBOE.

32

hour estimates provided under Approach 1 156 for large non-OATS-reporting firms in the
CAT NMS Plan.
Because the CAT reporting obligations have been in place for some time now,
the Commission assumes that the initial one-time hour burdens associated with
implementation of the system have already been incurred.
The Rule would impose ongoing annual burdens associated with, among other
things, personnel time to monitor each large non-OATS reporting broker-dealer’s
reporting of the required data and the maintenance of the systems to report the required
data; and implementing changes to trading systems that might result in additional reports
to the Central Repository. The CAT NMS Plan provides the following average ongoing
internal FTE count figure that a large non-OATS reporting broker-dealer would expect to
incur to maintain data reporting systems to be in compliance with Rule 613: 7.41 internal
FTEs. 157 Based on this information, the Commission estimates that it would take a large
non-OATS reporting broker-dealer approximately 13,338 burden hours per year 158 to
continue to comply with the Rule, for an estimated aggregate ongoing burden of 80,028
hours for ELP Firms and 120,042 hours for OMM Firms. 159
B.

Large OATS-Reporting Broker-Dealers

The Commission has estimated that 126 broker-dealers, which reported more than
350,000 OATS ROEs between June 15 and July 10, 2015, would strategically decide to
either self-report CAT Data or outsource their CAT data reporting functions. 160 To
156

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(i)(A)(2). Approach 1 assumes
CAT Reporters would submit CAT Data using their choice of industry protocols. Approach 2
assumes CAT Reporters would submit data using a pre-specified format. Approach 1’s aggregate
costs are higher than those for Approach 2 for all market participants except in one case where
service bureaus have lower Approach 1 costs. For purposes of this Paperwork Reduction Act
analysis, the Commission is not relying on the estimates for Approach 2 because overall the
Approach 1 aggregate estimates represent the higher of the proposed approaches. The
Commission believes it would be more comprehensive to use the higher of the two estimates for
its Paperwork Reduction Act analysis estimates.

157

Approach 1 also provided $3,000,000 in internal FTE costs related to maintenance. The
Commission believes the $3,000,000 in ongoing internal FTE costs is the Participants’ estimated
cost of the 7.41 FTEs. (7.41 FTEs) x ($401,440 Participants’ assumed annual cost per FTE
provided in the CAT NMS Plan) = $2,974,670. See CAT NMS Plan, supra note 17, at n.192. See
also supra note 124.

158

13,338 ongoing burden hours = (7.41 ongoing FTEs to maintain CAT data reporting systems) x
(1,800 working hours per year).

159

The Commission estimates that 15 large non-OATS reporting broker-dealers would be impacted
by this information collection. (15 large non-OATS reporting broker-dealers) x (13,338 burden
hours) = 200,070 aggregate ongoing burden hours.

160

The Commission believes this decision is strategic and discretionary because FINRA data reveals
that while many broker-dealers at these activity levels self-report most or all of their regulatory
data, other broker-dealers outsource most or all of their regulatory reporting at these activity
levels. At lower activity levels, most, but not all, broker-dealers outsource most if not all of their

33

conduct its Paperwork Burden Analysis for the 126 broker-dealers, the Commission
relied on the estimates used by the CAT NMS Plan of the expected FTE count that a
large OATS-reporting broker-dealer would incur as a result of the implementation of the
CAT under Approach 1. 161 Because OATS has been retired, the Commission assumes
the initial one-time implementation fees have already been covered; only the estimated
ongoing maintenance costs remain.
The Commission estimates that the Rule would impose on each broker-dealer
ongoing annual burdens associated with, among other things, personnel time to monitor
each broker-dealer’s reporting of the required data and the maintenance of the systems to
report the required data; and implementing changes to trading systems which might result
in additional reports to the Central Repository.
The CAT NMS Plan provides the following average ongoing internal FTE count
figures that a large OATS-reporting broker-dealer would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: 10.03 internal FTEs. 162 Based on
this information the Commission estimates that it would take a large OATS-reporting
broker-dealer approximately 18,054 ongoing burden hours per year 163 to continue
compliance with the Rule. Therefore, the Commission estimates that the average
ongoing annual burden per large OATS-reporting broker-dealer would be approximately
18,054 burden hours, for an estimated aggregate burden of 2,274,804 hours. 164
Outsourcing Firms
A.

Small OATS-Reporting Broker-Dealers

The Commission estimates that there were 806 broker-dealers that reported fewer
than 350,000 OATS ROEs monthly. The Commission believes that these broker-dealers
generally outsourced their regulatory reporting obligations because during the period
regulatory data reporting. The Commission is cognizant that some broker-dealers reporting fewer
than 350,000 OATS ROEs per month can and do opt to self-report their regulatory data. However,
based on conversations with broker-dealers, the Commission believes that most broker-dealers at
these activity levels do not have the infrastructure and specialized staff that would be required to
report directly to the Central Repository, and electing to self-report would be cost-prohibitive in
most but not all cases.
161

See supra note 159.

162

Approach 1 also provided $4,000,000 in internal FTE costs related to maintenance. The
Commission believes the $4,000,000 in ongoing internal FTE costs is the Participants’ estimated
cost of the 10.03 FTEs. (10.03 FTEs) x ($401,440 Participants’ assumed annual cost per FTE
provided in the CAT NMS Plan) = $4,026,443. See CAT NMS Plan, supra note 17, at Appendix
C, Section B.7(b)(ii)(C), at n. 192. See also supra note 124.

163

18,054 ongoing burden hours = (10.03 ongoing FTEs for maintenance of CAT data reporting
systems) x (1,800 working hours per year).

164

The Commission estimates that 126 large OATS-reporting broker-dealers would be impacted by
this information collection. (126 large OATS-reporting broker-dealers) x (18,054 burden hours) =
2,274,804 aggregate ongoing burden hours.

34

June 15 – July 10, 2015, approximately 88.9% of their 350,000 OATS ROEs were
reported through service bureaus, with 730 of these broker-dealers reporting more than
99% of their OATS ROEs through one or more service bureaus. 165
Because OATS was retired in September 2021, the Commission assumes that the
initial one-time implementation requirements have been fulfilled. The Commission
therefore estimates no additional burden hours in relation to the implementation.
Small OATS-reporting broker-dealers that outsourced their regulatory data
reporting would likely face internal staffing burdens and external costs associated with
ongoing activity, such as maintaining any systems that transmit data to their service
providers. The Commission estimates these firms would need 0.75 FTEs on an ongoing
basis to maintain CAT reporting.
Based on this information, the Commission estimates that it would take a small
OATS-reporting broker-dealer approximately 1,350 ongoing burden hours per year 166 to
continue compliance with the Rule. The burden hours would be associated with work
performed by internal technology, compliance and legal staff in connection with the
ongoing operation of CAT Data reporting. Therefore, the Commission estimates that the
average ongoing annual burden per small OATS-reporting broker-dealer would be
approximately 1,350 hours, for an estimated aggregate ongoing burden of 1,088,100
hours. 167
B.

Small Non-OATS-Reporting Broker-Dealers

In addition to firms that reported to OATS, the Commission estimates there are
373 broker-dealers that were previously exempt from OATS reporting rules due to firm
size, or excluded because all of their order flow was routed to a single OATS reporter,
such as a clearing firm, that would incur CAT reporting obligations. 168 A further 5 nonFINRA broker-dealers have Participant memberships only with one Exchange; 169 the
165

Because of the extensive use of service bureaus in these categories of broker-dealers, the
Commission assumes that these broker-dealers are likely to use service bureaus to accomplish
their CAT data reporting. See supra note 163.

166

1,350 ongoing burden hours = (0.75 FTE for maintenance of CAT Data reporting systems) x
(1,800 working hours per year).

167

The Commission estimates that 806 small OATS-reporting broker-dealers would be impacted by
this information collection. (806 small OATS-reporting broker-dealers x 1,350 burden hours) =
1,088,100 aggregate ongoing burden hours to ensure ongoing compliance with Rule 613.

168

The Commission notes that Rule 613 does not exclude from data reporting obligations Participant
members that quote or execute transactions in NMS Securities and Listed Options that route to a
single market participant. See CAT NMS Plan, supra note 17, at Appendix C, Section
B.7(b)(ii)(B)(2).

169

This group comprises 4 broker-dealers that have SRO memberships only with CBOE; the
Commission believes this group is comprised primarily of CBOE floor brokers and, further,
believes these firms would incur CAT implementation and ongoing reporting costs similar in

35

Commission believes this group is comprised mostly of floor brokers and further believes
these firms would experience CAT implementation and ongoing reporting costs similar in
magnitude to small equity broker-dealers that had no OATS reporting responsibilities.
The Commission assumes these broker-dealers would have very low levels of
CAT reporting, similar to those of the lowest activity firms that currently report to OATS.
Because these firms have more limited data reporting requirements than other firms, the
Commission assumes these firms currently have only 0.1 full-time employees currently
dedicated to regulatory data reporting activities.
Small non-OATS-reporting broker-dealers that outsource their regulatory data
reporting would likely face internal staffing burdens associated with ongoing activity,
such as maintaining any systems that transmit data to their service providers. Based on
conversations with market participants, the Commission estimates these firms would
need 0.75 full-time employees annually to maintain CAT reporting.
Based on this information the Commission estimates that it would take a small
non-OATS-reporting broker-dealer 1,350 ongoing burden hours per year 170 to continue
compliance with the Rule. Therefore, the Commission estimates that the average
ongoing annual burden per small non-OATS-reporting broker-dealer would be
approximately1,350 hours, for an estimated aggregate ongoing burden of 172,800
hours. 171 The estimated aggregate ongoing burden has fallen because of the reduced
number of estimated small non-OATS reporting broker-dealers (128 from 397).

magnitude to small equity broker-dealers that had no OATS reporting responsibilities because
they would face similar tasks to implement and maintain CAT reporting.
170

1,350 ongoing burden hours = (0.75 FTEs for maintenance of CAT data reporting systems) x
(1,800 working hours per year).

171

The Commission estimates that 128 small non-OATS-reporting broker-dealers would be impacted
by this information collection. (128 small non-OATS-reporting broker-dealers x 1,350 burden
hours) = 172,800 aggregate ongoing burden hours to ensure ongoing compliance with Rule 613.

36

Summary of Hourly Burdens
Name of Information
Collection

Type of Burden

[A.]
Number of
Entities
Impacted

[B.]
Annual
Responses
per Entity

Central Repository

Recordkeeping

27

Data Collection and Reporting
(Participants)

Third Party Disclosure

Surveillance

[D.]
Initial Burden
Annualized
per Entity per
Response
[ = C ÷ 3 years]

[E.]
Ongoing
Burden per
Entity per
Response

1

0

0

533.33

533.33

533.33

14,400

0

27

1

0

0

1,344.60

1,344.60

1,344.60

36,304

0

Recordkeeping

27

1

0

0

12,285

12,285

12,285

331,695

0

Written Assessment of
Operation of CAT

Reporting

27

1

0

0

150

150

150

4,050

0

Assessment of Material
Systems Change on Error Rate

Reporting

27

1

0

0

5.56

5.56

5.56

150

0

Background Checks

Disclosure

27

1

0

0

4.24

4.24

4.24

115

0

Data Collection and Reporting
(Large, Non-OATS Reporting
Broker-Dealers) - ELPs

Third Party Disclosure

9

1

0

0

13,338

13.338

13.338

120,042

0

Data Collection and Reporting
(Large, Non-OATS Reporting
Broker-Dealers) – Options
Market Makers

Third Party Disclosure

6

1

0

0

13,338

13338

13338

80,028

0

Data Collection and Reporting
(Large OATS Reporting
Broker-Dealers)

Third Party Disclosure

126

1

0

0

18,054

18,054

18,054

2,274,804

0

Data Collection and Reporting
(Small OATS Reporting
Broker-Dealers)

Third Party Disclosure

806

1

0

0

1,350

1.350

1,350

1,088,100

Estimated
490 172

172

[F.]
Annual
Burden Per
Entity per
Response
[ = D + E]

[G.]
Total Annual
Burden Per
Entity
[ = (D + E) * B]

[H.]
Total Industry
Burden
[ = G * A]

Small
Business
Entities
Affected

[C.]
Initial
Burden
per Entity
per
Response

The 618 Commission-registered broker-dealers (as of 2026) that are considered “small entities”
could be impacted by two categories of information collection: “data collection and reporting
(small OATS-reporting broker-dealers)” and “data collection and reporting (non-OATS reporting
broker-dealers).” The Commission estimates that the 128 respondents affected by the “data
collection and reporting (non-OATS reporting broker-dealers)” would all be considered small
entities as these firms would be exempt from OATS reporting rules due to firm size, or would be
excluded because all of their order flow is routed to a single OATS reporter, or are floor brokers

37

Name of Information
Collection

Data Collection and Reporting
(Small Non-OATS Reporting
Broker-Dealers)

13.

Type of Burden

[A.]
Number of
Entities
Impacted

[B.]
Annual
Responses
per Entity

Third Party Disclosure

128

1

[C.]
Initial
Burden
per Entity
per
Response

[D.]
Initial Burden
Annualized
per Entity per
Response
[ = C ÷ 3 years]

[E.]
Ongoing
Burden per
Entity per
Response

[F.]
Annual
Burden Per
Entity per
Response
[ = D + E]

[G.]
Total Annual
Burden Per
Entity
[ = (D + E) * B]

[H.]
Total Industry
Burden
[ = G * A]

Small
Business
Entities
Affected

0

0

1,350

1,350

1,350

172,800

Estimated
128 173

TOTAL HOURLY BURDEN FOR ALL RESPONDENTS

4,122,488

Costs to Respondents

The Commission estimates that the information collection requirements of Rule
613 will apply to 1,199 respondents who will incur an average aggregate of
approximately $384,727,051 in costs per year to comply with the requirements. The cost
burden is calculated as discussed below.
A.

Costs to National Securities Exchanges and National Securities
Associations
a.

Central Repository

The Commission previously estimated what the Participants would collectively
spend on external public relations, legal and consulting costs associated with the building
of the Central Repository and the selection of the Plan Processor for the Central
Repository. In addition, the Commission previously estimated the Participants collective
costs over the 12-month period after the effectiveness of the CAT NMS Plan within
which the Participants were required to select an initial Plan Processor and begin
reporting to the Central Repository. However, as noted above, on July 15, 2024, the
Participants represented to the Commission that the CAT had been fully implemented. 174
The Commission believes it is appropriate to only consider the ongoing costs associated
with ongoing costs for operating and maintaining the Central Repository, relying upon
publicly disclosed financial statements from the Participants instead of original estimates
of the original build-out and operation of the Central Repository.
with an SRO membership with a single Participant. The Commission believes these brokerdealers would have very low levels of CAT reporting and would outsource CAT data collection
and reporting to a third party, such as a service bureau. The Commission estimates that the
remaining 490 broker-dealers (of the estimated 618 small entity broker-dealers) would be
impacted by the information collection “data collection and reporting (small OATS-reporting
broker-dealers).” These firms would not have been small enough to be exempt from OATS
reporting, and the Commission believes that they would have had low levels of OATS reporting
and would likely outsource CAT data collection and reporting to a service bureau.
173

See id.

174

See CAT Q2 & Q3 2024 Quarterly Progress Report (July 29, 2024), available at
https://catnmsplan.com/sites/default/files/2024-07/CAT_Q2-and-Q3-2024-QPR.pdf.

38

Ongoing costs for operating and maintaining the Central Repository include the
cost of systems and connectivity upgrades or changes necessary to receive, consolidate,
and store the reported order and execution information from Participants and their
members; the costs to store data, and make it available to regulators, in a uniform
electronic format, and in a form in which all events pertaining to the same originating
order are linked together in a manner that ensures timely and accurate retrieval of the
information; the cost, including storage costs, of collecting and maintaining the NBBO
and transaction data in a format compatible with the order and event information
collected pursuant to the Rule; the cost of monitoring the required validation parameters,
which would allow the Central Repository to automatically check the accuracy and
completeness of the data submitted and reject data not conforming to these parameters
consistent with the requirements of the Rule; and the cost of compensating the CCO. The
CAT NMS Plan provides that the Plan Processor would be responsible for the ongoing
operations of the Central Repository. 175
Previously the Commission estimated the annual ongoing cost to the Participants
for building, operating, and maintaining the Central Repository to be approximately $55
million, based upon estimates from three final shortlisted bidders which were attempting
to be the Plan Processor. 176 However, since the Commission’s last estimates, the SROs
have represented to the Commission that the Central Repository is now fully
implemented. The current cost of operating the Central Repository is therefore most
accurately reflected in the most recent financial and operating budget of Consolidated
Audit Trail, LLC. Specifically, the Commission is relying upon a publicly posted 2026
Financial and Operating Budget provided by Consolidated Audit Trail LLC and dated
March 31, 2026 (the “2026 Financial and Operating Budget”). 177
Based on the 2026 Financial and Operating Budget, the Commission estimates the
annual ongoing cost to the Participants for building, operating, and maintaining the
Central Repository to be approximately $135 million, or approximately $5 million per
Participant ($135 million / 27 Participants). This estimate is based on the projected total
estimated annual cost of several items within the 2026 Financial and Operating Budget,
specifically “Total Technology Costs,” “Insurance,” “Professional and administration,”
and “Software License Fee – 2026” costs. 178 The Commission believes that this provides
a reasonable estimate of the annual ongoing cost to the Participants for building,
operating, and maintaining the Central Repository as currently required by the CAT NMS
175

See CAT NMS Plan, supra note 17, at Section 6.1.

176

See Letter to Brent J. Fields, Secretary, Commission, from Participants, dated October 7, 2016, at
14–15.

177

See Consolidated Audit Trail, LLC, 2026 Financial and Operating Budget, dated March 31, 2026,
available at: https://www.catnmsplan.com/sites/default/files/2026-04/03.31.26-CAT-2026Budget.pdf.

178

For the purposes of arriving at this estimate, the Commission has excluded “Interest Income,” as
well as “Capitalized Developed Technology Costs,” which it understands are costs specifically
related to the implementation of certain changes to the CAT NMS Plan that may not recur.

39

Plan. This estimate additionally does not take into account projected fees received by
Consolidated Audit Trail, LLC from industry members.
In addition, the CAT NMS Plan states that the Participants would incur costs for
public relations, legal, and consulting costs associated with maintaining the CAT upon
approval of the CAT NMS Plan. 179 The Commission previously estimated that the
Participants would collectively spend $800,000 annually on external public relations,
legal and consulting costs associated with the continued management of the Central
Repository, 180 but the 2026 Financial and Operating Budget provides more accurate
information about the ongoing cost. Based on the 2026 Financial and Operating Budget,
the Commission estimates that Participants will collectively spend approximately $10.5
million annually, or approximately $388,888.89 per Participant ($10,500,000 / 27
Participants) on external public relations, legal and consulting costs, which relates to the
line items of “Legal,” and “Consulting” in the 2026 Financial and Operating Budget.
Collectively, the estimated ongoing cost of the Central Repository item is
approximately $145,500,000, or approximately $5,388,888.89 per Participant
($145,500,000 / 27 Participants).
Data Collection and Reporting (Participants)
The CAT NMS Plan provides estimated costs for hardware and software, FTE
costs, and third-party providers to be incurred by the Participants to report CAT Data. 181
For these estimates, the Commission is relying on the cost data provided by the
Participants because it believes that the Plan’s estimates for Participants to report CAT
Data are reliable since all of the Participants provided cost estimates, and most
Participants have experience collecting audit trail data, as well as knowledge of both the
requirements of Rule 613 as well as their current business practices. As noted above, the
Participants have begun reporting CAT Data and thus the Commission believes it is
appropriate to only consider ongoing costs related to data collection and reporting.
Because the Participants have established the appropriate systems and processes
required for collection and transmission of the required information to the Central
Repository, the Commission estimates that Rule 613 imposes on each Participant ongoing
annual burdens associated with, among other things, personnel time to monitor each
Participant’s reporting of the required data and the maintenance of the systems to report
the required data; and implementing changes to trading systems that might result in
additional reports to the Central Repository. The CAT NMS Plan provides the following
179

See id. at Appendix C, Section B.7(b)(iii).

180

The Commission based this external cost estimate on the public relations, legal and consulting
external cost estimate provided in the CAT NMS Plan associated with the preparation of the CAT
NMS Plan (which the Participants consider “reasonably associated with creating, implementing,
and maintaining the CAT upon the Commission’s adoption of the CAT NMS Plan”). See id.

181

Third-party provider costs are generally legal and consulting costs, but may include other
outsourcing. The template used by respondents is available at http://catnmsplan.com/PastEvents/
under the Section titled “6/23/14” at the “Cost Study Working Template” link.

40

average aggregate costs that the Participants would expect to incur to maintain data
reporting systems to be in compliance with Rule 613: $720,000 in annual third-party
legal, consulting, and other costs 182 and $14,700,000 total annual costs. 183
Based on estimates provided in the CAT NMS Plan, the Commission estimates
that it would cost, on average, approximately $37,894.74 per Participant in ongoing thirdparty legal and consulting and other costs 184 and $ 476,579.58 per Participant in total
ongoing external costs. 185 Therefore, the Commission estimates that the annual
aggregate ongoing external cost for all Participants would be approximately
$12,867,648.66. 186 This estimate has increased from the 2023 PRA, because of the
increased number of Participants and the rising costs of inflation.
c.

Collection and Retention of NBBO, Last Sale Data and
Transaction Reports

Rule 613(e)(7) provides that the CAT NMS Plan must require the Central
Repository to collect and retain on a current and continuous basis NBBO information for
each NMS security, transaction reports reported pursuant to an effective transaction
reporting plan, and Last Sale Reports reported pursuant to the OPRA Plan. 187
Additionally, the CAT NMS Plan must require the Central Repository to maintain this
data in a format compatible with the order and event information consolidated and stored

182

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(2). The CAT NMS
Plan did not identify the other costs.

183

Of the $14,700,000 in aggregate total annual costs, $8,020,000 is identified (subtotal of FTE costs
and outsourcing), but the remaining $6,680,000 is not identified in the CAT NMS Plan. The
Commission believes that this amount may be attributed to hardware costs because the
Participants have not provided any hardware costs associated with data reporting elsewhere and
the Commission believes that the Participants will likely incur costs to upgrade their hardware to
report data to the Central Repository.

184

($720,000 in annual third party costs) / (19 Participants) = $37,894.73 per Participant in
anticipated annual third party costs.

185

To determine the total external annual cost per Participant, the Commission subtracted the
anticipated annual FTE internal compliance cost estimates for the Participants as provided in the
Plan (see notes 122 through 124 and accompanying text) from the total aggregate annual costs and
divided the remainder by 19 Participants, which is the number of Participants included in the
initial cost estimates provided by Participants. ($14,700,000 total aggregate annual cost to
Participants) – ($7,300,000 annual FTE —not updating because it’s an aggregate from participants
cost to Participants) = $7,400,000 (which includes the $720,000 in total anticipated annual third
party costs). ($7,400,000) / 19 Participants = $389,473.68 in annual external costs per Participant.
389,473.68/514,350=.917 FTE. .917 FTE x 519.256 =476,579.58 per Participant. See CAT NMS
Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(1) for the Participants’ anticipated
maintenance costs associated with regulatory reporting to the Central Repository.

186

$12,867,648.66 = ($476,579.58 in total annual external costs) x (27 Participants rounded up).

187

See 17 CFR 242.613(e)(7).

41

pursuant to Rule 613(c)(7). 188 The Commission notes that the CAT NMS Plan includes
these data as “SIP Data” to be collected by the Central Repository. 189
Pursuant to amendments to the CAT NMS Plan recently approved by the
Commission,190 the Central Repository must retain the information collected pursuant to
paragraphs (c)(7) and (e)(7) for a period of not less than three years in a convenient and
usable standard electronic data format that is directly available and searchable
electronically without any manual intervention by the Plan Processor, 191 except that
Options SIP Data older than six months may be deleted from the Central Repository. 192
The Commission believes the burden associated with SIP Data is included in the burden
to the Participants associated with the maintenance of the Central Repository, as
discussed above.
d.

Surveillance

Rule 613(f) provides that the CAT NMS Plan must require that every national
securities exchange and national securities association develop and implement a
surveillance system, or enhance existing surveillance systems, reasonably designed to
make use of the consolidated information contained in the consolidated audit trail.
Rule 613(a)(3)(iv) provides that the CAT NMS Plan must require that the surveillance
systems be implemented within fourteen months after effectiveness of the CAT NMS
Plan. Because the CAT NMS Plan has been in place, these initial costs should have
already been incurred.
The CAT NMS Plan states that the estimated total ongoing annual cost associated
with the maintenance of surveillance programs for the Participants is $87,700,000. 193
This amount includes annual legal, consulting, and other costs of $1,000,000, as well as
$66,700,000 in annual FTE internal compliance costs for internal operational,
technical/development, and compliance staff to be engaged in the maintenance of

188

Id.

189

See CAT NMS Plan, supra note 17, at Section 6.5(a)(ii).

190

See supra note 22.

191

See id. at Section 6.5(b)(i).

192

Id. at Appendix D, Section 6.4 (defining “Options SIP Data” as “quote and NBBO data included
in the SIP Data from the OPRA Plan or any successor SIP for Listed Options”).

193

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(2).

42

surveillance programs. 194 Based on the estimates provided in the CAT NMS Plan, 195 the
Commission estimates that each Participant would, on average, incur an annual ongoing
external cost of approximately $52,631.58 196 for outsourced legal, consulting and other
costs in order to maintain the new or enhanced surveillance systems, and a total estimated
ongoing external cost of $1,105,263.16, 197 for an estimated aggregate ongoing external
cost of $29,842,105.32 across the 27 Participants to maintain the surveillance systems. 198
This burden has changed due to the increased number of Participants (27 Participants
instead of 25) and the exclusion of initial development costs, which should have been
concluded.
e.

Written Assessment of Operation of the Consolidated Audit
Trail

Rule 613(b)(6) provides that the CAT NMS Plan must require the Participants to
provide the Commission a written assessment of the CAT’s operation at least every two
years, once the CAT NMS Plan is effective. 199 The assessment must address, at a
minimum, with respect to the consolidated audit trail: (i) an evaluation of its
performance; (ii) a detailed plan for any potential improvements to its performance;
(iii) an estimate of the costs associated with any such potential improvements; and (iv) an
estimated implementation timeline for any such potential improvements, if applicable. 200
Thus, the Participants must, among other things, undertake an analysis of the CAT’s
technological and computer system performance.
The CAT NMS Plan states that the CCO would oversee the assessment required
by Rule 613(b)(6), and would allow the Participants to review and comment on the
assessment before it is submitted to the Commission. 201 The CCO is an employee of the
194

Id. For purposes of the Paperwork Reduction Act analysis, the Commission is treating the FTE
cost as an internal burden. See text accompanying notes 137–139, supra. The Commission also
notes that based upon the data provided by the Participants, the source of the remaining
$20,000,000 in ongoing costs to maintain the new or enhanced surveillance systems is
unspecified. The Commission believes that this amount may be attributed to hardware costs
because the Participants have not provided any hardware costs associated with surveillance
elsewhere and the Commission believes that the Participants would likely incur costs associated
with maintaining the new or enhanced surveillance systems.

195

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(B)(2).

196

$52,631.58 = $1,000,000 for ongoing legal, consulting and other costs associated with
maintenance of surveillance programs / 19 Participants (the number of Participants in Participants
Study).

197

($87,700,000 in total ongoing surveillance costs - $66,700,000 in ongoing FTE costs) =
$21,000,000 in total ongoing external costs (which includes $1,000,000 in total ongoing external
third-party costs). $21,000,000 / 19 Participants (the number of Participants in Participants Study)
= $1,105,263.16.

198

$29,842,105.32 = $1,105,263.16 x 27 Participants.

199

17 CFR 242.613(b)(6).

200

Id.

201

See CAT NMS Plan, supra note 17, at Section 6.6.

43

Plan Processor and is compensated by the Plan Processor. 202 The Commission assumes
that the overall cost to the Participants to implement and maintain the Central Repository
includes both the compensation for the Plan Processor as well as its employees for the
implementation and maintenance of the Central Repository.
In addition, Section 6.6 of the Plan changes the frequency of the assessment
contemplated by Rule 613(b)(6) from biannual to annual and provides further detail
regarding elements of the written assessment to be conducted by the Participants. 203
Section 6.6 of the Plan as filed also requires the Participants to provide an estimate of the
costs associated with any potential improvements to the performance of the CAT,
including an assessment of the potential impact on competition, efficiency and capital
formation. Section 6.6 of the Plan also requires the annual assessment to consider the
benefits of potential improvements to the CAT, including to investor protection. 204
The Commission estimates that on average, each Participant would outsource 2.5
hours of legal time annually to assist in the review of the assessment, for an ongoing
annual external cost of approximately $1,286.25. 205 Therefore, the Commission
estimates that the ongoing annual external cost for outsourced legal counsel would be
$1,286.25 per Participant per year, for an estimated aggregate annual external cost of
$34,728.75. 206
The Commission estimates that the Participants would incur an aggregate,
annualized external cost of approximately $34,728.75 to review the written assessment
[($1,286.25 in annual, ongoing external costs) x (27 Participants)]. This has increased
due to the increased number of Plan Participants (27 Participants instead of 25
Participants) and to reflect the increased costs per hour for an attorney due to inflation.
e. Independent Audit of Expenses Incurred Prior to Effective
Date
202

Id. at Section 6.2(a).

203

Specifically, Section 6.6 of the Plan states that the Participants’ annual written assessment must
also include: (1) an evaluation of the information security program of the CAT to ensure that the
program is consistent with the highest industry standards for protection of data; (2) an evaluation
of potential technological upgrades based upon a review of technological developments over the
preceding year, drawing on necessary technological expertise, whether internal or external; (3) an
assessment of efforts to reduce the time to restore and recover CAT Data at a back-up site; (4) an
assessment of how the Plan Processor and SROs are monitoring Error Rates and addresses the
application of Error Rates based on product, data element or other criteria; (5) a copy of the
evaluation required by Section 6.8(c) of the Plan as to whether industry standards have evolved
such that: (i) the clock synchronization standard in Section 6.8(a) should be shortened; or (ii) the
required timestamp in Section 6.8(b) should be in finer increments; and (6) an assessment of
whether any data elements should be added, deleted or changed. See CAT NMS Plan Order, supra
note 19, at Section IV.H.

204

Id.

205

$1,286.25 = ($514.50 per hour rate for outside legal services) x (2.5 hours).

206

$34,728.75 = 27 Participants x ($514.50 per hour rate for outside legal services) x (2.5 hours).

44

Section 6.6(a)(i) of the CAT NMS Plan requires the Participants to provide to the
Commission an independent one-time audit of fees, costs and expenses incurred by the
Participants on behalf of the Company, prior to the Effective Date, in connection with the
creation and implementation of the CAT, at least one month prior to submitting any rule
filing to establish initial fees to the Commission. Participants made the audited financial
statements for CAT NMS LLC and CAT LLC for the period prior to the Effective Date
available on August 5, 2021. 207 Because this collection is now complete, there are no
further costs associated with it.
f. Assessment of Industry Member Bulk Access to Reported
Data
Section 6.6(a)(iv) of the CAT NMS Plan requires the Participants to provide a
written report discussing the feasibility, benefits, and risks of allowing an Industry
Member to bulk download the Raw Data it submitted to the Central Repository, within 24
months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(iv) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been
incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related thereto.
g. Assessment of Errors in Customer Information Fields
Section 6.6(a)(v) of the CAT NMS Plan requires the Participants to submit a
written assessment of errors in the customer information submitted to the Central
Repository and whether to prioritize the correction of certain data fields over others,
within 36 months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(v) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been
incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related thereto.
h. Report on Impact of Tiered Fees on Market Liquidity
Section 6.6(a)(vi) of the CAT NMS Plan requires the Participants to submit a
written report to study the impact of tiered-fees on market liquidity, including an analysis
of the impact of the tiered-fee structure on Industry Members provision of liquidity,
within 36 months of effectiveness of the Plan.
Because the time frame set forth in Section 6.6(a)(vi) has passed and any one-time
costs and/or burdens related to the preparation of this report already would have been

207

See https://www.catnmsplan.com/audited-financial-statements.

45

incurred and included in previous PRA submissions, the Commission considers this
collection complete and is not calculating any additional costs or burdens related thereto.
i. Financial Statements
Section 9.2 of the CAT NMS Plan requires that the CAT LLC financials be (i) in
compliance with GAAP, (ii) be audited by an independent public accounting firm, and
(iii) be made publicly available. The Commission estimates that each Participant would
incur an annual external cost of $2,407.41 208 associated with this requirement, for an
aggregate annual, ongoing external cost of $65,000 to the Participants. 209
The Commission estimates that the Participants would incur an aggregate,
external cost of approximately $65,000 to have the CAT LLC financials be (i) in
compliance with GAAP, (ii) be audited by an independent public accounting firm, and
(iii) be made publicly available [($2,407.41 in annual, ongoing external costs) x (27
Participants)]. The cost per individual Participant has decreased because the number of
Participants has increased (from 25 to 27 Participants) while the estimated aggregate
external cost has remained the same ($65,000).
j. Background Checks
Section 6.1(g) of the CAT NMS Plan requires each Participant to conduct
background checks of its employees and contractors that will use the CAT System. The
Commission estimates that this requirement will impact approximately 1,917users. 210
The Commission estimates that each Participant would need to have background checks
of approximately 71 users. 211 Because the Participants have been using the CAT System
208

In the CAT NMS Plan Order, the Commission estimated that the aggregate cost of this
requirement for the Participants is $65,000. To estimate this number, the Commission drew from
a Commission adopting release and an industry report. Specifically, the Commission’s
Crowdfunding Adopting Release estimated that the audit costs for affected issuers would be
$2,500 to $30,000. See Securities Act Release No. 9974 (October 30, 2015), 80 FR 71499
(November 16, 2015). The Commission believes this estimate could be reasonable if the
Company’s financials are of the same level of complexity as the larger issuers affected by the
Crowdfunding rule, which is realistic because the Company is not publicly traded, is organized as
a “business league”, and has a limited and predictable revenue stream. As an alternative estimate,
the Commission estimated an audit cost of approximately $65,000 using an industry estimate of
$479 in audit costs per $1 million in revenue, using the assumption that Company revenue will
just offset expected costs of $139 million. See Audit Analytics report “Audit Fees and Non-Audit
Fees: A Twelve -Year Trend,” October 9, 2014, available at
http://www.auditanalytics.com/blog/audit-fees-and-non-audit-fees-a-twelve-year-trend/. $479 x
$139 = $64,665 ~ $65,000. The Commission incorporates the higher estimate from the two
methodologies ($65,000) into its cost estimates. See CAT NMS Plan Order, supra note 19, at
84856, n.2503. ($65,000 annual, external cost) / (27 Participants) = $2,407.41 per Participant.

209

Id.

210

Previously, the Commission estimated that approximately 1,771 users would be impacted, based
on conversations with Participants, when there were only 25 Participants in the CAT NMS Plan.
The Commission is revising this estimate to account for 2 additional Participants.

211

71 users per Participant = (1,917 users) / (27 Participants).

46

for more than one year now, the Commission assumes that the initial costs for
fingerprinting have already been covered. The Commission therefore estimates $0 for
the remaining initial external cost.
The Commission estimates that the ongoing external cost to be incurred by each
Participant would be approximately $621.47, 212 for an aggregate annual external cost
of approximately $16,780. 213
The Commission thus estimates that the Participants would incur an aggregate,
average annual external cost of approximately $16,779.69 to conduct background checks
of its employees and contractors that will use the CAT System [($0 in initial external
costs amortized over three years) + ($621.47 in annual, ongoing external costs) x (27
Participants) = $16,779.69]. This estimated cost has increased due to the increased
number of estimated users (1,917 instead of 1,771) to account for the increased number
of Participants (27 Participants instead of 25 Participants) for the ongoing external cost.
The aggregate annual external cost has decreased due to the completion of the initial
background checks.
B.

Costs to Broker-Dealer Members
a.

Data Collection and Reporting

Rule 613(c)(1) requires the CAT NMS Plan to provide for an accurate, timesequenced record of orders beginning with the receipt or origination of an order by a
broker-dealer member of a Participant, and further documenting the life of the order
through the process of routing, modification, cancellation and execution (in whole or in
part) of the order. Rule 613(c) requires the CAT NMS Plan to impose requirements on
broker-dealer members to record and report CAT information to the Central Repository
in accordance with specified timelines.
The Commission’s estimates delineate broker-dealer firms by whether they
insource or outsource, or are likely to insource or outsource, CAT Data reporting
obligations. The Commission believes that firms that previously reported high numbers
of OATS ROEs 214 strategically would decide to either self-report their CAT Data or
212

Based on the Commission’s estimate that 16.95 users will need to be subject to background checks
annually, the Commission estimates that 45% of the 16.95 users would submit hard copy
fingerprints and 55% of the 16.95 users would submit electronic fingerprints to conduct their
background checks. 45% of 16.95 = 7.63 users that would submit hard copy fingerprints. 55% of
16.95 = 9.32 users that would submit electronic fingerprints. (7.63 hard copy fingerprinting users)
x ($44.50 per hard copy fingerprint) = $339.54 for hard copy fingerprinting users per Participant.
(9.32 electronic fingerprinting users) x ($30.25 per electronic fingerprint) = $281.93 for electronic
fingerprint users per Participant. $339.54 + $281.93 = $621.47 per Participant in ongoing external
costs for fingerprinting.

213

($621.47 per Participant in annual, ongoing external costs) x (27 Participants) = $16,779.69
rounded up to $16,780 to conduct a fingerprint-based background check of the users.

214

See supra note 152.

47

outsource their CAT Data reporting functions, while the firms with the lowest levels of
activity would be unlikely to have the infrastructure and specialized employees necessary
to insource CAT Data reporting and would almost certainly outsource their CAT Data
reporting functions. The Commission recognizes that more active firms that would likely
be CAT Reporters and insource regulatory data reporting functions likely did not have
OATS reporting obligations because they either were not FINRA members, or because
they did not trade in NMS equity securities. 215
As noted above, the Commission estimates that as of the time that OATS was
retired, there were 126 OATS-reporting Insourcers and 45 non-OATS reporting
Insourcers. 216 The Commission’s estimation categorizes the remaining 1,001 brokerdealers that the Plan anticipates would have CAT Data reporting obligations as
Outsourcers. 217
(1)

Insourcers
A.

Large Non-OATS Reporting Broker-Dealers

The Commission relies on the Plan’s large broker-dealer cost estimates in
estimating costs for large broker-dealers that can practicably decide between insourcing
or outsourcing their regulatory data reporting functions. 218 The Commission estimates
that there are 9 large broker-dealers that were not OATS reporters in the business of
electronic liquidity provision (“ELP Firms”) that would be classified as Insourcer
firms. 219
Additionally, the Commission estimates that there are 6 broker-dealers that may
transact in options but not in equities that can be classified as Insource firms (“OMM
Firms”). 220 These firms may have customer orders and other activity off-exchange that
would cause them to incur a CAT reporting obligation.
The Commission assumes the 6 OMM Firms and 9 ELP Firms would be typical
of the Plan’s large, non-OATS reporting firms; for these firms, the Commission relies on
the cost estimates provided under Approach 1 221 for large, non-OATS reporting firms in
the CAT NMS Plan.

215

The Commission also recognizes as discussed above that some broker-dealer firms may
strategically choose to outsource despite the Plan’s working assumption that these broker-dealers
would insource their regulatory data reporting functions.

216

See supra note 154.

217

See supra note 155.

218

See CAT NMS Plan, supra note 17, at Appendix C, Section A.6(c).

219

See supra note 157.

220

See supra note 158.

221

See supra note 159.

48

Because CAT reporting obligations have been in place for some time now, the
Commission assumes that the initial one-time implementation costs have already been
incurred.
The Rule imposes ongoing annual burdens associated with, among other things,
personnel time to monitor each large non-OATS reporting broker-dealer’s reporting of
the required data and the maintenance of the systems to report the required data; and
implementing changes to trading systems that might result in additional reports to the
Central Repository. The CAT NMS Plan provides the following average ongoing
external costs that a large non-OATS reporting broker-dealer would expect to incur to
maintain data reporting systems to be in compliance with Rule 613: $80,000 in external
hardware and software costs, and $1,300 in external third party/outsourcing costs. 222
Based on this information, the Commission estimates that it would cost, on average,
approximately $80,000 per year per large non-OATS reporting broker-dealer to maintain
systems connectivity to the Central Repository and purchase any necessary hardware,
software, and other materials, and an additional $1,300 in third party/outsourcing
costs. 223
Additionally, the Commission estimates that the ongoing cost to an ELP Firm and
an OMM Firm to maintain the modified allocation timestamp requirement would be
$29,166.67 per year. 224

222

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(C)(2)(b). The CAT NMS
Plan did not break down these third-party costs into categories.

223

Id.

224

See Letter to Brent J. Fields, Secretary, Commission, from Mary Lou Von Kaenel, Managing
Director, Financial Information Forum, dated July 18, 2016, at 88, Table 6 (“FIF Letter”). The
commenter based its implementation and ongoing estimates on a survey it conducted of brokerdealers to estimate the costs associated with the allocation report timestamp requirement. The
commenter noted that the estimates do not account for all Insourcers (the cost estimates cover the
126 large OATS-reporting broker-dealer Insourcers, but not the 14 ELPs or 31 Options Market
Makers), nor do they cover Outsourcing broker-dealers. The Commission believes those
categories likely were not included in the estimates due to a lack of participation by such brokerdealers in the survey. The Commission is assuming, for its Paperwork Reduction Act cost
estimates, that the portion of the estimates attributed by the commenter to service bureaus were be
passed-through to their Outsourcing broker-dealer clients that relied on service bureaus to perform
their regulatory data reporting. The Commission is thus applying the portion of the commenter’s
cost estimates attributed to the 126 Insourcers to all 171 Insourcers, as well as the portion of the
cost estimates attributed to the 13 service bureaus across the 1,329 broker-dealers that are
categorized as Outsourcing broker-dealers. The commenter stated that this requirement would
cost the industry $5,035,833 in ongoing costs. The commenter attributed $4,987,500 of the
ongoing cost estimate to 126 Insourcers. For purposes of this Paperwork Reduction Act analysis,
the Commission is applying the portion of the cost estimates attributed to the 126 Insourcers to all
171 Insourcers. $4,987,500/171 Insourcers = $29,166.67 in ongoing costs to maintain the
modified allocation timestamp requirement per Insourcer. The Commission believes that this cost
would be an external hardware and software cost related to maintenance of the modified allocation
timestamp.

49

The Commission estimates that the total average ongoing external cost per ELP
Firm would be $110,466.67 225 per year to maintain the systems necessary to collect and
transmit information to the Central Repository, for an estimated aggregate ongoing
external cost for the ELP Firms of approximately $994,200 per year. 226
The Commission also believes there is an ongoing external cost for the
requirement that an OMM Firm submit a Quote Sent Time to an exchange. The
Commission estimates that this requirement will impose an additional ongoing hardware
and software cost per OMM Firm of $1,980,000 per year. 227
Based on this information, the Commission estimates that the total ongoing
external cost per OMM Firm would be $2,090,466.67 per year 228 to maintain the systems
necessary to collect and transmit information to the Central Repository, for an estimated
aggregate ongoing external cost to OMM Firms of approximately $12,542,800.02
per year. 229
B.

Large OATS-Reporting Broker-Dealers

The Commission estimates that 126 broker-dealers, which reported more than
350,000 OATS ROEs between June 15 and July 10, 2015, would strategically decide to
225

($80,000 in external hardware and software costs) + ($29,166.67 to maintain the modified
allocation timestamp requirement) + ($1,300 ongoing external third party/outsourcing costs) =
$110,466.67 in ongoing external costs per ELP.

226

($110,466.67 in ongoing external costs per ELP) x (9 ELPs) = $994,200.03 rounded down to
$994,200 in aggregate ongoing external costs.

227

The Commission estimates that the ongoing cost of the Quote Sent Time requirement is
approximately $11,880,000. The Commission notes that the Quote Sent Time cost estimate was
not included in the cost estimates of the CAT NMS Plan Notice, because the Commission
concluded that this requirement did not represent a significant source of costs. However, the
Commission received a comment stating that the estimated 5-year cost to Options Market Makers
for adding a timestamp to the quote times was between the range of $39.9 million and $76.8
million, and the commenter further stated that this is “not a trivial cost for providing one data
element to the consolidated audit trail.” See FIF Letter at 65. In response to the comment, the
Commission agrees that the costs of quote sent time are significant and adds this cost to its
estimates for Options Market data collection and reporting. See also CAT NMS Plan Order, supra
note 19, at Section V.F.3.a(6). The Commission is using the maximum 5-year cost estimate to
Options Market Makers provided by the commenter ($76.8 million) and has divided it into
$17,400,000 in aggregate implementation external costs, and $11,880,000 in aggregate ongoing
external costs. ($11,880,000 in ongoing costs) / (6 Options Market Maker) = $1,980,000 in
ongoing external costs to maintain the Quote Sent Time requirement per Options Market Maker.
This figure has changed slightly since the prior submission due to the correction of a minor
computational error.

228

($80,000 in external hardware and software costs) + ($1,300 in external third party/outsourcing
costs) + ($29,166.67 in ongoing costs to maintain the modified allocation timestamp requirement)
+ ($1,980,000 in ongoing external costs to maintain the Quote Sent Time requirement) =
$2,090,466.67 in ongoing external costs per Options Market Maker.

229

($2,090,466.67 in ongoing external costs per Options Market Maker) x (6 options firms) =
$12,542,800.02 rounded down to $12,542,800 in aggregate ongoing external costs.

50

either self-report CAT Data or outsource their CAT data reporting functions. 230 To
conduct its Paperwork Burden Analysis for the 126 broker-dealers, the Commission
relied on the estimates used by the CAT NMS Plan of expected costs that a large OATSreporting broker-dealer would incur as a result of the implementation of the CAT under
Approach 1. 231 Because the OATS system was retired and CAT reporting obligations are
in place, the Commission assumes that the initial one-time implementation costs have
already been incurred.
Once a large former OATS-reporting broker-dealer has established the
appropriate systems and processes required for collection and transmission of the
required information to the Central Repository, such broker-dealers would be subject to
ongoing external costs associated with, among other things, personnel time to monitor
each broker-dealer’s reporting of the required data and the maintenance of the systems to
report the required data; and implementing changes to trading systems which might result
in additional reports to the Central Repository. The CAT NMS Plan provides the
following average ongoing external cost figures that a large OATS-reporting brokerdealer would expect to incur to maintain data reporting systems to be in compliance with
Rule 613: $380,000 in ongoing external hardware and software costs, and $120,000 in
ongoing external third party/outsourcing costs. 232 Based on this information the
Commission believes that it would cost, on average, approximately $380,000 per year per
large OATS-reporting broker-dealer to maintain systems connectivity to the Central
Repository and purchase any necessary hardware, software, and other materials, and an
additional $120,000 in external ongoing third party/outsourcing costs. 233 Therefore, the
Commission estimates that the average ongoing annual external cost per large OATSreporting broker-dealer would be approximately $500,000 234 to maintain the systems
necessary to collect and transmit information to the Central Repository.
Additionally, the Commission estimates that the ongoing cost to a large OATSreporting broker-dealer to maintain the modified allocation timestamp requirement would
be $29,166.67. 235
Based on this information, the Commission estimates that the average ongoing
annual external cost per large OATS-reporting broker-dealer would be approximately
230

See supra note 163.

231

See supra note 159.

232

See CAT NMS Plan, supra note 17, at Appendix C, Section B.7(b)(iii)(C)(2)(b). The CAT NMS
Plan did not categorize these third party costs. The Commission believes that these costs may be
attributed to the use of service bureaus, technology consulting, and legal services.

233

See id.

234

($380,000 in ongoing external hardware and software costs + $120,000 in ongoing external third
party/outsourcing costs) = $500,000 in ongoing external costs per large OATS-reporting brokerdealer.

235

See supra note 227. $4,987,500 / 171 Insourcers = $29,166.67 in ongoing costs to maintain the
modified allocation timestamp requirement per Insourcer.

51

$529,166.67 236 to maintain the systems necessary to collect and transmit information to
the Central Repository, for an estimated aggregate ongoing external cost of
approximately $66,675,000. 237
(2)

Outsourcing Firms
A.

Small OATS-Reporting Broker-Dealers

The Commission estimates that there were 806 broker-dealers that reported fewer
than 350,000 OATS ROEs monthly prior to OATS retirement. These broker-dealers
appear to have generally outsourced their regulatory reporting obligations because during
the period June 15 – July 10, 2015, approximately 88.9% of their 350,000 OATS ROEs
were reported through service bureaus, with 730 of these broker-dealers reporting more
than 99% of their OATS ROEs through one or more service bureaus. 238 The
Commission estimates that these firms spent, prior to OATS retirement an aggregate of
$100.2 million on annual outsourcing costs. 239 The Commission estimates these 806
broker-dealers spend $100.2 million in the aggregate to outsource their regulatory data
reporting to service bureaus to report in accordance with Rule 613, 240 or $124,317.62 per
broker-dealer. 241 Because OATS was retired in September 2021, the Commission
assumes that all initial one-time external costs have already been incurred.
The Commission estimates that it would cost small OATS-reporting brokerdealers, on average, approximately $124,317.62 in ongoing external outsourcing costs 242
to ensure ongoing compliance with Rule 613. Additionally, the Commission estimates
that the ongoing cost to a small OATS-reporting broker-dealer to maintain the modified
allocation timestamp requirement would be $81.51. 243
236

($380,000 in ongoing external hardware and software costs) + ($29,166.67 to maintain the
modified allocation timestamp requirement) + ($120,000 in ongoing external third
party/outsourcing costs) = $529,166.67 in ongoing external costs per large OATS-reporting
broker-dealer.

237

($380,000 in ongoing external hardware and software costs) + ($29,166.67 to maintain the
modified allocation timestamp requirement) + ($120,000 in ongoing external third
party/outsourcing costs) x (126 large OATS-reporting broker-dealers) = $66,675,000.42 rounded
down to $66,675,000 in aggregate ongoing external costs.

238

See supra note 163.

239

The average broker-dealer in this category reported 15,185 OATS ROEs from June 15-July 10,
2015; the median reported 1,251 OATS ROEs. Of these broker-dealers, 39 reported more than
100,000 OATS ROEs during the sample period.

240

See CAT NMS Plan Order, supra note 19, at Section V.F.1.c.(2)(B).

241

$124,317.62 = $100,200,000/806 broker-dealers. This amount is the average estimated annual
outsourcing cost to firms that currently report fewer than 350,000 OATS ROEs per month. Id.

242

See infra note 244.

243

See supra note 227. The commenter attributed $108,333 of the ongoing cost estimate to 13
service bureaus. For purposes of this Paperwork Reduction Act analysis, the Commission is
assuming that the portion of the estimates attributed by the commenter to service bureaus will be

52

Therefore, the Commission estimates that the average ongoing external cost per
small OATS-reporting broker-dealer would be approximately $124,399.13 per year, 244
for an estimated aggregate ongoing external cost of approximately $100,265,699 per
year for all such broker-dealers. 245
B.

Small Non-OATS-Reporting Broker-Dealers

In addition to firms that previously reported to OATS, the Commission estimates
there are 373 broker-dealers that were exempt from OATS reporting rules due to firm
size, or excluded because all of their order flow was routed to a single OATS reporter,
such as a clearing firm, that would incur CAT reporting obligations. 246 A further 24
broker-dealers have Participant memberships only with one Participant; 247 the
Commission believes this group is comprised mostly of floor brokers and further believes
these firms would experience CAT implementation and ongoing reporting costs similar in
magnitude to small equity broker-dealers that had no OATS reporting responsibilities. 248
The Commission assumes these broker-dealers would have very low levels of
CAT reporting, similar to those of the lowest activity firms that formerly reported to
OATS. Because CAT reporting obligations have already gone into effect, the
Commission assumes all costs of initial implementation have already been incurred.
The Commission estimates that it would cost, on average, approximately
$124,317.62 in ongoing external outsourcing costs 249 to ensure ongoing compliance with
Rule 613. Additionally, the Commission estimates that the ongoing cost to a small nonOATS-reporting broker-dealer to maintain the modified allocation timestamp

passed-through to their Outsourcing broker-dealer clients that rely on service bureaus to perform
their regulatory data reporting. The Commission is thus applying the portion of the commenter’s
cost estimates attributed to the 13 service bureaus across the 1,329 broker-dealers that are
categorized as Outsourcing broker-dealers. $108,333 / 1,329 Outsourcing broker-dealers = $81.51
in ongoing costs to maintain the modified allocation timestamp requirement per Outsourcing
broker-dealer.
244

$124,399.13 = ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain the allocation
timestamp)

245

$100,265,699 = ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain the allocation
timestamp) x (806 broker-dealers) = $100,265,698.78 rounded up to $100,265,699.

246

See supra note 168.

247

See supra note 169.

248

Id.

249

The Commission assumes these firms have very low levels of CAT reporting, similar to those of
the lowest activity firms that formerly report to OATS. For these firms, the Commission assumes
that under CAT they would incur the average estimated service bureau cost of firms that formerly
OATS reported fewer than 350,000 OATS ROEs per month of $124,373 annually.

53

requirement would be $81.51. 250 Therefore, the Commission estimates that the average
ongoing external cost per small non-OATS-reporting broker-dealer would be
approximately $124,399.13, 251 for an estimated aggregate ongoing external cost of
approximately $100,265,699 per year. 252
Summary of Dollar Costs
Name of
Information
Collection

Type of
Burden

[A.]
Number
of Entities
Impacted

[B.]
Annual
Responses
per Entity

[C.]
Initial Cost
per Entity
per
Response

[D.]
Initial Cost
Annualized
per Entity per
Response
[=C÷3
years]

[E.]
Ongoing Cost
per Entity per
Response

[F.]
Annual Cost
Per Entity per
Response
[ = D + E]

[G.]
Total Annual
Cost Per
Entity
[ = (D + E) *
B]

Central
Repository

Recordkeeping

27

1

$0

$0

$5,000,000

$5,000,000

$5,000,000

$145,500,000

0

Data Collection
and Reporting
(Participants)

Third Party
Disclosure

27

1

0

0

$476,579.58

$476,579.58

$476,579.58

$12,867,649

0

Surveillance

Recordkeeping

27

1

$0

$0

$1,105,263.16

$1,105,263.16

$1,105,263.16

$29,842,105

0

Written
Assessment of
Operation of
CAT

Reporting

27

1

$0

$0

$1,286.25

$1,286.25

$1,286.25

$34,729

0

Financial
Statements

Disclosure

27

1

0

0

$2,407.41

$2,407.41

$2,407.41

$65,000

0

Background
Checks

Disclosure

27

1

$0

$0

$621.47

$621.47

$621.47

$16,780

0

Data Collection
and Reporting
(Large, NonOATS
Reporting
Broker-Dealers
- ELPs)

Third Party
Disclosure

9

1

$0

$0

$110,466.67

$110,466.67

$110,466.67

$994,200

0

Data Collection
and Reporting
(Large, NonOATS
Reporting
Broker-dealers
– Options
Market Makers)

Third Party
Disclosure

6

1

$0

$0

$2,090,466.67

$2,090,466.67

$2,090,466.67

$12,542,800

0

[H.]

Industry Cost
[ = G * A]

250

See supra note 243.

251

$124,399.13= ($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain the allocation
timestamp)

252

[($124,317.62 in ongoing outsourcing costs) + ($81.51 to maintain the allocation timestamp)] x
(128 small non-OATS reporting broker-dealers) = $15,923,088.64 rounded up to $15,923,089 in
aggregate ongoing external costs to ensure ongoing compliance with Rule 613.

54

Total

Small
Business
Entities
Affected

Data Collection
and Reporting
(Large OATS
Reporting
Broker-Dealers)

Third Party
Disclosure

126

1

$0

$0

$529,166.67

$529,166.67

$529,166.67

$66,675,000

0

Data Collection
and Reporting
(Small OATS
Reporting
Broker-Dealers)

Third Party
Disclosure

806

1

$0

$0

$124,399.13

$124,399.13

$124,399.13

$100,265,699

Estimated
806 253

Data Collection
and Reporting
(Small NonOATS
Reporting
Broker-Dealers)

Third Party
Disclosure

128

1

$0

$0

$124,399.13

$124,399.13

$124,399.13

$15,923,089

Estimated
128 254

TOTAL COST FOR ALL RESPONDENTS

$384,727,051

14.

Costs to Federal Government

The SEC is in the process of revising its methodologies to estimate annualized costs to
the Federal government for all its relevant collections of information. The SEC anticipates that
future extensions of this collection of information will reflect the revised methodologies.
15.

Changes in Burden

The aggregate time burden decreased by 808,844 hours (from 4,931,332 hours to
4,122,488 hours) and the aggregate cost burden increased by $56,064,140 (from
$328,662,911 to $384,727,051).
The changes in burden have occurred because, as discussed above, while the
number of Participants subject to the Plan has increased (from 25 Participants to 27
Participants), certain information collection requirements have been completed, and
certain initial burdens and costs associated with implementation of certain information
collection requirements have been completed, although certain ongoing costs will
continue to accrue. In addition, the Commission has updated some of its estimates to
reflect more accurate cost information provided by the 2026 Financial and Operating
Budget.
The changes in burden also have occurred because certain information collection
requirements have been satisfied, as described above, including the initial burdens and
costs associated with certain information collection requirements.
The Commission notes that the number of Participants has increased from 25
Participants to 27 Participants. The estimated burdens and costs for Participants have
also been impacted by a change in calculation relating to the Participants Study.
Specifically, some burden and cost calculations relating to Participants have been
adjusted to more accurately represent the information presented by Participants in the
CAT NMS Plan in the Participants Study. The Commission is relying on aggregate
253

See supra note 179.

254

Id.

55

estimates provided by Participants in the CAT NMS Plan, based on a survey of 19
Participants, but previously assumed that all of these aggregate estimates applied equally
to 25 Participants. The Commission is now adjusting certain aggregate estimates
provided by Participants to account for the fact that those numbers are based on 19
Participants, where appropriate. For collectively shared burdens and costs the
Commission did not adjust the Participants Study numbers in a similar fashion.
In addition, the Commission has further reduced the estimated number of brokerdealers subject to CAT reporting from 1,350 to 1,172, resulting in a reduction in the
estimated number of small non-OATS-reporting broker-dealers from 397 to 128. This
has resulted in a number of changed estimated burdens and costs, including a substantial
decrease in the overall burdens and costs estimated for small non-OATS-reporting
broker-dealers in the aggregate, as well as slight changes to the estimated costs for small
non-OATS-reporting broker-dealers because of the way the cost of implementing and
maintaining the modified timestamp is estimated to be shared between small OATS
Reporting Broker-Dealers and small non-OATS-reporting broker-dealers. The chart
below identifies the Information Collections whose burdens have changed and
summarizes the amount of the changes and the primary reason(s) for the changes.

56

Summary of Annual Burden Changes (rounded to the nearest hour or dollar):
Name of
Information
Collection

Central
Repository

Change in Hours

Change in Cost

0 $89,700,000

Data Collection
and Reporting
(Participants)

(4,421) $953,159

Surveillance

(40,590) $2,210,526

Written
Assessment of
Operation of
CAT
Independent
Audit of
Expenses
Incurred Prior
to the Effective
Date
Assessment of
Industry
Member Bulk
Access to
Reporter Data
Assessment of
Errors in
Customer
Information
Fields

300 $4,104

Reason for Change
Based on the 2026 Financial
and Operating Budget, which
estimates the annual ongoing
cost to the Participants for
building, operating, and
maintaining the Central
Repository as currently
designed and as currently
required by the CAT NMS
Plan.
Increase in number of
respondents from 25 to 27,
which decreased anticipated
FTEs per participant.
Elimination of one-time initial
burdens and costs, increase in
number of respondents
(Participants) from 25 to 27,
which decreased anticipated
FTEs per participant.
Increase in number of
respondents (Participants) from
25 to 27 and increased costs
due to inflation.
Elimination of burden due to
completion of collection.

n/a n/a

(125) ($20,417)

Elimination of burden due to
completion of collection.

(200) ($5,104)

Elimination of burden due to
completion of collection.

57

Name of
Information
Collection
Report on
Impact of
Tiered Fees on
Market
Liquidity
Assessment of
Material
Systems
Change on
Error Rate
Background
Checks
Data Collection
and Reporting
(Large, NonOATS
Reporting
BrokerDealers) –
ELPs
Data Collection
and Reporting
(Large, NonOATS
Reporting
BrokerDealers) –
Options Market
Makers
Data Collection
and Reporting
(Large OATS
Reporting
BrokerDealers)
Data Collection
and Reporting
(Small OATS
Reporting
BrokerDealers)

Change in Hours

Change in Cost

Reason for Change

Elimination of burden due to
completion of collection.

(156) ($2,042)

Decrease in estimated number
of Material Systems Changes
per year, offset by increase in
number of participants (25 to
27)
Elimination of one-time initial
burdens and costs, increase in
number of respondents
(Participants) from 25 to 27.

(371) n/a

9 $l,280

(66,690) ($552,333)

Elimination of one-time initial
burdens and costs.

(333,450) ($2,761,667)

Elimination of one-time initial
burdens and costs.

0 $0

No change to the estimated
costs.

0 $0

No change to the estimated
costs.

58

Data Collection
and Reporting
(Small NonOATS
Reporting
BrokerDealers)

(363,150) ($33,463,366)

Total Change

(808,844) $56,064,140

16.

Reduction in number of
estimated small-non-OATS
Reporting Broker-Dealers,
from 397 to 128, and
elimination of one-time initial
burden and costs.

Information Collection Planned for Statistical Purposes
Not applicable. The information collection is not used for statistical purposes.

17.

Approval to Omit the OMB Expiration Date
The Commission is not seeking approval to omit the OMB expiration date.

18.

Exceptions to Certification
This collection complies with the requirements in 5 CFR 1320.9.

B.

Collections of Information Employing Statistical Methods
This information collection does not involve statistical methods.

59