Amendments to the Books and Records Rules

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SUPPORTING STATEMENT
Paperwork Reduction Act Information Collection Submission for Rule 608
OMB Control Number 3235-0500
This submission is being made pursuant to the Paperwork Reduction Act of 1995, 44
U.S.C. Section 3501 et seq.
A.

JUSTIFICATION
1.

Necessity of Information Collection

Section 11A(a)(3)(B) of the Securities Exchange Act of 1934 (the “Act”) enables the
Securities and Exchange Commission (the “Commission”) to act, in furtherance of its statutory
directive to facilitate the establishment of a national market system for securities,1 “by rule or by
order, to authorize or require self-regulatory organizations to act jointly with respect to matters
as to which they share authority under [the Act] in planning, developing, operating, or regulating
a national market system (or a subsystem thereof) or one or more facilities thereof . . . .” 2 This
section, however, does not specify any procedures for filing or amending national market system
plans (“NMS Plans”).
The Commission adopted Rule 11Aa3-2 to establish such procedures. 3 This rule was
later re-numbered as Rule 608 with the adoption of Regulation NMS, 4 and was amended in
August 2020 to modify certain processes set forth within the rule,5 but the information collection
requirements of the rule have remained the same:
a.

New NMS Plans. Self-regulatory organizations (“SROs”) filing a new NMS Plan
must submit the text of the NMS Plan to the Commission, along with a statement
of purpose, 6 and, if applicable, specified supporting materials. Such materials
may include: (1) a copy of all governing or constituent documents; 7 (2) a
description of the manner in which the NMS Plan, and any facility or procedure
contemplated by the NMS Plan, will be implemented; 8 (3) a listing of all
significant phases of development and implementation contemplated by the NMS

1

See 15 U.S.C. 78k-1(a)(2).

2

See 15 U.S.C. 78k-1(a)(3)(B).

3

See Securities Exchange Act Release No. 17580 (Feb. 26, 1981), 46 FR 15866 (Mar. 10, 1981).

4

See Securities Exchange Act Release No. 51808 (June 9, 2005), 70 FR 37496, 37570 (June 29, 2005).

5

See Securities Exchange Act Release No. 89618 (Aug. 19, 2020), 85 FR 65470 (Oct. 15, 2020) (“2020
Rule 608 Amendment”).

6

See 17 CFR 242.608(a)(1).

7

See 17 CFR 242.608(a)(4)(i).

8

See 17 CFR 242.608(a)(4)(ii)(A).

Plan, including a projected completion date for each phase; 9 (4) an analysis of the
competitive impact of implementing the NMS Plan and any facility or procedure
contemplated by the NMS Plan; 10 (5) a description of any written agreements or
understandings between or among plan participants or sponsors relating to
interpretations of the NMS Plan or conditions for becoming a plan participant or
sponsor; 11 and (6) a description of the manner in which any facility contemplated
by the NMS Plan shall be operated. 12 Participants or sponsors to the NMS Plan
must ensure that a current and complete version of the NMS Plan is posted on a
designated website or a plan website after being notified by the Commission that
the NMS Plan is effective. Each plan participant or sponsor must also provide a
link on its own website to the current version of the NMS Plan. 13
b.

NMS Plan Amendments. SROs proposing to amend an existing NMS Plan must
submit the text of the amendment to the Commission, along with a statement of
purpose, 14 and, if applicable, the supporting materials described above, 15 as well
as a statement that the amendment has been approved by the plan participants or
sponsors in accordance with the terms of the NMS Plan. 16 Participants or
sponsors to the NMS Plan must ensure that any proposed amendments are posted
to a designated website or a plan website after filing the amendments with the
Commission and that those websites are updated to reflect the current status of the
amendment and the NMS Plan. Each plan participant or sponsor must also
provide a link on its own website to the current version of the NMS Plan. 17

c.

Plan Processor Selections. To the extent that a plan processor is required for any
facility contemplated by a NMS Plan, the plan participants or sponsors must file
with the Commission a statement identifying the plan processor selected,
describing the material terms under which the plan processor is to serve, and
indicating the solicitation efforts, if any, for alternative plan processors, the
alternatives considered, and the reasons for the selection of the plan processor. 18

These information collection requirements were previously submitted and approved in
connection with Rule 11Aa3-2 under OMB Control Number 3235-0500. Commission staff
inadvertently and mistakenly discontinued this OMB Control Number on December 10, 2007,
9

See 17 CFR 242.608(a)(4)(ii)(B).

10

See 17 CFR 242.608(a)(4)(ii)(C).

11

See 17 CFR 242.608(a)(4)(ii)(D).

12

See 17 CFR 242.608(a)(5).

13

See 17 CFR 242.608(a)(8)(i).

14

See 17 CFR 242.608(a)(1).

15

See notes 6-12 and associated text supra for a description of these supporting materials.

16

See 17 CFR 242.608(a)(4)(ii)(E).

17

See 17 CFR 242.608(a)(8)(i)-(ii).

18

See 17 CFR 242.608(a)(6).

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following the re-numbering of Rule 11Aa3-2 as Rule 608. Accordingly, the Commission
requested, on an emergency basis, a reinstatement of the previously approved information
collection requirements associated with OMB Control Number 3235-0500. That reinstatement
was granted on May 28, 2020.
2.

Purpose and Use of the Information Collection

The information collected pursuant to Rule 608 is necessary to further the abovedescribed statutory directive to facilitate the establishment of a national market system for
securities. 19 The collected information enables the Commission to determine whether to
authorize the creation or amendment of NMS Plans. It also enables the Commission to better
monitor and regulate existing NMS Plans and the SROs that are participants or sponsors to such
NMS Plans. These functions would be much more difficult without the information collected
pursuant to Rule 608.
3.

Consideration Given to Improved Information Technology

Rule 608 uses information technology to lessen the burden on the SROs that are
participants or sponsors to NMS Plans. Rule 608 was amended in 2020 to, among other things,
require NMS Plans and NMS Plan amendments to be filed by email,20 lessening the need for any
additional copying or scanning. In addition, much of the information collected pursuant to Rule
608 is posted electronically on a website. The Commission further notes that it does not prohibit
the SROs from using any kind of information technology to facilitate the collection and/or
preparation of the information required by Rule 608.
4.

Duplication

Rule 608 will not result in, or require the collection of, duplicate information that is
otherwise available in a similar form.
5.

Effects on Small Entities

Rule 608 does not affect small entities. Rule 608 only imposes requirements on selfregulatory organizations that are national securities exchanges and national securities
associations. With respect to the national securities exchanges, the Commission’s definition of a
small entity is an exchange that has been exempt from the reporting requirements of Rule 601 of
Regulation NMS and that is not affiliated with any person (other than a natural person) that is not
a small business or small organization.21 None of the national securities exchanges subject to the

19

See notes 1-2 and associated text supra. The above-described collections of information also ensure that
affected market participants have access, via a public and designated website or a plan website, to a current
and updated version of any effective NMS Plans.

20

See 2020 Rule 608 Amendment, 85 FR at 65478.

21

See 17 CFR 240.0-10(e).

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amendments fall within this definition, and national securities associations similarly do not
qualify as a “small entity.” 22
6.

Consequences of Not Conducting Collection

The information collected pursuant to Rule 608 is necessary to further the abovedescribed statutory directive to facilitate the establishment of a national market system for
securities. 23 If the Commission did not collect this information, it would be more difficult for the
Commission to determine whether to approve the creation or amendment of NMS Plans. It
would also be more difficult for the Commission to monitor and regulate existing NMS Plans
and the SROs that are participants or sponsors to such NMS Plans. Moreover, the information
collected pursuant to Rule 608 cannot be collected less frequently. The information submitted
with each NMS Plan, amendment, or selection of a plan processor is only submitted once.
7.

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

The SROs are required by law to retain the records and information that are collected
pursuant to Rule 608 for a period of not less than 5 years, the first 2 years in an easily accessible
place. 24 Rule 608 does not affect this existing requirement.
There are no other special circumstances, and this collection is otherwise consistent with
the guidelines in 5 CFR 1320.5(d)(2).
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

No payment or gift is provided to respondents.
10.

Confidentiality

The text of the NMS Plans and any amendments will not be confidential, but published
on a designated website or a plan website. To the extent that Rule 608 requires the SROs to
submit confidential information to the Commission, that information will be kept confidential
subject to the provisions of applicable law. 25
22

See 13 CFR 121.201.

23

See notes 1-2 and associated text supra. The above-described collections of information also ensure that
affected market participants have access, via a public and designated website or a plan website, to a current
and updated version of any effective NMS Plans.

24

See 17 CFR 240.17a-1(b).

25

See, e.g., 5 U.S.C. 552 et seq.; 15 U.S.C. 78x (governing the public availability of information obtained by
the Commission).

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11.

Sensitive Questions

The Information Collection does not collect information about individuals, therefore, a
PIA, SORN, and PAS are not required.
12.

Burden of Information Collection

As noted above, Rule 608 establishes the following information collection requirements in
connection with (1) New NMS Plans, (2) NMS Plan Amendments, and (3) Plan Processor
Selections. The Commission estimates that 30 SROs26 incur the following reporting and/or thirdparty disclosure burdens:
Summary of Hourly Burdens
Name of
Information
Collection

New NMS
Plan

NMS Plan
Amendments

Plan
Processor
Selections

Number
of
Entities
Impacted

30

30

30

Small
Business
Entities
Affected

0

0

0

Type of
Burden

Ongoing
or
Initial
Burden

Annual
Responses
per Entity

Approximate
Burden per
Entity per
Response

Approximate
Annual
Burden Per
Entity

Approximate
Annual
Industry
Burden

3rd-Party
Discl.

Ongoing

1

5

5

150

Reporting

Ongoing

1 27

170

34

1,020

3rd-Party
Discl.

Ongoing

13

0.38

5

148

Reporting

Ongoing

13

34

442

13,260

Reporting

Ongoing

1 28

34

11.33

340

TOTAL ANNUAL INDUSTRY BURDEN

14,918

26

Currently, the following SROs are participants to a NMS Plan: 24X National Exchange LLC, 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., Financial Industry Regulatory
Authority, Inc., Green Impact Exchange, LLC, Investors Exchange LLC, Long Term Stock Exchange, Inc.,
MEMX LLC, Miami International Securities Exchange, LLC, MIAX Emerald, LLC, MIAX PEARL, LLC,
MIAX Sapphire, LLC, MX2 LLC, Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq
PHLX LLC, Nasdaq Texas, LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC,
NYSE American LLC, NYSE Arca, Inc., NYSE Texas, Inc., NYSE National, Inc., and Texas Stock
Exchange LLC.

27

The Commission estimates that a response would only be required once every five years. The annual
burdens included in this chart and detailed below therefore reflect burdens that are annualized over five
years. See notes 30-31 and associated text infra.

28

The Commission estimates that a response would only be required once every three years. The annual
burdens included in this chart and detailed below therefore reflect burdens that are annualized over three
years. See notes 36-37 and associated text infra.

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These burdens are discussed further below.
a.

New NMS Plans

The Commission estimates that the SROs would incur, on average, an ongoing third-party
disclosure burden of approximately 5 hours per year to keep a current and complete version of the
NMS Plan posted on a designated website or a plan website, and to provide a link to the current
version of the NMS Plan on its own website. This would result in an average aggregate annual
burden of approximately 150 hours. 29
Although the burdens involved with the creation of a new NMS Plan can and will vary, the
Commission estimates that each SRO would incur, on average, a burden of approximately 170
hours to create and submit to the Commission a new NMS Plan, along with a statement of purpose,
and if, applicable, any of the specified supporting materials. The Commission believes that a new
NMS Plan would only be created approximately once every five years. Accordingly, the
Commission estimates that the creation and submission of a new NMS Plan and any related
materials would result, on average, in an annual ongoing burden of approximately 34 hours per
SRO 30 and an aggregate annual burden of approximately 1,020 hours. 31
b.

NMS Plan Amendments

Although the burdens involved with the development of a NMS Plan amendment can and
will vary, the Commission estimates that each SRO would incur, on average, a reporting burden of
approximately 34 hours to create and submit to the Commission a NMS Plan amendment and any
supporting materials. Because the Commission believes that approximately 13 NMS Plan
amendments will be submitted each year, the Commission estimates that the creation and
submission of NMS Plan amendments and any related materials would result, on average, in an
ongoing burden of approximately 442 hours a year per SRO 32 and an aggregate burden of
approximately 13,260 hours per year. 33
The Commission further estimates that the SROs would incur, on average, an ongoing thirdparty disclosure burden of approximately 0.38 hours to post any pending NMS Plan amendments to
a designated website or a plan website and to update such websites to reflect the current status of the
amendment and the NMS Plan. This would result, on average, in an annual burden of
approximately 5 hours per SRO 34 and an aggregate annual burden of approximately 148
hours. 35
29

5 burden hours * 30 Participants = 150 burden hours.

30

170 burden hours / 5 = 34 burden hours per year.

31

34 burden hours * 30 Participants = 1,020 burden hours.

32

34 burden hours * 13 NMS Plan amendments = 442 burden hours per SRO per year.

33

442 burden hours per SRO per year * 30 SROs = 13,260 burden hours.

34

0.38 burden hours * 13 NMS Plan amendments = 4.94 burden hours per SRO per year.

35

4.94 burden hours * 30 Participants = 148.2 burden hours rounded down to 148.

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c.

Plan Processor Selections

Although the burdens involved with the selection of a plan processor can and will vary, the
Commission estimates that each SRO would incur, on average, a reporting burden of approximately
34 hours to submit to the Commission a statement identifying the plan processor selected and
supporting materials. The Commission further estimates that one plan processor will be selected
every three years. Accordingly, the Commission estimates that the preparation and submission of
materials related to the selection of a plan processor would result, on average, in an ongoing
annual burden of approximately 11.33 hours per SRO 36 and an aggregate annual burden of
approximately 340 hours. 37
hours.

The above estimates result in a total annual industry burden of approximately 14,918
13.

Costs to Respondents

The Commission estimates that 30 SROs 38 will incur the following costs in connection with
the collections of information required by Rule 608:
Summary of Cost Burdens
Name of Information
Collection

Number of
Entities
Impacted

Small
Business
Entities
Affected

Type of
Cost

Ongoing
or Initial
Cost

Annual
Responses
per Entity

Cost per
Entity
per
Response

Approximate
Annual Cost
Per Entity

Approximate
Annual
Industry
Cost

New NMS Plans

30

0

Reporting

Ongoing

1

$37,819 39

$7,563.80

$226,914

NMS Plan Amendments

30

0

Reporting

Ongoing

13

$1,261

$16,393

$491,790

Plan Processor Selections

30

0

Reporting

Ongoing

1

$1,261 40

$420.33

$12,610

TOTAL ANNUAL INDUSTRY COST

$731,314

These costs are described in more detail below.
a.

New NMS Plans

Although the costs involved with the creation of a new NMS Plan can and will vary, the
Commission estimates that each SRO would incur, on average, reporting costs of approximately
$37,819 in external public relations, legal, and consulting costs related to the development of a new
36

34 burden hours / 3 years = 11.33 burden hours per SRO per year.

37

11.33 burden hours per SRO per year * 30 SROs = 339.9 hours rounded up to 340.

38

See note 26 supra.

39

See note 27 supra; see also notes 41-42 and associated text infra.

40

See note 28 supra; see also notes 45-46 and associated text infra.

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NMS Plan and any related supporting materials. The Commission believes that a new NMS Plan
would only be created approximately once every five years. Accordingly, the Commission
estimates that the creation of a new NMS Plan and any related materials would result, on average, in
ongoing annual costs of approximately $7,563.80 per SRO 41 and aggregate annual costs of
approximately $226,914. 42
b.

NMS Plan Amendments

Although the costs involved with the creation of a NMS Plan amendment can and will vary,
the Commission estimates that each SRO would incur, on average, reporting costs of approximately
$1,261 in external public relations, legal, and consulting costs related to the creation and submission
of a new NMS Plan and any related supporting materials. Because the Commission estimates that
13 NMS Plan amendments would be filed each year, the Commission estimates that the creation
and submission of a NMS Plan amendment and any related materials would result, on average, in
ongoing annual costs of approximately $16,393 per SRO 43 and aggregate annual costs of
approximately $491,790. 44
c.

Plan Processor Selections

The Commission estimates that each SRO would incur, on average, reporting costs of
approximately $1,261 in external legal and consulting costs related to the preparation and
submission of materials related to the selection of a plan processor. The Commission further
estimates that a plan processor would be selected approximately once every three years.
Accordingly, the Commission estimates that the preparation and submission of materials related to
the selection of a plan processor would result, on average, in ongoing annual costs of
approximately $420.33 per SRO 45 and aggregate annual costs of approximately $12,610. 46
The above estimates result in a total annual industry cost of approximately $731,314.
14.

Cost 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.

41

$37,819 / 5 = $7,564 per SRO per year.

42

$7,563.80 per SRO per year * 30 SROs = $226,914.

43

$1,261 * 13 NMS Plan amendments = $16,393 per SRO per year.

44

$16,393 per year * 30 SROs = $491,790.

45

$1,261 / 3 years = $420.33 per SRO per year.

46

$420.33 per SRO per year * 30 SROs = $12,610.

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15.

Changes in Burden

The estimated burdens increased due to an increase in the number of respondents and to
inflation adjustments to the cost estimates.
16.

Information Collection Planned for Statistical Purposes

Not applicable. The information collection is not used for statistical purposes.
17.

OMB Expiration Date Display Approval

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

Exceptions to Certification for Paperwork Reduction Act Submissions

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

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

9