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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
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Committee 23 that would impact FINRAs ability to incorporate and use CAT Data in FINRAs surveillance program. For example, the Plan requires that raw unprocessed data that has been ingested by the Plan Processor must be available to Participant regulatory staff and the SEC prior to 12:00 p.m. Eastern Time on T+1, and access to all iterations of processed data must be available to Participant regulatory staff and the SEC
between 12:00 p.m. Eastern Time on T+1 and T+5.24 The Plan Processor also must ensure that regulators have access to corrected and linked order data by 8:00 a.m. Eastern Time on T+5.25
Additionally, after ingestion by the Central Repository, the raw unprocessed data must be transformed into a format appropriate for data querying and regulatory output.26 The user-defined direct queries and bulk extracts must provide authorized users with the ability to retrieve CAT Data via a query tool or language that allows users to query all available attributes and data sources.27 FINRAs use of the CAT Data has not uncovered any processing delays or other material issues impacting the availability of, and FINRAs access to, the data.
With respect to the second factor, FINRA stated in the OATS Retirement Filing that it believes that the CAT
includes all data necessary for FINRA to meet its surveillance obligations after the retirement of OATS. FINRA must ensure that the CAT, as the single source of order and trade data, can enable FINRA to conduct accurate and effective market surveillance in accordance with its regulatory obligations.28 As noted above, Phase 2a 23 FINRA notes that FINRA CAT tracks known issues relating to Industry Member and Plan Participant reporting. See, e.g., catnmsplan.com/
CAT-Transaction-Known-Issues-List. FINRA
regularly reviews and analyzes FINRA CATs list of current and resolved issues and does not believe that any of these issues would impact its ability to incorporate and use CAT Data in its surveillance program.
24 See CAT NMS Plan, Appendix D, Section 6.2.
25 See CAT NMS Plan, Appendix C, Section A.2a.
26 See CAT NMS Plan, Appendix C, Section A.1b.
27 See CAT NMS Plan, Section 6.10c.
28 As discussed in the OATS Retirement Filing, OATS was originally proposed to fulfill one of the undertakings contained in an order issued by the Commission relating to the settlement of an enforcement action against FINRA f/k/a National Association of Securities Dealers, Inc. NASD
for failure to adequately enforce its rules. See Securities Exchange Act Release No. 39729 March 6, 1998, 63 FR 12559 March 13, 1998 Order Approving File No SRNASD97- 56 OATS
Approval Order; see also Securities Exchange Act Release No. 37538 August 8, 1996; Administrative Proceeding File No. 39056 SEC Order. In the OATS Approval Order, the Commission concluded that OATS satisfied the conditions of the SEC Order
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Data includes all events and scenarios covered by OATS and is the most relevant for OATS retirement purposes.
FINRA Rule 7440 describes the OATS
requirements for recording information, which includes information related to the receipt or origination of orders, order transmittal, and order modifications, cancellations and executions. Large Industry Members and Small Industry Members that currently are reporting to OATS were required to submit data to the CAT for these same events and scenarios commencing in Phase 2a. FINRAs testing, analysis and use of the CAT Data including integration into POD, as described above, has confirmed that the CAT
includes all data necessary for FINRA to meet its surveillance obligations and that CAT is a reliable substitute for OATS. In addition, based on its qualitative data reviews, FINRA has concluded that Industry Member CAT
Data, in the aggregate, is a sufficient replacement for OATS for purposes of FINRAs surveillance program.
With respect to the third factor, FINRA stated in the OATS Retirement Filing that it believes that the Plan Processor is sufficiently meeting its obligations under the CAT NMS Plan relating to the reporting and linkage of Phase 2a Data. As detailed in the Implementation Plan and Quarterly Progress Reports submitted by the Plan Participants, the Plan Processor has met its targeted completion dates for the milestones for Phase 2a, including, for example, production Go-Live for Equities 2a file submission and data integrity validation Large Industry Members and Small OATS Reporters on June 22, 2020; Production Go-Live for Equities 2a Intrafirm Linkage validations on July 27, 2020; and production go-live for firm-to-firm linkage validations for equities Large Industry Members and Small OATS
Reporters and exchange and TRF/ORF
linkage validations for equities Large Industry Members and Small OATS
Reporters on October 26, 2020.29
Based on the foregoing, FINRA has determined that the CAT meets the accuracy and reliability standards approved by the Commission in the OATS Retirement Filing for purposes of eliminating the OATS Rules. FINRA has determined to retire OATS and remove the OATS rules from its rulebook effective September 1, 2021. Firms must and was consistent with the Exchange Act. See 63
FR 12559, 1256667. FINRA believes that it will continue to be in compliance with the requirements of the SEC Order once the OATS Rules are deleted.
29 The Implementation Plan and Quarterly Progress Reports are available at www.catnmsplan.com/implementation-plan.

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continue to report to OATS all order events that occur on or prior to August 31, 2021. Reports submitted to OATS for order events that occur after August 31, 2021 will be rejected. In other words, August 31, 2021 will be the last OATS
Business Day, as defined under FINRA
Rule 7450b3, for which OATS will accept order events and perform routine processing including incorporation of corrections and repairs of rejections occurring within the normal OATS
timeframe for such activities. OATS will continue to accept reports for order events that occur on or prior to August 31, 2021 including, but not limited to, late and corrected reports for such order events through September 16, 2021.
Firms must ensure that their OATS
reporting is accurate and complete for all order events that occur on or prior to August 31, 2021.
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,30 in general, and furthers the objectives of Section 6b5
of the Act,31 in particular, because it is designed to prevent fraudulent and manipulative acts and practices, promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest.
In particular, the Exchange believes that the proposed rule change is consistent with Section C.9 of Appendix C to the Plan, which requires each Participant to file with the SEC the relevant rule change filing to eliminate or modify its duplicative rules within six 6 months of the SECs approval of the CAT NMS Plan. 32 The Plan notes that the elimination of such rules and the retirement of such systems will be effective at such time as CAT Data meets minimum standards of accuracy and reliability. 33 Accordingly, the Exchange believes the proposed rule change implements, supports, interprets or clarifies the provisions of the Plan, and is designed to assist the Exchange and its member organizations in meeting regulatory obligations pursuant to, and milestones established by, the Plan. In approving the Plan, the SEC
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U.S.C. 78fb5.
32 Appendix C of CAT NMS Plan, Approval Order at 85010.
33 Id.
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