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Federal Register / Vol. 86, No. 152 / Wednesday, August 11, 2021 / Notices
Section 7.2 of Article VII of the CT
Plan governs the hours of operation during which time quotations and Transaction Reports must be entered by Members and will be disseminated by the Processor. The Commission received no comment on Section 7.2. The Commission finds that the requirements of this provision with respect to regulatory halts are consistent with the provisions of the existing Equity Data Plans previously approved by the Commission,797 and that maintaining the same hours of operation for the CT
Plan will avoid the need for market participants to adjust their systems to accept market data at other times, thereby reducing the risk of market disruption. For these reasons, the Commission is approving Section 7.2 as proposed.
9. Financial Matters
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a Capital Contributions Article VIII of the CT Plan sets forth the provisions related to the maintenance of capital accounts for the Members, additional capital contributions to the LLC, and the distribution of revenues of the LLC to the Members. Specifically, Article VIII, Section 8.1 of the CT Plan requires a separate capital account to be established and maintained by the Company for each Member.798 In addition, the CT Plan specifies the formula for crediting and debiting a Members capital account.799 The CT
Plan provides that a Members capital account will be credited for i the Members capital contributions at fair market value in the case of contributed property,800 ii allocations of Company profits and gain to such Member pursuant to Section 10.2; and iii any recaptured tax credits, or portion thereof, to the extent such increase to the tax basis of a Members interest in the Company may be allowed pursuant to the federal tax code.801 Furthermore, the CT Plan provides that a Members capital account will be decreased by x the amount of distributions at fair market value in the case of property distributed in kind to such Member, y allocations of Company losses to such 797 See Securities Exchange Act Release Nos.
92070 May 28, 2021, 86 FR 29849, 29851 June 3, 2021 File No. SRCTA/CQ202101; and 92071
May 28, 2021, 86 FR 29846, 29848 June 3, 2021
File No. S72489.
798 See Article VIII, Section 8.1a of the CT Plan.
799 See id.
800 The CT Plan specifies that the fair market value of contributed, distributed, or revalued property shall be agreed to by the Operating Committee or, if there is no such agreement, by an appraisal. See Article VIII, Section 8.1b of the CT
Plan.
801 See Article VIII, Section 8.1a of the CT Plan.

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Member and z any tax credits as may be required to be charged to the tax basis of a Members interest pursuant to the federal income tax code.802
Article VIII, Section 8.2 of the proposed CT specifies that no Member will be obligated or permitted to make any additional contribution to the capital of the Company except with the approval of the Operating Committee.
The CT Plan specifies that the Members agree to make additional capital contributions from time to time as appropriate in respect of reasonable administrative and other reasonable expenses of the Company.803
Article VIII, Section 8.3 of the CT Plan requires the distributions of revenues of the LLC to the Members at the times and in the aggregate amounts set forth in Exhibit D to the CT Plan. The CT Plan provides that distributions to Members may be made in cash or, if determined by the Operating Committee, in-kind.804
The CT Plan also specifies that the Operating Committee may reserve amounts for anticipated expenses or contingent liabilities of the LLC.805
Finally, the CT Plan provides that if additional capital contributions are called for, and any Member fails to provide the full amount of such additional capital contributions, any distributions to be made to such defaulting Member shall be reduced by the amount of any required but unpaid capital contribution due from such Member.806
The provisions in the CT Plan related to the maintenance of capital accounts for the Members, additional capital contributions to LLC, and the distribution of revenues of the LLC to the Members are reasonable and customary for LLC agreements, and the Commission received no comments addressing Article VIII. The Commission has, however, identified two incorrect cross references in Article VIII, Section 8.1. In particular, Section 8.1a twice incorrectly cites to Section 10.2 Tax Status; Returns instead of Section 9.2 Allocation of Profits and Losses of the CT Plan when describing provisions related to allocations of profits and losses. The Commission is therefore modifying Section 8.1a to correct these incorrect cross references.
For the reasons discussed above, the Commission is approving Article VIII as modified.
802 See
id.
Article VIII, Section 8.2 of the CT Plan.
804 See Article VIII, Section 8.3 of the CT Plan.
805 See id.
806 See id.
803 See
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b Allocations Article IX of the CT Plan sets forth the provisions related to the allocation of profits and losses of the LLC to Members. Pursuant to Article XI, Section 9.1, the profits and losses of the Company must be determined for each fiscal year in a manner consistent with GAAP. Article XI, Section 9.2 further provides that all profits and losses of the Company must be allocated among the Members in accordance with Exhibit D
of the CT Plan. Section 9.2 also specifies the procedures for certain allocation events in accordance with federal tax code regulations.807
Exhibit D of the CT Plan outlines the methodology for revenue sharing among Members. Specifically, paragraph a of Exhibit D specifies that each Member will receive an annual payment if any for each calendar year that is equal to the sum of the Members Trading Shares as defined in the CT Plan and Quoting Shares as defined in the CT Plan, in each Eligible Security for such calendar year.808 In the event that total Net Distributable Operating Income as defined below is negative for a given calendar year, each Member will receive an annual bill for such calendar year in accordance with the same formula for determining annual payments to the Members.809 Moreover, the Company will cause the Administrator to provide the Members with written estimates of each Members percentage of total volume within five business days of the end of each calendar month.810
Paragraphs b, c, and e through i of Exhibit D set forth the definitions used for determining the revenue sharing among Members, including Security Income Allocation, 811
Voting Percentage, 812 Trading 807 See
Article IX, Section 9.2bd of the CT

Plan.
808 See
Paragraph a of Exhibit D of the CT Plan.
id.
810 See id.
811 Paragraph b of Exhibit D of the CT Plan defines Security Income Allocation as multiplying i the Net Distributable Operating Income under Exhibit D for the calendar year by ii the Volume Percentage for such Eligible Security the Initial Allocation, and then adding or subtracting any amounts specified in the reallocation set forth in Exhibit D.
812 Paragraph c of Exhibit D of the CT Plan defines Volume Percentage as dividing A the square root of the dollar volume of Transaction Reports disseminated by the Processors in such Eligible Security during the calendar year by B the sum of the square roots of the dollar volume of Transaction Reports disseminated by the Processors in each Eligible Security during the calendar year.
809 See
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