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[Release No. 34-106343; File No. SR-TXSE-2026-028]

Self-Regulatory Organizations; Texas Stock Exchange LLC; Notice of Filing and

Immediate Effectiveness of a Proposed Rule Change to Amend the Fee Schedule to

Establish Fees for Industry Members Related to Certain Historical Costs of the National

Market System Plan Governing the Consolidated Audit Trail

September 11, 2026.

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”),1 and Rule

19b-4 thereunder,2 notice is hereby given that on September 2, 2026, Texas Stock Exchange LLC

(the “Exchange” or “TXSE”) filed with the Securities and Exchange Commission

(“Commission”) the proposed rule change as described in Items I, II and III below, which Items

have been prepared by the Exchange. The Commission is publishing this notice to solicit

comments on the proposed rule change from interested persons.

Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed

Rule Change

The Exchange is filing with the Securities and Exchange Commission (“Commission”) a

proposed rule change to adopt connectivity fees for physical connectivity at the primary and

disaster recovery facilities, as well as connectivity fees for logical connectivity on the Texas

Stock Exchange LLC (the “Exchange” or “TXSE”). The Exchange proposes to implement the

rule change upon commencement of its operations as a national securities exchange. 3

The text of the proposed rule change is available on the Commission’s website

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

17 CFR 240.19b-4.

This proposal was initially filed on July 29, 2026, as SR-TXSE-2026-016, and subsequently withdrawn and

replaced with the instant filing.

(https://www.sec.gov/rules/sro.shtml) at the Exchange’s website

(https://www.txse.com/regulations/rules-filings), and at the principal office of the Exchange.

II.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the

Proposed Rule Change

In its filing with the Commission, the Exchange included statements concerning the

purpose of and basis for the proposed rule change and discussed any comments it received on the

proposed rule change. The text of these statements may be examined at the places specified in

Item IV below. The Exchange has prepared summaries, set forth in Sections A, B, and C below,

of the most significant parts of such statements.

Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis

for, the Proposed Rule Change

Purpose

On July 11, 2012, the Commission adopted Rule 613 of Regulation NMS, which required

the self-regulatory organizations (“SROs”) to submit a national market system (“NMS”) plan to

create, implement and maintain a consolidated audit trail 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.4 On November 15, 2016, the

Commission approved the CAT NMS Plan.5 Under the CAT NMS Plan, the Operating

Committee has the discretion to establish funding for CAT LLC to operate the CAT, including

establishing fees for Industry Members to be assessed by CAT LLC that would be implemented

on behalf of CAT LLC by the Participants.6 On September 5, 2025, CAT LLC proposed a

Securities Exchange Act Rel. No. 67457 (July 18, 2012), 77 Fed. Reg. 45721 (Aug. 1, 2012) (“Rule 613

Adopting Release”).

Securities Exchange Act Rel. No. 79318 (Nov. 15, 2016), 81 Fed. Reg. 84696 (Nov. 23, 2016) (“CAT

NMS Plan Approval Order”).

Section 11.1(b) of the CAT NMS Plan.

revised funding model to fund the CAT (“CAT Funding Model”).7 On March 16, 2026, the

Commission approved the CAT Funding Model, after concluding that the model satisfied the

requirements of Section 11A of the Exchange Act and Rule 608 thereunder. 8

The CAT Funding Model provides a framework for the recovery of the costs to create,

develop and maintain the CAT, including providing a method for allocating costs to fund the

CAT among Participants and Industry Members. The CAT Funding Model establishes two

categories of fees: (1) CAT fees assessed by CAT LLC and payable by certain Industry Members

to recover a portion of historical CAT costs previously paid by the Participants (“Historical CAT

Assessment” fees); and (2) CAT fees assessed by CAT LLC and payable by Participants and

Industry Members to fund prospective CAT costs (“Prospective CAT Costs” fees).9

Under the CAT Funding Model, “[t]he Operating Committee will establish one or more

fees (each a ‘Historical CAT Assessment’) to be payable by Industry Members with regard to

CAT costs previously paid by the Participants (‘Past CAT Costs’).”10 In establishing a Historical

CAT Assessment, the Operating Committee will determine a “Historical Recovery Period” and

calculate a “Historical Fee Rate” for that Historical Recovery Period. Then, for each month in

which a Historical CAT Assessment is in effect, each CEBB and CEBS would be required to pay

Securities Exchange Act Rel. No. 103960 (Sept. 12, 2025), 90 Fed. Reg. 44910 (Sept. 17, 2025).

Securities Exchange Act Rel. No. 105003 (Mar. 16, 2026), 91 Fed. Reg. 13410 (Mar. 29, 2026) (“CAT

Funding Model Approval Order”). This CAT Funding Model replaced the prior funding model that was

approved by the Commission on September 6, 2023. Securities Exchange Act Rel. No. 98290 (Sept. 6,

2023), 88 Fed. Reg. 62628 (Sept. 12, 2023).

Under the CAT Funding Model, the Operating Committee may establish one or more Historical CAT

Assessments. Section 11.3(b) of the CAT NMS Plan. This filing only establishes Historical CAT

Assessment 1A related to certain Historical CAT Costs as described herein; it does not address any other

potential Historical CAT Assessment related to other Historical CAT Costs. In addition, under the CAT

Funding Model, the Operating Committee also may establish CAT Fees related to CAT costs going

forward. Section 11.3(a) of the CAT NMS Plan. This filing does not address any potential CAT Fees

related to CAT costs going forward. Any such other fee for any other Historical CAT Assessment or CAT

Fee for Prospective CAT Costs will be subject to a separate fee filing.

Section 11.3(b) of the CAT NMS Plan.

the fee – the Historical CAT Assessment – for each transaction in Eligible Securities executed by

the CEBB or CEBS from the prior month as set forth in CAT Data, where the Historical CAT

Assessment for each transaction will be calculated by multiplying the number of executed

equivalent shares in the transaction by one-third and by the Historical Fee Rate. 11

Each Historical CAT Assessment to be paid by CEBBs and CEBSs is designed to

contribute toward the recovery of two-thirds of the Historical CAT Costs. Because the

Participants previously have paid Past CAT Costs via loans to the Company, the Participants

would not be required to pay any Historical CAT Assessment. In lieu of a Historical CAT

Assessment, the Participants’ one-third share of Historical CAT Costs will be paid by the

cancellation of loans made by the Participants to the Company on a pro rata basis based on the

outstanding loan amounts due under the loans, instead of through the payment of a CAT fee. 12

In addition, the Participants also will be 100% responsible for certain Excluded Costs (as

discussed below).

CAT LLC proposes to charge CEBBs and CEBSs (as described in more detail below)

Historical CAT Assessment 1A to recover certain historical CAT costs incurred prior to January

1, 2022, in accordance with the CAT Funding Model. To implement this fee on behalf of CAT

LLC, the CAT NMS Plan requires the Participants to “file with the SEC under Section 19(b) of

the Exchange Act any such fees on Industry Members that the Operating Committee approves,

and such fees shall be labeled as ‘Consolidated Audit Trail Funding Fees.’”13 The Plan further

states that “Participants will be required to file with the SEC pursuant to Section 19(b) of the

In approving the CAT Funding Model, the Commission stated that, “[i]n the Commission’s view, the

proposed recovery of the Past CAT Costs via the Historical CAT Assessment is appropriate.” CAT

Funding Model Approval Order at 13450.

Section 11.3(b)(ii) of the CAT NMS Plan.

Section 11.1(b) of the CAT NMS Plan.

Exchange Act a filing for each Historical CAT Assessment.”14 Accordingly, the purpose of this

filing is to implement a Historical CAT Assessment on behalf of CAT LLC for Industry

Members, referred to as Historical CAT Assessment 1A, in accordance with the CAT NMS

Plan.15

Other Participants in the CAT, previously filed a fee filing to implement Historical CAT

Assessment 1. Based on the fee filing for Historical CAT Assessment 1, Historical CAT

Assessment 1 was expected to be in effect from the first invoice in November 2024 until

$212,039,879.34 (two-thirds of Historical CAT Costs 1) was invoiced to CAT Executing

Brokers collectively. However, Historical CAT Assessment 1 ceased before the entire amount

was invoiced.16 The last invoice for Historical CAT Assessment 1 was provided on December

2025, after only $173,075,024 of the total $212,039,879.34 had been invoiced to Industry

Members.17 Accordingly, $38,964,855.34 of Historical CAT Costs 1 has not been invoiced.

Historical CAT Assessment 1A would seek to recover this outstanding amount of Historical

CAT Costs 1 that has not been invoiced.

(1)

CAT Executing Brokers

Historical CAT Assessment 1A will be charged to each CEBB and CEBS for each

applicable transaction in Eligible Securities.18 The CAT NMS Plan defines a “CAT Executing

Section 11.3(b)(iii)(B)(I) of the CAT NMS Plan.

Note that there may be one or more Historical CAT Assessments. Section 11.3(b) of the CAT NMS Plan.

In response to the Eleventh Circuit’s decision vacating the prior CAT NMS Plan funding model, the last

invoices for Historical CAT Assessment 1 were sent in December 2025 based on November 2025

transactions. See American Securities Association v. SEC, No. 23-13396 (11th Cir. July 25, 2025).

CAT Fee Alert 2025-4 (Nov. 25, 2025).

In its approval order for the CAT Funding Model, the Commission determined that charging CAT fees to

CAT Executing Brokers was appropriate. In reaching this conclusion the Commission noted that the use of

CAT Executing Brokers is appropriate because the CAT Funding Model is based upon the calculation of

executed equivalent shares, and, therefore, charging CAT Executing Brokers would reflect their executing

role in each transaction. Furthermore, the Commission noted that, because CAT Executing Brokers are

Broker” to mean:

(a) with respect to a transaction in an Eligible Security that is executed on an

exchange, the Industry Member identified as the Industry Member responsible for

the order on the buy-side of the transaction and the Industry Member responsible

for the sell-side of the transaction in the equity order trade event and option trade

event in the CAT Data submitted to the CAT by the relevant exchange pursuant to

the Participant Technical Specifications; and (b) with respect to a transaction in an

Eligible Security that is executed otherwise than on an exchange and required to be

reported to an equity trade reporting facility of a registered national securities

association, the Industry Member identified as the executing broker and the

Industry Member identified as the contra-side executing broker in the

TRF/ORF/ADF transaction data event in the CAT Data submitted to the CAT by

FINRA pursuant to the Participant Technical Specifications; provided, however, in

those circumstances where there is a non-Industry Member identified as the contraside executing broker in the TRF/ORF/ADF transaction data event or no contraside executing broker is identified in the TRF/ORF/ADF transaction data event,

then the Industry Member identified as the executing broker in the TRF/ORF/ADF

transaction data event would be treated as CAT Executing Broker for the Buyer and

for the Seller.19

already identified in transaction reports from the exchanges and FINRA’s equity trade reporting facilities

recorded in CAT Data, charging CAT Executing Brokers could streamline the billing process. CAT

Funding Model Approval Order at 13413.

Section 1.1 of the CAT NMS Plan. In its approval order for the CAT Funding Model, the Commission

“recognize[d] that Industry Members may pass-through CAT fees for customer executed volume.” See

CAT Funding Model Approval Order at 13424.

The following fields of the Participant Technical Specifications indicate the CAT

Executing Brokers for the transactions executed on an exchange.

Equity Order Trade (EOT) 20

Field

Data Type

Description

Name

12.n.8/

member

13.n.8

Include

Key

Member

The identifier for the member firm that

Alias

is responsible for the order on this side

of the trade.

Not required if there is no order for the

side as indicated by the

NOBUYID/NOSELLID instruction.

This must be provided if orderID is

provided.

Option Trade (OT)21

Field

Data Type

Description

Name

16.n.13 /

member

Include

Key

Member

The identifier for the member firm that

See Table 23, Section 4.7 (Order Trade Event) of the CAT Reporting Technical Specifications for Plan

Participants, Version 4.2.0-r2 (Feb. 24, 2026), https://www.catnmsplan.com/sites/default/files/202602/02.24.2026-CAT_Reporting_Technical_Specifications_for_Participants_4.2.0-r2.pdf (“CAT Reporting

Technical Specifications for Plan Participants”).

See Table 52, Section 5.2.5.1 (Simple Option Trade Event) of the CAT Reporting Technical Specifications

for Plan Participants.

17.n.13

Alias

is responsible for the order

In addition, the following fields of the Participant Technical Specifications would indicate the

CAT Executing Brokers for the transactions executed otherwise than on an exchange.

TRF/ORF/ADF Transaction Data Event (TRF) 22

Field Name

Data Type

Description

Include

Key

reportingExecutingMpid

Member

MPID of the executing party

Member

MPID of the contra-side

Alias

executing party.

Alias

contraExecutingMpid

(2)

Calculation of Fee Rate for Historical CAT Assessment 1A

The Operating Committee determined the fee rate to be used in calculating Historical

CAT Assessment 1A based on the Historical CAT Costs for Historical CAT Assessment 1A and

the projected total executed share volume of all transactions in Eligible Securities for the

Historical Recovery Period for Historical CAT Assessment 1A (“Historical Recovery Period

1A”), as discussed in detail below. Based on this calculation, the Operating Committee has

determined that the fee rate for Historical CAT Assessment 1A would be $0.000002, as

discussed in detail below.

(A)

Executed Equivalent Shares for Transactions in Eligible

See Table 62, Section 6.1 (TRF/ORF/ADF Transaction Data Event) of the CAT Reporting Technical

Specifications for Plan Participants.

Securities

Under the CAT NMS Plan, for purposes of calculating each Historical CAT Assessment,

executed equivalent shares in a transaction in Eligible Securities will be reasonably counted as

follows: (1) each executed share for a transaction in NMS Stocks will be counted as one

executed equivalent share; (2) each executed contract for a transaction in Listed Options will be

counted based on the multiplier applicable to the specific Listed Options (i.e., 100 executed

equivalent shares or such other applicable multiplier); and (3) each executed share for a

transaction in OTC Equity Securities shall be counted as 0.01 executed equivalent share. 23

(B)

Historical CAT Costs

The CAT NMS Plan states that “[t]he Operating Committee will reasonably determine

the Historical CAT Costs sought to be recovered by each Historical CAT Assessment, where the

Historical CAT Costs will be Past CAT Costs minus Past CAT Costs reasonably excluded from

Historical CAT Costs by the Operating Committee. Each Historical CAT Assessment will seek

to recover from CAT Executing Brokers two-thirds of Historical CAT Costs incurred during the

period covered by the Historical CAT Assessment.”24 Historical CAT Assessment 1, the original

Historical CAT Assessment, was implemented to recover $212,039,879.34 of Historical CAT

Costs 1 from CEBBs and CEBSs collectively. As described in the fee filings for Historical CAT

Assessment 1, Historical CAT Costs 1 of $212,039,879.34 includes Past CAT Costs of

$401,312,909 minus certain Excluded Costs of $83,253,090. As described in the filing for

Historical CAT Assessment 1, Participants collectively will remain responsible for one-third of

Section 11.3(a)(i)(B) and 11.3(b)(i)(B) of the CAT NMS Plan. In approving the CAT Funding Model, the

Commission concluded that “in the Commission’s view, the use of executed equivalent share volume as the

basis for determining and allocating CAT costs during the two-year interim period is appropriate and consistent

with the funding principles of the CAT NMS Plan.” CAT Funding Model Approval Order at 13427.

Section 11.3(b)(i)(C) of the CAT NMS Plan.

Historical CAT Costs 1 (which is $106,019,939.67), plus the Excluded Costs of $83,253,090.

Accordingly, CEBBs collectively will be responsible for one-third of Historical CAT Costs 1

(which is $106,019,939.67), and CEBSs collectively will be responsible for one-third of

Historical CAT Costs 1 (which is $106,019,939.67), for a total of $212,039,879.34. CEBBs and

CEBSs collectively have been invoiced for $173,075,024 of the $212,039,879.34 of Historical

CAT Costs 1 via Historical CAT Assessment 1. Accordingly, Historical CAT Assessment 1A

would charge CEBBs and CEBSs collectively for the remaining $38,964,855.34 of Historical

CAT Costs 1 that was not invoiced to CEBBs and CEBSs via Historical CAT Assessment 1.

Historical CAT Assessment 1A will be designed to recover the remaining $38,964,855.34 of

Historical CAT Costs 1 from CEBBs and CEBSs collectively, with CEBBs collectively

responsible for $19,482,427.67 and CEBSs collectively responsible for $19,482,427.67.

(i)

Historical CAT Costs 1

The following describes in detail Historical CAT Costs 1 with regard to four separate

historical time periods as well as Past CAT Costs excluded from Historical CAT Costs 1

(“Excluded Costs”). The following cost details are provided in accordance with the requirement

in the CAT NMS Plan to provide in the fee filing “a brief description of the amount and type of

Historical CAT Costs, including (1) the technology line items of cloud hosting services,

operating fees, CAIS operating fees, change request fees, and capitalized developed technology

costs, (2) legal, (3) consulting, (4) insurance, (5) professional and administration and (6) public

relations costs.”25 Each of the costs described below are reasonable, appropriate and necessary

for the creation, implementation and maintenance of CAT. These Historical CAT Costs 1 are the

same as described in the fee filing for Historical CAT Assessment 1.

Section 11.3(b)(iii)(B)(II)(B) of the CAT NMS Plan.

(a)

Historical CAT Costs Incurred Prior to June 22,

2020 (Pre-FAM Costs)

Historical CAT Costs 1 would include costs incurred by CAT prior to June 22, 2020

(“Pre-FAM Period”) and already funded by the Participants, excluding Excluded Costs

(described further below). Historical CAT Costs 1 would include costs for the Pre-FAM Period

of $124,290,730. The Participants would remain responsible for one-third of this cost (which

they have previously paid) ($41,430,243.33), and Industry Members would be responsible for the

remaining two-thirds, with CEBBs paying one-third ($41,430,243.33) and CEBSs paying onethird ($41,430,243.33). These costs do not include Excluded Costs, as discussed further below.

The following table breaks down Historical CAT Costs 1 for the Pre-FAM Period into the

categories set forth in Section 11.3(b)(iii)(B)(II) of the CAT NMS Plan.

Operating Expense

Historical CAT Costs 1 for

Pre-FAM Period (Prior to

June 22, 2020)**

Capitalized Developed

$51,847,150

Technology Costs*

Technology Costs:

$33,568,579

Cloud Hosting Services

$10,268,840

Operating Fees

$21,085,485

CAIS Operating Fees

$2,072,908

Change Request Fees

$141,346

Legal

$19,674,463

Consulting

$17,013,414

Insurance

$880,419

Professional and administration

$1,082,036

Public relations

$224,669

Total Operating Expenses

$124,290,730

* The non-cash amortization of these capitalized developed technology

costs of $2,115,545 incurred during the period prior to June 22, 2020 have

been appropriately excluded from the above table. 26

** The costs described in this table of costs for the Pre-FAM Period were

calculated based upon CAT LLC’s review of applicable bills and invoices

and related financial statements. CAT LLC financial statements are

available on the CAT website. In addition, in accordance with Section

6.6(a)(i) of the CAT NMS Plan, in 2018 CAT LLC provided the SEC with

“an independent audit of fees, costs, and expenses incurred by the

Participants on behalf of the Company prior to the Effective Date of the

Plan that will be publicly available.” The audit is available on the CAT

website.

The Pre-FAM Period includes a broad range of CAT-related activity from 2012 through

June 22, 2020, including the evaluation of the requirements of SEC Rule 613, the development

of the CAT NMS Plan, the evaluation and selection of the initial and successor Plan Processors,

the commencement of the creation and implementation of the CAT to comply with Rule 613 and

With respect to certain costs that were “appropriately excluded,” such excluded costs relate to the

amortization of capitalized technology costs, which are amortized over the life of the Plan Processor

Agreement. As such costs have already been otherwise reflected in the filing, their inclusion would double

count the capitalized technology costs. In addition, amortization is a non-cash expense.

the CAT NMS Plan, including technical specifications for transaction reporting and regulatory

access, and related technology and the commencement of reporting to the CAT. The following

describes the costs for each of the categories for the Pre-FAM Period.

(I)

Technology Costs – Cloud Hosting Services

The $10,268,840 in technology costs for cloud hosting services represent costs incurred

for services provided by the cloud services provider for the CAT, Amazon Web Services, Inc.

(“AWS”), during the Pre-FAM Period.

As part of its proposal for acting as the successor Plan Processor for the CAT, FCAT

selected AWS as a subcontractor to provide cloud hosting services. In 2019, after reviewing the

capabilities of other cloud services providers, FCAT determined that AWS was the only cloud

services provider at that time sufficiently mature and capable of providing the full suite of

necessary cloud services for the CAT, including, for example, the security, resiliency and

complexity necessary for the CAT computing requirements. The use of cloud hosting services is

standard for this type of high-volume data activity and reasonable and necessary for

implementation of the CAT, particularly given the substantial data volumes associated with the

CAT.

Under the Plan Processor Agreement with FCAT, CAT LLC is required to pay FCAT the

fees incurred by the Plan Processor for cloud hosting services provided by AWS as FCAT’s

subcontractor on a monthly basis for the cloud hosting services, and FCAT, in turn, pays such

fees to AWS. The fees for cloud hosting services were negotiated by FCAT on an arm’s length

basis with the goals of managing cost and receiving services required to comply with the CAT

NMS Plan and Rule 613, taking into consideration a variety of factors, including the expected

volume of data, the breadth of services provided and market rates for similar services. The fees

for cloud hosting services during the Pre-FAM Period were paid to FCAT by CAT NMS, LLC 27

and subsequently Consolidated Audit Trail, LLC (as previously noted, both entities are referred

to generally as “CAT LLC”),28 and FCAT, in turn, paid AWS. CAT LLC was funded via loan

contributions by the Participants. 29

AWS was engaged by FCAT to provide a broad array of cloud hosting services for the

CAT, including data ingestion, data management, and analytic tools. Services provided by AWS

include storage services, databases, compute services and other services (such as networking,

management tools and DevOps tools). AWS also was engaged to provide various environments

for CAT, such as development, performance testing, test and production environments.

The cost for AWS services for the CAT is a function of the volume of CAT Data. The

greater the amount of CAT Data, the greater the cost of AWS services to the CAT. During the

Pre-FAM Period from the engagement of AWS in February 2019 through June 2020, AWS

provided cloud hosting services for volumes of CAT Data far in excess of the volume predictions

set forth in the CAT NMS Plan. The CAT NMS Plan states, when all CAT Reporters are

submitting their data to the CAT, it “must be sized to receive[,] process and load more than 58

billion records per day,”30 and that “[i]t is expected that the Central Repository will grow to more

CAT NMS, LLC was formed by FINRA and the U.S. national securities exchanges to implement the

requirements of SEC Rule 613 under the Exchange Act. SEC Rule 613 required the SROs to jointly submit

to the SEC the CAT NMS Plan to create, implement and maintain the CAT. The SEC approved the CAT

NMS Plan on November 15, 2016. CAT NMS Plan Approval Order.

On August 29, 2019, the Participants formed a new Delaware limited liability company named

Consolidated Audit Trail, LLC for the purpose of conducting activities related to the CAT from and after

the effectiveness of the proposed amendment of the CAT NMS Plan to replace CAT NMS, LLC. See

Securities Exchange Act Rel. No. 87149 (Sept. 27, 2019), 84 Fed. Reg. 52905 (Oct. 3, 2019).

For each of the costs paid by CAT NMS, LLC and Consolidated Audit Trail, LLC as discussed throughout

this filing, CAT NMS, LLC and Consolidated Audit Trail, LLC paid these costs via loan contributions by

the Participants to CAT NMS, LLC and Consolidated Audit Trail, LLC, respectively.

Appendix D-4 of the CAT NMS Plan at n.262.

than 29 petabytes of raw, uncompressed data.”31 However, the volume of CAT Data for the PreFAM Period was far in excess of these predicted levels. By the end of this period, data

submitted to the CAT included options and equities Participant Data, 32 Phase 2a and Phase 2b

Industry Member Data33 (including certain linkages), as well as SIP Data,34 reference data and

other types of Other Data. 35 The following chart provides data regarding the average daily

volume, cumulative total events, total compute hours and storage footprint of the CAT during the

Pre-FAM Period.36

Date Range: 3/29/19 to

Date Range: 4/13/20 to

4/12/20*

6/21/20**

Average Daily Volume in

Billions

Participant – Equities

Participant – Options

981

Industry Member –

0.04

Equities

Industry Member –

Options

SIP – Options & Equities

Appendix D-5 of the CAT NMS Plan.

See Section 6.3(d) of the CAT NMS Plan.

See Securities Exchange Rel. No. 88702 (Apr. 20, 2020), 85 Fed. Reg. 23075 (Apr. 24, 2020) (“Phased

Reporting Exemptive Relief Order”) for a description of Phase 2a and Phase 2b Industry Member Data.

See Section 6.5(a)(ii) of the CAT NMS Plan.

See Appendix C-109 of the CAT NMS Plan.

Note that the volume data described in this table does not include CAIS data.

Average Total Daily

149

166

3,890

4,990

N/A***

5,663,247

30.57

47.96

Volume

Cumulative Total Events for

the Period

Total Compute Hours for the

Period

Storage Footprint at End of

Period (Petabytes)

* The Participant Equities in RSA format.

** Start of Industry Member reporting on 4/13/2020

*** Note that, although there were compute hours during this period, data related to such

compute hours are no longer available in current data.

(II)

Technology Costs – Operating Fees

The $21,085,485 in technology costs related to operating fees represent costs incurred

with regard to activities of FCAT as the Plan Processor. Operating fees are those fees paid by

CAT LLC to FCAT as the Plan Processor to operate and maintain the CAT and to perform

business operations related to the system, including compliance, security, testing, training,

communications with the industry (e.g., management of the FINRA CAT Helpdesk, FAQs,

website and webinars) and program management as required by the CAT NMS Plan.

FCAT was selected to assume the role of the successor Plan Processor. Prior to this

selection, the Participants engaged in discussions with two prior Bidders 37 for the successor Plan

Processor role. The Operating Committee formed a Selection Subcommittee in accordance with

Section 4.12 of the CAT NMS Plan to evaluate and review Bids and to make a recommendation

to the Operating Committee with respect to the selection of the successor Plan Processor. In an

April 9, 2019 letter to the Commission, the Participants described the reasons for its selection of

the successor Plan Processor:

The Selection Subcommittee considered factors including, but not limited to,

the following, in recommending FINRA to the Operating Committee as the

successor Plan Processor:

FINRA’s specialized technical expertise and capabilities in the

area of broker-dealer technology;

The need to appoint a successor Plan Processor with

specialized expertise to develop, implement, and maintain the CAT

System in accordance with the CAT NMS Plan and SEC Rule 613;

FINRA’s detailed proposal in response to CATLLC’s recent

inquiries; and

FINRA’s data query and analytics systems demonstration to

the Participants.

Based on these and other factors, the Selection Subcommittee determined that

FINRA was the most appropriate Bidder to become the successor Plan

Processor.38

The term “Bidder” is defined in Section 1.1 of the CAT NMS Plan.

Letter from Michael J. Simon, Chair, CAT NMS, LLC Operating Committee, to Brent J. Fields, Secretary,

SEC (Apr. 9, 2019), https://www.sec.gov/divisions/marketreg/rule613-info-notice-of-plan-processor-

On February 26, 2019, the Operating Committee (with FINRA recusing itself) voted to select

FINRA as the successor Plan Processor pursuant to Section 6.1(t) of the CAT NMS Plan. 39 On

March 29, 2019, CAT LLC and FCAT (a wholly owned subsidiary of FINRA) entered into a

Plan Processor Agreement pursuant to which FCAT would perform the functions and duties of

the Plan Processor contemplated by the CAT NMS Plan, including the management and

operation of the CAT.

Under the Plan Processor Agreement with FCAT, CAT LLC is required to pay FCAT a

negotiated monthly fixed price for the operation of the CAT. This fixed price contract was

negotiated on an arm’s length basis with the goals of managing costs and receiving services

required to comply with the CAT NMS Plan and Rule 613, taking into consideration a variety of

factors, including the breadth of services provided and market rates for similar types of activity.

The operating fees during the Pre-FAM Period were paid to FCAT by CAT LLC.

From March 29, 2019 (the commencement of the Plan Processor Agreement with FCAT)

through June 22, 2020 (the end of the Pre-FAM Period), the Plan Processor’s activities with

respect to the CAT included the following:

•

Commenced user acceptance testing with market data provided by Exegy Incorporated

(“Exegy”), a market data provider;40

•

Published Technical Specifications and related reporting scenarios documents for Phase

2a, 2b and 2c reporting for Industry Members, after substantial engagement with SEC

staff, Industry Members and Participants on the Technical Specifications;

selection-040919.pdf.

Id.

The use of Exegy to provide market data, including the costs and market data provided, is discussed below

in Section 3(a)(2)(B)(a)(IX).

•

Facilitated testing for Phase 2a and 2b reporting for Industry Members;

•

Began developing Technical Specifications and related reporting scenarios documents for

Phase 2d reporting for Industry Members, after substantial engagement with SEC staff,

Industry Members and Participants on the Technical Specifications;

•

Published Central Repository Access Technical Specifications, and provided

regulator access to test data from Industry Members;

•

Facilitated Participant exchanges that support options market makers sending Quote Sent

Time to the CAT;

•

Facilitated the introduction of OPRA and Options NBBO Other Data to CAT;

•

Addressed compliance items, including drafting CAT policies and procedures, and

addressing requirements under Regulation SCI;

•

Provided support to the Operating Committee, the Compliance Subcommittee and CAT

working groups;

•

Assisted with interpretive efforts and exemptive requests regarding the CAT NMS Plan;

•

Oversaw the security of the CAT;

•

Monitored the operation of the CAT, including with regard to Participant and Industry

Member reporting;

•

Provided support to subcontractors under the Plan Processor Agreement;

•

Provided support in discussions with Participants, the SEC and its staff;

•

Operated the FINRA CAT Helpdesk, which is the primary source for answers to

questions about CAT, including questions regarding: clock synchronization, firm

reporting responsibilities, interpretive questions, technical specifications for reporting to

CAT and more;

•

Facilitated communications with the industry, including via FAQs, CAT Alerts,

meetings, presentations and webinars;

•

Administered the CAT website and all of its content; 41 and

•

Provided technical support and assistance with connectivity, data access, and user

support, including the use of CAT Data and query tools, for Participants and the SEC

staff.

(III)

Technology Costs – CAIS Operating

Fees

The $2,072,908 in technology costs related to CAIS operating fees represent the fees paid

for FCAT’s subcontractor charged with the development and operation of CAT’s Customer and

Account Information System (“CAIS”). The CAT is required under the CAT NMS Plan to

capture and store Customer Identifying Information and Customer Account Information in a

database separate from the transactional database and to create a CAT-Customer-ID for each

Customer.

During the Pre-FAM Period, the CAIS-related services were provided by the Plan

Processor through the Plan Processor’s subcontractor, Kingland Systems Incorporation

(“Kingland”). Kingland had experience operating in the securities regulatory technology space,

and as a part of its proposal for acting as the Plan Processor for the CAT, FCAT selected

Kingland as a subcontractor to provide certain CAIS-related services.

Under the Plan Processor Agreement with FCAT, CAT LLC was required to pay to the

The CAT website is https://www.catnmsplan.com.

Plan Processor the fees incurred by FCAT for CAIS-related services provided by FCAT through

Kingland on a monthly basis. FCAT negotiated the fees for Kingland’s CAIS-related services on

an arm’s length basis with the goals of managing costs and receiving services required to comply

with the CAT NMS Plan, taking into consideration a variety of factors, including the services to

be provided and market rates for similar types of activity. The fees for CAIS-related services

during the Pre-FAM Period were paid by CAT LLC to FCAT. FCAT, in turn, paid Kingland.

During the Pre-FAM Period, Kingland began development of the CAIS Technical

Specifications and the building of CAIS. In addition, Kingland also worked on the build related

to the CCID Alternative, an alternative approach to customer information that was not included

in the CAT NMS Plan as originally adopted. 42 Furthermore, Kingland also worked on the

acceleration of the reporting of large trader identifiers (“LTID”) earlier than originally

contemplated during this period, in accordance with exemptive relief granted by the SEC. 43

(IV)

Technology Costs – Change Request

Fees

The technology costs related to change request fees include costs related to certain

modifications, upgrades or other changes to the CAT. Change requests are standard practice and

necessary to reflect operational changes, including changes related to new market developments,

such as new market participants. In general, if CAT LLC determines that a modification,

upgrade or other change to the functionality or service is necessary and appropriate, CAT LLC

will submit a request for such a change to the Plan Processor. The Plan Processor will then

For a discussion of the CCID Alternative, see Securities Exchange Act Rel. No. 88393 (Mar. 17, 2020), 85

Fed. Reg. 16152 (Mar. 20, 2020).

Phased Reporting Exemptive Relief Order at 23079-80.

respond to the request with a proposal for implementing the change, including the cost (if any) of

such a change. CAT LLC then determines whether to approve the proposed change. The change

request costs were paid by CAT LLC to FCAT. During the Pre-FAM Period, CAT LLC incurred

costs of $141,346 related to change requests implemented by FCAT. Such change requests

related to a development fee regarding the OPRA and SIP data feeds, and the reprocessing of

certain exchange data.44

(V)

Technology Costs – Capitalized

Developed Technology Costs

This category of costs includes capitalizable application development costs incurred in

the development of the CAT. The capitalized developed technology costs for the Pre-FAM

Period of $51,847,150 relate to technology provided by the Initial Plan Processor and the

successor Plan Processor.

Initial Plan Processor: Thesys CAT, LLC. The capitalized developed technology costs

related to the Initial Plan Processor include costs incurred with regard to testing for Participant

reporting, Participant reporting to the CAT, a security assessment of the CAT, and the

development of the billing function for the CAT.

On January 17, 2017, the Selection Committee of the CAT NMS Plan selected the Initial

Plan Processor, Thesys Technologies, LLC, for the CAT NMS Plan pursuant to Article V of the

CAT NMS Plan.45 The Participants utilized a request for proposal (“RFP”) to seek proposals to

build and operate the CAT, receiving a number of proposals in response to the RFP. The

Note that CAT LLC also has incurred costs related to specific Industry Members (e.g., reprocessing costs

related to Industry Member reporting errors).

Letter from the Participants to Brent J. Fields, Secretary, SEC (Jan. 18, 2017),

https://www.sec.gov/divisions/marketreg/rule613-info-notice-of-plan-processor-selection.pdf.

Participants carefully reviewed and considered each of the proposals, including holding inperson meetings with each of the Bidders. After several rounds of review, the Participants

selected the Initial Plan Processor in accordance with the CAT NMS Plan, taking into

consideration that the Initial Plan Processor had experience operating in the securities regulatory

technology space, among other considerations. On April 6, 2017, CAT LLC entered into an

agreement with Thesys CAT LLC (“Thesys CAT”), a Thesys affiliate, to perform the functions

and duties of the Plan Processor contemplated by the CAT NMS Plan, including the management

and operation of the CAT. Under the agreement, CAT LLC would pay Thesys CAT a

negotiated, fixed price fee for its role as the Initial Plan Processor. Effective January 30, 2019,

the Plan Processor Agreement with Thesys CAT was terminated, and FCAT was subsequently

selected as the successor Plan Processor.

From January 17, 2017 through January 30, 2019, the time in which Thesys CAT was

engaged for the CAT, but excluding the period from November 15, 2017 through January 30,

2019, the Initial Plan Processor engaged in various activities with respect to the CAT, including

preparing iterative drafts of Participant Technical Specifications, Industry Member Technical

Specifications and the Central Repository Access Technical Specifications. In addition, Thesys

CAT also developed CAT technology, addressed compliance items, including drafting CAT

policies and procedures, addressing Regulation SCI requirements, establishing a CAT

Compliance Officer and a Chief Information Security Officer, addressed security-related matters

for the CAT, and worked towards the initiation of Participant reporting per the Participant

Technical Specifications.

Successor Plan Processor: FCAT. The capitalized developed technology costs related to

FCAT include: (1) development costs incurred during the application development stage to meet

various agreed-upon milestones regarding the CAT, including the completion of go-live

functionality related to options ingestion and validation, equities regulatory services agreement

query tool updates and unlinked options data query, options linkages release, Industry Member

Phase 2a file submission and data integrity (including error corrections), and Industry Member

testing, including reporting relationships, ATS order type management, basic reporting statistics,

SFTP data integrity feedback and error correction; (2) costs related to certain modifications,

upgrades, or other changes to the CAT that were not contemplated by the agreement between

CAT LLC and the Plan Processor, including a one-time development fee for a secure analytics

workspace, a one-time development fee for an Industry Member connectivity solution, and a

one-time development fee for the acceleration of multi-factor authentication; (3) CAIS

implementation fees; and (4) license fees.

(VI)

Legal Costs

The legal costs of $19,674,463 represent the fees paid for legal services provided by two

law firms, Wilmer Cutler Pickering Hale and Dorr LLP (“WilmerHale”) and Pillsbury Winthrop

Shaw Pittman LLP (“Pillsbury”), during the Pre-FAM Period. The legal costs exclude those

costs incurred from November 15, 2017 through November 15, 2018.

Law Firm: WilmerHale. Following the adoption of Rule 613, the Participants determined

it was necessary to engage external legal counsel to advise the Participants with respect to

corporate and regulatory legal matters related to the CAT, including drafting and developing the

CAT NMS Plan. The Participants considered a variety of factors in their analysis of prospective

law firms, including (1) the firm’s qualifications, resources and expertise; (2) the firm’s relevant

experience and understanding of the regulatory matters raised by the CAT and in advising on

matters of similar scope; (3) the composition of the legal team; and (4) professional fees.

Following a series of interviews, the Participants acting as a consortium determined that

WilmerHale was well qualified given the balance of these considerations and engaged

WilmerHale in February 2013.

WilmerHale’s billing rates are negotiated on an annual basis and are determined with

reference to the rates charged by other leading law firms for similar work. The Participants

assess WilmerHale’s performance and review prospective budgets and staffing plans submitted

by WilmerHale on an annual basis. WilmerHale’s compensation arrangements are reasonable

and appropriate, and in line with the rates charged by other leading law firms for similar work.

The legal costs for WilmerHale during the Pre-FAM Period included costs incurred from

2013 until June 22, 2020 to address corporate and regulatory legal matters related to the CAT.

The legal fees for this law firm during the period from February 2013 until the formation of the

CAT NMS, LLC on November 15, 2016 were paid directly by the exchanges and FINRA to

WilmerHale. After the formation of CAT NMS LLC, the legal fees were paid by CAT LLC to

WilmerHale.

After WilmerHale was engaged in 2013 through the end of the Pre-FAM Period on June

22, 2020 (excluding the legal costs from November 15, 2017 through November 15, 2018),

WilmerHale provided legal assistance to the CAT on a variety of matters, including with regard

to the following:

•

Analyzed various legal matters associated with the Selection Plan, and drafted an

amendment to the Selection Plan;

•

Assisted with the RFP and bidding process for the CAT Plan Processor;

•

Analyzed legal matters related to the Development Advisory Group (“DAG”);

•

Drafted the CAT NMS Plan, analyzed various items related to the CAT NMS Plan, and

responded to comment letters on CAT NMS Plan;

•

Provided legal support for the formation of the legal entity, the governance of the CAT,

including governance support prior to the adoption of the CAT NMS Plan, which

involved support for the full committee of exchanges and FINRA as well as

subcommittees of this group (e.g., Joint Subcommittee Group, Technical, Industry

Outreach, Cost and Funding and Other Products) and the DAG, governance support

during the transition to the new governance structure under the CAT NMS Plan, and

governance support after the adoption of the CAT NMS Plan, which involved support for

the Operating Committee, Advisory Committee, Compliance Subcommittee and CAT

working groups;

•

Assisted with the development of the CAT funding model and drafted related

amendments of the CAT NMS Plan and related filings;

•

Negotiated and drafted the plan processor agreements with the Initial Plan Processor and

the successor Plan Processor;

•

Provided assistance with compliance with Regulation SCI;

•

Assisted with clock synchronization study;

•

Provided assistance with respect to the establishment of CAT security;

•

Drafted exemptive requests from CAT NMS Plan requirements, including with regard to

options market maker quotes, Customer IDs, CAT Reporter IDs, linking allocations to

executions, CAT reporting timeline, FDIDs, customer and account information,

timestamp granularity, small industry members, data facility reporting and linkage,

allocation reports, SRO-assigned market participant identifiers and cancelled trade

indicators, thereby seeking to implement changes that would be cost effective and benefit

Industry Members and Participants;

•

Assisted with the Implementation Plan required pursuant to Section 6.6(c)(i) of the CAT

NMS Plan;

•

Provided advice regarding CAT policies and procedures;

•

Analyzed the SEC’s amendment of the CAT NMS Plan regarding financial

accountability;

•

Provided interpretations of and related to the CAT NMS Plan;

•

Provided support with regard to discussions with the SEC and its staff, including with

respect to addressing interpretive and implementation issues; and

•

Assisted with third-party vendor agreements.

Law Firm: Pillsbury. The legal costs for CAT during the Pre-FAM Period include costs

related to the legal services performed by Pillsbury. The Participants interviewed this law firm

as well as other potential law firms to provide legal assistance regarding certain liability matters.

After considering a variety of factors in its analysis, including the relevant expertise and fees of

the firm, CAT LLC determined to hire Pillsbury in April 2019. The hourly fee rates for this law

firm were in line with market rates for specialized legal expertise. The legal fees were paid by

CAT LLC to Pillsbury. The legal costs for Pillsbury during the Pre-FAM Period included costs

incurred from April 2019 until June 22, 2020 to address legal matters regarding the agreements

between CAT Reporters and CAT LLC concerning certain terms associated with CAT Reporting

(the “Reporter Agreement”). During that period, Pillsbury advised CAT LLC regarding

applicable legal matters, participated in negotiations between the Participants and Industry

Members, participated in meetings with senior SEC staff, the Chairman, and Commissioners,

represented CAT LLC and the Participants in an SEC administrative proceeding, and drafted a

proposed amendment to the CAT NMS Plan regarding liability matters. Liability issues related

to the CAT are important matters that needed to be resolved and clarified. CAT LLC’s efforts to

seek such resolution and clarity work to the benefit of Participants, Industry Members and other

market participants. Moreover, litigation involving CAT LLC is an expense of operating the

CAT, and, therefore, is appropriately an obligation of both Participants and Industry Members

under the CAT Funding Model.

(VII) Consulting Costs

The consulting costs of $17,013,414 represent the fees paid to the consulting firm

Deloitte & Touche LLP (“Deloitte”) as project manager during the Pre-FAM Period, from

October 2012 until June 22, 2020. These consulting costs include costs for advisory services

related to the operation of the CAT, and meeting facilitation and communications coordination,

vendor support and financial analyses.

To help facilitate project management given the unprecedented complexity and scope of

the CAT project, the Participants determined it was necessary to engage a consulting firm to

assist with the CAT project in 2012, following the adoption of Rule 613. A variety of factors

were considered in the analysis of prospective consulting firms, including (1) the firm’s

qualifications, resources, and expertise; (2) the firm’s relevant experience and understanding of

the regulatory issues raised by the CAT and in coordinating matters of similar scope; (3) the

composition of the consulting team; and (4) professional fees. Following a series of interviews,

the exchanges and FINRA as a consortium determined that Deloitte was well qualified given the

balance of these considerations and engaged Deloitte on October 1, 2012.

Deloitte’s fee rates are negotiated on an annual basis and are in line with market rates for

this type of specialized consulting work. CAT LLC assesses Deloitte’s performance and reviews

prospective budgets and staffing plans submitted by Deloitte on an annual basis. Deloitte’s

compensation arrangements are reasonable and appropriate, and in line with the rates charged by

other leading consulting firms for similar work.

The consulting costs for CAT during the period from 2012 until the formation of the

CAT NMS, LLC were paid directly by the Participants to Deloitte. After the formation of CAT

NMS, LLC, the consulting fees were paid by CAT LLC to Deloitte. CAT LLC reviewed the

consulting fees each month and approved the invoices.

After Deloitte was hired in 2012 through the end of the Pre-FAM Period on June 22,

2020 (excluding the consulting costs from November 15, 2017 through November 15, 2018),

Deloitte provided a variety of consulting services, including the following:

•

Established and implemented program operations for the CAT project, including the

program management office and workstream design;

•

Assisted with the Plan Processor selection process, including but not limited to, the

development of the RFP and the bidder evaluation process, and facilitation and

consolidation of the Participant’s independent reviews;

•

Assisted with the development and drafting of the CAT NMS Plan, including conducting

cost-benefit studies, analyzing OATS and CAT requirements, and drafting appendices to

the Plan;

•

Assisted with cost and funding-related activities for the CAT, including the development

of the CAT funding model and assistance with loans and the CAT bank account for CAT

funding;

•

Provided governance support to the CAT, including governance support prior to the

adoption of the CAT NMS Plan, which involved support for the full committee of

exchanges and FINRA as well as subcommittees of this group (e.g., Joint Subcommittee

Group, Technical, Industry Outreach, Cost and Funding and Other Products) and the

DAG, governance support during the transition to the new governance structure under the

CAT NMS Plan and governance support after the adoption of the CAT NMS Plan, which

involved support for the Operating Committee, Advisory Committee, Compliance

Subcommittee and CAT working groups;

•

Provided support to the Operating Committee, the Chair of the Operating Committee and

the Leadership Team, including project management support, coordination and planning

for meetings and communications, and interfacing with law firms and the SEC;

•

Assisted with industry outreach and communications regarding the CAT, including

assistance with industry outreach events, the development of the CAT website, frequently

asked questions, and coordinating with the CAT LLC’s public relations firm;

•

Provided support for updating the SEC on the progress of the development of the CAT;

•

Provided active planning and coordination with and support for the Initial Plan Processor

with regard to the development of the CAT, and reported to the Participants on the

progress;

•

Coordinated efforts regarding the selection of the successor Plan Processor;

•

Assisted with the transition from the Initial Plan Processor to the successor Plan

Processor, including support for the Operating Committee and successor Plan Processor

for the new role; and

•

Provided support for third-party vendors for the CAT, including FCAT, Anchin and the

law firms engaged by CAT LLC.

(VIII) Insurance

The insurance costs of $880,419 represent the cost incurred for insurance for CAT during

the Pre-FAM Period. Commencing in 2020, CAT LLC performed an evaluation of various

potential alternatives for CAT insurance policies, which included engaging in discussions with

different insurance companies and conducting cost comparisons of various alternative

approaches to insurance. Based on an analysis of a variety of factors, including coverage and

premiums, CAT LLC determined to purchase cyber security liability insurance, directors’ and

officers’ liability insurance, and errors and omissions liability insurance from USI Insurance

Services LLC (“USI”). Such policies are standard for corporate entities, and cyber security

liability insurance is important for the CAT System. The annual premiums for these policies

were competitive for the coverage provided. The annual premiums were paid by CAT LLC to

USI.

(IX)

Professional and Administration

Costs

In adopting the CAT NMS Plan, the Commission amended the Plan to add a requirement

that CAT LLC’s financial statements be prepared in compliance with GAAP, audited by an

independent public accounting firm, and made publicly available. 46 The professional and

administration costs include costs related to accounting and accounting advisory services to

support the operating and financial functions of CAT, financial statement audit services by an

independent accounting firm, preparation of tax returns, and various cash management and

Section 9.2 of the CAT NMS Plan.

treasury functions. In addition, professional and administration costs for the Pre-FAM Period

include costs related to the receipt of market data and a security assessment. The costs for these

professional and administration services were $1,082,036 for the Pre-FAM Period.

Financial Advisory Firm: Anchin Accountants & Advisors (“Anchin”). CAT LLC

determined to hire a financial advisory firm, Anchin, to assist with financial matters for the CAT

in April 2018. CAT LLC interviewed Anchin as well as other potential financial advisory firms

to assist with the CAT project, considering a variety of factors in its analysis, including the

firm’s relevant expertise and fees. The hourly fee rates for this firm were in line with market

rates for these financial advisory services. The fees for these services were paid by CAT LLC to

Anchin.

After Anchin was hired in April 2018 through the end of the Pre-FAM Period on June 22,

2020 (excluding the period from April 2018 through November 15, 2018), Anchin provided a

variety of services, including the following:

•

Developed, updated and maintained internal controls;

•

Provided cash management and treasury functions;

•

Facilitated bill payments;

•

Provided monthly bookkeeping;

•

Reviewed vendor invoices and documentation in support of cash disbursements;

•

Provided accounting research and consultations on various accounting, financial

reporting and tax matters;

•

Addressed not-for-profit tax and accounting considerations;

•

Prepared tax returns;

•

Addressed various accounting, financial and operating inquiries from Participants;

•

Developed and maintained quarterly and annual operating and financial budgets,

including budget to actual fluctuation analyses;

•

Addressed accounting and financial reporting matters relating to the transition

from CAT NMS, LLC to Consolidated Audit Trail, LLC, including supporting the

dissolution of CAT NMS, LLC;

•

Supported compliance with the CAT NMS Plan;

•

Worked with and provided support to the Operating Committee and various CAT

working groups;

•

Prepared monthly, quarterly and annual financial statements;

•

Supported the annual financial statement audits by an independent auditor;

•

Reviewed historical costs from inception; and

•

Provided accounting and financial information in support of SEC filings.

Accounting Firm: Grant Thornton LLP (“Grant Thornton”). In February 2020, CAT

LLC determined to engage an independent accounting firm, Grant Thornton, to complete the

audit of CAT LLC’s financial statements, in accordance with the requirements of the CAT NMS

Plan. CAT LLC interviewed this firm as well as another potential accounting firm to audit CAT

LLC’s financial statements, considering a variety of factors in its analysis, including the relevant

expertise and fees of each of the firms. CAT LLC determined that Grant Thornton was wellqualified for the proposed role given the balance of these considerations. Grant Thornton’s fixed

fee rate compensation arrangement was reasonable and appropriate, and in line with the market

rates charged for these types of accounting services. The fees for these services were paid by

CAT LLC to Grant Thornton.

Market Data Provider: Exegy. The professional and administrative costs for the Pre33

FAM Period included costs related to the receipt of certain market data for the CAT pursuant to

an agreement with the CAT LLC, and then with FCAT. Exegy provided SIP Data required by

the CAT NMS Plan.

After performing an analysis of the available market data vendors to confirm that the data

provided met the SIP Data requirements of the CAT NMS Plan and comparing the costs of the

vendors providing the required SIP Data, CAT LLC determined to purchase market data from

Exegy from July 2018 through March 2019. CAT LLC determined that, unlike certain other

vendors, Exegy provided market data that included all data elements required by the CAT NMS

Plan.47 In addition, the fees were reasonable and in line with market rates for the market data

received. Accordingly, the professional and administrative costs for the Pre-FAM Period include

the Exegy costs from November 2018 through March 2019. The cost of the market data was

reasonable for the market data received. The fees for the market data were paid directly by CAT

LLC to Exegy.

Upon the termination of the contract between CAT LLC and Exegy, FCAT entered into a

contract with Exegy to purchase the required market data from Exegy in July 2019. All costs

under the contract were treated as a direct pass through cost to CAT LLC. Therefore, the fees for

the market data were paid by CAT LLC to FCAT, who, in turn, paid Exegy for the market data.

Security Assessment: RSM US LLP (“RSM”). The operating costs for the Pre-FAM

Period include costs related to a third party security assessment of the CAT performed by RSM.

The assessment was designed to verify and validate the effective design, implementation, and

operation of the controls specified by NIST Special Publication 800-53, Revision 4 and related

standards and guidelines. Such a security assessment is in line with industry practice and

See Section 6.5(a)(ii) of the CAT NMS Plan.

important given the data included in the CAT. CAT LLC determined to engage RSM to perform

the security assessment, after considering a variety of factors in its analysis, including the firm’s

relevant expertise and fees. The fees were reasonable and in line with market rates for such an

assessment. RSM performed the assessment from October 2018 through December 2018.

Accordingly, the costs for the Pre-FAM Period include the costs incurred in November and

December 2018. The cost for the security assessment were paid directly to RSM by CAT LLC.

(X)

Public Relations Costs

The public relations costs of $224,669 represent the fees paid to public relations firms

during the Pre-FAM Period for professional communications services to CAT, including media

relations consulting, strategy and execution. By engaging a public relations firm, CAT LLC was

better positioned to understand and address CAT matters to the benefit of all market participants.

Specifically, the public relations firms provided services related to communications with the

public regarding the CAT, including monitoring developments related to the CAT (e.g.,

congressional efforts, public comments and reaction to proposals, press coverage of the CAT),

reporting such developments to CAT LLC, and drafting and disseminating communications to

the public regarding such developments as well as reporting on developments related to the CAT

(e.g., amendments to the CAT NMS Plan). Public relations services were important for various

reasons, including monitoring comments made by market participants about CAT and

understanding issues related to the CAT discussed on the public record.

The services performed by each of the public relations firms were comparable. The fees

for such services were reasonable and in line with market rates. Only one public relations firm

was engaged at a time; the three firms were engaged sequentially as the primary public relations

contact moved among the three firms during this time period.

Public Relations Firm: Peppercomm, Inc. (“Peppercomm”). The national securities

exchanges and FINRA, acting as a consortium, determined to hire the public relations firm

Peppercomm in October 2014 and continued to engage this firm through September 2017. The

exchanges and FINRA made this engagement decision after considering a variety of factors in

its analysis, including the firm’s relevant expertise and fees. The fee rates for this public

relations firm were negotiated on an arm’s length basis and were in line with market rates for

these types of services. The public relations costs during the period from October 2014 until the

formation of the CAT NMS, LLC were paid directly by the exchanges and FINRA to the public

relations firm. After the formation of CAT NMS, LLC, the consulting fees were paid by CAT

LLC.

Public Relations Firm: Sloane & Company (“Sloane”). CAT LLC determined to hire a

new public relations firm, Sloane, in March 2018, based on, among other things, their expertise

and the primary contact’s history with the project. The fee rates for this public relations firm

were in line with market rates for these types of services. The fees during the Pre-FAM Period

were paid by CAT LLC to Sloane. CAT LLC continued the engagement with Sloane until

February 2020.

Public Relations Firm: Peak Strategies. CAT LLC determined to hire a new public

relations firm, Peak Strategies, in March 2020, based on, among other things, their expertise and

the primary contact’s history with the project. The fee rates for this public relations firm were in

line with market rates for these types of services. The fees during the Pre-FAM Period were paid

by CAT LLC to Peak Strategies.

(b)

Historical CAT Costs Incurred in Financial

Accountability Milestone Period 1

Historical CAT Costs 1 would include costs incurred by CAT and already funded by the

Participants during Period 1 of the Financial Accountability Milestones (“FAM Period 1”),48

which covers the period from June 22, 2020 – July 31, 2020. Historical CAT Costs 1 would

include costs for FAM Period 1 of $6,377,343. The Participants would remain responsible for

one-third of this cost (which they have previously paid) ($2,125,781), and Industry Members

would be responsible for the remaining two-thirds, with CEBBs paying one-third ($2,125,781)

and CEBSs paying one-third ($2,125,781). The following table breaks down Historical CAT

Costs 1 for FAM Period 1 into the categories set forth in Section 11.3(b)(iii)(B)(II) of the CAT

NMS Plan.

Operating Expense

Historical CAT Costs for

FAM Period 1**

Capitalized Developed

$1,684,870

Technology Costs*

Technology Costs:

$3,996,800

Cloud Hosting Services

$2,642,122

Operating Fees

$1,099,680

CAIS Operating Fees

$254,998

Change Request Fees

Legal

$481,687

Consulting

$137,209

Insurance

Professional and administration

$69,077

Section 11.6(a)(i)(A) of the CAT NMS Plan.

Public relations

$7,700

Total Operating Expenses

$6,377,343

* The non-cash amortization of these capitalized developed technology

costs of $362,121 incurred during FAM Period 1 have been appropriately

excluded from the above table. 49

** The costs described in this table of costs for FAM Period 1 were

calculated based upon CAT LLC’s review of applicable bills and invoices

and related financial statements. CAT LLC financial statements are

available on the CAT website.

By the completion of FAM Period 1, CAT LLC was required to implement the reporting

by Industry Members (excluding Small Industry Members that are not OATS reporters) of

equities transaction data and options transaction data, excluding Customer Account Information,

Customer-ID and Customer Identifying Information. 50 CAT LLC completed the requirements of

FAM Period 1 by July 31, 2020. The following describes the costs for each of the categories for

FAM Period 1.

(I)

Technology Costs – Cloud Hosting

Services

CAT LLC continued to utilize AWS in FAM Period 1 to provide a broad array of cloud

hosting services for the CAT, including data ingestion, data management, and analytic tools.

As discussed above, with respect to certain costs that were “appropriately excluded,” such excluded costs

relate to the amortization of capitalized technology costs, which are amortized over the life of the Plan

Processor Agreement. As such costs have already been otherwise reflected in the filing, their inclusion

would double count the capitalized technology costs. In addition, amortization is a non-cash expense.

See definition of “Initial Industry Member Core Equity and Options Reporting” in Section 1.1 of the CAT

NMS Plan.

AWS continued to provide storage services, databases, compute services and other services (such

as networking, management tools and DevOps tools), as well as various environments for CAT,

such as development, performance testing, test, and production environments, during the FAM 1

Period. Accordingly, the $2,642,122 in technology costs for cloud hosting services represent

costs incurred for services provided by AWS, as the cloud services provider, during FAM Period

1. The fee arrangement for AWS described above with regard to the Pre-FAM Period continued

in place during FAM Period 1 pursuant to the Plan Processor Agreement. Moreover, CAT LLC

continued to believe that AWS’s maturity in the cloud services space as well as the significant

cost and time necessary to move the CAT to a different cloud services provider supported the

continued engagement of AWS.

The cost for AWS cloud services for the CAT continued to be a function of the volume of

CAT Data. During the FAM 1 Period, the volume of CAT Data continued to far exceed the

original predictions for the CAT as set forth in the CAT NMS Plan. During this period, data

submitted to the CAT included options and equities Participant Data, Phase 2a and Phase 2b

Industry Member Data (including certain linkages) as well as SIP Data, reference data and other

types of Other Data. The following chart provides data regarding the average daily volume,

cumulative total events, total compute hours and storage footprint of the CAT during FAM

Period 1.51

Date Range: 6/22/20-7/31/20

Average Daily Volume in

Billions

Participant - Equities

Note that the volume data described in this table does not include CAIS data.

Participant - Options

103

Industry Member -

Equities

Industry Member -

0.31

Options

SIP – Options & Equities

Average Total Daily

185

Volume

Cumulative Total Events for

5,190

the Period

Total Compute Hours for the

2,612,082

Period

Storage Footprint at End of

57.47

Period (Petabytes)

(II)

Technology Costs – Operating Fees

Pursuant to the Plan Processor Agreement discussed above, FCAT continued in its role as

the Plan Processor for the CAT during FAM Period 1. Accordingly, the $1,099,680 in

technology costs for operating fees represent costs incurred for the services provided by FCAT

under the Plan Processor Agreement during FAM Period 1. The fee arrangement for FCAT

described above with regard to the Pre-FAM Period continued in place during FAM Period 1

pursuant to the Plan Processor Agreement. During FAM Period 1, FCAT’s activities with

respect to the CAT included the following:

•

Published iterative drafts of draft Technical Specifications for Phase 2d, after substantial

engagement with SEC staff, Industry Members and Participants on the Technical

Specifications;

•

Published iterative drafts of CAIS Technical Specifications, after substantial engagement

with SEC staff, Industry Members and Participants on the Technical Specifications;

•

Facilitated Industry Member reporting of Quote Sent Time on Options Market Maker

quotes;

•

Addressed compliance items, including drafting CAT policies and procedures, and

addressing Regulation SCI requirements;

•

Provided support to the Operating Committee, the Compliance Subcommittee and CAT

working groups;

•

Assisted with interpretive efforts and exemptive requests regarding the CAT NMS Plan;

•

Oversaw the security of the CAT;

•

Monitored the operation of the CAT, including with regard to Participant and Industry

Member reporting;

•

Provided support to subcontractors under the Plan Processor Agreement;

•

Provided support in discussions with Participants and the SEC and its staff;

•

Operated the FINRA CAT Helpdesk;

•

Facilitated communications with the industry, including via FAQs, CAT Alerts,

meetings, presentations and webinars;

•

Administered the CAT website and all of its content; and

•

Provided technical support and assistance with connectivity, data access, and user

support, including the use of CAT Data and query tools, for Participants and the SEC

staff.

(III)

Technology Costs – CAIS Operating

Fees

Pursuant to the Plan Processor Agreement discussed above, Kingland continued in its

role as a subcontractor for the development and implementation of CAIS during FAM Period 1.

Accordingly, the $254,998 in technology costs for CAIS operating fees represent costs incurred

for services provided by Kingland during FAM Period 1. The fee arrangement for Kingland

described above with regard to the Pre-FAM Period continued in place during FAM Period 1

pursuant to the Plan Processor Agreement. During FAM Period 1, Kingland continued the

development of the CAIS Technical Specifications and building of CAIS. In addition, Kingland

continued to work on the CAIS Technical Specifications and build related to CCID Alternative,

as well as the acceleration of the reporting of LTIDs.

(IV)

Technology Costs – Change Request

Fees

CAT LLC did not incur costs related to change requests during FAM Period 1.

(V)

Technology Costs – Capitalized

Developed Technology Costs

Capitalized developed technology costs for FAM Period 1 of $1,684,870 include

capitalizable application development costs incurred in the development of the CAT by FCAT.

Such costs include: (1) costs related to certain modifications, upgrades, or other changes to the

CAT that were not contemplated by the agreement between CAT LLC and the Plan Processor,

including separate production and industry test entitlements, and reprocessing of exchange event

timestamps; (2) implementation fees; and (3) license fees.

(VI)

Legal Costs

The legal costs of $481,687 represent the fees paid for legal services provided by two law

firms, WilmerHale and Pillsbury during FAM Period 1.

Law Firm: WilmerHale. CAT LLC continued to employ WilmerHale during FAM

Period 1 based on, among other things, their expertise and long history with the project. The

hourly fee rates for this law firm were in line with market rates for specialized legal expertise.

The legal fees during FAM Period 1 were paid by CAT LLC to WilmerHale. During FAM

Period 1, WilmerHale provided legal assistance to the CAT including with regard to the

following:

•

Assisted with the development of the CAT funding model and drafted related

amendments and fee filings;

•

Drafted exemptive requests from CAT NMS Plan requirements regarding, for example,

verbal activity, options market maker quote sent time, TRF linkages, and allocations;

•

Provided interpretations related to CAT NMS Plan requirements, including the Financial

Accountability Milestone amendment;

•

Assisted with compliance with Regulation SCI;

•

Provided support for the Operating Committee, Compliance Subcommittee, working

groups and Leadership Team, including with regard to meetings with the SEC staff;

•

Assisted with the drafting of the Implementation Plan required pursuant to Section

6.6(c)(i) of the CAT NMS Plan;

•

Assisted with communications and presentations for the industry regarding CAIS;

•

Drafted SRO rule filings related to the CAT Compliance Rule;

•

Provided support for Compliance Subcommittee, including with regard to

responses to OCIE examinations and the annual assessment;

•

Provided guidance regarding CAT technical specifications;

•

Assisted with third-party vendor agreements; and

•

Provided support with regard to discussions with the SEC and its staff, including

with respect to addressing interpretive and implementation issues.

Law Firm: Pillsbury. CAT LLC continued to employ Pillsbury during FAM Period 1

based on, among other things, their expertise and history with the project. The hourly fee rates

for this law firm were in line with market rates for specialized legal expertise. The legal fees

during FAM Period 1 were paid by CAT LLC to Pillsbury. During FAM Period 1, Pillsbury

provided legal assistance to the CAT regarding the CAT Reporter Agreement. During that

period, Pillsbury advised CAT LLC regarding applicable legal matters and drafted a proposed

amendment to the CAT NMS Plan regarding liability matters. Liability issues related to the

CAT are important matters that needed to be resolved and clarified. CAT LLC’s efforts to seek

such resolution and clarity work to the benefit of Participants, Industry Members and other

market participants.

(VII) Consulting Costs

The consulting costs of $137,209 represent the fees paid to Deloitte as project manager

during FAM Period 1. CAT LLC continued to employ Deloitte during FAM Period 1 based on,

among other things, their expertise and cumulative experience with the CAT. The fee rates for

Deloitte during FAM Period 1 were negotiated and in line with market rates for this type of

specialized consulting work. The consulting fees during FAM Period 1 were paid by CAT LLC

to the consulting firm. CAT LLC reviewed the consulting fees each month and approved the

invoices. During FAM Period 1, Deloitte’s CAT-related activities included the following:

•

Implemented program operations for the CAT project;

•

Provided support to the Operating Committee, the Chair of the Operating Committee and

the Leadership Team, including project management support, coordination and planning

for meetings and communications, and interfacing with law firms and the SEC;

•

Assisted with cost and funding matters for the CAT, including the development of the

CAT funding model and assistance with loans and the CAT bank account for CAT

funding;

•

Provided support for updating the SEC on the progress of the development of the CAT;

•

Assisted with the transition from the Initial Plan Processor to the successor Plan

Processor; and

•

Provided support for third-party vendors for the CAT, including FCAT, Anchin and the

law firms engaged by CAT LLC.

(VIII) Insurance

Although insurance was in effect during FAM Period 1, CAT LLC did not incur costs

related to insurance during FAM Period 1.

(IX)

Professional and Administration

Costs

Financial Advisory Firm: Anchin. The professional and administration costs of $69,077

represent the fees paid to Anchin during FAM Period 1. CAT LLC continued to employ Anchin

during FAM Period 1 based on, among other things, their expertise and history with the project.

The hourly fee rates for this firm were in line with market rates for these type of financial

advisory services. The fees for these services during FAM Period 1 were paid by CAT LLC to

Anchin. During FAM Period 1, Anchin provided a variety of services, including the following:

•

Maintained internal controls;

•

Provided cash management and treasury functions;

•

Facilitated bill payments;

•

Provided monthly bookkeeping;

•

Reviewed vendor invoices and documentation in support of cash disbursements;

•

Provided accounting research and consultations on various accounting, financial

reporting and tax matters;

•

Addressed various accounting, financial reporting and operating inquiries from

Participants;

•

Developed and maintained quarterly and annual operating and financial budgets,

including budget to actual fluctuation analyses;

•

Supported compliance with the CAT NMS Plan;

•

Worked with and provided support to the Operating Committee and various CAT

working groups; and

•

Prepared monthly and quarterly financial statements.

(X)

Public Relations Costs

The public relations costs of $7,700 represent the fees paid to Peak Strategies during

FAM Period 1. CAT LLC continued to employ Peak Strategies during FAM Period 1 based on,

among other things, their expertise and history with the project. The fee rates for this firm were

reasonable and in line with market rates for these types of services. The fees for these services

during FAM Period 1 were paid by CAT LLC to Peak Strategies. During FAM Period 1, Peak

Strategies continued to provide professional communications services to CAT LLC, including

media relations consulting, strategy and execution. Specifically, the public relations firm

provided services related to communications with the public regarding the CAT, including

monitoring developments related to the CAT (e.g., congressional efforts, public comments and

reaction to proposals, press coverage of the CAT), reporting such developments to CAT LLC,

and drafting and disseminating communications to the public regarding such developments as

well as reporting on developments related to the CAT (e.g., amendments to the CAT NMS Plan).

As discussed above, such public relations services were important for various reasons, including

monitoring comments made by market participants about the CAT and understanding issues

related to the CAT discussed on the public record. By engaging a public relations firm, CAT

LLC was better positioned to understand and address CAT matters to the benefit of all market

participants.

(c)

Historical CAT Costs Incurred in Financial

Accountability Milestone Period 2

Historical CAT Costs 1 would include costs incurred by CAT LLC and already funded by

Participants during Period 2 of the Financial Accountability Milestones (“FAM Period 2”),52

which covers the period from August 1, 2020 – December 31, 2020. Historical CAT Costs 1

would include costs for FAM Period 2 of $42,976,478. The Participants would remain

responsible for one-third of this cost (which they have previously paid) ($14,325,493), and

Industry Members would be responsible for the remaining two-thirds, with CEBBs paying onethird ($14,325,493) and CEBSs paying one-third ($14,325,493). The following table breaks

Section 11.6(a)(i)(B) of the CAT NMS Plan.

down Historical CAT Costs 1 for FAM Period 2 into the categories set forth in Section

11.3(b)(iii)(B)(II) of the CAT NMS Plan.

Operating Expense

Historical CAT Costs for

FAM Period 2**

Capitalized Developed

$6,761,094

Technology Costs*

Technology Costs:

$31,460,033

Cloud Hosting Services

$20,709,212

Operating Fees

$9,108,700

CAIS Operating Fees

$1,590,298

Change Request Fees

$51,823

Legal

$2,766,644

Consulting

$532,146

Insurance

$976,098

Professional and administration

$438,523

Public relations

$41,940

Total Operating Expenses

$42,976,478

* The non-cash amortization of these capitalized developed technology

costs of $1,892,505 incurred during FAM Period 2 have been appropriately

excluded from the above table. 53

As discussed above, with respect to certain costs that were “appropriately excluded,” such excluded costs

relate to the amortization of capitalized technology costs, which are amortized over the life of the Plan

Processor Agreement. As such costs have already been otherwise reflected in the filing, their inclusion

would double count the capitalized technology costs. In addition, amortization is a non-cash expense.

** The costs described in this table of costs for FAM Period 2 were

calculated based upon CAT LLC’s review of applicable bills and invoices

and related financial statements. CAT LLC financial statements are

available on the CAT website.

By the completion of FAM Period 2, CAT LLC was required to implement the following

with regard to the CAT:

(a) Industry Member reporting (excluding reporting by Small Industry Members

that are not OATS reporters) for equities transactions, excluding Customer Account

Information, CustomerID, and Customer Identifying Information, is developed,

tested, and implemented at a 5% Error Rate or less and with sufficient intra-firm

linkage, inter-firm linkage, national securities exchange linkage, and trade

reporting facilities linkage to permit the Participants and the Commission to analyze

the full lifecycle of an order across the national market system, excluding linkage

of representative orders, from order origination through order execution or order

cancellation; and (b) the query tool functionality required by Section 6.10(c)(i)(A)

and Appendix D, Sections 8.1.1-8.1.3 and Section 8.2.1 incorporates the Industry

Member equities transaction data described in condition (a) and is available to the

Participants and to the Commission. 54

CAT LLC completed the requirements of FAM Period 2 by December 31, 2020. The following

describes the costs for each of the categories for FAM Period 2.

(I)

Technology Costs – Cloud Hosting

See definition of “Full Implementation of Core Equity Reporting Requirements” in Section 1.1 of the CAT

NMS Plan.

Services

CAT LLC continued to utilize AWS in FAM Period 2 to provide a broad array of cloud

hosting services for the CAT, including data ingestion, data management, and analytic tools.

AWS continued to provide storage services, databases, compute services and other services (such

as networking, management tools and DevOps tools), as well as various environments for CAT,

such as development, performance testing, test, and production environments, during the FAM 2

Period. Accordingly, the $20,709,212 in technology costs for cloud hosting services represent

costs incurred for services provided by AWS, as the cloud services provider, during FAM Period

2. The fee arrangement for AWS described above with regard to the Pre-FAM Period and FAM

Period 1 continued in place during FAM Period 2 pursuant to the Plan Processor Agreement.

The cost for AWS cloud services for the CAT continued to be a function of the volume of

CAT Data. During the FAM 2 Period, the volume of CAT Data continued to far exceed the

original predictions for the CAT as set forth in the CAT NMS Plan. During this period, data

submitted to the CAT included options and equities Participant Data, Phase 2a and Phase 2b

Industry Member Data (including certain linkages) as well as SIP Data, and Other Data,

including reference data. In addition, Industry Members began reporting LTID account

information. The following chart provides data regarding the average daily volume, cumulative

total events, total compute hours and storage footprint of the CAT during FAM Period 2. 55

Date Range: 8/1/20 –

12/31/20

Average Daily Volume in

Billions

Note that the volume data described in this table does not include CAIS data.

Participant - Equities

Participant - Options

116

Industry Member -

Equities

Industry Member -

0.98

Options

SIP – Options & Equities

Average Total Daily

282

Volume

Cumulative Total Events for

2,170

the Period

Total Compute Hours for the

15,660,392

Period

Storage Footprint at End of

114.59

Period (Petabytes)

(II)

Technology Costs – Operating Fees

Pursuant to the Plan Processor Agreement discussed above, FCAT continued in its role as

the Plan Processor for the CAT during FAM Period 2. Accordingly, the $9,108,700 in

technology costs for operating fees represent costs incurred for the services provided by FCAT

under the Plan Processor Agreement during FAM Period 2. The fee arrangement for FCAT

described above with regard to the Pre-FAM Period and FAM Period 1 continued in place during

FAM Period 2 pursuant to the Plan Processor Agreement. During FAM Period 2, FCAT’s

activities with respect to the CAT included publishing the Technical Specifications for Phase 2d

and overseeing the reporting of firm to firm and intrafirm linkages by Industry Members. In

addition, FCAT also continued to engage in the following activities during FAM Period 2:

•

Addressed compliance items, including drafting CAT policies and procedures, and

addressing Regulation SCI requirements;

•

Provided support to the Operating Committee, Compliance Subcommittee and CAT

working groups;

•

Assisted with interpretive efforts and exemptive requests regarding the CAT NMS Plan;

•

Oversaw the development and implementation of the security of the CAT;

•

Monitored the operation of the CAT, including with regard to Participant and Industry

Member reporting;

•

Provided support to subcontractors under the Plan Processor Agreement;

•

Provided support in discussions with the Participants and the SEC and its staff;

•

Operated the FINRA CAT Helpdesk;

•

Facilitated communications with the industry, including via FAQs, CAT Alerts,

meetings, presentations and webinars;

•

Administered the CAT website and all of its content; and

•

Provided technical support and assistance with connectivity, data access, and user

support, including the use of CAT Data and query tools, for Participants and the SEC

staff.

(III)

Technology Costs – CAIS Operating

Fees

Pursuant to the Plan Processor Agreement discussed above, Kingland continued in its

role as a subcontractor for the development and implementation of CAIS during FAM Period 2.

Accordingly, the $1,590,298 in technology costs for CAIS operating fees represent costs

incurred for services provided by Kingland during FAM Period 2. The fee arrangement for

Kingland described above with regard to the Pre-FAM Period and FAM Period 1 continued in

place during FAM Period 2 pursuant to the Plan Processor Agreement. During FAM Period 2,

Kingland continued the development of the CAIS Technical Specifications and building of

CAIS. In addition, Kingland continued to work on the CAIS Technical Specifications and build

related to the CCID Alternative, as well as the acceleration of the reporting of LTIDs.

(IV)

Technology Costs – Change Request

Fees

During FAM Period 2, CAT LLC engaged FCAT to pursue certain change requests in

accordance with the Plan Processor Agreement. The change request costs were paid by CAT

LLC to FCAT. Specifically, during FAM Period 2, CAT incurred costs of $51,823 related to a

change request regarding the addition of functionality for exchange Participants to report rejected

messages to the CAT.

(V)

Technology Costs – Capitalized

Developed Technology Costs

Capitalized developed technology costs for FAM Period 2 of $6,761,094 include

capitalizable application development costs incurred in the development of the CAT by FCAT.

Such costs include (1) development costs incurred during the application development stage to

meet various agreed-upon milestones regarding the CAT, as defined in the agreement between

CAT LLC and the Plan Processor; (2) costs related to certain modifications, upgrades, or other

changes to the CAT that were not contemplated by the agreement between CAT LLC and the

Plan Processor, including costs related to separate production and industry test entitlements,

market maker reference data, and back-processing of exchange exception logic; (3)

implementation fees; and (4) license fees.

(VI)

Legal Costs

The legal costs of $2,766,644 represent the fees paid for legal services provided by two

law firms, WilmerHale and Pillsbury during FAM Period 2.

Law Firm: WilmerHale. CAT LLC continued to employ WilmerHale during FAM

Period 2 based on, among other things, their expertise and long history with the project. The

hourly fee rates for this law firm were in line with market rates for specialized legal expertise.

The legal fees during FAM Period 2 were paid by CAT LLC to WilmerHale. During FAM

Period 2, the legal assistance provided by WilmerHale included providing legal advice regarding

the following:

•

Assisted with the development of the CAT funding model and drafting related

amendments and rule filings;

•

Drafted exemptive requests from CAT NMS Plan requirements regarding, for example,

allocations, exchange activity, OTQT, initial data validation, error corrections and

recordkeeping;

•

Provided interpretations related to CAT NMS Plan requirements, including with regard to

the Financial Accountability Milestone amendment, FAQs and technical specifications;

•

Provided support for the Operating Committee, Compliance Subcommittees, working

groups and Leadership Team, including with regard to meetings with the SEC staff;

•

Assisted with the Implementation Plan and Quarterly Progress Reports required pursuant

to Section 6.6 of the CAT NMS Plan;

•

Drafted SRO rule filings related to the CAT Compliance Rule;

•

Provided support for the Compliance Subcommittee, including with regard to responses

to OCIE examinations and the annual assessment;

•

Provided guidance regarding the SEC’s proposed security amendments to the CAT

NMS Plan;

•

Provided guidance regarding SRO rule filings for the retirement of systems;

•

Provided legal support for Operating Committee meetings, including drafting resolutions

and other materials and voting advice;

•

Assisted with third-party vendor agreements (e.g., with regard to Anchin, Grant Thornton

and insurance policies);

•

Assisted with change requests; and

•

Provided support with regard to discussions with the SEC and its staff, including with

respect to addressing interpretive and implementation issues.

Law Firm: Pillsbury. CAT LLC continued to employ Pillsbury during FAM Period 2

based on, among other things, their expertise and history with the project. The hourly fee rates

for this law firm were in line with market rates for specialized legal expertise. The legal fees

during FAM Period 2 were paid by CAT LLC to Pillsbury. During FAM Period 2, Pillsbury

provided legal assistance to the CAT regarding the CAT Reporter Agreement. During that

period, Pillsbury advised CAT LLC regarding applicable legal matters and drafted and filed a

proposed amendment to the CAT NMS Plan regarding liability matters. As discussed above,

liability issues related to the CAT are important matters that needed to be resolved and clarified.

CAT LLC’s efforts to seek such resolution and clarity work to the benefit of Participants,

Industry Members and other market participants.

(VII) Consulting Costs

The consulting costs of $532,146 represent the fees paid to Deloitte as project manager

during FAM Period 2. CAT LLC continued to employ Deloitte during FAM Period 2 based on,

among other things, their expertise and long history with the project. The fee rates for Deloitte

during FAM Period 2 were negotiated and in line with market rates for this type of specialized

consulting work. The consulting fees during FAM Period 2 were paid to Deloitte by CAT LLC.

CAT LLC reviewed the consulting fees each month and approved the invoices. During FAM

Period 2, Deloitte’s CAT-related activities included the following:

•

Implemented program operations for the CAT project;

•

Provided support to the Operating Committee, the Chair of the Operating Committee and

the Leadership Team, including project management support, coordination and planning

for meetings and communications, and interfacing with law firms and the SEC;

•

Assisted with cost and funding matters for the CAT, including the development of the

CAT funding model and assistance with loans and the CAT bank account for CAT

funding;

•

Provided support for updating the SEC on the progress of the development of the CAT;

and

•

Provided support for third-party vendors for the CAT, including FCAT, Anchin and the

law firms engaged by CAT LLC.

(VIII) Insurance

The insurance costs of $976,098 represent the fees paid for insurance during FAM Period

2. CAT LLC continued to maintain cyber security liability insurance, directors’ and officers’

liability insurance, and errors and omissions liability insurance offered by USI. After engaging

in a process for renewing the coverage, CAT LLC determined to purchase these insurance

policies from USI. The annual premiums for these policies were competitive for the coverage

provided. The annual premiums were paid by CAT LLC to USI.

(IX)

Professional and Administration

Costs

The professional and administration costs of $438,523 represent the fees paid to Anchin

and Grant Thornton for financial services provided during FAM Period 2.

Financial Advisory Firm: Anchin. CAT LLC continued to engage Anchin during FAM

Period 2 based on, among other things, their expertise and history with the project. The hourly

fee rates for this firm were in line with market rates for these types of financial advisory services.

The fees for these services during FAM Period 2 were paid by CAT LLC to Anchin. During

FAM Period 2, Anchin provided a variety of services, including the following:

•

Updated and maintained internal controls;

•

Provided cash management and treasury functions;

•

Facilitated bill payments;

•

Provided monthly bookkeeping;

•

Reviewed vendor invoices and documentation in support of cash disbursements;

•

Provided accounting research and consultations on various accounting, financial

reporting and tax matters;

•

Addressed not-for-profit tax and accounting considerations;

•

Prepared tax returns;

•

Addressed various accounting, financial reporting and operating inquiries from the

Participants;

•

Developed and maintained quarterly and annual operating and financial budgets,

including budget to actual fluctuation analyses;

•

Supported compliance with the CAT NMS Plan;

•

Worked with and provided support to the Operating Committee and various CAT

working groups;

•

Prepared monthly, quarterly and annual financial statements;

•

Supported the annual financial statement audit by an independent auditor; and

•

Reviewed historical costs from inception.

Accounting Firm: Grant Thornton. CAT LLC continued to employ the accounting firm

Grant Thornton during FAM Period 2 based on, among other things, its expertise and cumulative

knowledge of CAT LLC. CAT LLC continued to believe that Grant Thornton was well qualified

for its role and its fee rates were in line with market rates for these accounting services. The fees

for these services during FAM Period 2 were paid by CAT LLC to Grant Thornton. During

FAM Period 2, Grant Thornton performed a financial statement audit for CAT LLC as an

independent accounting firm.

(X)

Public Relations Costs

The public relations costs of $41,940 represent the fees paid to Peak Strategies during

FAM Period 2. CAT LLC continued to employ Peak Strategies during FAM Period 2 based on,

among other things, their expertise and history with the project. The fee rates for this firm were

in line with market rates for these types of services. The fees for these services during FAM

Period 2 were paid by CAT LLC to Peak Strategies. During FAM Period 2, Peak Strategies

continued to provide professional communications services to CAT, including media relations

consulting, strategy and execution. Specifically, the public relations firm provided services

related to communications with the public regarding the CAT, including monitoring

developments related to the CAT (e.g., congressional efforts, public comments and reaction to

proposals, press coverage of the CAT), reporting such developments to CAT LLC, and drafting

and disseminating communications to the public regarding such developments as well as

reporting on developments related to the CAT (e.g., amendments to the CAT NMS Plan). As

discussed above, such public relations services were important for various reasons, including

monitoring comments made by market participants about the CAT and understanding issues

related to the CAT discussed on the public record. By engaging a public relations firm, CAT

LLC was better positioned to understand and address CAT matters to the benefit of all market

participants.

(d)

Historical CAT Costs Incurred in Financial

Accountability Milestone Period 3

Historical CAT Costs 1 would include costs incurred by CAT and already funded by the

Participants during Period 3 of the Financial Accountability Milestones (“FAM Period 3”),56

which covers the period from January 1, 2021 – December 31, 2021. Historical CAT Costs 1

would include costs for FAM Period 3 of $144,415,268. The Participants would remain

responsible for one-third of this cost (which they have previously paid) ($48,138,423), and

Industry Members would be responsible for the remaining two-thirds, with CEBBs paying one-

Section 11.6(a)(i)(C) of the CAT NMS Plan.

third ($48,138,423) and CEBSs paying one-third ($48,138,423). The following table breaks

down Historical CAT Costs 1 for FAM Period 3 into the categories set forth in Section

11.3(b)(iii)(B)(II) of the CAT NMS Plan.

Operating Expense

Historical CAT Costs for

FAM Period 3**

Capitalized Developed

$10,763,372

Technology Costs*

Technology Costs:

$123,639,402

Cloud Hosting Services

$94,574,759

Operating Fees

$23,106,091

CAIS Operating Fees

$5,562,383

Change Request Fees

$396,169

Legal

$6,333,248

Consulting

$1,408,209

Insurance

$1,582,714

Professional and administration

$595,923

Public relations

$92,400

Total Operating Expenses

$144,415,268

* The non-cash amortization of these capitalized developed technology

costs of $5,108,044 incurred during FAM Period 3 have been appropriately

excluded from the above table. 57

As discussed above, with respect to certain costs that were “appropriately excluded,” such excluded costs

relate to the amortization of capitalized technology costs, which are amortized over the life of the Plan

** The costs described in this table of costs for FAM Period 3 were

calculated based upon CAT LLC’s review of applicable bills and invoices

and related financial statements. CAT LLC financial statements are

available on the CAT website.

By the completion of FAM Period 3, CAT LLC was required to implement the following

requirements with regard to the CAT:

(a) reporting to the Order Audit Trail System (“OATS”) is no longer required for

new orders; (b) Industry Member reporting for equities transactions and simple

electronic options transactions, excluding Customer Account Information,

Customer-ID, and Customer Identifying Information, with sufficient intra-firm

linkage, inter-firm linkage, national securities exchange linkage, trade reporting

facilities linkage, and representative order linkages (including any equities

allocation information provided in an Allocation Report) to permit the Participants

and the Commission to analyze the full lifecycle of an order across the national

market system, from order origination through order execution or order

cancellation, is developed, tested, and implemented at a 5% Error Rate or less; (c)

Industry Member reporting for manual options transactions and complex options

transactions, excluding Customer Account Information, Customer-ID, and

Customer Identifying Information, with all required linkages to permit the

Participants and the Commission to analyze the full lifecycle of an order across the

national market system, from order origination through order execution or order

Processor Agreement. As such costs have already been otherwise reflected in the filing, their inclusion

would double count the capitalized technology costs. In addition, amortization is a non-cash expense.

cancellation, including any options allocation information provided in an

Allocation Report, is developed, tested, and fully implemented; (d) the query tool

functionality required by Section 6.10(c)(i)(A) and Appendix D, Sections 8.1.18.1.3, Section 8.2.1, and Section 8.5 incorporates the data described in conditions

(b)-(c) and is available to the Participants and to the Commission; and (e) the

requirements of Section 6.10(a) are met. 58

CAT LLC completed the requirements of FAM Period 3 by December 31, 2021. The following

describes the costs for each of the categories for FAM Period 3.

(I)

Technology Costs – Cloud Hosting

Services

CAT LLC continued to utilize AWS in FAM Period 3 to provide a broad array of cloud

hosting services for the CAT, including data ingestion, data management, and analytic tools.

AWS continued to provide storage services, databases, compute services and other services (such

as networking, management tools and DevOps tools), as well as various environments for CAT,

such as development, performance testing, test, and production environments, during the FAM 3

Period. Accordingly, the $94,574,759 in technology costs for cloud hosting services represents

costs incurred for services provided by AWS, as the cloud services provider, during FAM Period

3. The fee arrangement for AWS described above for the earlier periods continued in place

during FAM Period 3 pursuant to the Plan Processor Agreement.

The cost for AWS cloud services for the CAT continued to be a function of the volume of

See definition of “Full Availability and Regulatory Utilization of Transactional Database Functionality” in

Section 1.1 of the CAT NMS Plan.

CAT Data. During FAM Period 3, the volume of CAT Data continued to far exceed the original

predictions for the CAT as set forth in the CAT NMS Plan. During this period, data submitted to

the CAT included options and equities Participant Data, Phase 2a, Phase 2b, Phase 2c and Phase

2d Industry Member Data (including certain linkages), SIP Data, Other Data, including reference

data, and LTID account information. The following chart provides data regarding the average

daily volume, cumulative total events, total compute hours and storage footprint of the CAT

during FAM Period 3.59

Date Range: 1/1/21 to 4/25/21

Date Range: 4/26/21/ to

12/31/21*

Average Daily Volume in

Billions

Participant - Equities

Participant - Options

135

136

Industry Member -

SIP – Options & Equities

129

137

Average Total Daily

297

304

7,480

5,310

Equities

Industry Member Options

Volume

Cumulative Total Events for

Note that the volume data described in this table does not include CAIS data.

the Period

Total Compute Hours for

15,860,304

33,487,318

180.22

284.62

the Period

Storage Footprint at End of

Period (Petabytes)

* Start of Participant Equities in CAT format and SIP Equities on 4/26/21

(II)

Technology Costs – Operating Fees

Pursuant to the Plan Processor Agreement discussed above, FCAT continued in its role as

the Plan Processor for the CAT during FAM Period 3. Accordingly, the $23,106,091 in

technology costs for operating fees represent costs incurred for the services provided by FCAT

under the Plan Processor Agreement during FAM Period 3. The fee arrangement for FCAT

described above with regard to the prior Periods continued in place during FAM Period 3

pursuant to the Plan Processor Agreement. During FAM Period 3, FCAT’s activities with

respect to the CAT included the following:

•

Facilitated Phase 2c and Phase 2d testing for Industry Members;

•

Oversaw creation of linkages of the lifecycle of order events based on the received data

through Phase 2d;

•

Addressed compliance items, including drafting CAT policies and procedures, and

addressing Regulation SCI requirements;

•

Provided support to the Operating Committee, the Compliance Subcommittee and CAT

working groups;

•

Assisted with interpretive efforts and exemptive requests regarding the CAT NMS Plan;

•

Oversaw the security of the CAT;

•

Monitored the operation of the CAT, including with regard to Participant and Industry

Member reporting;

•

Provided support to subcontractors under the Plan Processor Agreement;

•

Provided support in discussions with the Participants and the SEC and its staff;

•

Operated the FINRA CAT Helpdesk;

•

Facilitated communications with the industry, including via FAQs, CAT Alerts,

meetings, presentations and webinars;

•

Administered the CAT website and all of its content; and

•

Provided technical support and assistance with connectivity, data access, and user

support, including the use of CAT Data and query tools, for Participants and the SEC

staff.

(III)

Technology Costs – CAIS Operating

Fees

Pursuant to the Plan Processor Agreement with FCAT discussed above, Kingland

continued in its role as a subcontractor for the development and implementation of CAIS during

FAM Period 3. Accordingly, the $5,562,383 in technology costs for CAIS operating fees

represents costs incurred for services provided by Kingland during FAM Period 3. The fee

arrangement for Kingland described above with regard to the prior Periods continued in place

during FAM Period 3 pursuant to the Plan Processor Agreement. During FAM Period 3,

Kingland continued the development of the CAIS Technical Specifications and building of

CAIS. In addition, Kingland continued to work on the CAIS Technical Specifications and build

related to the CCID Alternative, as well as the acceleration of the reporting of LTIDs. The full

CAIS Technical Specifications were published during FAM Period 3.

(IV)

Technology Costs – Change Request

Fees

During FAM Period 3, CAT LLC engaged FCAT to pursue certain change requests in

accordance with the Plan Processor Agreement. The change request costs were paid by CAT

LLC to FCAT. Specifically, during FAM Period 3, CAT incurred costs of $396,169 related to

change requests, including the following: (1) the addition of functionality for exchange

Participants to report rejected messages to the CAT; (2) the migration of MIRS query engine to

AWS to reduce operational costs and increase resiliency; and (3) updating the Participant

Technical Specifications to allow for two-sided Participant option quote reporting.

(V)

Technology Costs – Capitalized

Developed Technology Costs

Capitalized developed technology costs for FAM Period 3 of $10,763,372 include

capitalizable application development costs incurred in the development of the CAT by FCAT.

Such costs include (1) development costs incurred during the application development stage to

meet various agreed-upon milestones regarding the CAT, as defined in the agreement between

CAT LLC and the Plan Processor, including the transition from equity data received by FINRA

pursuant to various regulatory services agreements between FINRA and Participant exchanges to

the equity CAT Data, and the completion of the Industry Member Phase 2d options manual and

complex orders go-live requirements; (2) costs related to certain modifications, upgrades, or

other changes to the CAT that were not contemplated by the agreement between CAT LLC and

the Plan Processor, including costs related to off-exchange volume concentration, Participant 24hour trading and an external metastore; (3) implementation fees; and (4) license fees.

(VI)

Legal Costs

The legal costs of $6,333,248 represent the fees paid for legal services provided by three

law firms, WilmerHale, Pillsbury and Covington & Burling LLP (“Covington”) during FAM

Period 3.

Law Firm: WilmerHale. CAT LLC continued to employ WilmerHale during FAM

Period 3 based on, among other things, their expertise and long history with the project. The

hourly fee rates for this law firm were in line with market rates for specialized legal expertise.

The legal fees during FAM Period 3 were paid by CAT LLC to WilmerHale. During FAM

Period 3, the legal assistance provided by WilmerHale included providing legal advice regarding

the following:

•

Assisted with the development of the CAT funding model and drafting related

amendments and rule filings;

•

Drafted exemptive requests from CAT NMS Plan requirements, including, for example,

verbal activity regarding Phase 2c cutover, error reports, error corrections, Phase 2d

Reporting, unique Order-ID on internal route events, reporting addresses, recordkeeping,

and unique CCID for foreign customers;

•

Provided interpretations related to CAT NMS Plan requirements, including with regard to

the Financial Accountability Milestone amendment, FAQs, CAIS requirements, ADF,

and technical specifications;

•

Provided support for the Operating Committee, Compliance Subcommittee, working

groups and Leadership Team, including with regard to meetings with the SEC staff;

•

Assisted with the Implementation Plan and Quarterly Progress Reports required pursuant

to Section 6.6(c) of the CAT NMS Plan;

•

Drafted SRO rule filings related to the CAT Compliance Rule;

•

Provided support for the Compliance Subcommittee, including with regard to responses

to OCIE examinations and the annual assessment;

•

Provided guidance regarding the SEC’s proposed security amendments to the CAT NMS

Plan;

•

Provided guidance regarding SRO rule filings for the retirement of systems;

•

Provided legal support for Operating Committee meetings, including drafting resolutions

and other materials and voting advice;

•

Provided assistance with change requests;

•

Provided guidance and regulatory support for litigation regarding the response to the

SEC’s exemptive orders;

•

Assisted with communications with the industry, including CAT Alerts and

presentations;

•

Provided guidance regarding the confidentiality of CAT Data, including third-party

information requests;

•

Assisted with cost management analysis and proposals; and

•

Provided support with regard to discussions with the SEC and its staff, including with

respect to addressing interpretive and implementation issues.

Law Firm: Pillsbury. CAT LLC continued to employ Pillsbury during FAM Period 3

based on, among other things, their expertise and history with the project. The hourly fee rates

for this law firm were in line with market rates for specialized legal expertise. The legal fees

during FAM Period 3 were paid by CAT LLC to Pillsbury. During FAM Period 3, Pillsbury

provided legal assistance to the CAT regarding the CAT Reporter Agreement. During this

period, Pillsbury advised CAT LLC regarding applicable legal matters, reviewed and responded

to comment letters regarding the proposed Plan amendment, participated in meetings with senior

SEC staff, responded to comments submitted following the SEC’s April 6, 2021 order instituting

proceedings,60 and assessed legal matters regarding the SEC’s October 29, 2021 order denying

the proposed Plan amendment. 61

Law Firm: Covington. CAT LLC hired Covington for litigation with the SEC regarding

certain exemptive orders related to the CAT, including orders issued in December 2020. 62 CAT

LLC interviewed this law firm as well as other potential law firms, considering a variety of

factors in its analysis for choosing legal assistance, including the relevant expertise and fees of

the potential lawyers. CAT LLC approved the engagement of Covington in January 2021. The

fee rates for this law firm, which were calculated based on hourly rates, were in line with market

rates for specialized services. The legal fees for FAM Period 3 for this firm were paid by CAT

LLC to Covington.

After Covington was hired in 2021 through the end of 2021, the firm provided legal

assistance regarding the litigation with the SEC regarding the 2020 Orders. These services

included researching, drafting, and filing motions to stay the 2020 orders and related materials in

Securities Exchange Act Rel. No. 91487 (Apr. 6, 2021), 86 Fed. Reg. 19054 (Apr. 12, 2021).

Securities Exchange Act Rel. No. 93484 (Oct. 29, 2021), 86 Fed. Reg. 60933 (Nov. 4, 2021).

See Securities Exchange Act Rel. No. 90688 (Dec. 16, 2020), 85 Fed. Reg. 83634 (Dec. 22, 2020); and

Securities Exchange Act Rel. No. 90689 (Dec. 16, 2020), 85 Fed. Reg. 83667 (Dec. 22, 2020) (collectively,

the “2020 Orders”).

proceedings before the SEC, as well as researching, drafting, and filing petitions for judicial

review of the 2020 Orders in proceedings before the U.S. Court of Appeals for the D.C. Circuit.

Covington oversaw ongoing litigation proceedings on these matters, and also supported

WilmerHale with respect to settlement negotiations with the SEC staff regarding the 2020

Orders.

In addition to these services, CAT LLC engaged Covington in November 2021 to provide

assistance with respect to the SEC’s disapproval of CAT NMS Plan amendments concerning a

proposed limitation on liability in the event of a data breach or similar event. Covington

provided advice concerning CAT’s response to the SEC’s disapproval order. This work

accounted for a minority of Covington’s fees in 2021.63

(VII) Consulting Costs

The consulting costs of $1,408,209 represent the fees paid to Deloitte as project manager

during FAM Period 3. CAT LLC continued to employ Deloitte during FAM Period 3 based on,

among other things, their expertise and long history with the project. The fee rates for Deloitte

during FAM Period 3 were negotiated and in line with market rates for this type of specialized

consulting work. The consulting fees during FAM Period 3 were paid to Deloitte by CAT LLC.

CAT LLC reviewed the consulting fees each month and approved the invoices. During FAM

Period 3, Deloitte’s CAT-related activities included the following:

•

Implemented program operations for the CAT project;

As discussed above with regard to Pillsbury’s work on liability matters, liability issues related to the CAT

are important matters that needed to be resolved and clarified. CAT LLC’s efforts to seek such resolution

and clarity work to the benefit of Participants, Industry Members and other market participants. Moreover,

such activity is a necessary part of the operation of the CAT.

•

Provided support to the Operating Committee, the Chair of the Operating Committee and

the Leadership Team, including project management support, coordination and planning

for meetings and communications, and interfacing with law firms and the SEC;

•

Assisted with cost and funding matters for the CAT, including the development of the

CAT funding model and assistance with loans and the CAT bank account for CAT

funding;

•

Provided support for updating the SEC on the progress of the development of the

CAT; and

•

Provided support for third-party vendors for the CAT, including FCAT, Anchin and the

law firms engaged by CAT LLC.

(VIII) Insurance

The insurance costs of $1,582,714 represent the fees paid for insurance during FAM

Period 3. CAT LLC continued to maintain cyber security liability insurance, directors’ and

officers’ liability insurance, and errors and omissions liability insurance offered by USI. After

engaging in a process for renewing the coverage, CAT LLC determined to purchase these

insurance policies from USI. The annual premiums for these policies were competitive for the

coverage provided. The annual premiums were paid by CAT LLC to USI.

(IX)

Professional and Administration

Costs

The professional and administration costs of $595,923 represent the fees paid to Anchin

and Grant Thornton for financial services during FAM Period 3.

Financial Advisory Firm: Anchin. CAT LLC continued to employ Anchin during FAM

Period 3 based on, among other things, their expertise and history with the project. The hourly

fee rates for this firm were in line with market rates for these financial advisory services. The

fees for these services during FAM Period 3 were paid by CAT LLC to Anchin. During FAM

Period 3, Anchin provided a variety of services, including the following:

•

Updated and maintained internal controls;

•

Provided cash management and treasury functions;

•

Faciliated bill payments;

•

Provided monthly bookkeeping;

•

Reviewed vendor invoices and documentation in support of cash disbursements;

•

Provided accounting research and consultations on various accounting, financial

reporting and tax matters;

•

Addressed not-for-profit tax and accounting considerations;

•

Prepared tax returns;

•

Addressed various accounting, financial reporting and operating inquiries from

Participants;

•

Developed and maintained quarterly and annual operating and financial budgets,

including budget to actual fluctuation analyses;

•

Supported compliance with the CAT NMS Plan;

•

Worked with and provided support to the Operating Committee and various CAT

working groups;

•

Prepared monthly, quarterly and annual financial statements;

•

Supported the annual financial statement audits by an independent auditor;

•

Reviewed historical costs from inception; and

•

Provided accounting and financial information in support of SEC filings.

Accounting Firm: Grant Thornton. CAT LLC continued to employ the accounting firm

Grant Thornton during FAM Period 3 based on, among other things, their expertise and

cumulative knowledge of CAT LLC. CAT LLC determined that Grant Thornton was well

qualified for its role and that its fixed fee rates were in line with market rates for these accountant

services. The fees for these services during FAM Period 3 were paid by CAT LLC to Grant

Thornton. During FAM Period 3, Grant Thornton provided audited financial statements for CAT

LLC.

(X)

Public Relations Costs

The public relations costs of $92,400 represent the fees paid to Peak Strategies during

FAM Period 3. CAT LLC continued to employ Peak Strategies during FAM Period 3 based on,

among other things, their expertise and history with the project. The fee rates for this firm were

in line with market rates for these types of services. The fees for these services during FAM

Period 3 were paid by CAT LLC to Peak Strategies. During FAM Period 3, Peak Strategies