Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments Regarding the FOCUS Report

Federal RegisterJan 21, 2025

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SECURITIES AND EXCHANGE COMMISSION

17 CFR Parts 202, 232, 240, 249, and 249b

[Release Nos. 33-11342; 34-101925; IC-35420; File No. S7-08-23]

RIN 3235-AL85

Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments Regarding the FOCUS Report

AGENCY:

Securities and Exchange Commission.

ACTION:

Final rule.

SUMMARY:

The Securities and Exchange Commission (“Commission” or “SEC”) is amending its rules to require electronic filing or submission of certain forms and other filings or submissions that are required to be filed with or submitted to the Commission under the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and regulations under the Exchange Act. The amendments require the electronic filing or submission on the Commission's Electronic Data Gathering, Analysis, and Retrieval (“EDGAR”) system, using structured data where appropriate, for certain forms filed or submitted by self-regulatory organizations (“SROs”). The amendments require the information currently contained in Form 19b-4(e) to be publicly posted on the SRO's website and remove the manual signature requirements for SRO proposed rule change filings. The Commission is also requiring that a clearing agency post supplemental material to its website. In addition, the Commission is amending rules under the Exchange Act and the Securities Act of 1933 (“Securities Act”) to require the electronic filing or submission on EDGAR, using structured data where appropriate, of certain forms, reports, and notices provided by broker-dealers, security-based swap dealers, and major security-based swap participants. The amendments also require withdrawal in certain circumstances of notices filed in connection with an exception to counting certain dealing transactions toward determining whether a person is a security-based swap dealer. Finally, the Commission is allowing electronic signatures in certain broker-dealer filings, and amending the Financial and Operational Combined Uniform Single Report (“FOCUS Report”) to harmonize with other rules, make technical corrections, and provide clarifications.

DATES:

Effective date:

March 24, 2025.

Compliance dates:

The compliance dates for the rule amendments are discussed in section VIII of this release.

FOR FURTHER INFORMATION CONTACT:

For Form 1—Justin Pica, Assistant Director, and David Remus, Special Counsel; for Form 1-N—David Dimitrious, Senior Special Counsel, and Michou Nguyen, Special Counsel; for Form 15A—Molly Kim, Assistant Director, and David Michehl, Special Counsel; for Form CA-1—Matthew Lee, Assistant Director, and Claire Noakes, Senior Special Counsel; for Form 19b-4(e) and technical amendment to Form 19b-4—Cristie March, Senior Special Counsel, and Edward Cho, Special Counsel; for Rule 17a-22—Matthew Lee, Assistant Director, and Susan Petersen, Special Counsel; for Rule 17a-5, Rule 17a-12, Rule 18a-7, Form X-17A-5 Part III and related annual filings, Form X-17A-5 Parts II, IIA, and IIC, Form 17-H, and Form X-17A-19—Raymond A. Lombardo, Assistant Director, and Valentina Minak Deng, Special Counsel; for notices provided pursuant to Rule 3a71-3(d)(1)(vi) and Rule 15fi-3(c)—Carol McGee, Associate Director; John Guidroz, Assistant Director, and Israel Goodman, Senior Counsel; and for reports submitted pursuant to Rule 15fk-1(c)(2)(ii)(A), Kelly Shoop, Branch Chief, and Patrick Bloomstine, Attorney-Adviser, Division of Trading and Markets, at (202) 551-5500, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549.

SUPPLEMENTARY INFORMATION:

The Commission is amending its rules to require the electronic filing or submission, using structured data where appropriate, of certain forms and other filings,

which are currently filed with or submitted to the Commission in paper or via email or are new filing requirements. This release is divided into five parts: (1) forms that are filed or submitted by or otherwise made available electronically by SROs (“Covered SRO Forms”); (2) supplementary materials (“Covered Supplementary Materials”) required to be posted on the internet websites of clearing agencies; (3) forms and related filings filed or submitted by broker-dealers and over-the-counter derivatives dealers (“OTC derivatives dealers”), as well as security-based swap dealers (“SBSDs”) and major security-based swap participants (“MSBSPs”) (each SBSD and each MSBSP also referred to as an “SBS Entity” and together referred to as “SBS Entities”); (4) other notices, filings, and reports consisting of (a) Form X-17A-19; (b) 17 CFR 240.3a71-3(d)(1)(vi) (“Rule 3a71-3(d)(1)(vi)”) Notices; (c) 17 CFR 240.15Fi-3(c) (“Rule 15fi-3(c)”) Notices; and (d) 17 CFR 240.15Fk-1(c)(2)(ii)(A) (“Rule 15fk-1(c)(2)(ii)(A)”) Compliance Reports; and (5) amendments regarding the FOCUS Report, that, among other things, would modernize signature requirements in Exchange Act Rules 17a-5, 17a-12, and 18a-7.

The Commission is adopting amendments to or relating to the following rules:

For purposes of this release, the term “form” means any Commission-created document labeled as a “Form” that is required to be submitted or filed electronically, and the term “filing” means any form, notice, report, or material required to be submitted or filed electronically or required to be posted on an internet website in lieu of being submitted or filed.

The Commission's release also includes amendments to CFR designations in order to ensure regulatory text conforms more consistently with section 2.13 of the Document Drafting Handbook.

See

Office of the Federal Register, Document Drafting Handbook (Aug. 2018 Edition, Revision 2.1, dated Oct. 2023),

available at https://www.archives.gov/files/federal-register/write/handbook/ddh.pdf

. For rules being amended in this release that contain an uppercase letter in their CFR citations (other than temporary rules like 17 CFR 240.17h-2T), the Commission is amending their CFR section designations to replace each such uppercase letter with the corresponding lowercase letter, and, in one case, to also redesignate the rule numbering. For example, 17 CFR 240.15Fi-3 is being redesignated as 17 CFR 240.15fi-3, 17 CFR 240.15Fk-1 is being redesignated as 17 CFR 240.15fk-1, 17 CFR 240.15Aa-1 is being redesignated as 17 CFR 240.15aa-1, and 17 CFR 240.15Aj-1 is being redesignated as 17 CFR 240.15aa-2.

ER21JA25.000

Finally, the Commission is rescinding:

See

15 U.S.C. 77a through 77mm.

See

15 U.S.C. 78a through 78qq.

ER21JA25.001

In developing this release with regard to SBS Entities, the Commission has consulted and coordinated with the CFTC and the prudential regulators in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).

See

Public Law 111-203, 124 Stat. 1376 (2010). Section 712(a)(2) of the Dodd-Frank Act provides in part that the Commission shall “consult and coordinate to the extent possible with the Commodity Futures Trading Commission and the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible.”

Table of Contents

I. Introduction

A. Experience With Targeted Regulatory Assistance During the COVID-19 Pandemic

B. Covered SRO Forms

C. Covered Supplementary Materials

D. Filings by Broker-Dealers, OTC Derivatives Dealers, SBSDs, and MSBSPs

E. Other Forms, Reports, or Notices

F. Structured Data Requirements

G. Amendments Regarding the FOCUS Report and Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings

II. Requirements to Electronically File Covered SRO Forms

A. Form 1

1. Relevant Statutory Framework

2. Previous Requirements for Filing Form 1

3. Requirement to Electronically File Form 1

B. Form 1-N

1. Relevant Statutory Framework

2. Previous Requirements for Filing Form 1-N

3. Requirement to Electronically File Form 1-N

C. Form 15A

1. Relevant Statutory Framework

2. Previous Requirements for Filing Forms X-15AA-1, X-15AJ-1, and X-15AJ-2

3. Requirements to Electronically File on Form 15A Information Previously Filed on Forms X-15AA-1, X-15AJ-1, and X-15AJ-2

D. Form CA-1

1. Relevant Statutory Framework

2. Pre-Existing Requirements for Filing Form CA-1

3. Comment Regarding Proposed Changes to Rule 17ab2-1 and Form CA-1

4. Requirement to Electronically File Form CA-1

5. Amendments to Rule 17ab2-1

6. Amendments to Form CA-1 and the Form CA-1 Instructions

E. Form 19b-4(e)

1. Relevant Statutory Framework

2. Background of Rule 19b-4(e)

3. Previous Requirements for Filing Form 19b-4(e)

4. Rescission of Form 19b-4(e)

F. Rule 19b-4(j) and Form 19b-4

1. Relevant Statutory Framework

2. Rule Change

G. Conforming Technical Amendment to Rule 202.3(b) Under the Exchange Act

III. Requirements for Clearing Agencies to Electronically File Covered Supplemental Materials

A. Preexisting Rule 17a-22

B. Amended Rule 17a-22

1. Two-Day Timeframe for Compliance

2. Scope of Supplemental Materials

3. Meaning of “Generally Available”

4. Requirement to “Prominently Post”

IV. Requirements to Electronically File Broker-Dealer, OTC Derivatives Dealer, and SBS Entity Reports

A. Rules 17a-5, 18a-7, and 17a-12

B. Rule 17h-2T and Form 17-H

V. Other Forms, Reports, or Notices

A. Notices Pursuant to Rule 17a-19 and Form X-17A-19

B. Notice (and Any Withdrawal of a Notice) Filed Pursuant to Rule 3a71-3(d)(1)(vi)

1. Proposed Rule

2. Amended Rule

C. Notice (and Any Amendment, including Notice of Dispute Termination) Provided Pursuant to Rule 15fi-3(c)

1. Proposed Rule

2. Amended Rule

D. Compliance Reports Submitted to the Commission pursuant to Rule 15fk-1(c)(2)(ii)(A)

1. Proposed Rule

2. Final Rule

VI. Amendments Regarding the FOCUS Report and Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings

A. Corrective and Clarifying Amendments to the FOCUS Report

B. Harmonizing FOCUS Report Part IIC With the Call Report

C. OTC Derivatives Dealer FOCUS Report Filing Requirement

D. Signature Requirements in Rule 17a-5, 17a-12, and 18a-7 Filings

1. Number of Signatures on FOCUS Report

2. Electronic Signatures in Rule 17a-5, 17a-12, and 18a-7 Filings

VII. Amendments to Regulation S-T (Including Structured Data Requirements) and Rule 24b-2

A. Amendments to Regulation S-T (Including Structured Data Requirements)

B. Amendments to Rule 24b-2

VIII. Compliance Dates

IX. Paperwork Reduction Act

A. Summary of Collection of Information

1. Form ID

2. Rules 6a-1, 6a-2, 6a-3, and Form 1

3. Rule 6a-4 and Form 1-N

4. Rules 15aa-1 and 15aa-2; Form 15A

5. Rule 17ab2-1 and Form CA-1

6. Rule 19b-4(e) and Form 19b-4(e)

7. Rule 19b-4(j) and Form 19b-4

8. Rule 17a-22

9. Rules 17a-5, 18a-7, and 17a-12

10. Rule 17h-2T

11. Rule 17a-19 and Form X-17A-19

12. Rule 3a71-3(d)(1)(vi)

13. Rule 15fi-3(c)

14. Rule 15fk-1(c)(2)(ii)(A)

B. Use of Information

1. Form ID

2. Rules 6a-1, 6a-2, 6a-3, and Form 1

3. Rule 6a-4 and Form 1-N

4. Rules 15aa-1 and 15aa-2; Form 15A

5. Rule 17ab2-1 and Form CA-1

6. Rule 19b-4(e) and Form 19b-4(e)

7. Rule 19b-4(j) and Form 19b-4

8. Rule 17a-22

9. Rules 17a-5, 18a-7, and 17a-12

10. Rule 17h-2T

11. Rule 17a-19 and Form X-17A-19

12. Rule 3a71-3(d)(1)(vi)

13. Rule 15fi-3(c)

14. Rule 15fk-1(c)(2)(ii)(A)

C. Respondents

1. Form ID

2. Rules 6a-1, 6a-2, 6a-3, and Form 1

3. Rule 6a-4, Form 1-N

4. Rules 15aa-1 and 15aa-2; Form 15A

5. Rule 17ab2-1, Form CA-1

6. Rule 19b-4(e), Form 19b-4(e)

7. Rule 19b-4(j), Form 19b-4

8. Rule 17a-22

9. Rules 17a-5, 18a-7, and 17a-12

10. Rule 17h-2T

11. Rule 17a-19 and Form X-17A-19

12. Rule 3a71-3(d)(1)(vi)

13. Rule 15fi-3(c)

14. Rule 15fk-1(c)(2)(ii)(A)

D. Total Initial and Annual Reporting and Recordkeeping Burdens

1. Form ID

2. Rules 6a-1, 6a-2, 6a-3 and Form 1

3. Rule 6a-4, Form 1-N

4. Rules 15aa-1 and 15aa-2; Form 15A

5. Rule 17ab2-1, Form CA-1

6. Rule 19b-4(e), Form 19b-4(e)

7. Rule 19b-4(j), Form 19b-4

8. Rule 17a-22

9. Rules 17a-5, 18a-7, and 17a-12

10. Rule 17h-2T

11. Rule 17a-19 and Form X-17A-19

12. Rule 3a71-3(d)(1)(vi)

13. Rule 15fi-3(c)

14. Rule 15fk-1(c)(2)(ii)(A)

E. Collection of Information is Mandatory

F. Confidentiality of Responses to Collection of Information

G. Retention Period for Recordkeeping Requirements

X. Economic Analysis

A. Broad Economic Considerations

B. Baseline

1. Affected Entities

2. Paper and Limited Electronic Submission

3. Structured Data

C. Economic Effects

1. Benefits

2. Costs

D. Efficiency, Competition, and Capital Formation

E. Reasonable Alternatives

1. Exempt Certain Entities or Disclosures From Structured Data Requirements

2. Require Structured Data on Form 1-N, Form 15A, and ANE Exception Notices to Same Extent as Structured Documents

3. Replace Inline XBRL Requirements With Custom XML Requirements or Vice Versa

4. Require Structured Data Languages Other Than Inline XBRL and Custom XML

5. Permit, Not Require, Structured Data for Affected Documents

6. Exempt Smaller Entities from Electronic Submission or Posting Requirements

7. Require SROs To Submit Form 19b-4(e) via EDGAR

8. Require the Use of Dedicated Mailbox

XI. Final Regulatory Flexibility Act Analysis

A. Regulatory Flexibility Act Certification

B. Regulatory Flexibility Act Analysis

1. Need for, and Objectives of, the Final Amendments

2. Significant Issues Raised by Public Comments

3. Small Entities Subject to Final Amendments

4. Projected Reporting, Recordkeeping, and Other Compliance Requirements

5. Significant Alternatives

XII. Other Matters

Statutory Authority

I. Introduction

A. Experience With Targeted Regulatory Assistance During the COVID-19 Pandemic

As part of its response to the COVID-19 pandemic, the Commission and its staff provided assistance and regulatory relief to market participants, as appropriate, to facilitate the continued orderly and fair functioning of the securities markets.

As part of these efforts, Division of Trading and Markets (“Division”) staff issued a statement providing that the staff would not recommend enforcement action if filers and registrants made alternative arrangements, as detailed in the statement, for delivery, execution, and notarization of certain paper filings.

More specifically, the staff stated that it would not recommend that the Commission take enforcement action with respect to any failure to comply with the paper format submission requirement or manual signature requirement of certain “Impacted Paper Submissions” (as defined in the Updated Staff Statement), which included, but were not limited to, broker-dealer audited annual reports, Form 1 filings for national securities exchanges, and Form CA-1 filings for clearing agencies.

See generally, e.g.,

An Update on the Commission's Targeted Regulatory Relief to Assist Market Participants Affected by COVID-19 and Ensure the Orderly Function of our Markets (public statement by Chairman Jay Clayton, William Hinman, Director, Division of Corporation Finance, Dalia Blass, Director, Division of Investment Management, Brett Redfearn, Director, Division of Trading and Markets (Jan. 26, 2020, updated Jan. 5, 2021)),

available at https://www.sec.gov/news/public-statement/update-commissions-targeted-regulatory-relief-assist-market-participants

See generally

Division Updated Staff Statement Regarding Certain Paper Submissions in Light of COVID-19 Concerns (“Updated Staff Statement”),

available at https://www.sec.gov/tm/paper-submission-requirements-covid-19-updates-061820

. Staff reports, Investor Bulletins, and other staff documents cited in this release represent the views of Commission staff and are not a rule, regulation, or statement of the Commission. The Commission has neither approved nor disapproved the content of these documents and, like all staff statements, they have no legal force or effect, do not alter applicable law, and create no new or additional obligations for any person.

In general, electronic filing of Impacted Paper Submissions has been practical and efficient. It also has been the Commission's experience that electronic filing has been positively received by the various registrants that have used it. Based in part on these positive experiences with electronic filing during the COVID-19 pandemic, and as part of its efforts to modernize the methods by which it collects and analyzes information from registrants, the Commission proposed to amend certain rules and forms to require that a number of the filings be submitted to the Commission electronically on EDGAR using structured data where appropriate.

The Commission received comment letters in response to the Proposing Release

and, as set forth in more detail below, is adopting the proposed amendments with certain modifications in response to comments.

See Electronic Submission of Certain Materials Under the Securities Exchange Act of 1934; Amendments Regarding the FOCUS Report;

Exchange Act Release No. 97182 (Mar. 22, 2023), 88 FR 23920 (Apr. 18, 2023) (“Proposing Release”).

The comments on the Proposing Release (File No. S7-08-23) are available at

https://www.sec.gov/comments/s7-08-23/s70823.htm

B. Covered SRO Forms

The Commission is requiring, as proposed, that the following forms be filed electronically on EDGAR:

ER21JA25.002

Prior to these amendments, the Commission's regulatory framework required an entity seeking to be registered as a national securities exchange (or seeking an exemption from such registration based on limited volume), a national securities association, a clearing agency (or seeking an exemption from such registration), and a national securities exchange solely for the purpose of trading futures on individual stocks or on narrow-based stock indexes

(“Security Futures Product Exchange”) to file, in a paper-based format, certain forms that are mandated by rules under the Exchange Act. Registered national securities exchanges, registered national securities associations, registered clearing agencies, and registered Security Futures Product Exchanges (collectively, SROs), as well as exempt exchanges and exempt clearing agencies (together with prospective SROs, “Filers”), were also required to submit paper-based amendments to their respective forms. The Commission's amendments modernize the filing process for these various forms by requiring that the forms and information contained therein be submitted to the Commission electronically, thereby removing the burden of preparing and submitting paper forms by the Filers, and of receiving, acting upon, and maintaining the paper forms by the Commission and its staff.

See

17 CFR 249.802 and 803. The forms and instructions to the form are incorporated by reference into the Code of Federal Regulations.

Futures on individual stocks or on narrow-based stock indexes are hereinafter referred to as “security futures products.”

In particular, as required by Rule 6a-1, Rule 6a-2, and Rule 6a-3 under the Exchange Act, a prospective exchange must file on Form 1 an application for registration as a national securities exchange (or for an exemption from the requirement to register as a national securities exchange based on limited volume), and, once registered, the exchange must file as an amendment to its Form 1 certain updating information, as well as certain supplemental material and reports. In addition, as required by Rule 6a-4 under the Exchange Act, a

prospective exchange may register as a Security Futures Product Exchange by filing Form 1-N (“notice registration”) if it satisfies certain prerequisites and must file amendments to its initial filing and certain supplemental materials on Form 1-N as well. An applicant for registration as a national securities association must file a registration statement with the Commission on Form X-15AA-1, and every association applying for registration or registered as a national securities association must file amendments and supplements to its registration statement with the Commission on Form X-15AJ-1 and annual supplements to its registration statement with the Commission on Form X-15AJ-2. Moreover, as required by Rule 17ab2-1 under the Exchange Act, a prospective clearing agency must file on Form CA-1 an application for registration as a clearing agency (or for an exemption from such registration), and both registered and exempt clearing agencies must file amendments to their Form CA-1 as necessary. In each of the foregoing situations, these forms were required to be submitted to the Commission in a paper-based format. As a result, the prospective and existing SROs, exempt exchanges, and exempt clearing agencies have incurred the costs of completing their respective paper-based forms, making the requisite number of copies, and submitting the original version and copies to the Commission.

The Commission also is rescinding the following form, as proposed, and instead requiring that the information currently contained in the form be publicly posted on the relevant SRO's internet website:

ER21JA25.003

Previously, Rule 19b-4(e) under the Exchange Act required an SRO to submit to the Commission reports regarding the listing and trading of new derivative securities products on Form 19b-4(e) in a paper-based format. As with the forms discussed above in this section, SROs incurred the costs of completing the paper-based form, making the requisite number of copies, and submitting the original version and copies to the Commission.

C. Covered Supplementary Materials

Rule 17a-22 requires a registered clearing agency to file with the Commission three copies of any material within 10 days after issuing, or making generally available, such materials to its participants or to other entities with whom it has a significant relationship.

A registered clearing agency for which the Commission is not the appropriate regulatory agency is required at the same time to file one copy of such material with its “appropriate regulatory agency” (“ARA”).

While the rule continues to support the Commission's oversight of clearing agencies, the rule is being modernized to better reflect the ways in which the registered clearing agencies now generally distribute the supplemental materials required under the rule, as discussed further below.

See

17 CFR 240.17a-22. Such materials are hereinafter referred to as “supplementary materials.”

See id.

When used with respect to a clearing agency, the term “appropriate regulatory authority” is defined under section 3(a)(34)(B) of the Exchange Act to mean broadly the Comptroller of the Currency, the Board of Governors of the Federal Reserve System (“Federal Reserve”), or the Federal Deposit Insurance Corporation, depending on the type of bank that is acting as a registered clearing agency.

See

15 U.S.C. 78c(a)(34).

Since the Commission adopted Rule 17a-22 in 1980, technology has evolved significantly and the internet has played an increasingly vital role in information distribution.

During this period, the Commission has encouraged the dissemination of information electronically via the internet, as well as through the use of automated systems and other services provided by clearing agencies.

In general, transitioning from a requirement to file paper with the Commission to an electronic filing requirement can help improve efficiency and transparency in the securities markets for registered clearing agencies, their participants, and the general public. Most recently, under the Updated Staff Statement described above,

registered clearing agencies have established alternate arrangements to satisfy the requirements of Rule 17a-22 that do not require the submission of paper filings.

See, e.g.,

The Impact of Recent Technological Advances on the Securities Market (Sept. 1997),

available at https://www.sec.gov/news/studies/techrp97.htm

. In this report, the Commission stated that it was mindful of the benefits of increasing use of new technologies, such as the internet, to access information more efficiently.

Id. See also, e.g.,

Commission Interpretation: Confirmation and Affirmation of Securities Trades; Matching, Exchange Act Release No. 39829 (Apr. 6, 1998), 63 FR 17943 (Apr. 18, 1998), available

at https://www.sec.gov/rule-release/34-39829

; Commission Interpretation: Use of Electronic Media, Exchange Act Release No. 42728 (Apr. 28, 2000), 65 FR 25843 (May 4, 2000),

available at https://www.sec.gov/rules/interp/34-42728.htm

; Press Release: SEC Provides Guidance to Open Up Use of Corporate websites for Disclosures to Investors (July 30, 2008),

available at https://www.sec.gov/news/press/2008/2008-158.htm

See supra

note 7.

The Commission is now amending Rule 17a-22 to eliminate the paper filing requirement altogether and require a registered clearing agency to post any supplementary materials to its internet website, as discussed further below.

The amended rule increases efficiency in the distribution of supplementary materials required under the rule and promotes transparency regarding their contents, as these supplementary materials are intended to be made generally available to participants in the clearing agency or other categories of market participants with whom the clearing agency has a significant relationship.

See generally infra

section III.

D. Filings by Broker-Dealers, OTC Derivatives Dealers, SBSDs, and MSBSPs

ER21JA25.004

Certain forms and other filings that the Commission is requiring to be filed on EDGAR by broker-dealers, OTC derivatives dealers, SBSDs, and MSBSPs are appropriate for electronic filing because many of them are voluminous (in number, size, or both) and some of them contain certain information that must be disclosed publicly.

Electronic conversion and/or publication of these filings by Commission staff, to make them available to the public and/or Commission staff, can be labor intensive and time consuming. Requiring submission of these filings on the Commission's established EDGAR filing system will facilitate more efficient transmission, analysis, dissemination, storage, and retrieval of information, and will benefit the Commission, the submitting entities, investors, and other market participants.

See generally infra

section IV.

The Commission is requiring the existing EDGAR system to be used for certain filings because Form X-17A-5 Part III and Form 17-H are already permitted to be filed on EDGAR. In turn, this will minimize the burden of transitioning to mandatory filing on EDGAR.

E. Other Forms, Reports, or Notices

ER21JA25.005

The Commission is adopting amendments requiring the EDGAR system to be used for the following notices, reports, and filings: (1) notices made pursuant to Rule 17a-19 under the Exchange Act and on accompanying Form X-17A-19; (2) notices made pursuant to Rule 3a71-3(d)(1)(vi); (3) notices made to the Commission pursuant to Rule 15fi-3(c); and (4) reports made pursuant to Rule 15fk-1(c)(2)(ii)(A) under the Exchange Act. Previously, the notices made pursuant to Rule 17a-19 under the Exchange Act and on accompanying Form X-17A-19 were submitted via paper.

The notices made pursuant to Rule 3a71-3(d)(1)(vi) were previously filed via email.

The notices made to the Commission pursuant to Rule 15fi-3(c) were previously submitted either via email or EDGAR, at the SBS Entity's option, and the reports required under Rule 15fk-1(c)(2)(ii)(A) were previously submitted via email, mail, or EDGAR, at the SBS Entity's option.

See infra

section V.A.

See infra

section V.B.

See infra

section V.C. and V.D. Rule 15fi-3(c) requires that SBS Entities “

notify

the Commission” (emphasis added).

See infra

section V.C.1. Requiring these notices and amendments to be submitted to the Commission via EDGAR does not cause them to be deemed filed for purposes of the Exchange Act.

See, e.g.,

15 U.S. Code 78r. 17 CFR 240.15fk-1(c) (“Rule 15fk-1(c)”) requires that the chief compliance officer of an SBS Entity prepare and sign an annual compliance report that “shall [b]e submitted to the Commission.” 17 CFR 240.15fk-1(c) (emphasis added). Requiring these reports to be submitted via EDGAR does not cause the report to be deemed filed for purposes of the Exchange Act.

F. Structured Data Requirements

The Commission is requiring, as proposed, certain of the disclosures required by the following filings to be provided in a structured, machine-readable data language: (1) the Covered SRO Forms; (2) the information required under Rule 19b-4(e); (3) Form X-17A-19; (4) the annual reports (and related annual filings) filed by broker-dealers (including OTC derivatives dealers) and

SBS Entities on Form X-17A-5 Part III; (5) the risk assessment reports filed by certain broker-dealers on Form 17-H; and (6) the notices and reports provided to the Commission by SBS Entities under Exchange Act Rules 15fi-3(c) and 15fk-1(c)(2)(ii)(A), respectively (together, the “Structured Documents”).

For certain affected documents, as proposed, only some aspects are required to be provided in a structured data language. For example, only the execution pages of Form 1-N and Form 15A are required to be provided in a structured data language.

See infra

section VII.A.

Specifically, the Commission is requiring, as proposed, the report required by Exchange Act Rule 15fk-1(c)(2)(ii)(A) and portions of Form 1, Form CA-1, Form 17-H, and Form X-17A-5 Part III and related annual filings to be provided in the Inline XBRL structured data language. The Commission is also requiring, as proposed, Form X-17A-19, the notice to the Commission (and any amendments to the notices) required by Exchange Act Rule 15fi-3(c), and portions of Form 1-N, Form 15A, Form 1, Form CA-1, Form 17-H, and Form X-17A-5 Part III and related annual filings to be provided in machine-readable, eXtensible Markup Language (“XML”)-based data languages specific to those documents (“custom XMLs”). As proposed, these structured documents will be filed or submitted, as appropriate to each document, on EDGAR.

The details of the structured data requirements, including the specific portions of affected documents that will be structured in Inline XBRL versus custom XML, are discussed in section VII.A below.

In addition, the Commission is requiring, as proposed, SROs to electronically post the information required under Rule 19b-4(e) using a custom XML-based data language (also referred to as a “schema”) that the Commission will create and publish on its website for SROs to use.

The Commission is also requiring, as proposed, SROs to post a rendered Portable Document Format (“PDF”) version of the custom XML document using a PDF renderer that the Commission will also create and publish on its website for SROs to use.

This requirement will mirror the existing requirement for registered broker-dealers to electronically post reports containing order routing information using the most recent versions of the XML schema and the associated PDF renderer as published on the Commission's website.

See

17 CFR 242.606. The custom XML schema and PDF renderer for Rule 606 reports are

available at https://www.sec.gov/structureddata/dera_taxonomies

See id.

As discussed in further detail below, the structured data requirements will facilitate access to the disclosures by users (

e.g.,

investors, market participants, analysts, and the Commission), enabling more efficient retrieval, aggregation, and comparison across different filers and time periods, as compared to an unstructured PDF, HyperText Markup Language (“HTML”), or American Standard Code for Information Interchange (“ASCII”) requirement.

See infra

sections VII.A and X.C.

The Commission is requiring, as proposed, some disclosures to be structured in Inline XBRL and other disclosures to be structured in custom XML. While Inline XBRL is well-suited for certain types of content—such as financial statements and extended narrative discussions—other types of content can be readily captured using custom XML data languages that yield smaller file sizes than Inline XBRL and thus facilitate more streamlined data processing. Such custom XML languages also enable EDGAR to generate fillable web forms that permit affected entities to input disclosures into form fields rather than encode their disclosures in custom XML themselves, thus easing compliance burdens on affected entities.

Finally, certain of the structured documents—Form X-17A-5 Part III and Form 17-H—were previously partially subject to custom XML structured data requirements when voluntarily filed on EDGAR. For these forms, the Commission is requiring, as proposed, the same custom XML requirements to minimize the associated burdens on registrants that were previously using these languages for these forms.

See infra

section X.E.3 (discussing and responding to one commenter's statement that XBRL should be used for all Structured Documents).

One commenter stated that the Commission “should make clear that the [Proposing Release] would not modify the content and format of reports that substituted compliance firms are required to submit.”

The Commission's orders granting substituted compliance (“substituted compliance orders”)

condition substituted compliance for the requirements of certain Exchange Act rules in part on a non-U.S. SBS Entity providing information to the Commission, including reports and other information required by foreign law. The substituted compliance orders do not, however, address how an SBS Entity relying on substituted compliance should provide such information to the Commission (

e.g.,

via EDGAR or in structured data format).

Rather, the Commission's website provides information regarding submitting notices and amendments under Rule 15fi-3(c)

and the annual report required by Rule 15fk-1(c)

as well as filing with the Commission annual audited reports required under local law when applying substituted compliance with respect to paragraph (c) of Rule 18a-7.

Prior to the amendments adopted in this release, SBS Entities have been using this information on the Commission's website when providing filings and submissions required under the relevant Exchange Act rules and substituted compliance orders. Therefore, the amendments requiring submission or filing on EDGAR or in structured data

format do not modify the terms of the substituted compliance orders and eligible SBS Entities may continue to rely on existing substituted compliance orders regarding the requirements of a relevant rule. However, the instructions on the Commission's website regarding the submission or filing of reports and other information that SBS Entities provide to the Commission pursuant to a substituted compliance order will be updated to specify how an SBS Entity must provide such information to the Commission in a manner consistent with the electronic filing and submission and structured data amendments being made in this release. This release does not change the substituted compliance orders.

See

Letter from Kyle Brandon, Managing Director and Head of Derivatives Policy, Securities Industry and Financial Markets Association (May 22, 2023) (“SIFMA 5/22/2023 Letter”) at 3.

See also infra

section V.A (discussing structured data requirements for Form X-17A-19, which is also filed by SROs).

For example, the copies of governing documents that are required to be attached as Exhibit A to Form 1 and as part of Exhibit E to Form CA-1 are required to be included as a PDF attachment, rather than being structured in Inline XBRL or custom XML.

See infra

sections II.A.3 and II.D.5.

ER21JA25.006

For Form CA-1, Schedule A and Exhibits C, F, H, J, K, L, M, O, R, and S must be filed in Inline XBRL.

The execution page and Exhibits A (in part), B, D, E (in part), I, N, and Q must be filed in custom XML.

Exhibits A (in part), E (in part), G, P, and T must be filed as unstructured PDF documents.

Schedule A to the execution page requires certain descriptive responses to complement the clearing agency's execution page disclosures. Exhibit C requires a description of the clearing agency's organizational structure. Exhibit F requires a description of material pending legal proceedings involving the clearing agency. Exhibit H requires the clearing agency's financial statements. Exhibit J requires a description of the clearing agency's services and functions. Exhibit K requires a description of the clearing agency's security measures and procedures. Exhibit L requires a description of the clearing agency's safeguarding measures and procedures. Exhibit M requires a description of the clearing agency's backup systems. Exhibit O requires a description of criteria governing access to the clearing agency's services and a description of the reasons for imposing such criteria. Exhibit R requires a schedule of prohibitions and limitations on access to the clearing agency's services. Exhibit S requires, if applicable, a statement explaining why the clearing agency should be exempt.

The execution page requires identifying information about the filer and the document being filed. Exhibit A requires, in relevant part, a list of persons controlling or directing the management or policies of the clearing agency, and descriptions of any unwritten agreements or arrangements through which such persons may exercise control or direction. Exhibit B requires a list of the clearing agency's officers, managers, and individuals occupying similar positions. Exhibit D requires a list of persons who are controlled by, or are under common control with, the clearing agency, as well as a description of each control relationship. Exhibit E requires, in relevant part, a list of dues, fees, and other charges imposed by the clearing agency for its clearing activities. Exhibit I requires the addresses of all offices in which the clearing agency conducts its activities, and an identification of the activities that are performed in each listed office. Exhibit N requires a list of participants, or applicants for participation, in the clearing agency. Exhibit Q requires a schedule of fees fixed by the clearing agency for services rendered by its participants.

Exhibit A requires, in relevant part, copies of written agreements with persons who may control or direct the management or policies of the clearing agency. Exhibit E requires, in relevant part, a copy of the currently effective constitution, articles of incorporation or association, bylaws, rules, procedures and instruments corresponding thereto, of the clearing agency. Exhibit G requires copies of all contracts with any national securities exchange, national securities association or clearing agency or securities market for which the clearing agency acts as a clearing agency or performs clearing agency functions. Exhibit P requires copies of any forms of contracts governing the terms on which persons may subscribe to clearing agency services provided by the registrant. Exhibit T requires any conditions, reports, notices or other submissions to the Commission required as directed in any order approving applications for exemption from registration as a clearing agency.

For Form 1, Exhibits D, E (in part), and I must be filed in Inline XBRL.

The execution page, Exhibits C (in part), H (in part), J, K, L, M, N, and the 17 CFR 240.6a-3(b) (“Rule 6a-3(b)”) volume reports must be filed in custom XML.

Exhibits A, B, C (in part), E (in part), F, G, H (in part), and the 17 CFR 240.6a-3(a)(1) (“Rule 6a-3(a)(1)”) supplemental materials must be filed as unstructured PDF documents.

For Forms 15A and 1-N, only the execution page must be filed using a structured data language (custom XML).

Exhibit D requires the unconsolidated financial statements for the latest fiscal year for each of the exchange's subsidiaries and affiliates. Exhibit E requires, in relevant part, a description of the manner of operation of the electronic trading system that the exchange uses to effect transactions. Exhibit I requires audited financial statements for the exchange's latest fiscal year.

The execution page requires identifying information about the filer and the document being filed. Exhibit C requires, in relevant part, information regarding each subsidiary or affiliate of the exchange, and each entity with whom the exchange has an agreement relating to the operation of an electronic trading system to be used to effect transactions on the exchange (such as the name and address of the organization, a brief description of the nature and extent of the affiliation, and a brief description of the business or functions of the organization). Exhibit H requires, in relevant part, a schedule of listing fees and a brief description of the criteria governing which securities may be traded on the exchange. Exhibit J requires a list of the exchange's officers, governors, standing committee members, or persons performing similar functions. Exhibit K requires a list of the exchange's significant owners, shareholders, or partners. Exhibit L requires descriptions of the criteria, conditions, and procedures governing membership in the exchange. Exhibit M requires a list of members, participants, subscribers, or other users of the exchange, as well as a description of each user's activities. Exhibit N requires schedules of securities traded on the exchange. Rule 6a-3(b) of the Exchange Act requires a report concerning the securities sold on the exchange during the previous calendar month.

See

17 CFR 240.6a-3(b).

Exhibit A requires copies of the constitution, articles of incorporation or association with all subsequent amendments, and of existing bylaws or corresponding rules or instruments, whatever the name, of the exchange. Exhibit B requires copies of all written rulings, settled practices having the effect of rules, and interpretations of the Governing Board or other committee of the exchange in respect of any provisions of the constitution, bylaws, rules, or trading practices of the exchange which are not included in Exhibit A. Exhibit C requires, in relevant part, copies of the constitution, a copy of the articles of incorporation or association including all amendments, and copies of the existing bylaws or corresponding rules or instruments for each of the exchange's subsidiaries or affiliates and for each entity with whom the exchange has an agreement relating to the operation of an electronic trading system to be used to effect transactions on the exchange. Exhibit E requires, in relevant part, a copy of the exchange's users' manual. Exhibit F requires a complete set of all forms pertaining to membership, participation, or subscription to the exchange, application for approval as a person associated with a member, participant, or subscriber of the exchange, or any other similar materials. Exhibit G requires a complete set of all forms of financial statements, reports, or questionnaires required of members, participants, subscribers, or any other users relating to financial responsibility or minimum capital requirements for such members, participants, or any other users. Exhibit H requires, in relevant part, a complete set of documents composing the exchange's listing applications, including any agreements required to be executed in connection with listing. Rule 6a-3(a)(1) of the Exchange Act requires any material (including notices, circulars, bulletins, lists, and periodicals) issued or made generally available to members of, or participants or subscribers to, the exchange.

See

17 CFR 240.6a-3(a)(1).

The execution page requires identifying information about the filer and the document being filed.

Similarly, the information under Rule 19b-4(e)(2)(ii) is required to be provided on the listing SRO's website using a custom XML data language, thus making the information machine-readable.

ER21JA25.007

The requirement that the Covered SRO Forms be filed, and information pursuant to Rule 19b-4(e) be posted, using structured data languages allows the Commission and, if applicable, investors, market participants, and other interested parties, to efficiently review and analyze the information.

In addition, the requirement to file Covered SRO Forms on EDGAR in a structured data language enables EDGAR to perform technical validations (

i.e.,

programmatic checks to ensure the documents are appropriately standardized, formatted, and complete) upon intake of the documents, which will improve the quality of the filed data by decreasing the incidence of non-substantive errors (such as the omission of values from fields that should always be populated).

For more detailed discussions of the anticipated benefits associated with structured data requirements,

see infra

sections VII.A. and X.C.1.b.

Based on the Commission's experience in reviewing the Covered SRO Forms and information posted pursuant to Rule 19b-4(e), the requirement to electronically file the Covered SRO Forms and electronically post the information required pursuant to Rule 19b-4(e) allows for more efficient use of Commission resources related to reviewing, assessing, and processing these filings and postings. In addition, information provided on the Covered SRO Forms will be captured automatically by EDGAR and is text-searchable or machine-readable. The information posted pursuant to Rule 19b-4(e) will be machine-readable as well. As a result, these features will facilitate the Commission's oversight of SROs.

The amendments include no substantive changes to the information required to be filed on the Covered SRO Forms or the information required to be posted pursuant to Rule 19b-4(e). Rather, the amendment is intended simply to require and facilitate the electronic filing of the Covered SRO Forms and the disclosure of the information required under Rule 19b-4(e), which the SROs currently are required to provide to the Commission.

A. Form 1

1. Relevant Statutory Framework

Section 6(a) of the Exchange Act states, “[a]n exchange may be registered as a national securities exchange . . . by filing with the Commission an application for registration in such form as the Commission, by rule, may prescribe containing the rules of the exchange and such other information and documents as the Commission, by rule, may prescribe as necessary or appropriate in the public interest or for the protection of investors.”

Rules 6a-1, 6a-2, and 6a-3

under the Exchange Act and Form 1

set forth the filing requirements for registration as a national securities exchange and for

exempt exchanges, as well as requirements for the filing of supplemental material and reports.

See

15 U.S.C. 78f(a).

See

17 CFR 240.6a-1; 17 CFR 240.6a-2; 17 CFR 240.6a-3.

See

17 CFR 249.1.

2. Previous Requirements for Filing Form 1

Rule 6a-1 under the Exchange Act generally requires that an entity seeking to register as a national securities exchange, or seeking an exemption from such registration based on limited volume, file an application on Form 1 and correct any inaccuracy therein upon discovery.

Form 1 contains an execution page as well as 14 exhibits that must be filed by the exchange.

The Form 1 execution page requires certain basic information from the exchange, such as the name and street and mailing addresses of the exchange; the name, title, and telephone number of the exchange's contact employee; and the legal status of the exchange (

e.g.,

corporation or limited liability company). The Form 1 exhibits require the exchange to provide, among other things: its audited financial statements and unconsolidated financial statements for each subsidiary or affiliate; its governing documents and rules; the names of its members, participants, subscribers, and users; information regarding its non-member owners, shareholders, or partners; and the securities it lists or trades. The instructions to Form 1 require that one original and two copies of all the Form 1 materials be filed with the Commission in paper form.

See

17 CFR 240.6a-1.

For purposes of this section relating to Form 1, these entities are collectively referred to as “exchanges.”

See

17 CFR 249.1.

Rule 6a-2 requires a registered national securities exchange or an exempt exchange

to amend its Form 1 as specified therein. Specifically, pursuant to 17 CFR 240.6a-2(a) (“Rule 6a-2(a)”), an exchange must file an amendment to its Form 1 within 10 days after it takes any action that renders any part of its Form 1 execution page or the information provided in its Form 1 Exhibits C, F, G, H, J, K, or M inaccurate or incomplete.

For purposes of this paragraph, these entities are collectively referred to as “exchanges.”

See

17 CFR 240.6a-2(a).

Pursuant to 17 CFR 240.6a-2(b) (“Rule 6a-2(b)”), on or before June 30 of each year, a national securities exchange or an exempt exchange

must file amendments to Exhibits D, I, K, M, and N with the Commission.

Pursuant to 17 CFR 240.6a-2(c) (“Rule 6a-2(c)”), on a triennial basis, an exchange must file complete Exhibits A, B, C, and J with the Commission.

Further, 17 CFR 240.6a-2(d) (“Rule 6a-2(d)”) provides alternative means for satisfying the requirements to file amendments to certain exhibits.

These alternative means require that the exchange: (i) on an annual or more frequent basis publish the information required by the pertinent exhibits, or cooperate in its publication;

(ii) keep the information up to date and make it available to the Commission and the public upon request;

or (iii) make the required information available continuously on an internet website controlled by the exchange.

As with Form 1 filings pursuant to Rule 6a-1, all amendments to Form 1 pursuant to Rule 6a-2 currently are submitted in paper form in accordance with the instructions to Form 1.

For purposes of this paragraph, these entities are collectively referred to as “exchanges.”

See

17 CFR 240.6a-2(b).

See

17 CFR 240.6a-2(c).

See

17 CFR 240.6a-2(d). Rule 6a-2(d) applies to information required to be filed pursuant to paragraphs (b)(2) and (c) of Rule 6a-2. Rule 6a-2(d) sets forth alternative means of providing access to the information contained in Exhibits A, B, C, J, K, M, and N in lieu of filing the information with the Commission.

The exchange would need to: (i) identify the publication in which the information is available, the name, address, and telephone number of the person from whom such publication may be obtained, and the price of the publication; and (ii) certify the accuracy of such information as of its publication date. 17 CFR 240.6a-2(d)(1).

The exchange would need to certify that the information is kept up to date and is available to the Commission and the public upon request. 17 CFR 240.6a-2(d)(2).

The exchange would need to: (i) indicate the location of the internet website where such information may be found; and (ii) certify that the information available at such location is accurate as of its date. 17 CFR 240.6a-2(d)(3).

See

17 CFR 249.1.

Pursuant to Rule 6a-3, a national securities exchange or an exempt exchange also must file certain supplemental material and reports with the Commission.

Specifically, Rule 6a-3(a)(1) requires an exchange to file with the Commission any material issued or made generally available to members of, or participants or subscribers to, the exchange within 10 days after issuing or making such material available to such members, participants or subscribers.

17 CFR 240.6a-3(a)(2) (“Rule 6a-3(a)(2)”) provides that, if information required by Rule 6a-3(a)(1) is available continuously on a website controlled by the exchange, in lieu of filing such information, the exchange may indicate the location of the website where the information can be found, and certify that the information is accurate as of its date.

Rule 6a-3(b) requires an exchange to file, within 15 days after the end of each calendar month, a volume report of securities transactions on the exchange during the calendar month. As with filings pursuant to Rules 6a-1 and 6a-2, all filings pursuant to Rule 6a-3 were previously submitted in paper form.

See

17 CFR 240.6a-3.

See

17 CFR 240.6a-3(a)(1).

See

17 CFR 240.6a-3(a)(2).

See

17 CFR 240.6a-3(b). This report must set forth: (i) the number of shares of stock sold and the aggregate dollar amount of such stock sold; (ii) the principal amount of bonds sold and the aggregate dollar amount of such bonds sold; and (iii) the number of rights and warrants sold and the aggregate dollar amount of such rights and warrants sold.

Id.

Form 1 filings are made available to the public.

Form 1 filings made pursuant to pre-existing Rule 6a-1 are scanned and the resulting PDF documents are posted on the Commission's website. Form 1 filings made pursuant to pre-existing Rule 6a-2 are scanned and the resulting PDF documents are uploaded to EDGAR. Form 1 filings made pursuant to pre-existing Rule 6a-3 are available for inspection in paper form in the Commission's public reading room.

When the Commission previously amended Form 1 and Rules 6a-1, 6a-2, and 6a-3, it stated that “[t]he information collected, retained, and/or filed pursuant to the rules for registration as a national securities exchange will not be confidential and will be available to the public.” Exchange Act Release No. 40760 (Dec. 8, 1998), 63 FR 70844, 70912 (Dec. 22, 1998) (Regulation of Exchanges and Alternative Trading Systems Adopting Release). Consistent with this statement, the Instructions to Form 1 specify that “[n]o assurance of confidentiality is given by the Commission with respect to the responses made in Form 1. The public has access to the information contained in Form 1.”

3. Requirement to Electronically File Form 1

The Commission is amending Rules 6a-1, 6a-2, and 6a-3 under the Exchange Act, as well as Form 1 and the instructions to Form 1, to require the electronic filing on EDGAR of all submissions required by the rules.

As explained in section II above, among other benefits, these amendments should increase efficiencies related to the filing of these forms and the review and analysis of the filed forms by the Commission and its staff as well as by investors, market participants, and other interested parties. In addition, the Commission is adopting conforming changes to Rule 3(b)(2) of its Informal and Other Procedures,

discussed below,

to clarify that defective

applications on Form 1 will be returned to the applicant and, although permitted as an option under the current rule, defective applications no longer will be held by the Commission. A description of the Commission's amendments to Rules 6a-1, 6a-2, and 6a-3, Form 1, and the instructions to Form 1 to implement the electronic filing requirement is provided below.

The Commission is also making a technical modification, not included in the Proposing Release, to Rule 232.101 (17 CFR 232.101(a)(1)) to include Form 1 in the list of filings required to be filed electronically.

See

17 CFR 202.3(b)(2).

See infra

section II.G.

a. Amendments to Rules 6a-1, 6a-2, and 6a-3

The Commission is adding a new paragraph (e) to Rule 6a-1 to require the electronic filing on EDGAR of all Form 1 filings and amendments to such filings. The Commission also is amending Rules 6a-2(a), (b), and (c) to mandate the electronic filing on EDGAR of the Form 1 amendments under those paragraphs by requiring the electronic filing of those amendments, in accordance with 17 CFR 240.6a-1(e) (“Rule 6a-1(e)”).

Moreover, the Commission is updating in Rule 6a-2(c) the due date for the next filings due pursuant to Rule 6a-2(c), from June 30, 2001, to June 30, 2025.

The Commission also is making a technical amendment to remove two extraneous commas from the text of Rule 6a-2(a). The Commission further is amending paragraph (d) of Rule 6a-2 to clarify that any certifications and other information permitted under that paragraph in lieu of filing the required documents as exhibits to Form 1 must be provided using Form 1. This change should facilitate compliance with the Rule 6a-2 requirements by exchanges and exempt exchanges by clarifying and standardizing the means to file any certifications and other information submitted pursuant to paragraph (d) of Rule 6a-2.

As stated earlier in this section, Rule 6a-3 requires national securities exchanges and exempt exchanges to file certain supplemental material and reports with the Commission after registration or being granted an exemption from registration. The Commission is amending Rule 6a-3 to require national securities exchanges and exempt exchanges to file on EDGAR such supplemental material and reports electronically on Form 1, in accordance with Rule 6a-1(e).

b. Amendments to Form 1 and the Form 1 Instructions

In addition to the revisions to Rules 6a-1, 6a-2, and 6a-3, the Commission is revising and reformatting Form 1, and the instructions thereto, to accommodate the electronic filing on EDGAR of initial applications, subsequent amendments, supplemental material, and reports that are made on Form 1. The changes to Form 1 to permit electronic submission to the Commission require minimal modifications to the form, as described below. The Commission also is revising the Form 1 instructions to facilitate the electronic filing and machine-readability of Form 1.

As discussed below, these revisions to Form 1 facilitate the filing and use of the information mandated by Form 1 and related Rules 6a-1, 6a-2, and 6a-3.

In addition, the Commission is removing the definition of the word “applicant” from the Form 1 instructions and replacing the word “applicant” with the word “exchange” on Form 1. Currently, Form 1 uses both the words “exchange” and “applicant” to refer to the entity filing the Form 1. The Commission is making this technical, change to make consistent the terminology used in Form 1.

The Commission is also making some technical amendments to what was proposed for Form 1 and Rules 6a-2 and 6a-3. In particular, the Commission is: (1) in Rules 6a-2 and 6a-3, removing the redundant qualifier “of this chapter” from the cross-references to Rule 6a-1(e); (2) in Section I of Form 1, adding the parenthetical “if any” next to “Facsimile”; (3) in Section V of Form 1, capitalizing certain words in the headings of the table of exhibits; (4) in Section V of Form 1, replacing “by-laws” with “bylaws”; (5) in Section V of Form 1 and in the Form 1 General Instructions, replaced “comprising” with “composing”; (6) in the Form 1 General Instructions, updating the estimated hourly burden of completing an initial Form 1 application from the old estimate of 891 hours to the new estimate of 901 hours; (7) in the Form 1 General Instructions, clarifying that the estimated hourly burden of 26 hours to prepare a Form 1 amendment refers to Form 1 amendments filed pursuant to Rules 6a-2(a) and 6a-2(c); and (8) in the Form General Instructions, specifying that the estimated hourly burden to prepare a Form 1 amendment pursuant to Rule 6a-2(b) is 40 hours.

Electronic Form 1 solicits information through prompts on the form. Electronic Form 1 also requires an exchange to attach exhibits via a new exhibit table that is part of electronic Form 1. Where Rule 6a-2 allows for alternative means of filing the information required under certain exhibits, the new exhibit table permits an exchange to electronically provide the certifications and details necessary for an exchange to avail itself of those alternative means. The information required to be filed with the exhibits is not changing. Currently, Rule 6a-2 provides that in lieu of filing certain exhibits as part of a paper Form 1 submission, an exchange may: (i) identify where such information is published and certify its accuracy as of its publication date; (ii) certify that the information is available to the Commission and the public upon request; or (iii) indicate the location of the internet website where such information may be found and certify that the information available at such location is accurate as of its date.

The amendments do not change the availability of these alternative means, only the method of providing the necessary certifications and details. As described above, instead of attaching paper exhibits, the amendments require the exhibits to be submitted electronically on EDGAR. Similarly, instead of providing on paper the certifications and details required for an exchange to avail itself of these alternative means, the amendments require those certifications and details to be provided via the electronic Form 1. In the event an exchange indicates on Form 1 an internet website where such information may be found, where applicable, the Commission is requiring the exchange to provide on Form 1 the Uniform Resource Locator(s) (“URL(s)”) of the location(s) on the internet website where such information may be found, and to certify that information posted on such a website is accurate as of its date and is free and accessible (without any encumbrances or restrictions) by the general public.

See

17 CFR 240.6a-2(d).

For electronic Form 1, the Commission is adding prompts prior to section I that require the exchange to identify the basis for submitting the form. Specifically, electronic Form 1 requires the exchange to check a box stating one of the following: (i) whether the filing is an initial Form 1 application and if it is, whether the exchange is applying to be a national securities exchange or an exempt exchange; (ii) whether the filing is an amendment to an initial Form 1 application prior to Commission action to grant registration or an exemption based on limited volume; (iii) whether the filing is to provide the exchange's consent to an extension of the time period within which the Commission must take action on an initial Form 1 application;

(iv) whether the filing is to withdraw an initial Form 1 application prior to the Commission taking action on the application; (v) whether the filing is an amendment to Form 1 pursuant to Rule 6a-2 following the Commission's granting of registration or an exemption; or (vi) whether the filing is supplemental material or reports pursuant to Rule 6a-3.

Previously, there was no place on Form 1 for an exchange to indicate the type of filing that it is submitting. For example, previously Form 1 did not provide an exchange the ability to indicate whether an initial Form 1 filing is an application to be a national

securities exchange or an exempt exchange. Accordingly, capturing information regarding the type of Form 1 filing facilitates the exchange's communication with the Commission and helps the Commission more efficiently review Form 1 submissions.

Such consents to an extension of the time period within which the Commission must act currently are submitted as letters in paper form. Adding the ability to indicate that the exchange consents to an extension of time on electronic Form 1 will streamline the process for making such a submission.

See

15 U.S.C. 78s(a)(1)(B).

The Commission also is amending the instructions to Form 1 to add a new section titled “When to Use the Form,” which explains when Form 1 filings are required.

Electronic Form 1 also captures contact information for the exchange and certain individuals. Consistent with the previous version of Form 1, electronic Form 1 requires the exchange to identify contact information for the exchange, a contact employee, and counsel for the exchange. Unlike previous Form 1, electronic Form 1 additionally requires an email address for the contact employee, which could take the form of an email to a specific contact employee or a general email to a group of contact employees. The requirement to provide an email address for the exchange contact employee expedites communications between Commission staff and the relevant exchange.

Electronic Form 1 requires an exchange to electronically attach exhibits by using an exhibit table. The exhibit table contains columns for the name of the exhibit, information required by the exhibit, whether alternative means of satisfying the filing of an exhibit are available for that particular exhibit (

e.g.,

URL(s)), if permitted by applicable Commission rule, and checkboxes to indicate whether such alternative means are being used.

The information required by the exhibits to electronic Form 1 remains the same as previous Form 1. In addition, to facilitate the electronic filing of the supplemental materials required under 17 CFR 240.6a-3(a) (“Rule 6a-3(a)”) and the volume reports required under Rule 6a-3(b), the Commission is adding new sections III and IV, respectively, to Form 1. Sections III and IV do not add new requirements beyond those currently included in Rules 6a-3(a) and (b). Rule 6a-3(a) requires exchanges to file certain information with the Commission or, in the alternative, to indicate where such information can be found on an internet website controlled by the exchange. The amendments require the filing of this information through section III of electronic Form 1 or, in the alternative, to provide through section III of electronic Form 1 the URL(s) of the location(s) on the internet website where such information can be found. If an exchange chooses this latter option and provides URL(s) of an internet website where such information can be found, section III also clarifies that such website must be free and accessible (without any encumbrances or restrictions) by the general public. Likewise, section IV does not change the substance of what must be filed; it merely requires the filing of the volume reports required under Rule 6a-3(b) to be made on electronic Form 1 instead of in paper format.

See supra

notes 66-68.

Furthermore, electronic Form 1 continues to require an exchange to consent to service of any civil action brought by, or notice of any proceeding before, the Commission in connection with its activities. The existing language under which the exchange consents to service via registered or certified mail at the main or mailing address provided on Form 1 continues to be included in the electronic form.

The Commission also is deleting the outdated provision allowing for service of any civil action pursuant to confirmed telegram.

In addition, electronic Form 1 requires the individual who is submitting the form to check a box on behalf of the exchange to represent that the information and statements contained in the Form 1, including exhibits, schedules, or other documents, are current, true, and complete. The previous requirement to sign and notarize the form is being eliminated because it is unnecessary, not compatible with, and not required for electronic filing on EDGAR.

Finally, electronic Form 1 requires exchanges to structure Exhibits D (unconsolidated financial statements of each of the exchange's subsidiaries or affiliates), E (description of the electronic trading system's manner of operation, except for the attached copy of the users' manual), and I (audited financial statements of the exchange) in Inline XBRL. The execution page, Exhibits C (information regarding each of the exchange's subsidiaries, affiliates, and entities with whom the exchange has an agreement relating to the operation of the exchange's electronic trading system, except for the copies of existing documents listed below), H (listing fee schedule and brief description of the criteria governing which securities may be traded on the exchange, except for the copies of existing documents listed below), J (list of officers, governors, standing committee members, or persons performing similar functions), K (list of significant shareholders or partners), L (description of criteria, conditions, and procedures governing membership in the exchange), M (list of members, participants, subscribers, or other users of the exchange and description of each user's activities), N (schedules of securities traded on the exchange), and the information required under Rule 6a-3(b) (reports regarding the securities sold on the exchange over the previous calendar month) must also be structured, albeit in a custom XML data language specific to Form 1 rather than in Inline XBRL.

Attached copies of existing documents, including those filed with Exhibits A (constitution, articles of incorporation or association, and existing bylaws or corresponding rules or instruments of the exchange), B (written rulings, settled practices having the effect of rules, and interpretations of the Governing Board or other committee of the exchange in respect of any provisions of the constitution, bylaws, rules, or trading practices of the exchange), C (written rulings, settled practices having the effect of rules, and interpretations of the Governing Board or other committee of the exchange in respect of any provisions of the constitution, bylaws, rules, or trading practices of the exchange's affiliates, subsidiaries, or entities with whom the exchange has an agreement related to the operation of the exchange's electronic trading system), E (listing applications and required agreements), F (forms pertaining to membership, participation, or subscription, application for approval as a person associated with a member, participant, or subscriber of the exchange, or any other similar materials), G (forms of financial statements, reports, or questionnaires required of members, participants, subscribers, or any other users relating to financial responsibility or minimum capital requirements for such members, participants, or any other users), H (listing applications and agreements required to be executed in connection with listing), and the information required under Rule 6a-3(a)(1) (supplemental materials issued or made available to members of, or participants or subscribers to, the exchange), must be filed as unstructured PDF documents.

ER21JA25.008

The structuring requirements will facilitate access to the exchange's disclosures (such as by enabling efficient retrieval of only those disclosures filed by a subset of exchanges over particular reporting periods) and their analysis (such as by enabling efficient comparisons of individual disclosures or sets of disclosures across different exchanges and reporting periods). This will benefit market participants through enhanced oversight of the exchanges. For example, Commission staff will be able to leverage the machine-readability of Exhibit I to automatically flag any atypical fluctuations in particular financial line items across every exchange's financial statements, and assess whether closer examination of any such fluctuations is warranted. Similarly, Commission staff will be able to leverage the machine-readability of Exhibit E by retrieving automated redline comparisons of the manner of operations description disclosed by exchanges from prior reporting periods to the current reporting period, thus pinpointing any widespread operational changes for further assessment.

Market participants (such as issuers, analysts, and other exchanges) will also benefit from direct use of the machine-readable disclosures on Form 1. For example, the structuring requirement for Exhibit I will allow analysts to more quickly and efficiently compare the audited financial statements of exchanges as they determine the exchange on which they list their securities. Without the structured data requirements, these analyses, to the extent they are done, need to be performed manually, such as by gathering the current and former financial statements for each exchange and entering all financial line items of interest into databases, resulting in a less efficient and precise process. In addition, the structured data requirement enables EDGAR to perform technical validations (

i.e.,

programmatic checks to ensure the documents are appropriately standardized, formatted, and complete) upon intake of the Form 1 disclosures, thus improving the quality of the filed data by decreasing the incidence of non-substantive errors (such as the omission of values from fields that should always be populated).

The nature and extent of such benefits may vary based on the content of each Form 1 Exhibit. As discussed in the subsequent economic analysis, studies of XBRL requirements for public operating company financial statements indicate a number of benefits for investors and market participants.

The probability that, and extent to which, these particular benefits arise from structured Form 1 disclosures could be heightened for Exhibits D and I, which likewise include structured financial statements under the rule amendments. In addition, the particular benefits of structuring data will vary based on the type of disclosures included in each particular Exhibit. Structured numerical disclosures, such as those included on Exhibit I, lend themselves to mathematical functionality, such as the calculation of key ratios or the identification of extreme statistical outliers. Structured textual disclosures, such as those included on Exhibit E, lend themselves to targeted keyword searching and more sophisticated sentiment analysis.

See infra

section X.C.1.b.

After consideration, the Commission, as proposed, is requiring Inline XBRL for certain exhibits to Form 1 and custom XML for others because each data language is better suited for particular types of disclosures. Exhibits D and I require disclosure of financial statements, and Inline XBRL was designed to accommodate financial statement information, including the particular metadata (

e.g.,

the relevant fiscal period, whether the line item is on the balance sheet, and whether the line item is a credit or debit) that must be linked to each data point within the financial statements to fully convey its semantic meaning to a machine reader. Exhibit E requires narrative disclosure regarding the trading system's manner of operations, and whereas custom XML data languages only have the capacity to accommodate brief narrative descriptions, Inline XBRL can accommodate longer narrative descriptions with presentation capabilities that preserve human-readability and maintain machine-readability.

Compare, for example, the Inline XBRL requirement for the description of investment strategies that open-end funds disclose on Form N-1A to the custom XML requirement for the brief description of the applicant's business that SBS Entities disclose on Form SBSE.

See

Item 4 of Form N-1A; Item 7 of Form SBSE.

The execution page of Form 1, Exhibits C (in part), H (in part), J, K, L, M, and N to Form 1, and the Rule 6a-3(b) reports filed on Form 1 do not require such content. For these disclosures, the use of custom XML data languages is preferable to Inline XBRL, because it yields smaller file sizes and therefore enables more streamlined processing of the information.