SEC GRANTS SRO requested relief from specific reporting requirements related to activities on national securities exchange floors & "upstairs activity,"

which describes off-exchange market trading with regards to the Consolidated Audit Trail. This is wrong!!

Wut Mean?:

• On March 31, 2023, multiple SROs requested the SEC grant temporary conditional exemptive relief to the them from the National Market System Plan Governing the Consolidated Audit Trai.

They're seeking relief from specific reporting requirements related to activities on national securities exchange floors and "upstairs activity," which describes off-exchange market trading.

• “Upstairs” is a term used to describe the off-exchange market. For example, trading that occurs within a broker dealer firm or between two broker-dealers in the over-the-counter market would be described as occurring “upstairs.”

The Exchange Act allows the SEC to grant exemptions if deemed in the public interest and ensures the protection of investors. In line with this, the SEC believes it is appropriate to grant temporary relief concerning the reporting of:

1. Floor broker verbal order announcements on an exchange reported as systematized orders.
2. Market maker verbal firm quotes on an exchange trading floor.
3. Telephone conversations between an Industry Member and a client discussing firm bid and offer communications.
4. Electronic and verbal communications not currently captured by Industry Member systems, such as Bloomberg chats and text messages.

This exemption is subjected to certain conditions and is set to expire on July 31, 2026.

Background and Request for Relief:

• On November 12, 2020, the Commission gave the Participants a temporary exemption lasting until July 31, 2023.

As of March 31, 2023, the Participants requested this exemption be extended for three more years, until July 31, 2026. They argue that:

1. The activities they want an exemption for weren't originally considered under the Rule 613 or CAT NMS Plan.
2. The Commission previously did not provide evidence contradicting the Participants’ view, nor address cost-benefit analyses.
3. The technological advancements hoped for in the 2020 order, like natural language processing and voice recognition, haven't reached a point where they can reliably capture and analyze trading interactions.
4. The current state of technology makes it impractical and not cost-effective to capture these communications automatically. Manual capturing would be prone to errors, leading to inconsistent reporting.
5. They believe manually recording and reporting this data would be problematic, resulting in different interpretations of the same data, leading to unreliable information.
6. The Participants argue that such reporting wouldn't offer significant value for regulation or surveillance. They feel that many of the activities in question are already reported elsewhere, like orders on exchange floors or "upstairs activity" trades.
7. They also believe that these verbal and unstructured communications aren't typically involved in market manipulation, and that the costs to comply with recording them would exceed any potential benefits for regulation or surveillance.

The SEC has decided to extend the temporary exemptive relief to the SROs. Their reasons include:

1. The extension aligns with the public interest, investor protection, and supports a structured national market system.
2. Participants challenge the SEC's view on the reporting of verbal and manual quotes to the CAT. Instead of diving into this dispute, the SEC has deemed the extension request reasonable and chosen not to address their arguments directly.
3. The extension should allow Participants and Industry Members more time to devise and enact a practical reporting framework for verbal quotes and other specific activities.
4. The relief will cover certain reporting activities, such as floor broker announcements, market maker announcements, telephone discussions, and certain electronic and verbal communications not captured by systems like Bloomberg chats.
5. This extension, lasting until July 31, 2026, gives Participants adequate time to make the required reporting adaptations and minimizes potential disruptions to business operations.

Wut Mean?:

• The SEC will extend the temporary exemptive relief until July 31, 2026.
• This relief concerns the recording and reporting of:

1. Floor broker verbal announcements of firm orders on exchanges.
2. Market maker verbal announcements of firm quotes on trading floors.
3. Telephone discussions between Industry Members and clients about firm bids and offers.
4. Unstructured electronic/verbal communications not captured by existing systems (e.g., Bloomberg chats, texts).

Participants must give a written status update by July 31, 2025, detailing:

• Analysis of feasibility for recording firm bid and offer information.
• Implementation plan for reporting these quotes and orders.
• The implementation plan must:

1. Identify verbal/manual workflows for reporting.
2. Give guidelines on when verbal/manual communications become reportable.
3. Reference technical specifications for reporting these quotes/orders.

What can be done?

Under the Administrative Procedure Act, the public has the right to petition any federal agency, including the SEC, to issue, amend, or repeal a rule.

Reply to anything that is open for comment (or submit a new comment if you have already submitted one) calling out that this exemption weakens any of the rules they are considering?

Additionally, one could consider emailing [email protected] subject: [Release No. 34-98023] and let the SEC know how you as an individual feel about this.

I believe under enough response, they can be compelled to reconsider a temporary item such as this.

Buy, hodl, drs, shop at GameStop

TLDRS:

• The SEC will extend the temporary exemptive relief until July 31, 2026.

They're (FINRA, CBOE, Investors Exchange, NASDAQ, NSE, Others) seeking relief from specific reporting requirements related to activities on national securities exchange floors and "upstairs activity," which describes off-exchange market trading.

• “Upstairs” is a term used to describe the off-exchange market. For example, trading that occurs within a broker dealer firm or between two broker-dealers in the over-the-counter market would be described as occurring “upstairs.”
• This relief concerns the recording and reporting of:

1. Floor broker verbal announcements of firm orders on exchanges.
2. Market maker verbal announcements of firm quotes on trading floors.
3. Telephone discussions between Industry Members and clients about firm bids and offers.
4. Unstructured electronic/verbal communications not captured by existing systems (e.g., Bloomberg chats, texts).

Under the Administrative Procedure Act, the public has the right to petition any federal agency, including the SEC, to issue, amend, or repeal a rule.

• You could reply to anything that is open for comment (or submit a new comment if you have already submitted one) calling out that this exemption weakens any of the rules they are considering?
• Additionally, one could consider emailing [email protected] subject: [Release No. 34-98023] and let the SEC know how you as an individual feel about this.

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