SEC Proposes to Require Proposed NMS Plan Fee Amendments to Follow Public Notice, Comment, and Approval Procedure
FOR IMMEDIATE RELEASE
Washington D.C., Oct. 1, 2019 —
The Securities and Exchange Commission today proposed to require an amendment to a national market system plan (NMS plan) that would establish or change a fee or other charge (Proposed Fee Change) to be subject to the standard procedure for NMS plan amendments. The proposal would rescind a rule exception that allows an NMS plan amendment to be effective upon filing if it establishes or changes a fee or other charge. The standard procedure requires publication of the amendment, an opportunity for public comment, and Commission approval by order before the amendment can become effective.
"The fees charged by NMS plans affect a wide variety of investors and market participants," said SEC Chairman Jay Clayton. "This rulemaking will help ensure that NMS plan fee changes benefit from review and comment by investors and market participants before those fees can be charged."
Rule 608(b)(3)(i) of Regulation NMS currently permits a Proposed Fee Change to become effective immediately upon filing with the Commission, and an NMS plan may begin charging the new fee prior to an opportunity for public comment and without Commission action. By changing the timing of effectiveness, the proposed rescission of Rule 608(b)(3)(i) provides investors and other market participants an opportunity to voice their views about a Proposed Fee Change prior to the time they are charged a new or changed fee.
Rescission of Effective-Upon-Filing Procedure for NMS Plan Fee Amendments
Oct. 1, 2019
Rule 608(b)(1) and (2) of Regulation NMS sets forth the standard procedure for amending a national market system plan (NMS plan). Pursuant to this procedure, a proposed NMS plan amendment cannot become effective until after the amendment has been published, the public has had an opportunity to comment, and the Commission has approved the amendment by order.
Rule 608(b)(3)(i) provides an exception to the standard procedure for an NMS plan amendment to establish or change a fee or other charge (Proposed Fee Change). Under this current exception (Fee Exception), a Proposed Fee Change is effective upon filing with the Commission, and an NMS plan can immediately begin charging the new fee. Rule 608(b)(3)(iii) provides that the Commission may summarily abrogate a Proposed Fee Change within 60 days after filing.
The Fee Exception is available for NMS plans that charge or intend to charge fees. Currently, these NMS plans are the four plans that govern the collection, consolidation, and distribution of market data to the public (Consolidated Tape Association, Consolidated Quotation, Nasdaq/Unlisted Trading Privileges, Options Price Reporting Association), and additionally the plan that governs the Consolidated Audit Trail.
The proposal would rescind the Fee Exception and require that a Proposed Fee Change follow the standard procedure for NMS plan amendments. As a result, investors and other market participants could not be charged a new or altered fee until after the Proposed Fee Change was published, after the public has an opportunity to comment, and after the Commission has approved the amendment. The proposal is intended to help ensure that NMS plan fees meet statutory requirements under the Exchange Act, including that they are fair and reasonable, before they go into effect.
The proposal will be published on the Commission's website and in the Federal Register. There will be a 60-day comment period following publication in the Federal Register.