2024-19645. Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Fees for Industry Members Related to Reasonably Budgeted Costs of the National Market System Plan ...

Equity Order Trade (EOT) ²²

No.	Field name	Data type	Description	Include key
12.n.8/13.n.8	member	Member Alias	The identifier for the member firm that 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	C

Option Trade (OT) ²³

No.	Field name	Data type	Description	Include key
16.n.13/17.n.13	member	Member Alias	The identifier for the member firm that is responsible for the order	R

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) ²⁴

No.	Field name	Data type	Description	Include key
26	reportingExecutingMpid	Member Alias	MPID of the executing party	R
28	contraExecutingMpid	Member Alias	MPID of the contra-side executing party.	C

(2) Calculation of Fee Rate 2024-1

The Operating Committee determined the Fee Rate to be used in calculating CAT Fee 2024-1 (“Fee Rate 2024-1”) by dividing the reasonably budgeted CAT costs (“Budgeted CAT Costs 2024-1”) for the period from July 16, 2024 through December 31, 2024 (“CAT Fee 2024-1 Period”) by the reasonably projected total executed share volume of all transactions in Eligible Securities for the four-month recovery period, as discussed in detail below.^[25] Based on this calculation, the Operating Committee has determined that Fee Rate 2024-1 would be $0.0001043598251997246 per executed equivalent share. This rate is then divided by three and rounded to determine the fee rate of $0.000035 per executed equivalent share that will be assessed to CEBBs and CEBSs, as also discussed in detail below.

(A) CAT Fee 2024-1 Period

CAT LLC proposes to implement CAT Fee 2024-1 as the first CAT Fee related to Prospective CAT Costs. CAT LLC proposes to commence CAT Fee 2024-1 during the year, rather than at the beginning of the year. Accordingly, CAT Fee 2024-1 “would be calculated as described in paragraph II” of Section 11.3(a)(i)(A) of the CAT NMS Plan, which states that “[d]uring each year, the Operating Committee will calculate a new Fee Rate by dividing the reasonably budgeted CAT costs for the remainder of the year by the reasonably projected total executed equivalent share volume of all transactions in Eligible Securities for the remainder of the year.” ^[26] For CAT Fee 2024-1, the reasonably budgeted CAT costs for “the remainder of the year” are the reasonably budgeted CAT costs from July 16, 2024 through December 31, 2024. This period is referred to as the CAT Fee 2024-1 Period. Such costs would be recovered over a four-month period, where the first invoices are sent in October 2024 based on transactions in September 2024.

(B) Executed Equivalent Shares for Transactions in Eligible Securities

Under the CAT NMS Plan, for purposes of calculating CAT Fees, 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 will be counted as 0.01 executed equivalent share.^[27]

(C) Budgeted CAT Costs 2024-1

The CAT NMS Plan states that “[t]he budgeted CAT costs for the year shall be comprised of all reasonable fees, costs and expenses reasonably budgeted to be incurred by or for the Company in connection with the development, implementation and operation of the CAT as set forth in the annual operating budget approved by the Operating Committee pursuant to Section 11.1(a) of the CAT NMS Plan, or as adjusted during the year by the Operating Committee.” ^[28] Section 11.1(a) of the CAT NMS Plan describes the requirement for the Operating Committee to approve an operating budget for CAT LLC on an annual basis. It requires the budget to “include the projected costs of the Company, including the costs of developing and operating the CAT for the upcoming ( print page 71727) year, and the sources of all revenues to cover such costs, as well as the funding of any reserve that the Operating Committee reasonably deems appropriate for the prudent operation of the Company.” Section 11.1(a)(i) of the CAT NMS Plan further states that:

[w]ithout limiting the foregoing, the reasonably budgeted CAT costs shall include technology (including cloud hosting services, operating fees, CAIS operating fees, change request fees and capitalized developed technology costs), legal, consulting, insurance, professional and administration, and public relations costs, a reserve and such other cost categories as reasonably determined by the Operating Committee to be included in the budget.

In accordance with the requirements under the CAT NMS Plan, the Operating Committee approved an annual budget for 2024 for CAT LLC in December 2023 (“Original 2024 Budget”).^[29] In August 2024, the Operating Committee approved an updated budget for 2024 (“Updated 2024 Budget”).^[30] The Updated 2024 Budget includes actual costs for each category for the months of January through July 2024, with estimated costs for the remaining months of 2024. The Operating Committee also approved the budgeted CAT costs for the CAT Fee 2024-1 Period ( i.e., Budgeted CAT Costs 2024-1), which are a subset of the costs set forth in the Updated 2024 Budget.

As described in detail below, the Budgeted CAT Costs 2024-1 would be $138,476,925. CEBBs collectively will be responsible for one-third of the Budged CAT Costs 2024-1 (which is $46,158,975), and CEBSs collectively will be responsible for one-third of Budgeted CAT Costs 2024-1 (which is $46,158,975).

The following describes in detail Budgeted CAT Costs 2024-1 for the CAT Fee 2024-1 Period. The following cost details are provided in accordance with the requirement in the CAT NMS Plan to provide in the fee filing the following:

the budget for the upcoming year (or remainder of the year, as applicable), including a brief description of each line item in the budget, including (1) 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, a reserve and/or such other categories as reasonably determined by the Operating Committee to be included in the budget, and the reason for changes in each such line item from the prior CAT fee filing.^[31]

Each of the costs described below are reasonable, appropriate and necessary for the creation, implementation and maintenance of CAT.

The following table breaks down Budgeted CAT Costs 2024-1 into the categories set forth in Section 11.3(a)(iii)(B) of the CAT NMS Plan.^[32]

Budget category	Budgeted CAT costs 2024-1 *
Capitalized Developed Technology Costs **	$4,101,990
Technology Costs:	99,728,258
Cloud Hosting Services	76,278,426
Operating Fees	14,008,947.50
CAIS Operating Fees	9,278,384.50
Change Request Fees	162,500
Legal	4,484,554.50
Consulting	652,623
Insurance	1,342,345
Professional and administration	428,544.50
Public relations	43,225
Subtotal	110,781,540
Reserve	27,695,385
Total Budgeted CAT Costs 2024-1	138,476,925
* Budgeted CAT Costs 2024-1 described in this table of costs were determined based an analysis of a variety of factors, including historical costs/invoices, estimated costs from respective vendors/service providers, contractual terms with vendors/service providers, anticipated service levels and needs, and discussions with vendors and Participants.
** The non-cash amortization of these capitalized developed technology costs to be incurred during the CAT Fee 2024-1 Period have been appropriately excluded from the above table.33