SEC Release 34-40760

I. Introduction I.

II. Executive Summary of Final Rules II.

A. New Interpretation of ''Exchange'' II.A.
B. Exemption for Regulated Alternative Trading Systems II.B.
C. Regulation ATS II.C.
D. For-Profit Exchanges II.D.
E. Temporary Exemption From Rule Filing Requirements II.E.

III. Rule 3b-16 Under the Exchange Act III.

A. Brings Together the Orders of Multiple Buyers and III.A.

1. To Bring Together III.A.1.
2. Multiple Buyers and Sellers III.A.2.
3. Definition of III.A.3.

B. Established, Non-Discretionary Methods III.B.

1. Established, Non-Discretionary Methods Provided by III.B.1.
2. Established, Non-Discretionary Methods Provided by III.B.2.

C. Systems Excluded From Rule 3b-16 III.C.

1. Order Routing Systems III.C.1.
2. Dealer Systems III.C.2.

D. Examples of Systems Illustrating Application of Rule... III.D.

1. Examples of Systems Included Within Rule 3b-16 III.D.1.
2. Examples of Systems Not Included Within Rule 3b-16 III.D.2.

E. Exemption From the Definition of ''Exchange'' III.E.
F. Commission's Authority To Require Registration as... III.F.

IV. Regulation of Alternative Trading Systems IV.

A. Regulation ATS IV.A.

1. Scope of Regulation ATS a. Definition of Alternative... IV.A.1.
2. Requirements for Alternative Trading Systems ... IV.A.2.

B. Registration as a National Securities Exchange I IV.B.

1. Self-Regulatory Responsibilities IV.B.1.
2. Fair Representation IV.B.2.
3. Membership on a National Securities Exchange IV.B.3.
4. Fair Access IV.B.4.
5. Compliance With ARP Guidelines IV.B.5.
6. Registration of Securities IV.B.6.
7. National Market System Participation IV.B.7.
8. Uniform Trading Standards IV.B.8.
9. Proposed Rule Changes IV.B.9.

C. Application for Registration as an Exchange IV.C.

1. Revisions to and Repeal of Form 1-A IV.C.1.
2. Amendments to Rules 6a-1, 6a-2, and 6a-3 Under IV.C.2.

D. National Securities Exchanges Operating Alternative ... IV.D.

V. Broker-Dealer Recordkeeping and Reporting Obligation... V.

A. Elimination of Rule 17a-23 V.A.
B. Amendments to Rules 17a-3 and 17a-4 V.B.

VI. Temporary Exemption of Pilot Trading System Rule... VI.

A. Introduction VI.A.

B. Rule 19b-5 VI.B.

1. Types of Systems Eligible for Exemption Under Rule VI.B.1.
2. Scope of Pilot Trading Rule Exemption VI.B.2.
3. SROs' Continuing Obligations Regarding Pilot VI.B.3.

C. Rule Filing Under Section 19(b)(2) of the Exchange VI.C.

VII. The Commission's Interpretation of the ''Exchange'... VII.

A. The Commission's Interpretation in Delta VII.A.
B. The Growing Significance of Alternative Trading Syst... VII.B.
C. The Revised Interpretation of ''Exchange'' VII.C.

D. Other Practical Reasons for Revising the Current Int... VII.D.

1. Additional Flexibility Provided by the National Secu... VII.D.1.
2. No-action Approach to Alternative Trading Systems... VII.D.2.
3. More Rational Treatment of Regulated Entities VII.D.3.

VIII. Effective Dates and Compliance Dates VIII.

IX. Costs and Benefits of the Rules and Amendments IX.

A. Costs and Benefits of the Rules and Amendments ... IX.A.

1. Benefits IX.A.1.
2. Costs IX.A.2.

B. Amendments to Application and Related Rules for ... IX.B.

1. Benefits IX.B.1.

C. Costs and Benefits of the Repeal of Rule 17a-23 ... IX.C.
D. SRO Pilot Trading System IX.D.

X. Effects on Competition, Efficiency and Capital Forma... X.

XI. Summary of Final Regulatory Flexibility Analysis XI.

XII. Paperwork Reduction Act XII.

A. Form 1, Rules 6a-1 and 6a-2 XII.A.
B. Rule 6a-3 XII.B.
C. Rule 17a-3(a)(16) XII.C.
D. Rule 17a-4(b)(10) XII.D.
E. Rule 19b-5 and Form PILOT XII.E.

F. Rule 301, Form ATS and Form ATS-R XII.F.

1. Notice, Reporting, and Recordkeeping XII.F.1.
2. Fair Access XII.F.2.
3. Systems Capacity, Integrity, and Security XII.F.3.

G. Rule 302 XII.G.
H. Rule 303 XII.H.

XIII. Statutory Authority XIII.

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