[00:00:08] Speaker 00: Good afternoon, Your Honors, and may it please the Court [00:00:35] Speaker 05: I'll be addressing the jurisdictional issue, and my colleague Mr. Henkin will be addressing the remaining issues in this case. [00:00:42] Speaker 05: This Court has jurisdiction to review the Commission's remand order and its related reconsideration order for three reasons. [00:00:49] Speaker 05: First, the remand order constitutes final agency action. [00:00:53] Speaker 05: Second, this Court has jurisdiction under the collateral order doctrine. [00:00:56] Speaker 05: And third, this Court has jurisdiction to treat the petitions for review as petitions for writs of mandamus. [00:01:02] Speaker 05: Turning first to final agency action, [00:01:04] Speaker 05: The remand order constitutes final agency action because it imposes extraordinary new procedural obligations on petitioners and marks the consummation of the agency's decision making with respect to those procedures. [00:01:19] Speaker 06: What burden does it place or require on the petitioners? [00:01:24] Speaker 05: The petitioners are required within the first six month period to promulgate new procedures for adjudicating each of the pending 400 fee challenges and then within the next six month period to provide SIFMAT and Bloomberg an opportunity to be heard, to develop a record, and then to issue written decisions with respect to each of those pending 400 fee challenges. [00:01:46] Speaker 06: Does that make it a final order or is that simply a procedural order within a proceeding that does not yet have a final? [00:01:53] Speaker 05: It makes it a procedural order, Your Honor, because under the Supreme Court's decision in Bennett v. Spear, where an order imposes new obligations and where it marks the consummation of the agency's decision-making regarding those obligations, finality is present. [00:02:09] Speaker 05: Those hallmarks of finality are present here. [00:02:12] Speaker 05: In the words of the two concurring commissioners, the remand order imposes a momentous task on the petitioners. [00:02:19] Speaker 05: Indeed, they're being required to adjudicate 400 fee challenges in one-fifth of the time that it took the commission to adjudicate just two pending fee challenges. [00:02:30] Speaker 05: That is an extraordinary task. [00:02:32] Speaker 05: The commission's decision-making with respect to... It says there's two parts. [00:02:36] Speaker 04: One is... [00:02:37] Speaker 04: creating or identifying procedures, and then the other one is processing the complaints. [00:02:44] Speaker 04: As to the former, the procedures, I assume all the SROs already have in place procedures for addressing complaints by people of limitations of access under 19D or rules, 6D, I forget what the 6 number is, [00:03:07] Speaker 05: We don't have procedures, Your Honor, for adjudicating fee challenges under the denial of access rubric. [00:03:14] Speaker 04: No, but you have procedures in place already for addressing these. [00:03:17] Speaker 04: And so I didn't see in your briefs where you said, here's what we'll have to do differently. [00:03:24] Speaker 04: And the commission, in its reconsideration decision, said, look, you all should already have these in place. [00:03:30] Speaker 04: You can just point to those. [00:03:33] Speaker 04: Or you're free to just stand on what you have. [00:03:37] Speaker 04: It's what we're trying to give you. [00:03:40] Speaker 04: We've laid out this whole new process, this whole new way of thinking about what it is you have to demonstrate to have your fees sustained under 19D and we're giving you another shot if you want it. [00:03:55] Speaker 04: You don't have to take it. [00:03:57] Speaker 04: But you probably want to take it because the other option is we're going to vacate your fees or you can take the shot. [00:04:01] Speaker 04: We're just giving you the option of taking this shot with the procedures you already have or if you want to make new procedures. [00:04:08] Speaker 05: Well, the way in which you have articulated the choice is very apt, Your Honor, because it is not a realistic choice. [00:04:15] Speaker 05: If the petitioners do not promulgate these new procedures, then it's all but certain that the commission will vacate. [00:04:23] Speaker 04: They said you don't have to do new procedures. [00:04:25] Speaker 04: I know you keep saying your procedures aren't for fees, but no one has explained to me in the briefing why the procedures you have in place can't be used to [00:04:38] Speaker 04: process an objection about a fee. [00:04:41] Speaker 04: Why can't they? [00:04:42] Speaker 05: Your Honor, the procedures that we have in place are for disciplinary proceedings, delisting proceedings. [00:04:48] Speaker 05: Those are different in kind from challenges to fees. [00:04:51] Speaker 04: Do you have any procedures in place for limitations or prohibitions on, say, membership? [00:04:57] Speaker 05: On membership, yes. [00:04:58] Speaker 04: Okay. [00:04:59] Speaker 04: Why can't that be used here? [00:05:01] Speaker 04: What's different? [00:05:02] Speaker 04: I assume these procedures are notice, which they say you've already done, an opportunity to be heard. [00:05:08] Speaker 04: written or in-person hearing, and a decision. [00:05:12] Speaker 04: Correct? [00:05:13] Speaker 04: Is there more to the procedures than that? [00:05:14] Speaker 05: That is the general scope of these procedures, but Your Honor. [00:05:17] Speaker 05: Why doesn't that work here? [00:05:18] Speaker 05: Because here we're talking about a challenge that is different in kind. [00:05:22] Speaker 05: one where SIFMA and Bloomberg have the burden to demonstrate that these challenged fees are invalid, and where the petitioners, according to the Commission, have the burden to issue written decisions with respect to each of these 400. [00:05:37] Speaker 04: Did the Commission say that they have the burden? [00:05:40] Speaker 05: In our view, the challengers have the burden of proof, Your Honor. [00:05:44] Speaker 04: In your view, but the Commission didn't say that. [00:05:47] Speaker 05: The commission disagrees with our... Right, okay, so that's not a difference in your procedure. [00:05:51] Speaker 04: So you have the burden of proof just like you normally do. [00:05:54] Speaker 04: You have, I guess you must have decision makers in place and you must have some rules somewhere that sort of say, once this happened within so many days, somebody files something and someone else files something and we'll have a hearing, right? [00:06:06] Speaker 04: I don't understand how to process. [00:06:10] Speaker 04: I get that you don't think you have to and that you haven't before run [00:06:15] Speaker 04: fee objections through these processes. [00:06:18] Speaker 04: But I don't understand operationally why you cannot. [00:06:25] Speaker 04: And that's the essence of your great big burden argument here. [00:06:28] Speaker 05: Well, there are two burdens. [00:06:29] Speaker 04: The second burden is... I'm just talking about the procedures one. [00:06:32] Speaker 04: We'll get to the decision making one. [00:06:33] Speaker 05: With respect to the procedures, the burden of proof is a pertinent difference. [00:06:38] Speaker 05: The burden of proof issue is... Okay, they've answered that for you. [00:06:40] Speaker 04: They've told you where the burden of proof is. [00:06:42] Speaker 05: Well, that's an open issue before this Court, Your Honor. [00:06:45] Speaker 05: It's the petitioner's view that the burden of proof rests with SIFMA and Bloomberg. [00:06:50] Speaker 05: We do not currently have procedures in place for enabling parties challenging a fee to build a record and to be afforded an opportunity to be heard with respect to their specific challenges to these fees. [00:07:03] Speaker 05: But even if we did have [00:07:05] Speaker 05: procedures in place. [00:07:07] Speaker 04: This would still be a momentous task for the petitioners, because within the next six month period, so a total of one year... The main thing here is you just don't have a process for someone to come in and show why they believe this is a limitation or an unreasonable limitation on access? [00:07:25] Speaker 05: We do not have procedures for applicants who bear the burden of proof to challenge... Do you have procedures if they don't bear the burden of proof? [00:07:34] Speaker 05: We have procedures, for example, in a disciplinary setting where the burden of proof would rest with the SRO. [00:07:41] Speaker 04: And in non-disciplinary settings like membership decisions? [00:07:45] Speaker 05: I'm not aware of procedures we have in place where the burden of proof would rest on anyone other than the SRO. [00:07:53] Speaker 04: But even if... So why can't you apply that? [00:07:54] Speaker 04: How would the SRO in a proceeding, what we call a normal limitation or prohibition on, say, membership proceeding, [00:08:03] Speaker 04: I assume that the SRO would come forward with some demonstration of why it's made its decision, and the other side would respond, and then some decision maker would make a decision. [00:08:14] Speaker 05: Is that right? [00:08:18] Speaker 05: proceed, for example, but that is not how a challenge to a fee would proceed because the burden of proof rests with the applicant. [00:08:27] Speaker 04: But even if we could jerry-rig our existing... That's the only objection I've heard so far to why your existing procedures don't work. [00:08:36] Speaker 05: Your Honor, the commissioners themselves recognize how arduous [00:08:41] Speaker 05: this undertaking would be for the petitioners. [00:08:44] Speaker 05: Two of them did, and they characterized this as a momentous task. [00:08:49] Speaker 05: Because even setting aside the first six month period, within the following six month period, the petitioners are required to adjudicate these 400 pending fee challenges and to issue written decisions with respect to each of them. [00:09:02] Speaker 05: That is one fifth of the time that it took the Commission itself to adjudicate just two fee challenges. [00:09:08] Speaker 04: Are there 400 petitions to 400 different fees or are there 100 petitions targeting one fee? [00:09:15] Speaker 05: There are 400 different rule filings. [00:09:18] Speaker 05: Some of the rule filings pertain to the same market data [00:09:22] Speaker 05: product, but there are 400 discreet rule challenges. [00:09:28] Speaker 05: The petitioners will be required to adjudicate each of those. [00:09:31] Speaker 04: Right, but you're now an analytical aspect of why you decide wherever you decide may well overlap for a lot of these. [00:09:40] Speaker 05: Your Honor, there may be some efficiencies at the margins, but it doesn't change the fact that we're being required to undertake [00:09:47] Speaker 05: a task that is exponentially more burdensome than the one that the Commission itself took five years to undertake with respect to just two key challenges. [00:09:58] Speaker 04: So you're saying that the SRS just absolutely cannot do it, or just that it's going to be really hard? [00:10:05] Speaker 05: I am not representing to you that they are not up to the task, Your Honor. [00:10:09] Speaker 05: I am representing that this is a burdensome task, that it is a momentous task. [00:10:13] Speaker 05: And that is sufficient for purposes of finality, especially when coupled with the fact that this is the consummation of the agency's decision-making process with respect to these procedures. [00:10:24] Speaker 05: There will be no further commission review of the propriety of these procedures. [00:10:28] Speaker 05: The petitioners filed motions for reconsideration, which were denied. [00:10:32] Speaker 05: And importantly, the petitioners do not even have the ability to get back to the commission from their own proceedings on remand. [00:10:40] Speaker 05: The keys to judicial review rest with SIFMA and Bloomberg, which underscores the finality of the remand order. [00:10:47] Speaker 05: The remand order here bears all the hallmarks of finality that this court identified. [00:10:52] Speaker 04: The remand order as read is simply run it through your existing processes. [00:10:57] Speaker 04: You've got processes in place, run them through. [00:11:01] Speaker 05: Then Your Honor, we would still have to issue 400 written decisions. [00:11:05] Speaker 04: But I'm trying to figure out how it would be final or subject to interlocutory review. [00:11:10] Speaker 04: How would you demonstrate those factors if that's all you have to do? [00:11:15] Speaker 05: we would still be on the receiving end of a substantial burden imposed by the Commission. [00:11:22] Speaker 04: Well, then they also said if you don't want to do it, you can say we stand on our existing filings and we'll take it. [00:11:27] Speaker 04: So you could do that pretty fast. [00:11:28] Speaker 05: We could, Your Honor, but that's not a viable option, as you recognize, because under these circumstances it's certain that the Commission would conclude that the record [00:11:37] Speaker 05: as it exists is not sufficient to justify these fees. [00:11:40] Speaker 05: The commission has a very different view of what the petitioner's obligations are under these circumstances from the petitioners themselves. [00:11:47] Speaker 05: The remand order here bears all the hallmarks of finality of the FERC remand order that this court held to be final agency action in Public Utilities Commission of California versus FERC, where FERC remanded a matter to an agency ALJ [00:12:02] Speaker 05: the court concluded that that was final agency action because there was no possibility that review at that point would interfere with ongoing agency proceedings. [00:12:12] Speaker 05: There was the possibility that this court's review would obviate the need for further agency proceedings and conserve the court's own resources, which is very much the case here when we have 400 pending fee challenges. [00:12:24] Speaker 05: And if there were further proceedings in that case, any subsequent appeal would raise analytically distinct issues from [00:12:31] Speaker 05: the appeal then before the court, which is the case here as well. [00:12:34] Speaker 05: But even if this court were to disagree, this court would still have jurisdiction under the collateral order doctrine. [00:12:40] Speaker 05: The remand order conclusively determines that petitioners will be required to implement these new burdensome procedures. [00:12:47] Speaker 05: The propriety of those procedures is an important question, especially because petitioners are self-regulatory organizations with important quasi-governmental responsibilities. [00:12:56] Speaker 05: under the Exchange Act. [00:12:58] Speaker 05: And the validity of these procedures is distinct from the merits of the underlying fee challenges initiated by CFMA and Bloomberg. [00:13:06] Speaker 04: So if the Commission says the procedures are somehow deficient, you can seek judicial review of that. [00:13:15] Speaker 05: The commission in subsequent proceedings were to conclude that the procedures were deficient. [00:13:20] Speaker 05: But the problem, Your Honor, is that we as petitioners do not have the ability to get back to the commission. [00:13:26] Speaker 05: Our position is analogous to the SEC's position in Occidental Petroleum versus SEC, where the SEC itself invoked the Collateral Order Doctrine to appeal a district court remand order. [00:13:39] Speaker 05: The SEC argued that it would not have the ability to appeal its own decision on remand [00:13:44] Speaker 05: and therefore should be entitled to take an immediate collateral order appeal. [00:13:47] Speaker 05: This court agreed. [00:13:49] Speaker 05: This court likewise afforded the Department of Labor the opportunity to take a collateral order appeal from a remand order in NAACP versus U.S. [00:13:57] Speaker 05: Sugarcorp. [00:13:58] Speaker 05: The petitioners here are in an indistinguishable position because they lack the ability to pursue an appeal from their own decision on remand. [00:14:05] Speaker 04: Thank you. [00:14:06] Speaker 04: Thank you very much. [00:14:15] Speaker 07: Good afternoon, may it please the Court again. [00:14:17] Speaker 07: With respect to the remand order itself, if the Court agrees with respect to either the inapplicability in general of Section 19D to these petitions, or the fact that Sithmata and Bloomberg don't have standing, that's sufficient to dispose of the remand order on its own. [00:14:38] Speaker 07: I should also note, by the way, that not all of the challenged rule filings relate to market data. [00:14:47] Speaker 07: Some of them relate to other types of products like colocation services, things we haven't had a chance to discuss, but they're not all market data products. [00:14:57] Speaker 07: Essentially, at a certain point, CIFMA and later Bloomberg [00:15:02] Speaker 07: began just filing these roughly every two weeks about every new fee filing that most of the exchanges dealt with. [00:15:14] Speaker 07: The SECs, even if the court disagrees about the applicability of 19D and or standing, and 11A and or standing. [00:15:25] Speaker 06: Again, standing that we're dealing with is not Article 3 standing. [00:15:29] Speaker 06: You're talking about standing to be heard within the agency's own standards, correct? [00:15:33] Speaker 07: Correct. [00:15:33] Speaker 07: What we're talking about is standing to bring a 19D petition or a Section 11A plan. [00:15:40] Speaker 07: Which is not adjudicated necessarily by Article 3 stand. [00:15:45] Speaker 07: Correct. [00:15:45] Speaker 07: This is not correct. [00:15:46] Speaker 07: We're not dealing with the issue that arose in either in Net Coalition 1 under Section 25A. [00:15:53] Speaker 07: So what then would be the test for whether they have standing? [00:15:57] Speaker 07: The test for whether they have standing is what we were talking about earlier, whether they are agreed by or by a specific rule filing. [00:16:06] Speaker 06: So again, it would be something akin to or similar to an Article 3 analysis on associational standing, right? [00:16:13] Speaker 07: And you would have to look at this and as I mentioned before you would have to look at the particular statutes to determine whether [00:16:22] Speaker 07: associational standing made sense under those specific standards and statutes. [00:16:27] Speaker 07: And when you have a statute that refers, as do both Section 19D and Section 11A and also Rule 608, to specific actions by specific SROs against specific entities, that is not a situation in which associational standing makes sense, because one way of phrasing it is that [00:16:51] Speaker 07: is not, one way to think about it is to think about a class action. [00:16:55] Speaker 07: SIPMA is not a member of the class that's purporting to represent. [00:16:59] Speaker 06: Well, that's not the same thing as associational standing. [00:17:03] Speaker 06: When we have an associational standing, of course, under Article III, we don't ask if there's a class. [00:17:09] Speaker 06: We ask whether there is an association and whether the United Party is an association [00:17:16] Speaker 06: whose interest in membership is such that if one of his members has standing or some of his members have standing, then that's good enough for associative standing. [00:17:26] Speaker 06: Right, and with respect to these statutes... I'm not sure what it is that precludes CISMA or an association similarly situated from having standing, administrative standing, in this kind of case. [00:17:40] Speaker 07: It's what we discussed before for the same reasons as in the ARCA book level two appeals, CIFMA didn't have standing to bring those proceedings because CIFMA doesn't buy market data products, it doesn't buy co-location services with respect to any of the petitioners that offer them. [00:17:58] Speaker 07: It doesn't, it's not a purchaser of these and no action. [00:18:01] Speaker 07: How about Bloomberg? [00:18:03] Speaker 07: Bloomberg, to the extent Bloomberg buys market data, it buys it as a vendor to distribute to its customers, so it's actually Bloomberg's customer. [00:18:14] Speaker 07: It might, although there's nothing in the record that addresses that. [00:18:22] Speaker 07: Oh, yes, that's actually... Bloomberg? [00:18:24] Speaker 04: On what basis did you challenge Bloomberg's standing? [00:18:26] Speaker 07: On the same basis, on the basis that they're not an aggrieved party. [00:18:29] Speaker 07: That's .3D of the opening brief. [00:18:32] Speaker 07: Well, why aren't they an aggrieved party? [00:18:34] Speaker 07: Because for, and now I'll speak specifically with respect to NYSE, with when, and let's talk only about market data, NYSE's market data fees are passed through Bloomberg. [00:18:49] Speaker 07: It builds Bloomberg and all the NYSE petitioners bill Bloomberg's customers directly for whatever market data they get through their Bloomberg terminals, for example. [00:19:00] Speaker 07: And so Bloomberg is not aggrieved by any NYSE fees. [00:19:04] Speaker 07: That's something that there is no evidence in the record about. [00:19:07] Speaker 07: To the extent the court had any questions about it, I think it would have to vacate for further development of the record. [00:19:15] Speaker 07: Just with respect to the Bloomberg issues, those are a relatively small number. [00:19:20] Speaker 07: With respect to CFMA, I think there's no question that CFMA itself doesn't have standing [00:19:25] Speaker 07: to bring all of these and there is even less evidence in the record that, you know, regarding this issue. [00:19:33] Speaker 04: You make an argument that at least the plan petitioners are not registered securities information processors for purposes of the rule? [00:19:44] Speaker 04: Correct. [00:19:45] Speaker 04: Did you raise that argument before the commission? [00:19:49] Speaker 07: I don't recall whether it was raised in the motion for reconsideration. [00:19:54] Speaker 07: Did you raise it at any time before the commission? [00:19:58] Speaker 07: Well, we had no opportunity to raise any arguments before the commission, before the remand order was issued. [00:20:04] Speaker 07: And, in fact, that's an issue for several of the petitioners. [00:20:08] Speaker 07: It was literally the first order that the Commission issued because they had never participated in, for example, the procedural order. [00:20:16] Speaker 04: So then the first logical time to raise it is the reconsideration order. [00:20:19] Speaker 04: You don't know if you raised it there? [00:20:21] Speaker 07: I don't recall if we specifically raised that issue. [00:20:24] Speaker 04: If you didn't raise it there, then how can you raise it here? [00:20:27] Speaker 07: If we didn't raise it, and I'd have to check whether we did, then we would have waived that issue. [00:20:36] Speaker 04: But the issues that we did raise are that this was... Are some of the plans registered, securities information processors, or any of them? [00:20:44] Speaker 07: Well, are you talking about the plans or the plan participants? [00:20:48] Speaker 07: Because there's a difference. [00:20:52] Speaker 07: So some of the plans are registered as SIPs, yes. [00:20:55] Speaker 07: But the plan participants can't be SIPs. [00:20:58] Speaker 07: The plan participants are NYSE, NASDAQ, for example, things like that. [00:21:03] Speaker 04: But as to the plans then, which I thought from the briefs for some of the parties here, the argument doesn't apply. [00:21:13] Speaker 07: No, the argument doesn't apply because it's not relevant to whether the participants are registered as SIPs. [00:21:19] Speaker 07: That's not an issue. [00:21:21] Speaker 07: And again, one of the main issues here is that this is, the position that the SEC has taken that the petitioners are required to have these procedures [00:21:35] Speaker 07: in place under 67 is a position that the SEC has never taken before. [00:21:42] Speaker 07: And not only has it never taken that position before, when it approved the long-term stock exchanges exchange registration a few months after, [00:21:54] Speaker 07: issuing the remand order and the reconsideration, a few months after issuing the remand order, that stock exchange's rules, one of the newest stock exchanges, don't have these rules and don't have these procedures in them. [00:22:08] Speaker 04: All right, thank you. [00:22:08] Speaker 04: Yeah, we saw that in your brief. [00:22:09] Speaker 04: Thank you very much. [00:22:14] Speaker 04: Thank you. [00:22:14] Speaker 04: Mr. I'm sorry, is it Frieda or Freda? [00:22:16] Speaker 04: I'm sorry. [00:22:17] Speaker 04: Frieda. [00:22:18] Speaker 08: Frieda, you had it right the first time. [00:22:24] Speaker 03: All right. [00:22:26] Speaker 04: Can I throw a question out? [00:22:28] Speaker 04: I don't mean to hit you right out of the box, but if you want to start somewhere else, I'd just like you at some point to address what would happen to the remand order if we agree with petitioners on their 19-D argument. [00:22:42] Speaker 04: I'm just trying to sort what happens out in our decision trees here. [00:22:46] Speaker 08: What would happen? [00:22:46] Speaker 08: I mean, I think it might depend on what [00:22:51] Speaker 08: ruling looked like, but let me back up for a minute. [00:22:56] Speaker 04: The remand order... No, no, it's fine. [00:22:59] Speaker 08: I didn't really have anything I wanted to necessarily cover. [00:23:05] Speaker 08: I thought you were doing a great job. [00:23:11] Speaker 08: But the remand order only remanded those actions back to the SROs, and it [00:23:18] Speaker 08: So it didn't make any determinations on the section 19D question. [00:23:24] Speaker 08: It didn't assert. [00:23:26] Speaker 08: Yeah, it didn't make any ruling. [00:23:28] Speaker 08: So before the SROs on remand, they could dismiss if it were not a 19D, if they believed it was not properly a 19D reviewable 19D limitation. [00:23:41] Speaker 04: Why wouldn't the remand, would the remand order just not [00:23:46] Speaker 04: or fall with whether there's 19, I should say, 19-day slash 11-day processes? [00:23:52] Speaker 04: Or would we remand to the commission to decide what we want to do with the remand order? [00:23:56] Speaker 08: Or? [00:23:56] Speaker 08: I mean, that might be the safest course. [00:23:59] Speaker 04: If we get to that. [00:24:00] Speaker 04: Yeah. [00:24:01] Speaker 08: No, that might be the, if you got to that point, that might be the safest course. [00:24:05] Speaker 08: Because I do agree. [00:24:07] Speaker 08: It's, I mean, it's raised in both actions, but it's also tied up with the, [00:24:12] Speaker 08: final order issue in the second one. [00:24:15] Speaker 08: One of the reasons why the court need not view or should not view this as a final order review order is because the predominant issue is raised in the case we just argued before. [00:24:28] Speaker 08: And as you pointed out, it's a remand, so they have an opportunity to determine in the first instance whether or not these are reviewable limitations of access. [00:24:41] Speaker 04: According to your reconsideration order, at least as I read it, they could say an SOR on the remand could go. [00:24:47] Speaker 04: We've already explained the basis for our fee. [00:24:53] Speaker 03: We're done. [00:24:54] Speaker 04: We think it's sufficient. [00:24:54] Speaker 04: We're done. [00:24:56] Speaker 04: Does it automatically come back up to the commission or would then [00:25:00] Speaker 04: Whoever is challenging the fee would bring it to the commission? [00:25:02] Speaker 08: CFMA, well, it then goes to the normal 19D process. [00:25:07] Speaker 08: So it would be either a challenger has to petition or the commission could call it on its own. [00:25:14] Speaker 08: But yeah, that's an option. [00:25:15] Speaker 04: Oh, the commission can also just bring cases up on their own? [00:25:18] Speaker 01: Yeah. [00:25:21] Speaker 01: And at that level of review, is the record closed at that point? [00:25:29] Speaker 01: So the SRO couldn't, at that point, try to add more evidence to demonstrate that there is competition, etc. [00:25:41] Speaker 08: Well, the commission, I mean, I think if you think of this case, it's a great example of what flexibility the commission has in its rules. [00:25:49] Speaker 08: In 2014, it had the limitation of access challenge that we just talked about, and it sent it to an ALJ to open up the record. [00:25:56] Speaker 08: So it has that option under Rule 452 of its rules of practice, or it has the option to remand if it wants the SRO to reopen the record or review something that it points out. [00:26:08] Speaker 08: So yeah, it has flexibility to do both. [00:26:11] Speaker 08: Thank you. [00:26:12] Speaker 08: No problem. [00:26:15] Speaker 04: So in the reconsideration order where you said, look, maybe if you've already got 60 procedures in place, just identify them, so we're really not requiring a whole lot from you because presumably you already have them, then why did the commission say come show them to us in six months? [00:26:33] Speaker 04: Haven't they already, I assume exchanges at some point early on, [00:26:37] Speaker 04: are obligated to assure the commission they have appropriate procedures in place. [00:26:41] Speaker 04: So why are they supposed to come show you anything in six months? [00:26:44] Speaker 08: I mean, I think it just, it's a, it was just a timeline given so that they'd have a... Tell them for what, if they're just using the procedures they already have, why do, you don't normally do that. [00:26:53] Speaker 04: I mean, it seems to me the commission is not always consistent in its discussion. [00:26:58] Speaker 04: On the one hand, it seems like this is a big new thing, go back, you're going to have to get procedures, and as they also say, [00:27:04] Speaker 04: tailor those procedures to the CFMA and Bloomberg cases or applications or complaints, whatever the phrase is, tailor those procedures to them. [00:27:14] Speaker 04: So that seems to me quite inconsistent with the Commission's statement that they can just sit on their existing procedures. [00:27:20] Speaker 04: How do you reconcile those two? [00:27:21] Speaker 08: Well, I think the Commission was giving flexibility with some guideposts. [00:27:26] Speaker 04: Flexibility with guideposts when you say tailor your existing procedures? [00:27:29] Speaker 04: What does that mean? [00:27:32] Speaker 08: I think it just means apply procedure you have or develop a procedure to determine these cases. [00:27:38] Speaker 08: I mean that's all they were doing in the remand order. [00:27:40] Speaker 04: Do you think that existing procedures are capable of handling, you must be aware of what procedures they have, are they capable of handling these or do they need to be changed? [00:27:48] Speaker 08: I believe that it may, I mean there are a number of petitioners in this case. [00:27:54] Speaker 08: I think the ones that I'm aware of, they could tailor [00:27:58] Speaker 08: for lack of a better word, their procedures for other limitations to these specific cases. [00:28:07] Speaker 08: But again, the commission really was just taking this because it had set forward the lead case procedure in 2014 when it joined these two main cases and sent it to an ALJ, it held all the remaining cases [00:28:24] Speaker 08: without objection that had been filed for further determination in light of CFMA. [00:28:30] Speaker 08: I think that's all it was doing in the remand order. [00:28:33] Speaker 08: And I think the Taylor procedures language, I think, is just a guidepost, as I said, for, you know, to decide these cases in light of CFMA. [00:28:44] Speaker 04: their procedures. [00:28:45] Speaker 04: I could be wrong, but I thought you had to do that by rulemaking. [00:28:48] Speaker 08: If we were requiring a change in procedures, yes, but as we pointed out, they should have them in place already or they don't have to. [00:28:55] Speaker 04: You thought for some reason they all had to come make a showing to you. [00:29:00] Speaker 04: Are you requiring them to show anything differently? [00:29:03] Speaker 04: To make a proper record on one of these fees in light of your decision to justify these fees, do they have to make [00:29:15] Speaker 04: a different or more comprehensive showing than they normally do for a fee under 19-D or for a disciplinary action under 19-D? [00:29:23] Speaker 08: I mean, I think it's up to them to determine whether or not they're meeting the standards. [00:29:28] Speaker 08: I can't say that because I don't have the cases before me. [00:29:32] Speaker 08: All I know is what we decided and I know what we remanded. [00:29:34] Speaker 08: I can't prejudge what the commission would say is sufficient. [00:29:38] Speaker 08: I mean, I think, again, this court in Necolation 1 set forth the standards. [00:29:42] Speaker 04: Do you think we can do anything different or not? [00:29:44] Speaker 04: Because the reconsideration decision, at least on my read, is inconsistent. [00:29:48] Speaker 04: If you look at the original remand order and the reconsideration decisions together, [00:29:53] Speaker 04: They seem to be talking in different directions. [00:29:56] Speaker 04: So what am I supposed to do about that? [00:29:57] Speaker 08: Yeah, I think they can be reconciled because I think the intent of them, which is pretty clear, is that they're just intending to send this back in light of the SEPHMA decision and that the SROs were expected to. [00:30:13] Speaker 08: have-in-place procedures that they would be able to utilize to determine these cases. [00:30:19] Speaker 08: The Commission provided much flexibility. [00:30:21] Speaker 08: It also noted that if they thought that the records that they had already were sufficient, they didn't need to do anything else at all to certify them. [00:30:31] Speaker 08: So the Commission was trying to just provide a little bit of guidance and flexibility, but mostly it was just sending the cases back for determination. [00:30:38] Speaker 04: So it didn't have to do them first? [00:30:40] Speaker 04: I'm sorry? [00:30:40] Speaker 04: Someone else wade through the process first? [00:30:42] Speaker 08: Well, I mean, I think, you know, again, as you pointed out, the commission can, has the ability to set aside and has the ability to remand under its rules if it finds that the records are inadequate. [00:30:51] Speaker 08: I think, you know, as this court would do in, if we're a lot of courts to. [00:30:54] Speaker 04: Is there a rule that allows remand? [00:30:55] Speaker 04: I'm sorry? [00:30:56] Speaker 04: Where, where did the statute or rules allow remand? [00:30:59] Speaker 04: Rule. [00:30:59] Speaker 04: It's not in 19F. [00:31:01] Speaker 08: 452 of the commission's rules of practice. [00:31:05] Speaker 04: Okay. [00:31:05] Speaker 04: And what about in the statute? [00:31:09] Speaker 04: has a different differentiation, does not reference remand in 19F. [00:31:15] Speaker 08: Right, it does, but it does not reference remand in 19F. [00:31:19] Speaker 08: Right, I was agreeing with you. [00:31:21] Speaker 08: Sorry, in 19M, but as this court's recognized and the commission's recognized as well, the power to set aside often includes the power to remand, specifically when you're engaging in a process like the commission set forth in 2014 where you're holding cases to be decided in light of the other case or the lead cases. [00:31:43] Speaker 04: So that's, and as I said, that's... So it's assumed Congress was not deliberate when it referenced remand under one statutory provision, but not under 19-0? [00:31:52] Speaker 08: Well, again, I mean, the statutory, as this course recognized, the power to set aside, you know, has the implicit power to remand. [00:32:00] Speaker 08: But also, more importantly, the Commission's rules require or allow for remand in these circumstances. [00:32:07] Speaker 08: I assume that the petitioners didn't want the commission just to set aside all the filings. [00:32:12] Speaker 08: And that was not what the commission had set out to do in 2014 when it said it was holding them in light of CFMA. [00:32:20] Speaker 04: If you imagine a world in which you didn't have the power to remand, would you have just had to vacate all of these? [00:32:27] Speaker 04: What would you have done with all these petitions? [00:32:28] Speaker 04: Again, I can't say. [00:32:29] Speaker 08: Because there's no record that we [00:32:33] Speaker 08: have given about what we thought of the petitions or the filings themselves. [00:32:39] Speaker 08: So I just couldn't say. [00:32:41] Speaker 04: All right. [00:32:43] Speaker 04: Thank you very much. [00:32:44] Speaker 08: Thank you. [00:32:46] Speaker 04: General Lee. [00:32:48] Speaker 04: Mr. Hinken, are you the only one doing rebuttal? [00:32:50] Speaker 04: Oh, I'm sorry, Mr. Phillips. [00:32:51] Speaker 03: I apologize. [00:32:53] Speaker 02: I'm easy to overlook your own worries. [00:32:54] Speaker 02: Not at all. [00:32:56] Speaker ?: Not at all. [00:32:58] Speaker 02: Good afternoon, Your Honors. [00:32:59] Speaker 02: Again, may it please the Court. [00:33:01] Speaker 02: I think the right answer here, and the reason I ask for time, frankly, is to be the one person here who expresses some righteous indignation that the petitioners complained that they've been thrown back into the briar patch as part of this process when all the Commission is trying to do is to give them every opportunity to justify what is otherwise completely unjustifiable. [00:33:21] Speaker 02: I mean, it may be that among those 400 fee filings, all of which they made, right, [00:33:27] Speaker 02: every one of them references competition as a constraint on whatever action they took. [00:33:32] Speaker 02: So the Commission, in my mind, could easily have said, given the absence of proof, the competition constrains anything with regard to what these exchanges do in connection with my clients, they're all set aside, and then you can go back and start over again, which of course they would probably do about as quickly as the Commission acted. [00:33:51] Speaker 04: My recollection is that when this started [00:33:53] Speaker 04: If I'm misrecalling, please tell me that when this started, the commission said we're going to treat the case we have before as sort of a lead case. [00:34:02] Speaker 04: Yes. [00:34:03] Speaker 04: When they said that, did that lead case mean simply we're going to do it first to work it through or lead case in that it was also a lead case on this? [00:34:12] Speaker 04: competitive is showing that the competitive evidence is sort of the same in other fees as it is here, or was just sort of a procedural vanguard? [00:34:21] Speaker 02: I mean, I think it was clearly just a procedural vanguard, but I do think as it developed, and they said, and when they sent it to the administrative law judge and said, [00:34:31] Speaker 02: make a record here. [00:34:32] Speaker 02: Let's create a real record and let's have an independent decision or an initial decision with respect to the role the competition plays. [00:34:38] Speaker 02: Let's answer the questions that this court asked and that coalition won on substitutability and on whether or not order flow is a significant constraint. [00:34:47] Speaker 02: You would expect that the outcome of that, if the answer is these things don't make any difference whatsoever, the answer to that would be that none of these rules should be allowed to continue on under these circumstances. [00:35:00] Speaker 02: And then if the exchanges want to come back with a whole new set of changes, [00:35:07] Speaker 02: They're free to file again the next day, candidly, just as they did after coalition one. [00:35:13] Speaker 02: It's just that I suspect, at this point now, having analyzed this issue with some care, the commission would be more inclined to do what it's been doing since it reached this decision, which is to suspend these rules because, again, they aren't justified. [00:35:27] Speaker 02: We're talking about rules that have been in place, paid for by my clients for more than 10 years, that are still demonstrably unfair and unreasonable. [00:35:37] Speaker 02: The last point I want to make before I step down is just with respect to associational standing, I mean it's clear to me that the Commission has authority to do what it thinks is appropriate in terms of identifying who's been aggrieved and what the relationship ought to be. [00:35:51] Speaker 02: And the Commission here concluded that we are, you know, CFMA's an aggrieved party, Bloomberg's an aggrieved party. [00:35:56] Speaker 02: The idea that somehow indirect purchasers are the real parties who should be bringing these actions, I mean that's completely inconsistent with the way most courts think about this. [00:36:04] Speaker 02: The Commission cannot be faulted for saying this is an efficient way to resolve these issues under these circumstances. [00:36:11] Speaker 02: I urge you to uphold the Commission's decision. [00:36:13] Speaker 04: Thank you. [00:36:13] Speaker 04: I apologize. [00:36:14] Speaker 04: Mr. Henken now will give you two minutes. [00:36:19] Speaker 07: Thank you, Your Honor. [00:36:22] Speaker 07: With respect to the procedural order, I would refer the Court to page 9 of the Joint Appendix for this appeal, and specifically the sentence saying where the Commission said we will allow all parties to assert their views in the 50th proceeding while reserving the ultimate resolution of the remaining rule challenges in the 51th proceeding. [00:36:43] Speaker 07: That was the last thing anyone ever heard about any of these proceedings which, as the Court knows, continued to multiply over the [00:36:51] Speaker 07: succeeding years. [00:36:52] Speaker 04: What's the option if they don't remand? [00:36:54] Speaker 04: Do they just adjudicate them all? [00:36:56] Speaker 07: Well, that's in fact our argument that they don't have the power to remand. [00:37:01] Speaker 04: And then you wouldn't be able to add anything to the record. [00:37:02] Speaker 04: If they just adjudicate them, you wouldn't be able to add anything to the record. [00:37:06] Speaker 07: Well, we don't know. [00:37:08] Speaker 07: It would depend how they decided to adjudicate them. [00:37:10] Speaker 07: As Mr. Frieda said, there were a number of possibilities as to how they might choose to adjudicate them. [00:37:16] Speaker 07: We know that they don't have the power to remand them. [00:37:18] Speaker 07: Section 19E is the only part of section 19 that permits remand, and that only applies to disciplinary proceedings. [00:37:28] Speaker 04: I just thought the remand here gave you all a second chance, assuming your other arguments don't work, that this gives you a second chance. [00:37:35] Speaker 04: Now that you've got heads up as to what kind of evidence they want to back up your competitiveness assertions, we're giving you a chance if you want to [00:37:46] Speaker 04: supplement your record. [00:37:48] Speaker 04: If you don't, you can stand on the record you have, and I just would have thought you all would be grateful for the second chance. [00:37:54] Speaker 07: Well, no, Your Honor, because what it does, what the remand order does is it requires the petitioners to treat all of these rule files, all of these petitions as 19D proceedings and Section 11A proceedings on their own. [00:38:10] Speaker 07: somehow address them without any guidance at all. [00:38:13] Speaker 07: And I think it's important to reflect back on the fact that two commissioners thought that the remand order gave effectively no guidance at all for this task. [00:38:22] Speaker 07: And for us to treat them as if they were denials of access, [00:38:28] Speaker 07: when in fact there's nothing in the record indicating that there ever were any denials of access with respect to any of these specific rule filings, and yet all the petitioners are required to treat them as if they were. [00:38:40] Speaker 04: So CIFMA filed 19D petitions, either CIFMA or Bloomberg filed 19D petitions, what do you call them, 19D petitions in all of these cases, correct? [00:38:50] Speaker 07: Correct. [00:38:50] Speaker 04: Did they have to make some showing or did they just say... These are bare bones. [00:38:56] Speaker 07: They're generally speaking, Your Honor, they were one to three pages long, two to three pages long. [00:39:02] Speaker 07: They indicate and I'm not going to... Did they assert that it was a limit, that the feet was a limit? [00:39:08] Speaker 04: It was a bare bones assertion and then... Bare bones and I'm just asking, did they assert it was a limit because it wasn't competitive? [00:39:14] Speaker 07: I don't recall whether they actually said because it wasn't competitive or just whether they asserted that they were limitations or denials of access. [00:39:23] Speaker 07: And then they generally attached a list of the filings that each of the petitions was applying to. [00:39:30] Speaker 07: That's the sum and substance of them. [00:39:32] Speaker 07: And even that's not in the record, but that's the sum. [00:39:35] Speaker 07: And so we would urge the court to vacate the remand order. [00:39:38] Speaker 04: Thank you very much. [00:39:39] Speaker 04: We appreciate counsel's efforts this morning and afternoon. [00:39:44] Speaker 04: I'm excited.