Form PILOT OMB APPROVAL OMB Number: 3235-0507 Expires: Novemeber 30, 2019 Estimated average burden hours per response. . . . . . 6.0 INITIAL OPERATION REPORT, AMENDMENT TO INITIAL OPERATION REPORT AND QUARTERLY REPORT FOR PILOT TRADING SYSTEMS OPERATED BY SELFREGULATORY ORGANIZATIONS SEC 2552 (6-01) American LegalNet, Inc. www.FormsWorkFlow.com FORM PILOT INSTRUCTIONS A. ENERAL INSTRUCTIONS G 1. Form PILOT is the form a self-regulatory organization ("SRO") files to notify the Securities and Exchange Commission ("SEC" or "Commission" ) of its intention to operate a pilot trading system pursuant to Rule 19b-5, § 240.19b-5, under the Securities Exchange Act of 1934 ("Exchange Act"). 2. WHEN TO FILE A FORM PILOT - The SRO must file the initial operation report, Part I of Form PILOT, at least 20 days prior to commencing operation of the pilot trading system. The SRO operating a pilot trading system under Rule 19b-5 must update information reported in Part I of Form PILOT by submitting amendments to the initial operation report at least 20 calendar days prior to implementing a material change to the operation of the pilot trading system as described on Form PILOT or any amendment thereto, other than information reported in Items 3b and 4b on Form PILOT relating to subscribers to, and securities traded on, the pilot trading system. Additionally, the SRO must file Part II of Form PILOT by submitting quarterly reports within 30 calendar days after the end of each calendar quarter in which the pilot trading system has operated after the effective date of Regulation ATS. 3. CONTACT EMPLOYEE - The individual listed on page 1 as the contact employee must be authorized to receive all contact information, communications and mailings and be responsible for disseminating that information within the SRO. 4. FORMAT Attach an Execution Page (Page 1) with original manual signatures. Please type all information. Provide the name of the SRO, pilot trading system and the filing date on each page. Use only the current version of Form PILOT or a reproduction. 5. WHERE TO FILE AND NUMBER OF COPIES - Submit one original and eight copies of Form Pilot to: SEC, Division of Market Regulation, 450 Fifth Street, N.W., Washington D.C. 20549. 6. RECORDKEEPING - A copy of this Form PILOT, as well as any amendments thereto filed with the SEC, must be retained by the SRO operating the pilot trading system at its principal place of business and made available for inspection upon request of the SEC. 7. PAPERWORK REDUCTION ACT DISCLOSURE Form PILOT requires an SRO intending to operate a pilot trading system pursuant to the temporary exemption under Rule 19b-5 to file certain information about the operation of the pilot trading system, and notices of material changes to the pilot trading system. In addition, Form PILOT requires SROs to report transaction volume on the pilot trading system on a quarterly basis. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid control number. Sections 3(a)(26), 3(a)(27), 3(a)(28), 19(b), 23(a) and 36(a) authorize the Commission to collect information on this Form PILOT from SROs. See 15 U.S.C. §§78c(a)(26), 78c(a)(27), 78c(a)(28), 78s(b), 78w(a) and 78mm(a). Any member of the public may direct to the Commission any comments concerning the accuracy of the burden estimate on the facing page of Form PILOT and any suggestions for reducing this burden. Form PILOT is designed to enable the Commission to determine whether an SRO has properly availed itself of Rule 19b-5, is operating a pilot trading system in compliance with the Exchange Act, and is carrying out its statutory oversight obligations under the Exchange Act. It is estimated that an SRO will spend approximately 24 hours completing the initial operation report on Form PILOT pursuant to Rule 19b-5. It is also estimated that each SRO will spend approximately 3 hours to prepare each notice of a material change and approximately 3 hours to prepare quarterly transaction information. It is mandatory that an SRO seeking to operate a pilot trading system under Rule 19b-5 file a Form PILOT with the Commission. It is also mandatory that an SRO operating a pilot trading system file notices of material systems changes and quarterly transaction reports on Form PILOT. All reports provided to the Commission on Form PILOT are deemed confidential and will be available only to the examination of Commission staff and state securities authorities. Subject to the provisions of the Freedom of Information Act, 5 U.S.C. 522 ("FOIA") and the Commission's rules thereunder (17 CFR 200.80(b)(4)(iii)), the Commission does not generally publish or make available information contained in any reports, summaries, analyses, letters, or memoranda arising out of, in anticipation of, or in connection with an examination or inspection of the books and records of any person or any other investigation. 2 American LegalNet, Inc. www.FormsWorkFlow.com FORM PILOT INSTRUCTIONS This collection of information has been reviewed by the Office of Management and Budget ("OMB") in accordance with the clearance requirements of 44 U.S.C. §3507. The applicable Privacy Act system of records is SEC-2 and the routine uses of the records are set forth at 40 FR 39255 (August 27, 1975) and 41 FR 5318 (February 5, 1976). B. EXPLANATION OF TERMS PILOT TRADING SYSTEM - Shall mean any trading system, operated by an SRO, that: (1) (i) has been in operation for less than two years; (ii) is independent of any other trading system operated by such selfregulatory organization that has been approved by the Commission pursuant to Section 19(b) of the Exchange Act; (iii) with respect to each security traded on such pilot trading system, during at least two of the last four consecutive calendar months, has traded no more than 5% of the average daily trading volume of such security in the United States; and (iv) with respect to all securities traded on such pilot trading system, during at least two of the last four consecutive calendar months, has traded no more than 20% of the average daily trading volume of all trading systems operated by such selfregulatory organization; or (2) (i) has been in operation for less than two years; (ii) with respect to each security traded on such pilot trading system, during at least two of the last four consecutive calendar months, has traded no more than 1% of the average