United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT



Argued March 20, 2017                 Decided August 8, 2017

                        No. 16-1061

    SUSQUEHANNA INTERNATIONAL GROUP, LLP, ET AL.,
                    PETITIONERS

                              v.

          SECURITIES AND EXCHANGE COMMISSION,
                       RESPONDENT

             OPTIONS CLEARING CORPORATION,
                      INTERVENOR


            On Petition for Review of an Order of
           the Securities & Exchange Commission


    David H. Thompson argued the cause for petitioners. With
him on the briefs were Howard C. Nielson Jr., Peter A.
Patterson, and Harold S. Reeves.

     Robert Battalio and Robert Jennings, pro se, were on the
brief for amicus curiae Robert Battalio and Robert Jennings in
support of petitioners.

    Tracey A. Hardin, Assistant General Counsel, Securities
and Exchange Commission, argued the cause for respondent.
With her on the brief were Anne K. Small, General Counsel,
                                 2

Sanket J. Bulsara, Deputy General Counsel, Michael A. Conley,
Solicitor, and Emily T.P. Rosen, Senior Counsel.

    William J. Nissen argued the cause for intervenor. With
him on the brief were Steven E. Sexton and Kristen E. Rau.

    Before: GARLAND, Chief Judge, GRIFFITH, Circuit Judge,
and SENTELLE, Senior Circuit Judge.

    Opinion for the court filed by Chief Judge GARLAND.

     GARLAND, Chief Judge: Seeking to increase its capital
reserves, the Options Clearing Corporation proposed a change
in its rules. That change was subject to approval by the
Securities and Exchange Commission, which granted approval
without itself making the findings and determinations prescribed
by the Securities Exchange Act of 1934. Instead, it effectively
abdicated that responsibility to the Corporation. Because this
does not represent the kind of reasoned decisionmaking required
by either the Exchange Act or the Administrative Procedure Act,
we remand the case to the Commission for further proceedings.

                                 I

     The Options Clearing Corporation (OCC), a Delaware
corporation, is a clearing agency that facilitates trades in options
and other financial instruments. It is the only clearing agency
for standardized U.S. options listed on U.S. national securities
exchanges. Given its significant role, OCC has been designated
a systemically important financial market utility and is closely
regulated by the Securities and Exchange Commission (SEC).
See Order Approving Proposed Rule Change Concerning the
Options Clearing Corporation’s Capital Plan, 81 Fed. Reg. 8294,
8294 (Feb. 18, 2016) (“Order”).
                                3

     At the time of the events in this case, there were twelve
national securities exchanges on which listed options were
traded. Five were equal shareholders in OCC; seven were
nonshareholders, lacking any ownership interest. All of the
exchanges clear their trades in listed options through OCC. In
addition to the exchanges, OCC has “clearing members” that
clear and settle options trades for their customers through the
exchanges. See Order, 81 Fed. Reg. at 8294; OCC, Bylaws Art.
V (amended 2009).

     OCC charges clearing members fees for the transactions
they make. For each upcoming year, OCC sets the fees to cover
the year’s projected expenses, plus a buffer. If, at the end of the
year, OCC has taken in more fees than needed to cover its
expenses and maintain its reserves, it refunds the excess fees to
the clearing members, allocated in proportion to what they had
paid. Until the developments at issue here, OCC refunded all
such excess fees. See Notice of Filing of a Proposed Rule
Change Concerning a Proposed Capital Plan, 80 Fed. Reg. 5171,
5175 (Jan. 30, 2015) (“Notice of Proposed Rule Change”).

     This case concerns OCC’s attempt to boost its capital
reserves and, in order to do so, to alter how fees and refunds are
calculated. In 2014, OCC began evaluating its capital level and
eventually determined that it did not have enough to cover
“business, operational, and pension risks.” Order, 81 Fed. Reg.
at 8296. While these capital needs exclude counterparty and on-
balance-sheet risks, which are covered by billions of dollars in
other funds, they are still significant. OCC determined that on
top of its existing capital reserves of $25 million, it needed an
additional $222 million of capital immediately on hand, plus
another $117 million in backup “Replenishment Capital” that it
could call upon if necessary. See Notice of Proposed Rule
Change, 80 Fed. Reg. at 5172; Order, 81 Fed. Reg. at 8295-96.
                                4

     To amass those reserves, OCC developed a Capital Plan.
Under the Plan, OCC’s five shareholder exchanges would make
immediate capital contributions to reach OCC’s current capital
target and also pledge to provide Replenishment Capital upon
request. The Plan compensates those contributions with
dividends paid out of OCC’s fees. In particular, after fees are
applied to OCC’s operating expenses, and then used to restore
capital reserves if they have dipped, the remaining unused fees
are split between dividends and refunds. Approximately half of
the unused fees go to shareholders as dividends; approximately
half are refunded to clearing members. In other words, whereas
clearing members previously received all of the excess fees as
refunds, the Plan diverts roughly half of those refunds to
dividends. See Notice of Proposed Rule Change, 80 Fed. Reg.
at 5173-75.

     The Plan makes other changes to OCC’s fee practices as
well. The buffer used to calculate each year’s fees -- that is, the
amount by which that year’s projected expenses are inflated to
arrive at the amount to be charged as upfront fees -- decreases
under the Plan from 31% to 25%. And the Plan provides for a
permanent end to refunds (but not dividends) if Replenishment
Capital becomes necessary and is not repaid in 24 months or if
the target capital requirement is not restored within that period.
See id.

     OCC’s Plan cannot go into effect unless approved by the
SEC because OCC is a “self-regulatory organization” under the
Securities Exchange Act of 1934, 15 U.S.C. § 78a et seq.
(“Exchange Act”). In early 2015, OCC brought its Plan to the
SEC, which published a Notice of Filing of a Proposed Rule
Change and solicited public comments. The SEC issued a final
Order approving the Plan in early 2016. See Order, 81 Fed. Reg.
at 8294-95.
                                5

     Petitioners -- two nonshareholder exchanges (Miami
International Securities Exchange, LLC and BOX Options
Exchange LLC), a clearing member (KCG Americas LLC, a
subsidiary of Petitioner KCG Holdings), and a market
participant (Susquehanna International Group, LLP) -- sought
judicial review. They also moved to stay the SEC’s Order to
prevent the OCC’s Plan from going into effect, but a panel of
this court denied the stay. Susquehanna Int’l Grp., LLP v. SEC,
No. 16-1061 (D.C. Cir. Feb. 23, 2016) (order denying motion
for stay). As a consequence, OCC currently operates according
to the Plan.

                                II

     We have jurisdiction to review the SEC’s Order pursuant to
15 U.S.C. § 78y(a)(3). We review the Order under the
Administrative Procedure Act (APA), which requires us to hold
unlawful agency action that is “arbitrary, capricious, an abuse of
discretion, or otherwise not in accordance with law” or that is
“unsupported by substantial evidence.” 5 U.S.C. § 706(2)(A),
(E); see 15 U.S.C. § 78y(a)(4); NetCoalition v. SEC, 615 F.3d
525, 532 (D.C. Cir. 2010). To satisfy the “arbitrary and
capricious” standard, “the agency must examine the relevant
data and articulate a satisfactory explanation for its action
including a ‘rational connection between the facts found and the
choice made.’” Motor Vehicle Mfrs. Ass’n v. State Farm Mut.
Auto. Ins. Co., 463 U.S. 29, 43 (1983) (quoting Burlington Truck
Lines, Inc. v. United States, 371 U.S. 156, 168 (1962)).

     OCC is registered as a clearing agency with the SEC, and
is therefore classified as a “self-regulatory organization.” See 15
U.S.C. §§ 78c(a)(26), 78q-1(b). The SEC “shall approve” a self-
regulatory organization’s proposed rule change only “if it finds
that such proposed rule change is consistent with” provisions of
the Exchange Act.              Id. § 78s(b)(2)(C)(i); see id.
                                6

§ 78s(b)(2)(C)(ii). In turn, a clearing agency’s rules are
consistent with the Act only if “the Commission determines
that” they meet certain specified requirements. Id. § 78q-
1(b)(3). Petitioners argue that the SEC erred in approving
OCC’s Plan because it does not meet several of those
requirements.

     First, the Exchange Act requires that a clearing agency’s
rules “not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of” the Act. Id.
§ 78q-1(b)(3)(I).       Petitioners object that the Plan
overcompensates shareholder exchanges, which unjustifiably
burdens competition by nonshareholders. See Pet’rs’ Br. 24.1

     Second, the Act requires that a clearing agency’s rules be
“designed . . . , in general, to protect investors and the public
interest.” Id. § 78q-1(b)(3)(F). Petitioners contend that the Plan
harms investors and the public by transforming OCC from a
public utility to a profit-seeking monopoly and by increasing the
fees charged to OCC’s customers. See Pet’rs’ Br. 33-40.

     Third, the same subsection requires that rules not be
“designed to permit unfair discrimination . . . among participants
in the use of the clearing agency.” 15 U.S.C. § 78q-1(b)(3)(F).
Petitioners maintain that the Plan unfairly discriminates between
shareholder exchanges and nonshareholder exchanges by
denying nonshareholders the opportunity to contribute capital in
exchange for dividends. Petitioners argue further that the Plan




    1
       Petitioners make a similar argument under § 3(f) of the
Exchange Act, which requires the SEC to “consider . . . whether the
action will promote . . . competition.” 15 U.S.C. § 78c(f).
                                 7

discriminates between shareholder exchanges and clearing
members by denying clearing members compensation for the
capital they contribute as fees. See Pet’rs’ Br. 41-43.2

     Fourth, the Act requires that a self-regulatory organization
“comply with . . . its own rules.” 15 U.S.C. § 78s(g)(1). OCC’s
bylaws provide that nonshareholder exchanges “will be
promptly provided with information that [OCC’s] Executive
Chairman considers to be of competitive significance” and that
a “requesting [nonshareholder exchange] shall be afforded the
opportunity to make presentations” to OCC’s Board or to a
committee of the Board.             OCC, Bylaws Art. VIIB,
Interpretations & Policies § 1.01, .02 (§ 1.01 amended 2014;
§ 1.02 adopted 2002). Petitioners object that OCC violated both
provisions by failing to notify nonshareholder exchanges while
OCC was developing the Plan. See Pet’rs’ Br. 43-48.

     We do not reach any of those arguments, all of which
contend that the OCC’s Plan is inconsistent with the above-
described requirements of the Exchange Act. We do not reach
them because, as Petitioners also argue, the SEC’s Order
approving the Plan fails in a more basic respect: the
Commission did not itself “find[]” or “determin[e],” 15 U.S.C.
§§ 78q-1(b)(3), 78s(b)(2)(C)(i), that the Plan met any of those
requirements. Instead, the SEC effectively abdicated that
responsibility to OCC -- the proponent of the Plan and the entity
whose rule changes the SEC is statutorily obligated to approve
or disapprove, id. § 78s(b)(2)(C)(i), (ii). Moreover, the SEC’s
Order reflects little or no evidence of the basis for the OCC’s


    2
        To support these objections, Petitioners also invoke
§ 17A(b)(3)(D) of the Act, which requires that a clearing agency’s
rules “provide for the equitable allocation of reasonable dues, fees,
and other charges among its participants.” 15 U.S.C. § 78q-1
(b)(3)(D).
                                8

own determinations -- and few indications that the SEC even
knew what that evidence was.

    We have rejected this kind of agency “decisionmaking”
before. In Gerber v. Norton, we held:

         When a statute requires an agency to make a finding as
         a prerequisite to action, it must do so. Merely
         “[r]eferencing a requirement is not the same as
         complying with that requirement.” . . . Nor may the
         agency delegate its responsibility to the regulated
         party. See State of Idaho v. ICC, 35 F.3d 585, 596
         (D.C. Cir. 1994) (holding that the ICC failed to meet
         its responsibilities under [the National Environmental
         Policy Act] by “deferr[ing] not only to the judgments
         of other agencies, but also to that of Union Pacific, the
         licensee”).

294 F.3d 173, 185-86 (D.C. Cir. 2002) (quoting Sugar Cane
Growers Coop. v. Veneman, 289 F.3d. 89, 97 (D.C. Cir. 2002)).
To be sure, SEC appellate counsel acknowledges that the SEC
cannot “simply accept what [a self-regulatory organization] has
done,” but rather is “obligated to make an independent review.”
Oral Arg. Tr. 24. And the SEC’s Order states that the
Commission did make the necessary findings. See Order, 81
Fed. Reg. at 8300-04. But “‘[s]tating that a factor was
considered’ -- or found -- ‘is not a substitute for considering’ or
finding it.” Gerber, 294 F.3d at 185 (quoting Getty v. Fed.
Savings & Loan Ins. Corp., 805 F.2d 1050, 1055 (D.C. Cir.
1986)). As explained below, stating, not finding, is what the
Commission did here.
                                 9

                                 A

     The Order’s shortcomings are apparent in its discussion of
whether the Plan pays dividends to shareholder exchanges at a
reasonable rate. That is a central issue: if the dividend rate
represents an unnecessary windfall for shareholders, as
Petitioners argue, then the Plan may run afoul of the Exchange
Act’s prohibitions by unnecessarily or inappropriately burdening
competition, harming the interests of investors and the public, or
unfairly discriminating against nonshareholders and clearing
members. See 15 U.S.C. § 78q-1(b)(3)(F), (I). The SEC found
that the Plan heeds those statutory prohibitions because the
dividends represent a reasonable return on the shareholders’
capital contribution. See Order, 81 Fed. Reg. at 8301-03
(declaring that the dividend level is “appropriate” as
“compensation” for the costs and risks incurred by the
shareholders).

     Why did the SEC find the return reasonable? The Order
says only that the Plan is “designed to set the dividends . . . at a
level that [OCC’s] Board, with the assistance of independent
outside financial experts, has determined to be reasonable for the
cost and risks associated” with the shareholders’ obligations. Id.
at 8300.

     That explanation raises more questions than it answers.
Who were those independent experts? How does the SEC know
they were independent? What analysis did they and OCC’s
Board perform? How did they measure the “level” of the
dividends? How did they measure the “cost and risks”? And
how did they determine that the dividend level was reasonable
for the associated cost and risks? The Order is silent on all
counts. Instead, the SEC candidly admits that it simply “rel[ied]
on the Board’s analysis” of “the rate of return the Stockholder
Exchanges were receiving for their capital investment.” SEC
                               10

Br. 30. That is, to decide whether the dividend level was
reasonable, the SEC took OCC’s word for it.

    This is not the reasoned analysis that the Exchange Act and
the APA require. The Exchange Act permits the SEC to
approve OCC’s proposed rule change only “if it finds that” the
proposal is consistent with the requirements of the Act. 15
U.S.C. § 78s(b)(2)(C)(i), (ii). That is possible only if the SEC
“determines that” the rule complies with specified requirements,
15 U.S.C. § 78q-1(b)(3). Thus, to approve the Plan, the SEC
must make “find[ings]” and “determin[ations]” -- not merely
accept those made by OCC. See Gerber, 294 F.3d at 185.

     Nor may the SEC reach a conclusion that is “unsupported
by substantial evidence” or “arbitrary [and] capricious.” 5
U.S.C. § 706(2)(A), (E); 15 U.S.C. § 78y(a)(4). That was the
flaw that led us to vacate an SEC order approving a self-
regulatory organization’s proposed rule change in NetCoalition,
615 F.3d at 537-44. There, we faulted the SEC for reaching a
conclusion despite a “lack of support in the record.” Id. at 541.
The SEC had tried to rely on statements by the self-regulatory
organization, but we saw “little” supporting value in the “self-
serving views of the regulated entit[y].” Id. Here, too, the
SEC’s unquestioning reliance on OCC’s defense of its own
actions is not enough to justify approving the Plan. Instead, the
SEC should have critically reviewed OCC’s analysis or
performed its own. See Bradford Nat’l Clearing Corp. v. SEC,
590 F.2d 1085, 1113-14 (D.C. Cir. 1978) (finding the SEC’s
reasoning inadequate when it approved registration of a clearing
agency by deferring to the clearing agency’s “business
judgment” on an issue governed by the Act).

     On appeal, the SEC defends the Order’s approach to the
dividend rate in several ways. The SEC’s principal argument is
that it was reasonable for it to trust “the process” undertaken by
                                  11

OCC. Oral Arg. Tr. 20, 29. Restating the words of the Order,
the SEC’s brief says that the process included “independent
analysis” by outside consultants. SEC Br. 31. But the SEC does
not appear to have identified the consultants or seen their
analysis, so it came as no surprise that the SEC disclaimed
reliance on that outside analysis at oral argument. Oral Arg. Tr.
18. Instead, the SEC ultimately relies on another aspect of
OCC’s decisionmaking process:             what it describes as
“arm’s-length negotiations” between those OCC Board directors
who represented clearing members and those who represented
shareholders, which culminated in a “supermajority” Board vote
in favor of the plan. SEC Br. 31, 38 & n.16; see also Oral Arg.
Tr. 19-20.

     “Trust the process” may be a reasonable slogan for the
hometown basketball team of lead petitioner Susquehanna
International Group.3 But the process alone cannot justify the
dividend rate in this case. For one thing, it is hardly accurate to
describe the negotiations between Board members as “arm’s
length.” OCC’s shareholders have effective veto power over
certain proposals, giving them outsize bargaining power
compared to clearing members represented on the Board. See
Letter from James E. Brown, Executive Vice President, OCC, to
Brent J. Fields, Secretary, SEC at 6 n.10 (Feb. 23, 2015) (J.A. 85
n.10). Indeed, only four of nine directors representing clearing
members voted in favor of the Plan, see id. at 7 n.12 (J.A. 86
n.12), making it less than clear that the process struck an
appropriate balance between the interests of shareholders and
clearing members. What is more, not all of the interested parties


     3
       See Trust The Process? 76ers Hope So, Have the No. 1 Pick
Again, USA TODAY, June 21, 2017 (describing the Philadelphia 76ers’
strategy that accepts losses in the short term to build a stronger team
in the long term, embodied by “the three words that have defined the
organization since the implosion started: Trust The Process”).
                               12

were even part of the negotiations among Board members. Only
a small fraction of clearing members are on the Board, and none
of the nonshareholder exchanges are. See Order Approving
Proposed Rule Change Concerning a Proposed Capital Plan, 80
Fed. Reg. 13058, 13060 n.8 (Mar. 12, 2015). So, as to any
agreement between OCC and shareholders regarding the
dividend rate, the shareholder exchanges were on both sides of
the transaction (because they were both OCC Board members
and recipients of the dividends), while nonshareholder
exchanges were on neither.

     More fundamentally, the SEC cannot rely on OCC’s
process totally divorced from any examination of the substance
of the Plan, especially when the procedural features that the SEC
cites are little more than the general elements of OCC’s
governance structure. Indeed, were we to accept this
justification, that would mean the SEC could or should approve
nearly any plan OCC proposes -- hardly the result the Exchange
Act envisions. See, e.g., 15 U.S.C. § 78s(b)(2)(C)(i), (ii) (“The
Commission shall disapprove a proposed rule change of a
self-regulatory organization if it does not make a finding” that
“such proposed rule change is consistent with the requirements
of” the Act.).

     The SEC also defends its approval of the Plan’s dividend
rate by arguing that the Plan’s structure guarantees reasonable
dividends. See Order, 81 Fed. Reg. at 8301 (“The Commission
believes that various components of the Capital Plan operate to
set reasonable dividends for the cost and risks associated with
the Stockholder Exchanges’ contributed and committed
capital.”); id. at 8303; Oral Arg. Tr. 21. In particular, the SEC
notes that the Plan sets fees based on a fixed percentage of
projected costs, and allocates unused fees between dividends
and refunds in a fixed proportion. Those inputs, the SEC argues,
                                 13

ensure that the dividend rate will turn out to be reasonable. Oral
Arg. Tr. 21, 23.

     That reasoning begs the question. The resulting dividend
rate will only be reasonable if the Plan’s structure (most
significantly, the portion of unused fees allocated to dividends)
is reasonable. But the Order does not analyze whether -- or
explain why -- it is reasonable to allocate roughly half of unused
fees to dividends, as opposed to using a different percentage or
a formula other than a fixed proportion of unused fees. In other
words, the SEC defends its unquestioning reliance on OCC’s
claim that the dividend rate is reasonable by its unquestioning
reliance on OCC’s claim that the Plan’s structure is reasonable.
That is no defense at all.

                                 B

     The SEC’s lack of reasoned decisionmaking in assessing the
dividend rate is enough to make its Order arbitrary and
capricious. But that is not the Order’s only flaw. A similar lack
of reasoned decisionmaking recurs throughout the Order,
including in the four additional instances that follow.4

     First, the Order fails to support its conclusion that the Plan’s
capital target is reasonable. Commenters disputed whether the
Plan raises a reasonable amount of capital at a reasonable pace
(as OCC argues), or raises more capital more quickly than OCC
actually needs (as Petitioners argue). As with the dividend-rate
issue, the Order adopts OCC’s claims at face value. The Order
accepts that the target is “appropriately designed” simply
because “OCC represents that it used various measures and took


    4
      We do not mean to imply approval (or disapproval) of other
aspects of the Order that Petitioners challenge but that we do not
discuss.
                                  14

a methodical and reasoned approach.” Order, 81 Fed. Reg. at
8301 (emphasis added); see also id. at 8300 (“The [OCC] Board
determined that the historical practice . . . did not allow OCC to
reach adequate capitalization.”(emphasis added)). The Order
then relies on that representation in finding the Plan consistent
with the Act. See id. at 8301 (concluding that the Plan’s capital
target is not excessive and hence does not burden competition
more than “necessary or appropriate,” 15 U.S.C. § 78q-1
(b)(3)(I)); id. at 8300-01 (concluding that the Plan’s capital
target is appropriately “designed . . . to protect investors and the
public interest,” § 78q-1(b)(3)(F)).5

    In the Order, the SEC states that it “review[ed] the process
used by OCC to establish” the target. Order, 81 Fed. Reg. at
8301. But what was that process? OCC states that “[a]n outside
consultant conducted a ‘bottom-up’ analysis of OCC’s risks”
and, “[b]ased on internal operational risk scenarios and loss
modeling,” OCC quantified its operational and pension risk.
Notice of Proposed Rule Change, 80 Fed. Reg. at 5172-73. But
since there is no indication that the SEC knew who the
consultant was, what analysis he or she conducted, or what
additional analysis OCC performed, the Commission was in no
position to make a reasoned finding that OCC’s process was
sound -- let alone that the resulting capital target was reasonable.
In short, the SEC’s Order reflects the same lack of reasoned
decisionmaking when assessing the capital target as it displays



     5
       See also Order, 81 Fed. Reg. at 8304 & n.141 (rejecting
commenters’ suggestions to raise capital through other means, partly
on the ground that “OCC represents that, in considering alternatives,
OCC’s Board determined that the Capital Plan was financially
superior to accumulating capital through fees” (emphases added)); id.
at 8302-04 (faulting alternative proposals for failing to raise capital
quickly enough, as “forecasted by OCC”).
                               15

when assessing the dividend rate. “Trusting the process” is
simply not enough.

     Second, the SEC was also too quick to accept OCC’s claims
that the Plan would not increase fees for customers. In
determining that the Plan is designed to protect investors and the
public interest, 15 U.S.C. § 78q-1(b)(3)(F), the SEC’s Order
relies on the proposition that the Plan will “allow[] generally
lower fees,” Order, 81 Fed. Reg. at 8301, or at least will not
make higher fees “inevitable,” id. To support that proposition,
the Order only addresses the Plan’s lowering of upfront fees --
that is, the amount OCC initially charges clearing members,
before refunding excess fees at the end of each year. It does not
take into account the Plan’s reduction of year-end refunds.
Taking both into account, Petitioners argue that the Plan harms
investors and the public by driving up net fees. Pet’rs’ Br. 37 &
n.20.

     The only thing the Order says to justify ignoring net fees in
favor of focusing on upfront fees is that the Plan is “designed to
give market participants the benefit of lower upfront transaction
costs, especially those customer end users who do not receive
passed through refunds from the clearing member.” Order, 81
Fed. Reg. at 8302-03 (emphasis added). The underlying
assumption of this justification must be that there are so few
market participants who do receive passed-through refunds that
net fees are irrelevant. But the SEC’s Order does not provide
record support for that assumption. Instead, it cites, see id. at
8303 n.127, a portion of the Notice of Filing of a Proposed Rule
Change, prepared by OCC, stating that “OCC is aware that a
portion -- possibly a significant portion -- of those refunds are
not passed through by the clearing members to their end user
customers.” 80 Fed. Reg. at 5175. That is, the SEC Order’s
only basis for not taking passed-through refunds into account is
a statement by OCC, prepared to justify OCC’s own proposal,
                                16

that a “possibly” significant portion of refunds are not passed
through. That does not qualify as a “satisfactory explanation,”
State Farm, 463 U.S. at 43. See NetCoalition, 615 F.3d at 540-
41 (criticizing the SEC’s reliance on the “self-serving views of
the regulated entities” in that case).

     Third, the Order fails to give any explanation at all for
rejecting one of Petitioners’ objections. Petitioners charged the
Plan with unfair discrimination for treating refunds to clearing
members differently from dividends to shareholders under the
following scenario:       If Replenishment Capital becomes
necessary and is not repaid in 24 months (or if the target capital
requirement is not restored in the same period), refunds will end
permanently but dividends can resume. See Notice of Proposed
Rule Change, 80 Fed. Reg. at 5174-75 (explaining this feature);
Letter from James E. Brown, Executive Vice President, OCC, to
Brent J. Fields, Secretary, SEC at 4-5 (Feb. 24, 2015) (J.A. 105-
06) (discussing objections). The Order does not explain why
that criticism is unavailing. In fact, as the SEC concedes, the
Order misstates the Plan feature at issue, incorrectly explaining
at one point that both refunds and dividends will end
permanently if Replenishment Capital goes unpaid for 24
months. Order, 81 Fed. Reg. at 8297; Oral Arg. Tr. 13-14
(concession by SEC counsel that “that is mistaken”). Hence, not
only does the Order give no indication that the SEC analyzed
this Plan feature for compliance with the Act, but it instead
suggests that the SEC may have misunderstood the feature
entirely. That double deficiency demonstrates a lack of
reasoned decisionmaking.

     Finally, the Order gives short shrift to Petitioners’ objection
that OCC, by failing to notify nonshareholder exchanges earlier
in its development of the Plan, violated its own bylaws.
Primarily at issue is OCC’s bylaw requirement that
nonshareholder exchanges “be promptly provided with
                              17

information that [OCC’s] Executive Chairman considers to be
of competitive significance.” OCC, Bylaws Art. VIIB,
Interpretations & Policies § 1.01 (amended 2014). Despite
recognizing that there was a dispute over whether the Plan was
competitively significant, the Order merely notes that “OCC
represented that it” had “completed all action required to be
taken under its . . . bylaws.” Order, 81 Fed. Reg. at 8305. On
remand, the SEC must resolve Petitioners’ argument that OCC
could not reasonably have considered the Plan to be
competitively insignificant. Or, if the SEC concludes that this
does not matter, it must give a reasoned explanation why.

                              III

     Having concluded that the SEC’s Order is arbitrary and
capricious, unsupported by substantial evidence, and otherwise
not in accordance with law, we are left with the question of the
proper remedy. “An inadequately supported rule . . . need not
necessarily be vacated.” Allied-Signal, Inc. v. U.S. Nuclear
Regulatory Comm’n, 988 F.2d 146, 150 (D.C. Cir. 1993). “The
decision whether to vacate depends on ‘the seriousness of the
order’s deficiencies (and thus the extent of doubt whether the
agency chose correctly) and the disruptive consequences of an
interim change that may itself be changed.’” Id. at 150-51
(quoting Int’l Union, UMW v. Fed. Mine Safety & Health
Admin., 920 F.2d 960, 967 (D.C. Cir. 1990)).

     Here, the SEC may be able to approve the Plan once again,
after conducting a proper analysis on remand. Moreover,
unwinding the Plan in the interim would be -- in Petitioners’
own words -- a “logistical nightmare.” Pet’rs’ Emergency Mot.
for Stay 9. Indeed, the parties may well awaken from that
nightmare just as the SEC decides to rewind the unwinding.
                               18

     Thankfully, we can avoid that restless night. The SEC and
OCC assure us that it will be possible to unwind the Plan at a
later time, see SEC’s Opp’n to Pet’rs’ Emergency Mot. for Stay
2-3; Oral Arg. Tr. 12 (SEC); id. at 33-34 (OCC), and no party
contends that the task would be materially more difficult if done
then rather than now. Thus, with no immediate need to vacate
the Order, we will remand the case to give the SEC an
opportunity to properly evaluate the Plan. See Allied-Signal,
Inc., 988 F.2d at 151 (remanding rather than vacating “because
of the possibility that the Commission may be able to justify the
Rule, and the disruptive consequences of vacating”).

                                                    So ordered.
