The Securities and Exchange Commission (SEC) recently issued an order granting conditional exemptive relief designed to reduce the operating costs of the Consolidated Audit Trail (CAT) while maintaining its core regulatory functionality. This relief pertains to certain requirements of the National Market System Plan governing the CAT (CAT NMS Plan), Rule 613 of Regulation NMS, and Rule 17a-1 under the Securities Exchange Act of 1934, enabling the self-regulatory organizations participating in the CAT NMS Plan to achieve significant and swift cost reductions.
SEC Chairman Paul S. Atkins stressed the imperative for both the Commission and CAT participants to seriously address what he termed "seemingly endless cost increases." He emphasized that CAT must operate with greater efficiency and cost-effectiveness, particularly in the wake of the U.S. Court of Appeals for the Eleventh Circuit’s recent decision to vacate the 2023 Funding Model Order. While endorsing the exemptive relief, Chairman Atkins reiterated that this action marks only the beginning of broader efforts. Concurring, Jamie Selway, Director of the SEC’s Division of Trading and Markets, characterized the Commission’s action as initiating an overdue process to reform and rationalize the CAT. He affirmed the Division’s ongoing engagement with participants and industry members to facilitate necessary improvements aimed at reducing costs for investors.
This conditional exemptive relief expands upon previous cost-saving measures approved by the Commission. It will allow plan participants, among other provisions, to discontinue the creation of interim lifecycle linkages unless a regulator specifically requests them, ease the requirements related to the re-processing of late records, cease providing certain functionalities associated with the online targeted query tool, and delete specific CAT data while more cost-effectively storing older datasets. These collective efforts are expected to yield substantial financial savings. The CAT budget initially approved by its Operating Committee for 2025 had exceeded $248 million. However, as a result of implementing prior cost amendments and the relief granted today, CAT’s projected expenses for 2025 are forecast to fall an additional $20 million to $27 million below the approximately $196 million previously forecast for the year.