The Securities and Exchange Commission on Tuesday granted conditional exemptive relief intended to save tens of millions of dollars in annual operating costs of the Consolidated Audit Trail, or CAT.

Paul Atkins, the agency chair, has instructed agency staff to undertake a comprehensive review of the CAT, which tracks orders and trades and was conceived by the SEC after the 2010 "flash crash."

"Over time, the costs of operating the CAT have ballooned beyond belief," Atkins said Tuesday in a statement. "When the CAT was established, in November 2016, its ongoing annual costs were estimated to total, at the upper end, about $55 million. Unfortunately, even that estimate proved woefully unrealistic, and costs have regularly increased."

The conditional exemptive relief allows the self-regulatory organizations that participate in the CAT National Market System, or NMS Plan, "to expeditiously and meaningfully reduce the operating costs" of CAT while maintaining core regulatory functionality, the agency said.

As of November 2024, annual CAT costs were projected to exceed $248 million, Atkins said.

"Ultimately, these costs make participating in our equities and options markets more expensive," he said.

Both the commission and the participants that operate the CAT "need to take very seriously their roles in reducing these seemingly endless cost increases," Atkins continued. "CAT must be more efficient and cost-effective, especially after the recent decision by the U.S. Court of Appeals for the Eleventh Circuit that vacated the 2023 Funding Model Order governing the CAT."

Atkins said the "comprehensive review will include, but is not limited to, taking a hard look at the costs of CAT by examining the scope of what is collected and whether any duplicative reporting systems should be retired or otherwise modified."

The exemptive relief Tuesday "is just the start,” Atkins said.

“The Division will continue to engage participants and industry members to facilitate needed improvements to reduce costs for investors,” Jamie Selway, director of the SEC’s Division of Trading and Markets, said in the statement.

The relief, the SEC explained, expands on previous cost-saving measures approved by the commission and will allow the plan participants to, among other things:

  • cease creating interim lifecycle linkages absent regulator request;
  • ease requirements related to the reprocessing of late records;
  • cease providing certain functionality associated with the online targeted query tool; and
  • delete certain CAT data and more cost effectively store older CAT data.

The CAT budget originally approved by the Operating Committee of the CAT for 2025 exceeded $248 million, the agency said.

"As a result of implementation of previous cost amendments and the relief granted today, CAT’s expenses are approximately forecast to fall an additional $20 million-$27 million below the approximately $196 million forecast expenses for 2025," the SEC said.

The relief "is a long overdue step in the right direction," Ken Bentsen, president and CEO of the Securities Industry and Financial Markets Association, a trade group, said Tuesday in a statement.

SIFMA has "long held the view that ever-increasing CAT costs, lacking any transparency or accountability, is one of many festering problems with the CAT and we commend the SEC for leadership in trying to rein them in," Bentsen said. "We also agree with the Chairman that more work needs to be done, including further reducing costs, eliminating investors’ personally identifiable information (PII) and establishing rational governance.”

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