The Securities and Exchange Commission issued an order to reduce the operating costs of the consolidated audit trail.
The 2025 CAT budget as originally approved was for over $248 million. Now, given the recent order and other cost amendments, its expenses are forecasted to drop by $20 million, which is $27 million below the previous $196 million forecast for expenses.
The SEC approved the CAT in 2016 to enable regulators to track orders and trading activity throughout U.S. markets, but it’s faced delays and obstacles for a decade, with over $500 million already spent to build the system.
Earlier this year, a federal appeals court struck down the 2023 funding order for the CAT, saying it violated the Administrative Procedure Act because it allowed self-regulatory organizations to pass along their CAT costs to their members (primarily broker-dealers) while retaining control over CAT governance and budgeting, and relied on outdated economic analysis.
Joshua Roberts/Bloomberg
“Both the Commission and the participants that operate the CAT need to take very seriously their roles in reducing these seemingly endless cost increases,” SEC chairman Paul Atkins said in a statement. “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. While I am pleased to support today’s exemptive relief, I want to reiterate that this is just the start.”
The SEC’s order expands on previous cost-saving measures and will allow participants to:
- Cease creating interim lifecycle linkages without regulator requests;
- 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 store older data in a more cost effective manner.
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