The SEC approved the amendment along with exemptive relief from certain Rule 17a-1 requirements to implement cost savings measures designed to reduce CAT expenses while maintaining core regulatory functionality. The Commission estimates the changes will save $50-70 million annually compared to the 2025 CAT budget, with an additional $19.4-24.1 million in incremental savings beyond cost reductions already approved in 2025.
The amendment allows Plan Participants to implement eight specific cost-cutting measures, including ceasing creation of interim lifecycle linkages absent regulatory request, deleting all CAT data older than three years, easing requirements for re-processing late records, and eliminating certain functionality in the online targeted query tool. The changes also permit Plan Participants to stop reporting rejected messages and relax certain processing deadlines for CAT data.
Under the approved measures, Plan Participants can implement a revised approach for generating anonymized customer identifiers and establish a spending cap provision governing future CAT changes. The amendment builds on cost savings measures the Commission approved in 2025 as part of ongoing efforts to control the audit trail's escalating expenses.
The approval comes after a decade of increasing CAT costs that have drawn criticism from industry participants and regulators. The Consolidated Audit Trail, designed to provide regulators with comprehensive transaction data across U.S. equity and options markets, has faced persistent budget overruns and operational challenges since its implementation.
"After a decade of increasing costs, today's amendment builds on last year's progress towards a more efficient and cost-effective CAT. It is a step in the right direction, but there are still many more steps to be taken," said SEC Chairman Paul S. Atkins. "The Commission's ongoing comprehensive review of the CAT will consider the sustainability of the CAT's budget, and we expect the Plan Participants that operate the CAT and the industry to work together towards further cost savings."
Jamie Selway, Director of the SEC's Division of Trading and Markets, said the division "supports efforts by the CAT NMS Plan Participants to control the sizeable costs of operating the CAT. We expect these efforts to continue and look forward to additional progress." The Commission indicated its comprehensive review of the CAT will examine budget sustainability as pressure mounts to control the system's costs while preserving regulatory oversight capabilities.