The SEC is stepping in to cut down the soaring costs of the Consolidated Audit Trail (CAT), providing relief to participants while ensuring key regulatory functions remain intact.
Key Points
•📅 New Measures: SEC issues conditional exemptive relief
•💸 Cost Reduction: CAT expenses forecast to drop by $20M-$27M
•⚖️ Court Decision: U.S. Court of Appeals vacated the 2023 Funding Model Order
•📊 Significant Budget: Originally approved CAT budget for 2025 exceeded $248M
•🔍 In Focus: SEC Chairman emphasizes efficiency and cost-effectiveness
📉 The SEC's Bold Move
In a bid to curb the escalating costs of the Consolidated Audit Trail (CAT), the Securities and Exchange Commission has issued an order granting conditional exemptive relief. This move allows self-regulatory organizations to cut down on operational expenses while still maintaining core regulatory functions. Efficiency and cost-effectiveness are the new watchwords.
SEC Chairman Paul S. Atkins highlighted the importance of this action, stating, "Both the Commission and the participants that operate the CAT need to take very seriously their roles in reducing these seemingly endless cost increases. 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."
💼 What This Means for the Industry
Today's order is not just a one-off measure; it's a significant step towards long-term reform and rationalization of the CAT. Jamie Selway, Director of the SEC’s Division of Trading and Markets, assured that the Division will continue to engage participants and industry members to facilitate needed improvements. > "The Division will continue to engage participants and industry members to facilitate needed improvements to reduce costs for investors," said Selway.
Among the measures approved are:
Ceasing the creation of interim lifecycle linkages absent regulator request
Easing requirements related to the re-processing of late records
Ceasing certain functionalities associated with the online targeted query tool
Deleting certain CAT data and more cost-effective storage of older data
🤑 The Financial Impact
The financial implications of these measures are substantial. The CAT budget originally approved by the Operating Committee for 2025 exceeded a whopping $248 million. With the new cost amendments and today's relief, the expenses are forecasted to fall by an additional $20 million to $27 million, bringing the forecast expenses for 2025 down to approximately $196 million.
Bold numbers and strategic decisions are at play here, aiming for a more sustainable financial future for the CAT.
