Consolidated Audit Trail: A New Day for the CAT

Today, the Commission approved an order that grants conditional exemptive relief allowing the immediate implementation of much needed changes designed to save tens of millions of dollars in annual operating costs of the Consolidated Audit Trail ("CAT").

Over time, the costs of operating the CAT have ballooned beyond belief. When the CAT was established, in November 2016, its ongoing annual costs were estimated to total, at the upper end, about $55 million.[1] Unfortunately, even that estimate proved woefully unrealistic, and costs have regularly increased. As of November 2024, annual CAT costs were projected to exceed $248 million.[2] Ultimately, these costs make participating in our equities and options markets more expensive.

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.[3]

As previously stated, I have instructed staff to undertake a comprehensive review of the CAT.[4] That 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 participants, industry members, and the public are encouraged to engage with the Commission and staff and to share their thoughts and suggestions regarding all aspects of the CAT.

While I am pleased to support today's exemptive relief, I want to reiterate that this is just the start. More changes are needed, and I look forward to reviewing the staff's recommendations.