September 7, 2022

SEC Opens Comment Period on Objections to Proposed Revisions to Funding Model for CAT

The SEC opened a new comment period to consider objections to proposed revisions to the funding model for the consolidated audit trail ("CAT").

The proposal was first published in the Federal Register on June 1, 2022 (see previous coverage) and the original comment period ended on June 22, 2022. Commenters raised numerous objections to the proposed amendments.

Under this order to institute proceedings under Regulation NMS Rule 608(b)(2)(i)("Filing and amendment to national market system plans"), the SEC stated that it will "determine whether to disapprove the Proposed Amendment or to approve the Proposed Amendment with any changes or subject to any conditions the Commission deems necessary or appropriate." The SEC restated that the "burden to demonstrate that a NMS plan filing is consistent with the Exchange Act and the rules and regulations issued thereunder . . . is on the plan participants that filed the NMS plan filing." The SEC further stated that "any failure of the plan participants that filed the NMS plan filing to provide such detail and specificity may result in the Commission not having a sufficient basis to make an affirmative finding that the NMS plan filing is consistent with the Exchange Act and the applicable rules and regulations thereunder."

By this action, the Commission "is providing notice of the grounds for disapproval under consideration" and opening up a new comment period for additional opinion on the revisions and to specifically respond to the original commenter's "views" and objections.

Comments on the proposal and objections must be submitted by September 27, 2022. Rebuttals to submitted comments must be submitted by October 11, 2022.

The SEC noted that instituting proceedings should not be viewed as an indication of an agency conclusion with respect to the proposed rule change.