SEC Adopts Two-Year Interim CAT Funding Model

The SEC approved an amendment to the National Market System Plan Governing the Consolidated Audit Trail ("CAT") to implement a revised, two-year interim funding model known as the "Executed Share Model."

This action follows a July 2025 decision by the U.S. Court of Appeals for the Eleventh Circuit vacating the SEC’s 2023 CAT funding model, primarily because the agency failed to adequately justify a "pass-through" provision that allowed exchanges to shift costs to brokers. Under the newly approved interim model, CAT costs are allocated evenly across three parties for each transaction: (i) the "applicable participant" (i.e., the self-regulatory organization or exchange), (ii) the "CAT executing broker for the buyer," and (iii) the "CAT executing broker for the seller." Fees are calculated based on "executed equivalent share volume," with asset-class-specific weighting: one share equals one equivalent share for NMS stocks, options are calculated using the applicable contract multiplier (typically 100), and OTC equity securities are discounted so each share counts as 0.01 equivalent shares to reflect high volumes of sub-dollar trades.