SEC Approves CAT NMS Plan Amendments to Reduce Costs
The SEC approved amendments to the National Market System Plan Governing the Consolidated Audit Trail ("CAT NMS Plan") to implement various cost-saving measures.
In the Order, published in the Federal Register, the SEC said the rule changes aim to significantly reduce the cloud hosting and operational costs associated with the CAT. The Order includes the following amendments:
The Interim CAT-Order-ID Amendment eliminates the daily delivery of interim lifecycle linkages by T+1 at noon. Instead, the Plan Processor will create and deliver interim CAT-Order-IDs only on an ad hoc basis when requested by authorized regulatory users from the Participants or the SEC (estimated savings: $2 to $3 million annually).
The Data Storage Amendment permits deletion of all CAT Data older than three years, Options Market Maker ("OMM") quotes older than six months, Interim Operational Data older than 15 days, and Options SIP Data older than six months. This amendment is projected to save up to $32 million annually on cloud hosting fees. The Commission also granted exemptive relief from Exchange Act Rule 17a-1 ("Recordkeeping rule for national securities exchanges, national securities associations, registered clearing agencies and the Municipal Securities Rulemaking Board"), while clarifying that Industry Member obligations under Rules 17a-3 ("Records to be made by certain exchange members, brokers and dealers") and 17a-4 ("Records to be preserved by certain exchange members, brokers and dealers") remain unchanged.
The Late Data Re-Processing Amendment codifies the approach established in the 2025 Cost Savings Exemptive Order, rather than eliminating all late data reprocessing as originally proposed. The Commission rejected CAT LLC's proposal to cease all reprocessing of records received after T+4 at 8 a.m. Eastern Time, finding the incremental savings of $1.5 to $2 million did not justify the risk to regulatory data quality. Instead, the amendment requires quarterly Enhanced Late to the Lifecycle processing for trade dates within the prior three years and preserves ad hoc Full Replay reprocessing upon request by authorized regulatory users from the Participants or the Commission.
The Reference Data Amendment eliminates the Customer and Account Information System ("CAIS") and replaces it with a streamlined Reference Database. Industry Members will no longer be required to report Large Trader IDs or Legal Entity Identifiers to CAT. The amendment establishes a new CCID:FDID mapping table accessible to regulators and maintains the anonymized CAT Customer ID ("CCID") generation process using hashed Transformed Identifiers. This amendment is projected to save up to $6 million annually on cloud hosting fees, plus $7 million on Plan Processor operating fees. The Commission granted exemptive relief from Rule 17a-1 to permit deletion of customer data from CAIS.
The amendments also add a spending cap provision to the CAT NMS Plan, requiring that any additions or modifications to CAT functionality or system operations that would materially increase operating expenses must be approved through a CAT NMS Plan amendment under Rule 608(b) or by Commission order, unless the change is intended to maintain existing functionality, ensure system security, or realize cost savings.
The SEC said that the amendments do not foreclose further cost-reduction measures and that it expects to engage with participants, industry members, and the public as part of its ongoing comprehensive review of the CAT.