ChainCatcher report: U.S. Securities and Exchange Commission (SEC) Chairman Paul S. Atkins sent a letter to Robert Walley, Chair of the Consolidated Audit Trail (CAT) Operating Committee, stating that the SEC plans a comprehensive overhaul of the CAT system, including reforms to its governance structure, funding sources, and operational model. Atkins noted that during his tenure, the SEC has significantly reduced CAT’s annual operating costs by issuing exemptions and approving amendments to the CAT NMS plan, as well as eliminating the requirement to report personally identifiable information (PII) to the CAT system. These reforms have lowered system costs and narrowed the scope of data collection; however, fundamental issues remain in CAT’s cost structure, governance, and funding mechanisms. To address these concerns, the SEC issued a concept release on April 16, 2026, initiating a comprehensive review of CAT and other audit trail systems and data sources used in U.S. securities market regulation. The SEC stated that it has received hundreds of comments, with one core consensus being that investors and market participants expect the SEC to assume greater responsibility for CAT’s management and funding. Atkins said he has directed SEC staff to develop a comprehensive reform proposal for CAT, including: 1) exploring new funding sources for CAT, such as congressional appropriations and transaction fees under Section 31 of the Securities Exchange Act; 2) drafting a rule proposal that, if adopted, would rescind Rule 613 and require exchanges, FINRA, and broker-dealers to continue using existing CAT infrastructure and reporting standards to submit CAT data directly to the SEC or its designated entity; 3) assessing internal SEC resource needs to prepare for the SEC’s future assumption of CAT governance responsibilities. The SEC anticipates that this reform involves multiple interconnected components requiring coordinated implementation, with the full transition expected to be completed by the end of 2027.
U.S. SEC Plans Major Overhaul of Consolidated Audit Trail System
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Summary
SEC news: The U.S. Securities and Exchange Commission (SEC) has proposed a major overhaul of the Consolidated Audit Trail (CAT) system, focusing on governance, project funding, and operational changes. SEC Chair Paul S. Atkins mentioned exploring new funding methods, including congressional appropriations and transaction fees under the Securities Exchange Act. The plan may also involve revoking Rule 613. The transition is expected to continue through 2027.
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