SEC Approves CAT Cost-Cut Plan for U.S. Market Surveillance

The SEC said on 27 March that it approved an amendment to the National Market System plan for the Consolidated Audit Trail, or CAT, together with exemptive relief tied to Rule 17a-1. The package is meant to lower the cost of running CAT while preserving what the agency calls its core regulatory functionality.

According to the Commission, the changes let CAT operators scale back or simplify several processes, including some lifecycle-linkage work, retention of older data, targeted-query functions, and certain reprocessing obligations. The SEC said the move could reduce annual CAT operating costs by roughly $50 million to $70 million against the 2025 budget, with additional savings beyond earlier relief granted in 2025.

CAT is mostly invisible to retail traders, but it sits underneath how U.S. equity and options markets are reconstructed for surveillance and enforcement. That means the cost of CAT eventually lands on exchanges, broker-dealers, and other market participants that have to fund or report into the system.

Why it matters

Lower CAT costs will not change a trader’s screen overnight, but they can matter for market plumbing. If oversight remains intact while compliance and operating costs fall, that can ease pressure on brokers and venues that absorb the bill.

What to watch next

Watch whether the SEC and plan participants push for another round of CAT redesign. Cost savings were the headline here, but the broader fight over CAT’s scope, governance, and long-term funding clearly is not finished.