The U.S. Securities and Exchange Commission has outlined a comprehensive plan to take control of the Consolidated Audit Trail (CAT), replace its funding model, and prepare a transition that could run through late 2027. According to reports from crypto.news, SEC Chair Paul Atkins sent an August 10 letter to CAT Operating Committee Chair Robert Walley directing staff to prepare recommendations for changing how the market surveillance system is funded, governed, and operated. The agency will examine whether CAT expenses could be covered through congressional appropriations or transaction fees collected under Section 31 of the Securities Exchange Act.
A separate rulemaking proposal could remove Rule 613 of the Regulation National Market System, the provision that led to CAT's creation. As reported by crypto.news, Atkins asked staff to consider requiring stock exchanges, the Financial Industry Regulatory Authority, and broker-dealers to send the same CAT data directly to the SEC or an agency-appointed operator. Existing infrastructure and technical reporting standards would remain in use, limiting disruption during the changeover. The proposed model would place responsibility more directly with the federal regulator that uses the data for market oversight.
According to Atkins' letter, the current arrangement still has 'persistent cost, governance, and funding issues,' even after the SEC reduced the system's annual operating expenses and narrowed its data collection. The agency achieved some reductions through targeted regulatory exemptions and amendments to the CAT NMS Plan, including ending the requirement to report personally identifiable information to the system. Despite these changes, Atkins said the existing structure requires additional work because CAT remains managed under a joint national market system plan involving exchanges and FINRA.
The SEC expects several parts of the work to proceed simultaneously, with the handover probably not finishing before late 2027. As reported by crypto.news, the instructions follow an SEC concept release issued on April 16, which received hundreds of responses covering the system's management, costs, funding, and the SEC's role. Market participants will have opportunities to comment as the process advances, with the SEC planning to issue regular public updates and seek input from market participants during implementation.
The CAT instructions form part of an active review of rules governing American securities trading, including provisions that could affect blockchain-based versions of U.S. stocks. According to crypto.news, in June, the commission proposed rescinding Rules 611 and 610(e) of Regulation NMS, intended to simplify equity market structure and reduce costs after two decades under Rule 611. The CAT plan does not depend on the CLARITY Act and deals with surveillance of securities orders and trades under the SEC's existing market mandate, requiring commission consideration and public comment before becoming final.
