Atkins asks SEC staff to draft a rule rescinding Rule 613 and prepare to take on the CAT

SEC Chairman Paul Atkins has set out plans for the Commission to take responsibility for the Consolidated Audit Trail (CAT). In a letter dated 10 August to Robert Walley, chair of the CAT NMS Plan Operating Committee, he says it is critical for the Commission to “move quickly and lay the groundwork necessary to restructure the CAT” to address persistent cost, governance and funding issues.

Rule 613 of Regulation NMS required the self-regulatory organisations, the exchanges and FINRA, to jointly create the CAT, and they run it as participants in the CAT NMS Plan. Atkins wrote that the Commission had already made significant cuts to the system’s annual operating costs and ended reporting of personally identifiable information, through exemptive relief and plan amendments. “Nevertheless, further changes are needed to address the costs, governance, and funding of the CAT,” he wrote.

What staff have been told to do

Atkins said he had asked staff to:

• explore funding options for the CAT, including appropriated funds and Section 31 transaction fees;
• draft a rulemaking for the Commission to consider that, if adopted, would rescind Rule 613 and require exchanges, FINRA and broker-dealers to report CAT data to the Commission or its designee, “while utilizing current CAT infrastructure and reporting specifications”;
• assess SEC resources needed to take on the CAT, and identify needs for SEC governance of it.

Because many of these steps would need to happen together, Atkins wrote, “the transition would likely not be complete until late 2027.” He said he was setting out the approach now so that market participants and investors can understand the reforms planned.

The concept release

The letter follows a concept release the Commission issued on 16 April, seeking comment on a comprehensive review of the CAT and other audit trails and data sources used in regulating US securities markets. According to Atkins, staff had reviewed hundreds of comments. “One theme emerges from the comment file: investors and market participants want the Commission to take more responsibility for managing and funding this project,” he wrote. With the comment period closed, he has asked staff for detailed recommendations on fundamental changes.

Atkins said market participants would be “given a voice in the process”, both now and after any SEC takeover, if the Commission adopts rules to restructure the CAT. He added that changes should be implemented “as seamlessly as possible”.

What the letter does not say

The letter sets out a direction, not a Commission decision. The rulemaking it describes would be drafted for the Commission’s consideration and would rescind Rule 613 only “if adopted”. The letter gives no cost figures, no split between appropriations and Section 31 fees, and no timetable for a proposal beyond the late-2027 estimate for the full transition.

Why it matters

Analysis. For market practitioners, the funding line matters most. The April concept release records that the Eleventh Circuit vacated the Commission’s 2023 CAT funding model order in July 2025, and that market participants have since challenged the funding model again. Moving the CAT on to appropriated funds or Section 31 fees would take its costs out of the plan’s own fee schedules. That would not necessarily make the cost disappear for firms. The concept release quotes the Commission’s earlier observation that, “In practice,” SROs obtain Section 31 money “by assessing charges on their members, and the members in turn pass these charges to their customers.” Who ultimately bears the cost would depend on how any rule sets the mechanism.

For compliance and reporting teams, the phrase “current CAT infrastructure and reporting specifications” points to continuity. On the letter’s description, firms would keep reporting the same data in the same formats, but to the Commission or its designee rather than to a participant-run plan. The governance change is larger. Control of the system and its budget would move from the exchanges and FINRA to the regulator.

What we are watching

• A proposal to rescind Rule 613, and how it would allocate costs between appropriations and Section 31 fees.
• How the CAT participants respond, given that they currently run the plan.

Added 1 Nov 2026 to the Regulation section; dated to the event, not published at the time.

Sources

• Chairman Paul S. Atkins letter to Robert Walley, Chair, CAT NMS Plan Operating Committee, U.S. Securities and Exchange Commission, 10 Aug 2026
• Release No. 34-105251: Concept Release on Consolidated Audit Trail and Other Audit Trails and Data Sources, U.S. Securities and Exchange Commission, 16 Apr 2026