FACT SHEET

CAT NMS Plan 

Amendment: 

Funding Model

U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 1 OF 2

Why This Matters

The CAT NMS Plan requires both Participants and Industry Members to fund the CAT. The 

purpose of the funding model is to provide a framework for the recovery of the Participants’ 

costs to create, develop, and maintain the CAT. The amendment sets forth the method for 

allocating the costs to fund CAT among Participants and the members of a national 

securities exchange or a members of a national securities association (“Industry 

Members”).

How the Funding Amendment Works

The amendment sets forth a new Executed Share Model that will:

• Charge fees to Participants and Industry Members based on executed equivalent 

share volume:

o Fees will be charged to each Industry Member that is a CAT Executing 

Broker for the buyer in a transaction (“CEBB”) and each Industry Member 

that is the CAT Executing Broker for the seller in a transaction (“CEBS”); 

o The CAT fee for each Participant, CEBB, and CEBS in a transaction will be 

calculated by multiplying the number of executed equivalent shares in the 

transaction by one-third and by a Fee Rate.

• Calculate executed equivalent share volume based on whether securities being 

traded are NMS Stocks, Listed Options, and/or OTC Equity Securities, to account 

for differences in the trading characteristics of each of those securities.

o NMS Stocks will be counted as one executed equivalent share;

The Securities and Exchange Commission approved an amendment to the National Market 

System Plan for the Consolidated Audit Trail (“CAT NMS Plan”) that implements a revised 

funding model (“Executed Share Model”) for the Consolidated Audit Trail (“CAT”) and 

establishes a fee schedule for CAT fees for the self-regulatory organizations that are 

participants to the CAT NMS Plan (the “Participants”) in accordance with the Executed Share 

Model. The amendment also sets forth a framework for the recovery of the costs incurred by 

the Participants in developing and maintaining the CAT system.
FACT SHEET | CAT NMS Plan Amendment: Funding Model

U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 2 of 2

o Each executed contract for a transaction in Listed Options will be counted 

using the contract multiplier applicable to the specific Listed Option in the 

relevant transaction (typically 100 shares);

o Each executed share for a transaction in OTC Equity Securities would be 

counted as 0.01 executed equivalent shares.

The amendment establishes two categories of fees:

• CAT fees for CAT costs not previously paid by the Participants (“Prospective CAT 

Costs”).

• CAT fees (“Historical CAT Assessments”) to be payable by Industry Members that 

are CAT Executing Brokers for the Buyer and for the Seller with regard to CAT 

costs previously paid by the Participants (“Past CAT Costs”). 

The Fee Rate for CAT fees related to Prospective CAT Costs would be determined by 

dividing the reasonably budgeted CAT costs for the upcoming year by the reasonably 

projected total executed equivalent share volume of all transactions for that year.

To calculate the Fee Rate for the Historical CAT Assessment related to Past CAT Costs, 

the CAT Operating Committee would divide such costs (less any excluded amount) by the 

reasonably projected total executed equivalent share volume of all transactions during a 

projected recovery period. The projected recovery period would be determined by the CAT 

Operating Committee and must be no less than two years and no more than five years.

The amendment further provides: 

• For every new Fee Rate and adjustment to the Fee Rate, the Participants would be 

required to file a Section 19(b) filing with the Commission to implement the Fee 

Rate on Industry Members. As with other Section 19(b) filings, these filings would 

be published for public comment and could likely take effect upon filing. Such a

filing for a Fee Rate change would provide notice to Industry Members and the 

public of the Fee Rate change and permit such entities to provide comment on the 

change and on the effectiveness of the budget reconciliation. 

• The CAT LLC’s Operating Committee is required to set a “reasonable” operating 

budget for CAT LLC, as well as to make sure that fees, costs, and expenses are 

reasonable and that they are reasonably budgeted to be incurred by or for the 

Company in connection with the development, implementation, and operation of the 

CAT as set forth in the annual operating budget approved by the Operating 

Committee.

What’s Next

The amendment became effective upon Commission approval.