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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-106237; File No. 4-698]

Notice of a Request for Exemption from Certain Provisions of the National Market

System Plan Governing the Consolidated Audit Trail Related to the Recovery of Costs

Incurred During Period 4 of the Financial Accountability Milestones Pursuant to Section

36 of the Securities Exchange Act of 1934 and/or Rule 608(e) of Regulation NMS

Thereunder, and Request for Comment

September 1, 2026.

On August 11, 2026, Consolidated Audit Trail, LLC (“CAT LLC”), on behalf of the

Participants 1 in the National Market System Plan Governing the Consolidated Audit Trail (“CAT

NMS Plan” or “Plan”), 2 submitted a letter (the “FAM 4 Exemption Request”) 3 requesting that

The twenty-eight Participants of the CAT NMS Plan are: 24X National Exchange LLC, BOX Exchange

LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe EDGA

Exchange, Inc., Cboe EDGX Exchange, Inc., Cboe Exchange, Inc., Financial Industry Regulatory

Authority, Inc., Investors Exchange LLC, Long-Term Stock Exchange, Inc., MEMX LLC, Miami

International Securities Exchange LLC, MIAX Emerald, LLC, MIAX PEARL, LLC, MIAX Sapphire,

LLC, Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The Nasdaq

Stock Market LLC, Nasdaq Texas, LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE

Arca, Inc., NYSE Texas, Inc., NYSE National, Inc., and Texas Stock Exchange LLC. CAT LLC notes

that, while this exemptive request represents the consensus of the Participants, individual Participants may

not fully agree with every statement set forth in the exemptive request letter.

The CAT NMS Plan is a national market system plan approved by the Commission pursuant to Section

11A of the Securities Exchange Act of 1934 (“Exchange Act”) and the rules and regulations thereunder.

See Securities Exchange Act Release No. 79318 (Nov. 15, 2016), 81 FR 84696 (Nov. 23, 2016) (“CAT

NMS Plan Approval Order”). The CAT NMS Plan is Exhibit A to the CAT NMS Plan Approval Order.

See CAT NMS Plan Approval Order, 81 FR at 84943–85034. The CAT NMS Plan functions as the limited

liability company agreement of the jointly owned limited liability company formed under Delaware state

law through which the Participants conduct the activities of the CAT (“Company”). Each Participant is a

member of the Company and jointly owns the Company on an equal basis. The Participants submitted to

the Commission a proposed amendment to the CAT NMS Plan on August 29, 2019, which they designated

as effective on filing. On August 29, 2019, the Participants replaced the CAT NMS Plan in its entirety with

the limited liability company agreement of a new limited liability company, CAT LLC, which became the

Company. See Securities Exchange Act Release No. 87149 (Sept. 27, 2019), 84 FR 52905 (Oct. 3, 2019).

The latest version of the CAT NMS Plan is available at https://catnmsplan.com/about-cat/cat-nms-plan.

Unless otherwise noted, capitalized terms are used as defined in Rule 613, in the CAT NMS Plan, or in the

FAM 4 Exemption Request.

See letter from Participants to Vanessa Countryman, Secretary, Commission, dated August 11, 2026 (the

“FAM 4 Exemption Request”). The FAM 4 Exemption Request is included as an Appendix to this notice.

the Securities and Exchange Commission (“Commission” or “SEC”) use its exemptive authority

under Section 36 of the Exchange Act 4 and/or Rule 608(e) of Regulation NMS thereunder 5 in

connection with the recovery of certain costs incurred during the fourth and final Financial

Accountability Milestone (“FAM 4”) of the Plan. The Commission is publishing this notice to

provide interested persons with an opportunity to comment.

Background

On July 18, 2012, the Commission adopted Rule 613 of Regulation NMS. 6 The goal of

Rule 613 was to create a modernized audit trail system – the CAT – that would provide

regulators with timely access to a comprehensive set of trading data, thus enabling regulators to

more efficiently and effectively analyze and reconstruct market events, monitor market behavior,

conduct market analysis to support regulatory decisions, and perform surveillance, investigation,

and enforcement activities. On November 15, 2016, the Commission approved the CAT NMS

Plan as the national market system plan required by Rule 613. While Rule 613 7 and the CAT

NMS Plan contemplated that the costs of building the CAT may eventually be split between

15 U.S.C. 78mm(a)(1). Section 36(a)(1) of the Exchange Act gives the Commission the authority to

exempt any person, security or transaction or any class or classes of persons, securities or transactions,

conditionally or unconditionally, from any Exchange Act provision or any rule or regulation thereunder by

rule, regulation or order, to the extent that the exemption is necessary or appropriate in the public interest

and consistent with the protection of investors.

17 CFR 242.608(e). Rule 608(e) provides that “[t]he Commission may exempt from the provisions of this

section, either unconditionally or on specified terms and conditions, any self-regulatory organization,

member thereof, or specified security, if the Commission determines that such exemption is consistent with

the public interest, the protection of investors, the maintenance of fair and orderly markets and the removal

of impediments to, and perfection of the mechanisms of, a national market system.”

See Securities Exchange Act Release No. 67457 (July 18, 2012), 77 FR 45722 (Aug. 1, 2012) (“Rule 613

Adopting Release”); 17 CFR 242.613.

See Rule 613(a)(1)(vii)(D) (requiring the CAT NMS Plan to address “[h]ow the plan sponsors propose to

fund the creation, implementation, and maintenance of the consolidated audit trail, including the proposed

allocation of such estimated costs among the plan sponsors, and between the plan sponsors and members of

the plan sponsors”).

Industry Members 8 and the Participants, 9 during the development and implementation stages of

the CAT, the Participants fully funded the historical costs associated with building the CAT

through non-interest-bearing loans. 10 On September 9, 2019, after significant delays in the

development and implementation of the CAT where the Participants had met neither the

deadlines set forth in the CAT NMS Plan 11 nor their own proposed extensions of those

deadlines, 12 the Commission proposed to amend the CAT NMS Plan to include provisions

designed to increase operational transparency surrounding the implementation process and the

Participants’ financial accountability for the timely completion of the CAT. 13 On May 15, 2020,

the Commission approved the FAM Proposal and amended the CAT NMS Plan to require the

Participants to develop a complete implementation plan containing a detailed timeline with

“Industry Member” means “a member of a national securities exchange or a member of a national

securities association.” See CAT NMS Plan, Article I, Section 1.1.

See Rule 613 Adopting Release at 45795 (“[A]lthough the plan sponsors likely would initially incur the

costs to establish and fund the central repository directly, they may seek to recover some or all of these

costs from their members.”). See, e.g., Rule 613(a)(1)(vii)(D) of Regulation NMS under the Exchange Act.

See, e.g., Securities Exchange Act Release No. 100938 (Sept. 5, 2024), 89 FR 73802, 73803 (Sept. 11,

2024) (“Example Historical CAT Costs Fee Filing”) (providing an example Participant fee filing discussing

the loans for the historical CAT costs).

The CAT NMS Plan established deadlines related to the implementation of critical CAT functionality,

including (1) the requirement that the Participants begin recording and reporting data by November 15,

2017, and (2) the requirement that each Participant require Industry Members and Small Industry Members

to begin reporting data by November 15, 2018 and November 15, 2019, respectively. See CAT NMS Plan,

supra note 2, at Section 6.7(a). The Participants requested an exemption extending these deadlines. The

Commission did not grant this request. See, e.g., Statement on Status of the Consolidated Audit Trail (Aug.

27, 2018), https://www.sec.gov/news/public-statement/tm-status-consolidated-audit-trail (stating that the

Participants requested an exemption to commence Participant reporting on November 15, 2018 and

Industry Member reporting on November 15, 2019). Although the Participants began reporting some

transaction data to the Central Repository on November 15, 2018, the Participants acknowledged that not

all of the required functionality had been implemented. See CAT NMS Announces Initiation of Reporting

to the Consolidated Audit Trail (Nov. 16, 2018), https://www.catnmsplan.com/wpcontent/uploads/2018/11/Press-Release-CAT-Launchfinal.pdf.

See Securities Exchange Act Release No. 86901 (Sept. 9, 2019), 84 FR 48458, 48458–461 (Sept. 13, 2019)

(“FAM Proposal”) (discussing the various deadlines missed by the Participants).

Id.

objective milestones to achieve full CAT implementation. 14 Accordingly, the Participants

developed and implemented Section 11.6 (Funding Incentives for Post-Amendment Expenses) of

the CAT NMS Plan to establish a four phased implementation schedule, as well as funding

penalties in the event that their chosen deadlines for the phased implementation schedule were

missed—the four Financial Accountability Milestones (“FAMs”). Section 11.6 of the CAT

NMS Plan requires the four FAMs to be met by certain deadlines in order for the Participants to

recover the full amount of any fees established by the Operating Committee, or implemented by

the Participants, to recover a portion of Post-Amendment Expenses 15 from Industry Members

(“Post-Amendment Industry Member Fees”) and imposed penalties on what could be recovered

if a deadline was missed. 16

The Participants stated that FAM 4—Full Implementation of CAT NMS Plan

Requirements—requires the completion of the Customer and Account Information System

(“CAIS”), among other things, and is defined as:

the point at which the Participants have satisfied all of their obligations to build and

implement the CAT, such that all CAT system functionality required by Rule 613

and the CAT NMS Plan has been developed, successfully tested, and fully

implemented at the initial Error Rates specified by Section 6.5(d)(i) or less,

See Securities Exchange Act Release No. 88890 (May 15, 2020), 85 FR 31322 (May 22, 2020) (“Financial

Accountability Milestones Release”); See also, CAT NMS Plan, supra note 2, at Section 11.6.

“Post-Amendment Expenses” are defined as “all fees, costs, and expenses (including legal and consulting

fees, costs, and expenses) incurred by or for the Company in connection with the development,

implementation, and operation of the CAT from the effective date of this Section until such time as Full

Implementation of CAT NMS Plan Requirements has been achieved.” Section 11.6 of the CAT NMS Plan.

The Participants stated that the first three FAMs, including full implementation of the transactional

database, were completed by the deadlines set forth in the Plan. See FAM 4 Exemption Request, supra

note 3, at 6. Indeed, beginning in 2024, the Participants have sought to fully recover the expenses of the

first three FAMs and other historical costs from Industry Members by implementing a Historical CAT

Assessment in CAT fee filings. See, e.g., the Example Historical CAT Costs Fee Filing, supra note 10.

including functionality that efficiently permits the Participants and the Commission

to access all CAT Data required to be stored in the Central Repository pursuant to

Section 6.5(a), including Customer Account Information, Customer-ID, Customer

Identifying Information, and Allocation Reports, and to analyze the full lifecycle

of an order across the national market system, from order origination through order

execution or order cancellation, including any related allocation information

provided in an Allocation Report. This Financial Accountability Milestone shall be

considered complete as of the date identified in a Quarterly Progress Report

meeting the requirements of Section 6.6(c). 17

Section 11.6(a)(i)(D) of the CAT NMS Plan sets forth the target deadline for FAM 4 of

December 30, 2022. It states that:

[t]he Participants will be entitled to collect the full amount of: . . . (D) Any PostAmendment Industry Member Fees established or implemented to recover the PostAmendment Expenses incurred from the date immediately following the

achievement of Full Availability and Regulatory Utilization of Transactional

Database Functionality to the date of Full Implementation of CAT NMS Plan

Requirements (“Period 4”), so long as such date is no later than December 30, 2022.

Section 11.6(a)(iii) of the CAT NMS Plan sets forth the penalty for missing the target deadline of

December 30, 2022. It states that:

The amount of Post-Amendment Industry Member Fees that the Participants are

entitled to collect for Periods 2, 3, and 4 will be reduced according to the following

schedule if the Participants miss the deadline set forth for that Period:

Section 1.1 of the CAT NMS Plan.

(A)

By 25% if the Participants miss the deadline set forth in Section

11.6(a)(i)(B)-(D) by less than 90 days;

(B)

By 50% if the Participants miss the deadline set forth in Section

11.6(a)(i)(B)-(D) by 90 days or more, but less than 180 days;

(C)

By 75% if the Participants miss the deadline set forth in Section

11.6(a)(i)(B)-(D) by 180 days or more, but less than 270 days; and

(D)

By 100% if the Participants miss the deadline set forth in Section

11.6(a)(i)(B)-(D) by 270 days or more.

The Participants stated that under Section 1.1 of the CAT NMS Plan, a FAM is considered

complete as of the date identified in the Participants’ Quarterly Progress Reports (“QPRs”), and

that due to the need to address certain technical defects associated with CAIS, Full

Implementation of CAT NMS Plan Requirements was completed on July 15, 2024. 18 Because

July 15, 2024 was more than 270 days beyond FAM 4’s December 30, 2022 deadline, under the

schedule set forth in Section 11.6(a)(iii), the amount of Post-Amendment Industry Member Fees

that the Participants could collect for FAM 4 would be reduced by 100%.

II.

Summary of the FAM 4 Exemption Request

The Participants requested exemptive relief from this 100% reduction penalty, as they

stated that various other factors should be taken into consideration. 19 Specifically, the

Participants stated that they, through CAT LLC, seek exemptive relief to allow for the recovery

of non-CAIS FAM 4 costs from Industry Members. The Participants also requested an

See FAM 4 Exemption Request, supra note 3, at 7. See also, Q2 & Q3 2024 Quarterly Progress Report

(July 29, 2024), https://www.catnmsplan.com/sites/default/files/2024-07/CAT_Q2-and-Q3-2024-QPR.pdf

(indicating that Full Implementation of CAT NMS Plan Requirements was completed as of July 15, 2024).

See FAM 4 Exemption Request, supra note 3, at 7.

exemption from Sections 11.3(b)(i)(D)(I) and 11.3(f) of the CAT NMS Plan, which would allow

for a shortened historical recovery period or relief from the March 31, 2028 deadline to recover

Historical CAT Costs.

The Participants stated that the requested exemptive relief is “necessary or appropriate in

the public interest, and is consistent with the protection of investors,” 20 and is “consistent with

the public interest, the protection of investors, the maintenance of fair and orderly markets and

the removal of impediments to, and perfection of the mechanisms of, a national market

system,” 21 because it would prevent “an excessive and grossly disproportionate” penalty from

being imposed in connection with FAM 4. 22 The Participants stated that, in spite of what they

believe to be the limited nature of the delay in FAM 4 CAIS implementation, FAM 4 would

prevent the recovery of any CAT costs incurred by CAT LLC during Period 4—including any

costs related to the ongoing, successful operation of the transactional database that was

completed on time. 23 The Participants further stated that such a result would not be a reasonable

or equitable application of the financial accountability provisions adopted by the Commission.24

The Participants stated that FAM 4 required the completion of a novel and separate

system for the submission of customer and account data known as CAIS, among other

requirements, and established a target deadline of December 30, 2022. 25 The Participants stated

that although the CAT NMS Plan requirements related to the transactional database were

implemented prior to FAM 4, certain technical aspects of the CAIS database were not completed

15 U.S.C. 78mm(a)(1).

17 CFR 242.608(e).

See FAM 4 Exemption Request, supra note 3, at 2.

Id.

Id. at 3.

until July 15, 2024. 26 The Participants stated that during Period 4 (from January 1, 2022 through

July 15, 2024), total CAT costs were $490,151,144, and these costs were funded by the

Participants through voluntary, interest-free loans provided to CAT LLC. 27 The Participants

stated that total costs incurred during Period 4 fall into three categories: (1) expenses incurred

during FAM 4 related to the transactional database; (2) expenses incurred during FAM 4 related

to CAIS; and (3) other operating costs incurred during FAM 4, largely comprised of fees for

legal, consulting, and accounting support. 28 The Participants further stated that based on the

current funding model, which allocates two-thirds of CAT costs to Industry Members and onethird of CAT costs to Participants, the application of the 100% penalty under FAM 4 would

prevent the Participants’ recovery of $326,767,429 from Industry Members. 29 The Participants

stated that, unrelated to the CAIS delay, throughout Period 4 (January 1, 2022 through July 15,

2024), CAT LLC continued to operate the transactional database, incurring $364,219,549 in

related technology costs and $26,624,090 in other CAT LLC operating costs—separate and apart

from any CAIS-related costs. 30 In addition, the Participants stated that during Period 4, CAT

LLC incurred CAIS-related costs of $99,307,505, or approximately 20% of overall Period 4

costs of $490,151,144. 31 The Participants provided the following chart, which outlines the FAM

See Q2 & Q3 2024 Quarterly Progress Report (July 29, 2024),

https://www.catnmsplan.com/sites/default/files/2024-07/CAT_Q2-and-Q3-2024-QPR.pdf (indicating that

Full Implementation of CAT NMS Plan Requirements was completed as of July 15, 2024).

See FAM 4 Exemption Request, supra note 3, at 7.

Id.

Id. at 8.

Id. at 3.

Id. at 8.

4 costs that would otherwise be recoverable by Participants from Industry Members under the

current CAT funding model. 32

FAM 4 Costs

FINRA CAT Technology Costs

– Non-CAIS

FINRA CAT Technology Costs

– CAIS

Other Operating Costs

TOTAL FAM 4 COSTS

$364,219,549

2/3 Recovery

Per CAT

Funding Model

$242,813,033

$99,307,505

$66,205,003

$26,624,090

$490,151,144

$17,749,393

$326,767,429

The Participants stated that this $490 million total excludes remediation costs incurred by

FINRA CAT relating to the delayed implementation of CAIS, and that FINRA CAT is

prohibited from passing through remediation costs associated with the CAIS implementation to

CAT LLC. 33 The Participants stated that absent exemptive relief, they would bear the full

burden of $490,151,144 of Period 4 costs. 34

The Participants stated that, based on the current funding model, which allocates twothirds of CAT costs to Industry Members and one-third of CAT costs to Participants, the

requested relief would permit the recovery of $260,562,426. 35 The Participants provided the

following chart, which gives a breakdown of the FAM 4 amounts that would be anticipated in a

subsequent Historical CAT Assessment, should the Commission grant this exemptive request. 36

Id.

See FAM 4 Exemption Request, supra note 3, at 8.

Id.

FAM 4 Costs

FINRA CAT Technology Costs

– Non-CAIS

FINRA CAT Technology Costs

– CAIS

Other Operating Costs

TOTAL FAM 4 COSTS

2/3 Recovery

Per CAT

Funding Model

$364,219,549

$242,813,033

Anticipated 2/3

Recovery

Per CAT

Funding Model

if Exemption

Granted

$242,813,033

$99,307,505

$66,205,003

---

$26,624,090

$490,151,144

$17,749,393

$326,767,429

$17,749,393

$260,562,426

The Participants stated that the exemptive relief should be granted because the vast

majority of Period 4 costs related to the operation of the transactional database, which was fully

implemented by December 31, 2021, and was fully operational during the entirety of Period 4. 37

The Participants stated that during the period when certain aspects of CAIS were delayed, the

Commission acknowledged that “CAT is now operational and serves as a critical market

oversight tool,” and that “CAT has also contributed to the Commission’s enforcement and

regulatory work.” 38 The Participants provided the examples of the Commission relying on CAT

data in December 2022 to uncover a multi-year front-running scheme that generated at least $47

million in illegal trading profits, 39 and using CAT data in conducting the economic analyses for a

Id. at 9.

Id. (citing American Securities Association; Citadel Securities LLC v. Securities and Exchange

Commission, Brief for Respondent Securities and Exchange Commission at 19 (11th Cir. Apr. 15, 2024)).

See FAM 4 Exemption Request, supra note 3, at 9. See also Press Release, SEC Charges Financial

Services Professional and Associate in $47 Million Front-Running Scheme (Dec. 14, 2022)

https://www.sec.gov/newsroom/press-releases/2022-228 (stating that SEC staff analyzed CAT data to

uncover defendant’s allegedly fraudulent trading and to identify how he profited by repeatedly frontrunning large trades by the other defendant’s employer).

package of market structure rule proposals. 40 The Participants stated that the Commission

adopted the FAMs with the goal of seeking to ensure that the Participants acted diligently while

building the CAT and sought to encourage the timely development of the CAT by reducing the

Participants’ potential recovery of CAT costs in the event of delays. 41 The Participants stated

that the transactional database was successfully completed on time and in accordance with the

FAM deadlines, and thus the central premise underlying the FAMs—i.e., that missed deadlines

“prevent regulators and market participants from reaping the regulatory benefits of the CAT” 42—

was absent with regard to the transactional database. 43 Therefore, the Participants stated,

denying recovery of all Period 4 costs, the vast majority of which were attributed to the ongoing

operation of the transactional database, would be an unfair and inequitable result. 44

In addition, the Participants stated that when the Commission adopted the FAMs, it could

not have reasonably envisioned imposing a strict liability $326 million FAM 4 penalty for CAISrelated defects while the transactional database remained fully operational and in active

See FAM 4 Exemption Request, supra note 3, at 9. See also Regulation Best Execution, Exchange Act

Release No. 96496 (Dec. 14, 2022), 88 FR 5440, 5499 n.422 (Jan. 27, 2023) (“[t]his analysis used CAT

data to examine the execution quality of marketable orders in NMS Common stocks and ETFs that

belonged to accounts with a CAT account type of ‘Individual Customer’ and that originated from a brokerdealer MPID that originated orders from 10,000 or more unique ‘Individual Customer’ accounts during

January 2022.”); Order Competition Rule, Exchange Act Release No. 96495 (Dec. 14, 2022), 88 FR 128,

150 n.194 (Jan. 3, 2023) (“[t]he proposed level is supported by an analysis of the distribution of order

activity across accounts reported to the Consolidated Audit Trail as being held for the benefit of an

‘Individual Customer’ for the first six months of 2022.”); Minimum Pricing Increments, Access Fees, and

Transparency of Better Priced Orders, Exchange Act Release No. 96494 (Dec. 14, 2022), 87 FR 80266,

80334 n.625 (Dec. 29, 2022) (“[t]his estimate [of the number of broker-dealers with order entry systems] is

obtained using consolidated audit trail data ‘CAT’ [sic] data from the month of June 2022.”); Disclosure of

Order Information, Exchange Act Release No. 96493 (Dec. 14, 2022), 88 FR 3786, 3791 n.86 (Jan. 20,

2023) (“[a]nalysis of Consolidated Audit Trail (‘CAT’) data from the first five months of 2022 found that

wholesalers provide different execution quality to different retail brokers, and in particular that brokerdealers with higher average selection risk systematically receive higher effective spreads and lower price

improvement than broker-dealers with lower adverse selection risk.”).

Id. at 10.

Financial Accountability Milestones Release at 31335.

See FAM 4 Exemption Request, supra note 3, at 10.

Id.

regulatory use. 45 The Participants stated that the delayed technical aspects of CAIS did not

affect the overall utility of the transactional database, which was fully operational throughout

Period 4. 46 The Participants stated that based on the successful completion of the transactional

database, the Commission approved the retirement of OATS, which was supported by Industry

Members. 47 The Participants further stated that neither the Commission nor the Participants

anticipated such an excessive and disproportionate penalty would be possible when the FAMs

were adopted, and that it would be inequitable for the Commission to impose a $326 million

penalty tied to the completion of CAIS when the Commission later determined—only after the

costs had already been incurred—that CAIS should no longer exist as originally conceived when

the Commission established FAM 4. 48

The Participants stated that, when adopting the FAMs, the Commission expressly

highlighted its general exemptive authority, suggesting that the availability of exemptive relief

was a material consideration in adopting the FAMs. 49 The Participants stated that the

unforeseeable nature of an excessively large reduction in recoverable costs resulting from the

delay in certain limited aspects of one part of the CAT system is exactly the type of circumstance

See FAM 4 Exemption Request, supra note 3, at 4.

Id.

Id. See also, e.g., Letter from Ellen Greene, Managing Director, Equity & Options Market Structure,

SIFMA, to Vanessa Countryman, Secretary, Commission (Sept. 24, 2020) (“The elimination of duplicative

systems is one of the CAT’s most critical issues, and we support FINRA’s proposal to eliminate the

reporting rules for the OATS.”); William J. Leahey, Head of Regulatory Compliance, Refinitiv, to Vanessa

Countryman, Secretary, Commission (Sept. 22, 2020) (advocating for the “urgent decommissioning of

OATS”).

Id. See also Exchange Act Release No. 102386 (Feb. 10, 2025), 90 FR 9642, 9644-45 (Feb. 14, 2025)

(“CAIS Exemption Order”) (concluding that “the regulatory benefit of collecting the names, addresses and

years of birth for natural persons reported with transformed SSNs no longer justifies the associated risks”);

Exchange Act Release No. 104586 (Jan. 13, 2026), 91 FR 2164 (Jan. 16, 2026) (“CAIS Amendment

Approval Order”).

See FAM 4 Exemption Request, supra note 3, at 10.

that warrants the use of the Commission’s exemptive authority. 50 The Participants stated when

the SEC proposed the FAMs, both the Participants and Industry Members “recommended that

the Commission adopt a more flexible approach that could account for the possibility of

reasonable delays to CAT implementation” 51 without giving rise to financial penalties. 52 The

Participants summarized sections from the Financial Information Forum (“FIF”), Securities

Industry and Financial Markets Association (“SIFMA”), and Fidelity Capital Markets comment

letters on the Financial Accountability Milestones Release suggesting that the Commission

should allow for flexibility with the milestone dates and financial penalties, taking into account

reasonable delays and unforeseen circumstances. 53 In their own comment letter on the Financial

Accountability Milestones Release, the Participants stated that “the Commission and all market

participants would benefit from a more flexible approach in which the Commission would assess

the appropriateness of the recovery of Post-Amendment Industry Member Fees in the context of

particular facts and circumstances in the event of a delay in meeting such a Milestone.” 54 The

Participants stated that in Financial Accountability Milestones Release, the Commission noted “it

Id. at 11.

See Financial Accountability Milestones Release at 31335 (summarizing comments regarding the

possibility of reasonable delays to CAT implementation).

See FAM 4 Exemption Request, supra note 3, at 11.

Id. See also, Financial Accountability Milestones Release at 31332. See Letter from Christopher Bok,

Director, Financial Information Forum, to Vanessa Countryman, Secretary, Commission, dated October 28,

2019 (“FIF Letter”), at 4, https://www.sec.gov/comments/s7-13-19/s71319-6355358-196251.pdf. See

Letter from Theodore R. Lazo, Managing Director & Associate General Counsel, and Ellen Greene,

Managing Director, Financial Services Operations, Securities Industry and Financial Markets Association,

to Vanessa Countryman, Secretary, Commission, dated October 28, 2019 (“SIFMA Letter”), at 2,

https://www.sec.gov/comments/s7-13-19/s71319-6366765-195937.pdf. See Letter from Thomas Tesauro,

President, Fidelity Capital Markets, to Vanessa Countryman, Secretary, Commission, dated October 28,

2019 (“Fidelity Letter”), at 5, https://www.sec.gov/comments/s7-13-19/s71319-6357608-196387.pdf.

See FAM 4 Exemption Request, supra note 3, at 11. See also, Financial Accountability Milestones Release

at 31335 n.168. See Letter from Michael Simon, CAT NMS Plan Operating Committee Chair, to Vanessa

Countryman, Secretary, Commission, dated October 28, 2019 (“Participant Letter”), at 10,

https://www.sec.gov/comments/s7-13-19/s71319-6357609-196389.pdf.

is sensitive to the concerns expressed by commenters,” 55 that it has “authority to grant exemptive

relief from any requirement associated with a particular Financial Accountability Milestone,”

and that “this ability, in particular, should alleviate the Participants’ concerns regarding the

potential impact of unforeseeable or reasonable delays.” 56 The Participants stated that this is the

type of circumstance that warrants exemptive relief. The Participants stated that, in the past, they

submitted three exemptive requests seeking full recovery of FAM 4 costs, but the Commission

has not acted on those requests. 57 The Participants distinguished this request for exemptive

relief by stating that this request relates to the recovery of non-CAIS FAM 4 costs. 58 The

Participants stated that this circumstance—where certain technical defects with a single

component of the larger CAT system would preclude recovery of $326 million in reasonably

incurred costs, the vast majority of which were attributed to the ongoing operation of the

transactional database—represents exactly the sort of scenario the Commission recognized in

adopting the FAMs where it would be appropriate to exercise its exemptive authority. 59

In addition, the Participants stated that the Commission has consistently reaffirmed that

both the Participants and Industry Members should share in the costs of the CAT. 60 The

Participants stated that all industry participants—the Commission, Participants, and Industry

Members—benefitted from the regulatory oversight afforded by a fully operational CAT that

was used in surveillance, enforcement, and rulemaking throughout Period 4. 61 The Participants

Financial Accountability Milestones Release at 31335.

Id. See also, FAM 4 Exemption Request, supra note 3, at 12.

Id. See also, letters from Michael Simon, CAT NMS Plan Operating Committee Chair, to Vanessa

Countryman, Secretary, Commission, dated June 30, 2022, November 22, 2022, and May 22, 2023.

See FAM 4 Exemption Request, supra note 3, at 12.

Id. at 13.

Id. at 12.

Id. at 13.

stated that Industry Members would be unjustly enriched by FAM 4 absent exemptive relief

because the Participants would bear the full burden of $490 million in reasonably incurred FAM

4 costs. 62 Additionally, the Participants stated that the vast majority of FAM 4 costs were cloud

hosting fees and Plan Processor operating fees associated with the development and operation of

the transactional database, which was fully operational throughout Period 4. 63 The Participants

stated that any such penalty would overlook the specific intent expressed in Rule 613 that the

Participants and Industry Members are to share in the costs of CAT. 64

For these reasons, the Participants stated that they requested, through CAT LLC, that the

Commission provide exemptive relief from the provisions in Section 11.6(a)(i)(D) and (iii)

limiting the collection of the full amount of any Post-Amendment Industry Member Fees

established or implemented to recover the Post-Amendment Expenses incurred from the date

immediately following the achievement of Full Availability and Regulatory Utilization of

Transactional Database Functionality to the date of Full Implementation of CAT NMS Plan

Requirements with respect to the $390,843,639 in non-CAIS FAM 4 costs described above. 65

The Participants stated that with such exemptive relief, based on the existing funding model,

CAT LLC would anticipate seeking recovery of $260,562,426 in costs related to FAM 4 from

Industry Members via a Historical CAT Assessment (i.e., two-thirds of $390,843,639). 66

The Participants further stated that in order to facilitate the recovery of historical CAT

costs pursuant to the funding model under the CAT NMS Plan, the Operating Committee is

Id.

See FAM 4 Exemption Request, supra note 3, at 13.

Id.

required to reasonably establish the length of the Historical Recovery Period used in calculating

each Historical Fee Rate based upon the amount of the Historical CAT Costs to be recovered by

the Historical CAT Assessment, and to describe the reasons for its length. 67 Section

11.3(b)(i)(D)(I) of the CAT NMS Plan states that the Historical Recovery Period used in

calculating the Historical Fee Rate may not be less than 24 months or more than five years. 68

However, Section 11.3(f) of the CAT NMS Plan would prohibit the billing of Historical CAT

Assessments after March 31, 2028, which is less than 24 months from the date of this request. 69

Accordingly, the Participants stated that a shortened historical recovery period or relief from the

March 2028 deadline is necessary to effectuate the requested relief. 70

In order to establish a Historical CAT Assessment to recover the FAM 4 costs

contemplated by the requested relief prior to the March 31, 2028 deadline, the Participants

requested an exemption from Section 11.3(b)(i)(D)(I) of the CAT NMS Plan to allow for a

historical recovery period of one year. 71 The Participants represented that using a historical

recovery period shorter than two years would continue to result in a reasonable fee rate, as CAT

LLC currently estimates, based on the recovery of $260,562,426 and based on recent executed

equivalent share volumes, the estimated fee rate would be approximately $0.000022 for a oneyear recovery period. 72 The Participants stated that this is comparable to the fee rates previously

charged for Prospective CAT Fees and Historical CAT Assessments. 73

Id. See also, Section 11.3(b)(i)(D)(I) and Section 11.3(b)(iii)(B)(II) of the CAT NMS Plan.

See FAM 4 Exemption Request, supra note 3, at 13.

Id.

See FAM 4 Exemption Request, supra note 3, at 14.

Id. See also CAT Fee Alerts, https://www.catnmsplan.com/cat-fee-alerts.

III.

Request for Comment

We request and encourage any interested person to submit written data, views,

arguments, and comments regarding the FAM 4 Exemption Request, including whether the

Commission should grant the request.

Comments should be received on or before October 5, 2026. Comments may be

submitted by any of the following methods:

Electronic Comments:

•

Use the Commission’s internet comment form (http://www.sec.gov/rules/sro.shtml); or

•

Send an email to rule-comments@sec.gov. Please include File Number 4-698 (CAT

FAM 4 Exemption Request) on the subject line.

Paper Comments:

•

Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street,

NE, Washington, DC 20549-1090.

All submissions should refer to File Number 4-698 (CAT FAM 4 Exemption Request). This file

number should be included on the subject line if email is used. To help the Commission process

and review your comments more efficiently, please use only one method. The Commission will

post all comments on the Commission’s internet website (http://www.sec.gov/rules/sro.shtml).

Do not include personal identifiable information in submissions; you should submit only

information that you wish to make available publicly. We may redact in part or withhold

entirely from publication submitted material that is obscene or subject to copyright protection.

For further information, you may contact David Hsu, Office of Market Supervision,

Division of Trading and Markets, at (202) 551-5500, Securities and Exchange Commission, 100

F Street, NE, Washington, DC 20549.

By the Commission.

Sherry R. Haywood,

Assistant Secretary.

Note: The following appendix containing the FAM 4 Exemption Request will not appear in the

Federal Register.

Appendix: The FAM 4 Exemption Request for an exemption pursuant to section 36 of the

Exchange Act.

August 11, 2026

VIA EMAIL (tradingandmarkets@sec.gov)

Ms. Vanessa Countryman

Secretary

Securities and Exchange Commission

100 F Street, NE

Washington, DC 20549-1090

Re:

Request for Exemption from Certain Provisions of the National Market System Plan

Governing the Consolidated Audit Trail Related to the Recovery of Costs Incurred

During Period 4 of the Financial Accountability Milestones

Dear Ms. Countryman:

Consolidated Audit Trail, LLC (“CAT LLC”), on behalf of the Participants 1 in the

National Market System Plan Governing the Consolidated Audit Trail (“CAT NMS Plan” or

“Plan”) 2 respectfully requests that the Securities and Exchange Commission (“Commission” or

“SEC”) use its exemptive authority under Section 36 of the Securities Exchange Act of 1934

(“Exchange Act”) 3 and/or Rule 608(e) of Regulation NMS under the Exchange Act 4 in

connection with the recovery of certain costs incurred during the fourth and final Financial

Accountability Milestone (“FAM 4”) of the Plan. CAT LLC seeks exemptive relief to allow for

the recovery of non-Customer and Account Information System (“CAIS”) FAM 4 costs. The

Participants believe that the requested exemptive relief is “necessary or appropriate in the public

interest, and is consistent with the protection of investors,” 5 and is “consistent with the public

interest, the protection of investors, the maintenance of fair and orderly markets and the removal

The twenty-eight Participants of the CAT NMS Plan are: 24X National Exchange LLC, BOX Exchange

LLC, Cboe BYX Exchange, Inc., Cboe BZX Exchange, Inc., Cboe C2 Exchange, Inc., Cboe EDGA Exchange, Inc.,

Cboe EDGX Exchange, Inc., Cboe Exchange, Inc., Financial Industry Regulatory Authority, Inc., Investors

Exchange LLC, Long-Term Stock Exchange, Inc., MEMX LLC, Miami International Securities Exchange LLC,

MIAX Emerald, LLC, MIAX PEARL, LLC, MIAX Sapphire, LLC, Nasdaq GEMX, LLC, Nasdaq ISE, LLC,

Nasdaq MRX, LLC, Nasdaq PHLX LLC, The Nasdaq Stock Market LLC, Nasdaq Texas, LLC, New York Stock

Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE Texas, Inc., NYSE National, Inc., and Texas Stock

Exchange LLC. CAT LLC notes that, while this exemptive request represents the consensus of the Participants,

individual Participants may not fully agree with every statement set forth in this letter.

The Limited Liability Company Agreement of Consolidated Audit Trail, LLC is the CAT NMS Plan.

Unless otherwise noted, capitalized terms are used as defined in Rule 613, in the CAT NMS Plan, or in this letter.

See 15 U.S.C. § 78mm(a)(1), which provides, in relevant part, that the “Commission, by rule, regulation, or

order, may conditionally or unconditionally exempt any person, security, or transaction, or any class or classes of

persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation

thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with

the protection of investors.”

17 C.F.R. § 242.608(e), which provides that “[t]he Commission may exempt from the provisions of this

section, either unconditionally or on specified terms and conditions, any self-regulatory organization, member

thereof, or specified security, if the Commission determines that such exemption is consistent with the public

interest, the protection of investors, the maintenance of fair and orderly markets and the removal of impediments to,

and perfection of the mechanisms of, a national market system.”

15 U.S.C. § 78mm(a)(1).

Ms. Vanessa Countryman

August 11, 2026

Page 2

of impediments to, and perfection of the mechanisms of, a national market system,” 6 because it

would prevent an excessive and grossly disproportionate penalty from being imposed in

connection with FAM 4, which would not be a reasonable or equitable application of the

financial accountability provisions adopted by the Commission.

The Commission imposed on the Participants the obligation to build the CAT pursuant to

Rule 613. Rule 613 and the CAT NMS Plan provide that the substantial costs to build and

operate the CAT are to be shared by the Participants and Industry Members. 7 Historically, the

Participants funded 100% of CAT costs through voluntary, interest-free loans, based on the

understanding that Industry Members would eventually bear a portion of those historical costs.

In May 2020, the Commission adopted amendments to the CAT NMS Plan establishing target

deadlines for four Financial Accountability Milestones (“FAMs”) and financial penalties for

missed deadlines, and preventing the Participants from establishing any fee pursuant to the CAT

NMS Plan to recover historical costs until the Participants completed FAM 4. 8 The first three

FAMs, relating to the completion of the transactional database, were completed on time. 9 In

light of the successful completion of the transactional database, FINRA’s Order Audit Trail

System (“OATS”) was retired effective September 1, 2021. 10 In 2024, Participant fee filings

implementing a Historical CAT Assessment designed to recover from Industry Members certain

historical costs incurred through completion of the first three FAMs became immediately

effective. The vast majority of these costs relate to cloud hosting fees and Plan Processor

operating fees associated with the development and operation of the transactional database.

17 C.F.R. § 242.608(e).

See, e.g., Rule 613(a)(1)(vii)(D), 17 C.F.R. § 242.613(a)(1)(vii)(D) (discussing how the CAT NMS Plan

shall discuss the proposed allocation of estimated costs among the plan sponsors, and between the plan sponsors and

members of the plan sponsors); CAT NMS Plan at Section 11.1(c) (providing that the Operating Committee shall

“take into account fees, costs and expenses . . . incurred by the Participants on behalf of the Company . . . and such

fees, costs and expenses shall be fairly and reasonably shared among the Participants and Industry Members”);

Exchange Act Release No. 105003 (Mar. 16, 2026), 91 Fed. Reg. 13410, 13421-22 (Mar. 19, 2026) (“The CAT

NMS Plan contemplates that the costs of the CAT are to be allocated between the Participants and Industry

Members (which would include CAT Executing Brokers).”).

See Exchange Act Release No. 88890 (May 15, 2020), 85 Fed. Reg. 31322 (May 22, 2020) (“Financial

Accountability Milestones Release”); CAT NMS Plan at Section 11.6.

Each FAM is considered complete as of the date identified in the Participants’ Quarterly Progress Reports,

available at https://www.catnmsplan.com/implementation-plan. See Q3 2020 Quarterly Progress Report (Oct. 30,

2020) and Updated Q3 2020 Quarterly Progress Report (Jan. 29, 2021) (indicating that Initial Industry Member Core

Equity and Option Reporting was completed on schedule on July 22, 2020); Q4 2020 Quarterly Progress Report

(Jan. 29, 2021) (indicating that Full Implementation of Core Equity Reporting was completed on schedule by

December 31, 2020); Q4 2021 Quarterly Progress Report (Jan. 17, 2022) (indicating that Full Availability and

Regulatory Utilization of Transactional Database Functionality was completed on schedule by December 31, 2021).

See Exchange Act Release No. 90535 (Nov. 30, 2020), 85 Fed. Reg. 78395 (Dec. 4, 2020) (“OATS

Retirement Filing”) (approving FINRA’s proposed rule change to delete the OATS rules once members are

effectively reporting to the CAT); Exchange Act Release No. 92239 (June 23, 2021), 86 Fed. Reg. 34293 (June 29,

2021) (explaining that FINRA has determined that the CAT meets the accuracy and reliability standards approved

by the Commission in the OATS Retirement Filing for purposes of eliminating the OATS rules and designating

September 1, 2021 as the date on which FINRA would retire OATS).

Ms. Vanessa Countryman

August 11, 2026

Page 3

FAM 4, requiring the completion of a novel and separate system for the submission of

customer and account data known as CAIS, among other requirements, established a target

deadline of December 30, 2022. Although the CAT NMS Plan requirements related to the

transactional database were implemented prior to FAM 4, certain technical aspects of the CAIS

database were not completed until July 15, 2024. 11 Unrelated to the CAIS delay, throughout

Period 4 (January 1, 2022 through July 15, 2024), CAT LLC continued to operate the

transactional database, incurring $364,219,549 in related technology costs and $26,624,090 in

other CAT LLC operating costs—separate and apart from any CAIS-related costs. During

Period 4, CAT LLC incurred CAIS-related costs of $99,307,505, or approximately 20% of

overall Period 4 costs of $490,151,144.

Despite the limited nature of the delay, FAM 4 would prevent the recovery of any CAT

costs incurred by CAT LLC during Period 4—including any costs related to the ongoing,

successful operation of the transactional database that was completed on time. Based on the

current funding model, which allocates one-third of CAT costs to the Participants and two-thirds

of CAT costs to Industry Members, 12 absent the requested relief, FAM 4 would reduce the

amount recoverable from Industry Members by $326,767,429.

This would be an unfair and grossly disproportionate outcome for several reasons.

First, the vast majority of Period 4 costs related to the operation of the transactional

database, which was fully implemented and utilized by the Commission in both enforcement 13

and rulemaking 14 during this entire period. During the period when certain aspects of CAIS

were delayed, the Commission nevertheless acknowledged that “CAT is now operational and

serves as a critical market oversight tool.” 15 Similarly, the Securities Industry and Financial

Markets Association (“SIFMA”) has recognized that “[t]he transaction database became fully

operational in December 2021, marking a major milestone in market surveillance

infrastructure.” 16 Accordingly, the Commission’s central premise underlying the FAM

penalties—i.e., that missed deadlines “prevent regulators and market participants from reaping

See Q2 & Q3 2024 Quarterly Progress Report (July 29, 2024),

https://www.catnmsplan.com/sites/default/files/2024-07/CAT_Q2-and-Q3-2024-QPR.pdf (indicating that Full

Implementation of CAT NMS Plan Requirements was completed as of July 15, 2024).

See Exchange Act Release No. 105003 (Mar. 16, 2026), 91 Fed. Reg. 13410 (Mar. 19, 2026).

See, e.g., Press Release, SEC Charges Financial Services Professional and Associate in $47 Million FrontRunning Scheme (Dec. 14, 2022) https://www.sec.gov/newsroom/press-releases/2022-228 (“The SEC staff analyzed

trading using the Consolidated Audit Trail (CAT) database to uncover [Defendant A]’s allegedly fraudulent trading

and to identify how he profited by repeatedly front-running large trades by [Defendant B]’s employer.”).

See, e.g., Disclosure of Order Information, Exchange Act Release No. 96493 (Dec. 14, 2022), 88 Fed. Reg.

3786 (Jan. 20, 2023); Regulation NMS: Minimum Pricing Increments, Access Fees, and Transparency of Better

Priced Orders, Exchange Act Release No. 96494 (Dec. 14, 2022), 87 Fed. Reg. 80266 (Dec. 29, 2022); Order

Competition Rule, Exchange Act Release No. 96495 (Dec. 14, 2022), 88 Fed. Reg. 128 (Jan. 3, 2023); Regulation

Best Execution, Exchange Act Release No. 96496 (Dec. 14, 2022), 88 Fed. Reg. 5440 (Jan. 27, 2023).

American Securities Association; Citadel Securities LLC v. Securities and Exchange Commission, Brief for

Respondent Securities and Exchange Commission at 19 (11th Cir. Apr. 15, 2024).

SIFMA, Consolidated Audit Trail (CAT), https://www.sifma.org/issues/regulatorycompliance/consolidated-audit-trail (last visited July 30, 2026).

Ms. Vanessa Countryman

August 11, 2026

Page 4

the regulatory benefits of the CAT, as well as potentially increase costs for Industry Members

attempting to comply with the Participants’ projected timelines” 17—does not apply to the

transactional database, which was fully operational on time.

Second, CAT LLC does not believe that the Commission can justify an all-or-nothing

FAM 4 penalty lacking any consideration of materiality or proportionality. The delayed

technical aspects of CAIS did not affect the overall utility of the transactional database, which

was fully operational throughout Period 4. Based on the successful completion of the

transactional database, the Commission approved the retirement of OATS, which was supported

by Industry Members. 18 FAM 4 should not be a strict liability standard where any technical

nonconformance automatically triggers an overly punitive outcome, notwithstanding the

Commission’s own conclusion that the CAT overall was operational. Moreover, imposing a

$326 million strict liability penalty would endorse the principle that technical violations justify

significant Commission penalties untethered from materiality or proportionality, which is at odds

with recent statements noting a renewed emphasis on actual harm in other contexts. 19

Third, shortly after FAM 4 was completed and only after the Participants had incurred

tens of millions of dollars in costs in reliance on the Commission’s original mandate to build

CAIS, the Commission fundamentally altered CAIS, eliminating the collection of customer

information and, in practical effect, unwinding the system as it was conceived when the target

FAM deadline was established. 20 It is difficult to reconcile imposing a $326 million penalty with

the Commission’s later decision to fundamentally reshape the system at issue.

Given all this, treating FAM 4 as wholly unmet—and effectively imposing a $326 million

strict liability penalty—based solely on the late completion of certain technical CAIS elements

would ignore the reality that the transactional database was successfully completed and

delivering its intended regulatory benefits by the deadline, rendering the resulting penalty grossly

disproportionate and inconsistent with the purpose of the FAMs themselves.

Financial Accountability Milestones Release at 31335.

See, e.g., Letter from Ellen Greene, Managing Director, Equity & Options Market Structure, SIFMA, to

Vanessa Countryman, Secretary, Commission (Sept. 24, 2020) (“The elimination of duplicative systems is one of

the CAT’s most critical issues, and we support FINRA’s proposal to eliminate the reporting rules for the OATS.”);

William J. Leahey, Head of Regulatory Compliance, Refinitiv, to Vanessa Countryman, Secretary, Commission

(Sept. 22, 2020) (advocating for the “urgent decommissioning of OATS”).

See, e.g., Chairman Paul S. Atkins, Prepared Remarks Before SEC Speaks (Mar. 19, 2026) (noting that the

SEC is “undergoing a course correction by prioritizing cases that provide meaningful investor protection and

strengthen market integrity rather than technical rule violations in situations where investors have not been

harmed”).

See Exchange Act Release No. 102386 (Feb. 10, 2025), 90 Fed. Reg. 9642 (Feb. 14, 2025) (“CAIS

Exemption Order”); Exchange Act Release No. 104586 (Jan. 13, 2026), 91 Fed. Reg. 2164 (Jan. 16, 2026) (“CAIS

Amendment Approval Order”).

Ms. Vanessa Countryman

August 11, 2026

Page 5

From the inception of Rule 613, the Commission has recognized that CAT costs would

be shared between Participants and Industry Members. 21 The CAT NMS Plan provides that

CAT costs “shall be fairly and reasonably shared among the Participants and Industry

Members.” 22 The FAMs were intended to ensure that the Participants acted diligently as they

carried out the Commission’s mandate to build the CAT, but they were never intended to shift

the burden or risk of CAT solely onto the Participants, as evidenced by the Commission’s

emphasis on its “authority to grant exemptive relief from any requirement associated with a

particular Financial Accountability Milestone,” and assurances that “this ability, in particular,

should alleviate the Participants’ concerns regarding the potential impact of unforeseeable or

reasonable delays.” 23 This type of technical delay in certain aspects of CAIS, which was both

unforeseeable and reasonable, is precisely the kind that should not alter the default assumption of

CAT costs being fairly and reasonably shared between the Participants and Industry Members.

To do so now belies both the intent of the FAMs and the SEC’s prior statements regarding cost

allocation, and unfairly creates a strict liability standard for Participants that renders relief

necessary and appropriate in the public interest. Consistent with the rationale articulated in the

adopting release and the cost allocation principles under the CAT NMS Plan, the Commission

should exercise its broad exemptive authority to fairly and reasonably allocate FAM 4 costs

between the Participants and Industry Members. 24

Therefore, CAT LLC respectfully requests that the Commission provide exemptive relief

to permit the recovery of non-CAIS Period 4 costs. If the relief is granted, based on the existing

funding model, the Participants would be permitted to seek recovery of $260,562,426 in costs

related to FAM 4 from Industry Members via a Historical CAT Assessment. The requested

relief would avoid the grossly disproportionate outcome of denying recovery of any Period 4

costs related to aspects of the CAT that were completed on time. 25

Background

Financial Accountability Milestones

Section 11.6 of the CAT NMS Plan requires four FAMs to be met by certain dates in

order for the Participants to collect the full amount of any fees established by the Operating

Committee, or implemented by the Participants, to recover a portion of Post-Amendment

See Rule 613(a)(1)(vii)(D) (requiring the CAT NMS Plan to address “[h]ow the plan sponsors propose to

fund the creation, implementation, and maintenance of the consolidated audit trail, including the proposed allocation

of such estimated costs among the plan sponsors, and between the plan sponsors and members of the plan

sponsors.”).

Section 11.1(c) of the CAT NMS Plan.

Financial Accountability Milestones Release at 31335.

CAT LLC previously submitted exemptive requests to the Commission on June 30, 2022, November 22,

2022, and May 22, 2023. See Letters from Michael Simon, CAT NMS Plan Operating Committee Chair, to Vanessa

Countryman, Secretary, Commission, dated June 30, 2022, November 22, 2022, and May 22, 2023. This request for

exemptive relief revises the prior requests submitted to the Commission on June 30, 2022, November 22, 2022, and

May 22, 2023.

See Financial Accountability Milestones Release at 31328.

Ms. Vanessa Countryman

August 11, 2026

Page 6

Expenses 26 from Industry Members (“Post-Amendment Industry Member Fees”). If the target

deadline specified for a given FAM is met, Section 11.6 of the CAT NMS Plan would entitle the

Participants to collect the full amount of any related Post-Amendment Industry Member Fees.

However, if the date specified for a given FAM is not met, Section 11.6 of the CAT NMS Plan

would reduce the amount of related Post-Amendment Industry Member Fees that the Participants

may recover. 27

The first three FAMs relate to completion of the transactional database and do not include

any requirements relating to the reporting of customer information. As noted, the first three

milestones, including full implementation of the transactional database, were completed by the

deadlines set forth in the Plan. FAM 4—Full Implementation of CAT NMS Plan

Requirements—requires the completion of CAIS, among other things, and is defined as: