On June 23, MFA submitted comments to the SEC on proposed Self-Regulatory Organizations (SROs) rules to adopt a fee schedule to establish industry fees with respect to the consolidated audit trail (CAT)—in essence, establishing a funding model for the CAT. In the letter, MFA raised concerns both with respect to the process for developing the CAT funding model, as well as the CAT funding model; and urged the SEC to suspend the proposed rules and to expand industry participation in the CAT National Market System (NMS) Plan.
With respect to the governance of the CAT NMS Plan, MFA raised concerns that the process for establishing CAT fees and making other significant determinations that are certain to impact market participants does not address potential conflicts of interest related to the commercial interests of the SROs/Plan Participants. With respect to the CAT funding model, MFA raised concerns that it disproportionately imposes fees on non-Plan Participants (broker-dealers and ATSs), which may create a competitive disadvantage for such market participants. Since fees imposed on broker-dealers are likely to be passed through to investors, MFA raised concerns that the CAT funding model could effectively limit investor choice in execution venues.
