Joint Industry Plan; Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail Regarding CAT Funding Model

<NOTICE> SECURITIES AND EXCHANGE COMMISSION <DEPDOC>[Release No. 34-103960; File No. 4-698]</DEPDOC> <SUBJECT>Joint Industry Plan; Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail Regarding CAT Funding Model</SUBJECT> <DATE>September 12, 2025.</DATE> <HD SOURCE="HD1">I. Introduction</HD> On September 5, 2025, the Consolidated Audit Trail, LLC (“CAT LLC”), on behalf of the following parties to the National Market System Plan Governing the Consolidated Audit Trail (the “CAT NMS Plan” or “Plan”):  <SU>1</SU> <FTREF/> 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. (“FINRA”), 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 BX, Inc., Nasdaq GEMX, LLC, Nasdaq ISE, LLC, Nasdaq MRX, LLC, Nasdaq PHLX LLC, The NASDAQ Stock Market LLC, New York Stock Exchange LLC, NYSE American LLC, NYSE Arca, Inc., NYSE National, Inc., and NYSE Texas, Inc. (collectively, the “Participants,” “self-regulatory organizations,” or “SROs”) filed with the Securities and Exchange Commission (“SEC” or “Commission”) pursuant to Section 11A(a)(3) of the Securities Exchange Act of 1934 (“Exchange Act”), <SU>2</SU> <FTREF/> and Rule 608 thereunder, <SU>3</SU> <FTREF/> a proposed amendment to implement a revised funding model (the “Funding Proposal”) for the consolidated audit trail (the “CAT”) and to establish a fee schedule for Participant CAT fees in accordance with the Funding Proposal. <FTREF/> <SU>4</SU> <E T="03">Exhibit A</E> sets forth the cumulative changes proposed to be made to the CAT NMS Plan. The Commission is publishing this notice to solicit comments from interested persons on the Funding Proposal. <FTNT> <SU>1</SU>  In July 2012, the Commission adopted Rule 613 of Regulation NMS, which required the Participants to jointly develop and submit to the Commission a national market system plan to create, implement, and maintain a consolidated audit trail (the “CAT”). <E T="03">See</E> Securities Exchange Act Release No. 67457 (July 18, 2012), 77 FR 45722 (Aug. 1, 2012 (“Rule 613 Adopting Release”); 17 CFR 242.613. On November 15, 2016, the Commission approved the CAT NMS Plan. <E T="03">See</E> Securities Exchange Act Release No. 78318 (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, at 84943-85034. </FTNT> <FTNT> <SU>2</SU>  15 U.S.C. 78k-1(a)(3). </FTNT> <FTNT> <SU>3</SU>  17 CFR 242.608. </FTNT> <FTNT> <SU>4</SU>   <E T="03">See</E> Letter from Robert Walley, CAT NMS Plan Operating Committee Chair, to Vanessa Countryman, Secretary, Commission, dated Sept. 5, 2025. </FTNT> <HD SOURCE="HD1">II. Description of the Plan</HD> Set forth in this Section II is the description of the proposed Funding Proposal, along with information required by Rule 608(a) under the Exchange Act, <SU>5</SU> <FTREF/> as prepared and submitted by the Participants to the Commission. <SU>6</SU> <FTREF/> <FTNT> <SU>5</SU>   <E T="03">See</E> 17 CFR 242.608(a). </FTNT> <FTNT> <SU>6</SU>   <E T="03">See</E> Transmittal Letter, <E T="03">supra</E> note 4. Unless otherwise defined herein, capitalized terms used herein are defined as set forth in the CAT NMS Plan. </FTNT> When the Commission approved the CAT NMS Plan in 2016, the Commission approved the funding model set forth in Article XI of the original CAT NMS Plan (the “Original Funding Model”). The Original Funding Model involved a bifurcated approach, where costs associated with building and operating the CAT would be borne by (1) Industry Members (other than alternative trading systems (“ATSs”) that execute transactions in Eligible Securities (“Execution Venue ATSs”)) through fixed tiered fees based on message traffic for Eligible Securities, and (2) Participants and Industry Members that are Execution Venue ATSs for Eligible Securities through fixed tiered fees based on market share. On September 6, 2023, the SEC approved a proposed amendment to the CAT NMS Plan to replace the Original Funding Model with a new funding model (the “Executed Share Model”). <SU>7</SU> <FTREF/> The Executed Share Model charged fees based on executed equivalent share volume of transactions in Eligible Securities whereas the Original Funding Model charged fees based on market share and message traffic. In proposing the Executed Share Model, CAT LLC had undertaken an extensive process of evaluating and seeking comment on various funding models since the inception of CAT. In addition to the variety of alternative models considered by CAT LLC (as described in Section A.10 of this filing), the Executed Share Model was subject to substantial public review and comment via the proposed amendment to the CAT NMS Plan published by the SEC on May 25, 2022 (the “2022 Funding Proposal”), <SU>8</SU> <FTREF/> the subsequent order instituting proceedings related to the 2022 Funding Proposal  <SU>9</SU> <FTREF/> and two partial amendments regarding the 2022 Funding Proposal, <SU>10</SU> <FTREF/> as well as the proposed amendment to the CAT NMS Plan published by the SEC on March 15, 2023 ultimately approved by the Commission. <SU>11</SU> <FTREF/> <FTNT> <SU>7</SU>  Securities Exchange Act Rel. No. 98290 (Sept. 6, 2023), 88 FR 62628 (Sept. 12, 2023) (“Executed Share Model Approval Order”). </FTNT> <FTNT> <SU>8</SU>  Securities Exchange Act Rel. No. 94984 (May 25, 2022), 87 FR 33226 (June 1, 2022) (“2022 Funding Proposal Release”). </FTNT> <FTNT> <SU>9</SU>  Securities Exchange Act Rel. No. 95634 (Aug. 30, 2022), 87 FR 54558 (Sept. 6, 2022). </FTNT> <FTNT> <SU>10</SU>  Securities Exchange Act Rel. No. 96394 (Nov. 28, 2022), 87 FR 74183 (Dec. 2, 2022) (“Partial Amendment I”), and Letter from Michael Simon, CAT NMS Plan Operating Committee Chair, to Vanessa Countryman, Secretary, Commission (Feb. 15, 2023) (“February 2023 Proposed Partial Amendment”). </FTNT> <FTNT> <SU>11</SU>  Securities Exchange Act Rel. No. 97151 (Mar. 15, 2023), 88 FR 17086 (Mar. 21, 2023) (“Executed Share Model Proposal Release”). </FTNT> Under the Executed Share Model, CAT LLC established two categories of CAT fees. The first category of CAT fees were fees (“CAT Fees”) payable by Participants and Industry Members that are CAT Executing Brokers for the Buyer and for the Seller with regard to CAT costs not previously paid by the Participants (“Prospective CAT Costs”). The CAT Fee for each transaction was calculated by multiplying the executed equivalent shares in the transaction by one-third and the applicable “Fee Rate.” The Executed Share Model described in detail each aspect relevant to the CAT Fees, including a description of the Prospective CAT Costs, the calculation of the Fee Rate, the definition of “CAT Executing Broker,” the fee filings made pursuant to Section 19(b) of the Exchange Act for CAT Fees, and information available related to CAT Fees, both publicly and upon request. The second category of CAT fees were 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 Historical CAT Assessment for each transaction was calculated by multiplying the number of executed equivalent shares in the transaction by one-third and the applicable “Historical Fee Rate.” Like with the CAT Fees related to Prospective CAT Costs, the Funding Proposal described in detail each aspect relevant to Historical CAT Assessments, including a description of Historical CAT Costs, the calculation of the Historical Fee Rate, the definition of “CAT Executing Broker,” the fee filings made pursuant to Section 19(b) of the Exchange Act for Historical CAT Assessments, and information available related to Historical CAT Assessments, both publicly and upon request. After the SEC approved the Executed Share Model, each Participant separately filed rule filings under Section 19(b) of the Exchange Act and Rule 19b-4(f)(2) thereunder to establish CAT Fees and a Historical CAT Assessment to be charged to Industry Members based on the Executed Share Model. Specifically, to date, each of the Participants filed fee filings related to three CAT Fees  <SU>12</SU> <FTREF/> and one Historical CAT Assessment, <SU>13</SU> <FTREF/> and CAT LLC has collected or is collecting such CAT fees. To date, the process for billing and collecting CAT fees has proven to be highly efficient and manageable to administer, with approximately 99% of CAT fees paid on time. In addition, the Plan Processor makes available trade-by-trade data to CAT Executing Brokers for each CAT bill. CAT LLC understands that many Industry Members have implemented processes to pass-through their CAT fees to upstream broker-dealers and customers. <FTNT> <SU>12</SU>  Each of the Participants filed rule filings to implement CAT Fee 2024-1, CAT Fee 2025-1 and CAT Fee 2025-2. <E T="03">See, e.g.,</E> Securities Exchange Act Rel. No. 100828 (Aug. 27, 2024), 89 FR 71699 (Sept. 3, 2024) (New York Stock Exchange LLC filing for CAT Fee 2024-1); Securities Exchange Act Rel. No. 102054 (Dec. 30, 2024), 90 FR 714 (Jan. 6, 2025) (Long-Term Stock Exchange, Inc. filing for CAT Fee 2025-1); Securities Exchange Act Rel. No. 103400 (July 8, 2025), 90 FR 30172 (July 11, 2025) (Investors Exchange LLC filing for CAT Fee 2025-2). </FTNT> <FTNT> <SU>13</SU>  Each of the Participants filed rule filings to implement Historical CAT Assessment 1 ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 312k characters. 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