The concept of the CAT project was conceived following the flash crash of 2010, intended to enhance market oversight and monitoring. However, the project’s progression has been sluggish. Stock exchanges initially shouldered the financial burden of this initiative, which resulted in complaints that the costs were disproportionately high.
Responding to these concerns, the SEC determined last month that brokerage firms, including Citadel Securities, would also bear the financial responsibility for CAT’s development. This decision was made despite opposition from industry trade groups such as the Securities Industry and Financial Markets Association (SIFMA).
Kenneth Bentsen, CEO of SIFMA, expressed his objections following the SEC’s vote, asserting that broker-dealers were being compelled to fund the project despite having no involvement in CAT’s governance, oversight, or design. Furthermore, they were not expected to receive any direct, tangible benefits from the database’s operation.
While Citadel Securities and the ASA have submitted their petition to challenge the SEC’s implementation of the new funding model, the specific arguments supporting their case are yet to be presented.
