MFA joins amicus brief on CAT funding model

MFA has joined an amicus curiae brief alongside 6 other associations in response to the case American Securities Association v. U.S. Securities and Exchange Commission. The brief expresses their objections to the SEC’s approval of a proposal to fund the Consolidated Audit Trail (CAT), a system for the identification and collection of data on every transaction of equities and exchange-listed options across all markets in the US. The organizations behind the design of the CAT proposed to shift the majority of CAT costs to broker-dealers and their investors and customers. The funding proposal approved by the SEC assigned two-thirds of CAT costs to broker-dealers and one-third to the participants that submitted the proposal. The brief was filed in the United States Court of Appeals for the Eleventh Circuit.

The brief argues the following:

  • The Commission’s order is invalid because it inequitably and unjustifiably imposes massive costs on broker-dealers and investors while affording them no genuine role in establishing the CAT’s budget
    • The Commission failed to address the effect of the CAT’s structure on CAT costs
    • The Commission failed adequately to consider alternative cost-control mechanisms
  • The allocation of more than two-thirds (and potentially all) of the costs to broker-dealers is contrary to law and arbitrary and capricious
    • The Commission’s allocation of costs is inequitable and unreasonable
    • The Commission failed adequately to consider the effect of participants passing though their share of costs