SEC considers direct control of trade-tracking database after Citadel lawsuit

The Securities and Exchange Commission is considering taking direct control of the Consolidated Audit Trail, a database that tracks activity across US equities and options markets, Bloomberg reported Tuesday.

The potential change would give the agency direct responsibility for the CAT’s funding and operations. The system is currently governed under a National Market System plan administered by self-regulatory organizations, including exchanges and the Financial Industry Regulatory Authority.

The review follows a July 25, 2025, decision by the US Court of Appeals for the Eleventh Circuit that vacated the SEC’s 2023 CAT funding order. The court found the order internally inconsistent and said the agency had not adequately explained its departure from earlier positions. Citadel Securities and the American Securities Association brought the challenge.

The SEC began a broader review of the CAT in an April 2026 concept release covering the system’s funding, governance, costs, security and relationship with other regulatory data sources.

The Securities Industry and Financial Markets Association urged the SEC in June to eliminate the current funding model and pay for the CAT through its congressional budget request. SIFMA also called for the agency to eliminate the CAT NMS Plan and assume direct control of the system.

SIFMA said the CAT was originally expected to cost between $36 million and $56 million annually. Its 2026 budget stood at approximately $147 million as of March, even after cost reductions, according to the trade group.

The group also asked the SEC to strengthen data-security controls, broaden representation on the CAT Advisory Committee and retire duplicative Electronic Blue Sheets requirements for equities and listed options transactions.

Citadel separately petitioned the SEC in January over fees collected under the invalidated funding structure. The firm said CAT LLC’s 2026 budget showed reserves of $119.1 million at the start of the year and sought changes to the plan governing the system.

The SEC created the CAT framework under Rule 613 in 2012 following the 2010 Flash Crash, with the goal of giving regulators a consolidated record of orders and trades across US equity and options markets.