FIA PTG submitted a second comment letter to the SEC on the proposed fee structure for the Consolidated Audit Trail (CAT). The letter is in response to an SEC call for industry input on the proposed fees.
The letter reiterated the problems mentioned in FIA PTG's first round of comments, including the conflicts of interest in the design the fee structure. FIA PTG also raised the issue of discriminatory and inconsistent metrics. Plan Participants have recognized that message traffic is an inequitable metric to drive cost allocations, yet the Proposals use message volume as the sole apportionment metric for applying fees to market participants. Message traffic may not be the best metric to determine fees, but whatever metric is used should be applied across the board when determining cost allocations.
This approach is particularly detrimental to options market-makers, which, regardless of size, generate high volumes of message traffic in order to meet their obligation to quote thousands of options strikes and series. Many options market-makers will find themselves in the highest tiers and may incur a disproportionate percentage of the CAT costs.