PTG Responds to Request for Exemption from CAT Financial Accountability Milestone 4
Oct 16, 2026
In a letter filed today with the Securities and Exchange Commission (SEC) PTG strongly opposes the request by CAT LLC and the self-regulatory organizations (SROs) for an exemption from Financial Accountability Milestone 4 (FAM 4), arguing that the request would improperly shift more than $260 million in CAT implementation costs from the SROs to broker-dealers and investors. PTG contends that the SEC established the Financial Accountability Milestones specifically to hold the SROs financially accountable for delays in implementing the Consolidated Audit Trail (CAT). According to the letter, the SROs missed the FAM 4 deadline by more than 560 days, far beyond the 270-day grace period established by the SEC, causing their right to recover those costs from industry participants to be reduced to zero under the framework intentionally adopted by the Commission.
The letter argues that granting the exemption would be contrary to the public interest because it would eliminate the consequences of the SROs’ delays while imposing substantial costs on firms and investors that were not responsible for CAT implementation. PTG maintains that the exemption would undermine the credibility of the SEC’s accountability framework, provide no market or investor benefit, and create an unfair outcome in which industry members bear both their own CAT compliance costs and the unrecoverable costs resulting from the SROs’ failures. PTG also argues that the SEC’s exemptive authority should not be used to transfer financial obligations to third parties and notes that it is unaware of any precedent for doing so.
Finally, PTG contends that the SEC lacks authority to retroactively restore the SROs’ extinguished right to recover FAM 4 costs and that doing so would effectively impose new liabilities on industry participants years after the relevant deadlines passed. The letter further asserts that the SEC has never analyzed the economic impact of recovering these costs because they were excluded from the Commission’s review of the current CAT funding model. PTG warns that the proposal would not only add more than $260 million in previously unexamined costs but would also concentrate those costs into a single year, increasing the burden on market participants and investors. The letter concludes by urging the SEC to deny the request in its entirety and preserve the accountability framework it adopted for CAT implementation.