FR 2025-00893

The document from the Federal Register details a notice by the Miami International Securities Exchange, LLC (MIAX), which involves the establishment of a new fee schedule for 2025 related to the Consolidated Audit Trail (CAT) under the National Market System Plan (NMS Plan). This rule change aims to amend the fee structure for Industry Members, defined as members of a national securities exchange or association, who will be charged a new fee rate known as CAT Fee 2025-1. This fee is set at $0.000022 per executed equivalent share, replacing the previous CAT Fee 2024-1, and aims to cover half of the budgeted costs of the CAT for 2025.

Summary of the Document

The document announces that MIAX has proposed a fee change to cover the costs associated with the management of the CAT under the CAT NMS Plan. The CAT is a system designed to monitor and track trading activity in the securities markets. The proposal was submitted to the Securities and Exchange Commission (SEC) and took effect immediately. The first invoices under this new fee structure are expected in February 2025. The SEC has invited public comments on this proposed fee change until February 6, 2025.

Significant Issues or Concerns

One key issue with the proposal is the lack of transparency and a detailed breakdown of what constitutes the "reasonably budgeted CAT costs" for 2025. Without a clear explanation, stakeholders may have concerns about the basis for the fee calculations and the overall financial transparency of the initiative. Additionally, although the transition from CAT Fee 2024-1 to CAT Fee 2025-1 features a lower rate (from $0.000035 to $0.000022), there is no detailed justification provided for this change. This absence of explanation might lead to uncertainties among Industry Members regarding how the new rate impacts their financial commitments.

The technical language of the document might also present a barrier for individuals who are not familiar with securities regulations. Understanding such proposals often requires specific knowledge, which may limit broader public engagement in the commenting process.

Impact on the Public and Stakeholders

The proposed fee changes may affect the public and stakeholders in various ways. For Industry Members, particularly those actively involved in the securities exchange market, the revised fee structure could potentially lower operational costs due to the reduced rate, assuming it accurately reflects budget efficiencies. On the other hand, if the actual costs of managing the CAT have not decreased, but fees have been lowered, stakeholders may question the sustainability and fiscal responsibility behind MIAX's budgeting.

The broader public impact of this document is more indirect. While the new fee schedule directly affects exchange members, the efficiency and effectiveness of the CAT eventually serve to protect market integrity, which benefits all market participants, including retail investors. Maintaining a robust audit trail is critical for transparency and trustworthiness in financial markets.

Conclusion

The announcement of the fee schedule change by MIAX presents both a potential positive by lowering certain cost burdens on securities exchange members and a concern due to the lack of clarity and transparency in the presentation and justification of these changes. It remains crucial for involved stakeholders, including industry members and regulatory bodies, to carefully assess whether the proposed adjustments meet the intended objectives while providing a stable foundation for monitoring and managing market activities. Public commentary solicited by the SEC allows for a broader evaluation of these proposed changes and their alignment with regulatory expectations and market needs.

This document from the Securities and Exchange Commission (SEC) involves changes to the fee schedule related to the Consolidated Audit Trail (CAT) for the Miami International Securities Exchange, LLC (MIAX). The document discusses the establishment of new fees and rates concerning the operational costs for 2025.

Financial Summary

The MIAX proposes a new fee, CAT Fee 2025-1, with a rate of $0.000022 per executed equivalent share. This fee aims to cover part of the costs associated with the operation of the Consolidated Audit Trail (CAT) as laid out in the National Market System Plan. This fee would replace the prior fee rate from 2024, known as CAT Fee 2024-1, which had been set at $0.000035 per executed equivalent share. The fees are categorized as "Consolidated Audit Trail Funding Fees" on the Exchange's fee schedule and are intended to recover approximately one-half of the reasonably budgeted CAT costs for the year 2025.

Relation to Identified Issues

The change from the previous fee rate of $0.000035 to the new rate of $0.000022 prompts several questions and issues. One relevant issue is the lack of clarity regarding what constitutes "reasonably budgeted CAT costs." Without this transparency, stakeholders such as industry members and other interested parties cannot fully understand what the fees are specifically intended to cover or how the funds are being allocated.

The reduction in the fee rate may suggest careful budgeting or a decrease in expected costs, but the document does not provide sufficient information to substantiate whether the lower rate is a result of decreased costs, improved budget efficiency, or other factors. This omission could lead to uncertainty about whether MIAX is effectively managing the budget linked to the CAT.

Furthermore, the document lacks an in-depth explanation or justification for this revision of the fee rate. Not providing a clear rationale for this fee adjustment may raise questions about how the new fee rate was determined and its impact on industry members who are obligated to pay these fees.

Overall, the financial references presented in the document highlight areas where increased transparency and clearer communication could benefit industry members and other parties concerned with these fee changes.