Citadel Securities and Trade Group Sue SEC Over Market Data Surveillance System
Citadel Securities and the American Securities Association (ASA) have taken legal action against the U.S. Securities and Exchange Commission (SEC) over new rules surrounding the funding of a comprehensive market data surveillance system. The lawsuit, filed with the U.S. Court of Appeals for the 11th Circuit in Atlanta, marks an escalation in the ongoing battle between the investment industry and the SEC regarding the Consolidated Audit Trail (CAT).
The ASA stated, “The SEC has exceeded its authority and failed to address concerns from investors and the industry, leaving us with no choice but to pursue litigation.” The SEC recently implemented new rules aimed at distributing the cost of operating the CAT among sellers, buyers, and stock exchanges. However, this decision has faced objections from the investment industry, which argues that its members may be burdened with an unfair share of the costs.
An SEC spokesperson defended the agency’s actions, stating, “The Commission carries out its regulatory responsibilities in accordance with its authorities.” The CAT, established in response to the 2010 “flash crash” that wiped out nearly $1 trillion in market value, serves as a repository of investor and transaction data, providing regulators with comprehensive insight into U.S. market transactions.
Concerns and Opposition
Republican officials and industry representatives have raised concerns about cybersecurity and privacy risks associated with the CAT, as well as the potential for increased costs for investors. The ongoing legal dispute reflects the investment industry’s determination to challenge the SEC’s regulations and seek a resolution that addresses their concerns.
As the battle between Citadel Securities, the ASA, and the SEC continues, the future of the CAT and its impact on the investment industry remains uncertain. The outcome of this legal battle will likely shape the regulatory landscape surrounding market data surveillance systems.
