The SEC approved a rule proposed by FINRA establishing the Consolidated Audit Trail ("CAT") fee dispute resolution process. As previously covered, FINRA Rule 6898 (Fee Dispute Resolution) will implement resolution procedures for disputes that arise in relation to the fees assessed to FINRA members in connection with the CAT. Under the National Market System Plan Governing the CAT, the operating committee is authorized to establish fees charged to members in order to fund operation of the CAT. FINRA Rule 6898 incorporates the procedures adopted by the operating committee into the FINRA rulebook; the other CAT NMS Plan participants (i.e., SROs) are also adopting these procedures.
While the Fee Dispute Resolution rule will be implemented on December 1, 2017, FINRA noted that the rule imposing CAT fees (FINRA Rule 6897 (Consolidated Audit Trail Funding Fees)) has not yet been adopted. Upon adoption of Rule 6897, FINRA said that it will release a Regulatory Notice providing further information for market participants.
Commentary / Patrick A. Calves
To summarize the CAT fee dispute resolution process: (1) the CAT operating committee (the "Operating Committee") establishes the fees that firms must pay to fund the CAT; (2) a subcommittee (the "Fee Review Subcommittee") is established by the Operating Committee to review any and all disputes raised by firms regarding such fees and (3) firms may request an appeal of the Fee Review Subcommittee's decision regarding any disputes, but the decision whether or not to hear an appeal and the ultimate outcome of such appeal is made by the Operating Committee.
This process has an eerily familiar feel to it (e.g., see NFL re. Ezekiel Elliot and NFL re. Tom Brady).
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