OTC Markets claims that the CAT Plan Operating Committee, which is comprised primarily of representatives from the national securities exchanges, "abused its discretion" and allocated a disproportionate percentage of total funding to the operator of the OTC Link ATS.

It said in a letter filed with the SEC last week that given its share of the combined market for exchange-listed securities based on trade volume is less than 1%, it should not have been placed in the first tier of execution venues along with the New York Stock Exchange and Nasdaq and assigned as the largest execution venue, at 29.9%, for the purposes of funding the CAT.

As OTC Markets' General Counsel outlines in the letter: "The Operating Committee’s failure to take into account the disconnect between costs to the CAT system and the burden being placed on OTC Link ATS, as well as the unfair burden being placed on the OTC Equity securities market generally, likely can be explained by considering the make-up of the Operating Committee.

"The Members of the CAT Company (the “Participants”), which is governed by the National Market System Plan
that excludes OTC Link ATS and other ATS, consist of national securities exchanges, except for FINRA, a national securities association. The members of the Operating Committee are representatives of the Participants.... Therefore, the Operating Committee overwhelmingly consists of representatives of Participants that have a strong financial incentive to allocate the costs of CAT to ATS and the OTC equity markets, where they have few interests. Neither OTC Markets Group nor any other operator of an ATS is a Participant and there is no ATS representative to the CAT NMS Plan or on the Operating Committee."

The SEC was approached for this story but declined to comment.