As originally proposed, the CAT was envisioned as a real-time, comprehensive database of certain securities quotes and orders.  The CAT is intended to enhance regulators’ ability to regulate the securities markets, including investigating illegal activities and monitoring overall market structure.

On July 11, 2012, the SEC approved a final rule requiring the SROs to establish a CAT.   The new SEC Rule requires securities exchanges and securities associations to submit to the SEC a plan to create a CAT system that will capture information regarding securities quotes and orders.  In particular, the CAT system will have to track securities orders across all markets and will have to include information for the entire life-cycle of a securities order -- that is its origination through routing, cancellation, modification, or execution.   

The SEC Rule requires that the CAT system developed by the SROs meet certain requirements, including:

• That stock exchanges, FINRA and broker-dealers report certain securities quote and order information to a newly created data repository;
• Data must be reported by 8 a.m. ET the following trading day;
• Reported data must be tagged and stored by the repository in a linked manner so that regulators can track the life cycle of an order.
• Each broker-dealer and securities exchange must be assigned a unique identifier that must be reported to the repository along with all reported data; and
• Each customer (including any adviser to a customer who has trading discretion) must be assigned a unique customer identifier to be reported to the repository for every order originated by the customer.

Importantly, the SEC moved away from a real-time reporting regime as included in the original proposal, in favor of a next day reporting scheme.