Consolidated Audit Trail (CAT) Resource Center



Overview

In response to the increasingly automated nature of securities markets and trading activity being widely dispersed across many trading centers, the SEC in 2010 proposed a rule that would require the SROs (stock exchanges and national securities associations) to develop a consolidated audit trail (CAT).

As originally proposed, the CAT was envisioned as a real-time, comprehensive database of all quotes and orders in Reg NMS Securities.  The CAT is intended to enhance regulators' ability to monitor and analyze trading activity on a market-wide basis. 

On July 11, 2012, the SEC approved a final rule which requires that the securities exchanges and FINRA submit to the SEC a plan to create a CAT system that will collect and accurately identify every order, cancellation modification and execution for all exchange-listed equities and equity options across all U.S. markets. CAT will create a single comprehensive set of orders and executions and allow regulators to conduct cross-market analysis without obtaining and merging together large volume of disparate data from different entities. Rule 613 requires that the CAT system developed by the SROs meet certain requirements, including:

  • All exchanges, FINRA and broker-dealers report quote and order information in Reg NMS Securities 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.*

* The SEC moved away from a real-time reporting regime as included in the original proposal, in favor of a next day reporting scheme. The SRO's have also filed for Exemptive relief with the SEC to modify certain requirements of Rule 613 in order to address operational challenges presented by CAT in the original rule; the Exemptive request does not alter the efficacy of CAT data.  

On February 27, 2015, the SROs filed a formal plan with the SEC for the operation of CAT. The plan is expected to be published in the Federal Register within a few months. The publication will be followed by a public comment period. 

CAT Implementation Timeline

The below is a snapshot of the implementation table for the CAT.  

Date

Event

May 26, 2010

Proposing Release published by the SEC.

July 18, 2012

Adopting Release issued by the SEC

Feb. 26, 2013

CAT Request For Proposal (“RFP”) Published

Mar. 5, 2013

RFP Intent to Bid Submission

Apr. 25, 2013

RFP Responses Due

Apr. 28, 2013

A final NMS Plan creating the CAT must be filed with the SEC. The NMS Plan will not be effective until it is approved by the SECThe SROs filed the NMS Plan Governing the Process of Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail

December 6, 2013

CAT NMS Plan deadline to file with SEC (date was extended from April 28, 2013)

February 21, 2014

The Selection Plan receives SEC approval

September 30, 2014

CAT NMS Plan deadline to file with the SEC (date was extended from December 6, 2013)

September 30, 2014

Proposed NMS Plan filed with the SEC

December 12, 2014

SROs submit an Amendment to the Selection Plan with the SEC.

January 30, 2015

Exemptive relief request filed with the SEC.

February 27, 2015

SROs submit an amended NMS plan that replaces the initial plan (filed 9/30/14) in its entirety.

Within two months after effectiveness of the approved NMS Plan

CAT Processor Selected by NMS Plan Participants

Within four months after effectiveness of the approved NMS Plan

Business Clock Synchronization for SROs and Broker-dealers

Within one year after effectiveness of the approved NMS Plan

SROs begin submitting data to the central repository

Within 14 months after effectiveness of the approved NMS Plan

SROs must implement enhanced surveillance using CAT data

Within two years after effectiveness of the approved NMS Plan

SRO members, except small members, must begin submitting data to the central repository

Within three years after effectiveness of the approved NMS Plan

Small SRO members must begin submitting data to the central repository

 

Position

SIFMA has long supported the SEC's efforts to provide regulators with timely access to a more robust and effective cross-market order and execution audit trail. We believe that a centralized and comprehensive audit trail would enable the SEC and securities SROs to perform their monitoring, enforcement and regulatory activities more effectively.

When CAT was first proposed in 2010, the system required real-time reporting. The adopting release issued in 2012 modified this requirement to a T+1, which strengthens the original proposal. While SIFMA and our member firms believe that this change creates a more manageable and cost-effective approach to CAT, we identified a number of issues with the plan, and provided recommendations on topics such as governance, the funding model, timeline to eliminate systems, implementation timeline and error correction in Recommendations for the Creation of a Consolidated Audit Trail. 

SIFMA will continue to advocate for a cost effective and efficient system that expedites the retirement of duplicative systems, while promoting an inclusive governance structure and equitable funding model. 


Market Data