SIFMA Statement on SEC Disapproval of CAT Limitation of Liability Proposal

Washington, D.C., November 1, 2021 – SIFMA today issued the following statement from president and CEO Kenneth E. Bentsen, Jr. on the SEC’s disapproval of the CAT limitation of liability proposal:

“SIFMA believes the SEC’s rejection of the amendment proposed by the national exchanges to revise the Consolidated Audit Trail (CAT) Reporter Agreement to insert limitation of liability provisions was the right outcome.  The proposal would have unfairly shifted liability for CAT data breaches to the broker-dealer industry.   It was inappropriate and unfair for the SROs to unilaterally impose limits on their liability when they alone hold and control the data inside the CAT.  SIFMA’s guiding principle has long been ‘they who hold the data bear the liability’ and we strenuously opposed efforts to shield responsibility for maintaining the security and privacy of such data.  We appreciate the SEC’s recognition that the SROs did not meet their burden to demonstrate that the Proposed Amendment is consistent with the Exchange Act.

“SIFMA has fully supported the goals of the CAT since its inception and its member firms have been diligently working to implement the CAT transaction database, which has become operational and is allowing regulators to examine market events including the January 2021 market volatility.  It is imperative the CAT be held to the highest security standards, not only to maximize the efficacy of the CAT System itself, but also to bolster the confidence of market participants reporting into the system, and to ensure investors their personally identifiable information will not be at risk of a data breach.  We look forward to continuing to work with the SEC and the SROs to ensure that the CAT cybersecurity measures are as robust as possible given the immeasurable value of the data within CAT.”

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SIFMA is the leading trade association for broker-dealers, investment banks and asset managers operating in the U.S. and global capital markets. On behalf of our industry’s nearly 1 million employees, we advocate for legislation, regulation and business policy affecting retail and institutional investors, equity and fixed income markets and related products and services. We serve as an industry coordinating body to promote fair and orderly markets, informed regulatory compliance, and efficient market operations and resiliency. We also provide a forum for industry policy and professional development. SIFMA, with offices in New York and Washington, D.C., is the U.S. regional member of the Global Financial Markets Association (GFMA). For more information, visit http://www.sifma.org.