Washington, D.C., November 30, 2020 – SIFMA today filed a comment letter with the Securities and Exchange Commission (SEC) which supports the proposed amendments to the NMS plan governing the Consolidated Audit Trail (CAT), calling them a “significant step forward” in holding the CAT to the highest security standards.

While SIFMA supports much of what is included in the proposal, it also outlines some minor enhancements it believes the SEC should consider in connection with finalizing the proposal, as they will help enhance the overall confidence of the investing public in the CAT, which will hold vast amounts of their data.

“SIFMA has long supported the development of the CAT and believes that it will provide a critical market infrastructure resource for regulators to track equity and options trading activity across markets,” said Ellen Greene, SIFMA managing director, equity and options market structure.  “At the same time, we have had serious concerns about the protection of CAT Data by the self-regulatory organizations, who we believe have the responsibility to protect it along with the associated liability should the data be exposed.  The value of the data within the CAT system is immeasurable and we appreciate the SEC’s efforts to strengthen the security and protections for CAT data and to limit the scope of sensitive information required to be collected by the CAT.  We urge the SEC to approve the proposed amendments without delay.”

The proposal contains many of the recommendations SIFMA has made over the years to enhance the security and protection of data within the CAT.  The proposal also incorporates the terms of the PII Exemption Order, which no longer requires industry members to report customer social security numbers/individual taxpayer identification numbers and account numbers, and would require reporting of a customer’s year of birth rather than his or her date of birth.

The enhancements suggested by SIFMA include:

• Working with the exchanges that do not currently use FINRA for cross-market surveillance activities to encourage them to do so.
• Clarifying that the scope of the terms “customer type” and “account type” are strictly bound by broker-dealers’ existing recordkeeping obligations; providing such clarification should help further limit the amount of customer and account data maintained in the CAT.
• Restricting each exchange’s access to transaction data to trading activity conducted on that exchange (and not trading activity on other markets), with the only exception being for limited and well-defined regulatory purposes.
• Adopting procedures to monitor and log an exchange’s access to other markets’ trading data to further ensure that the data is only used for limited and well-defined regulatory purposes and to provide an audit trail of the SROs’ access to the data.
• Adding industry member representation to the Security Working Group, which is designed to enhance its effectiveness much like the work SRO and SIFMA member representatives conducted to find a solution for collecting PII data that is reflected in the PII Exemption Order.
• Requiring the data confidentiality policies to be subject to a public notice and comment process. Such a process would allow the policies to be subject to public input from investors and securities industry participants whose data will reside in the CAT System.

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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.