Consolidated Audit Trail (CAT) - Overview

In October 2012, the SEC adopted Rule 613 under the Securities Exchange Act of 1934  to require national securities exchanges and national securities associations (“SROs”) to submit a national market system (“NMS”) plan to create, implement, and maintain a consolidated order tracking system, or Consolidated Audit Trail (CAT), with respect to the trading of NMS securities, that would capture customer and order event information for orders in NMS securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution. The purpose of this CAT is to enhance the ability of the SROs and the Commission to oversee today’s securities markets and fulfill their responsibilities under the federal securities laws.

The Securities and Exchange Commission approved a national market system (NMS) plan to create a single, comprehensive database – a consolidated audit trail (CAT) – that would enable regulators to more efficiently and accurately track trading in equity and option securities throughout the U.S. markets.  The plan, submitted jointly by the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) to the Commission, would increase the effectiveness of market research and monitoring, event reconstruction, and the ability to identify and investigate market misconduct.  The Commission made modifications to the original plan that would include strengthening security requirements, tightening synchronization standards and adding additional members to the governance committee.

SROs have selected Thesys as the plan processor to build and operate the CAT.  SROs will be required to begin reporting to the CAT within one year of approval, with large broker-dealers following the next year and small broker-dealers the year after.

FIF’s Consolidated Audit Trail (CAT) Working Group will be addressing implementation issues associated with the approved plan, and actively working with the SEC, the SROs and the Plan Processor to identify concerns and propose solutions. 

All FIF members are welcome to join the FIF CAT Working Group. For more information contact fifinfo@fif.com.