Grygo is the chief content officer for FTF & FTF News.
There’s a twist in the ongoing saga of the Consolidated Audit Trail (CAT) via a new delay that actually has the approval of a key player in the securities industry.
To remind you, the CAT system is the result of SEC Rule 613, which requires U.S. securities exchanges and FINRA, the self-regulatory organization (SRO) for broker-dealers, to build and maintain an electronic audit trail “that collects and accurately identifies every order, cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets,” according to FINRA, which is overseeing operations and the emergence of the new system.
Late last month (May 27), officials behind the CAT’s Customer and Account Information System (CAIS) extended a compliance deadline that must be met before there is a full launch of the CAT platform.
“The participants have determined to delay the full Customer Account Information System (CAIS) compliance deadline from July 11, 2022, to a date projected to be in Q4 2022, which new date will be subsequently announced,” according to an online announcement. “This extension of the compliance deadline will assist in addressing reporting challenges and delays in error feedback and processing and will allow time for such issues to be remediated.”
Officials say that the CAIS testing environment “has been available since January 31, 2022, and the production environment has been available since April 25, 2022.”
Despite the compliance deadline extension, “industry members are expected to continue testing and now will be required to certify for production system access by July 11, 2022 (instead of July 1, 2022). There will be interim reporting requirements between July and Q4 2022 to ensure industry members can comply with CAIS reporting requirements by the new full CAIS compliance deadline,” according to the CAIS announcement.
FINRA CAT and CAIS officials will hold an industry webinar to offer more information about the new interim reporting requirements and compliance schedule. The full notice can be found here: https://bit.ly/3x7Z1DH
This latest turn in the CAT tale follows Kenneth E. Bentsen, Jr., president and CEO of SIFMA, recently calling upon the SEC to pick up the pace when it comes to a data security proposal for the CAT system. (FTF News covered SIFMA’s concerns here: https://bit.ly/3M7WQ8l )
But in the latest SIFMA statement on the matter, dated May 27, Bentsen applauds the CAT pause.
“SIFMA believes the SROs were correct to delay the implementation of the Consolidated Audit Trail (CAT) Customer and Account Information System until the fourth quarter of 2022,” Bentsen says.
“This will assist firms in addressing reporting challenges and allow time for other issues to be remediated. When fully implemented, the CAT will be the largest database of retail and institutional trading data ever created. It also will include personal information on every retail brokerage customer in America, as well as identifying information for every pension fund, mutual fund, and other institutional account in America. The need to get it right is essential,” Bentsen says.
Bentsen also took the opportunity to nudge the SEC closer to adopting a data security proposal.
“To that end, we once again call on the Securities and Exchange Commission (SEC) to adopt its August 2020 CAT data security proposal, which is designed to significantly enhance the security of data held within CAT,” Bentsen says.
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