The SEC adopted a national market system plan to create a comprehensive database for all trading activity in the U.S. equity and options markets (the "consolidated audit trail" or "CAT" plan). The CAT plan, submitted jointly to the SEC by the national securities exchanges and FINRA (together, "SROs"), is intended to improve regulators' ability to conduct market research, market monitoring and market event reconstruction, and to identify and investigate market misconduct. The SEC Order approving the CAT plan was published in the Federal Register.
As previously reported, in response to public comments received on the initial proposal, the SEC modified several provisions of the CAT plan by: (i) strengthening security requirements (particularly those that concern personally identifiable data), (ii) tightening synchronization standards, (iii) enhancing CAT plan governance by expanding the membership of the advisory committee to include an additional institutional investor representative and the representative of a service bureau that provides CAT reporting services, and (iv) shortening the deadline for SROs to submit proposals for retiring regulatory data reporting systems that will be rendered obsolete by the CAT plan in order to minimize the burden of redundant reporting obligations for broker-dealers.
The SEC also stated that the SROs must select a plan processor within two months of approval. SROs are required to begin reporting within one year of plan approval, with large broker-dealers following suit within the year after, and small broker-dealers reporting within the year after that.
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