SIFMA recommended "minor enhancements" to the SEC's proposed amendments (see previous coverage) to the National Market System ("NMS") plan governing the Consolidated Audit Trail ("CAT").
In its comment letter to the SEC, SIFMA offered suggestions to better protect the confidentiality of data. Proposed modifications include:
- Cross-Market Surveillance: SIFMA recommended that the SEC amend the CAT NMS Plan to restrict an exchange's access to CAT data so that the exchange can generally only see data for trading activity conducted on that exchange (rather than trading activity taking place on other markets). SIFMA acknowledged an exception for situations in which an exchange has a "regulatory need" to look at the trading data of another market (e.g., verifying the execution of the options leg of a qualified contingent trade to ensure that it qualifies for the exception to the SEC's trade-through rule).
- The PII Exemption Order: With respect to modifications of the Customer-ID creation process regarding personally identifiable information ("PII"), SIFMA recommended greater clarity regarding the definitions of "customer type" and "account type," stating that current ambiguity in these definitions could be used as pretext to impose new recordkeeping obligations on industry members.
- Secure Analytical Workspaces ("SAWs"): SIFMA recommended that the SEC require Self-Regulatory Organization ("SRO") participants that are seeking an exception from the requirement to use Secure Analytical Workspaces ("SAWs") for review of transaction data, to describe their planned surveillance activities in the SAWs regarding such transaction data. SIFMA also recommended that the SEC act as an independent arbiter to approve (or not object to) such exceptions.
- The Security Working Group: SIFMA recommeded the permanent inclusion of industry members with voting rights in any permanent Security Working Group.
- Participants' Data Confidentiality: SIFMA recommended data confidentiality policies be subject to a public notice and comment period. (SIFMA also commended the SEC for the prohibition of CAT Data use in connection with "SRO commercial endeavors" (e.g., rule filings that have a commercial purpose).
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