SEC publishes CAT National Market System Plan for public comment

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On April 27, 2016, the Securities and Exchange Commission (SEC) unanimously approved a proposal to implement the Consolidated Audit Trail (CAT) National Market System (NMS) plan for public comment. This milestone reflects a multi-year commitment by the US national securities exchanges and the Financial Industry Regulatory Authority (FINRA) (collectively, the self-regulatory organizations, or SROs). The SROs, with the support of Deloitte, have developed this NMS plan to govern the creation and operation of the CAT Central Repository, which will contain information about all transactions conducted within the US equities and options markets.

The CAT will require market participants to capture, retain, and report granular trade detail at the beneficial owner level across multiple asset classes and the trade order life cycle.

Deloitte has been an integral party in the development of the CAT NMS Plan, working with the SROs, outside counsel and the SEC over the past three years. Independent of the CAT NMS Plan development efforts, Deloitte has been developing solutions designed to help firms to prepare for the Consolidated Audit Trail reporting obligations and have been focused on a number of specific topics including:

  • Impacts of the consolidated audit trail on order handling and trade reporting systems
  • Changes to customer information collection processes, client on-boarding, and customer and account relationship platforms
  • Technology infrastructure, data storage, processing tools, and internal control modifications

The public comment period on the CAT, which must be approved by the SEC, is now open.  The comment period will end 60 days after the plan is published in the Federal Register, which has not yet occurred.

Within one year of SEC approval of the plan, which we anticipate will occur by the end of 2016, the SROs would be required to begin reporting data to the central repository (large broker-dealers would be required to begin reporting data within two years of SEC approval).

Deloitte will be an active participant at the SIFMA Ops Conference on May 3 where we will be on the CAT Panel as well as moderating a Shortened Settlement Cycle panel. For anyone who will be attending the SIFMA Ops Conference, our Deloitte colleagues will be happy to discuss issues related to the CAT.

Additional information, including the planned timeline for the CAT NMS PLan is available at www.catsnmsplan.com.

About the Consolidated Audit Trail

Rule 613, adopted by the Securities and Exchange Commission (SEC) in July 2012, requires the SROs to submit to the SEC a NMS Plan (CAT NMS Plan) to create, implement, and maintain the CAT.

The CAT will be an audit trail that will allow regulators to more efficiently and accurately track activity in NMS securities throughout the US markets. The purpose of the CAT NMS Plan is to create a central repository for the SROs and the SEC to perform surveillance on order event data, linked to customer and account information, and to permit regulators to efficiently and effectively perform market reconstructions. When complete, the CAT will be the world’s largest data repository for securities transactions tracking approximately 58 billion records of orders, executions, and quote life-cycles for equities and options markets on a daily basis.

For more information, please contact:

Bob Walley
Principal | Deloitte Advisory
Deloitte & Touche LLP

James Weber
Managing Director | Deloitte Advisory
Deloitte & Touche LLP

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