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Consolidated Audit Trail (CAT)

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What is Consolidated Audit Trail (CAT)?

The Consolidated Audit Trail (CAT), also known as Rule 613, was approved by the Securities and Exchange Commission (SEC) on November 15, 2016. The plan creates a single, comprehensive database to enable regulators to more effectively and accurately track equity and option securities trading throughout the US markets in the National Market Systems (NMS). 

CAT is being implemented to address the lack of consolidated information available to regulators for market reconstruction and surveillance. Currently, regulators have no single point of reference to meet the comprehensive market data requirements necessary for effective regulatory surveillance. 

CAT aims to serve as a replacement of the Order Audit Trail System (OATs), but will also incorporate elements of existing regulations, such as Electronic Blue Sheets (EBS) and Large Trader Reporting (LTR). 

Under the CAT NMS plan, broker-dealers and members of exchanges will be required to report order, quotes, trades, and account details to the CAT processor on a daily basis. The CAT NMS plan calls for a Plan Processor to build and maintain a centralised data warehouse that will collate the reported information to provide the SEC with an up-to-date view on a US firm’s trading activity.

The regime requires Self-Regulating Organizations (SROs), like the national securities exchanges and FINRA, to submit an NMS plan to the SEC that outlines the creation, implementation, maintenance, and reporting requirements for a CAT warehouse (CAT Processor). 

This warehouse will become the central repository for regulators to store and query the data gathered. 

What are the timelines for CAT implementation?

Event Implementation Date
NMS Plan Approval by SEC 15 November 2016 
CAT Processor Selected (Thesys Technologies) by NMS Plan Participants 18 January 2017
Business Clock Synchronization for SROs and Broker-dealers By March 2017
SROs begin submitting data to the central repository By November 2017
SROs must implement enhanced surveillance using CAT data By February 2018
SRO members, except small members, must begin submitting data to the central repository By November 2018
Small SRO members must begin submitting data to the central repository By November 2019

Based on current information we can estimate an initial go-live for CAT participants: 

  • For SROs submitting data to the central processor: Est. Nov 2017 
  • SRO member’s submission Est.  by: Nov 2018 
  • Small SRO Members submission Est. by: Nov 2019

Which firms will this affect?

The reporting obligation falls on:

  • all SROs (exchanges),
  • all members of SROs (broker-dealer/executing brokers), and
  • introducing brokers 

What are the main reporting obligations of CAT?

Firms will be expected to report their trade information to the CAT processor on a daily basis. This information will also be more extensive than previously seen in OATs as brokers will be expected to include customer information and market-maker proprietary order submission data.

Types of reports expected:

  • Orders
  • Market-Maker Quotes
  • Customer Information (Account details)
  • Market participant information

The reports are expected to include lifecycle events and the following:

  • Receipt or origination of order
  • Routing of an order to another broker-dealer, national securities exchange, or foreign exchange
  • Routing of an order between desks or departments within a broker-dealer
  • Modifications
  • Cancellations
  • Executions
  • Details of the customer when modified 

High level of comparison between OATs and CAT:

# Category OATS CAT (Rule 613)
1 Options Not in Scope In scope
2 OTC Equities In scope Not included in the initial phase
3 Link the audit trail execution reports for buy and sell orders to the public trade report In scope Not In scope
4 Timestamp granularity Seconds One millisecond
5 Market maker proprietary order submission Not in Scope In scope
6 Customer information Not in Scope In scope
7 Error correction timeline Reject-repair window is within five business days of final rejection delivery Proposed reject-repair window is within three business days from the date the trade was executed
8 Exemptions for manual orders of certain broker-dealers/firms In scope No exemptions
9 Exclusions from definition of Reporting Member firms In scope No exclusions allowed

How UnaVista can assist with CAT reporting

UnaVista has a range of services to help firms with their global regulatory reporting. These services not only help firms report accurately, but provide suitable systems, controls, and analytics to improve their reporting over time.  UnaVista is closely monitoring the advances of the CAT proposal and intends to offer services that will help firms manage and support their reporting obligations.

Data translation and management

The CAT regulation requires the reporting of a broad range of data, impacting a firm’s processes surrounding data collection, data management, and data quality. Firms will undoubtedly need to source this data from multiple source systems and standardize the data into a single format quickly and efficiently. 

UnaVista’s Rules Engine Solution can take a firms’ raw data from multiple internal sources and enrich, validate, and normalize this data using LSEG reference data and business and regulatory rules logic to organize this information and put it into the format required for CAT reporting. UnaVista’s Rules Engine Solution can help reduce a firm’s costs and operational risks. 

Data enrichment

UnaVista is an approved local operating unit (LOU) on behalf of London Stock Exchange, issuing Legal Entity Identifiers (LEI) globally. LEIs have become a common tool in new global regulations to identify reporting entities and counterparties. UnaVista can support the allocation and maintenance of LEIs via the UnaVista LEI Allocation platform and the LEI Data Management Tool. 

Reconciliation

UnaVista provides reconciliation services that allow firms to qualify the integrity of their reported CAT data, pre-submission and post-submission, to the CAT Processor.

Find out more

If you are interested in finding out more about Consolidated Audit Trail or are interested in how UnaVista can help, please fill your details in below.