Consolidated Audit Trail (CAT)

SEC Rule 613 requires FINRA and the national securities exchanges to jointly submit a National Market System (NMS) plan detailing how they would develop, implement and maintain a consolidated 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. FINRA is working with the exchanges to develop an NMS plan that meets the requirements of Rule 613.

For more information, see the CAT NMS Plan website.


Consolidated Audit Trail Webcast

Wednesday, February 20, 2019
4:15 p.m. Eastern Time

On Wednesday, February 20, 2019, at 4:15 p.m. ET, the CAT NMS, LLC Operating Committee will host a Consolidated Audit Trail webcast to discuss current progress on the CAT. The webcast will be recorded and playback will be available on the CAT NMS website. Please forward this meeting invitation to any interested parties who would like to attend.

WebEx:
Join the WebEx webcast.
The event password for the WebEx is catnms

Teleconference:
Toll-Free: +1-888-848-6721
Passcode: 3216365#


CAT Plan Processor Transition

CAT NMS, LLC confirms that it is transitioning the Consolidated Audit Trail (“CAT”) project to a new Plan Processor. In transitioning the project to a new Plan Processor, the Participants are evaluating the impact the transition will have on current Industry Member implementation plans. While certain dates may change, there are no material changes planned for the Industry Member Technical Specifications. The Participants will continue to work with industry participants to finalize the Industry Member Reporting Specification. As an initial matter, the Participants anticipate the initial test period for data ingestion will move from August 2019 to late 2019 and plan to announce a more fulsome implementation schedule shortly. The Participants plan to host an industry webcast in the very near future to provide more information and answer questions.

Background

Rule 613 of the Securities Exchange Act of 1934 requires national securities exchanges and national securities associations to submit a national market system plan to the Commission to create, implement, and maintain the CAT that would allow regulators to more efficiently and accurately track all activity in U.S. equity and options markets. Pursuant to Rule 613, the Participants filed with the Commission the CAT NMS Plan, which was approved by the Commission on November 15, 2016.

Under Rule 613(g)(2), each member of a national securities exchange or national securities association is required to comply with all the provisions of the CAT NMS Plan. Relatedly, as mandated under Rule 613, the CAT NMS Plan requires each Participant to adopt rules requiring its members to comply with Rule 613 and the CAT NMS Plan, and to agree to enforce compliance by its members in that regard. Accordingly, each Participant has adopted rules requiring its members to comply with Rule 613 and the CAT NMS Plan. See, e.g., FINRA Rule 6800 Series.

The SROs jointly own and operate CAT NMS, LLC, which was formed by the SROs to arrange for and oversee the creation, implementation, and maintenance of the CAT as required under Rule 613. Further, the CAT is a facility of each SRO. Accordingly, when Industry Member reporting commences, Industry Members will submit data to an SRO facility.

CAT Reporting Obligations and Contact Information

FINRA is reminding all members, regardless of size, that receive or originate orders in NMS stocks, OTC equity securities or listed options that they will be required to report to CAT.  Further all proprietary trading activity, including market making activity is subject to CAT reporting. There are no exclusions or exemptions of any kind for type of firm or type of trading activity.  Further, FINRA members required to report to CAT can NOT assume their clearing firm, or any other entity, will automatically report on their behalf.  If an introducing firm elects to have their clearing firm report on their behalf the firm must have a signed agreement in place and a supervisory system designed to ensure that data reported to CAT on their behalf by their clearing firm is timely, accurate and complete.

On October 30, 2018 the CAT NMS LLC, of which FINRA is a Participant, published the final version of the CAT Reporting Technical Specifications for Industry Members.  FINRA strongly recommends that its members review this document and other related material which can be found on the Consolidated Audit Trail web site to understand their obligations related to CAT. 

In December 2018 and January 2019, the CAT NMS LLC Plan Processor, Thesys CAT sent emails to potential CAT Reporters.  The purpose of this email is to identify contacts the Plan Processor should use for registration with the CAT system. Starting in the first quarter of 2019, all firms with a CAT reporting obligation, regardless of when that obligation commences, are required to register with the CAT system.  Additional information regarding the CAT registration and onboarding processes will be forthcoming.

Industry Education


CAT Reporting Technical Specifications

On October 30, 2018, the participants of the CAT NMS Plan (“Participants”) published the final version of the CAT Reporting Technical Specifications for Industry Members (“Technical Specifications”). This version incorporates industry feedback submitted to the Participants since publication of the Version 0.6 draft published on September 5, 2018. No further material changes to the Technical Specifications are planned for publication before the November 15, 2019 CAT implementation date.

Industry Members should note that the Participants have created a separate companion document to be used in conjunction with the Technical Specifications, the CAT Reporting Scenarios for Industry Members (“Reporting Scenarios”). The Reporting Scenarios document contains detailed reporting guidance on how to report various equity and options order handling and execution scenarios. This document will be updated periodically as new scenarios are presented to the Participants. The Reporting Scenarios document is subject to the same Operating Committee approval process as the Technical Specifications. The reporting scenarios section of the Technical Specifications has been removed in lieu of this new companion document.

The participants have also published two new CAT Alerts related to these Technical Specifications which may be found at the following links:

Background

Rule 613 of the Securities Exchange Act of 1934 requires national securities exchanges and national securities associations to submit a national market system plan to the Commission to create, implement, and maintain the CAT that would allow regulators to more efficiently and accurately track all activity in U.S. equity and options markets. Pursuant to Rule 613, the Participants filed with the Commission the CAT NMS Plan, which was approved by the Commission on November 15, 2016.

Under Rule 613(g)(2), each member of a national securities exchange or national securities association is required to comply with all the provisions of the CAT NMS Plan. Relatedly, as mandated under Rule 613, the CAT NMS Plan requires each Participant to adopt rules requiring its members to comply with Rule 613 and the CAT NMS Plan, and to agree to enforce compliance by its members in that regard. Accordingly, each Participant has adopted rules requiring its members to comply with Rule 613 and the CAT NMS Plan. See, e.g., FINRA Rule 6800 Series.

The Participants jointly own CAT NMS, LLC, which was formed by the Participants to arrange for and oversee the creation, implementation, and maintenance of the CAT as required under Rule 613. Thus, the CAT is a facility of each SRO Participant. CAT NMS, LLC selected Thesys CAT LLC as the Plan Processor to create, implement, and maintain the CAT System; however, CAT NMS, LLC is the exclusive owner of the CAT System. Thus, when Industry Member reporting commences, Industry Members will submit data to an SRO facility, rather than a system that is owned by a non-SRO entity.

CONTACT OGC

FINRA's Office of General Counsel (OGC) staff provides broker-dealers, attorneys, registered representatives, investors and other interested parties with interpretative guidance relating to FINRA’s rules. Please see FINRA OGC Interpretative Guidance for more information.

OGC staff contacts:
Alex Ellenberg and Julia Bogolin
FINRA, OGC
1735 K Street, NW
Washington, DC 20006
(202) 728-8000