Regulatory Obligations and Related Considerations
FINRA and the national securities exchanges have adopted rules requiring their members to comply with Exchange Act Rule 613 and the CAT NMS Plan FINRA Rule 6800 Series (Consolidated Audit Trail Compliance Rule) (collectively, CAT Rules), which cover reporting to the CAT; clock synchronization; time stamps; connectivity and data transmission; development and testing; recordkeeping; the timeliness, accuracy and completeness of data; and compliance dates. Regulatory Notice 20-31 (FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT) describes certain practices and recommended steps firms should consider when developing and implementing their CAT Rules compliance program.
- Do your firm’s CAT Rules WSPs, at a minimum: (1) identify the individual, by name or title, responsible for the review of CAT reporting; (2) describe specifically what type of review(s) will be conducted of the data posted on the CAT Reporter Portal; (3) specify how often the review(s) will be conducted; and (4) describe how the review(s) will be evidenced?
- How does your firm confirm that the data reported by your firm or on your firm’s behalf is transmitted in a timely fashion and is complete and accurate?
- How does your firm determine how and when clocks are synchronized, who is responsible for clock synchronization, how your firm evidences that clocks have been synchronized, and how the firm will self-report clock synchronization violations?
- Does your firm conduct daily reviews of the Industry Member CAT Reporter Portal (CAT Reporter Portal) to, among other requirements, review file status to ensure the file(s) sent by the member or by their reporting agent was accepted by CAT and to identify/address any file submission or integrity errors?
- Does your firm conduct periodic comparative reviews of accepted CAT data against order and trade records and the CAT Reporting Technical Specifications?
- Does your firm communicate regularly with your CAT reporting agent, review relevant CAT guidance and announcements, and report CAT reporting issues to the FINRA CAT Help Desk?
Exam Findings and Effective Practices
As FINRA is in the early stages of reviewing for compliance with certain CAT Rules obligations, this Report does not include exam findings or effective practices relating to CAT Rules. FINRA reminds firms to review the materials noted in the Additional Resources section below.
- Regulatory Notice 19-19 (FINRA Reminds Firms to Register for CAT Reporting by June 27, 2019)
- Regulatory Notice 17-09 (The National Securities Exchanges and FINRA Issue Joint Guidance on Clock Synchronization and Certification Requirements Under the CAT NMS Plan)
- CAT NMS Plan
- Consolidated Audit Trail (CAT) Topic Page