Consolidated Audit Trail

Regulatory Obligations

Rule 613 under Regulation NMS required 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 equities and exchange-listed options across all U.S. markets. FINRA and the national securities exchanges filed the NMS plan and the plan was approved and is now effective. 

FINRA and the national securities exchanges have adopted rules requiring their members to comply with SEA Rule 613 and the CAT NMS Plan, which cover reporting to the CAT; clock synchronization; time stamps; connectivity and data transmission; development and testing; recordkeeping; and timeliness, accuracy and completeness of data requirements.

Regulatory Notice 20-31 (FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT) notes that firms’ WSPs also must be reasonably designed to ensure that the data reported by them or on their behalf is transmitted in a timely fashion and that it is complete and accurate. 

Findings

• Incomplete Submission of Reportable Events: Failing to report certain Reportable Events, as defined by CAT, in a timely manner to the Central Repository (e.g., new order events, route events, execution events).
• Failure to Repair Errors Timely: Not repairing errors by the T+3 correction deadline.
• Failure to Submit Corrections: Not submitting corrections for previously inaccurately reported data, including data that did not generate error feedback from CAT.
• Inaccurate or Incomplete Reporting of CAT Orders: Submitting information that was inaccurate, incomplete or both to the Central Repository.
• Unreasonable Supervision:
  • Not establishing and maintaining reasonable WSPs or supervisory controls regarding CAT reporting and clock synchronization performed by the firm, third-party vendors, or both.
  • Not implementing an accuracy review as described in the “Specific Consideration for CAT Supervisory Systems and Procedures” in Regulatory Notice 20-31 (FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT).
  • Not using a reasonable sample size when selecting firm CAT reports for review.
  • Not using a sample with a variety of order and event types when selecting firm CAT reports for review.
  • Not using a proportionate sample of all desks, aggregation units, business lines and types of order flow from across the firm when reviewing for reporting accuracy.
  • Not reasonably supervising Reporting Agents that report to CAT on the firm’s behalf.
  • Not promptly remediating CAT reporting issues when brought to the firm’s attention either through its own reviews or regulatory inquiries from FINRA.
• Recordkeeping: Not maintaining underlying books and records to support transactional data reported to CAT. 

Effective Practices

• Mapping Internal Records to CAT-Reported Data: Maintaining a “map” that shows how the firm’s internal records and blotters correspond to various fields reported to CAT.
• Archiving CAT Feedback: Archiving CAT feedback within a 90-day window so that firms can submit corrections, if necessary.
• CAT Supervision: Implementing WSPs requiring a comparative review of CAT submissions versus firm order and trade records (including for firms that rely on third-party submitters); conducting a daily review of the CAT Reporter Portal, regardless of the error rate percentage; utilizing CAT Report Cards and CAT FAQs to design an effective and reasonable supervision process; and, when relying on a CAT reporting agent, maintaining a written agreement that specifies the respective functions and responsibilities for exception management and error correction.
• CAT Clock Synchronization: When relying on third-party, non-broker-dealer vendors for synchronization of business clocks, obtaining synchronization logs daily from such parties and reviewing them to ensure that the clock drifts are within acceptable thresholds (i.e., 50 milliseconds).²
• Supervision of Transformed Identifier and FDID Reporting: Establishing reasonable supervisory processes and procedures that address monitoring that customer and account information is reported in an appropriately secure manner pursuant to CAT reporting requirements (e.g., customer identifiers are not submitted to CAT or CAIS unless they have been properly transformed into a “hashed” Transformed Input ID (TID) prior to submission; customer account identifiers (FDIDs) do not reflect actual account numbers).
• Self-Reporting: Self-reporting CAT or CAIS reporting issues via the appropriate form (available in the Forms section of the CAT NMS Plan website) or through the FINRA CAT Help Desk.

Additional Resources

• FINRA
  • Consolidated Audit Trail (CAT) Key Topics Page
  • Regulatory Notices
    • Regulatory Notice 20-41 (FINRA Amends Its Equity Trade Reporting Rules Relating to Timestamp Granularity)
    • Regulatory Notice 20-31 (FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT)
    • 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 Alert 2025-02: Update Regarding SEC’s CAIS Exemption Order
  • CAT NMS Plan Website
  • CAT NMS Clock Synchronization 

1 The CAIS Amendment was proposed on March 13, 2025, and amended on May 28, 2025. See Securities Exchange Act Release No. 102665 (Mar. 13, 2025), 90 FR 12845 (Mar. 19, 2025) (Notice of Filing of Amendment to the National Market System Plan Governing the Consolidated Audit Trail); and Letter from Brandon Becker, CAT NMS Plan Operating Committee Chair, dated May 28, 2025 (“CAIS Amendment”).

2 See Regulatory Notice 20-31 (FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT).