SEC Publishes NMS Plan for CAT, Seeks Public Comment

Regulators have six months to approve or deny the plan for the consolidated audit trail.


The US Securities and Exchange Commission (SEC) has voted to publish for public comment the proposed national market system (NMS) plan for the consolidated audit trail (CAT), a comprehensive database that would allow regulators to track all trading activity in the US equity and options markets.

"The Commission's action to approve the proposed CAT plan for public comment is a major market structure milestone. CAT will enable regulators to harness today's technology to enhance the regulation and oversight of today's trading markets," said SEC chair Mary Jo White at Wednesday's meeting where the decision to publish the plan was voted on. "It will significantly increase the ability of regulators to conduct research, reconstruct market events, monitor market behavior, and identify and investigate misconduct."

The self-regulatory organizations (SROs) submitted the plan in accordance with Rule 613. Public comments on the proposal will now be accepted for 60 days. The SEC has 180 days to approve or deny the CAT NMS plan.

If approved, the SROs have two months to select a plan processor via a two-round voting process during which each SRO has one vote. There are currently three remaining bidders left: the Financial Industry Regulatory Authority (Finra), SunGard and Thesys Technologies.

In addition to being a bidder, Finra is also one of the 18 SROs charged with picking a winning bid. The firm has repeatedly stated it's gone to great lengths to separate the two parties so there is no chance of influence.

The SROs would have to begin reporting to the CAT within a year of SEC approval of the CAT NMS plan. Large broker-dealers would have two years, while small broker-dealers would be required to begin reporting to the CAT within three years.

In October 2014, WatersTechnology published a feature on the CAT and the six finalists who were in the running at the time.


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