CAT’s eyes on the US market

While Europe still doesn’t have a consolidated post-trade tape, US regulators are moving forward with an ambitious plan that will eventually provide them with a detailed view of the entire market, readily available on a next-day basis. After the usual drawn-out process to approve SEC Rule 613, the industry has started work on the Consolidated Audit Trail, or CAT.

The SEC has charged the seventeen US national securities exchanges and independent regulator FINRA (collectively the SROs, or self-regulatory organizations) to come up with the plan to develop this comprehensive audit trail of orders that will allow regulators to track all activity in NMS securities throughout the US markets.

Last week thirty-one companies, including exchange operators BATS Global Markets, the NYSE Technologies unit of NYSE Euronext and Nasdaq OMX, as well as FINRA (the industry regulator), Google and IBM, indicated they plan to submit bids, via an RFP process, to build and operate the CAT.

FINRA hosted a meeting in New York last Friday for these companies to discuss the bidding process. RFPs are due by April 25 and the exchanges and FINRA expect to “preliminarily” select the successful bidder by July. Broker-dealers may need to start reporting CAT information sometime in 2015.

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