82 years after 1934 Act, SEC seeks comment on CAT plan

Rick Steves

The Securities Exchange Act of 1934 has the Rule 613 of Regulation NMS (National Market System) that requires the SRO the self-regulatory organization to jointly submit a NMS plan to create, implement and maintain a consolidated audit trail (CAT) database that would capture, in a single, consolidated data source, customer and order event information for […]

The Securities Exchange Act of 1934 has the Rule 613 of Regulation NMS (National Market System) that requires the SRO the self-regulatory organization to jointly submit a NMS plan to create, implement and maintain a consolidated audit trail (CAT) database that would capture, in a single, consolidated data source, customer and order event information for orders in NMS securities, across all markets.

Only following the financial crisis and the 2010 flash crash, the Securities Exchange Commission decided to adopt Rule 613 and made the required submission on July 11, 2012. Now, the SEC is sharing the proposal and a detailed preliminary economic analysis of the proposal, including cost analysis and discussion of economic effects. The regulator is open for public comment within 60 days, and within 180 days the CAT NMS plan will be approved.

CAT rules on reporting information to the central repository regarding options market maker quotations apply to options exchanges only, and exclude market makers from any obligations.

SEC Chair Mary Jo White said: “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. It will significantly increase the ability of regulators to conduct research, reconstruct market events, monitor market behavior, and identify and investigate misconduct.”

Broker-dealers will record and report information, including the identity of the customer, of all orders and transactions in the US equity and options markets.

 

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