SEC Adopts CAT NMS Plan to Increase Operational Transparency

May 15th | 2020

Friday May 15, 2020 the Securities and Exchange Commission (“SEC”) voted to adopt amendments to the national market system (“NMS”) plan governing the consolidated audit trail (the “CAT NMS Plan”). SEC Chairman Jay Clayton indicates that the “amendments are another significant step in our efforts to bring both much-needed transparency and accountability to CAT’s implementation” and that “ these amendments build upon other recent Commission actions relating to the CAT designed to enable the SROs, in conjunction with the broker-dealers, to focus on bringing a functional, more secure CAT online.”

The SEC’s CAT plan will create one of the largest comprehensive data repositories for securities transactions to date processing more than 58 billion records daily. By centralizing and standardizing data collection and creating a single audit trail, CAT will enhance regulators’ ability to identify unlawful trading such as attempted market manipulation and insider trading in either a single market or across multiple markets. However, this will come at a cost to registered Broker-dealers who will be assessed a fee for maintaining the CAT and will incur additional costs adapting systems to meet the enhanced reporting requirements.

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