Consolidated Audit Trail (CAT) Action Items (11/21/19)
CONSOLIDATED AUDIT TRAIL (CAT)
ACTION ITEMS
While I am SURE all small BDs that handle ANY orders or quotes in
• NMS Equities
• OTC Equities
• Listed Options
are on track with their CAT prep process, there is another part of me that is really worried some members may not be staying informed of and current with their regulatory responsibilities.
To assuage my concern, please allow me to cover some of your current obligations (on the firm level) and provide a link to the FINRA CAT Industry Member Onboarding Guide (below).
RULE REFERENCE SUMMARY
SEA Rule 613 relates to CAT. Under Rule 613, FINRA is required to write CAT-related rules, these rules may be found in the FINRA Rule 6800 Series. (Clink here for more information on SEC Rule 613)
BD ACCOUNT SET-UP / PEOPLE
All BDs that handle orders or quotes in Equities or Listed Options must register their CAT Reporters.
Who are your CAT Reporters?
• Super Account Administrator - this is someone at your BD
• CAT Reporting Agents - this is your Reporting Agent (i.e., clearing firm), you may designate more than one person as a CAT Reporting Agent
• CAT User Account/s for the CAT Reporter Portal (at least one person affiliated with your BD and then, potentially, individuals at your clearing firm/third-party)
BD ACCOUNT SET-UP / SYSTEM CONNECTIVITY
If your firm is a large volume shop (equities/listed options), then you will almost certainly be connecting to CAT via a private line over a managed private network. This Private Line solution will provide for machine-to-machine connectivity, as well as to the CAT Reporter Portal for interactive reporting through web-based forms or manual file upload. ($$$)
If, however, your volume is less then there is a less costly alternative to connect to CAT and it is via the CAT Reporter Portal. The CAT Reporter Portal will be accessible via the web using a secure, authenticated internet connection. This method of connectivity requires the use of a modern browser that supports HTML5 and TLS (Transport Layer Security). FINRA states that no client software installation is required with the CAT Reporter Portal.
BD ACCOUNT SET-UP / TEST ENVIRONMENT
BD firms are required to authorize a Reporting Agent to report on behalf of your CAT Reporter AND to authorize a Third-Party Reporting Agent to view data submitted on behalf of your firm by another submitter (like your clearing agent).
Set these up using the CAT Reporter Portal in the Test Environment, which will be availabe beginning NOVEMBER 18, 2019 = NOW!
*If you're not using a Reporting Agent or Third-Party Reporting Agent then you are not required to add any Reporting Relationships.
TESTING
After doing all that ^^^^ (see link below for details on HOW to do all that),
• CONDUCT YOUR TESTING FOR PRODUCTION READINESS!!!
• DEADLINE ON THE TESTING IS APRIL 6, 2020
PLEASE DO NOT MISS THIS DEADLINE -- AND APRIL 6TH WILL BE HERE FASTER THAN YOU THINK!
(Esp. w/ Reg BI work happening concurrently!)
REMEMBER, EVERYONE, THERE ARE NO EXCLUSIONS OR EXEMPTIONS FROM CAT!
(Unlike OATS)
Many thanks to Jennifer Szaro (CCO, XML Financial Group / Lara May & Associates, LLC) for helping me with this newsletter.