On April 20th, the SEC voted to issue two exemptive orders in order to move Consolidated Audit Trail (CAT) implementation forward. These orders (1) establish a phased CAT reporting timeline for broker-dealers, and (2) permit the introduction of brokers that meet certain requirements to follow the small broker-dealer reporting timeline.
The first order allows for equity and options reporting in phases, an action which takes into account the complexity of reporting events. To address the impact of COVID-19 while preserving progress toward existing milestones, this order also allows for a delayed start to CAT reporting conditioned upon compliance with certain other obligations. Such obligations include milestones related to testing and releases of CAT functionality, as well as all other compliance dates for broker-dealer reporting to the CAT.
The second SEC order focuses on those introducing brokers that meet the net capital requirements for small broker-dealers under Rule 0-10(c)(1) under the Securities Exchange Act of 1934 but fail to qualify as small broker-dealers for the purposes of the CAT NMS Plan. The order provides exemptive relief permitting these firms to follow the CAT reporting timeline already available to small broker-dealers.
The following dates are select milestones for broker-dealer reporting to the CAT:
- June 22, 2020 — Initial equities reporting for large broker-dealers and small broker-dealers that currently report to FINRA’s Order Audit Trail System
- July 20, 2020 — Initial options reporting for large broker-dealers
- Dec. 13, 2021 — Full equities and options reporting for large and small broker-dealers
- July 11, 2022 — Full customer and account reporting for large and small broker-dealers
Sources:
SEC Provides for Phased CAT Broker-Dealer Reporting Timelines with Conditional Exemption for Impacts of COVID-19 (www.sec.gov)
Order Granting Conditional Exemptive Relief, Pursuant to Section 36 of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 608(e) of Regulation NMS Under the Exchange Act, from Sections 6.4, 6.7(a)(v) and 6.7(a)(vi) of the National Market System Plan Governing the Consolidated Audit Trail (www.sec.gov)
Order Granting Limited Exemptive Relief, Pursuant to Section 36 of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 608(e) of Regulation NMS Under the Exchange Act, Related to Certain Introducing Brokers, From the Requirements of the National Market System Plan Governing the Consolidated Audit Trail (www.sec.gov)
