Preparing for 2019 CAT Industry Testing
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Phase 2a of the Consolidated Audit Trail (CAT) implementation will cover everything that is reportable to OATS today – and more. Most market participants and SROs, including FINRA, want to retire OATS as soon as possible to avoid the need to run two different reporting systems. OATS will be retired once error rates reach an acceptable level and FINRA can transfer its surveillance programs from OATS over to the new CAT data.
But the issue is not just about OATS mapping cleanly over to CAT. These are key differences every firm must be aware of:
CAT covers all street-side orders – including all proprietary orders for non-FINRA members.
|Only applicable to FINRA members||Applies to every U.S. registered broker-dealer|
|Does not capture proprietary orders||Clearly deciphers proprietary vs. representative (customerdriven) orders|
|Requires multiple requests to track down representative orders||FDID/CCID links avoid the need for multiple requests to research activity|
Reportable Data & Events
New reportable data and event types will expose resource principal, order activity or aggregated average price order attributes.
|No need to report market making with street-side vs. principal||Eliminates market making exclusions|
|Recording of electronic quotes are limited in scope||Includes OTC equities quoting activity and electronic quotes (exchanges and NMS)|
|Requires only one timestamp on manual events||Requires capture and report of two timestamps on manual events|
Accuracy of Reporting
Firms must have a clear understanding of what they are reporting when the move from OATS to CAT occurs – which may require different approaches.
|Very high compliance rate of more than 99%||Will use FINRA’s surveillance patterns from OATS data|
|High accuracy relied on heavily for FINRA surveillance||Accuracy will rely on achieving the same high compliance rates as OATS|
|Useful for comparing and contrasting with CAT data and surveillance results||Conducting early and frequent testing will drive accurate reporting|