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Consolidated Audit Trail

What is it?

SEC Rule 613, otherwise known as the Consolidated Audit Trail (CAT), announces a plan to establish a central data repository to house a complete record of all equities and options trades in the U.S. National securities exchanges, and self-regulatory organizations (SROs) will be required to submit trade information to the CAT to allow regulators to efficiently and accurately track all activity through the U.S. market in National Market System (NMS) securities.1 Over time, this single reporting process is expected to replace existing ones, such as Electronic Blue Sheets (EBS) and FINRA’s Order Audit Trail System (OATS).

The existing market surveillance tools have various limitations that the CAT seeks to supplement. Current tools exhibit various shortcomings concerning the regularity of reporting, as well as the completeness, accuracy/validity and accessibility of data.1 More specifically, present tools frequently lack a daily reporting requirement and the capacity to identify if multiple sets of orders were originated by the same customer. By aggregating information in an accessible, centralized location, the SEC expects CAT to address these deficiencies. The present lack of cohesion diminishes regulators’ capability to survey and identify noncompliant trading activity in the market.