SEC Adopts Changes to CAT Plan to Improve Transparency and Accountability

The US Securities and Exchange Commission voted last week to adopt amendments to the national market system plan governing the consolidated audit trail (the “CAT NMS Plan”) to bring additional transparency, governance, oversight, and financial accountability to its implementation.

The amendments to the CAT NMS Plan require the Financial Industry Regulatory Authority (FINRA) and the exchanges, the self-regulatory organizations that are participants to the CAT NMS Plan (the “Participants”), to publish and file with the SEC a complete implementation plan for the Consolidated Audit Trail (“CAT”) and quarterly progress reports.  Each of the reports must be approved by the Operating Committee established by the CAT NMS Plan and submitted to the CEO, President, or an equivalently situated senior officer at each participant.  In addition, the amendments include financial accountability provisions that establish target deadlines for four critical implementation milestones and reduce the amount of fee recovery available to the participants if those target deadlines are missed.

“Today’s amendments are another significant step in our efforts to bring both much-needed transparency and accountability to CAT’s implementation,” said SEC Chairman Jay Clayton. “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 amendments will become effective 30 days after publication of the adopting release in the Federal Register.