Consolidated Audit Trail (CAT)
CAT Compliance Rules
Rule 613 under the Securities Exchange Act of 1934 requires FINRA and the national securities exchanges to jointly submit a National Market System (NMS) plan detailing how they would develop, implement and maintain a consolidated audit trail that collects and accurately identifies every order, cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets. FINRA is working with the exchanges to develop an NMS plan that meets the requirements of Rule 613.
• FINRA Rule 6800 Series: Consolidated Audit Trail Compliance Rule
• Visit The Consolidated Audit Trail website (https://www.catnmsplan.com/) for more information
FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT
FINRA issued this Regulatory Notice as part of its continuing efforts to provide members with guidance on requirements relating to the Consolidated Audit Trail (CAT), and FINRA Rule 6800 Series (the “CAT Rules”). In particular, FINRA is reminding members of their supervisory responsibilities under the CAT Rules and FINRA’s Supervision Rule (Rule 3110). Members may wish to consider whether the practices and recommended steps described below are applicable to their own circumstances and would enhance their supervisory systems and compliance programs.
• FINRA Regulatory Notice 20-31 (August 31, 2020): FINRA Reminds Firms of Their Supervisory Responsibilities Relating to CAT
FINRA Provides Updates on Regulatory Coordination Concerning CAT Reporting Compliance
FINRA and the national securities exchanges, as CAT NMS Plan Participants, have entered into a Rule 17d-2 Plan and corresponding Regulatory Services Agreements (RSAs) to coordinate regulation of the CAT compliance rules through FINRA. Relatedly, FINRA and the exchanges developed a coordinated approach for enforcement of the CAT compliance rules under the Participants’ respective Minor Rule Violation Plans.
• FINRA Regulatory Notice 20-20 (June 29, 2020): FINRA Provides Updates on Regulatory Coordination Concerning CAT Reporting Compliance
(NEW) SEC Approves Registration of First Security-Based Swap Data Repository; Sets the First Compliance Date for Regulation SBSR
The SEC has approved the registration of its first security-based swap data repository (SDR). DTCC Data Repository (U.S.), LLC (DDR), the security-based swap market now has the first SDR that can accept transaction reports. DDR intends to operate as a registered SDR for security-based swap transactions in the equity, credit, and interest rate derivatives asset classes.
Nov. 8, 2021, is the first compliance date for Regulation SBSR, which governs regulatory reporting and public dissemination of security-based swap transactions. Regulation SBSR is a key component of the security-based swap regulatory regime established by Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Regulation SBSR provides for the reporting of security-based swap information to registered SDRs and for public dissemination of transaction, volume, and pricing information.
• SEC Release No. 34-91798 (May 7, 2021), 86 FR 26115 (May 12, 2021): Security-Based Swap Data Repositories; DTCC Data Repository (U.S.), LLC; Order Approving Application for Registration as a Security-Based Swap Data Repository
FINRA Reminds Firms of their Obligations Regarding TRACE Reporting.
FINRA has issued several notices to remind members of their obligation to have systems or processes in place to properly report transactions in TRACE-Eligible Securities. FINRA has also publishing technical specifications for reporting, which are available on FINRA’s website.
• FINRA Regulatory Notice 19-30 (September 19, 2019): SEC Approves Amendments Relating to Transactions in U.S. Treasury Securities Executed to Hedge a Primary Market Transaction
• FINRA Trade Reporting Notice (July 19, 2019): FINRA Reminds Firms of their Obligations Regarding TRACE Reporting
• FINRA Trade Reporting Notice (January 22, 2019): TRACE Reporting of OTC Transactions in Listed Bonds
• FINRA Trade Reporting Notice (January 9, 2019): US Treasury Security Auction Awards
• FINRA Regulatory Notice 16-39 (October 2016): SEC Approves Rule Change to Require Reporting of Transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine (TRACE)
Disclosure of Order Handling Information
The Commission extended the compliance date for the recently adopted amendments to Rule 606 of Regulation National Market System (“Regulation NMS”) under the Securities Exchange Act of 1934 (“Exchange Act”), which require additional disclosures by broker-dealers to customers concerning the handling of customer orders. Specifically, the Commission extended the compliance date for the recently adopted amendments to Rule 606. Following September 30, 2019, broker-dealers must begin to collect the information required by Rules 606(a) and 606(b) as amended. The compliance date remains May 20, 2019 for the amendments to Rule 605. The Commission extended the compliance date for the recently adopted amendments to Rule 606 in order to give broker-dealers additional time to develop, program, and test for compliance with the new and amended requirements of the rule.
• Securities and Exchange Commission Release No. 34-85714 (April 24, 2019): Disclosure of Order Handling Information
FINRA Reminds Firms of Their Obligations Regarding Transactions in OTC Equity Securities Quoted Pursuant to a Submitted Form 211
In consultation with SEC staff, FINRA is reminding members of legal obligations that apply when initiating a quote in an over-the-counter (OTC) security in addition to filing a Form 211.
• FINRA Regulatory Notice 18-32 (September 24, 2018): FINRA Reminds Firms of their Obligations Regarding Transactions in OTC Equity Securities Quoted Pursuant to a Submitted Form 211
FINRA Reminds Firms of their Obligations when Effecting OTC Trades in Equity Securities on a Net Basis
FINRA is issuing this Notice to remind firms of their obligations under the FINRA trade reporting rules and other applicable FINRA and SEC rules when effecting over-the-counter (OTC) trades in equity securities on a “net” basis.
• FINRA Regulatory Notice 18-29 (September 12, 2018): FINRA Reminds Firms of their Obligations when Effecting OTC Trades in Equity Securities on a Net Basis