New FINRA CAT Subsidiary to Develop Consolidated Audit Trail

FINRA, the notice states, “will fulfill its obligations as a participant of the plan, including among others, enforcing FINRA rules requiring its members to comply with the CAT NMS Plan, through FINRA (and FINRA Regulation Inc.) and not through FINRA CAT LLC.”

Stock exchanges announced in early February that they were poised to appoint a new processor to build the Consolidated Audit Trail, which will track market trading activity, and intended to fire the contractor they hired in 2017, Thesys Technologies LLC, as the project fell a year behind schedule.

FINRA stated in its recent report on how the broker-dealer self-regulator spent its 2018 fine money that $2.0 million went to comply with CAT, the system mandated by the Securities and Exchange Commission to track orders throughout their life cycle and identify the broker-dealers handling them.

The SEC hired Manisha Kimmel in late January to coordinate the SEC’s oversight of the self-regulatory organizations’ creation and implementation of the CAT.

CAT, created under Securities and Exchange Commission Rule 613 of Regulation NMS, “was really intended to promote the ability of regulators to have a consolidated view of the markets,” Robert Cook, president and CEO of FINRA, said last November at the 2018 Financial Markets Quality Conference at Georgetown University in Washington.