SEC opens broad review of the Consolidated Audit Trail
The US Securities and Exchange Commission (SEC) has launched a wide-ranging review of the Consolidated Audit Trail (CAT), publishing a concept release on 16 April that invites public comment on the system’s future.
The CAT tracks orders and trades across US equity and options markets and is one of the most ambitious market surveillance tools ever implemented. In this review, the SEC is stepping back to consider how it operates today, how it should evolve, and whether its current design strikes the right balance.
The consultation spans a broad set of issues, including the CAT’s funding and governance, its scope and technical design, and questions around cybersecurity and data privacy. It also explicitly raises the tension between the system’s regulatory value and concerns about civil liberties (read: data privacy).
The SEC notes that it has already made changes over the past year to address some of these concerns, including cutting projected annual operating costs by more than $100 million and permanently removing the collection of personally identifiable information.
Since its introduction under the Dodd-Frank Act, the CAT has attracted both strong support and sustained criticism. For some, it’s essential infrastructure, for others, costly and potentially risky from a data security perspective. This review suggests the Commission is open to a fundamental rethink.
The concept release will be open for comment for 60 days after it is published in the Federal Register.
Read more here.
