Half of Brokers Have Not Started CAT Work


Only 8% of surveyed brokerages have their Consolidated Audit Trail governance team up and running, according to a recent research note published by the industry analyst firm Tabb Group.

Of the remaining firms, 42% are in the process of setting them up while 50% have not begun assembling their teams.

Monica Summerville,
Tabb Group

“I would have expected the percentage to be higher,” Monica Summerville, a senior analyst at Tabb Group and author of the note, told Markets Media.

She noted that the survey, which her firm conducted at the end of 2016 and start of 2017, includes representation from tier-one, tier-two, and tier-three brokerages and not all of them have to be prepared to send data to the CAT starting on November 15.

“The large industry members have the November deadline, but the smaller players have another year before they need to be compliant,” said Summerville.

The one issue that may contribute to the procrastination is the lack of a final technical specification.

According to the CAT NMS Plan’s current timeline, the plan processor was supposed to publish the Technical Specifications for Industry Members submission of order data a year before the November deadline.

However, it has issued a partial draft of the specification, according to Summerville.

The CAT NMS LLC’s Operating Committee reportedly anticipates that it will release the final version of the specifications in late October, which makes the November deadline unrealistic to many.

The industry has filed a request to alter the present timeline with the US Securities and Exchange Commission, but the Commission has yet to respond.

In the meantime, there is no reason for firms to take “a wait and see” approach since there is a lot of enterprise data management issues that brokerages can address in the interim, according to Summerville.

“To report, you need to pull data in from a number of systems,” she said. “The previous reports that the industry members had to do came out of the order management systems mostly. Since CAT’s remit is broader, they will need to pull data from systems that they had not had to before.”

Of those who have begun the process have told Summerville that it is a significant task to accomplish.

She also noted that the CAT would help further the adoption of cloud-based architecture on Wall Street.

During conversations with Summerville, many surveyed firms, especially the larger ones, anecdotally shared that since that CAT data well be in the cloud, it has made a stronger case for their in-house solutions also to be in the cloud.

Only about a third, 29%, of the brokerages polled, also thought that this would provide an opportunity to improve their firms’ artificial intelligence and machine learning capabilities while 37% thought it would be an opportunity to enhance their investor transparency and client reporting capabilities.

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