The Securities and Exchange Commission issued an exemptive order Monday establishing a new consolidated audit trail reporting timeline for broker-dealers due to the COVID-19 pandemic.
The order allows for equity and options reporting in phases, taking into account the complexity of reporting events, the SEC said in a statement. In order to "address the impact of COVID-19 while preserving progress toward existing milestones," the order also allows for a delayed start to CAT reporting conditioned upon compliance with certain other obligations, the SEC said. The obligations include milestones related to testing and releases of CAT functionality, as well as all other compliance dates for broker-dealer reporting to the CAT.
When fully operational, CAT will be the world's largest data repository of information on securities transactions, tracking all orders throughout their life cycle, according to the operating committee for the CAT. Moreover, it will be a single database for all equity and options trades executed on U.S. exchanges. It's intended to allow regulators to track illegal or manipulative trades and show a way to quickly determine what caused large, sudden losses in trading value, such as the flash crash of May 6, 2010.
Broker-dealer reporting on the CAT went live April 13. On March 17, the SEC released a no-action letter saying due to the coronavirus pandemic, its staff will not enforce CAT implementation deadlines, the next of which was slated for April 20 when broker-dealers were required to submit data to the CAT on trades they execute on behalf of clients — including institutional investors.