Risk & Compliance

Stock Exchanges on Track to Develop Audit Trail System

A consolidated audit trail of all stock and options trading activity was first proposed after the May 2010 Flash Crash.
Matthew HellerSeptember 29, 2014
Stock Exchanges on Track to Develop Audit Trail System

U.S. stock exchanges have withdrawn a request for an extension and are on track to meet Tuesday’s deadline for submitting a plan for a system that will track all equity and options transactions, Reuters reports.

stocktrackingThe Consolidated Audit Trail, which will be the world’s largest depository of securities transactions, will enable regulators to better monitor trading activity. The U.S. Securities and Exchange Commission approved the automated system after it took months to gather the necessary data to analyze the precipitous market plunge of May 2010 known as the Flash Crash.

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According to Reuters, the exchanges and the Financial Industry Regulatory Authority had asked the SEC earlier this month to extend the Sept. 30 deadline for submitting a final blueprint for building the CAT to the end of the year. But they are now saying they intend to meet the deadline.

“After discussions with SEC staff, we intend to withdraw our request for an extension at the time we file the plan. We will continue to engage with the industry and seek to amend the plan as necessary,” a spokesman for the CAT National Market System Plan committee told Reuters.

Reuters noted that another delay might have displeased regulators, who had already granted several extensions to the 18 U.S. stock and options exchanges, and could have further pushed out an already lengthy timeline by three to six months. Implementation of the CAT is expected to take three years once the plan and winning bidder have been chosen.

The six remaining bidders have been asked to meet separately with the selection panel the week of Oct. 6.

The CAT, according to Bloomberg, will track every stock quote, order, and trade, including when and where transactions occur, the brokers who handle them, and the customers they represent. Data will be collected from every stock and options exchange as well as the private trading venues known as dark pools.

Source: Reuters Exchanges to meet deadline to for U.S. audit trail plan

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