CAT Roll-Out Smooth, but System Still Needs Work

The first roll-out of the consolidated audit trail (CAT) was largely smooth, but the system still needs to evolve further to be able to handle the influx of information coming from the industry next year, its builders say.

Thesys CAT, a unit of Thesys Technologies LLC that built the CAT system, says it processed over 58 billion records of equities, options, and market data.

The first roll-out was strictly limited to self-regulatory organizations (SROs) like exchanges and groups including the Financial Industry Regulatory Authority (Finra). The next phase, expected to begin on November 15, 2019, will cover large broker-dealers. Implementation of the CAT for the industry will be accomplished in phases, with small broker-dealers following a year after large firms.

Assets being reported into the CAT will be phased. Equities will come first, followed by simple options, then more complicated options trades.

Andre Frank, president of Thesys CAT, says the system successfully launched on November 15 but work still continues to meet the requirements for staggered industry reporting.

“The system will have to continue to evolve in order to be able to properly handle the challenges of the industry member rollout, in particular with the complexities around the phased implementation schedule,” Frank says. “That said, Thesys CAT is ready for the challenge and is excited to bring the next phase forward in 2019.”

Frank adds that any concerns about the CAT’s ability to link trades are unfounded as the system already performs lifecycle processing on all equities orders, trades, and quotes.

The CAT national market systems (NMS) committee said in a statement that Thesys CAT plans to complete full CAT functionality by March 31, 2019.

Part of the system’s evolution will be around tying individual firms and traders to transactions. The CAT NMS committee is planning a way to identify firms to trades without revealing personal information, a concern that lawmakers and other industry members had prior to the CAT’s roll-out.

The CAT will be one of the largest databases of contemporaneous financial trading information ever created once it completes its full roll-out.