Industry Given CAT Relief Due to Coronavirus [UPDATE]

April was to be a big month for the rollout of the long-awaited Consolidated Audit Trail, otherwise known as the CAT. But in the face of a global pandemic, the CAT will have to wait a bit longer to come to life.

On March 17, the US Securities and Exchange Commission (SEC) released a no-action letter that will last through mid-May.

“We understand that COVID-19’s impact on market participants, including necessitating [self-regulatory organizations] and industry members to implement their business continuity plans [BCPs], has placed stress on their information technology infrastructure and required the deployment of significant resources, including to implement and adapt business continuity plans. To allow firms to maintain focus on operational readiness and reduce operational risk, we are issuing this no-action letter so that personnel who are working on CAT matters but are important to maintaining critical operations and implementing business continuity plans can focus their attention on those immediate needs.”

It continues: “The staff’s position in this letter applies only until May 20, 2020, but could be extended.”

On April 6, industry members and CAT reporting agents were to complete production readiness testing for equities. April 20 was then to be the production go-live date for large industry members and small OATS reporters. [OATS is the precursor to the CAT.] Now that timeline has been muddied.

Yesterday, a compliance manager at a small broker-dealer told WatersTechnology that it was going to be hard for them to hit the April 6 deadline, pandemic or not. They noticed less email traffic coming through on Monday related to the CAT, and had their fingers crossed that there would be an extension.

“I would be hard pressed to think that any place has the bandwidth to handle this abrupt switch to their BCP and also work on development in regards to that April 6th roll-out,” they said. Today, the source said that the company breathed a sigh of relief. “We have to certify CAT for our old and new vendors, plus train and [do] everything remotely,” they say, noting that even certain migration projects are likely going to be pushed back.

A senior executive at a tier-1 bank echoed those sentiments, noting that it was all-hands-on-deck as the company began enacting its BCP last week. Another source at a different tier-1 bank noted that “it’s just really busy and folks are on edge.” A fourth source, who has worked closely on the CAT implementation for several years, says there’s “zero chance” that production will go back to normal on May 20, as the ripple effects of this quarantine will be felt for months to come, at best.

And this is a sentiment sweeping the markets, as tech and ops folks are trying to keep their heads above water in the face of great uncertainty and disruption.

So it goes: the CAT will be delayed yet again, though this time through no fault of anyone in the industry. To read about why it’s taking so long to get this platform off the ground and running, click here to read this deep-dive report.