Industry Recommendations for the Creation of a Consolidated Audit Trail
This white paper, Industry Recommendations for the Creation of a Consolidated Audit Trail (CAT), presents SIFMA’s views on how a Consolidated Audit Trail (CAT) system should be organized, provides key principles on operations, structure, governance, and scope, and outlines the industry vision of how the CAT system should be implemented and expanded.
SIFMA supports the creation of an effective, efficient CAT system which can help strengthen regulation of financial markets. This white paper is meant to provide the industry’s input on the best path forward to create a CAT that captures the full lifecycle of trades, including customer account information – a massive undertaking that will require significant resources from the industry.
In its paper, SIFMA identified eight guiding principles for the development of a CAT system:
- Elimination of Duplicative Systems and Reporting;
- Appropriate Flexibility and Scalability;
- Centralized Administration;
- Public Transparency and Industry Engagement;
- Minimal Disruption to Existing Market and Business Practices;
- Reuse of Existing Assets and Standards;
- Data Security, Privacy, and Consumer Protection; and
- Special Considerations for Options.
SIFMA utilized these principles to make specific recommendations on ten key topics that are vital to CAT implementation. These recommendations include:
- Elimination of Other Rules and Systems
- Implementation Timeline
- Infrastructure
- Governance
- Customer ID
- Reporter ID
- Linkages
- Options
- Other Products
- Cost/Benefit
SIFMA’s white paper was developed through iterative dialog with the SIFMA membership, representing a range of firm types, sizes and business models. The paper is co-authored by SIFMA and IBM, which was engaged as a consultant to this process.
We hope that this white paper contributes to the creation of a CAT system that provides transparency which helps to strengthen financial markets, and thereby build a measure of trust and confidence in the financial industry.
Excerpt
Executive Summary
a) Objectives
This document presents the position and recommendations of the Securities Industry and Financial Markets Association (“SIFMA”) regarding the creation of a Consolidated Audit Trail (“CAT”) for the US Securities Markets.
SIFMA supports the creation of an effective, efficient CAT system that can help advance SIFMA’s goal of strengthening financial markets while building trust and confidence in the financial industry.
This document presents the Industry’s perspective of how the CAT system should be organized, provides key principles on operations, structure, governance, and scope, and outlines the Industry vision of how the CAT system should be implemented and expanded. The document was developed through iterative dialog with the SIFMA membership, representing a range of firm types, sizes and business models. SIFMA expects this document to help guide the creation and implementation of the CAT.