CAT delay looms
When the consolidated audit trail (CAT) was adopted by the SEC in July, people were already talking about realistic implementation schedules.
I noted at the time that this was the sort of regulatory project that could easily prove overwhelming. FINRA has been asked to create a system to reconstruct market action at a very granular level across 13 equity exchanges, 10 options markets and scores of broker-dealers operations that execute stock trades separate from the main exchanges.
Exchanges at the time were given nine months to come up with some initial plans and Bloomberg now reports that the exchanges will ask regulators for an extension. The issue seems to be the same one we've been talking about since the Flash Crash. The cost of CAT construction is expected to be $4 billion, which is to say that there's a lot of complexity that must be grappled with.
One executive was quoted saying, "The delays that are being asked for are valid since it is a heavy lift with a lot of nuances and moving parts. If we don't allow the time for all participants to be ready, it will fall short and likely never be done properly."
The sentiment here is understandable. Any project this complex and ambitious runs the risk of an implementation nightmare. It would be far better to get it right from the beginning. I do wonder if the plan as of now is to leverage the current OATS (order audit trail system) system. That would seem to offer an easier route to success. Then again, some may want to start from scratch.
In any case, this ought to be decided definitively before the build out begins in earnest.
- here's the article