SIFMA and SROs Settle on CAT Reporter Agreement
In a surprising announcement, SIFMA and the Self-Regulatory Organizations (SROs) have reached a settlement on the Consolidated Audit Trail (CAT) Reporter Agreement. This comes after SIFMA issued a statement last week from Industry Members in support of their accusation of improper SRO action based on Section 19(d) of the Securities Exchange Act of 1934. Within this statement, member firms claimed that the terms of the CAT Reporting Agreement are “unfair, inappropriate and bad policy,” specifically calling out the limited liability limitations and the indemnification provisions. The participating SIFMA members also suggested that they signed the CRA because they felt they had no practical choice, as access to the CAT system would be otherwise denied. SIFMA has consistently argued that the holder of the data should bear all liability, as they alone retain and control access to the data submitted to CAT by industry members.
What does this mean?
This settlement will have no impact to the overall CAT project or the current compliance dates of CAT. However, it will likely result in a new CAT Reporter Agreement, revised to no longer contain language limiting SRO liability for any data breach. In addition, SROs will be required to limit liability language in the CAT Reporter Agreement without first proposing a rule and going through the public notice, comment and approval process with the SEC. This settlement will have the largest impact on firms which had not signed the CAT Reporter Agreement. Those firms will have little more than a month to test and become certified before the compliance Go Live date of Phase 2a of June 22nd, 2020. Once the revised agreement is published and accepted by reporting firms or CRAs, CAT should see a significant increase in reporting events and firms seeking their production certification.
Oyster Consulting can help you assess how your firm is positioned for CAT readiness, manage your requirements assessment and implementation phases, interface with your own technology providers, and assist you in determining what and how your technology providers will report for you. We can also assist in testing data scenarios and data linkage, as well as creating an error repair process. Firms can also leverage the Oyster CAT Application to gather and analyze reported data and errors. You can schedule a demo and one of our associates will be happy to assist you.
About the Author: Ralph Magee is a Senior Consultant with over 20 years of experience in the financial services industry. Through a variety of roles with Wachovia Securities, LLC and The Financial Group of Virginia, Ralph gained his expertise in clearing conversions, trading, compliance, and retail brokerage, including his extensive understanding of trading and regulatory reporting of equity and fixed income securities. A member of the Oyster Consulting team since 2010, Ralph has led multifaceted teams in large-scale client remediation and clearing platform conversion-related projects. Ralph has also completed the registration of RIAs, designed and implemented compliance programs, personal trading compliance review systems and national trade suitability review programs. The ability to keep projects on track, within scope and on budget, is one of Ralph’s greatest skills.