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.

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You can also listen to our podcasts  and read our blogs to learn more about the new deadlines and what your firm should be doing to prepare.

About The Author

Ralph Magee Jr. is a Senior Consultant with over 20 years of experience in the financial services industry. Ralph has led multifaceted teams in large-scale client remediation and clearing platform conversion-related projects. Ralph also uses his expertise in trade reporting providing large broker dealers project management and subject matter expertise related to the Consolidated Audit Trail (CAT).

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Whether you are looking to change from self-clearing to fully-disclosed (or vice-versa), exploring your clearing options or starting a broker-dealer, Oyster can assist with the assessment, analysis, vendor selection and conversion processes.

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