The Securities and Exchange Commission (SEC) has set out plans to build a database, called the consolidated audit trail (CAT), which will help regulators track all trading activity in the US equity and options market.
The SEC voted to force US exchanges and Finra to build the consolidated audit trail system to monitor and analyse trading activity back in 2012, partly in response to the notorious flash crash of two years before.
Mary Jo White, chair, SEC, says the CAT will "significantly increase the ability of regulators to conduct research, reconstruct market events, monitor market behavior, and identify and investigate misconduct."
Currently, exchanges each operate their own systems to track activity on their platforms. In the absence of a single database, the SEC has said that it has a tough job obtaining and merging large volumes of disparate data.
The new plan details the methods by which self-regulatory organisations and broker-dealers would record and report information, including the identity of the customer, resulting in a range of data elements that together provide the complete lifecycle of all orders and transactions in the US equity and options markets.
The plan also sets forth how the data in the CAT would be maintained to ensure its accuracy, integrity and security. An economic analysis of building and maintaining the database has also been produced.
The plan is now available for public comment for 60 days, after which the SEC has 180 days to approve it before the self-regulatory organisations pick a firm to build the database. Back in 2013 Google, IBM, Nyse Technologies and Thomson Reuters were among 31 firms to throw their hats into the ring.