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SEC Proposes Consolidated Audit Trail

The SEC recently proposed a plan that would create a “single, comprehensive database – a consolidated audit trail (CAT) – that would enable regulators to efficiently track all trading activity in U.S. equity and options markets.”  The plan was submitted by FINRA and the national securities exchanges.  According to the SEC’s press release, “the proposed plan would increase the effectiveness of market research and monitoring, event re-construction, and the ability to identify and investigate market misconduct.”  In her statement at the open meeting, SEC Chair Mary Jo White stated that “[t]he consolidated audit trail will greatly strengthen our ongoing efforts – through regulation, examination, and enforcement – to ensure that the U.S. equity markets remain the most robust and reliable in the world.”

The proposal acknowledges the importance of data security for the project, given the comprehensive and sensitive information that would be included in the database.  Therefore, the plan includes security requirements regarding connectivity and transfer, encryption, storage, access, breach management, and personally identifiable information.