Fintech Insights

Pin the Tail on the CAT: A Compliance Officer’s View of SEC Rule 613

February 12, 2018

November 15, 2018, is when large broker-dealers must comply with SEC Rule 613, the Consolidated Audit Trail (CAT) mandate. However, many compliance officers are in the dark about how to prepare for the event. We interviewed Greg Pratnicki, chief compliance officer, FIS Brokerage & Securities Services LLC, Member NYSE, FINRA, SIPC, for his take on the situation. Here it is:

Q. How prepared are broker-dealers for the implementation of CAT?
G.P. We’re not prepared at all. The systems and procedures necessary to comply are very complex. Any solution will require that data be integrated from a broad array of sources, aggregated, analyzed, prepared, submitted, corrected, and archived around rules and specifications that are not finalized yet. It’s like playing a game blindfolded, without a full set of rules, but full consequences for not following the rules.

Q. So, what’s keeping you up at night?
G.P. The clock is ticking. Crafting a solution in the next few months will take time, money and resources. But no one knows exactly how much of what. I think many compliance officers are paralyzed by the prospect, hoping that somehow, the deadline will be extended until more answers are provided.

Q. Is there anything a compliance officer can do to remain proactive?
G.P. Yes. We’re all familiar with Order Audit Trail System (OATS) and Electronic Blue Sheets (EBS). CAT will utilize much of the same information. We also know that any solution will need to be implemented, which entails data mining, development, quality assurance, business and reporting resources, governance, hardware, software, training, and workflows. Taking inventory of these now will buy time later. Mapping where the data is and talking to experienced vendors about synthesizing the pieces is a good use of time.

The last thing anyone should do is hope it goes away. It won’t. When the picture finally becomes clear, you must be ready to go. This means staying active, talking to peers, vendors, and experts, and participating in the dialog. CAT is coming and anything you can do to keep a pulse on the progress will add value.

For more about CAT, please join the discussion with FIS.