SEC Rule 613: Consolidated Audit Trail – National Market System (NMS) Plan
Considerations for broker-dealers
The Securities and Exchange Commission issued Rule 613 under Regulation NMS that requires the national securities exchanges and Financial Industry Regulatory Authority to submit an NMS plan to create, implement, and maintain a consolidated audit trail (CAT). A primary purpose of the CAT is to address the lack of consolidated information available to regulators for market reconstruction and surveillance. Once implemented, the CAT is expected to enhance regulators’ abilities to monitor and track trading activity and, in turn, help identify noncompliant trading activity in the market.
As the regulatory and compliance, operations, technology, and controls functions of broker-dealers are expected to experience the greatest impact from the implementation of the rule, this paper highlights anticipated challenges broker-dealers are expected to face in these four areas. It also provides insights on how broker-dealers might prepare for these challenges and considerations broker-dealers should evaluate in preparation for the implementation of the rule.