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S&P Global: Massive Trading Database Project Should Be ‘Killed,’ SEC’s Peirce Says

STA

Alexandra Hamer

Alexandra Hamer

From the STA Conference in Washington, DC—A top SEC official wants the CAT “killed.” Known officially as the Consolidated Audit Trail, the massive trading database will use the more than 58 billion records it is expected to receive daily to create an unprecedented view of U.S. stock and option trading for regulators and exchanges.

But SEC Commissioner Hester Peirce, a Republican member of the agency’s top panel appointed by President Donald Trump, said she is not sure the “liberty cost” of centralizing all that data into the hands of a few governing bodies is worth it.

“I would eliminate [the CAT],” Peirce told reporters on the sidelines of the Security Traders Association’s annual conference in Washington. “That would be a more effective way to protect the information. At least then, it’s not collected all in one place.”

Peirce, as just one member of the SEC’s five-person commission, does not have the unilateral authority to end the CAT. Still, her comments come just months ahead of a key April 2020 date when broker/dealers, many of which have expressed concerns of their own about the CAT, will finally begin reporting into the system. The Financial Industry Regulatory Authority and U.S. stock and option exchanges, including those owned by Intercontinental Exchange Inc., Nasdaq Inc. and Cboe Global Markets Inc., began reporting into the CAT in late 2018 after a series of delays derailed the project’s original timeline.

Born out of the 2010 flash crash, when stocks plunged dramatically only to rebound soon after, the CAT was first hailed as a regulatory necessity.

The flash crash event sparked questions across the trading landscape, many of which the SEC struggled to answer as it worked its way through a mess of different databases to piece together how the flash crash occurred. The difficulty of that detective work paved the way for the CAT as a solution.

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