Congressman Calls for Delay as CAT Deadline Nears
By: Gwenn Barney
As the deadline nears for exchanges to report all stock and option trades to the Consolidated Audit Trail (CAT) database of the Security and Exchange Commission (SEC), calls are increasing for the launch of the planned massive inventory of equity and options markets activity to be delayed.
Rep. Jeb Hensarling, chairman of the House Financial Services Committee urged the SEC to delay the November 15 data collection deadline during a committee hearing held October 4. Hensarling believes that the appropriate safeguards and internal controls are not yet in place to protect the vast amount of data that the SEC intends to collect through the CAT program. Thesys Technologies LLC, the contractor building CAT, has not received approval for its security plan proposal from the exchanges overseeing the project. Additionally, no chief information security officer has been selected for the project. Last month’s revelation that in 2016, hackers infiltrated the SEC’s database for information about public companies, has fueled skepticism about the commission’s ability to ensure safety of information in the much larger CAT database. Lobbyists for the New York Stock Exchange are also reportedly calling for a delay of the November deadline.
Once the program is activated, CAT will collect about 58 billion records each day. In addition to data about all stock and option trades, the database is also expected to retain personal information about stockbrokers’ customers, including their social security numbers and birth dates. The CAT program was first proposed by the SEC in May 2010 as a response to the commission’s inability to explain the sudden single-day crash and rebound of the Dow Jones Industry Average, known as the “flash crash,” in 2010. The SEC will use CAT to track the possible causes of extreme market price swings and to identify incidents of insider trading.