Audit Trail Wont Be Fully Delivered Until 2017
March 15, 2013
The consolidated audit trail of all quote, order and trade details on U.S. equities markets will not be rolled out to all broker-dealers until some time in 2017.
That is the projection made March 8 in a gathering of potential bidders to build the system that the Securities and Exchange Commission charged national exchanges and the Financial Industry Regulatory Authority to come up with, in a mandate last July.
The industry working group developing the National Market System plan for the audit trail, which includes all national stock and options exchanges as well as FINRA, said it does not expect to file the plan itself with the SEC until December.
The plan originally had been due in April.
A winning bidder, the group noted in its presentation at the meeting last Friday in the financial district of New York, will not be picked until two months after the SEC approves the plan.
That puts selection, at best, in the first quarter of 2013. After that, it will take at least 12 months for the “plan processor” – the winning bidder – to implement the system that allows the exchanges to report all details to regulators.
It will take another 12 months to implement reporting tools for mainstream broker-dealers, according to the timeline set out in the group’s presentation.
And 12 more months after that to get tools in place for small brokers to report in.
The group, in its presentation, notes that the rule mandating creation of the system requires “that the NMS Plan must discuss the feasibility, benefits and costs of broker-dealers reporting to the CAT the identity of all market participants (broker-dealers and customers) that are allocated NMS securities, directly or indirectly, in a primary market transaction.’’