The SEC is exempting broker-dealers from collecting sensitive customer data for the Consolidated Audit Trail.
The CAT is a single comprehensive database expected to store an unprecedented amount of trade data and initially, it was also expected to store personally identifiable information. In an earlier announcement from the SEC, the information included an investor’s name, address, date of birth and Social Security number or Individual Taxpayer Identification number.
But broker-dealers will not need to collect individual Social Security numbers or individual taxpayer identification numbers, dates of birth and account numbers, according to a statement from SEC chairman Jay Clayton issued on Monday.
Broker-dealers will only need to report an account holder’s name, address and birth year, which Clayton says “represents an important step in significantly reducing the risk of retail investor identity theft associated with the [CAT].”
Broker-dealer industry lobby group Sifma had been urging the SEC to limit access to the Consolidated Audit Trail out of concern over the security of data.
The SEC has also issued a no-action letter regarding the national securities exchanges’ enforcement of their CAT compliance rules through May 20, 2020 in response to the coronavirus pandemic, “so that personnel who are working on CAT matters but are important to maintaining critical operations and implementing business continuity plans can focus their attention on those immediate needs,” Clayton says.
The coronavirus has infected close to 370,000 people and resulted in the deaths of at least 16,294 as of Tuesday morning, according to the New York Times. In the U.S., at least 43,499 people have tested positive for the virus and 537 have died, the newspaper writes.
The CAT is expected to take in 58 billion records daily — including orders, cancellations, modifications, executions and quotes for the equities and options markets — and maintain data for more than 100 million customer accounts and their unique customer information, according to parties involved in the CAT.
The CAT was created in response to the flash crash of May 2010, which saw up to $1 trillion in the value of U.S. stocks erased in a matter of minutes before markets rebounded. It took five months before the SEC and the Commodity Futures Trading Commission completed a report on their investigation of the flash crash, which placed the blame on one trader in London.
The CAT is intended to give the SEC and SROs the ability to monitor, analyze and investigate trading activities in the equities and options markets on a consolidated basis with the end goal of better protecting investors.
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