January 24, 2022

Volume XII, Number 24

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January 21, 2022

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FINRA Proposed Rule Change to the Consolidated Audit Trail

In February, pursuant to Regulation NMS, the various national securities exchanges and the Financial Industry Regulatory Authority (each, a Participant) filed with the Securities and Exchange Commission a plan (Plan) to create, implement and maintain a consolidated audit trail (CAT) to capture information related to customers and order events for transactions in NMS securities and over-the-counter equity securities. The CAT will capture order information across all markets and throughout the life of an order (from inception to execution).

The Plan accomplishes this by creating CAT NMS, LLC (the Company), of which each Participant is a member, to operate the CAT. Under the Plan, the Operating Committee of the Company (Operating Committee) has discretion to establish funding for the Company to operate CAT, including establishing fees that the Participants will pay, and establishing fees to be implemented by Participants for their respective members (Industry Members) that are required to record and report information pursuant to the Plan (CAT Fees). The Participants are required to file with the SEC under Section 19(b) of the Securities Exchange Act of 1934any such CAT Fees applicable to Industry Members that the Operating Committee approves. Accordingly, FINRA submitted this filing to propose the Consolidated Audit Trail Funding Fees, which will require Industry Members that are FINRA members to pay the CAT Fees determined by the Operating Committee.

The proposed rule change, as well as more information, including with respect to the level of fees being contemplated in the fee schedule, is available here.

©2022 Katten Muchin Rosenman LLPNational Law Review, Volume VII, Number 132
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About this Author

Our Financial Services Practice advises a broad spectrum of domestic and international fund managers, trading advisors, banks, brokerages and proprietary trading firms in all aspects of exchange-traded and over-the-counter commodities, securities and derivatives transactions. We help clients find business-based solutions and make business-driven decisions that are in compliance with applicable regulatory requirements. Our lawyers have extensive experience in the financial markets and are fully attuned to the need to provide advice quickly and efficiently in light of the time-sensitive and...

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