Consolidated Audit Trail (CAT)

CAT is the single most important post-execution reporting regime tested on the Series 24. Where TRF / ADF / ORF / TRACE capture the trade, CAT captures everything that happened before, during, and after the trade: every order received, every modification, every route to another venue, every fill, every cancel. The supervisor's job is to ensure the firm's systems produce this lifecycle data and submit it on time, with synchronized clocks.

Coverage and Scope

CAT captures the full lifecycle of every:

• Order (including the receipt of a customer order)
• Cancel
• Modification
• Route (to another broker-dealer or venue)
• Execution

CAT scope is all NMS securities and listed options across all U.S. markets. Equity-only firms still report options-related events; options-only firms still report the equity-leg side of any cross-product activity.

Each Industry Member (a FINRA member that handles orders) must report to the CAT Plan Processor by 8:00 a.m. ET on T+1 (the morning after the trade date). Errors must be corrected by 8:00 a.m. ET on T+5 (the morning of the third business day after T+1, with daily error rate thresholds).

Think of it this way: CAT is a daily batch process, not a real-time tape. The firm has the trade day plus the night to assemble the data and submit it; if the data is wrong, the firm has another four business days to clean it up. The exam tests the deadlines because they define what "compliant" means.

Exam Tip: Gotchas

• CAT is T+1 reporting, not real-time. The firm has until 8:00 a.m. ET the morning after trade date to submit. A misread that says "CAT requires real-time order reporting" is wrong; CAT is a next-day batch.
• Error correction has its own deadline (8:00 a.m. ET T+5). A firm that submits on time but never corrects errors fails the error-rate thresholds and is in violation. The two deadlines are independent.
• CAT covers all NMS securities AND listed options. The exam will sometimes try to limit CAT to equities; options are equally in scope.

Clock Synchronization

CAT depends on accurate timestamps, so industry members must synchronize business clocks used to record event timestamps:

Synchronization checks must occur at least once per business day before market open. The firm must keep a synchronization log for at least 5 years.

Drift exceeding the Operating Committee's reporting threshold must be reported to the Plan Processor and FINRA. This is a separate notification obligation from the underlying clock-sync rule: a firm that drifts and notifies on time still violated the sync requirement, but it limits the secondary failure to disclose.

Think of it this way: Without clock-sync, the lifecycle data is unreliable. If a firm's order-management system shows a customer order received at 10:30:00.500 but the routing system shows the same order at 10:30:00.800, the lifecycle reconstruction is broken. Sub-second precision (50 ms) is the only way to make sense of high-frequency events.

Exam Tip: Gotchas

• Computer clocks must be within 50 milliseconds of NIST; manual clocks within 1 second. A firm whose order-management system drifts to 200 ms is in violation EVEN IF no late trade reports occur. The violation is the clock, not the report.
• Synchronization checks happen DAILY, before market open. The exam may test the cadence; weekly is wrong, monthly is wrong, daily-pre-open is right.
• Synchronization logs are retained for 5 years. This matches the broader CAT retention requirement, so the two regimes line up.

CAT Definitions and Recordkeeping

The CAT definitions are mostly mechanical (who has to report, how to identify a customer in CAT records). The CAT retention period parallels the SEC books-and-records framework: the long tail is 5 years, with the recent records easily retrievable.

Exam Tip: Gotchas

• CAT records are retained for 5 years (2 easily accessible). This is longer than the trade-report blotter period under the SEC recordkeeping rules (3 years / 2 easily accessible). The exam tests both periods; they are not the same.
• "Industry Member" is a FINRA member that handles orders. Pure clearing firms or firms that do not handle orders may not be Industry Members for CAT purposes. The status determines who has the reporting obligation.
• Customer-ID and Firm Designated ID are CAT-specific identifiers. They are how CAT links a customer's order activity across firms; a misassignment of these IDs is a CAT data-quality violation.

How CAT Connects to Other Reporting

CAT does not replace TRF / ADF / ORF / TRACE reporting; it sits on top of them. A single trade produces:

The two report streams have to reconcile. If the trade report shows an execution at 10:30:00 for 100 shares at $50.00, the CAT lifecycle has to show an order received earlier, routed (or not), and filled at 10:30:00 for 100 shares at $50.00. A break in the reconciliation is a CAT data-quality violation; the exam tests this as a supervisory pain point.

Exam Tip: Gotchas

• CAT supplements trade reporting; it does not replace it. A firm that submits clean CAT data but misses TRF reports has violated the TRF reporting rules; a firm that submits clean TRF reports but misses CAT has violated the CAT reporting requirements. Both regimes apply to the same trade.
• Trade-report data and CAT data must reconcile. Mismatches between the trade report and the lifecycle (different timestamps, different quantities, different MPIDs) are CAT data-quality flags. Supervisors must run reconciliation reports daily.