Quick Answer
CAT covers NMS securities and OTC equities. Reports are due 8 a.m. ET next trading day; corrections by 8 a.m. T+3. Clock tolerance is 50 milliseconds, or one second for clocks used solely for manual events or allocations. Member event records require three years, first two easily accessible; clock logs require five years.
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-eligible securities include NMS securities, including listed options, and OTC equity securities. Members report the applicable events they actually handle. CAT does not require a firm to invent cross-product events outside its activity and does not cover debt merely because TRACE reports it.
An Industry Member is a member of a national securities exchange or national securities association. Its reporting duties depend on actual reportable activity. Required member event reports are due to the Plan Processor by 8:00 a.m. ET on the next trading day; errors must be corrected by 8:00 a.m. ET on T+3. Weekends and market holidays affect the trading-day count.
| CAT Deadline | Standard |
|---|---|
| Initial submission | By 8:00 a.m. ET on T+1 (morning after trade date) |
| Error correction | By 8:00 a.m. ET on T+3 |
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 two more 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+3). 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:
| Clock Type | Tolerance |
|---|---|
| Business clocks recording CAT events, except the limited category below | Within 50 milliseconds of NIST, including transmission delay and drift |
| Clocks used solely for manual order events or solely for allocations | Within 1 second of NIST, even if the clock is computerized |
Synchronize before each trading session and check and resynchronize as necessary throughout the day. A pre-open check alone does not excuse later drift. Retain synchronization logs for at least five 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
- Clock use determines the exception. An electronic order-event clock normally has a 50-millisecond tolerance; a clock used solely for manual events or allocations has a one-second tolerance.
- Maintain synchronization throughout the day. Check before the session and monitor and resynchronize as necessary afterward.
- Clock logs require five years. Ordinary member event records have a separate three-year minimum.
CAT Definitions and Recordkeeping
| Topic | Scope |
|---|---|
| CAT definitions | Key CAT terms (Industry Member, CAT Reporter, Customer-ID, Firm Designated ID) |
| CAT member event-data recordkeeping | Three years, with the first two years easily accessible, under the applicable member record-retention provision |
Keep the member event-data period separate from the five-year clock-log requirement. Another applicable record category or preservation hold can require longer retention. The Firm Designated ID identifies a trading account or permitted relationship consistently over time; it is not simply any customer account number.
Exam Tip: Gotchas
- Ordinary member CAT records require three years, first two accessible. Daily purchase-and-sale blotters require six years, first two accessible. A uniform six-year archive can satisfy both durations; separate storage classes are not mandatory.
- Membership and activity are separate questions. A FINRA-member research-only or lending firm is still an Industry Member. Determine its reporting obligations from its actual reportable activities.
- 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:
| Report | Purpose | Deadline |
|---|---|---|
| Applicable trade-facility report | Transaction report; public dissemination depends on the product and report | Facility-, product-, and session-specific deadline |
| CAT lifecycle reports | Order receipt, modifications, cancels, routes, fills | 8:00 a.m. ET on T+1 |
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.
What Should You Check on Exam Day?
- Do you know the CAT submission deadline of 8:00 a.m. ET on T+1, and the separate error-correction deadline of T+3?
- Can you distinguish the usual 50-millisecond clock tolerance from the one-second exception for clocks used solely for manual events or allocations?
- Do you know how long CAT records and synchronization logs must be retained, and how much must stay easily accessible?
- Can you distinguish CAT lifecycle reporting from trade-report facility reporting, and state why both must reconcile?