CAT Reporting Timing and Time Stamps

Two separate duties run on two separate clocks in the consolidated audit trail (CAT) rules. Recording of event data happens as the event happens. Reporting happens overnight. A firm can satisfy one and fail the other.

When Must Audit Trail Data Be Recorded and Reported?

Each Industry Member records Recorded Industry Member Data contemporaneously with the applicable Reportable Event.

Each Industry Member then reports on two parallel deadlines.

Industry Members may, but are not required to, voluntarily report Industry Member Data before the applicable 8:00 a.m. Eastern Time deadline.

Exam Tip: Gotchas

• The 8:00 a.m. Eastern Time deadline is a reporting deadline only. The recording duty is contemporaneous with the event, so a firm that assembles accurate data overnight and reports it on time has still failed the recording half.
• The two deadlines start from different events. Recorded data is measured from the day it was recorded, and received data from the day it was received, so the same order can produce reports due on different days.

How Are Errors Corrected?

For each Industry Member for which errors in Industry Member Data submitted to the Central Repository have been identified by the Plan Processor or otherwise, the member submits corrected Industry Member Data to the Central Repository by 8:00 a.m. Eastern Time on T+3.

Exam Tip: Gotchas

• The correction clock does not wait for the Plan Processor. The rule reads "identified by the Plan Processor or otherwise", so a firm that finds its own error is on the same T+3 clock.
• The correction hour matches the reporting hour. Both the daily report and the correction are due by 8:00 a.m. Eastern Time, on different days.

How Precise Must the Time Stamps Be?

The SEC's consolidated audit trail rule sets the floor. Time stamps carry at minimum the granularity set out in the plan, which shall reflect current industry standards and be at least to the millisecond. Where a member's relevant order handling and execution systems use finer increments, the plan requires those finer increments when providing data to the central repository, so that all reportable events can be accurately sequenced.

FINRA's time stamp rule states the member's own duty.

• Subject to the exceptions below, each Industry Member records and reports Industry Member Data to the Central Repository with time stamps in milliseconds.
• To the extent that a member's order handling or execution systems use time stamps in increments finer than milliseconds, the member records and reports with time stamps in that finer increment, up to nanoseconds.
• A member that captures time stamps in increments more granular than nanoseconds must truncate the time stamps after the nanosecond level for submission to the audit trail, rather than rounding them up or down, until April 8, 2030.

Exam Tip: Gotchas

• For electronic order events a millisecond is the baseline, not a cap. A firm whose systems run in microseconds must report in microseconds; it cannot round back up to the millisecond minimum.
• Sub-nanosecond capture is truncated, never rounded. The rule names truncation specifically and runs that instruction until April 8, 2030.

Which Two Events Can Use a One-Second Time Stamp?

Two uses are relaxed to increments up to and including one second.

• Manual Order Events. Each Industry Member may record and report Manual Order Events in increments up to and including one second, provided that the member records and reports the time when the Manual Order Event was captured electronically in one of its order handling and execution systems, the Electronic Capture Time, in milliseconds.
• Allocation Reports. Each Industry Member may record and report the time of Allocation Reports in increments up to and including one second.

Exam Tip: Gotchas

• The manual relief is conditional and the allocation relief is not. A one-second manual order event time is allowed only where the member also records and reports the Electronic Capture Time in milliseconds; the allocation report relief carries no such condition.
• Both reliefs are permissive. The rule says a member may use one-second increments, so a firm capturing finer times for these events is free to report them.

How Long Must the Member Preserve Its Audit Trail Records?

Each Industry Member maintains and preserves records of the information required to be recorded under the audit trail rules for the period of time and accessibility specified in the records retention rule for records preserved for not less than three years, the first two years in an easily accessible place.

Those records may be immediately produced or reproduced on micrographic media, meaning microfilm or microfiche or any similar medium, or by means of electronic storage media, meeting the conditions the retention rule sets for those media, and be maintained and preserved for the required time in that form.

The audit trail rule uses the older label electronic storage media. The paragraph it points to now defines an electronic recordkeeping system, meaning a system that preserves records in a digital format in a manner that permits the records to be viewed and downloaded.

Exam Tip: Gotchas

• Electronic production is permitted, not required. The rule says the records may be produced on micrographic media or by an electronic system. It permits those forms and does not require the electronic one.

What Should You Check on Exam Day?

• Separate the two duties: recording of Recorded Industry Member Data is contemporaneous with the reportable event, and reporting is by 8:00 a.m. Eastern Time on the next trading day.
• Check which data the deadline runs on, because recorded data and received data are measured from different days.
• Put error correction at 8:00 a.m. Eastern Time on T+3, whoever identified the error.
• Match the time stamp to the firm's own systems: milliseconds is the baseline for electronic order events and finer increments up to nanoseconds are required where the systems use them.
• Allow a one-second stamp only for manual order events, with the Electronic Capture Time in milliseconds, and for allocation report times.