It’s a remarkably simple name for something so complicated: the CAT. But, Schrödinger's aside, this may be the most complex CAT ever imagined.

The SEC’s state-of-the-art market monitoring system is fully operational after 14 years — just in time for legal challenges to kill it.

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2024-10-22 03:00:05

It’s a remarkably simple name for something so complicated: the CAT. But, Schrödinger's aside, this may be the most complex CAT ever imagined.

The Consolidated Audit Trail, or CAT, is a massive repository of trading data that US regulators use to follow the action and perform investigations in today’s algorithmically enhanced, high-speed financial markets.

Every day, it collects more than 400 billion data points from the country’s 24 stock and options exchanges, as well as dozens of dark pools and Wall Street trading desks, creating a constellation of information on tens of millions of transactions.

It has been online in bits and pieces for a few years, but since May 31 — the deadline for full reporting compliance from brokers — it has been fully operational, the culmination of a 14-year bureaucratic ultramarathon that entailed endless rounds of congressional hearings, industry meetings, panel discussions, SEC proposals, comment periods, rule-makings, negotiations with contractors, and, crucially, intra-industry wrangling over who would pay for it.

Importantly, since 2021, when the previous system — Finra’s Order Audit Trail System (OATS) — used for market investigations was retired, the CAT has been basically the only way market regulators can keep a close eye on the markets.