Consolidated Audit Trail

The Securities and Exchange Commission ordered the creation of the Consolidated Audit Trail (CAT) in 2012 after regulators found they didn’t have enough information to explain the “Flash Crash” that occurred in May 2010. It is a database designed to compile detailed information on orders and trades for the US equity and options markets. One SEC commissioner, Kara Stein, said the CAT could become the “Hubble telescope of securities markets.” The Consolidated Audit Trail is designed to collect and accurately identify every order, cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets. 
SEC Rule 613 required FINRA and the U.S. securities exchanges to jointly submit a National Market System (NMS) plan detailing how they would develop, implement and maintain a consolidated audit trail that would track orders throughout their life cycle and identify the broker-dealers handling them, thus allowing regulators to more efficiently track activity in Eligible Securities throughout the U.S. markets. 
The database is owned by CAT LLC, which is composed of stock exchanges and the Financial Industry Regulatory Authority (FINRA). The SEC plans to allocate two-thirds of the costs of developing and operating CAT to broker-dealers as opposed to the exchanges and FINRA. 
In December 2022, the SEC gave its first indication of how it would use CAT data for enforcement, crediting the database with uncovering one of the biggest front-running schemes ever, in which Nuveen trader Lawrence Billimek was charged with tipping off Oregon retiree Alan Williams about stocks the asset-management company was planning to buy. The scheme netted the two $47 million in illegal profits. Some legal experts said the pair’s insider trading likely wouldn’t have been caught without the CAT.
===CAT Delays===
The CAT’s data collection has proceeded in stages, starting with equity trades and non-complex options trades in 2020 and moving to complex options trades in 2021. 
Initial implementation of the CAT was delayed for several years. Phase I was finally launched on November 15, 2018, although some "bugs" still remained to be ironed out. On day one of the first phase, only the US exchanges, including Nasdaq, the New York Stock Exchange and Cboe Global Markets, began reporting market information. That came after a one-year delay on the original timetable of milestones for the scheme amid calls by exchanges for the postponement. FINRA had been working with the exchanges to develop an NMS plan that met the requirements of Rule 613.
Thesys Group was the company hired to build the database. But the Phase I launch in November of 2018, was one year late and without the functionality that was expected. The exchanges overseeing the contract said in January 2019 they would switch to a new vendor. The group said Thesys “is providing necessary services through the transition period,” the Wall Street Journal reported. 
The exchanges are evaluating how the switch will affect coming deadlines, including "Phase II," scheduled to begin in November 2019, which calls for the large brokerage firms to report orders to the data warehouse. 
Just days before the Thesys news, the SEC announced it had hired Manisha Kimmel to coordinate its oversight of the project. Kimmel is an expert in trading technology who previously led a consortium of Wall Street banks and broker-dealers that implement complex technology solutions.
In September 2019, with the CAT still not fully launched, SEC Chairman Jay Clayton threatened to levy financial penalties if the industry missed further deadlines. Large brokers were due to begin reporting to the database on April 30, 2020. Clayton said that if members of the consortium missed that deadline, they would lose 25% of the fees they are entitled to for running the system. Each delay in 90-day segments would result in another 25% reduction.
In March of 2020 the SEC issued a “no-action” letter, delaying enforcement of data reporting requirements for industry members until May 20, 2020, with further extension possible. The commission cited the effects of the global reaction to COVID-19, and the need for firms to concentrate their efforts on operational readiness. That deadline was again delayed in April 2020. 
In May 2024, after 14 years of debate, the SEC was in the final stages of bringing the CAT fully online, but Citadel Securities and other Wall Street firms sued the agency, seeking to have the CAT declared illegal. Citadel's Ken Griffin, in a court brief, accused the SEC of trying to “keep the American people in the dark about the adverse impacts of its unprecedented effort to subject the national securities markets to an Orwellian surveillance regime.” 
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