Ryan P. Smith Law, PLC

I am convinced that if Plato was alive, then he would be spending his time at the D.C. Improv whenever he came to town. Yesterday’s philosophers are today’s comedians, and as I noted earlier, George Carlin was one of the best. Carlin captured his -uh- philosophy in many tomes, including Brain Droppings, which I shamelessly stole as an inspiration for my micro-blog on LinkedIn.

Those in broker-dealer compliance know that the Consolidated Audit Trail (CAT) represents the most comprehensive change to trade reporting ever undertaken. Broker-dealers must report a significant amount of information not only about the trades it processes, but also about its participants. Successful implementation of CAT reporting requires, among other things, keeping a close eye on guidance from the CAT’s processor, FINRA CAT. Below I offer a few examples of my “brain droppings” in this space.

Updates on Reporting Deadlines

Thanksgiving comes a few days early for CAT reporters! FINRA CAT has pushed the full #compliance go-live date for CAIS from early December to March 17, 2023. (Happy St. Patrick’s Day?) See https://lnkd.in/gtc3wxgv.

Broker-dealers now have a target to complete their CAT Phase 2e build. FINRA CAT announced last week in CAT Alert 2022-01 that the full CAIS compliance go-live date (also known as Phase 2e) is December 12. Of course, rigorous testing and troubleshooting well in advance of this date is critical as the Alert outlines a number of interim reporting obligations. More importantly, production certification from CAT is not a proxy for quality control

Announcements about New FAQs

Attention broker-dealers that have regulatory reporting obligations to the CAT: FINRA CAT has issued new FAQ Q63 to address how to deal with certain foreign clients that do not have an allowable Input Identifier (i.e., a foreign Tax Identifier or Legal Entity Identifier) when reporting CAIS information.

Announcements about Report Cards

Not so fast! FINRA CAT has announced that the June Transaction Report Card does not display trade counts and percentages and will be republished no later than July 26. This issue does not impact overall compliance error rates. More details are available in the IM Report Card Known Issues List at https://lnkd.in/eKUYYA7n.

FINRA CAT has posted the June 2022 CAT Industry Member Transaction and CAIS Report Cards to the CAT Reporter Portal. As noted in https://lnkd.in/gtSVzvH2, a review of these reports is a part of an effective surveillance program.

The CAT has posted Transaction and CAIS report cards for May. However, a review of these reports is only a part of a comprehensive compliance program. Please DM me or visit my site for a free copy of my article “A Strategy for Creating an Effective CAT Compliance Program” to learn more.

I invite you to contact me or subscribe to my feed to learn more.

Are you a broker-dealer and have questions about reporting to the CAT? Contact Ryan

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Thank you for reading this article. Please know that I wrote it for informational purposes only (some may consider it ADVERTISING MATERIAL) and did not intend for it to be legal advice or to form an attorney-client relationship with you – especially in jurisdictions where I am not licensed to practice law. I encourage you to seek your own counsel to help you with your specific situation. To that end, I invite you to contact me if you would like to discuss my services.

Ryan Smith enables broker-dealers, registered investment advisers and their associates to spend more time growing their business by helping them with the legal and compliance needs.