Consolidated Audit Trail; Final Rule (SEC)

The SEC is adopting Rule 613 under the Exchange Act to require national securities exchanges and national securities associations (“self-regulatory organizations” or “SROs”) to submit a national market system (“NMS”) plan to create, implement, and maintain a consolidated order tracking system, or consolidated audit trail, with respect to the trading of NMS securities, that would capture customer and order event information for orders in NMS securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution. The proposed version of Rule 613 is discussed in the Broker-Dealer Guide, Trading Chapter.

Although the requirements of final Rule 613 appear to have been somewhat liberalized as compared to the proposed version, this is yet another major rulemaking initiative that is likely to further stress the SROs, and eventually member firm broker-dealers, that are already having a very difficult time keeping up with the requirements imposed by Dodd-Frank. Broker-dealers will have to obtain and transmit material additional information to the SROs so that the information can be analyzed by the various regulators. (It would likely be better for the U.S. economy if the various regulators would consider their information demands as a whole. This regulation is being adopted at the same time that Title VII of Dodd-Frank is going to impose tremendous, and tremendously expensive, information requirements on swaps.)

Effective Date: [insert date 60 days from publication in the Federal Register]

Cross Reference(s): Lofchie's Guide to Broker-Dealer Regulation, Trading.

View rule release in full here (links externally to SEC website).