SIFMA Criticizes Decision to Move Forward with Request for Proposal for the Creation of Consolidated Audit Trail (with Lofchie Comment)
SIFMA submitted comments to the SROs responsible for developing and implementing a consolidated audit trail ("CAT"). The CAT will collect and identify every order for all exchange-listed equities and equity options across all U.S. markets. In its letter, SIFMA stated that the SROs' decision to seek requests for proposals for the CAT's data processor was premature because:
- The details of the SROs' NMS Plan for implementing the CAT are too vague to elicit meaningful proposals for the CAT's data processor;
- No procedure is in place to prevent conflicts of interest from SROs who intend to submit proposals to be the CAT's data processor;
- The SROs have not determined how the CAT will be funded and its costs allocated; and
- No decision has been made about the ownership of the CAT or how to phase out the old auditing systems when the CAT goes into effect.
Lofchie Comment: There is an indirect, but nevertheless significant, relationship between (i) today's news item that the GAO has found that the Dodd-Frank rulemaking process is way behind and (ii) this item. In short, the regulatory process is completely overwhelmed, which is to say nothing of those who are subject to it. Therefore, in the case of a rule that is not mandated by statute and requires massive time and development costs, unless the rule is absolutely essential to the protection of baby kittens, there should be a presumption that the rule is put on hold.
View letter in full here (links externally to SIFMA website).