SEC Enhances Market Oversight With Adoption of Consolidated Audit Trail Rule

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The U.S. Securities and Exchange Commission (SEC) on July 11, 2012 voted to adopt new rulemaking to implement a consolidated audit trail (CAT) to monitor and analyze trading activity. The rulemaking is the result of efforts to improve market-wide surveillance stemming from the so-called “flash crash” in 2010 and more recent market events.

Rule 613 of Regulation NMS (Rule) under the Securities Exchange Act of 1934 (Exchange Act)1 will require self-regulatory organizations (SROs), including the national securities ex-changes and the Financial Industry Regulatory Authority (FINRA), to jointly create a compre-hensive CAT that will allow regulators to rapidly reconstruct trading activity in exchange-listed equity securities and listed equity options. The CAT will capture order and event information across all markets — from order inception through routing, cancellation, modification, and execution.

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Published In: Administrative Agency Updates, Business Organization Updates, Finance & Banking Updates, Securities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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