Regulators rejected a last-minute request from U.S. stock and options exchange operators to delay by a year the start of a far-reaching new market-surveillance system.
Exchanges are required to begin feeding trading data into the Consolidated Audit Trail on Wednesday under an SEC rule passed last year, and not complying could open them up to punishment from the regulator. After quietly lobbying for a delay, on Monday they formally asked for a one-year reprieve, citing cybersecurity concerns and other issues.
The SEC turned them down late Tuesday. In a statement, Chairman Jay Clayton said talks with the exchanges in recent days had been “constructive,” but he said he was “not in a position to support the issuance of the requested relief on the terms currently proposed.”
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Tom Buck was once a top-ranked Barron's advisor at the wirehouse, where he worked for more than 30 years.
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Two hundred fraudulent wire transfers were made over more than a decade, says the regulator.
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Bernard Parker spent his client's money on his home, car and father-in-law’s bills, according to federal prosecutors.
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The system, known as the CAT, is among the biggest databases ever conceived, meant to track billions of orders a day. It’s intended to help the SEC catch manipulators and diagnose the causes of market turmoil. It was first discussed before the infamous May 2010 Flash Crash, one of the worst routs in stock market history.
A year ago, SEC commissioners led by then-Chairwoman Mary Jo White voted unanimously to approve the system’s plan, with a Nov. 15, 2017 deadline for exchanges to begin feeding data into the system. The bourses asked to move that date to Nov. 15, 2018.
SIMFA, whose members include big brokerages, had also asked the SEC to delay the system. Large brokers are supposed to start submitting information, which will include sensitive client data, in November 2018.
The attempt to stall the project comes amid heightened concerns about cybersecurity — an issue underscored for many in the industry by the hack of Equifax’s database of credit reports and the breach of the SEC’s Edgar database of corporate filings.
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The new database is a good first step in helping to address gaps in the oversight of advisors, but more needs to be done, say industry observers.
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Chairman Jay Clayton and top SEC brass are putting advisors on notice. The regulator is drilling down on investor protections, while warning firms on cybersecurity and AML compliance.
November 14 -
Tom Buck was once a top-ranked Barron's advisor at the wirehouse, where he worked for more than 30 years.
October 31 -
Two hundred fraudulent wire transfers were made over more than a decade, says the regulator.
October 23
Clayton also said that the SEC was evaluating whether the CAT needed to include personally identifiable information. The system as envisioned could ultimately include personal details for more than 100 million trading accounts.
“I have made it clear that the SEC will not retrieve sensitive information from the CAT unless we believe appropriate protections are in place,” Clayton said.
