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U.S. Securities and Exchange Commission

Rule 613 (Consolidated Audit Trail)

The Commission adopted Rule 613 to create a comprehensive consolidated audit trail that would allow regulators to efficiently and accurately track all activity throughout the U.S. markets in National Market System (NMS) securities.  Among other things, the rule requires the self-regulatory organizations (SROs) to jointly submit a plan – called an NMS plan – to create, implement and maintain a consolidated audit trail.  The rule specifies the type of data to be collected and when the data is to be reported to a central repository.

In particular, the rule mandates that the NMS plan:

  • Require each national securities exchange and FINRA, as well as their respective members, to provide certain detailed information to a newly created central repository regarding each quote and order in an NMS security, and each reportable event with respect to each quote and order, such as origination, modification, cancellation, routing, and execution.
     
  • Require certain data to be reported to the central repository by 8 a.m. Eastern Time the following trading day, and be subsequently available to regulators for their analysis.
     
  • Require all reportable events to be reported to the central repository in a way that allows the central repository to efficiently and accurately link them to an order through its entire life cycle from generation through routing, modification, cancellation, or execution.
     
  • Require each broker-dealer and national securities exchange to be assigned a code that uniquely and consistently identifies such broker-dealer or national securities exchange that will be reported to the central repository along with every reportable event.
     
  • Require each account holder, as well as any person who has trading discretion over an account holder’s account, to be assigned a code that uniquely and consistently identifies such account holder or person with trading discretion over the account, that will be reported to the central repository for every order originated.
     
  • Require SROs and their members to synchronize the business clocks they use to record the date and time of any reportable event, and require timestamps for each reportable event to the central repository to be in millisecond or finer increments.

The rule allows the SROs to determine the specifics of how market participants would report data to the central repository.  While this might allow for multiple electronic formats, the data must be reported in a way that enables the central repository to send it to regulators in a uniform electronic format.

Timeline

Under the rule, the SROs are required to submit the NMS plan to the Commission within 270 days of the date of publication of the adopting release in the Federal Register, which was April 29, 2013.  On March 7, 2013, the Commission granted the SROs an exemption so that the new deadline by which SROs must submit the NMS plan to the Commission is December 6, 2013.

If and when the Commission approves the NMS plan, the SROs are required to report the required data to the central repository within one year after effectiveness of the NMS plan. Members of the SROs are required to report the required data to the central repository within two years after effectiveness of the NMS plan, with a possible exception that would provide up to an additional year for members of the SROs that qualify as small broker-dealers.

Status

The SROs currently are developing an NMS plan to be submitted to the Commission in accordance with Rule 613.  The SROs have made available a wide range of information about their process for developing the NMS plan and the current status of those efforts at www.catnmsplan.com.  

Releases

  • Order Approving Proposed National Market System Plan Governing the Process of Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail (Release No. 34-71596; File No. 4-668; February 21, 2014)
     
  • Order Granting a Temporary Exemption Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 from the Filing Deadline Specified in Rule 613(a)(1) of the Exchange Act (Release No. 34-71018; December 6, 2013). See also:  Incoming Letter
     
  • Notice of Filing of Proposed National Market System Plan Governing the Process of Selecting a Plan Processor and Developing a Plan for the Consolidated Audit Trail (Release No. 34-70892; File No. 4-668; November 15, 2013).
     
  • Order Granting a Temporary Exemption Pursuant to Section 36(a)(1) of the Securities Exchange Act of 1934 from the Filing Deadline Specified in Rule 613(a)(1) of the Exchange Act (Release No. 34-69060; March 7, 2013). See also Incoming Letter
     
  • Consolidated Audit Trail (Adopting Release No. 34-67457; July 18, 2012)
     
  • Consolidated Audit Trail (Proposing Release No. 34-62174; May 26, 2010)

 

http://www.sec.gov/divisions/marketreg/rule613-info.htm

Modified: 02/24/2014