In a timely move for broker-dealers and trading firms dealing in US equity and options, Capital Markets data automation specialist Inforalgo has been named an authorised Consolidated Audit Trail (CAT) reporting agent and connectivity hub (Service Bureau).
The company, which provides RegFlex™, a consolidated, automated online reporting hub spanning multiple trading platforms and regulatory requirements, pledges to get small and mid-sized broker-dealers and proprietary trading firms set up with a CAT connection within just 40 days, as part of a complete package including connectivity, data ingestion, consolidation, mapping, submissions and exceptions management.
Focusing specifically on compliance with Phase 2a and 2b CAT requirements, affecting this size of market participant, the package will cost less than half of alternative solutions.
“This is significant news to the thousands of market participants affected by CAT,” says Phil Flood, Chief Commercial Officer at Inforalgo, who says anxiety levels have reached fever pitch among small/mid-sized broker-dealers and proprietary trading firms.
“Because we’re already a major reporting hub and have comprehensive existing connections in place, we can make light work of CAT connectivity and compliance for our clients, cutting through the pain and allowing them to start testing on time. Without Inforalgo, this could take months for firms to resolve – before they can even think about compliance testing,” Phil says.
CAT is a new comprehensive database for US equity and options orders, which will be orchestrated and overseen by the Financial Industry Regulatory Authority (FINRA). Yet, FINRA only came on board relatively recently having taken over from Thesys Group, a New York-based fintech start-up, which planned to use Amazon’s AWS cloud-based infrastructure to host CAT.
The expectation was that FINRA would use one of its existing data-centre platforms – allowing market participants to use the same connectors they used for other forms of trade reporting. Yet, with time running out, FINRA will follow the plan set out by Thesys, leaving brokers and traders with no choice but to create new connections to AWS.
“There are only very limited options to connect to CAT, which are dictated by the regulator,” Phil says. “Existing connections are not applicable: a whole new method is needed, with huge implications for timelines and costs. So now firms are panicking about not being ready when compliance testing starts in December, and how much this will all cost them.”
Simply connecting to CAT could cost firms $7,600 a year. “And that’s before firms have even thought about what solution they will use for submissions – whether they will build something themselves, or outsource to a vendor for a further annual fee,” Phil says.
“And that cost is likely to be high, because most of the solutions on offer are far beyond the needs of a smaller firm and will take a long time to implement. Inforalgo’s CAT package will cut through all of that, coming in at least half the price and taking a fraction of the time to implement.”