The Technical Complexity of CAT
CAT requires reporting of every order event — submission, modification, cancellation, execution — with microsecond timestamps, unique identifier linking across firms and venues, and strict data format requirements. For a market maker executing millions of trades per day, this generates an enormous volume of reporting data that must be captured, validated, and transmitted accurately. Small error rates can result in millions of reporting inaccuracies at scale.
Industry-Wide Compliance Issues
CAT's CAIS (CAT OATS Industry Member Review) process and FINRA's follow-up examinations have identified widespread compliance issues across the industry. Multiple market participants have received regulatory feedback about CAT reporting accuracy. This industry-wide pattern suggests that the challenges are partly systemic — inherent to the complexity of CAT itself — rather than isolated to specific firms.
Regulatory Enforcement for CAT Failures
FINRA and the SEC can bring enforcement actions for persistent or willful CAT reporting failures. The regulatory standard requires that firms have adequate systems and supervisory procedures to ensure accurate CAT reporting, and that they investigate and correct identified issues. Firms that fail to maintain adequate CAT compliance expose themselves to examination findings and potential enforcement.
Remediation Obligations
When regulators identify CAT reporting inaccuracies, firms are typically required to investigate the root cause, correct historical data where feasible, and implement process improvements to prevent recurrence. The remediation process is itself data-intensive and can require significant operational investment. Whether a firm's data infrastructure is sufficiently robust to support both real-time operations and compliance remediation simultaneously is a meaningful operational question.