Consolidated Audit Trail (CAT) Compliance Explained: A Complete Guide for Broker-Dealers

CARLSTADT, N.J. - Dec. 16, 2025 - PRLog -- Regulatory reporting in U.S. securities markets has never been more complex. The Consolidated Audit Trail (CAT) — established under SEC Rule 613 of Regulation NMS — represents one of the most significant reporting regimes for broker-dealers in decades. It fundamentally changed how trade and order data is collected, stored, and used by regulators to monitor market activity. Securities and Exchange Commission

In this guide, we'll break down:

What the CAT is
Why it matters
Who must comply
Key compliance challenges
Best practices for CAT compliance
The role of technology and RSMS
What Is the Consolidated Audit Trail (CAT)?
The Consolidated Audit Trail (CAT) is a central repository that collects detailed order, quote, and trade data across all U.S. equity and listed option markets. The goal is to create a comprehensive audit trail capturing every order's entire lifecycle — from origination to routing, modification, cancellation, and execution — with precise timestamps. Securities and Exchange Commission

Under Rule 613, the SEC required all self-regulatory organizations (SROs) and FINRA to submit a National Market System (NMS) plan that enables this consolidated reporting. Once implemented, CAT replaced older systems like the Order Audit Trail System (OATS), introducing significantly more transparency into market surveillance. Securities and Exchange Commission

Why CAT matters:

Market integrity: Provides regulators with a granular dataset to detect manipulation, layering, spoofing, insider trading, and other misconduct.
Audit readiness: Facilitates quicker and more accurate reconstructions of market events.
Investor protection: Enhances regulatory capabilities to protect investors and uphold fair markets.
Who Must Comply?
Every broker-dealer that originates or handles orders in:

National Market System (NMS) equities
Over-the-counter (OTC) equities
Listed options
…is required to report to CAT. There are no exemptions based on firm size or trading activity type — proprietary and market-making trades are included too. FINRA

Become a member
Crucially, firms cannot assume their clearing firms will automatically report on their behalf. If an introducing broker elects this route, a formal written agreement and robust oversight must be in place to ensure data is accurate, complete, and timely. FINRA
https://capmarketsolutions.com/cat/

Key CAT Reporting Obligations
CAT reporting revolves around several core components:

1. Order & Trade Events
Every order event — creation, modification, execution, cancellation, routing — must be captured and reported to CAT with:

Unique identifiers
Millisecond-level timestamps
Accurate linkage of events to orders and accounts
These requirements ensure every step of trading activity is traceable. Securities and Exchange Commission

https://capmarketsolutions.com/cais/

2. Clock Synchronization
Accurate timestamps require synchronized business clocks across systems and vendors — often a compliance trap for firms relying on third-party tech. FINRA