Securities group asks SEC to intervene for brokers in audit-trail database fight

FILE PHOTO: The U.S. Securities and Exchange Commission brand adorns an workplace door on the SEC headquarters in Washington, June 24, 2011. REUTERS/Jonathan Ernst/File Photo

NEW YORK (Reuters) – U.S. brokers shouldn’t be pressured to signal an settlement that would make them chargeable for breaches of a large new business buying and selling database that they haven’t any management over, a number one monetary business commerce group advised regulators on Wednesday.

Brokers should quickly start sending delicate data derived from their purchasers’ trades to a brand new database referred to as the Consolidated Audit Trail (CAT) that the Securities and Exchange Commission tasked alternate operators and the Financial Industry Regulatory Authority (FINRA) with constructing and working.

But earlier than they start sending the data, the brokers should signal an settlement that limits the monetary legal responsibility of the exchanges and FINRA, collectively referred to as self-regulatory organizations (SROs), to $500 per reporting agency if there’s a breach of that knowledge.

That places the brokers on the hook for any safety breaches of the database, which they haven’t any management over, stated Kenneth Bentsen, chief govt officer of the Securities Industry and Financial Markets Association (SIFMA), which represents banks, broker-dealers and asset managers.

“SIFMA’s guiding principle is ‘they who hold the data bear the liability,’” Bentsen stated in an announcement.

SIFMA petitioned the SEC to remain the requirement that brokers signal the settlement earlier than they start sending the mandated knowledge, which incorporates delicate transactional and monetary data of their prospects, and open the method as much as public remark.

The CAT will enable regulators to trace all trades from their inception, pinpointing consumers, sellers, exchanges and brokers concerned, with one former SEC commissioner likening it to a Hubble Space Telescope for the securities markets.

The undertaking has confronted years of delays, the latest of which got here on Monday when the SEC prolonged the deadline for broker-dealers to start submitting studies to June 22, as an alternative of May 20, resulting from disruptions attributable to the coronavirus disaster.

Reporting by John McCrank; enhancing by Jonathan Oatis


What do you think?