Referring to concerns about liability for data breaches, the Securities Industry and Financial Markets Association on Wednesday asked the SEC to weigh an important provision of the cat journalist agreement that industry members must sign before connecting to the consolidated audit loop. The CAT journalist agreement limits the liability of SROs to $500 per industry benchmark company and requires broker-dealers to waive liability claims against SROs before companies can provide data on the performance of cat obligations, the registration note says. “This would have hooked brokers for breaches of the security of the database over which they have no control,” SIFMA argued. On Wednesday, srOs agreed to remove the language of the agreement limiting the SRO`s liability in the event of a database breach. Sifma had submitted a Section 19(d) request to the Securities & Exchange Commission (SEC) following feedback from its members suggesting that some of the existing terms of the CAT journalist agreement were not appropriate. All members of the industry must sign the CAT Journalist Agreement to have access to the system of tests, certifications and production reports. “CAT is a whole other beast. It contains all trading data for stocks and options. It will cover customer data and the lifecycle of an order,” said Ellen Greene, Managing Director of Equity and Options Market Structure at SIFMA.
This type of pressure should, in some way, influence the agreement. As part of the transaction, the SROs agreed to remove the specific language of the CAT Journalist Agreement, which limits the SRO`s liability in the event of a database breach, and also agreed not to impose a limitation of liability in the postponement agreement without first proposing a rule and going through the official notification process, “I think everyone is concerned that the regulations require companies to file applications. Customer identification data in CAT,” Campbell added. The SEC is expected to refuse the Securities Industry and Financial Markets Association`s challenge to the CAT journalist agreement, which industry members must sign before connecting to the consolidated audit trail, according to a filing by the SEC of the group that implements the CAT. This will have a considerable impact on brokers who will have to adapt to be able to provide information reports to customers, establish reporting functions for the order lifecycle, synchronize watches at a demanding standard time and adapt processes to CAT thinking. While existing regulatory rules, such as the Order Audit System (OATS), do not require customer credentials, they must be included for CAT, which has raised serious concerns. As of April 17, 1,382 companies had signed the CAT journalist agreement, as concluded by information on the cat LLC website. “The prospect of defending against a hypothetical disciplinary measure,” an action that sifma fears that industry members who decide not to sign the agreement “are not irreparable damage,” CAT LLC said. . . .