SIFMA asks SEC to intervene for U.S. brokers in CAT database conflict

23.04.2020 - Evdokimov Roman
SIFMA asks SEC to intervene for U.S. brokers in CAT database conflict

On Wednesday, a leading financial industry trade group told regulators, “U.S. brokers should not be forced to sign an agreement that could make them liable for breaches of a massive new industry trading database that they have no control over.”

Together with the Financial Industry Regulatory Authority (FINRA), Securities and Exchange Commission (SEC) exchange operators were assigned on Thursday to develop a new database called the Consolidated Audit Trail (CAT). This program will allow brokers to send confidential data derived from their clients’ trades. However, before the sending of information could commence, brokers must sign a contract that limits the financial liabilities of the exchanges.

Self-regulatory organizations (SROs) like FINRA will give a $500 fine to any organization that has a data breach in its transactions.

The Securities Industry and Financial Markets Association (SIFMA) is a U.S. industry trade group that represents securities firms, banks, and asset management companies. SIFMA supports SEC with its plans to require brokers in signing a contract first before exchanging data and asks SEC to open the process to public comment.

“That puts the brokers on the hook for any security breaches of the database, which they have no control over,” said Kenneth Bentsen, Chief Executive Officer of (SIFMA).

“SIFMA’s guiding principle is ‘they who hold the data bear the liability,’” the CEO said in a statement.

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