SEC votes in favour of $4 billion audit trail; Finra widens net to back office
27 May 2010 | 7029 views | 0
The Securities and Exchange Commission has voted to approve a proposal requiring national securities exchange to establish a consolidated audit trail of all stocks traded in US markets from order through to execution.
The regulator says the system would enable it to better track trading patterns and reconstruct events leading to market disruptions such as the 6 May 'flash crash'.
The database, to be operational within three years, would come with a $4 billion price tag and $2 billion a year running costs.
SEC Chairman Mary Schapiro says: "This consolidated audit trail would, for the first time ever, allow the SEC and other market regulators to track trade data across multiple markets, products and participants in real time. It would allow us to rapidly reconstruct trading activity and quickly analyze both suspicious trading behavior and unusual market events."
The decision should provide a welcome fillip to vendors of market surveillance software. John Bates, CTO of Progress Software says: "While it's always been a concern that regulators do not have real-time access and monitoring capabilities for all securities market data, it is very encouraging to see that they are about to address the issue."
Separately, the US-based Financial Industry Regulatory Authority (Finra) has proposed a rule change designed to enhance oversight of broker-dealers' 'back-office' operations by expanding registration requirements to operational suport staff. It would be backed up by an SEC-approved 'qualification programme' for back-office staff "to heighten awareness of operating in a regulated environment and to demonstrate a basic understanding of the securities industry".