BROKER-DEALERS. Protegent CAT for broker-dealers

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Ashlee Simpson
6 years ago
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1 BROKER-DEALERS Protegent CAT for broker-dealers

2 2 Protegent CAT for broker-dealers Are you ready for CAT? The implementation of the Consolidated Audit Trail (CAT) may well kick off one of the largest and most expensive IT rebuilds in the history of capital markets. Large broker-dealers will be required to submit their U.S. equities and options data in eligible securities to the CAT Processor, Thesys CAT, as mandated by Rule 613 of the U.S. Securities Exchange Commission (SEC). As a result, many firms will have to re-architect existing reporting platforms and, with large broker-dealers compelled to begin submitting data soon, the clock is ticking on CAT readiness. CAT: key facts The SEC and Self-Regulatory Organizations (SROs) will use CAT to analyze the market, perform regulatory analyses and reconstruct market events. By centralizing and standardizing data collection and creating a single audit trail, the CAT will enhance the regulators ability to determine the precise cause of disruptive market events and trading violations. With approximately 58 billion CAT-eligible records created daily, the ability to handle peak message loads of up to 100 billion records per day, and an initial annual growth rate of 25% year over year, CAT will store over 21 petabytes of data over five years. 1 It will be the largest comprehensive data repository for securities transactions to date. In the wake of the 2010 Flash Crash, the SEC in 2012 adopted Rule 613 of Regulation NMS, which requires the national securities exchanges and FINRA (collectively, the SROs ) to work together to develop and submit to the SEC a plan to create, implement, and maintain a consolidated audit trail (the CAT ). Simply put, CAT is intended to enable regulators to oversee our securities markets on a consolidated basis and in so doing, better protect these markets and investors. JAY CLAYTON, CHAIRMAN, SEC 1 CAT RFP Documents: version 3.0, page 23:

3 Protegent CAT for broker-dealers 3 The challenge for broker-dealers For broker-dealers, CAT compliance will present significant operational, compliance and technology staffing burdens. CAT reporters will need to establish new procedures, processes and systems to collect, report and maintain data required by CAT. In addition, broker-dealers will no longer have extended periods of time to discover and repair errors; in the CAT environment, data quality issues will be presented promptly and compounded daily. However, CAT may allow broker-dealers to consolidate overlapping regulatory reporting requirements, as it will eventually eliminate legacy reporting systems, including the Order Audit Trail System (OATS), Electronic Blue Sheets (EBS) and Large Trade Reporting (LTID). Solution: Protegent CAT FIS Protegent CAT is a CAT regulatory compliance and trade life cycle forensics solution for broker-dealers. It covers CAT reporting requirements and serves as a central data repository, designed to collect, normalize, validate, transmit and maintain all reportable events and supporting data pursuant to SEC Rule 613. Protegent CAT also offers advanced pre- and post-submission data validation and error-correction capabilities. Having access to the same data that the regulators will be using for regulatory purposes will help broker-dealers keep their surveillance programs in sync and ensure proactive compliance, for example, by detecting and fixing errors prior to CAT submission. In addition, CAT datasets submitted by broker-dealers will offer an unprecedented amount of information and, with the right tools, inject valuable business intelligence into the firm s order flows. Protegent CAT will provide timely insight into order flow volumes, routing practices and various other trading metrics, with drill-down functionality, allowing further order routing optimization. Finally, the Protegent product suite allows broker-dealers to consolidate and streamline overlapping regulatory reporting requirements, such as OATS, EBS and LTID, without waiting for their retirement. The solution can keep submitting data to other regulators on the broker-dealer s behalf. Figure 1: High-level Protegent CAT architecture and data flows Broker-dealer Protegent suite WORM Protegent suite modules Analytics CAT Errors Thesys CAT OMS / Systems of record Web-based UX or API Data normalization, enhancement & validation OATS OATS Visibility-see what the requlator sees EBS LTID EBS LTID

4 Protegent CAT for broker-dealers Game-changing functionality Protegent CAT effectively turns Rule 613 into an opportunity to run, connect and grow at an accelerated pace, thanks to the power of big

4 4 Protegent CAT for broker-dealers Game-changing functionality Protegent CAT effectively turns Rule 613 into an opportunity to run, connect and grow at an accelerated pace, thanks to the power of big data analytics, made possible by the following functionality: Consolidated interface Users can easily access, review and analyze data via a single, configurable interface that displays the data on a real-time or intraday basis. Data ingestion and normalization Protegent CAT collects all required data from multiple, disparate sources both structured and unstructured and normalizes the data to eliminate disparities and reduce the complexities when referencing data across different systems. It also validates the data to ensure that the appropriate data is submitted to CAT. Pre-submission simulation and progress reporting Decreasing errors identified by the CAT processor is essential, as it helps mitigate potential scrutiny and risk of fines related to non-compliance. Protegent CAT simulates the same checks as the CAT processor, detecting errors prior to submission, streamlining corrections, and enhancing visibility into the overall process. These capabilities help ensure reporting deadlines are met without issue. Post-submission corrections The solution will include a repair facility that incorporates an intuitive interface for resolving issues or errors reported by the CAT Processor. Big data analytics CAT datasets will represent a massive amount of data. Protegent CAT is built on the Apache Hadoop framework on the FIS cloud, allowing it to stream-process billions of market events in a timely, flexible and cost-efficient way for any CAT reporter. Furthermore, Protegent CAT offers powerful analytics tools to discover patterns and correlations of order volumes, profitability, routing and other factors, leading to new business insights and opportunities. Figure 2: Screenshot of the pre-submission dashboard in Protegent CAT

5 Protegent CAT for broker-dealers 5 Account management Protegent CAT s interface makes it easy to upload, add, delete and update account information directly within the solution. Record retention Protegent CAT will retain data for a period of seven years, per Books and Records data retention requirements. It adheres to WORM-compliant standards, which requires the preservation of electronic storage media to be exclusively in a non-rewriteable and non-erasable format, therefore satisfying the requirements of SEC Rule 17a-4. CAT file submission to Thesys CAT Protegent CAT will submit CAT files to the Thesys CAT to simplify the submission process. Additionally, it can submit data sets into other trade reporting systems, such as OATS, EBS and LTID. Security is our top priority Since the CAT Processor will collect sensitive data, brokerdealers must choose a partner that has a track record of handling sensitive data. FIS maintains close relationships with the information security community, conducts ongoing vulnerability scanning and penetration testing, employs data loss prevention (DLP) controls, maintains robust vendor risk management (VRM) protocols, encrypts data at rest and in flight, and monitors and controls physical and logical access to all FIS data centers and servers 24x7, to ensure that hosted systems and our clients data are secure at all times. Continue to run, connect and grow with Protegent CAT FIS Protegent CAT can help broker-dealers not only comply with the CAT, but also gain additional business value from its requirements, turning them into opportunities. Connect with us to discuss how to meet the CAT challenge and get ready to rise with FIS.

6 About Protegent FIS Protegent is a suite of solutions that help automate financial institutions compliance processes. It helps give financial institutions transparency into their data, while helping them to enforce and document their compliance policies and procedures. Protegent s solutions cover social media review, personal trading oversight, market abuse, Reg NMS, Order Audit Trail System (OATS), and transaction supervision and surveillance review. For more information us at getinfo@fisglobal.com About FIS FIS is a global leader in financial services technology, with a focus on retail and institutional banking, payments, asset and wealth management, risk and compliance, consulting and outsourcing solutions. Through the depth and breadth of our solutions portfolio, global capabilities and domain expertise, FIS serves more than 20,000 clients in over 130 countries. Headquartered in Jacksonville, Florida, FIS employs more than 53,000 people worldwide and holds leadership positions in payment processing, financial software and banking solutions. Providing software, services and outsourcing of the technology that empowers the financial world, FIS is a Fortune 500 company and is a member of Standard & Poor s 500 Index. For more information about FIS, visit twitter.com/fisglobal getinfo@fisglobal.com linkedin.com/company/fisglobal 2018 FIS FIS and the FIS logo are trademarks or registered trademarks of FIS or its subsidiaries in the U.S. and/or other countries. Other parties marks are the property of their respective owners

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