On Wednesday, the SEC announced a proposal that would create a consolidated audit trail system across the securities markets. The new system would, among other benefits, permit regulators to track trading orders received and executed across all securities markets.

The proposal would require that the self-regulatory organizations (SROs) establish a plan for the implementation of a uniform, consolidated cross-market order and execution tracking system within 90 days of the approval of the final rules. Under the plan, detailed information regarding each quote and order in the National Market System (NMS), and each reportable event with respect to each quote and order, would be transmitted to a newly created central repository. Under the proposal, the central repository would be jointly owned and operated by the exchanges and FINRA.

The creation of a consolidated audit trail system is intended to:

  • Provide regulators direct and timely access to uniform consolidated order and execution information for all orders in NMS securities from all market participants across all markets.
  • Enable SROs to better fulfill their regulatory responsibilities to oversee their markets and their members.
  • Enable the SEC to better carry out its oversight of the NMS for securities and to perform rapid and accurate market analysis.

In announcing the proposal, Chairman Schapiro stated that "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.”