What do I need to know about CATS for the series 57 exam? Do I need to...

The operation of the CATS system is definitely an area you want to have down cold. CATS plays a vital role in market surveillance and it is heavily tested on the series 57 exam. In order to ensure that customer orders are transmitted to the marketplace in a timely manner, FINRA developed the Consolidated Audit Trail system (CATS). CATS tracks an order through each stage of its life, from receipt to execution or cancellation. The CATS system has replaced the Order Audit Trail or OATS system previously used to track customer order information. The CATS system is often still referred to as OATS in the industry and may appear as OATS on your exam. Each firm is required to synchronize clocks used for electronic order events to within 50 milliseconds of the National Institute of Standardized Time’s atomic clock. These clocks must display and record military time in hours, minutes, seconds and milliseconds. Each clock used solely for manual order events may be synchronized to a tolerance within 1 second of the NIST clock. Each member may record and submit manual order events and allocation reports to the Central Repository in increments of 1 second. Firms are only requested to collect and submit data in nanoseconds if the firm collects the data. Firms are required to submit daily electronic CATS reports to FINRA’s Central Repository. The business day for CATS is 4:150:00:01 p.m. to 4:15 p.m. the following business day. CATS reports must be made by 8 a.m. on T+1 on the business day following the trade date. For trades executed on Friday, CATS reports may be submitted on Saturday but must be submitted by 8 a.m. Monday morning. Daily CATS reports must be made for each order and include the following information:

• Customer name, account number, date of birth, address and tax ID.
• Date and time of receipt.
• Order ID.
• Terms of the order (i.e. buy, sell, long, short, security, price, shares, account type and handling instructions).
• If the order was received manually or electronically.
• If the order was routed manually or electronically
• Where the order was routed for execution.
• Any modifications to the order, including the date and time of any modifications.
• Execution information, including partial executions, price, date, time, and capacity in which the firm acted in the trade.