Consolidated Audit Trail Compliance Rule
FINRA Rule 6800 is the series marker for FINRA's Consolidated Audit Trail Compliance Rule, through which FINRA implements its obligations, as a Participant in the National Market System Plan Governing the Consolidated Audit Trail, to require its members to comply with SEC Rule 613 of Regulation NMS and the CAT NMS Plan itself.
The CAT NMS Plan was filed by the exchange and FINRA Participants pursuant to Section 11A of the Exchange Act and SEC Regulation NMS Rule 608, and the SEC approved the Plan on November 15, 2016. Each Participant was then required to separately adopt its own compliance rule enforcing member compliance with the Plan; FINRA's proposal to adopt the Rule 6800 Series appeared in the Federal Register on February 9, 2017, initially setting out twelve proposed rules covering definitions, clock synchronization, Industry Member Data reporting, customer information reporting, time stamps, connectivity, development and testing, recordkeeping, and data quality standards.
FINRA was subsequently selected as the successor Plan Processor for the CAT NMS Plan in February 2019, succeeding the initial Plan Processor, Thesys Technologies, LLC, giving FINRA a dual role as both a Rule 6800 Series enforcer against its own members and the operator of the Central Repository itself.
This is a high-stakes series for examination purposes given its cross-cutting scope and unusually active amendment history. The series consists of Rule 6810, Definitions; Rule 6820, Clock Synchronization; Rule 6830, Industry Member Data Reporting; Rule 6840, Customer Information Reporting; Rule 6850, Industry Member Information Reporting; Rule 6860, Time Stamps; Rule 6865, Time Stamp and Clock Synchronization Rule Violations; Rule 6870, Connectivity and Data Transmission; Rule 6880, Development and Testing; Rule 6890, Recordkeeping; Rule 6893, Timely, Accurate and Complete Data; Rule 6895, Compliance Dates; Rule 6897, Consolidated Audit Trail Funding Fees; and Rule 6898, Consolidated Audit Trail Fee Dispute Resolution.
Definitions
Rule 6810 establishes the series' vocabulary, much of it defined by direct cross-reference to Section 1.1 of the CAT NMS Plan rather than restated independently. "Industry Member" means a member of a national securities exchange or a member of a national securities association required to record and report information pursuant to the CAT NMS Plan and the Rule 6800 Series. "Central Repository" means the repository responsible for the receipt, consolidation, and retention of all information reported under Rule 613 and the CAT NMS Plan. "Reportable Event" includes, but is not limited to, the original receipt or origination, modification, cancellation, routing, execution in whole or in part, and allocation of an order, and receipt of a routed order, mirroring the identical definition in Section 1.1 of the Plan itself. "Small Industry Member" means an Industry Member that qualifies as a small broker-dealer under SEA Rule 0-10(c), a status that determines different compliance dates under Rule 6895. "SRO-Assigned Market Participant Identifier" means an identifier assigned to an Industry Member by an SRO, or an identifier used by a Participant, allowing an Industry Member to use any existing identifier, such as a FINRA MPID, Nasdaq MPID, NYSE Mnemonic, CBOE User Acronym, or CHX Acronym, when reporting order information to the Central Repository, rather than requiring a bespoke CAT-only identifier.
Rule 6810 also defines the phased Industry Member Data categories: "Phase 2a Industry Member Data," "Phase 2b Industry Member Data," "Phase 2c Industry Member Data," "Phase 2d Industry Member Data," and "Phase 2e Industry Member Data," each referring to the scope of data an Industry Member is required to report commencing at that particular implementation phase.
Clock Synchronization
Rule 6820 requires each Industry Member to synchronize its Business Clocks, other than those used solely for Manual Order Events or solely for the time of allocation on Allocation Reports, to a minimum tolerance of fifty milliseconds of the NIST atomic clock. Business Clocks used solely for Manual Order Events, and those used solely for allocation timing, are instead held to a looser one-second tolerance. FINRA has confirmed that this fifty-millisecond standard is substantially the same as the clock synchronization requirement FINRA had already adopted in Rule 4590, meaning Rule 6820 did not impose materially new substantive requirements on Industry Members already complying with Rule 4590, though it did extend the coverage explicitly to the CAT reporting context. Each Industry Member must periodically certify to FINRA that its Business Clocks satisfy these requirements, and must separately report large-drift and persistent-drift violations to the Plan Processor and to FINRA when thresholds set by the Operating Committee are breached.
Industry Member Data Reporting
Rule 6830 requires each Industry Member to record and report to the Central Repository the Industry Member Data set forth in paragraph (a), spanning the full order lifecycle from origination through allocation. Recorded Industry Member Data must be recorded contemporaneously with the applicable Reportable Event, while Received Industry Member Data must be reported to the Central Repository by 8:00 a.m. Eastern Time on the Trading Day following receipt, with corrected data submitted by 8:00 a.m. Eastern Time on T+3.
Customer Information Reporting
Rule 6840 requires each Industry Member to submit to the Central Repository the Firm Designated ID, the Transformed Value for ITIN/SSN, and Customer Account Information and Customer Identifying Information for each Customer with an Active Account, together with daily updates reflecting any changes to that information.
Industry Member Information Reporting
Rule 6850 requires Industry Members to report identifying and technical information about themselves, distinct from the customer-level reporting under Rule 6840, supporting the Central Repository's ability to properly attribute the data submitted under Rule 6830.
Time Stamps
Rule 6860 requires Industry Members whose systems capture time more granularly than milliseconds to record and report time stamps at that finer increment, up to nanoseconds, with truncation relief for systems capturing time even more granularly than nanoseconds, currently extended through April 8, 2030.
Time Stamp and Clock Synchronization Rule Violations
Rule 6865 provides the enforcement bridge for the timing requirements of Rules 6820 and 6860: a pattern or practice of reporting Reportable Events with time stamps generated by non-synchronized Business Clocks, without reasonable justification, may be treated as a violation.
Connectivity and Data Transmission
Rule 6870 establishes the technical connectivity obligations Industry Members must satisfy to transmit CAT data to the Central Repository.
Development and Testing
Rule 6880 addresses the testing and certification obligations Industry Members must satisfy before, and while, reporting live production data to CAT.
Recordkeeping
Rule 6890 requires each Industry Member to maintain and preserve records of information required under the Rule 6800 Series for the period and accessibility specified in SEA Rule 17a-4(b), tying CAT recordkeeping directly to the broader broker-dealer books-and-records framework rather than creating a bespoke CAT-only retention period.
Timely, Accurate and Complete Data
Rule 6893 establishes the overarching data-quality standard: Industry Members must record and report data in a manner ensuring timeliness, accuracy, integrity, and completeness. If an Industry Member's error percentage exceeds the maximum Error Rate the Operating Committee has established, that member is not in compliance. Each Industry Member is separately subject to its own individualized Compliance Threshold, comparing that member's own error rate against the aggregate rate; falling short of that threshold does not, as a matter of law, itself signify a violation.
Compliance Dates
Rule 6895 sets out compliance date distinctions between Industry Members generally and Small Industry Members, and separately requires Introducing Industry Members to comply with the Small Industry Member compliance schedule even though they do not independently qualify as small businesses.
Consolidated Audit Trail Funding Fees
Rule 6897 establishes the fee structure funding CAT's reasonably budgeted costs allocable to Industry Members, calculated based on executed equivalent shares and charged to the CAT Executing Brokers for the buyer and seller sides of a transaction.
Consolidated Audit Trail Fee Dispute Resolution
Rule 6898 provides the dispute mechanism for Industry Members contesting CAT Fees, resolved by the CAT NMS Plan's Operating Committee or its designated Fee Review Subcommittee.
Enforcement Context and Examination Priorities
FINRA has built a specific, graduated enforcement mechanism for CAT compliance rather than relying solely on standard disciplinary proceedings. Effective under SR-FINRA-2020-013, approved by the SEC on May 14, 2020, FINRA amended Rule 9217 to add minor violations of the Rule 6800 Series to its Minor Rule Violation Plan, allowing FINRA to impose a fine of up to $2,500 on a member or associated person for a minor or technical CAT violation without pursuing more significant, immediately reportable disciplinary sanctions. FINRA was explicit that inclusion in the MRVP does not minimize the importance of CAT compliance and does not preclude FINRA from pursuing more serious violations, or a firm with a pattern of violations or adverse disciplinary history, through a formal Acceptance, Waiver and Consent or a Complaint instead. FINRA modeled this approach on its existing MRVP treatment of the OATS-era audit trail rules, specifically the clock synchronization requirements under Rule 4590 and the recording and reporting requirements formerly under Rules 7440 and 7450, extending the same graduated enforcement philosophy to CAT's clock synchronization (Rule 6820), order and trade data recording and reporting (Rules 6830, 6840, 6850, 6860, 6870, 6880, and 6893), and recordkeeping (Rule 6890) rules.
FINRA has also issued specific supervisory guidance for CAT compliance under Regulatory Notice 20-31, reminding members that Rule 3110(a) requires a supervisory system reasonably designed to achieve CAT compliance, and that Rule 3110(b) separately requires written supervisory procedures reasonably designed to achieve that same compliance. FINRA identified minimum elements a reasonably designed CAT-specific WSP should address, including identifying by name or title the individual responsible for reviewing CAT reporting and describing specifically what that review entails, and noted that a well-designed supervisory system becomes particularly important where a member relies on a third-party reporting agent, since the member remains responsible for ensuring the agent's CAT activities comply with the rules. FINRA has stated plainly that all members receiving or originating orders in NMS stocks, OTC equity securities, or listed options must report to CAT, including all proprietary trading and market-making activity, with no exclusions or exemptions of any kind based on firm size or trading activity type.
Examination Relevance and Key Takeaways
Candidates should retain the 50-millisecond clock synchronization tolerance under Rule 6820 for standard Business Clocks, and the looser one-second tolerance for clocks used solely for Manual Order Events or Allocation Report timing. Under Rule 6830, the 8:00 a.m. Eastern Time next-Trading-Day deadline for Received Industry Member Data, and the T+3 deadline for correcting identified errors, are frequently tested specifics. Candidates should understand that Rule 6893's Compliance Threshold framework is explicitly designed so that falling short of an individualized threshold does not itself constitute a rule violation as a matter of law. On the enforcement side, candidates should retain that FINRA treats minor or technical CAT violations through its Minor Rule Violation Plan, carrying fines of up to $2,500, while reserving more significant sanctions for patterns of violation or firms with adverse disciplinary histories, and that FINRA has stated there are no exclusions from CAT reporting based on firm size or trading activity type, including proprietary and market-making activity. Finally, candidates should recognize CAT's cross-market, all-Eligible-Security scope, covering NMS Securities, OTC Equity Securities, and Listed Options, as fundamentally broader than the single-market-segment scope of the OTC Reporting Facility and TRACE rule series that precede it in the rulebook.
