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Overview
In November 2016, the Securities and Exchange Commission approved a national market system (NMS) plan that required national securities exchanges and national securities associations ("SROs") to create a single, comprehensive database known as the Consolidated Audit Trail (CAT NMS Plan) that will enable regulators to more efficiently and thoroughly track all trading activity in U.S. equity and options markets. The CAT NMS Plan selected FINRA CAT as Plan Processor and adopted a phased in approach to report CAT Transactions Reporting (CAT) and Customer and Account Information (CAIS) Reports.
To learn more about the requirements visit: https://catnmsplan.com/index.html.
Important timeline on the CAT NMS Plan schedule for implementing CAT and CAIS are as follows:
| Phase | Date |
|---|---|
| Annual Clock Synchronization and Certification | March 15 of Each Year |
| Equities 2a Go-Live | April 2020 |
| Options 2b Go-Live | May 2020 |
| Equities 2c Go-Live | April 2021 |
| CAIS – LTID Reporting Go-Live | April 2021 |
| Small Firms Go-Live | December 2021 |
| 2d Options Go-Live | December 2021 |
| CAIS Interim Obligation 1 | August 2022 |
| CAIS Interim Obligation 2 | October 2022 |
| CAIS Interim Obligation 3 | November 2022 |
| CAIS Interim Obligation 4 | May 24, 2024 |
| CAIS Compliance Go-Live | May 31, 2024 |
What IBKR Clients Need to Know
An IBKR client falls under the rule and is obligated to report to CAT/CAIS if they are a member of a U.S. national securities exchange or a U.S. national securities association that handles orders or quotes in NMS equity securities, OTC equity securities or listed options.
We recommend that such clients become familiar with the rules that are available on the regulator’s website: https://catnmsplan.com/index.html.
Please note that the CAT Rules do not provide for any firms to be excluded or exempted from the CAT reporting obligation except under very limited cases.1
IBKR offers CAT reporting services for its clients that are obligated to CAT report but only for events carried out on our platform. If interested, please email us at IBKR-CAT-FEEDBACK@interactivebrokers.com.
If your firm requests services, IBKR will provide you with a CAT Reporting Agreement in its on boarding process. Please be aware your firm will also need to update its own policies and procedures in accordance with the CAT Rules
Notes:
Updated: 06/04/2020. Because the RIA is part of the same legal entity as the US registered broker-dealer, orders received or originated by the RIA are subject to all applicable CAT reporting rules and the US registered broker-dealer must report to CAT all orders that the RIA receives or originates. If the RIA were a separate legal entity that was not a member of a US registered broker-dealer, the RIA would not have an obligation to report orders originated and routed by the RIA to the CAT (also see FAQ B55).
On June 5, 2019, the Securities and Exchange Commission (SEC) adopted a package of rulemakings and interpretations designed to enhance the quality and transparency of retail investors’ relationships with investment advisers and broker-dealers, bringing the legal requirements and mandated disclosures in line with reasonable investor expectations, while preserving access (in terms of choice and cost) to a variety of investment services and products. Specifically, these actions include new Regulation Best Interest (Reg BI), the new Form CRS Relationship Summary (Form CRS), and two separate interpretations under the Investment Advisers Act of 1940.
According to the SEC, these actions are designed to enhance and clarify the standards of conduct applicable to broker-dealers and investment advisers, help retail investors better understand and compare the services offered and make an informed choice of the relationship best suited to their needs and circumstances, and foster greater consistency in the level of protections provided by each regime, particularly at the point in time that a recommendation is made.
A copy of IBKR’s Form CRS and responses to the conversation starters in the Form CRS are publicly available here:
Introducing Brokers and Financial Advisors
The Form CRS above is specific to IBKR and addresses the nature and scope of services provided by IBKR, the types of fees customers of IBKR will incur, potential conflicts of interest, and IBKR’s disciplinary history. The document does not address compliance and legal obligations of IBKR’s clients that have their own customers (e.g. introducing brokers, financial advisors, registered investment advisors, etc.).
At this time, IBKR does not provide a regulatory solution for introducing brokers and financial advisors to meet their Reg BI and Form CRS obligations.
IBKR clients with underlying clients of their own should consult with independent counsel to determine their obligations under Reg BI and Form CRS.