February 11, 2019
Nate Call, Director RegTech Solutions, FIS
As Benjamin Franklin once said, “by failing to prepare, you are preparing to fail.” With the first go-live phase of the Consolidated Audit Trail (CAT) implementation date set for November 15, 2019, large broker-dealers should be elbow-deep in preparations by now.
The CAT reporting process will require broker-dealers to integrate, aggregate, analyze, prepare, submit, correct and archive massive amounts of data. There’s no way around it: Broker-dealers will have to automate the process, not just for efficiency, but to ensure data accuracy and integrity.
To manage the workload, many will invest in artificial intelligence, robotic and machine learning solutions. Fortunately, the fringe benefits of these investments go well beyond basic regulatory compliance.
So, when it comes to CAT, think beyond compliance. Here are three ways to maximize your investment and drive positive, measurable change.
Full trade cycle visualization
The SEC will be using CAT data to gain greater insight into trading activities, end to end. Why shouldn’t you do the same? Event reconstruction and pattern recognition of every order placed, routed and filled can provide a gold mine of detail useful in building future trade strategies.
As you get comfortable with your CAT data visualization engine, new ways to use the data will come to light. How many shares of stock were traded on a specific day by a specific trader? What exchange is yielding the greatest alpha and how can it be enhanced by asset class or day part?
Deep digital intelligence
It has been said the “data knows”, but you don’t – because you don’t have time to comb through the information and piece together conclusions. However, machines can, and with a combination of AI, machine learning and robotics, your CAT system can learn to fish for new insights. Is there hidden correlation between stock movement in a customer account that might be useful in managing your own company stock? Turn on the engines and let the data speak for itself.
You can visit here for a roadmap to compliance, along with the latest information and insights on CAT and make sure you’re prepared for the upcoming compliance deadline.
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