How time flies. Five years after the market plummeted nearly 1,000 points in a single day, the agency and regulators that monitor the market are no closer to setting up a data system to avoid another flash crash.
We know it was the Consolidated Audit Trail, or the CAT and according to the Wall Street Journal, the 10 firms with the mandate to build the data monitoring system are experiencing epic bureaucratic delays.
Yet the 10 organizations overseeing the process, including Nasdaq OMX Group Inc. and Intercontinental Exchange Inc., which operates the New York Stock Exchange, still havent chosen a firm to build and run it, and a final plan hasnt been approved by the Securities and Exchange Commission.
There is also no consensus on how to pay for the project, which could face costs ranging from about $150 million to more than $500 million in its first five years of operation, according to a planning document filed last year.
And the politicians who pushed for the project. As Democratic Virginia Sen. Mark Warner told the Journal, The 2010 Flash Crash wiped out a trillion dollars in equity in a matter of seconds, raised serious questions about the stability of our markets and exposed fundamental weaknesses in our current regulatory system. Its mind boggling that a key part of the solution-building an audit trail-has faced delay after delay.
A representative from the Securities and Exchange Commission confirmed that the CAT is still needed and soon. In fact, last month SEC chairwoman Mary Jo White requested a budget of $1.772 billion to run the American capital markets. Of that number, we said that the regulatory agency needs 14 new technologists for 2016 to address the IT needs of the agency.
The CAT should be one of the hot topics at tomorrows SIFMA market structure event. Traders will report on the CAT and its delays. Stay tuned.
