(Bloomberg) — U.S. stock exchanges plan to meet a deadline for filing plans for a new audit system that tracks all transactions in the $23 trillion American equity market.
The markets will give the Securities and Exchange Commission their proposal for the consolidated audit trail, as the system is know, on Sept. 30, said Jim Gorman, a spokesman for Bats Global Markets Inc., which is one of the exchanges involved in the process. Exchanges have withdrawn a request for a delay after consulting with the SEC, he said.
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Proposed in the aftermath of the May 2010 flash crash that drove the Dow Jones Industrial Average down to an almost 1,000- point loss in minutes, the audit trail is intended to give regulators a better grasp on trading. Such detail was lacking as regulators tried to piece together what caused the plunge, which temporarily erased almost $1 trillion in value from U.S. stocks, more than four years ago.
The automated system will track every stock quote, order, and trade, including when and where transactions occur, the brokers who handle them, and the customers they represent. Data will be pulled from every stock and options exchange as well as the private trading venues known as dark pools.
On Sept.30, the exchanges and the Financial Industry Regulatory Authority will detail their plans for the system and describe who will pay for it. Brokers dont want to bear the cost alone and say the exchanges should kick in part of the money. If the agency approves the plan, the industry consortium will then select a winning bid. The computer wont be fully up and running until at least 2018.
