The U.S. Securities and Exchange Commission will facilitate a massive government surveillance program to track trades.
The consolidated audit trail project (CAT), first approved by the SEC in 2012, will trace all equity and options trades executed on U.S. exchanges, consolidating them on a single database controlled by the US government.
CAT is designed to track illegal or manipulative trades and to give regulators the data they need to determine the cause of any large market movements, such as the flash crash of May 6, 2010 that saw about $1 trillion in U.S. equity value evaporate from the Dow Jones industrial average in roughly 30 minutes.
Broker-dealers will now have to start submitting trades to the CAT database in April of 2020, pushing the latest deadline of November 2019, according to a report by Pensions & Investments.
Says SEC Chairman Jay Clayton,
“CAT needs to be implemented without further delays. The proposed amendments are designed to bring greater transparency and accountability to the implementation of the CAT.”
In a recent blog post entitled This Cat is a Dangerous Dog, Commissioner Hester Peirce, known in the cryptocurrency community as ‘Crypto Mom’ for her pro-Bitcoin stance and for expressing her concerns about regulatory overreach, says the program is akin to the government setting up a direct feed from your car’s GPS to interrogate you about any of your travels.
“The federal government is forcing every broker in the United States to turn over every investor’s trades from start to finish to a database that the SEC and private regulators will be able to mine for data and analyze. Your broker cannot opt out, and neither can you, unless you stop trading in U.S. markets.
People working for over a dozen different organizations in the public and private sector will have access to the data, and there are few concrete parameters on how they can use it.”
On Friday, Jay Clayton along with US regulators from the U.S. Commodity Futures Trading Commission (CFTC) and the Financial Crimes Enforcement Network (FinCEN) issued a joint statement addressing cryptocurrencies and the obligations of platforms involved in trading such assets.
The statement is intended to “remind persons engaged in activities involving digital assets of their anti-money laundering and countering the financing of terrorism (AML/CFT)obligations under the Bank Secrecy Act (BSA).”