FAQs

The CAT NMS Plan requires Industry Members to synchronize their Business Clocks at a minimum to within 50 milliseconds of the time maintained by the National Institute of Standards (NIST), with the exception of Business Clocks used solely for Manual Order Events or the time of allocation on Allocation Reports, which must be synchronized to within one second of the NIST clock.

The CAT NMS Plan requires Participants to synchronize their Business Clocks at a minimum to within 100 microseconds of the time maintained by the NIST, consistent with industry standards, with the exception of Business Clocks used solely for Manual Order Events, which must be synchronized to within one second of the NIST clock.

An Industry Member must satisfy the CAT clock synchronization requirements for all of its Business Clocks. Business Clocks are defined as clocks used to record the date and time of any Reportable Event required to be reported under SEC Rule 613. If an Industry Member relies on a third-party service provider’s clocks, including, but not limited to, third-party service providers that are registered broker-dealers, to record the date and time of any of the Industry Member’s Reportable Events required to be reported under SEC Rule 613, such clocks are considered to be the Industry Member’s Business Clocks for purposes of the CAT clock synchronization requirements. Accordingly, the Industry Member has the ultimate responsibility for ensuring that such Business Clocks satisfy the CAT clock synchronization requirements. Industry Members also must satisfy the documentation, certification and violation reporting requirements related to clock synchronization as set forth in the Compliance Rule with regard to such third-party service providers’ clocks.

Industry Members will need to obtain information regarding clock synchronization procedures from their third-party service providers to satisfy these requirements. The amount of information an Industry Member must obtain from a third-party vendor may depend on whether the vendor is itself a registered broker-dealer. Industry Members would be expected to obtain at least the information specified below to satisfy the clock synchronization requirements provided in the Participants’ common CAT clock synchronization rule, although Industry Members may employ their own reasonable arrangements with their vendors to demonstrate compliance. Third-party vendors are encouraged to provide this information to Industry Members to facilitate compliance. Industry Members also would be expected to document in their own procedures the steps they take to perform this oversight of their vendors with respect to clock synchronization.

If its vendor is not a registered broker-dealer, an Industry Member should:

• On a reasonable periodic basis, receive and review the vendor’s clock synchronization procedures and copies of sample logs for consistency with the requirements of paragraphs (a) and (b) of the clock synchronization rule.
  • Specifically, an Industry Member should confirm that its vendor’s procedures apply the correct clock synchronization standard, call for Business Clocks to be synchronized every business day before market open to ensure that timestamps for Reportable Events are accurate, provide for re-synchronization throughout the day as necessary, and provide for sufficient log creation, retention, and accessibility (consistent with FAQ R.6 below).
  • An Industry Member should also periodically review copies of sample logs for verification
• Receive an attestation or comparable written assurance to provide the Industry Member a sufficient basis to complete the certification required by paragraph (c) of the clock synchronization rule.
  • Specifically, the attestation or comparable written assurance should communicate to the Industry Member that the vendor complied with paragraph (a) of the clock synchronization rule by synchronizing its Business Clocks to the correct clock synchronization standard and maintaining such synchronization. This attestation or comparable written assurance could use the same language that is used on the certification form that each Industry Member must execute annually.
• Receive alerts from its vendor so that it can report violations as required by paragraph (d) of the clock synchronization rule, once violation reporting thresholds are in effect.

If its vendor is a registered broker-dealer, an Industry Member should:

• Receive a copy of the certification that the vendor completed as required by paragraph (c) of the clock synchronization rule.
• Receive a supplemental attestation concerning the vendor’s compliance with the documentation requirements in paragraph (b) and, once violation reporting thresholds are in effect, the violation reporting requirements in paragraph (d).
  • An Industry Member that receives such an attestation from its vendor would not itself need to submit violation reports that would be duplicative of reports submitted by its vendor.
  • The supplemental attestation may be provided at the same time the vendor provides a copy of its yearly certification required by paragraph (c).

In addition, to the extent that the Industry Member has any Business Clocks other than those of the third-party service provider, then the Industry Member must satisfy the CAT clock synchronization requirements, as well as the documentation, certification and violation reporting requirements related to clock synchronization set forth in the Compliance Rule, with regard to those Business Clocks.

The CAT NMS Plan does not disallow the use of manually written timestamps provided the clock referenced is synchronized properly.

Computer system and mechanical clocks must be synchronized every business day before market open. To maintain clock synchronization, clocks should be checked against the NIST atomic clock and re-synchronized, if necessary, throughout the day. Industry Members must document and maintain their clock synchronization procedures.

All Industry Members that have Business Clocks that are subject to the clock synchronization requirements must document and maintain their synchronization procedures and keep a log of the times when they synchronize their Business Clocks and the results of the synchronization process. The Participants expect that each Industry Member will synchronize its Business Clocks every business day before market open, and check synchronization at pre-determined intervals throughout the business day, to reasonably ensure that Business Clocks maintain synchronization. The Participants also expect that each Industry Member’s synchronization log will document whenever a Business Clock fails to be within the applicable tolerance of the time maintained by NIST.

Yes. Firms required to synchronize their clocks according to the CAT NMS Plan should keep a log of the times when they synchronize their clocks and the results of the synchronization process. This log should include notice of any time the clock drifts more than allowed by the CAT NMS Plan. Logs must be maintained consistent with the five-year retention period in paragraph (b) of the Participants’ common clock synchronization rule and accessible to the firm or made available by the firm in response to a regulatory request on a reasonably prompt basis whether maintained and preserved on site or by a third party.

The Annual Clock Synchronization Certification Form certifies that the Industry Member’s Business Clocks satisfied the synchronization requirements of the CAT compliance rule for the prior calendar year.