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This CAT Alert describes how Industry Members must transition from Phase 2c to Phase 2d data submissions and the Coordinated Industry Test Plan for Phase 2d. This CAT Alert also describes how FINRA CAT will provide support during the transition period between Phase 2c and Phase 2d. This CAT Alert also discusses how FINRA CAT, LLC will facilitate six coordinated industry tests with the first test commencing with CAT Trading Day September 10, 2021.

During Phase 2b of the revised implementation schedule, Industry Members will be required to report to the CAT Industry Member Data related to Eligible Securities that are options and that are related to Simple Electronic Option Orders, excluding Electronic Paired Option Orders. “Simple Electronic Option Orders” mean orders to buy or sell a single option that are not related to or dependent on any other transaction for pricing or timing of execution that are either received or routed electronically by an Industry Member CAT Reporter.

The origination or receipt of an order involving any security that meets the definition of an NMS security pursuant to SEC Rule 600 must be reported to the CAT, regardless of where the order is ultimately executed. This includes any NMS security that is also listed on a foreign exchange (“dually listed”). If the order is sent to a foreign market for execution, the CAT Reporter is required to report the relevant Reportable Events for the order (e.g., origination or receipt of the order and the routing of the order to the foreign market). All prices must be converted into U.S.

The pairedOrderID field is required on Option and Multi-leg Order Route events for orders that are routed electronically as a single message containing both the initial and contra side orders for simple or multileg options directly to an exchange for crossing and/or price improvement.

As stated in FAQ B53, transfers of securities during an account transfer between broker-dealers (e.g., ACATS transfers, transferring a Registered Investment Advisor (RIA) book of business from one Industry Member to another Industry Member and for a clearing firm when a correspondent firm changes to another clearing firm) are not orders, as defined by SEC Rule 613. Such account transfer activity as outlined above between Industry Members does not meet the definition of Mass Transfer of FDIDs across CAT Reporter Firms for CAT CAIS reporting requirements.

No. Starting in Phase 2d, Industry Members must capture and report the date and time they received a request from a customer or another Industry Member to modify or cancel an order in the requestTimestamp field. This requirement is also applicable to requests received from an internal desk to modify/cancel an existing order. The requestTimestamp is not required on modify/cancel events initiated by the firm or by a receiving desk but can be optionally reported. 

Starting in Phase 2d, Industry Members must use the ‘PBG’ handlingInstructions value when the customer instruction is to determine the limit price for an option order based on option Greeks (e.g., Delta, Vega) or other formula based on market conditions. These events must be reported using the orderType of ‘LMT’ and price of ‘0’. The specific option Greek value or formula related to the order is not required to be reported. 

If the Industry Member’s practice is to close an account and open a new account in the scenario where there is a triggering event, the Industry Member must populate the “end date” fields with the date that is maintained in its books and records.

The updated record is required to be reported to CAT CAIS by 8:00 a.m. Eastern Time on the CAT Trading Day following the day the Industry Member confirmed the date in its books and records.