Review Your CAT Reporting Now: Insights from FINRA’s Annual Report

CAT Compliance and Supervision: FINRA’s Expectations for Firms in 2025

On Wednesday January 29, 2025, FIINRA notified industry members in their weekly update that the 2025 FINRA Annual Regulatory Oversite Report is now available. The report had some notable changes to the Consolidated Audit Trail (CAT) reporting section which are summarized by below. In the report, FINRA reminds members of their supervisory responsibilities outlined in Regulatory NTM 20-31, specifically that firm’s must have policies that are reasonably designed to ensure that the data reported by them, or on their behalf, is transmitted in a timely manner and that it is complete and accurate.

Note: In addition to the following changes, the “Recent Considerations” section has been completed eliminated.

Common CAT Compliance Findings

FINRA added language related to findings for unreasonable supervision:

• The scope clearly includes both self-submitting firms and those that utilize CAT Reporting Agents (“CRAs”)
• Industry members need to be implementing an accuracy review, as described in Regulatory Notice 20-31; NTM 20-31 is re-emphasized
• Firms have been found to not use a sufficient or reasonable sample size when reviewing their CAT files
• Firms are failing to supervise CRAs who report on their behalf (lack of Due Diligence)

CAIS Reporting: Updates and Compliance Requirements

FINRA reminds industry members that ALL members (large and small) must be fully compliant with CAIS (Customer and Account Information System) reporting obligations, which became effective May 31, 2024. The report provides link to the latest technical specifications document for Full CAIS, and directs firms to the CAT NMS website for additional information and compliance schedule.

Enhancing Consolidated Audit Trail Compliance: How Firms Can Stay Ahead

These updates are consistent with what Oyster Consulting is observing when working with our clients. Regardless of how a firm chooses to report to CAT, industry members are expected to surveille the reporting through regular and robust testing.  It is unacceptable to solely rely on a report agent to comply. 

The accuracy review mentioned by FINRA includes on-going or periodic due diligence, which should also include source file validations. The detail and frequency of these reviews will vary depending on reporting volume firm to firm. Though FINRA removed details found in the previous report’s recent consideration, Oyster believes the information to still be relevant for firms.

Next Steps: Reviewing Your CAT and CAIS Compliance Controls for 2025

This is a great time to review your firm’s compliance policies, procedures, and controls to ensure each is aligned with the expectations described in this most recent regulatory oversight report and the previous standards of NTM 20-31.

Additional Resources

Finding Success with CAT CAIS Reporting

Successful FINRA CAT and CAIS Reporting

Your Partner in Achieving CAT and CAIS Compliance

Oyster Consulting’s CAT experts help your firm meet CAT reporting requirements and get the most out of CAT reporting investments. With our support, you can reduce costs, save time, and focus on growing your business while maintaining compliance.

Our proprietary Oyster Solutions CAT reporting application consolidates all CAT reporting events, error analysis, and validation data into one central program. This powerful application helps identify errors, connections, and missing information in vendor data and CAT-reported data, making the reporting process easier and more efficient for you.

The  Oyster Solutions CAIS Module lets you see CAIS reports and source data on one platform. You can use it with or without the CAT Application. Companies can achieve Full CAIS reporting with the help of a web-based tool. This tool helps them identify and correct errors in their data.