CAT Interfirm Linkage Reporting Preparation: Q+A | Gresham

With the Consolidated Audit Trail interfirm linkage deadline looming on October 26th, industry thoughts are turning to the practicalities involved. How will firms manage the volume of reporting and the associated stresses and strains that this puts on systems, infrastructure, and counterparty relationships?

Ahead of our CAT Interfirm Linkage Reporting webinar, I sat down with panellist Harshad Pitkar, Founder and CEO of RegEdge, to understand how firms should be prioritizing activity to make the most of their time before the next Consolidated Audit Trail phase deadline.

How has the industry responded to CAT so far and what are the biggest challenges faced?

It has been a race to the finish line, but most broker dealers have successfully met the deadlines for Phase 2A/2B. It has been all hands on-deck to support T+1 processes and rejections / breaks resolution and reaching a BAU state has been challenging.

The biggest challenge currently is to make sure that Interfirm linkage breaks are down to a minimum by the 26th, so that support teams are able to resolve linkage issues in a timely fashion.

Earlier in the year we saw data privacy concerns emerge – have there been any further developments around this?

Data privacy continues to be an area of concern and it will get more attention as we approach Phase 2c and subsequent phases pertaining to reporting CAIS information.

How does interaction with counterparties look and who is leading outreach from firms – is this mostly the domain of the CAT project teams, or are the front office also getting involved? How responsive have counterparties been so far?

Firms are using existing relations/points of contact (from OATS support teams and front office teams) to discuss and resolve linkage issues with counterparties. As is the case with most situations, some counterparties are not as responsive as you would like. Our clients are taking a risk-based approach focusing on counterparties with the most issues and leveraging firm leadership for escalations.

We have created contact lists for all our counterparties that we interact with and have defined a model to facilitate communication and resolution on linkage issues post go-live.

With deadlines drawing closer, what are the top things that broker dealer firms should prioritise between now and the end of the year?

A well-defined interaction model with various counterparties to facilitate timely resolution. Phase 2C goes live in April 2021, which seems like a long way ahead. However, with holidays approaching this will again be a race to the finish line. Firms have been busy with Oct 26th deadline, but need to finalize implementation details and plans for Phase 2C.

T+1 support processes are still largely manual or at best semi-automated. Firms should start focusing on implementing tools / solutions to streamline the T+1 support processes.

Have firms started planning for strategic initiatives to use the CAT reporting data for other use cases (e.g. surveillance, other reporting obligations etc)?

Not yet. Step 1 is to make sure all data is being reported to CAT completely and accurately. We are working with clients to kick off some of the strategic initiatives in Q1 of 2021.

How has the COVID-19 situation impacted preparations? Is it likely to affect the timescale going forward?

It has been pretty seamless. We have seen no impact across our clients due to remote working.

With not only the immediate interfirm linkage deadline to contend with on October 26th, but also further demands during 2021, it’s clear that broker dealers need to move quickly on CAT.

To discover how we can make your CAT reporting fast, simple, and painless, as well as position you to comply easily with future requirements and leverage your data for strategic initiatives, click here to register for our free CAT Interfirm Linkage reporting webinar on October 22nd, where Phil and Harshad will be joined by panellists from FINRA CAT, Morgan Stanley, and Cboe Global Markets.

About the Author

Philip Flood, Business Development Director, Regulatory and STP Services, Gresham Technologies

Phil worked with Inforalgo for 18 years prior to its acquisition by Gresham Technologies (Gresham), starting out in support, an ideal vantage point for understanding clients’ challenges first hand. Having witnessed a myriad of solutions, and the support and maintenance tasks required, Phil now provides an invaluable support to the sales and marketing teams at Gresham, helping to scope, design and propose client solutions. His expertise are also applied broadly across the business to support a number of operational and technical activities

About the Interviewee

Harshad Pitkar, Founder & CEO, RegEdge

Seasoned leader with over 16 years of experience in helping firms define, identify and implement regulatory and risk management strategy and solutions to further strengthen their risk and regulatory functions. Throughout his career, Harshad has helped multiple firms transform their risk and regulatory capabilities based on emerging technologies, peer practices and regulatory expectations. Prior to founding RegEdge, Harshad spent several years working for Big 4 consulting firms, most recently as a Partner in PWC’s risk and regulatory practice. Prior to consulting, Harshad worked at a large high frequency trading firm (Susquehanna Intl Grp.) across front office, middle office and back office functions. Harshad brings to the table a unique mix of deep / hands-on subject matter knowledge from his industry experience and a breadth of knowledge pertaining to peer practices and emerging trends from his consulting experience where he worked across several large and small banks and broker-dealers around the world. In addition to RegEdge, Harshad serves as a Board Advisor to multiple fintech firms helping them define new product offerings and identify growth opportunities. Harshad is a regular speaker at industry events and a contributing author at several financial and technology publications.


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