How Firms Can Strengthen Regulatory Confidence With Smarter CAT Reviews

 

As regulatory expectations continue to evolve, broker-dealers face increasing pressure to ensure accuracy, transparency, and consistency in regulatory reporting. Within the framework of FINRA CAT, comparative reviews have become a critical benchmark for maintaining data integrity and avoiding regulatory scrutiny. Accurate reporting under the Consolidated Audit Trail (CAT) Compliance framework is no longer optional — it is essential for audit readiness and operational credibility.

To address these growing challenges, Capital Market Solutions has enhanced its RSMS platform with a powerful new Comparative Review feature, helping firms strengthen controls, streamline workflows, and maintain confidence in their CAT reporting processes.

Understanding FINRA CAT and Its Importance

The Consolidated Audit Trail (CAT) is designed to provide regulators with a complete and accurate view of order and trade activity across U.S. markets. Under FINRA CAT requirements, member firms must submit detailed lifecycle data for every order event, enabling regulators to reconstruct trading activity from inception to execution.

A key pillar of CAT oversight is the comparative review process. Firms are expected to validate their CAT submissions against internal systems such as Order Management Systems (OMS), Execution Management Systems (EMS), algorithmic trading platforms, and, where applicable, Customer Account Information System (CAIS) data. Any discrepancies may signal weaknesses in data governance or reporting controls.

Comparative Reviews: A Core CAT Compliance Requirement

A comparative review is a structured data quality check where CAT-reported data is measured against a firm’s internal source records. This process ensures that:

  • All required CAT events are accurately reported
  • Sourc system data is properly mapped to CAT fields
  • Missing, inconsistent, or inaccurate records are promptly identified

Maitaining clear documentation of mappings between OMS, EMS, CAIS, and CAT event fields is essential. Strong comparative reviews not only support FINRA CAT compliance but also help firms demonstrate audit readiness and internal control maturity.

The Operational Challenges Firms Face

Despite its importance, comparative review remains a complex and resource-intensive process for many compliance teams. High data volumes, evolving regulatory guidance, and field-level mapping requirements often force firms to rely on multiple tools and screens to complete reviews.

This fragmented approach creates inefficiencies, increases manual effort, and heightens the risk of missed exceptions. In today’s regulatory environment, even small oversights can lead to inquiries, remediation requests, or enforcement actions — making process optimization a top priority.

RSMS: A Unified Approach to Comparative Reviews

Capital Market Solutions has addressed these challenges by introducing a unified Comparative Review feature within RSMS (Alpha Version). This enhancement consolidates all comparative review activities into a single, intuitive interface — eliminating the need for multiple systems and disconnected workflows.

With RSMS, compliance teams can:

  • Compare CAT submissions directly against OMS, EMS, and CAIS data
  • Review field-level mappings within one screen
  • Investigate discrepancies efficiently
  • Track and manage exceptions with greater visibility

By centralizing the comparative review lifecycle, RSMS reduces operational risk while improving accuracy and efficiency.

Driving Efficiency and Data Confidence

The new RSMS Comparative Review feature significantly improves workflow efficiency across FINRA CAT compliance operations. Pre-review validation, reconciliation, investigation, and exception management can now be handled seamlessly within one platform.

This streamlined approach minimizes system hopping, reduces review cycle times, and allows compliance professionals to focus on data quality and regulatory assurance rather than manual coordination. The result is stronger reporting integrity and increased confidence in CAT submissions.

What Firms Can Expect From the RSMS Rollout

Firms adopting the enhanced RSMS platform can expect structured onboarding, clear documentation, and training support to ensure a smooth transition. The goal is simple: reduce complexity, strengthen controls, and support accurate, defensible CAT reporting aligned with FINRA expectations.

Advancing CAT Compliance With Confidence

Inefficient comparative review processes often result in late filings, unresolved exceptions, and recurring data issues — key risk indicators for regulators. Navigating FINRA CAT, Customer Account Information System (CAIS) alignment, and Consolidated Audit Trail (CAT) Compliance requires both expertise and the right technology.

With RSMS, Capital Market Solutions delivers a smarter, unified approach to comparative reviews — helping firms reduce risk, improve transparency, and meet regulatory expectations with confidence. Firms seeking to elevate their CAT compliance posture should consider how RSMS can transform their comparative review strategy.

To learn more about RSMS and advanced CAT compliance solutions, visit Capital Market Solutions.


Comments

Post a Comment

Popular posts from this blog

How Cloud-Based RegTech Is Reshaping FINRA CAT and CAIS Compliance in Financial Markets

Image
  Introduction As regulatory requirements continue to tighten in the financial services industry, firms are turning to  cloud-based solutions  to manage complex reporting mandates. From  FINRA CAT  to  CAIS compliance , cloud-native RegTech platforms are changing the game for broker-dealers, clearing firms, and asset managers. Tools like  Regulatory Surveillance and Management Systems (RSMS)  and platforms such as  CAIS-Connect  are enabling scalable, secure, and efficient compliance — without overwhelming internal teams. Why Cloud Matters in Regulatory Reporting Traditional compliance systems often rely on fragmented infrastructure and outdated manual processes. Cloud-based solutions, on the other hand, offer: Real-time scalability Automated reporting workflows Secure and centralized data access Regulatory updates without downtime These features are crucial in managing data-intensive regulations like  Consolidated Audit Trail (CAT)...
Read more

Navigating the Complexities of FINRA's Consolidated Audit Trail (CAT) Compliance

Image
In today's rapidly evolving financial landscape, regulatory compliance has become more intricate than ever. The Financial Industry Regulatory Authority (FINRA) introduced the Consolidated Audit Trail (CAT) to enhance market transparency and oversight. While its objectives are clear, the path to seamless compliance is fraught with challenges for many firms. For a comprehensive understanding of the Consolidated Audit Trail and its implications, refer to the official FINRA CAT page. Understanding the CAT Mandate Established in response to the 2010 "flash crash," the CAT system aims to provide regulators with a unified view of trading activities across U.S. equity and options markets. By capturing detailed information on orders, executions, and cancellations, CAT seeks to identify and mitigate market anomalies more effectively. Challenges in CAT Reporting While the intent behind CAT is commendable, firms often grapple with several challenges in their compliance journey: Data ...
Read more

Mastering Consolidated Audit Trail (CAT) Compliance: A Strategic Imperative for Financial Firms

Image
  In recent years, the U.S. financial industry has faced an intensifying push for transparency, driven by an increasing demand from regulators and investors to better understand how orders move through complex market systems. One of the most significant efforts in this regulatory evolution is the creation and ongoing expansion of the  Consolidated Audit Trail , or CAT. Born out of SEC Rule 613, CAT is a centralized database designed to capture a complete view of order and trade activity across all U.S. equity and options markets. It is the most ambitious market surveillance initiative ever undertaken in the country, both in terms of scale and the depth of information it collects. At its core, the purpose of the Consolidated Audit Trail is to empower the Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority ( FINRA ) with the tools they need to monitor market activity more effectively. By capturing detailed data for every order — from the mome...
Read more