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Audit Trail Security Worries Wall Street

Traders Magazine Online News, November 16, 2018

John D'Antona Jr.

What, us worry?

In a word, yes. Wall Street is worried that the Consolidated Audit Trail which is now operational collecting data from Wall Streetís brokers, etc might be be too tempting a target for hackers Ė and that they might be able to corrupt the system.

As first written in the S&P Global Market Intelligence report, the system, mandated into existence by the Securities and exchange Commission in response to the 2010 Flash Crash security might not be up to snuff.

"The industry is going to continue to have concerns about the system and the protection of the information," said Gary Goldsholle, a partner with law firm Steptoe & Johnson and a former official with the SEC's Division of Trading and Markets, in an interview with S&P Global Intelligence.

On Nov. 15, the public exchanges and Finra will be feeding trade data into the long-awaited system in the initial rollout of the system. The system is hoped to shed more light on the workings of the US equities market, especially in times of market crisis or nefarious trading activity. The CAT is expected to garner more than 58 billion records daily.

With the rise in cyber crime and recent hackings of cryptocurrency platforms, the need for the tightest security is paramount on Wall Streetís collective mind.

Several industry participants said they expect the rollout to go smoothly. But the next phase of the system's launch could be more problematic because it includes large broker/dealers, all of which will have to rethink their reporting systems, S&P Global noted.

"More people will have access to [the trading database], and whenever you have more eyes, safeguarding it becomes a little bit more challenging," Security Traders Association President and CEO Jim Toes said in an interview.

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