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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices in OATS today, for purposes of OATS
retirement.21
On June 17, 2021, FINRA made an immediately effective filing setting forth the basis for its determination that the accuracy and reliability of the CAT met the standards approved by the Commission in the OATS Retirement Plan Order and designating September 1, 2021 as the date on which FINRA
would retire OATS.22 Specifically, FINRA determined that the CAT met the threshold requirements endorsed by the Commission in the OATS Retirement Plan Order for Industry Member reporting in each of the following categories:
A. Rejection Rates and Data Validations As described in the OATS Retirement Filing, the Plan Processor must perform certain basic data validations, and if a record does not pass these basic data validations, it must be rejected and returned to the CAT Reporter to be corrected and resubmitted.23 FINRA
determined that for the applicable period, aggregate rejection rates across all Industry Member Reporters were 0.03% pre-correction and 0.01% postcorrection, which far exceeds the threshold requirements of a 5% or lower pre-correction error rate and a 2% or lower post-correction error rate.
B. Intra-Firm Linkages As described in the OATS Retirement Filing, the Plan Processor must be able to link all related order events from all CAT Reporters involved in the lifecycle of an order. At a minimum, this requirement includes the creation of an order lifecycle between all order events handled within an individual CAT
Reporter, including orders routed to internal desks or departments with different functions e.g., an internal ATS. FINRA determined that for the applicable period, the intra-firm linkage accuracy rates across all Industry Member Reporters were 99.07% precorrection and 99.99% post-correction, which far exceeds the threshold requirements of 95% or higher precorrection and 98% or higher postcorrection in other words, the intrafirm linkages accuracy far exceeds the threshold requirement that there be less 21 See
supra note 19.
Securities Exchange Act Release No. 92239
June 23, 2021, 86 FR 34293 June 29, 2021 SR
FINRA2021017 OATS Retirement Filing.
23 Appendix D of the CAT NMS Plan, Section 7.2, for example, requires that certain file validations e.g., file transmission and receipt are in the correct formats, confirmation of a valid SRO-Assigned Market Participant Identifier, etc., and syntax and context checks e.g., format checks, data type checks, consistency checks, etc. be performed on all submitted records.

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than 5% inaccuracy pre-correction and less than 2% inaccuracy postcorrection.
C. Inter-Firm Linkages As described in the OATS Retirement Filing, the Plan Processor must be able to create the lifecycle between orders routed between broker-dealers. FINRA
determined that for the applicable period, the intra-firm linkage accuracy rates across all Industry Member Reporters were 99.08% pre-correction and 99.84% post-correction, which far exceed the threshold requirements of 95% or higher pre-correction and 98%
or higher post-correction in other words, the inter-firm linkages accuracy far exceeds the threshold requirement that there be less than 5% inaccuracy pre-correction and less than 2%
inaccuracy post-correction.
D. Order Linkage Rates As described in the OATS Retirement Filing, in addition to creating linkages within and between broker-dealers, the Plan Processor must be able to create lifecycles to link various pieces of related orders. For example, the Plan requires linkages of order information to create an order lifecycle from origination or receipt to cancellation or execution. This category essentially combines all of the order-related linkages to capture an overall snapshot of order linkages in the CAT.24 FINRA
determined that for the applicable period, the order-related linkage accuracy rates across all Industry Member Reporters were 99.66% precorrection and 99.93% post-correction, which far exceed the threshold requirements of 95% or higher precorrection and 98% or higher postcorrection in other words, the order linkages accuracy far exceeds the threshold requirement that there be less than 5% inaccuracy pre-correction and less than 2% inaccuracy postcorrection.
E. Exchange and TRF/ORF Match Rates As described in the OATS Retirement Filing, an order lifecycle must be created to link orders routed from broker-dealers to exchanges and executed orders and trade reports.
FINRA determined that for the applicable period, the match rate across all equity exchanges for orders routed from Industry Members to an exchange was 99.51% pre-correction and 99.87%
post-correction. This match rate far exceeds the threshold requirements of 24 See Letter from Lisa C. Horrigan, Associate General Counsel, FINRA, to Vanessa Countryman, Secretary, Commission, dated October 29, 2020.

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95% or higher pre-correction and 98%
or higher post-correction in other words, the match rate accuracy far exceeds the threshold requirement that there be less than 5% inaccuracy precorrection and less than 2% inaccuracy post-correction.
Based upon the accuracy and reliability of the above five categories of CAT Data, FINRA determined that the CAT Data met the accuracy and reliability standards required for OATS
retirement.25
II. FINRAs Use of CAT Data Additionally, the OATS Retirement Plan Order set forth that before retiring OATS, FINRAs use of CAT data must confirm that i there are no material issues that have not been corrected e.g., delays in the processing of data, issues with query functions, etc.; ii the CAT
includes all data necessary to allow FINRA to continue to meet its surveillance obligations 26; and iii the Plan Processor is sufficiently meeting its obligations under the CAT NMS Plan relating to the reporting and linkage of Phase 2a Data.
As set forth in FINRAs OATS
Retirement Filing, by September 1, 2021, FINRA will be ready to retire its use of OATS data for cross-market surveillance, and replace it with a newly created surveillance data mart, the Pattern Optimized Datamart POD, which incorporates equities and options data submitted by both Participants such as LTSE and Industry Members. LTSE has been reporting via the CAT technical specifications since its launch on August 28, 2020. Full Participant equities reporting and linkage validations commenced on June 1, 2021.27 Successful completion of the transition to the CAT specification for Participants was a prerequisite for FINRA to retire the OATS-based cross market surveillance patterns and leverage CAT Data and linkages in POD
for its surveillance patterns. FINRA has completed all planned activities on schedule, including substantially completing the process of integrating 25 See
supra note 22.
conducts surveillance on behalf of LTSE pursuant to the Regulatory Service Agreement entered into by LTSE and FINRA RSA.
Therefore, any references in this rule filing to FINRA surveillance include FINRAs use of either OATS or CAT Data in furtherance of the regulatory services it provides on behalf of LTSE.
27 For example, according to the CAT Reporting Technical Specification for Participants version 4.0.0r4 dated April 20, 2021, additional linkage error feedback for off-exchange trade reports was effective as of June 1, 2021. The Technical Specifications can be found on the CAT NMS Plan website at www.catnmsplan.com/sites/default/files/
2021-04/04.20.2021-CAT-Reporting-TechnicalSpecifications-for-Participants-4.0.0-r4.pdf.
26 FINRA

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