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Federal Register / Vol. 86, No. 171 / Wednesday, September 8, 2021 / Notices
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As discussed in the OATS Retirement Filing, FINRA has performed broad analysis of its equity surveillance patterns and has determined that all of the data required to support the transition is available in CAT. By mapping OATS data to Industry Member CAT Data in POD, FINRA has confirmed that CAT Data has equivalent analogs to all data elements in OATS. In that regard, FINRA notes that, as a Plan Participant, FINRA has been involved in CAT development efforts to ensure that the scope and features of Industry Member data and processed output are sufficient for FINRAs surveillance program. These efforts include, for example, developing and updating the Industry Member Technical Specifications and Reporting Scenarios, conducting OATSCAT gap analyses and validating that all such gaps have been properly addressed, and performing OATS-to-CAT field-level mappings.
With respect to Plan Participant data, FINRA notes in the OATS Retirement Filing that the test environment for Plan Participant reporting in accordance with the CAT specification opened on February 15, 2021.21 Plan Participant equity reporting in accordance with the CAT specification in the test environment had a very high compliance rate for data ingestion and validation, and compliance in the production environment is comparable.
In addition, starting on April 26, 2021, CAT began linking copies of Industry Member and Plan Participant data reported via the CAT specification in a test environment, and at that point, FINRA began its evaluation of the quality of these linkages. Based on this review and evaluation, in the OATS
Retirement Filing, FINRA stated that it believes that the linkages between Plan Participant data and Industry Member data in CAT are comparable to the linkages between RSA exchange data and OATS data in the CMDM today.22
FINRA CAT and the Plan Participants have now met the necessary criteria for a full cutover from the RSA
specification to the CAT specification, including, e.g., achieving comparable data ingestion validation and intervenue linkage rates within a variance of under one percent between RSA and CAT specification submissions.
21 See, e.g., CAT Q1 2021 Quarterly Progress Report dated April 30, 2021, available at www.catnmsplan.com/sites/default/files/2021-05/
CAT-Q1-2021-QPR.pdf.
22 FINRA notes that the CAT uses the same code in both the test and production environments.
Thus, FINRA believes that linkages in the test environment are reliable indicators of linkages in the production environment.

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Accordingly, the Operating Committee approved the cutover from the RSA
specification to the CAT specification as the official source of Plan Participant data as of June 1, 2021, and today, all Industry Member and Plan Participant equities data reported via the CAT
specification is linked in the CAT
production environment.
As discussed in the OATS Retirement Filing, FINRA continues to evaluate CAT Data quality, and in particular, linkages between Industry Member and Plan Participant data, and to test its surveillance patterns to run on CAT
Data in POD. In that regard, FINRA
notes that it has followed established and time-tested processes and protocols throughout the development process to ensure that its patterns will perform as expected and produce the necessary output using CAT Data following the retirement of OATS. For example, FINRAs Software Development Lifecycle SDLC procedures govern systems design, changes, testing and controls. The SDLC procedures are an essential component of FINRAs operations and have been developed to serve FINRAs unique regulatory needs and structure. Additionally, consistent with SEC Regulation SCI, FINRA
procedures include a plan of coordination and communication with regulatory staff. By relying on these established processes and protocols, FINRA has confidence that the CAT
Data and linkages are reliable and sufficient to run FINRAs surveillance patterns.
Based on these results, as well as the results of its quantitative and qualitative reviews of CAT Data and successful efforts integrating CAT Data into POD, in the OATS Retirement Filing, FINRA
stated that it believes that the complete portfolio of equity surveillance patterns will be capable of consuming CAT Data and achieving comparable or better output results.
Thus, FINRA proposes to retire OATS
in accordance with the schedule set forth herein. FINRA will run its surveillance patterns for review periods through the end of the second quarter of 2021 using OATS data and begin usingand be fully reliant onCAT
Data for its surveillance patterns for review periods beginning in the third quarter of 2021. Following the retirement of OATS, FINRA expects to maintain the current established cadence of its monthly, quarterly and semi-annual surveillance patterns. In addition, FINRAs analytics platforms will have access to CAT Data as soon as such data is made available to regulators. Thus, outside of regularly scheduled surveillance pattern runs,
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FINRA can perform expedited analytics, as required by market events.
As discussed in the OATS Retirement Filing, FINRA is finalizing the development and certification of its surveillance patterns to run on CAT
Data on a rolling basis and, in accordance with its existing SDLC
procedures, will run a months worth of data and compare the output before certifying each pattern. For those equity patterns that will be subject to certification after OATS retirement, FINRA anticipates that there would be sufficient time to identify and remediate any issues prior to running the patterns in accordance with the current established cadence. FINRA does not anticipate significant issues arising from additional scheduled POD releases or in the final stages of its pattern development and certification efforts.
As discussed in the OATS Retirement Filing, on an ongoing basis following the retirement of OATS, FINRA will conduct regular reviews to ensure confidence in the completeness and accuracy of Industry Member reporting, along with the ability to remediate any issues in a timely manner. Among other things, FINRA has a robust mechanism for detecting data issues, determining which issues are material for purposes of its surveillance program, and requesting resubmission and/or reprocessing of data, as necessary.
FINRA also 1 performs a suite of data quality checks against data sourced from CAT to POD and against data processed by POD for use in surveillance patterns;
2 oversees a robust surveillance and examination compliance program that evaluates Industry Member reporting timeliness, data quality, and other issues and trends; 3 reviews CAT
compliance program alerts using a rapid remediation process and formal reviews, as necessary; and 4 reviews Industry Member self-reporting and error correction trends. FINRA believes that these practices are sufficient for identification and timely resolution of Industry Member reporting and data issues after OATS has been retired.
Specifically, with regard to the additional standards approved in the OATS Retirement Filing, through its use of CAT Data to date, as described above, FINRA believes that these standards have been satisfied. With respect to the first factor, FINRA does not believe that there are any material issues that have not been corrected or could not be corrected in the course of operation of CAT, as approved by the Operating
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