It has been described as “the largest financial IT project of all time”. So perhaps it is not surprising that it has taken more than five years to narrow down the list of bidders who want to build the Consolidated Audit Trail (CAT) — the giant data repository for stock orders and quotes on US exchanges.
Now the US Securities and Exchanges Commission (SEC) which instigated the CAT project in the wake of the May 2010 “flash crash” says the project will be ready to be put out for public comment in the second quarter of this year, and will should be up and running by the end of 2017.
There are three remaining bidders for the CAT build, which have been selected by the exchanges (or, as they are officially referred to in the process: the self-regulating organisations), whittled down from an initial 14. These three bidders are fintech vendors SunGard (acquired by Fidelity National Systems last November for $9.1 billion) and Thesys, together with FINRA — the industry association that represents the exchanges and which operates the OATS audit trail that CAT is designed to replaced.
The core objective, that of creating a comprehensive database that will enable regulators to reconstruct events in securities markets, demands a system that links the exchanges’s data to those of their broker dealer customers. That means tracking each day an estimated 58 billion records of orders, executions and quotes for equity and options trades across the exchanges.
It’s a task so vast, according to SunGard, that use of the public cloud is a prerequisite of a successful project. The firm has teamed up with Google for its pitch, and has also said that automated testing of the database will be a key part of its bid.
Financial market volatility adds to the complexity of building the CAT, says SunGard. “Because the volume of data that needs to be processed can vary dramatically from day to day, the need to scale up and down is imperative in terms of cost control,” it said. “Some days might see 30 billion trade events, while a tumultuous trading day could trigger as many as 120 billion events. A traditional fide-hardware IT solution in this scenario could result in millions of dollars of equipment sitting idle on many trading days.”
SunGard says it has tested its prototype CAT solution that processes trades into Google Cloud Bigtable, which allows for scalable usage. Two of the key tests have been, firstly, to simulate a spike in trading, in which 2.5 billion trade records were processed in 15 minutes and, secondly, a more sustained test in which six billion trade events were processed in a one-hour test.
The total cost of the CAT project has been estimated at up to $4 billion. But one reason it has been moving forward so slowly, said some industry insiders, is that because of its costs the data repository will not actually improve the profitability of the exchanges. Which is one reason why FINRA, whose tender for the build is based on enhancing the existing OATS audit trail, is one of the remaining bidders.
Additional information on CAT, including details of the system’s high level security requirements, published in January, can be found here .
