TMCnet News

TABB Research IDs 10 Critical Criteria in Selecting CAT Processor
[March 25, 2015]

TABB Research IDs 10 Critical Criteria in Selecting CAT Processor


The Consolidated Audit Trail (CAT) initiative is one of the largest, most ambitious and potentially most problematic projects the capital markets industry has undertaken. According to TABB Group in the last of its three-part series analyzing the current state of the CAT effort and the ongoing effort of selecting the CAT processor, they delved deep into the project's details and identified 10 critical criteria for theĀ self-regulatory organizations (SROs) to apply in selecting the processor drawn from six final proposals.

With vendor selection process at the heart of the overall success of the program, TABB categorizes key selection criteria into three groups: technical capability and capacity; operational focus; and fiscal strength and stability. When choosing the processor, the SROs should consider who can best deliver against the combined criteria. To build and manage this massive undertaking, the processor should have world-class technology capabilities, a deep understanding of the US securities market and experience handling long-term projects.

"The devil's in the details," says technical research analyst Shagun Bali, who co-authored "The Consolidated Audit Trail (Part III): Value Proposition and Hard Decisions" with Alex Tabb, partner and COO. Not to be overlooked is that building the CAT is only the beginning of the challenges testing the processor, cautions Tabb, that "the real tests start once the program is up and running." Analyzing the CAT RFP questions also reveals 47% focus on technology, a core ompetency, with 53% on the actual running of the CAT, including program and project management, commercial terms and organizational setup.



The processor should also have deep pockets, says Bali, along with a demonstrated commitment on issues such as big data, digital security and infrastructure management. Putting aside its cost, she explains, "the complexity of the US markets combined with the integration of approximately 1,800 data providers into the CAT - broker/dealers, exchanges, Securities Information Processors (SIPs) and The Options Price Reporting Authority (OPRA) - makes it a task of uncompromising difficulty."

Given its size and complexity, one of the most important issues to be addressed is storage and its resulting security implications. Currently, there are three options under consideration: public cloud; hybrid cloud; and a traditional datacenter/private cloud. "TABB Group believes that while all three storage options are viable, traditional data centers combined with private clouds allow for the flexibility the CAT needs, while ensuring the safety, security and control that the CAT demands," says Bali.


Data security is the biggest concern after funding issues, which is why the processor needs to have a recognized leadership position in the digital security space with a demonstrated commitment to sustained R&D investments.

The options market adds to the complexity. Although the two analysts are confident all the bidders have necessary market knowledge to handle the US equities markets, Tabb says "we're less confident for the options markets, but we remain hopeful."

The 17-page, 3-exhibit final report can be downloaded by TABB Group Research Alliance Data and Analytics (DnA) clients and pre-qualified media at http://www.tabbgroup.com/Login.aspx. For the Executive Summary and to purchase the report, write to [email protected].

The Executive Summary for the complete series, including "The Consolidated Audit Trail: Reconstructing Humpty-Dumpty" and "Consolidated Audit Trail (Part II): Problems and Pitfalls," can be found at http://tinyurl.com/p7volzo.

About TABB Group

Based in New York and London, TABB Group is the research and consulting firm focused exclusively on capital markets, based on the interview-based, "first-person knowledge" research methodology developed by Larry Tabb.


[ Back To TMCnet.com's Homepage ]