Sifma Cat Reporter Agreement

Oct
2021
08

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Referring to concerns about liability for data breaches, the Securities Industry and Financial Markets Association on Wednesday asked the SEC to weigh an important provision of the cat journalist agreement that industry members must sign before connecting to the consolidated audit loop. “Sifma and its members support the CAT and its regulatory intentions, but remain concerned about the risks of compiling sensitive customer information into a government-imposed database. Dealer brokers should not be held liable for an infringement in the CAT database over which they have no control. The main idea of SIFMA is: “Whoever holds the data is responsible.” Responsibility for cat infringement should lie with SROs, as they retain, maintain and control data. The SROs wrongly denied brokers the ability to report the data in accordance with the law, including failing to properly offer the CAT Reporter agreement for notification and comment. Given our members` commitment that CAT will continue, we ask the SEC to lift the SRO`s denial of access and suspend the application of the reporting agreement. This would allow CAT reports to continue in accordance with the proposed timetable, while examining and addressing the obvious shortcomings of the proposed agreement. In addition, the SROs did not properly propose the cat journalist`s agreement for notification and commentation, Bentsen said. SIFMA is now asking the SEC to abide by the reporting agreement. “This would allow the CAT report to be done in accordance with the proposed timeline, while verifying and correcting the obvious flaws in the proposed agreement,” he said. “This would have hooked brokers for breaches of the security of the database over which they have no control,” SIFMA argued.

On Wednesday, srOs agreed to remove the language of the agreement limiting the SRO`s liability in the event of a database breach. The SROs wanted the brokers to sign an agreement limiting the financial liability of the former to $500 per reporting company in all cases of privacy breaches, so that brokers would be liable for database security breaches. SIFMA questioned a section of the cat journalists agreement, which concerns the liability of self-regulatory organizations (SROs) composed of stock exchanges and securities associations, and CAT LLC, the group formed by the U.S. stock exchanges to develop an implementation plan for the consolidated audit band, and its executives, employees and representatives “in the event of a cat data protection breach or other behavior, are responsible for CAT LLC or SROs, limited. “SIFMA said in its submission to the SEC. The SEC was asked to intervene in the dispute, but the two sides reached an agreement that removes the language of the CAT journalist agreement that limits the SRO`s liability for a breach of the CAT database, said Kenneth E. Bentsen, Jr., president of SIFMA and CEO, in a press release. The SROs also agreed not to impose a limitation of liability in the deferback agreement without first proposing a rule and going through the formal process of notice, comment and approval with the SEC, Bentsen said. SIFMA and the self-regulatory bodies reached an agreement on the agreement on cat journalists and removed a language that limits liability.

The solution comes in the wake of a dispute between U.S. stock markets and dealer brokers, which threatened to hold brokers liable for breaches of a new trading database controlled by exchanges and the Financial Industry Regulatory Authority (FINRA). As brokers prepare to send critical and sensitive business information to the CAT, SROs had insisted that brokers sign an agreement limiting the financial liability of SROs to $500 per reportable company in the event of a data protection breach. . . .