Nasdaq OMX told the SEC in a November 2011 letter not to “lower its expectations” by turning to a system such as OATS that doesn’t meet the agency’s needs. The exchange operator said it could build the system the SEC envisions. The exchanges and Finra will be responsible for selecting the technology provider or plan processor that would operate the repository for the audit trail data, the SEC said in 2010.
Thomas Jordan, president and chief executive officer of Jordan & Jordan, a New York-based firm specializing in securities industry information and compliance issues, said he hopes the exchanges and Finra will put out a request for proposal to select the service provider that will be the plan processor. More clarification is also needed on how the audit trail initiative relates to the tracking system implemented to monitor activity by brokers, high-frequency firms and asset managers deemed large traders by the SEC, he said.
“It would be good for the SEC to be part of the creation of the plan,” Jordan said in a phone interview. “I can’t overemphasize how complicated creating this will be. If the SEC stays involved and doesn’t just throw it over the wall, we could get a stronger result. Maybe we could also come up with more than one alternative and the SEC can choose among them.”
Jamie Selway, head of liquidity management at Investment Technology Group Inc., a New York-based brokerage, said it’s likely that governance of the national plan won’t be spelled out at the SEC meeting. The issue is important to brokers who want a say in how the system that compiles their data will use or handle the information.
“We’re not expecting finality,” Selway said in a telephone interview. “It’s a pretty good piece of policy that we should have had a long time ago.”
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