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SIFMA Cautions Liability Provisions Under CAT NMS Plan Will Harm Investors Date
25/02/2021
A new report analyzing the economic impact of the proposed NMS Plan governing the Consolidated Audit Trail (CAT) concludes the proposed plan amendment, if adopted, would reduce investor welfare in two ways:
First, if the CAT does not bear the liability of data breaches, it is incentivized to invest less in data security to protect investors’ personally identifiable information and trading data in the CAT, which would place investors at greater risk of having their data compromised.
Second, requiring industry members to absorb litigation-related expenses for an event which they have no direct control over will lead to the inefficient purchase of insurance with additional costs likely passed downstream to investors.