WASHINGTON, D.C.—Benjamin Schiffrin, Director of Securities Policy, issued the following statement on the filing of Better Markets’ Comment Letter to the Securities and Exchange Commission (SEC) in response to a proposal to reduce the amount of customer information collected and retained in the consolidated audit trail (CAT):

“The importance of a consolidated audit trail that provides the SEC with the information it needs to effectively police the securities markets cannot be overstated. A CAT that provides the SEC with a repository of all information about an order, including the identity of customers, facilitates market surveillance. So a fully functioning CAT enables the SEC to identify the parties responsible for market disruptions, manipulations, and other abuses.

“The proposal to prohibit the submission to the CAT of customers’ names, addresses, and years of birth and to require the deletion of all names, addresses, and years of birth currently stored in the CAT would frustrate these goals. The SEC will not be able to quickly investigate abusive trading and identify the parties responsible if the CAT does not collect or retain customer identifying information such as names, addresses, and years of birth.

“The fact that the SEC could still attempt to obtain this information through a convoluted process misses the point. The point of the CAT was to make market oversight more efficient. The CAT is supposed to put the information necessary for the SEC to effectively police the securities markets and identify lawbreakers at its fingertips.

“The pretext for the proposal is that preventing the CAT from collecting or retaining customers’ names, addresses, and years of birth would better safeguard their personal information. There is no question that the SEC must ensure the safety of the personal information in the CAT. But legitimate privacy concerns can be addressed in ways that do not needlessly prevent the SEC from policing the markets, increase the chances of lawbreakers escaping detection, and disregard the reasons for the CAT in the first place.”

The Comment Letter is available here.

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Better Markets is a non-profit, non-partisan, and independent organization founded in the wake of the 2008 financial crisis to promote the public interest in the financial markets, support the financial reform of Wall Street and make our financial system work for all Americans again. Better Markets works with allies—including many in finance—to promote pro-market, pro-business and pro-growth policies that help build a stronger, safer financial system that protects and promotes Americans’ jobs, savings, retirements and more. To learn more, visit www.bettermarkets.org.