SEC Audit System for Stock Trading Won’t Be Real Time, WSJ Says

The U.S. Securities and Exchange Commission is reversing course and won’t require its planned system for monitoring trades to collect data in real time, according to the Wall Street Journal.

The regulator is dropping its original plan to compile trading information as it occurs, responding to criticism that the system would be expensive and speeding up implementation, according to the newspaper, which cited an interview with SEC Chairman Mary Schapiro.

The SEC proposed requiring exchanges and the Financial Industry Regulatory Authority to build a system known as a consolidated audit trail less than three weeks after the equity market crash on May 6, 2010. It said the system would help analyze and explain the cause of events such as the rout 21 months ago that erased $862 billion in 20 minutes. The SEC took three months to gather data on stock trading after the plunge since information didn’t exist in a uniform or accessible format from exchanges and brokers.

The SEC estimated in its May 2010 proposal that an audit trail project would cost exchanges and brokers $4 billion to establish and $2.1 billion a year to maintain. Schapiro later said that the $4 billion estimate was too high. The system would initially include equities trading data and later options, according to SEC officials.

The regulator didn’t say how much the system would cost without the requirement that data be submitted in real time, the Journal said. The newspaper said the commission would adopt a “revised framework” for the consolidated audit trail in the coming months. The exchanges and Finra would then be required to provide a “detailed blueprint” for the system, according to the Journal.

To contact the reporter on this story: Nina Mehta in New York at nmehta24@bloomberg.net

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net

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