From Cato, February 17:
Brokers will have to report every trade and the trader’s personal information.
What little financial privacy you have when trading stocks is about to get even smaller next month. When you make a stock trade, your broker already is required by the Bank Secrecy Act to maintain records of it, monitor your trading activity, and report any suspicion of illegal activity to the federal government. But, starting in March, your broker will be required to directly report all of your trades, including your personal information, to a massive government database. If the Bank Secrecy Act concerns you—and even if it doesn’t—just wait until you hear about the Consolidated Audit Trail (CAT).
The Consolidated Audit Trail is intended to collect and accurately identify every order, cancellation, modification, and trade execution for all exchange‐listed equities and options across all U.S. markets, allowing the Securities and Exchange Commission (SEC) to track orders and identify who made them.
The SEC ordered the CAT to be created in 2012 after regulators had difficulty identifying the causes of the 2010 “flash crash.” At the time, then‐SEC Chair Mary Schapiro described the CAT as providing regulators with the “data and means to exponentially enhance [their] abilities to oversee a highly complex market structure.” And in years since, the CAT has been championed as necessary for the SEC’s enforcement efforts.
The CAT began collecting trading data in 2020, after years of development replete with challenges and controversies. It is scheduled to begin collecting customer information on March 17, 2023. Although the SEC has limited the scope of customer information to be collected—initial plans called for Social Security numbers, dates of birth, and account numbers—brokers must still provide customer names, addresses, and birth years which allows for easy identification of individual investors....
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