Citadel Securities to Pay $1M Over CAT Reporting Failures

News October 16, 2024 at 01:02 PM

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The Financial Industry Regulatory Authority has fined Citadel Securities $1 million for failing to timely and/or accurately report order event data to the Consolidated Audit Trail, or CAT.

From the start of its CAT reporting obligation on June 22, 2020, through Aug. 28, 2024, Citadel failed to timely and/or accurately report data for "tens of billions of equity and option order events to the CAT Central Repository," according to FINRA's order.

CAT tracks orders and trades and was conceived by the Securities and Exchange Commission after the 2010 "flash crash."

Citadel "inaccurately reported certain data fields for approximately 42.2 billion equity and option order events to CAT, spanning 33 unique CAT reporting error types," FINRA's order states.

As a large industry member, Citadel Securities was required to begin reporting its order event data to the CAT Central Repository on June 22, 2020.

To prepare to report to CAT, "Citadel Securities developed a proprietary order and trade reporting system, a testing process, and related supervisory procedures designed to comply with the firm's CAT reporting obligations," the order states.

Three types of errors accounted for 41.8 billion inaccurately reported events, according to the order.

Citadel Securities' reporting violations "were caused by various coding and system issues, issues with data received from third parties, and the firm's interpretation of certain reporting scenarios," the order states.

Citadel Securities identified many of the reporting errors through its supervisory reviews.

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