A CAT Delay Probably a Done Deal

On October 11, the House Financial Services Committee overwhelmingly approved H.R. 3973, better known as The Market Data Protection Act of 2017. The vote to move the bill out of the committee fell one vote shy of being unanimous.

The bill requires Thesys CAT, the operator of the Consolidated Audit Trail, to develop a comprehensive internal risk control mechanism in consultation with theSecurities and Exchange Commission’s¬†Chief Economist before the CAT could start collecting data. The act also grants relief to those who are mandated to submit data until the mechanisms are in place.

The vote’s result does not come as much as a surprise. After the announcements of the hacks of Equifax and the SEC’s EDGAR corporate filing platform coming within weeks of each other, passing a bill that, in theory, would protect constituents’ personally identifiable information would be attractive to any Representative no matter which side of the aisle they are on.

I expect that the vote by the entire Hosue will mirror the Committee’s vote for the same exact reason. And given its popularity, I also think that Speaker Paul Ryan (R-WI) would want to hold a floor vote relatively quickly so his party could place a check in the win column.

As of yet, no one in the Senate has submitted a similar bill to the Senate’s Committee on Banking, Housing, and Urban Affairs. It would not take that much effort. H.R. 3973 is the legislative equivalent of being written on the back of a cocktail napkin. It is only 417 words long.

The big question is whether the Senate Democrats want to be seen as protecting their constituents’ financial data or keep the Trump Administration from achieving a legislative accomplishment.

It is not likely that the Senate banking committee could introduce a bill, mark it up, and advance it to the full Senate for a vote and then reconcile it with the House’s version and have President Trump sign it before November 15, when the self-regulatory organizations start submitting data to the CAT. This would mean that the SROs would need to provide their data and then stop once the act became law.

How long it would take for Thesys to develop new mechanisms in consultation with the SEC’s Chief Economist is anyone’s guess.

No matter how you look at this, it is a win for CAT critics everywhere.