Six Bidders Vying to Build New $53m Audit Trail

Start passing the collection plate as the Securities and Exchange Commission announced the new consolidated audit trail (CAT) will cost about $53 million to build.

The estimated cost to build, including the projected five operational costs of roughly $256 million was disclosed in an SEC filing published Wednesday. Also in the filing was the number of bidder vying to build the equity market surveillance system – six.

The need for a new CAT is rooting in the May 2010 “Flash Crash” whereas regulators didn’t have enough information to properly and speedily recreate the events leading up to the market meltdown. Much like an aircraft’s “black box,” CAT will allow regulators and others to examine specific details of a market event, such as the “flash crash,” understand it and draft rules and policies to mitigate future events.

The document calls for an independent corporate entity to be formed, CAT NMS LLC, which will oversee the new market watchdog system once fully operational and approved by the SEC.

The major U.S. stock and options exchanges, and the industry’s own overseer, the Financial Industry Regulatory Authority, worked in crafting the CAT proposal with the SEC.

FINRA is reported to be one of the bidders vying to build the system. The winning bidder is set to be selected shortly after the SEC formally approves the construction of CAT.

FINRA, along with the market exchanges, will run CAT NMS LLC.