--- title: OATS Nears End of Line description: A look back at the start of a longstanding trade reporting system that's now being replaced. image: https://articles.marketsmedia.com/hubfs/Imported_Blog_Media/2846787_72e2070a-324x160-1.jpg --- ![websites-group](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/new-MMG-01.svg) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-new-marketsmedia-logo.svg)](https://www.marketsmedia.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-traders-redlogo.svg)](https://www.tradersmagazine.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-bestexe-logo.svg)](https://www.bestexecution.net/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-menu-fidesk-logo.svg)](https://www.fixglobal.com/) [![](https://articles.marketsmedia.com/hubfs/raw_assets/public/MarketsMedia_August2021/images/dropdown-fixglobal-new-logo.svg)](https://www.fixglobal.com/) - [*Facebook*](https://www.facebook.com/MarketsMedia/) - [*Twitter*](https://twitter.com/marketsmedia) - [*Linkedin*](https://www.linkedin.com/company/markets-media-llc) - [Newsletter](https://articles.marketsmedia.com/oats-nears-end-of-line#popup-newsletter) #### Want the latest news on securities markets -- FREE? 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FLASH FRIDAY is a weekly content series looking at the past, present and future of capital markets trading and technology. FLASH FRIDAY is sponsored by Instinet.* It’s had a good run. When it was introduced more than 20 years ago, the financial industry’s Order Audit Trail System was a new and improved way to capture trade information. From a 1998 Traders Magazine article (which incidentally quotes the biggest Ponzi schemer in history): ----- NASD OATS Deadline Extension Seems Likely Under prodding by market makers, the National Association of Securities Dealers is proposing to push back its phase-in of a system designed to electronically capture more than two dozen trade details. The first component of the Order Audit Trail System (OATS), the direct entry and capture of trade information, was originally to be implemented this August. Non-electronic procedures were to be covered starting Jan. 1, 1999, followed by all other orders on Jan. 31, 2000. Under an amended proposal filed with the Securities and Exchange Commission, the NASD wants to push back the first phase to February 1999, the second phase to August 1999 and the final phase to July 31, 2000. The original schedule was criticized by market makers because they said it strained their technology resources. In addition, adopting the OATS requirements, mandated by the SEC, was making life difficult for traders coping with other major changes, such as the order handling rules. SIA As previously reported, the Securities Industry Association's OATS Ad Hoc Committee complained that more time was required to comply with the workload involving OATS. "A technological undertaking of this kind requires more time \[to program and to test\]," stated the committee chairman, Bernard L. Madoff, in a letter to the SEC. The SIA committee had warned that the original schedule put an unfair burden on small and medium-sized Nasdaq trading desks that were unlikely to have the order flow to run in-house audit-trail systems. Their only option was to use service bureaus and their clearing firms, the committee stressed. Indeed, the real winners would be clearing firms that offer "one-stop shopping \[for their correspondents\]," the SIA committee maintained. The SEC is expected to approve the NASD's revised OATS plan, according to industry sources. ----- But as with most any data and technology system in capital markets, the evolution of the markets render it obsolete. Market participants and regulators have noted that OATS has been of limited value for a number of years now, as it was not built for the high-speed, complex and fragmented system that has evolved in the 21st century. Enter the Consolidated Audit Trail, the concept for which was unveiled by the U.S. Securities and Exchange Commission in 2012 as a way for regulators to better monitor and analyze trading activity. CAT development has been beset by delays and various starts and stops in recent years, but it seems to be getting its act together: production and testing commence this year and then the plan is for a gradual roll-out in 2021 and 2022. The CAT is effectively meant to supplant OATS; indeed, there is no need to keep a beat-up old laptop when a new iMac is being shipped. Finra has proposed eliminating OATS once member firms begin reporting to the CAT, and when FINRA determines that thresholds for CAT accuracy and reliability have been met. (Madoff was unavailable for comment on the startup of the CAT or the pending OATS retirement.) FEATURE IMAGE CREDIT: Photo © [Peter Church](https://www.geograph.org.uk/profile/16649) ([cc-by-sa/2.0](http://creativecommons.org/licenses/by-sa/2.0/)) [Share](https://www.facebook.com/share.php?u=https://articles.marketsmedia.com/oats-nears-end-of-line) [Tweet](https://twitter.com/intent/tweet?text=US+ETFs+Have+Record+Net+Inflows&url=https://articles.marketsmedia.com/oats-nears-end-of-line) [Share](https://www.linkedin.com/cws/share?url=https://articles.marketsmedia.com/oats-nears-end-of-line) ![email](https://articles.marketsmedia.com/hubfs/Markets%20Media/email.svg) ### NEWSLETTER SIGN UP And receive exclusive articles on securities markets ### Related articles 1. 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