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← Series 7: Order Processing & Trade Settlement
Series 7 practice questionhardTrade Reporting — OATS

A broker-dealer receives a customer order for a Nasdaq-listed stock at 10:15:30 AM and routes it to a market maker at 10:15:32 AM. Under FINRA's audit trail requirements, which events must be reported?

  1. AOrder receipt, order routing, and order execution events with timestamps✓ Correct answer
  2. BOnly the execution of the trade
  3. COnly the final execution and settlement
  4. DOnly orders that result in executed trades
Explanation

Why A — Order receipt, order routing, and order execution events with timestamps

FINRA's Consolidated Audit Trail (CAT), which replaced OATS (Order Audit Trail System), requires broker-dealers to report the complete lifecycle of an order, including order receipt, routing, modification, cancellation, and execution events. Each event must include precise timestamps. This comprehensive audit trail allows FINRA to reconstruct trading activity for surveillance and enforcement purposes. All orders must be reported, not just those that result in executions, to provide a complete picture of market activity.

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