Keeping up with the Consolidated Audit Trail (CAT) has become a critical part of every firm’s compliance priorities. With ever-changing guidelines and increasing scrutiny from FINRA, the stakes are higher than ever. Whether it’s submitting accurate data, fixing errors, or promptly responding to regulatory inquiries, there’s no room for error when it comes to CAT reporting in 2025.
But have you ever wondered which parts of your firm’s Written Supervisory Procedures (WSP) are most likely to draw FINRA’s attention? Let’s break down the top five CAT WSP areas FINRA is emphasizing and explore why they matter—and how solutions like RSMS (Regulatory Surveillance and Management System) are helping firms stay compliant and ahead of challenges. By understanding these hotspots, your firm can assess its WSP readiness and stay ahead of regulatory challenges. Let’s begin!
1. Correct Reporting
Accuracy is the very foundation of CAT compliance, yet it often becomes the first stumbling block for firms. Common issues in WSPs include:
- Incomplete Definition of Reporting Steps: Many WSPs fail to clearly define how data should be validated before submission.
- Lack of Standardization: Missing protocols for ensuring data accuracy lead to inconsistencies in CAT submissions.
- Poor Training: Compliance staff may struggle to decipher what data needs to be reported and how to format it correctly.
Even minor inaccuracies—such as incorrect timestamps or erroneous customer identifiers—could flag the firm for FINRA inspection, highlighting operational inefficiencies.
How RSMS Helps
RSMS excels at guiding firms to report accurately and completely. It provides:
- Comprehensive Reporting Guidance: Clear instructions on required CAT fields, ensuring firms know exactly what and how to report.
- Data Validation Features: Tools that cross-check CAT submissions against original records to spot inconsistencies before they reach regulators.
- Actionable Insights: Dashboards offering compliance teams a quick overview of potential problem areas in submitted data.
With RSMS, firms achieve unmatched accuracy and avoid unnecessary regulatory investigations.
2. Complete Reporting
Completeness isn’t just about submitting data on time—it’s about ensuring no details are overlooked. Many firms struggle with:
- Inadequate Reconciliation Processes: WSPs may lack robust measures for identifying missing or inconsistent data across systems.
- Overreliance on Manual Efforts: Manual checks leave room for oversights, especially when handling high transaction volumes.
- Failure to Catch Anomalies Early: Without reliable tools, firms risk discovering gaps only after submission, making error corrections more difficult.
Regulators expect firms to reconcile reported data in advance to confirm all trading activity has been accurately captured.
How RSMS Helps
RSMS introduces a strong recon process to help firms maintain total control of their reporting completeness. Key benefits include:
- Pre-Submission Reconciliation: RSMS cross-validates CAT filings, identifying missing or mismatched data long before submission deadlines.
- Integrated Tools for Anomaly Detection: Advanced analytics that flag inconsistencies in trade records for immediate attention.
- End-to-End Coverage: The system seamlessly consolidates data across platforms so that no critical details fall through the cracks.
With RSMS, firms close all gaps in their submissions and ensure FINRA sees a complete picture of their trading activity.
3. On-Time Delivery
Timely submissions reflect a firm’s operational efficiency and prioritization of compliance. However, operational bottlenecks often lead to:
- Delayed Data Processing: Firms may struggle to collate, validate, and format trade data before deadlines.
- Reactive Submission Workflows: WSPs designed for "firefighting" rather than planned reporting cycles often fail on tight schedules.
- Lack of Contingency Planning: Without backup procedures for IT downtimes or staffing challenges, submission timelines are more difficult to achieve.
Failing to meet reporting deadlines not only triggers immediate regulatory attention but may also harm client trust.
How RSMS Helps
From its outset, RSMS was designed to maintain a 100% on-time delivery record. It offers:
- Streamlined Submission Workflows: Helps compliance staff process CAT data efficiently and submit ahead of deadlines.
- Proactive Monitoring Features: Tracks submissions, notifying teams of upcoming deadlines and highlighting bottlenecks.
- Operational Consistency: Built-in safeguards ensure deadlines are met even during unexpected system or staffing issues.
RSMS takes the stress out of submission deadlines, ensuring your firm can focus on broader compliance priorities.
4. Error Corrections
Error correction remains one of the most complex areas for firms. Simply correcting errors after submission is not enough—FINRA expects firms to demonstrate proactive measures to prevent recurring mistakes. Common WSP shortcomings include:
- Insufficient Error Logs: Lack of detailed error tracking makes it hard to identify recurring issues.
- Reactive Correction Processes: Firms often address errors only after regulators point them out, which creates reputational risks.
- Failure to Identify Root Causes: WSPs may lack frameworks for determining how and why an error occurred.
Even a small error rate can raise questions about a firm’s compliance infrastructure.
How RSMS Helps
RSMS provides state-of-the-art tools for error correction management, enabling firms to achieve industry-best error rates (as low as 0.001%) Features include:
- Pre-Submission Validation: Identifies errors before reports are submitted to FINRA, drastically reducing correction needs.
- Detailed Error Tracking Logs: Maintains a comprehensive record of errors, including resolution actions and timestamps.
- Root Cause Analysis Workflows: Helps compliance teams uncover the origins of recurring errors and implement targeted fixes.
With RSMS, error management becomes a proactive process, minimizing risks and regulatory scrutiny.
5. Regulatory Inquiries
Regulatory inquiries often test a firm’s ability to quickly retrieve, analyze, and submit records. Common challenges include:
- Decentralized Data: Information stored across multiple systems delays the retrieval process.
- Slow Response Times: Without direct access to data, inquiries can take days—or even weeks—to resolve.
- Lack of Documentation: Firms may struggle to provide complete, accurate responses to detailed requests.
Regulators value firms that can respond swiftly and thoroughly to inquiries—delays can create negative impressions and deeper investigations.
How RSMS Helps
RSMS empowers firms to handle inquiries confidently through its integrated compliance warehouse It enables:
- Single-Source Data Access: Consolidates CAT and transaction data in one centralized system for quick retrieval.
- Inquiry Management Tools: Built-in features allow compliance teams to prepare responses within hours, not weeks.
- Comprehensive Documentation: Automatically captures and organizes response records, ensuring nothing is overlooked.
With RSMS, firms are always prepared for FINRA inquiries, demonstrating operational transparency and compliance strength.
6. Comparative Reviews: Staying Ahead of the Curve
Regulators have shifted their focus to comparative reviews, measuring firms against their peers. Challenges include:
- Fragmented Data Views: Multiple trading platforms make it tough to compile and analyze performance data.
- Lack of Benchmarking Tools: Firms without analytics tools struggle to track how their compliance efforts compare to industry standards.
- Overwhelming Data Volume: Large datasets hinder compliance teams from making sense of insights.
Falling behind in comparative reviews can raise red flags with regulators and clients alike.
How RSMS Helps
RSMS stays ahead of regulatory trends with advanced Analytics and Comparative Review tools that provide:
- Consolidated Data Insights: Offers a single integrated view of all trading activity, no matter how complex the operations.
- Peer Benchmarking: Allows firms to track their performance against industry averages.
- Actionable Analytics: Pinpoints weaknesses, helping firms close gaps before regulators identify them.
The tools RSMS offers keep firms well-prepared for comparative reviews, reinforcing their position as compliance leaders.
RSMS: Your Partner for FINRA CAT Compliance
Staying compliant in 2025 means having the right tools and processes to address FINRA’s most critical CAT WSP areas. With RSMS, firms are no longer limited by manual processes, fragmented data systems, or inadequate error management. RSMS ensures:
- Accurate Reporting: No discrepancies, no unnecessary investigations.
- Complete Submissions: Gaps are identified and closed before reports are submitted.
- Timely Results: Deadlines are always met, building trust with regulators.
- Error-Free Processes: Best-in-class validation tools give you peace of mind.
- Regulatory Confidence: Fast, accurate responses to inquiries strengthen your compliance posture.
- Proactive Insights: Analytics tools let you benchmark and stay ahead.
With RSMS, avoiding regulatory pitfalls becomes second nature, and achieving operational efficiency feels effortless. Don’t let compliance weigh down your firm’s momentum—RSMS enables you to stay compliant while focusing on growth. Partner with Capital Market Solutions to future-proof your compliance efforts and build trust with regulators. Take the next step towards better compliance today!