“Markets have gone light years ahead while the surveillance system is outdated,” said Joe Saluzzi, co-founder of Themis Trading and a critic of high-frequency traders.

The SEC ordered the CAT’s creation in 2012, outsourcing it to a partnership of national securities exchanges and associations known as self-regulatory organizations, which are responsible for self-policing members including the NYSE, Nasdaq OMX, BATS, Chicago Board of Trade and the Financial Industry Regulatory Authority (Finra), an independent, not-for-profit organization authorized by Congress to regulate market participants.

Guidelines for the project indicated that it would be implemented in 2015. There have been more than 700 meetings to discuss parameters, costs and vendors, according to the Financial Times. As of November, there was only a shortlist of potential vendors — Finra, SunGard and Thesys, which the SEC is reviewing.

This frustrates Hunsader, who calls the task “obscenely easy” since he is already able to collect similar data through his subscription feeds, albeit without participants’ IDs. “The Consolidated Audit Trail will NEVER get built,” he tweeted recently.

Spokespeople for the partnership and, separately, the SEC declined further comment on the project.

Hunsader also laments the legal immunity afforded the exchanges, which can’t be sued if, for example, an investor believes others had access to information that gave them unfair advantages.

Granted immunity when they were created as nonprofit membership organizations because they are regulated by federal agencies, some say they should have lost it when they became for-profit corporations. Without it, Hunsader said, it would be easier to hold exchanges accountable to market participants.

He points to a class-action suit that accused the major stock exchanges of making data available to high-frequency traders before the rest of the investing public. That case was dismissed by a federal court last year, the judge saying the court lacked jurisdiction; the decision was appealed.

“If exchanges are stripped of their legal immunity, legal cases and market forces would sort out the problem,” said Hunsader.

And he says the exchanges’ fines for quote-stuffing and other forms of wrongdoing are too low. “A $75,000 fine for abusive behavior is like instituting a 10-cent speeding ticket,” he said.

Eoin Treacy's view

If exchanges have legal immunity from showing clear favouritism to their HFT clients they have absolutely no incentive to change. That helps to explain the slow pace of decision making in a sector clearly in need of reform.