Wall Street's self-regulator is weighing whether to drop a planfor a trade-surveillance system that has drawn sharp oppositionfrom the brokers that fund the agency.

The Financial Industry Regulatory Authority (Finra) hasdescribed the new system as critical for modernizing how itoversees more than 4,000 securities firms and 630,000 brokersacross the country. It was meant to automate Finra's review ofsuspicious activity such as overcharging clients, excessivetrading, and pump-and-dump schemes.

Brokers have said the proposed system, known as CARDS, would bevulnerable to hackers and that it would create huge new costs forthem. Finra is now mulling whether it can do its job without thedatabase, Finra Chief Executive Officer Richard Ketchum said inremarks prepared for testimony before the House Financial ServicesCommittee on Friday.

Finra is “reviewing the feasibility of meeting the importantgoal of enhancing our early warning capability regarding fraud andinvestor abuse using existing data sources,” Ketchum said in hisstatement.

Finra agreed last year to back away from collecting customers'personal information. Brokers have continued to lobby against thesystem, though, arguing the data would still be valuable tohackers.

Finra is also competing with bidders to build the ConsolidatedAudit Trail, a massive database that will eventually receive dataon every trade, order, or message sent by brokers buying andselling stocks and options. The Securities and Exchange Commissionapproved creation of the audit trail after the May 6, 2010, stockrout known as the “flash crash,” when more than $862 billion inU.S. equity value vanished before prices recovered.

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