April 15, 2002
This article reminds member firms how to report changes to previously submitted and accepted data in OATS. Firms should refer to OATS Reporting Technical Specifications, Section 4, Order Reporting Scenarios and Section 6.5, Firm Generated Corrections and Deletions. In a nutshell, cancel and cancel/replace reports should be used to reflect a customer's instruction that an order be canceled or modified. Correction reports should be used to change incorrect data. Deletions should be made to remove reports of events that did not actually take place.
Members need to distinguish between the modification or cancellation of an order and the correction of erroneous data submitted to OATS. A modification or cancellation of an order can only result from a customer instruction. A correction of data should result from a determination that inaccurate, incomplete, or invalid information regarding an order event has been submitted to OATS. Thus, the first step in determining the proper report to use is to determine what triggers the need to change data submitted to OATS. If a customer instruction triggers the change, a cancel or cancel/replace report must be used. In fact, all modifications to an order made by a customer must be submitted via a cancel/replace report. If a firm submits inaccurate, incomplete, or invalid data, a correction report must be used. (As discussed below, however, some data fields cannot be corrected and require a deletion of the entire report.) If a firm submits data that suggests an order event took place that, in fact, did not take place, the firm must delete the original report to ensure the integrity of the order audit trail.
The following examples illustrate the distinctions to be made:
Customer Instruction: A customer mistakenly tells his account representative to buy 500 shares of ABCD at a limit price of 30. The customer calls back to say that the intention was to buy 300 shares of ABCD at a limit price of 30. In this instance, the original report for the customer order should be canceled or modified using a Cancel/Replace report.
Incorrect Submission of Data: When entering an order into the firm's order management system, the account executive records the wrong special handling code or "fat-fingers" the price and the report is submitted and accepted by OATS. These are instances where the firm should correct the data via a correction report.
Submission of Mistaken Report: A firm receives an order and correctly submits a new order report. The firm then executes the order, but mistakenly submits a cancellation report instead of an execution report. In this instance, the firm should delete the cancellation report submitted by mistake.
Fields that Cannot be Corrected: Members also need to be aware that certain data fields cannot be corrected via a correction report. They include the following:
The first three event fields represent the "Enhanced OATS Three-Part Key" that allows NASD to uniquely identify that particular order across the entire market. If for any reason, one or more of the five fields above need to be corrected, the firm should delete the incorrect report and any related subsequent order events containing the same erroneous information, and submit new reports reflecting the correct data. If the firm needs to do a deletion because the wrong symbol was reported, it should not reuse the Order Receiving Firm Order ID of the deleted report.
Should you have questions about this article, please contact the Gateway Business Applications Support group at (800) 321-NASD (Listen to the prompts for "Business" and "OATS".)