February 1, 2001
With the February 1, 2001 implementation of the Riskless Principal Trade Reporting Rules, many firms have asked how to report riskless principal executions to OATS.
If a firm either does not report a trade with a customer to ACT (NASD Notice to Members 99-65) or submits a "non-tape, non-clearing report" or a "clearing-only" report (NASD Notice to Members 00-79) because the trade qualifies for riskless principal treatment, the firm still is required to submit an Execution Report to OATS. This reporting of riskless principal trade executions to OATS was specifically discussed in Question 10 of the Question and Answer section of NASD Notice to Members 99-65.
As of April 4, 2001 OATS will include a new Reporting Exception Code of "R" (Riskless Principal Transaction) to be used on the Execution Report when reporting a riskless principal transaction. Until that time, firms should supply a Reporting Exception Code of "M" (M = Market Maker side of Nasdaq® execution system execution). This Reporting Exception Code indicates that there is no corresponding trade report in ACT.
Please note that OATS reporting obligations are for Nasdaq securities only; there is no OATS obligation for CQS and OTC Bulletin Board® securities.
If you have any questions regarding these issues or on OATS in general, please contact Business and Technology Support Services at (800) 321-NASD.