February 1, 2001
Many NASD members have inquired about OATS Written Supervisory Procedures and their responsibilities when using a Reporting Agent, such as a clearing firm or a service bureau, to transmit their OATS data to NASD Regulation.
In the December 4, 2000 edition of The OATS Report, an article entitled OATS Written Supervisory Procedures provided guidance on what should be included by members' in these types of procedures. The article stated that written supervisory procedures should, at a minimum, (1) identify the individual responsible for the review of OATS reporting, including, but not limited to, the repair of rejections; (2) describe specifically what type of review(s) will be conducted; (3) specify how often the review(s) will be conducted; and (4) describe how the review(s) will be evidenced. These procedures should incorporate frequent reviews by the firm of the data reported on the OATS Web interface. With respect to the frequency of reviews, given the volume of OATS data reported by member firms to OATS, NASD Regulation staff strongly recommends that firms conduct their supervisory reviews on a daily basis.
As required under NASD Rule 6955(c), Reporting Members using a third party to record and transmit their OATS data must have a written agreement that specifies the responsibilities of each party. However, each Reporting Member is ultimately responsible for its own data, notwithstanding the existence of such an agreement.
Therefore, Reporting Members need to ensure that the data transmitted on their behalf is transmitted in a timely fashion and that it is complete and accurate. Among other things, firms should review to verify that (1) their data is sent to OATS by 0400 the following calendar day; (2) the data is complete with no missing events; and (3) the data is accurate with all of the appropriate data fields reported correctly. As noted above, NASD Regulation staff recommends that each of these reviews be conducted on a daily basis. Just reviewing rejected data will not suffice. Reporting Members will need to review all of the data transmitted to OATS on their behalf.
Reviewing the OATS Web interface for rejected data is an integral part of any such review. Reporting Members can check the FORE Status Notification to ensure that OATS received the FORE file sent by their Reporting Agent and whether OATS accepted the file. They can check Statistics on the number of ROEs transmitted and rejected. They can also check their Order/Trade Matching Statistics, if they are responsible for submitting OATS Execution Reports.
Using the OATS Web interface, Reporting Members also can access more specific information regarding the Rejected ROEs that need to be reviewed and, if appropriate, can be repaired and resubmitted to OATS. Accepted OATS data, which is not available directly on the OATS Web interface, also will need to be reviewed to ensure it is complete and accurate. Further, repaired and corrected data will need to be saved and maintained as part of a member's records [see OATS Rule 6954(a)(4)(A) on maintenance of OATS data].
Members that have questions about this or other OATS matters may contact the OATS Business Help Desk by calling (800) 321-NASD or by sending an e-mail.