Exemptive Relief from Certain Trade Reporting Requirements Related to Regulation NMS
May 21, 2007
On May 10, 2007, NASD filed an immediately effective rule change with the SEC to adopt new Rule 5150 and amend Rule 9610 to provide NASD with authority to temporarily exempt members from certain new NASD trade reporting requirements for the Alternative Display Facility (ADF) and the NASD Trade Reporting Facilities (TRFs) relating to Regulation NMS (Reg NMS).1 Specifically, Rule 5150 provides NASD with exemptive authority to address implementation issues concerning: (1) the self-help modifier; (2) the qualified contingent trade modifier; (3) the sub-penny modifier; and (4) the modifier used to distinguish between inbound and outbound intermarket sweep orders. Firms should review NASD Notice to Members 07-23 for more information about the new required Regulation NMS-related trade reporting modifiers.
To seek exemptive relief, firms must submit a written request to NASD, which:
To formally request exemptive relief, members must email or send via regular mail their written request addressing each of the criteria specified above to the following address:
Regulation NMS Modifiers
9509 Key West Avenue
Rockville, MD 20850
Attention: Matt Pikel
With a copy to:
Office of General Counsel
1735 K Street, NW
Washington, D.C. 2006
Attention: Matthew Adeola
Members should note that NASD will only grant such an exemption on a firm-by-firm basis for good cause shown after taking into consideration all relevant factors, and only if it is consistent with the protection of investors and the public interest. In addition, it should be noted that NASD does not intend to grant exemptions under Rule 5150 except in exceptional circumstances and only where the requester has demonstrated that it has made best efforts to comply in a timely fashion with the new trade reporting requirements related to Regulation NMS and there is a specific, limited problem or issue preventing the member from achieving full compliance. NASD will exercise such exemptive authority on a temporary basis and, as set forth in the new rule, NASD will determine the duration of any exemption, which shall not exceed six months.
1 NASD's authority to provide such an exemption will automatically sunset one year after the Pilot Stocks Phase Date, scheduled to occur on July 9, 2007.