NASD Notice to Members 99-27 - April 1999

Order Audit Trail System Phase 2 Firms Required to Register; Firms Should Register by April 1, 1999

Executive Summary

In accordance with National Association of Securities Dealers, Inc. (NASD®) Rules 6950 through 6957 (the OATS Rules), the NASD has established a registration process for member firms and third parties that will begin reporting to the Order Audit Trail SystemSM (OATSSM) in Phase 2 (August 1, 1999) and Phase 3 (July 31, 2000). In Phase 2, NASD member firms are required to report all electronic orders for Nasdaq® securities. All manual orders for Nasdaq securities must be reported by Phase 3.

 

Organizations reporting to OATS should complete registration approximately 120 days before they are required to report (April 1, 1999, for Phase 2; April 1, 2000, for Phase 3) in order to allow sufficient time for familiarization and testing. NASD member firms that handle orders in Nasdaq securities and fail to complete and return the OATS Subscriber Initiation and Registration Form or fail to perform all required registration activities will not be able to report OATS data to the NASD; failure to report order information by the specified OATS implementation date is a violation of NASD Rules 6955 and 3110.

 

Registration for Phase 1 (March 1, 1999) began in September 1998. Parties registered for Phase 1 have begun reporting order data to OATS. (See NASD Notices to Members 98-33, 98-73, and 99-04 for a complete description of the OATS Rules, OATS Registration process for Phase 1, and OATS Rules amendments.)

 

For Phase 2 and Phase 3 registration, the NASD has revised the existing OATS Subscriber Initiation and Registration Form. The form is available at www.nasdr.com/3370.htm. Member firms and third parties that will be transmitting to OATS directly or via another entity during Phases 2 and 3 are required to complete Sections 1 through 4 of the revised registration form and return it to the NASD prior to the date when they intend to begin reporting. The completed form must be accompanied by a request for an initial user account. The request must be on letterhead, and contain the organization’s name, address, broker/dealer number (if appropriate), and the user’s name, telephone number, and fax number.

 

All member firms and third parties that will report to OATS in Phase 2 or 3, including those that have previously registered but do not intend to report to OATS in Phase 1, should refer to the Registration Activity Checklist contained in the registration form to ensure that they have performed all required registration activities, including requesting an initial user account. Any party that intends to use the OATS private network to report to OATS by Phase 2 via File Transfer Protocol (FTP) or CONNECT:Direct, formerly known as Network Data Mover or NDM, must complete a contract with MCIWorldCom by April 1, 1999.

 

Questions regarding OATS or the OATS Subscriber Initiation and Registration Form may be directed to NASD Business and Technology Support Services via phone at (800) 321-NASD, via fax at (888) 345-6275, or via e-mail at supportservices@nasd.com. Business Support is available from 8 a.m. to 6 p.m. Monday through Friday, Eastern Time (ET). Technical Support is available from 8 a.m. Monday through 7:30 a.m. Saturday, ET. Information about OATS and copies of the revised registration form and other OATS-related publications are available on the NASD Regulation, Inc. (NASD RegulationSM) Web Site (www.nasdr.com).