Special NASD Notice to Members 01-16 - February 2001

Member Obligations to Provide Statistical Information About Order Executions Under Rule 11Ac1-5 of the Securities Exchange Act of 1934

Executive Summary

On November 17, 2000, the Securities and Exchange Commission (SEC) adopted Exchange Act Rule 11Ac1-5 ("Rule"), which requires "market centers" that trade national market system securities to make available standardized, monthly reports containing statistical information about "covered order" executions. The Rule is intended to promote visibility and competition in order execution quality, particularly with respect to execution price and speed.

 

The Rule defines a market center as "any exchange market maker, OTC market maker, alternative trading system, national securities exchange, or national securities association." In order to establish uniform reporting procedures between market centers, the Rule directs national securities exchanges and the National Association of Securities Dealers, Inc. (NASD®) to submit for approval by the SEC a joint national market system plan. The plan must be submitted no later than February 15, 2001. A proposed plan has been drafted, but has not yet been submitted to the SEC for approval. As further detailed in this Notice, the first phase-in of securities subject to the Rule will begin on April 2, 2001.

 

Questions concerning this Notice may be directed to Kathleen O'Mara, Assistant General Counsel, or Philip Shaikun, Assistant General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8071.