NASD Notice to Members 04-40 - May 2004

NASD Clarifies ACT Short Sale Reporting Requirements

Executive Summary

On May 20, 2004, NASD, through its subsidiary, The Nasdaq Stock Market, Inc. (NASDAQ), filed for immediate effectiveness with the Securities and Exchange Commission (SEC) proposed interpretive material to Rule 6130 clarifying that, as currently required by the text of Rule 6130 (Trade Report Input), a "short sale" or "short sale exempt" indicator, as applicable, is required in all short-sale transactions reported to the Automated Confirmation Transaction Service (ACT), including transactions in: (1) NASDAQ National Market (NNM) securities; (2) NASDAQ SmallCap Market (SmallCap) securities; (3) over-the-counter (OTC) transactions in exchange-listed securities; (4) OTC Bulletin Board; and (5) OTC equity securities.1 New IM-6130 is set forth in Attachment A. Because of confusion that may have existed in the marketplace regarding the application of these requirements, NASD and NASDAQ are providing members additional time to re-program their systems, if necessary, to comply with the clarification. Accordingly, the operative date of these requirements is July 26, 2004.

 

Questions concerning this Notice may be directed to Jeffrey S. Davis, Office of General Counsel, NASDAQ, at (202) 912-3035; the Legal Section, Market Regulation, NASD, at (240) 386-5126; or Office of General Counsel, Regulatory Policy and Oversight, NASD, at (202) 728-8071.