NASD Notice to Members 04-66 - September 2004

NASD Reminds Member Firms of Their Obligations to Ensure the Accuracy and Integrity of Information Entered into Order-Routing and Execution Systems

Executive Summary

In recent months, there have been several instances where member firms inadvertently have entered, or permitted customers or non-members to enter, the incorrect quantity of shares or prices into the handling, routing, and execution services of a vendor, automated trading system, electronic communications network, or other market center (collectively, "trading systems"). NASD is issuing this Notice to remind firms of their obligations under Rule 3010 (Supervision) to have in place a supervisory system and written supervisory procedures reasonably designed to ensure that such orders placed into trading systems are not entered in error or in a manner inconsistent with NASD rules, including Rule 3310 (Publication of Transactions and Quotations) and IM-3310 (Manipulative and Deceptive Quotations). NASD is also reminding firms that their supervisory systems should promote compliance with the subscriber agreements of such trading systems to the extent necessary to ensure compliance with NASD rules.

 

Questions regarding this Notice may be directed to the Legal Section, Market Regulation, at (240) 386-5126; or Office of General Counsel, Regulatory Policy and Oversight, at (202) 728-8071.