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Printer-Friendly Last Updated: 7/20/06 OATS Announcements

OATS Compliance Tools - Telephone Conference and Web-Ex Presentation - August 2, 2006 4:15 PM ET

NASD is offering an educational telephone conference that includes a Web-Ex demonstration, on Wednesday, August 2, 2006, at 4:15 PM ET. This session is designed to help member firms meet their compliance responsibilities with respect to OATS.

The details of the call are below:

Time: 4:15 p.m., ET

Call-In Number: (888)324-6856

Leader's Name: Paul McKenney

Password: OATS

Please note that this call is closed to all members of the media. 

You may access the Web-Ex link by clicking on the following link: https://nasd.webex.com/nasd/j.php?ED=93382607&UID=50816847

NOTE: When accessing the Web-Ex application, if prompted, please follow the download instructions.

During this telephone conference and Web-Ex demonstration, NASD staff will cover the following:

• Overview and demonstration of the OATS Reporting and Feedback section of the OATS Web Interface
• Overview of the OATS Compliance Report Cards
• Question and Answer Session

To participate in this telephone conference, please RSVP at https://www.mymeetings.com/emeet/rsvp/index.jsp?customHeader=mymeetings by entering the following information: Conference ID: 9581672 Conference Passcode: OATS

For more information on OATS, please view the following web page www.nasd.com/oats. Please contact the OATS Helpdesk at (800) 321-6273 should you have any questions or concerns regarding OATS.

OATS Phase III

NASD has published two documents regarding the amended OATS reporting requirements and the implementation of OATS Phase III, which will be effective May 8, 2006.  The first document is a Notice to Members providing background and interpretative guidance related to the recently approved amendments to the OATS Rules.

NASD has also updated the OATS Reporting Technical Specifications to include, among other things, technical enhancements required by the amendments to the OATS Rules.  The changes to the OATS Reporting Technical Specifications  will be effective May 8, 2006.  Firms and OSOs may begin to test their codes for compliance with the system specifications, in the OATS Customer Testing (CT) environment, on March 27, 2006.

For more information on OATS Phase III please visit www.nasd.com/oats/PhaseIII. Should you have any questions regarding OATS, please contact the OATS Helpdesk at (800) 321-6273.

SEC Request for Comments

On October 11, 2005, the Securities and Exchange Commission (SEC) noticed for comment SR-NASD-2005-101, which proposes to expand OATS reporting requirements to OTC equity securities.  View the SEC's notice (Rel. 34-52581).

Those interested in commenting on the proposed changes should submit comments directly to the SEC, as described in the SEC's notice. The comment period will expire 21 days after publication of the proposal in the Federal Register, which is expected during the week of October 17, 2005.  Rule filings are not effective until approved by the SEC.  In addition, some rule filings may be followed by amendments that modify the original filing.

Please contact the OATS Helpdesk at (800) 321-6273 with any questions regarding OATS.

NASD Rule Filing Approval

On September 28, 2005, the SEC approved SR-NASD-00-23 relating to the OATS rules.  As approved, the amendments (1) implement the OATS requirements for manual orders (OATS Phase 3);  (2) provide that members are required to capture and report both the time the order is received by the member from the customer and the time the order is received by the member's trading desk or trading department, if those times are different; (3) exclude certain members from the definition of "Reporting Member" for those orders that meet specified conditions and are recorded and reported to OATS by another member; and (4) permit NASD to grant exemptive relief from the OATS reporting requirements in certain circumstances to members that meet specified criteria.

For more detailed information, members can view the SEC approval order.

In addition, NASD will provide additional information and guidance in a Notice to Members and updated OATS Reporting Technical Specifications both to be published shortly.  

NASD Rule Filing
On September 14, 2005, NASD filed Amendment No. 3 to SR-NASD-00-23 with the SEC, the proposed rule change was originally filed with the SEC on April 19, 2000. 
 
The purpose of Amendment No. 3 is to address the comment letters received by the SEC in response to the publication of the proposed rule change in the Federal Register and to propose amendments responsive to the comments where appropriate.  If approved, the amendments to the OATS Rules proposed in SR-NASD-00-23 would: (1) provide that members are required to capture and report both the time the order is received by the member from the customer and the time the order is received by the member's trading desk or trading department, if those times are different; (2) exclude certain members from the definition of "Reporting Member" for those orders that meet specified conditions and are recorded and reported to OATS by another member; and (3) permit NASD to grant exemptive relief from the OATS reporting requirements in certain circumstances to members that meet specified criteria. 
 
Please note that rule filings generally are not effective until approved by the SEC.  Rule filings also may be followed by amendments that modify the original filing or prior filing thereto.

If you have any questions or concerns regarding this proposal, please contact the OATS Helpdesk at (800) 321-6273.

As previously announced, the Market Regulation Department of NASD is conducting a review of members' supervisory systems as they relate to the OATS Rules.  In this regard, all member firms currently submitting OATS data, either on their own behalf or via another party, were requested pursuant to NASD Procedural Rule 8210 to complete an online survey concerning their OATS supervisory system by July 15, 2005. After August 12, 2005, the questionnaire will no longer be available on the OATS Web site. NASD may initiate disciplinary proceedings against any firm that failed to submit a completed survey.

Each firm must access the survey through the secure OATS Web Interface. Access to the OATS Web Interface requires an OATS UserID and password.  If you have not yet established and received an OATS UserID and password, you may request one through the OATS Helpdesk according to the instructions on our site. 

Should you have any questions when applying for a User ID and password or when accessing the supervisory survey, please contact the OATS Helpdesk at (800) 321-6273. 

If you have questions regarding the survey itself, please contact the Market Regulation Department at (240) 386-5126.

NASD Rule Filing

On June 10, 2005, NASD filed with the SEC Amendment No. 2 to SR-NASD-00-23, originally filed with the Commission on April 19, 2000.  Pursuant to NASD Rule 6957(c),  the OATS Rules will apply to all manual orders effective 120 days after Commission approval of SR-NASD-SR-00-23 (“Phase Three”). 
 
The SEC requests comment on the NASD proposal to amend the Order Audit Trail System (OATS) Rules which:  (1) provide that members are required to capture and report both the time the order is received by the member from the customer and the time the order is received by the member's trading desk or trading department, if those times are different; (2) exclude certain members from the definition of "Reporting Member" for those orders that meet specified conditions and are recorded and reported to OATS by another member; and (3) permit NASD to grant exemptive relief from the OATS reporting requirements in certain circumstances to members that meet specified criteria. The comment period expires July 18, 2005.
 
View the Federal Register Notice. Should you have any questions or concerns regarding this proposal, please contact the OATS Helpdesk at (800) 321-6273.

NASD Extends Implementation Date of New Special Handling Code

In the January 14, 2005 OATS Report entitled "OATS Reporting Obligations for Modifications to Executed Orders", members were instructed that a new special handling code of ADD will be required for certain order modifications beginning with the February 14, 2005 OATS release. In order to give firms additional programming time to accommodate this new code, use of the new ADD Special Handling Code will not be required until April 1, 2005. Firms should note that because the new code will be included in the February 14, 2005 release, OATS will accept the code beginning February 14, 2005.

Please contact the OATS Helpdesk at 1-800-321-6273 if you have any further questions. (Last updated on: 1/27/05)

Passing Routed Order IDs via ACES

On November 24, 2004 NASDAQ issued a letter to ACES subscribers concerning translation issues in ACES that result in the routing and receiving firms reporting different OATS Routed Order IDs to OATS. NASDAQ's proposed short-term solution is for both routing and receiving firms to remove the spaces between the Branch and Sequence number when reporting the Routed Order ID to OATS.  This solution is consistent with NASD's guidance posted in the OATS Report article Matching OATS Routed Order IDs on Orders Routed via Nasdaq's ACES System on September 2, 2004. 

NASDAQ posted new ACES specifications on December 21, 2004.  The specifications allow for Order Entry firms to transmit the Branch Sequence number to ACES without interval spaces beginning on January 12, 2005.  As of that date, however, market makers will still receive the Branch/Sequence numbers with embedded spaces.  NASD continues to recommend that the embedded spaces be eliminated when reporting the Routed Order ID to OATS. 

As of April 2005,  ACES plans to eliminate the embedded space between the Branch and Sequence numbers that ACES passes through to the receiving firms. 

Please contact the OATS Helpdesk at 1-800-321-6273 with any question regarding this notice or on OATS in general. (Last updated on: 12/22/04)

New Notices to Members Regarding OATS

NASD recently published two Notices to Members regarding OATS.  Notice to Members 04-80 seeks comment on proposed changes to the OATS Rules.  These proposed changes would require members to record and report to OATS:  (1) order information relating to exchanged listed and OTC equity securities; (2) enhanced information relating to orders routed to non-members or exchanges; (3) and order information related to proprietary orders generated during normal market making activities.  Comments are due by January 20, 2005. 

Notice to Members 04-85 announces SEC approval of amendments to Rule 6954(c) requiring that Electronic Communication Networks (ECNs) report the Routed Order ID on orders received electronically from other members. 

Please contact the OATS Helpdesk at 1-800-321-6273 with any questions regarding these notices, or regarding OATS in general. (Last updated on: 11/24/04)

QQQ to Become OATS Reportable on December 1, 2004

On December 1, 2004, the NASDAQ-100 Index Tracking Stock^SM, known as QQQ^SM, will transfer its listing to the NASDAQ National Market^® under the trading symbol QQQQ. (See Nasdaq Head Trader Alert #2004-142) Upon listing on NASDAQ, QQQ will trade under NASDAQ market rules.  This means that orders received for QQQ will become subject to the OATS Rules on December 1, 2004. 

 
Therefore, any QQQ order received on or after December 1, 2004, must be reported to OATS.  Order events related to orders received prior to December 1, 2004, however, are not subject to OATS reporting and should not be reported to the OATS production environment.  Any Desk, Routing, Execution, Cancel/Replace, or Cancel Reports submitted to OATS for orders received before 12/1/04 will be rejected. Should you have any questions on this announcement or on OATS in general, please contact the OATS Helpdesk at 1-800-321-6273. (Last updated on: 11/12/04)

OATS Reporting

NASD has published Notice to Members 04-69 to notify firms that mandatory use of combined New Order/Route and combined New Order/Execution Reports has been delayed until April 4, 2005. The notice also provides clarification of combined reporting format requirements for related order information submitted by multiple order sending organizations. Please contact the OATS Helpdesk at 1-800-321-6273 should you have any questions regarding this notice, or regarding OATS in general. (Last updated on: 10/21/04)

OATS Customer Test (CT)

The OATS third quarter 2004 release will be available in the OATS Customer Test (CT) Web site on Tuesday, September 7, 2004. This date is moved forward from the scheduled date of September 20, 2004 to allow firms more time to test the reporting changes associated with the release. Specifically, two additional fields will be added to the New Order and Combined New Order/Route Reports to allow for the reporting of same day cancellations. Two additional fields will also be added to the Execution and Combined Order/Execution reports to allow for the mandatory reporting of Execution Price and Capacity. New Order, Execution Order, Combined New Order/Route, and Combined Order/Execution Reports submitted to OATS CT without these additional fields after September 7, 2004 will be rejected by OATS CT. The release date for OATS Production remains on schedule for October 4, 2004. Should you have any questions regarding this announcement, or on OATS in general, please contact the OATS Helpdesk at (800) 321-6273. (Last updated on: 08/30/04)

Interfirm Route Matching Statistics

NASD reminds firms that as of July 14, 2004, routing firms can view Interfirm Route Matching statistics on the OATS Web Interface. The Interfirm Route Matching statistics provide routing firms with the number and percentage of Route Reports that do not match to the corresponding New Order Report submitted by the receiving firm to which the order was routed. Along with the number and percentage of unmatched Route Reports, members will also be provided the specific unmatched reports so that they may research and correct any identified problems. Further, NASD reminds firms that it is incumbent upon any firm routing an order to another firm to communicate with the receiving firm to ensure they are able to receive and record the routing firm's Routed Order ID.

More information, including matching criteria, can be found in the most recent OATS Report and in the OATS Reporting Technical Specifications. Please contact NASD's OATS Helpdesk at (800) 321-6273 with questions regarding this notice or on OATS in general. (Last updated on: 08/13/04)
 

OATS Reporting Changes

NASD is announcing several additional reporting changes that will be effective with the OATS third quarter 2004 release, currently scheduled for October 4, 2004. Specifically, two additional fields will be added to the New Order and Combined New Order/Route Reports to allow for the reporting of same day cancellations. New Order and Combined New Order/Route Reports submitted to OATS without these additional fields after October 4, 2004 will be rejected by OATS. Further, the current optional use of Combined New Order/Route and Combined New Order/Execution reports will become mandatory for orders that are fully routed or executed on the same business day they are received effective December 1, 2004. Further details regarding these new reporting requirements are available in Notice to Members 04-46 (Last updated on: 06/16/04)

OATS Report Cards

On May 24, 2004, NASDAQ Trader.com implemented the following new Compliance Report Cards within the Secure Data section: Order Audit Trail System (“OATS”) Compliance Summary; OATS Compliance Daily Total Summary Data; and OATS Compliance Detail Data.

The OATS Compliance report card is a monthly status report on the number and percentage of: i. Late OATS submissions; ii. Unmatched execution reports; iii. Unmatched NASDAQ Execution System route reports; and iv. Unrepaired Repairable Rejected order events. As you know, member firms are required to submit Reportable Order Events (“ROEs”) to OATS in accordance with established NASD rules and regulations. If your firm engages in a pattern or practice of late OATS reporting or improperly reporting order events, the firm may be found to be in violation of NASD Conduct Rule 2110 and applicable OATS rules. Member firms should make no inference, however, that staff of NASD’s Market Regulation Department has or has not determined that the information contained on the OATS Compliance report cards does or does not constitute rule violations.

The OATS Compliance report card for each month will be made available on the site on the 24th of the following calendar month, or the first business day after the 24th if that day falls on a weekend or holiday. OATS Compliance report cards remain online for 13 months.

Also, this report will be included in the QMRC Scorecard. The QMRC Scorecard provides an overview of certain performance and comparison statistics from each of the active individual report cards in one specific location. The Scorecard will only supply data already available in the respective report cards for current month and the preceding month.

If you have questions concerning access to these reports, please call the NASDAQTrader Web Help Desk at (800) 777-5606. If you have questions regarding the data contained in these reports or on OATS in general, please call the OATS Helpdesk at (800) 321-6273. (Last updated on: 06/04/04)

Upcoming Changes To OATS Reporting Requirements

On April 29, the SEC approved NASD's proposed rule change SR-NASD-2004-023 regarding OATS Execution Reports. The rule change requires firms to add to their OATS Execution Reports the execution price and the capacity in which the member executed the transaction (eg. agency, principal, riskless principal). To allow firms adequate time to program for the rule change, the additional data elements will be required beginning with NASD's regular quarterly OATS release for third quarter 2004, currently scheduled for September 2004. Detailed information regarding the new data requirements will be included in an upcoming Notice to Members and updated OATS Reporting Technical Specifications. Should you have any questions regarding this notice, or on OATS in general, please contact the OATS Helpdesk at (800) 321-6273.

Connect: Direct

As of June 30, 2004, OATS will no longer support Connect: Direct as a method of transmission of OATS data to NASD. Firms currently using Connect: Direct may send OATS data via: FTP, IFT (Internet File Transfer), Email or the OATS Web Interface. Should you have any questions regarding this matter, or on OATS in general, please contact the OATS Help Desk at (800) 321-6273.

Special Handling Code

NASD is adding a new Special Handling Code of ("IO") Imbalance Only to the OATS New Order, Combined Order/Route and Combined Order/Execution reports. The definition of an Imbalance Only order is an order to buy or sell at a specified price or better that may be executed only during the Nasdaq Closing Cross and only against an imbalance. This Special Handling Code will be available in OATS on March 29, 2004. The corresponding OATS Reporting Technical Specifications will be published in the coming days.

Nasdaq Dual Listing Program

NASD member firms that receive orders for securities that are dually listed on Nasdaq and the New York Stock Exchange are not required to report the orders for dual listed securities to NASD's Order Audit Trail System (OATS). In Nasdaq Head Trader Alert #2004-006 http://nasdaqtrader.com/Trader/News/2004/headtraderalerts/hta2004-006.stm, Nasdaq has indicated that InterMarket Trading System (ITS) rules apply to dual-listings. The OATS rules do not require member firms to report to OATS orders handled pursuant to ITS rules.

Should you have any questions regarding dual listed securities or OATS in general, please contact the OATS Help Desk at (800) 321-6273.

For additional information, contact NASD Business and Technology Support Services.

View previous OATS Announcements.