Notice to Members 00-17
NASD Regulation Requests Comment on Proposed Recordkeeping and Reporting Requirements for Quotations on Certain Automated, Inter-Dealer Quotation Systems
NASD Regulation, Inc. (NASD RegulationSM) requests comment from members, investors, and other interested parties on a rule proposal that would require members to record and maintain their proprietary quotations displayed in certain automated, inter-dealer quotation systems, such as the Electronic Pink Sheets (EPS), and to report such data to NASD Regulation upon request. Access to this quotation data is an integral part of NASD Regulation’s efforts to surveil for member compliance with applicable rules and regulations. In addition, with respect to allegations of fraud or certain types of unusual trading activity, quotation data is necessary to reconstruct the market in order to obtain an accurate and complete representation of the cause of the potentially fraudulent or unusual activity.
The proposed rule would permit a member to use a reporting agent to provide the quotation data to NASD Regulation, with the member being ultimately responsible for provision of the data. NASD Regulation believes that most, if not all, members will use the services of a reporting agent, which will likely be the operator of the system, such as the National Quotation Bureau (NQB) with respect to the EPS. However, if a member knows or has reason to believe that it or its reporting agent is not complying with the requirements of the proposed rule, the member would be required immediately to withdraw its proprietary quotations until such time that the member is satisfied that the quotation data is being properly maintained and reported.
Questions concerning this Notice to Members—Request for Comments may be directed to the Legal Section, Market Regulation Department, at (301) 590-6410; or Stephanie M. Dumont, Assistant General Counsel, Office of General Counsel, NASD Regulation, at (202) 728-8176.