Notice to Members 99-98
NASD Regulation Reiterates That Members Must Comply With All Short Sale Rules When Receiving Orders Through Electronic Order Systems or the Internet and Reiterates the Operation of the Affirmative Determination Rule
The purpose of this Notice is to reiterate the long-standing position of NASD Regulation, Inc. (NASD RegulationSM) and Nasdaq® that member firms must comply with the rules concerning short sales regardless of how a short sale order is received, e.g., through the telephone, an electronic transmission, the Internet, or otherwise. Accordingly, firms must comply with the bid test, make affirmative determinations, and identify short sales in the Automated Confirmation Transaction ServiceSM (ACTSM) for all proprietary and customer short sale orders that are received electronically through proprietary electronic order routing systems, the Internet, or otherwise.
Questions concerning National Association of Securities Dealers, Inc. (NASD®) Rule 3350 (Bid Test Rule) should be directed to the Office of General Counsel, The Nasdaq Stock Market, Inc. (The Nasdaq Stock Market®), at (202) 728-8294; or the Legal Section, Market Regulation, NASD Regulation, at (301) 590-6410. Questions concerning NASD Rule 3370 (Affirmative Determination Rule) should be directed to the Office of General Counsel, NASD Regulation, at (202) 728- 8071; or the Legal Section, Market Regulation, NASD Regulation, at (301) 590- 6410.