OATS Report - September 2, 2004

August 2, 2004

NASD reminds firms that when an NASD member firm receives or originates an order and electronically routes that order to another member firm, the routing firm must provide a Routed Order ID to the receiving firm. (This requirement does not apply when routing to an ECN or to a non-member.) Both the routing firm and the receiving firm must record and report this Routed Order ID to OATS so that NASD is able to electronically link the orders together and create a complete lifecycle for the order. (See the OATS Technical Specifications for detailed reporting requirements). It is the responsibility of the routing firm to communicate with the receiving firm to ensure that the receiving firm is able to capture and accurately report to OATS the Routed Order ID passed by the routing firm.

This obligation applies when firms use Nasdaq's ACES system to route to, or receive orders from, another member. Firms must report to OATS as the Routed Order ID on the Route Report, or as the Sent to Routed Order ID on the Combined Order/Route Report, the number it enters in the ACES Branch/Sequence Number fields. In turn, the receiving firm must report the number it receives from ACES in those same fields as the Routed Order ID on its New Order, Combined Order/Route or Combined Order/Execution Report. It has come to NASD's attention that firms have difficulty matching orders routed between firms via ACES due to the way that the ACES Branch/Sequence Number fields are set up as four characters, a single delimiter, and four numbers. For example, one problem that has been brought to NASD's attention is that a routing firm will enter four characters in each of the two Branch/Sequence numbers fields in ACES and will then report that same sequence of characters to OATS as an eight-character number with a delimiter or space. However, when ACES passes the Branch/Sequence Number to the receiving firm, it translates the two four character fields into one eight-character field with no delimiter between the fourth and fifth character. The receiving firm only sees the Branch/Sequence number with no delimiter included and therefore, reports such to OATS not realizing the delimiter was part of the original eight character number generated by the routing firm. NASD is also aware that there may be other types of translation problems that firms may be experiencing with orders routed through ACES.

Therefore, NASD recommends that routing firms, when reporting the Routed Order ID to OATS for orders routed through ACES, remove the delimiter or space between the fourth and fifth character that is eliminated by ACES when the order is passed by that system. NASD also recommends that receiving firms not add any delimiters or spaces to their Routed Order IDs to compensate for translation issues in ACES. If both parties eliminate the delimiter or space, then there will be a greater probability of correctly matching the Routed Order IDs in OATS.

For more information on Interfirm Route Matching please consult the OATS Reporting Technical Specifications and the OATS Subscriber Manual. Should you have any questions regarding this article or on OATS in general, please contact the OATS Helpdesk at 1-800-321-NASD.