Updated Guidance on the Reporting Requirements for Orders Transmitted to a Member Firm’s Trading Desk: Effective Date September 15, 2014

OATS Rules 7440(c)(1) and 7450 require firms to record and report to OATS information related to the transmittal of an order to a department within the member. This information must be reported to OATS via a Desk Report or via desk related fields (e.g., Desk Type Code, Desk Received Timestamp) contained in the New Order, Combined Order/Route and Combined Order/Execution reports.

In the OATS Phase III FAQ, Desk Reports, Questions 1 and 2, it says that if an order is received at the firm and transmitted to the trading desk within a second, no Desk Report is required. Given changes over the past several years in order handling practices, particularly with respect to the use of computer driven trading strategies, multiple order events often occur within the same second, and a large number of orders are received and transferred to one or more desks or departments within a member within one second of receipt. Further, this one second interpretation is inconsistent with recent changes to the OATS Rules and FINRA's transaction reporting rules that require execution timestamps to be reported in milliseconds, if captured by the firm, given the large number of order events and trades that occur within the same second.

In order to align the granularity of desk information with both OATS and trade reporting timestamp granularity, FINRA is amending the guidance previously provided in the OATS Phase III FAQ. Effective September 15, 2014, a Desk Report (or desk information on new type events as described above) will be required for all transfers to the trading desk or other desk or department within the firm even if such transfers occurs within one second of receipt at the member.

The guidance contained in this OATS Report supersedes all previous guidance related to a firm's obligation to submit desk information for orders transferred to the trading desk within one second of receipt. If you have questions related to this report, please contact the OATS Helpdesk at 1-800-321-6273.