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4632A. Transactions Reported by Members to TRACS

This rule is no longer applicable. NASD Rule 4632A has been superseded by FINRA Rule 6282. Please consult the appropriate FINRA Rule.

(a) When and How Transactions are Reported to TRACS
(1) Transaction Reporting to TRACS During Normal Market Hours
Members shall, within 90 seconds after execution, transmit to TRACS, or if TRACS is unavailable due to system or transmission failure, by telephone, facsimile or e-mail to ADF Operations, last sale reports of transactions in ADF-eligible securities executed between 9:30 a.m. and 4:00 p.m. Eastern Time otherwise than on an exchange. Transactions not reported within 90 seconds after execution shall be designated as late. A pattern or practice of late reporting without exceptional circumstances shall be considered conduct inconsistent with high standards of commercial honor and just and equitable principles of trade in violation of Rule 2110.
(2) Transaction Reporting to TRACS Outside Normal Market Hours

(A) Last sale reports of transactions in ADF-eligible securities executed otherwise than on an exchange between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported within 90 seconds after execution and shall be designated as ".T" trades to denote their execution outside normal market hours. Additionally, last sale reports of transactions in ADF-eligible securities executed between the hours of 4:00 p.m. and 6:30 p.m. Eastern Time shall be reported within 90 seconds after execution and shall be designated as ".T" trades to denote their execution outside normal market hours.
(B) Last sale reports of transactions in ADF-eligible securities executed otherwise than on an exchange outside the hours of 8:00 a.m. and 6:30 p.m. Eastern Time shall be reported as follows:

(i) Last sale reports of transactions executed otherwise than on an exchange between midnight and 8:00 a.m. Eastern Time shall be reported between 8:00 a.m. and 9:30 a.m. Eastern Time on trade date and be designated as ".T" trades to denote their execution outside normal market hours.
(ii) Last sale reports of transactions executed otherwise than on an exchange between 6:30 p.m. and midnight Eastern Time shall be reported on the next business day (T+1) between 8:00 a.m. and 6:30 p.m. Eastern Time, be designated "as/of" trades to denote their execution on a prior day and be designated as .T transactions to denote their execution outside of normal market hours.
(3) All Trade Tickets Must be Time-Stamped
Members shall time-stamp all trade tickets at the time of execution for transactions in ADF-eligible securities. Execution time shall be reported to NASD on all last sale reports and shall be expressed in hours, minutes and seconds based on Eastern Time in military format, unless another provision of NASD rules requires that a different time be included on the report.
(4) Other Modifiers Required to be Reported to TRACS
Reporting Members also shall append the applicable trade report modifiers as specified by NASD to all last sale reports, including reports of "as/of" trades:
(A) if the trade is executed during normal market hours and it is reported later than 90 seconds after execution;
(B) if the trade is a Seller's Option Trade, denoting the number of days for delivery;
(C) if the trade is a Cash Trade;
(D) if the trade is a Next Day Trade;
(E) if the trade occurs at a price based on an average weighting or another special pricing formula;
(F) if the trade is a Stop Stock Transaction (as defined in Rule 4200A) (Note: the time at which the member and the other party agreed to the Stop Stock Price must be given in lieu of including the time of execution on the trade report and the designated modifier shall not be appended to a report of a Stop Stock Transaction if the Stop Stock Transaction is executed and reported within 90 seconds of the time the member and the other party agree to the Stop Stock Price);
(G) if the transaction report reflects a price different from the current market when the execution price is based on a prior reference point in time (Note: the transaction report shall include the prior reference time in lieu of the actual time the trade was executed and the designated modifier shall not be appended to a report of a transaction whose price is based on a prior reference point in time if the trade is executed and reported within 90 seconds from the prior reference point in time);
(H) to identify pre-opening and after-hours trades (executed between 8:00 a.m. and 9:30 a.m. Eastern Time or between 4:00 p.m. and 6:30 p.m. Eastern Time) reported more than 90 seconds after execution;
(I) if the trade would be a trade-through of a protected quotation, but for the trade being qualified for an exception or exemption from SEC Rule 611 (Note: to ensure consistency in the usage of SEC Rule 611 related modifiers by registered broker-dealers, this modifier will be used in conformity with the specifications approved by the Operating Committee of the relevant National Market System Plans to identify trades executed pursuant to an exception or exemption from SEC Rule 611);
(J) if the trade would be a trade-through of a protected quotation, but for the trade being qualified for an exception or exemption from SEC Rule 611, members must, in addition to the modifier required in paragraph (I) above, append an appropriate unique modifier, specified by NASD, that identifies the specific applicable exception or exemption from SEC Rule 611 that a member is relying upon (Note: to ensure consistency in the usage of SEC Rule 611 related modifiers by registered broker-dealers, these modifiers will be used in conformity with the specifications approved by the Operating Committee of the relevant National Market System Plans to identify trades executed pursuant to an exception or exemption from SEC Rule 611); and
(K) any other modifier as specified by NASD or the Securities and Exchange Commission.
(5) Form T Reporting Obligations
Members shall report as soon as practicable to the Market Regulation Department on Form T, last sale reports of transactions in ADF-eligible securities for which electronic submission to TRACS is not possible (e.g., the ticker symbol for the security is no longer available or an ADF Trading Center identifier is no longer active). Transactions that can be reported to TRACS, whether on trade date or on a subsequent date on an "as of" basis (T+N), shall not be reported on Form T.
(b) Which Party Reports Transaction
(1) In transactions between two Registered Reporting Members, the member representing the sell side shall report the trade using TRACS.
(2) In transactions between a Registered Reporting Member and a Non-Registered Reporting Member, the Registered Reporting Member shall report the trade using TRACS.
(3) In transactions between two Non-Registered Reporting Members, the member representing the sell side shall report the trade to TRACS.
(4) In transactions between a member and a customer or non-member, the member shall report the trade using TRACS.
(c) Information To Be Reported — Two Party Trade Reports

(1) A two party trade report is a last sale report that denotes a trade between one Reporting NASD Member and one Non-Reporting Member. The Reporting NASD Member is denoted as the ("MMID") side of the trade report and the Non-Reporting Member is denoted as the ("OEID") side of the report.

(2) Each two party last sale report submitted by a reporting NASD Member should contain:

(A) Security identification symbol (SECID);

(B) Number of shares or bonds;

(C) Price of the transaction as required by paragraph (h) below;

(D) A designated symbol denoting whether the transaction, from the Reporting NASD Member's perspective, is a buy, sell, sell short, or cross;

(E) If known, a designated symbol denoting whether the transaction, from the perspective of the Non-Reporting Member, is a buy, sell, or sell short;

(F) A designated symbol denoting whether the transaction, from the perspective of the Reporting Member, is a principal, riskless principal, or agent;

(G) If known, a designated symbol denoting whether the transaction, from the perspective of the Non-Reporting Member, is a principal, riskless principal, or agent;

(H) For any transaction in an order for which a member has recording and reporting obligations under NASD Rules 6954 and 6955, the trade report must include an order identifier, meeting such parameters as may be prescribed by NASD, assigned to the order that uniquely identifies the order for the date it was received (see Rule 6954(b)(1))
(I) Execution time expressed in hours, minutes and seconds based on Eastern Time in military format, unless another provision of NASD rules requires that a different time be included on the report;

(J) The market participant identifier of the Reporting Member and the Non-Reporting Member;

(K) Reporting Member clearing broker;

(L) Reporting Member Executing Broker in case of a "give up;"

(M) Non-Reporting Member Executing Broker;

(N) Non-Reporting Member introducing broker in case of a "give up;"

(O) Non-Reporting Member clearing broker;

(P) A designated symbol denoting whether the trade report should be published;

(Q) A designated symbol denoting whether the trade report should be compared in TRACS;

(R) If the contra side to the trade report is a customer of the Reporting Member, the Reporting Member shall denote that the trade is an internalized trade with the designated symbol;

(S) If the contra side to the trade report is a Non-NASD member, the Reporting Member shall indicate with the designated symbol that the contra side is a non-member.

(T) For two party trade reports submitted pursuant to an Automated Give Up ("AGU") arrangement or a Qualified Service Representative ("QSR") Agreement, disclosure of the information set forth in subparagraphs (e) (2) (E) and (G) is mandatory.
(3)(A) In the event that the MMID side or the OEID side determines that any information provided pursuant to subparagraphs (e)(2)(D), (E), (F), (G), or (H)(i) is inaccurate or incomplete, the MMID side or OEID side, as applicable, must submit a trade report addendum within fifteen (15) minutes of the submission of the original trade report to correct or provide some or all of the following information:

(i) Short sale indicator;

(ii) Volume related to short sale indicator change;

(iii) Capacity Indicator;

(iv) Volume related to capacity change; or

(v) Branch Sequence Number

(B) The trade report addendum feature of TRACS may also be used by members to add or modify the User Assigned Reference Number.

(C) Each trade report addendum must contain the following information:

(i) Reference number for the original trade report that is being amended or modified;

(ii) OEID side or MMID side flag; and

(iii) MPID.

(d) Information To Be Reported — Three Party Trade Reports

(1) A three party trade report is a single last sale trade report that denotes one Reporting Member and two contra parties. The Reporting Member is denoted as the MMID side of the trade report and the two non-reporting sides are denoted as the OEID side of the trade report. In a three party report, the Reporting Member is the buyer to one OEID and the seller to the other OEID. Registered ECNs may submit three party trade reports. Riskless principal trades also may be submitted by reporting members as three party trade reports.

(2) Each Three Party Trade Report Submitted by a Reporting Member shall contain the following information:
Transaction Information
(A) Security Identification Symbol (SECID);
(B) Number of shares or bonds;
(C) Price of the transaction as required by paragraph (h) below;
(D) Execution time expressed in hours, minutes and seconds based on Eastern Time in military format, unless another provision of NASD rules requires that a different time must be included on the report;
(E) The market participant identifier of the Reporting Member and the two Non-Reporting Members;
(F) A designated symbol denoting whether the trade should be published;
(G) For any transaction in an order for which a member has recording and reporting obligations under NASD Rules 6954 and 6955, the trade report must include an order identifier, meeting such parameters as may be prescribed by NASD, assigned to the order that uniquely identifies the order for the date it was received (see Rule 6954(b)(1)). This order number must associate both the buy side and sell side OATS Execution Reports to the TRACS report.
MMID Side
(H) All three party trade reports from ECNs must be marked as agency cross transactions;

(I) All three party trade reports from Non-ECNs must be denoted as riskless principal trade reports and shall include a designated symbol denoting whether the trade between the non-ECN and the buy-side OEID is a sell or sell short transaction;

(J) Reporting Member clearing broker;

(K) Reporting Member Executing Broker in the case of a "give up";

Buy Side OEID
(L) Buy Side OEID executing broker;

(M) Buy Side OEID introducing broker in case of a "give up";

(N) Buy Side OEID clearing broker;

(O) If known, a designated symbol denoting whether the trade, from the Buy Side OEID's perspective, is as principal, riskless principal, or agent;

(P) If the Buy Side OEID is a customer of the Reporting Member, the Reporting Member shall denote that the trade is an internalized trade with the designated symbol;

(Q) If the Buy Side OEID is a non-NASD member, the Reporting Member shall indicate with the designated symbol that the buy side OEID is a non-member;

(R) A designated symbol denoting whether the trade between the MMID and the Buy Side OEID shall be compared in TRACS;
Sell Side OEID
(S) Sell Side OEID executing broker;

(T) Sell Side OEID introducing broker in case of a "give up";

(U) Sell Side OEID clearing broker;

(V) If known, a designated symbol denoting whether the trade, from the Sell Side OEID's perspective, is as principal, riskless principal, or agent;
(W) If known, a symbol denoting whether the trade, from the Sell Side OEID's perspective, is a sell or sell short transaction;

(X) If the Sell Side OEID is a customer of the Reporting Member, the Reporting Member shall denote that the trade is an internalized trade with the designated symbol;

(Y) If the Sell Side OEID is a non-NASD Member, the Reporting Member shall indicate with the designated symbol that the buy side OEID is a non-member;

(Z) A designated symbol denoting whether the trade between the MMID and the Sell Side OEID shall be compared in TRACS;

(AA) If the transaction between the Buy Side OEID and the Reporting Member is reported pursuant to an AGU arrangement or a QSR agreement, disclosure of the information set forth in subparagraph (f) (2) (O) is mandatory; and

(BB) If the transaction between the Sell Side OEID and the Reporting Member is reported pursuant to an AGU arrangement or a QSR agreement, disclosure of the information set forth in subparagraphs (f) (2) (V) and (W) is mandatory.
(3)(A) In the event that the MMID side or the OEID side determines that any information provided pursuant to subparagraphs (f)(2)(G)(i), (I), (O), (V), or (W) is inaccurate or incomplete, the MMID side or OEID side, as applicable, must submit a trade report addendum within fifteen (15) minutes of the submission of the original trade report to correct or provide some or all of the following information:

(i) Short sale indicator;

(ii) Volume related to short sale indicator change;

(iii) Capacity Indicator;

(iv) Volume related to capacity change; or

(v) Branch Sequence Number

(B) The trade report addendum feature of TRACS may also be used by members to add or modify the User Assigned Reference Number.

(C) Each trade report addendum must contain the following information:

(i) Reference number for the original trade report that is being amended or modified;

(ii) OEID side or MMID side flag; and

(iii) MPID.

(e) Procedures for Reporting Price and Volume
(1) Members that are required, or have the option, to report transactions pursuant to paragraph (d) above shall transmit last sale reports in the following manner:
(A) For agency transactions, report the number of shares (or bonds) and the price excluding the commission charged.
Example:
SELL as agent 100 shares at 40 less a commission of $12.50;
REPORT 100 shares at 40.

(B) For dual agency transactions, report the number of shares (or bonds) only once, and report the price excluding the commission charged.
Example:
SELL as agent 100 shares at 40 less a commission of $12.50;
BUY as agent 100 shares at 40 plus a commission of $12.50;
REPORT 100 shares at 40.

(C)(i) For principal transactions, except as provided below, report each purchase and sale transaction separately and report the number of shares (or bonds) and the price. For principal transactions that are executed at a price that includes a mark-up, mark-down or service charge, the price reported shall exclude the mark-up, mark-down or service charge. Such reported price shall be reasonably related to the prevailing market, taking into consideration all relevant circumstances including, but not limited to, market conditions with respect to the security, the number of shares (or bonds) involved in the transaction, the published bids and offers with size at the time of the execution (including the reporting firm's own quotation), the cost of execution and the expenses involved in clearing the transaction.
Example:
BUY as principal 100 shares from another member at 40 (no mark-down included);
REPORT 100 shares at 40.

Example:
BUY as principal 100 shares from a customer at 39.85 which includes a .15 mark-down from prevailing market at 40;
REPORT 100 shares at 40.

Example:
SELL as principal 100 shares to a customer at 40.15, which includes a .15 mark-up from the prevailing market of 40;
REPORT 100 shares at 40.

Example:
BUY as principal 10,000 shares from a customer at 39.75, which includes a .25 mark-down or service charge from the prevailing market of 40;
REPORT 10,000 shares at 40.

(ii) Exception: A "riskless" principal transaction in which a member after having received an order to buy a security, purchases the security as principal at the same price to satisfy the order to buy or, after having received an order to sell, sells the security as principal at the same price to satisfy the order to sell, shall be reported to TRACS as one three party transaction, excluding the mark-up or mark-down, commission-equivalent, or other fee. Alternatively, a member may report a riskless principal transaction by submitting the following report(s):

a. The member with the obligation to report the transaction pursuant to paragraph (d) above must submit a last sale report for the initial leg of the transaction.

b. Where the initial leg of the transaction has been reported to NASD, regardless of whether a member has a reporting obligation pursuant to paragraph (d) above, the firm must submit, for the offsetting, "riskless" portion of the transaction, either:

1. a clearing-only report with a capacity indicator of "riskless principal," if a clearing report is necessary to clear the transaction; or

2. a non-tape, non-clearing report with a capacity indicator of "riskless principal," if a clearing report is not necessary to clear the transaction.
Example:
SELL as a principal 100 shares to another member at 40 to fill an existing order;
BUY as principal 100 shares from a customer at 40 minus a mark-down of $12.50;
REPORT 100 shares at 40 by submitting a single trade report marked with a "riskless principal" capacity indicator to TRACS or by submitting the following reports:
3. where required by this Rule, a tape report marked with a "principal" capacity indicator; and

4. either a non-tape, non-clearing report or a clearing-only report marked with a "riskless principal" capacity indicator.

In a riskless principal transaction in which a member purchases or sells the security on an exchange to satisfy a customer's order, the trade will be reported by the exchange. A member may, however, submit to TRACS a clearing only report or a non-tape, non-clearing report for the "riskless" leg of a riskless principal transaction where the initial leg has been reported on or through an exchange. Any such report submitted to TRACS shall comply with all applicable requirements for trade reports set forth in this Rule 4632A.
Example:
BUY as principal 100 shares on an exchange at 40 to fill an existing order;
DO NOT REPORT this leg (will be reported by exchange).
SELL as principal 100 shares to a customer at 40 plus a mark-up of $12.50.
A member MAY submit to TRACS either a non-tape, non-clearing report or a clearing-only report for this leg marked with a "riskless principal" capacity indicator.
(D) For transactions that are executed at a price different from the current market when the execution is based on a prior reference point in time, members shall append to the transaction report a trade report modifier designated by NASD and shall include in the transaction report the prior reference time.
Example:
At 9:45 a.m., a member discovers that a customer's order to BUY 100 shares at the opening price has not been executed. The member executes the customer's order at 9:45 a.m. at the opening price (40). Current market is 41.
REPORT 100 shares at 40 and append the .PRP modifier with the time 9:30.
(f) Prohibition on Aggregation of Transactions
Individual executions of orders in a security at the same price may not be aggregated, for transaction reporting purposes, into a single transaction report.
(g) Special Trade Indicator
A Reporting Member shall append the designated symbol for special trades, step out trades, reversals, and as-of trades.
(h) Clearing Indicators
A Reporting Member shall use a designated symbol to denote whether the trade is to be: (i) compared in TRACS; (ii) not compared in TRACS; (iii) compared in TRACS pursuant to an Automatic Give Up Agreement ("AGU"); or (iv) not compared in TRACS, but locked in pursuant to a Qualified Service Representation Agreement ("QSR").
(i) Transactions Not To Be Reported To NASD For Publication Purposes
The following types of transactions effected by NASD members shall not be reported to TRACS for publication purposes:
(1) transactions that are part of a primary distribution by an issuer or of a registered secondary distribution (other than "shelf distributions") or of an unregistered secondary distribution;

(2) transactions made in reliance on Section 4(2) of the Securities Act of 1933;

(3) transactions where the buyer and seller have agreed to trade at a price substantially unrelated to the current market for the security (e.g., to enable the seller to make a gift);

(4) purchases or sales of securities effected upon the exercise of an option pursuant to the terms thereof or the exercise of any other right to acquire securities at a pre-established consideration unrelated to the current market;

(5) transactions reported on or through an exchange;

(6) the acquisition of securities by a member as principal in anticipation of making an immediate exchange distribution or exchange offering on an exchange; and
(7) purchase of securities off the floor of an exchange pursuant to a tender offer.
(j) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
Members shall report the cancellation of any trade through TRACS that was previously submitted to NASD through TRACS. The member responsible under the 4600A series for submitting the original trade report shall submit the cancellation report in accordance with the procedures set forth in 4600A Series.
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4:00 p.m. Eastern Time, the member responsible under paragraph (j)(1) shall use its best efforts to report the cancellation not later than 6:30 p.m. on the date of execution, and otherwise it shall report the cancellation on the following business day by 6:30 p.m.
(B) For trades executed outside the hours of 9:30 a.m. and 4:00 p.m. Eastern Time, the member responsible under paragraph (j)(1) shall use its best efforts to report the cancellation not later than 6:30 p.m. on the date of execution, and otherwise it shall report the cancellation on the following business day by 6:30 p.m.
(C) For purposes of determining the deadline by which a trade cancellation must be reported to NASD pursuant to subparagraph (j) of this rule the term "cancelled" or "cancellation" shall mean the time at which (i) the member with the reporting responsibility informs its contra party, or is informed by its contra party, that a trade is being cancelled, (ii) the member with the reporting responsibility and its contra party agree to cancel a trade if neither party can unilaterally cancel the trade, or (iii) the member with the reporting responsibility takes an action to cancel the trade on its books and records, whichever event occurs first.
Amended by SR-FINRA-2007-017 eff. March 3, 2008.
Amended by SR-NASD-2007-040 eff. Nov. 5, 2007.
Amended by SR-NASD-2007-047 eff. July 6, 2007.
Amended by SR-NASD-2007-001 eff. March 5, 2007.
Amended by SR-NASD-2006-091 eff. March 5, 2007.
Amended by SR-NASD-2006-098 eff. Dec. 1, 2006.
Amended by SR-NASD-2006-055 eff. Dec. 1, 2006.
Amended by SR-NASD-2005-87 eff. Aug. 1, 2006
Adopted by SR-NASD-2002-97 eff. July 29, 2002.

Selected Notices: 07-31, 07-33, 07-38, 07-63.