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4632C. Transaction Reporting

This rule is no longer applicable effective Jan. 1, 2009.

(a) When and How Transactions are Reported
(1) Trade Reporting Facility Participants shall, within 90 seconds after execution, transmit to the NASD/NSX Trade Reporting Facility or if the NASD/NSX Trade Reporting Facility is unavailable due to system or transmission failure, by telephone to the Operations Department, last sale reports of transactions in designated securities executed during normal market hours. Transactions not reported within 90 seconds after execution shall be designated as late.
(2) Transaction Reporting to the NASD/NSX Trade Reporting Facility Outside Normal Market Hours
(A) Last sale reports of transactions in designated securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported within 90 seconds after execution and shall be designated with the unique trade report modifier, as specified by NASD, to denote their execution outside normal market hours. Such transactions not reported before 9:30 a.m. shall be reported after 4:00 p.m. and before 6:30 p.m. with the appropriate trade report modifier as specified by NASD.
(B) Last sale reports of transactions in designated 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 be designated with the unique trade report modifier, as specified by NASD, to denote their execution outside normal market hours. Transactions not reported before 6:30 p.m. shall be reported on an "as/of" basis the following business day (T+1) between 8:00 a.m. and 6:30 p.m. Eastern Time.
(C) Last sale reports of transactions executed 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 with the unique trade report modifier, as specified by NASD, to denote their execution outside normal market hours. Such transactions not reported before 9:30 a.m. shall be reported after 4:00 p.m. and before 6:30 p.m. with the appropriate trade report modifier as specified by NASD.
(D) Last sale reports of transactions executed between 6:30 p.m. and midnight Eastern Time shall be reported the following business day (T+1) between 8:00 a.m. and 6:30 p.m. Eastern Time and be designated "as/of" trades.
(3) Members shall time-stamp all trade tickets at the time of execution for transactions in designated 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) Transactions not reported within 90 seconds after execution shall be designated as late. A pattern or practice of late reporting without exceptional circumstances may be considered conduct inconsistent with high standards of commercial honor and just and equitable principles of trade in violation of Rule 2110.
(5) 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 4200C) (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 Rule 611 of Regulation NMS under the Act (Note: to ensure consistency in the usage of 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 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 Rule 611 of Regulation NMS under the Act, 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 Rule 611 that a member is relying upon (Note: to ensure consistency in the usage of 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 Rule 611); and
(K) any other modifier as specified by NASD or the Securities and Exchange Commission.

To the extent that any of the modifiers required by this rule conflict, NASD shall provide guidance regarding the priorities among modifiers and members shall report in accordance with such guidance, as applicable.
(6) The NASD/NSX Trade Reporting Facility will append the appropriate modifier to indicate that a trade was executed outside normal market hours or that a report was submitted late to the NASD/NSX Trade Reporting Facility, where such report contains the time of execution, but does not contain the appropriate modifier.
(7) To identify pre-opening and after-hours trades reported late, the NASD/NSX Trade Reporting Facility will convert the late modifier, as applicable, on any pre-opening or after-hours report submitted to the NASD/NSX Trade Reporting Facility more than 90 seconds after execution.
(8) Participants must use an alternative electronic mechanism, and comply with all rules applicable to such alternative mechanism, to report transactions to NASD in designated securities for which electronic submission to the NASD/NSX Trade Reporting Facility is not possible. Where last sale reports of transactions in designated securities cannot be submitted to NASD via an alternative electronic mechanism (e.g., the ticker symbol for the security is no longer available or a market participant identifier is no longer active), members shall report such transactions as soon as practicable to the NASD Market Regulation Department on Form T. Transactions that can be reported to NASD electronically, 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 the Transaction
(1) In transactions between two Market Makers, the member representing the sell side shall report the trade.
(2) In transactions between a Market Maker and a Non-Market Maker, the Market Maker shall report the trade.
(3) In transactions between two Non-Market Makers, the member representing the sell side shall report the trade.
(4) In transactions between a member and a non-member or customer, the member shall report the trade.
(5) In transactions conducted through a Reporting ECN (as defined in Rule 6110C) that are reported to the NASD/NSX Trade Reporting Facility, the Reporting ECN shall ensure that transactions are reported in accordance with Rule 6130C(c).
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1) Stock symbol of the designated security;
(2) Number of shares or bonds;
(3) Price of the transaction as required by paragraph (d) below;
(4) A symbol indicating whether the transaction is a buy, sell, sell short, or cross;
(5) The time of execution 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 in the report; and
(6) For any transaction in an order for which a member has recording and reporting obligations under 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)).
(d) Procedures for Reporting Price and Volume
Members that report transactions to the NASD/NSX Trade Reporting Facility, pursuant to paragraph (b) above shall transmit last sale reports for all purchases and sales in designated securities in the following manner:
(1) 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.
(2) 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.
(3) (A) 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 39.90 which includes a $0.10 mark-down from prevailing market at 40;
REPORT 100 shares at 40.
Example:
SELL as principal 100 shares to a customer at 40.10, which includes a $0.10 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 $0.25 mark-down or service charge from the prevailing market of 40;
REPORT 10,000 shares at 40.
(B) 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 the NASD/NSX Trade Reporting Facility as one transaction in the same manner as an agency transaction, excluding the mark-up or mark-down, commission-equivalent, or other fee. Alternatively, a member may report a riskless principal transaction to by submitting the following report(s):
(i) The member with the obligation to report the transaction pursuant to paragraph (b) above must submit a last sale report for the initial leg of the transaction.
(ii) Where the initial leg of the transaction has been reported to NASD, regardless of whether a member has a reporting obligation pursuant to paragraph (b) above, the firm must submit, for the offsetting, "riskless" portion of the transaction, either:
a. a clearing-only report with a capacity indicator of "riskless principal," if a clearing report is necessary to clear the transaction; or
b. 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 the NASD/NSX Trade Reporting Facility or by submitting the following reports:
1. where required by this Rule, a tape report marked with a "principal" capacity indicator; and
2. 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 order will be reported by the exchange. A member may, however, submit to the NASD/NSX Trade Reporting Facility 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 the NASD/NSX Trade Reporting Facility shall comply with all applicable requirements for trade reports set forth in this Rule 4632C.
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 the NASD/NSX Trade Reporting Facility either a non-tape, non-clearing report or a clearing-only report for this leg marked with a "riskless principal" capacity indicator.
(e) Transactions Not To Be Reported for Publication Purposes
The following types of transactions shall not be reported to the NASD/NSX Trade Reporting Facility 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) purchases of securities off the floor of an exchange pursuant to a tender offer.
(f) Reporting Cancelled Trades
(1) Obligation and Party Responsible for Reporting Cancelled Trades
With the exception of trades cancelled in accordance with Rule 11890, members shall report to the NASD/NSX Trade Reporting Facility the cancellation of any trade previously submitted to the NASD/NSX Trade Reporting Facility. The member responsible for submitting the original trade report shall submit the cancellation report in accordance with the procedures set forth in paragraph (f)(2).
(2) Deadlines for Reporting Cancelled Trades
(A) For trades executed between 9:30 a.m. and 4:00 p.m. Eastern Time and cancelled before 4:00 p.m. on the date of execution, the member responsible under paragraph (f)(1) shall report the cancellation within 90 seconds of the time the trade is cancelled.
(B) For trades executed between 9:30 a.m. and 4:00 p.m. Eastern Time and cancelled after 4:00 p.m. but before 6:30 p.m. on the date of execution, the member responsible under paragraph (f)(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 trades executed between 9:30 a.m. and 4:00 p.m. Eastern Time and cancelled after 6:30 p.m. on the date of execution, the member responsible under paragraph (f)(1) shall report the cancellation on the following business day by 6:30 p.m.
(D) For trades executed outside the hours of 9:30 a.m. to 4:00 p.m. Eastern Time and cancelled prior to 6:30 p.m. on the date of execution, the member responsible for reporting under paragraph (f)(1) shall report the cancellation by 6:30 p.m.
(E) For trades executed outside the hours of 9:30 a.m. to 4:00 p.m. Eastern Time and cancelled after 6:30 p.m. on the date of execution, the member responsible under paragraph (f)(1) shall report the cancellation on the following business day by 6:30 p.m.
(F) For any trade cancelled on any date after the date of execution, the member responsible under paragraph (f)(1) shall report the cancellation (i) by 6:30 p.m. on the date of cancellation if the trade is cancelled before 6:30 p.m., or (ii) by 6:30 p.m. on the following business day if the trade is cancelled at or after 6:30 p.m.
(G) For purposes of determining the deadline by which a trade cancellation must be reported pursuant to subparagraph (f) of this rule the term "cancelled" 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.
(g) A member may agree to allow a Participant to report and lock-in trades on its behalf, if both parties have completed an agreement to that effect (a "give up agreement") as specified by NASD and submitted it to the NASD/NSX Trade Reporting Facility. However, the member with the reporting obligation remains responsible for the transaction submitted on its behalf. Further, both the member with the reporting obligation and the member submitting the trade to the NASD/NSX Trade Reporting Facility are responsible for ensuring that the information submitted is in compliance with all applicable rules and regulations.
(h) Prohibition on Aggregation of Transaction Reports

Individual executions of orders in a security at the same price may not be aggregated, for purposes of transaction reporting to the NASD/NSX TRF, into a single transaction report.
Amended by SR-FINRA-2007-017 eff. March 3, 2008.
Amended by SR-FINRA-2007-003 eff. Jan. 2, 2008.
Amended by SR-NASD-2007-040 eff. Nov. 5, 2007.
Amended by SR-NASD-2007-014 eff. July 9, 2007.
Amended by SR-NASD-2007-047 eff. July 6, 2007.
Amended by SR-NASD-2006-115 eff. March 20, 2007.
Amended by SR-NASD-2007-016 eff. Feb. 27, 2007.
Adopted by SR-NASD-2006-108 eff. Nov. 27, 2006.

Selected Notices: 07-23, 07-31, 07-33, 07-38, 07-63.

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