OATS Reporting Obligations When Reducing Share Quantity

FINRA is issuing this OATS Report to clarify a firm’s OATS reporting obligations when receiving an instruction to reduce the shares quantity of an order. FINRA understands that a customer’s wish to reduce the shares quantity of an order may be communicated to firms in one of two ways as explained in further detail below. Firms should report to OATS in accordance with the customer’s instruction.

One way a firm may receive a customer instruction to reduce the shares quantity of an order is by an instruction or message to cancel part of the order while leaving the residual shares quantity under the same order identifier.  In this instance, the customer’s instruction to reduce the shares quantity must be reported via a Cancel Report with a leaves quantity.  The leaves quantity will remain active under the original order identifier with any subsequent events also linking to that same identifier.

For example, a firm receives an order at 10:05:03:052 for 1,000 shares which the firm identifies with an Order ID of ABC2854. At 10:05:04:007 the firm receives a cancel message from its customer with an instruction to reduce the order quantity to 500 shares. At 10:05:04:041 the firm routes the reduced shares quantity to another entity.  In this example the firm would report as follows:

  1. New Order Report for 1,000 shares with an Order ID of ABC2854
  2. Cancel Report with an Order ID of ABC2854 and a Leaves Quantity of 500 shares
  3. Route Report with an Order ID of ABC2854 reflecting the route of the reduced shares to another entity.

A second way a firm may receive a customer instruction to reduce the shares quantity of an order is by an instruction or message to cancel the existing order and replace it with a new order of a lesser quantity under a new order identifier.  In this instance, the customer’s instruction to cancel the existing order and replace it with a new order of a lesser quantity must be reported to OATS via a Cancel/Replace Report, and any subsequent actions related to the replacement order will be reported under the new replacement order identifier.

For example, a firm receives an order at 12:15:43:025 for 1,000 shares which the firm identifies with an Order ID of XYZ4852. At 12:15:43:054 the firm receives a cancel/replace message from its customer with an instruction to replace the 1,000 share order with a new order with a quantity of 500 shares. The firm assigns the order a new identifier of XYZ4870.  At 12:15:44:010, the firm routes the new order of 500 shares to another entity.  In this example the firm would report as follows:

  1. New Order Report for 1,000 shares with an Order ID of XYZ4852
  2. Cancel/Replace Report with a Replaced Order ID of XYZ4852and an Order Receiving Firm Order ID of XYZ4870 a Shares Quantity of 500 shares
  3. Route Report with an Order ID of XYZ4870 reflecting the route of the order for 500 shares to another entity.

Please contact the OATS Helpdesk at 1-800-321-6273 with any questions related to this OATS Report.