OATS Phase III

On September 28, 2005, the SEC approved rule filing SR-NASD-00-23 relating to the OATS rules. As approved, the amendments (1) implement the OATS requirements for manual orders (OATS Phase III);  (2) provide that members are required to capture and report both the time the order is received by the member from the customer and the time the order is received by the member's trading desk or trading department, if those times are different; (3) exclude certain members from the definition of "Reporting Member" for those orders that meet specified conditions and are recorded and reported to OATS by another member; and (4) permit NASD to grant exemptive relief from the OATS reporting requirements in certain circumstances to members that meet specified criteria.

This portion of the NASD Web site is designed to provide members with up to date information regarding OATS Phase III.

Manual Orders Received Prior to July 10, 2006

Pursuant to NASD's OATS Rules, manual orders in NASDAQ-listed securities must be reported to OATS beginning July 10, 2006. Manual orders received or originated prior to July 10, 2006, are not required to be reported to OATS. In addition, order events occurring after July 10, 2006 relating to manual orders received or originated prior to July 10, 2006, are not required to be reported to OATS. Firms should note that subsequent events (Desk, Route, Execution, Cancel/Replace or Cancel Reports) related to orders not previously reported to OATS (i.e., manual orders received or originated prior to July 10, 2006) will be rejected by OATS. Rejections that occur as a result of submissions of order reports related to manual orders received before July 10, 2006 are not required to be repaired. Firms should note, however, that these rejections will appear in the daily OATS Statistics posted to the OATS web site.

OATS Phase III Test Reminder

Members are reminded that the implementation date for OATS Phase III is July 10, 2006. Phase III requires, among other things, the reporting of manual orders and transmittal of orders to a member's trading desk. OATS provides an independent environment for testing, referred to as the OATS Certification Test (CT) environment. All parties transmitting information to OATS for the first time must successfully transmit test data to the CT environment before they may begin reporting data to the OATS production system.

The OATS Phase III code has been available in the CT environment since March 27, 2006 and can be accessed at the following locations:

Web via Internet: https://firmstest.finra.org
FTP - SAVVIS: oatstest-ftp.nasd.com
IFT: iftcert.nasd.com

Email: [email protected]

Firms that will be reporting data for the first time on July 10, 2006, must have successfully transmitted test data to NASD before they will be allowed to submit data to the production system. If your clearing firm or a third party entity will be reporting OATS data on your firm's behalf, you must establish an OSO (Order Sending Organization) Relationship with that firm or entity within the OATS Web site. Failure to establish an OSO relationship will cause data submitted on your behalf by another party to be rejected by OATS. Please contact the OATS Helpdesk at (800) 321-6273 for assistance in setting up OSO Relationships.

Firms that currently report to OATS are strongly encouraged to test their Phase III code changes in the CT environment prior to the actual implementation date of July 10, 2006. Because the OATS CT environment is not designed to accommodate production level volume, any firm planning to submit more than 5 million ROEs at one time should contact the OATS Helpdesk to schedule a time for submission.

The last day to submit test data prior to the July 10, 2006 implementation date is Friday, July 7, 2006. Please contact the OATS Helpdesk prior to testing if you need assistance.

If you have any additional questions, please call the OATS Helpdesk at (800) 321-6273.

Effective Date of OATS Phase III extended until July 10, 2006

In response to concerns raised by firms and service bureaus, on April 20, 2006, NASD filed a rule change for immediate effectiveness to extend the compliance date for the recently approved amendments to the OATS Rules, including the reporting of manual orders (Phase III), from May 8, 2006 to July 10, 2006.  NASD believes that the extended effective date will greatly assist firms by providing additional time to ensure that all the necessary system changes can be tested and implemented, thereby helping to ensure the integrity and accuracy of OATS data. In addition, as described in NTM 06-15, NASD has granted exemptions from the OATS requirements for a period of six months to those members that meet the specified criteria set forth in Rule 6958. Exemptions granted thus far were scheduled to begin on May 8, 2006 and expire on November 8, 2006. Given the delayed compliance date, all exemptions granted to date will commence on July 10, 2006 and expire on January 10, 2007. Members already granted exemptions need not resubmit an exemption request to extend their exemption to January 10, 2007.  View NASD Notice to Members 06-17 for more information.

If you have any questions regarding OATS Phase III please contact the OATS Helpdesk at 1-800-321-6273.

OATS Registration Reminder (Updated 5/18/2006)

Due to the change in effective date for OATS Phase III from May 8, 2006 to July 10, 2006, NASD has modified the dates for registration and testing of the Phase III environment as indicated below:

Members are reminded that the implementation date for OATS Phase III is July 10, 2006. Phase III requires, among other things, the reporting of manual orders and transmittal of orders to a member's trading desk. In order to transmit data to OATS beginning July 10, 2006, all NASD member firms that meet the definition of Reporting Member under NASD Rule 6951(n) and receive and/or handle orders for NASDAQ-listed equity securities must register for the Order Audit Trail SystemSM (OATSSM) by Monday, July 3, 2006.

To register and gain initial access to OATS, please view our OATS Registration Web page.

OATS provides an independent environment for testing, referred to as the OATS Certification Test (CT) environment.  All parties transmitting information to OATS for the first time must successfully transmit test data to the CT environment before they may begin reporting data to the OATS production system. The OATS Phase III code is currently available in the CT environment. Firms that will be reporting data for the first time on July 10, 2006, must have successfully transmitted test data to NASD before they will be allowed to submit data to the production system. The last day to submit test data prior to the July 10, 2006 implementation date is Friday, July 7, 2006.

If your clearing firm or a third party entity will be reporting OATS data on your firm's behalf, you must establish an OSO (Order Sending Organization) Relationship with that firm or entity within the OATS Web site. Failure to establish an OSO relationship will cause data submitted on your behalf by another party to be rejected by OATS. Please contact the OATS Helpdesk at (800) 321-NASD for assistance in setting up OSO Relationships.

Firms that are excluded from the definition of Reporting Member or that have been exempted from the OATS Reporting requirements do not have to register with OATS.

If you have any additional questions, please call the OATS Helpdesk at (800) 321-6273.

Rule Filing

View the SEC approval order and related documents regarding SR-NASD-00-23 for more detailed information.

Notice to Members

06-15 SEC Approves Expansion of NASD's Exemptive Authority under the OATS Rules; NASD Provides Additional Guidance Regarding Exemptive Relief and Encourages Exempted and Other Small Firms to Test the Enhanced OATS Web Interface (Notice Posted on: 4/5/06)

Important Dates

Phase III Exemption Request

Note:  The Exemption Request Application was updated on January 6, 2006.  Firms that have already submitted their application need not resubmit as they will be contacted for the additional information by OATS staff.  Firms that have not yet submitted an application must use the latest version.

Frequently Asked Questions

View a listing of frequently asked questions about OATS Phase III.