OATS Report - OATS Reporting of Manually Received Orders Executed On an Agency Post-Trade Allocation Basis

September 21, 2005

NASD is issuing this OATS Report to clarify the application of guidance provided in the June 22, 2005 OATS Report entitled "OATS Reporting Obligations for Agency Orders," to OATS Phase II reporting requirements.  Specifically, the requirement prescribed in the June 22, 2005 OATS Report to submit Execution Reports instead of Route Reports for certain post trade allocations does not apply during OATS Phase II to orders received manually that are subsequently captured on an aggregated basis by an electronic order routing or execution system.  Because the aggregated electronic order, rather than each individual customer manual order, is OATS reportable in Phase II, there will not be individual New Order Reports in OATS to match with any subsequent Execution Reports representing post trade allocations.  As such, members should continue to report New Order Reports and Route Reports in this scenario during OATS Phase II.  Members should note, however, that upon implementation of Phase III, the reporting guidance for post trade allocations issued in the June 22, 2005 OATS Report will apply equally to both manual and electronic orders.  The reporting requirements for post trade allocations involving manual orders for Phase II and Phase III are outlined below:

Scenario

    • Introducing broker ("IB") receives ten 1,000 share manual orders.
    • IB enters four 2,500 share orders into its clearing firm's system directing to various market centers for execution in an effort to fill the ten customer orders.
    • Upon receiving fills totaling 8,000 shares, the IB allocates the fills to the ten accounts, 800 shares per account at an average price.

 

Phase II Reporting Requirements

 

IB reports four New Order reports for 2,500 shares each.

 

IB reports four Route reports to each market center.

 

Note: Because the ten original 1,000 share orders are not reportable during Phase II, the average price allocations cannot be submitted to OATS via Execution Reports.

 

Phase III Reporting Requirements (Manual Orders)

 

IB reports ten New Order reports for 1,000 shares each.

 

IB reports ten Execution Reports for 800 shares, for each of the ten orders.

 

Please call the OATS Helpdesk at 1-800-321-NASD with any questions regarding this article or on OATS in general.