FINRA Guidance on the OATS Reverse Linkage Process

FINRA is issuing this OATS Report to describe the new reverse linkage process and feedback for instances where OATS was unable to find the related Route Report or Execution Report for an OATS new order event, exchange order, or TRF/ADF/ORF trade report. The new feedback will be available beginning with the September 28, 2015 OATS release.

Currently, OATS matching starts with OATS Route or Execution Reports and attempts to link them to related OATS new order events, exchange orders and TRF/ADF/ORF trade reports.  Beginning with the September 28, 2015 release, additional linkage processes will start with OATS new order events, exchange orders and TRF/ADF/ORF trade reports and attempt to link them to the related OATS Route or Execution Report.

Identification of unlinked OATS new order events, exchange orders, and TRF/ADF/ORF trade reports may help firms detect instances where they are failing to submit required Route Reports or Execution Reports.  Because certain order handling scenarios may not result in an obligation to submit a Route or Execution Report, only those orders and trades that suggest a Route Report or Execution Report may be required are included for the new linkage process.  However, because not all such scenarios can be eliminated entirely, the statistics are being provided for informational purposes and will not appear on a firm’s OATS Compliance Report Card.  

Interfirm Reverse Linkage

Unlinked OATS new order events in the categories listed below will be identified when a related OATS Route Report is not found.  Statistics will be generated for the routing firms named in the unlinked OATS new order events. 

Included OATS new order events:

• Event Type Codes NW, OE, OR
• Order is received electronically from a FINRA-member Broker/Dealer

Excluded OATS new order events:

• Modification events (Event Type Code is CR)
• Orders reported with an Excluded Member Type Code
• Orders reported with a Routing Firm that is exempt from OATS reporting
• Late reports and Resubmitted reports that were reported on T+1 or later
• Proprietary and market making orders (Account Type Codes O and P)
• Negotiated trades (Negotiated Trade Flag is Y)

Exchange Reverse Linkage

Unlinked exchange orders in the categories listed below will be identified when a related OATS Route Report is not found.  Statistics will be generated for the member firm appearing as the entering firm in the exchange order.

Included exchange orders:

• Order originations (order represents the original receipt of the order at the exchange)
• Agency orders

Excluded exchange orders:

• Exchange generated orders, such as price slides
• Order modifications (e.g., cancel /replaced orders)
• Orders with a capacity of principal or an account type indicating the order is for the account of the member

Trade Reverse Linkage

Unlinked TRF/ADF/ORF trade reports in the categories listed below will be identified when a related OATS Execution Report is not found.  Statistics will be generated for the Reporting Executing Firm appearing on the unlinked trade report.

Included TRF/ADF/ORF trade reports:

• Media reported trades
• Non-media reports where the Reporting Executing Firm capacity is riskless

Excluded TRF/ADF/ORF trade reports:

• Reversal, cancelled, broken, declined, and rejected trades
• Non-media reports where the Reporting Executing Firm capacity is agent or principal

Refer to the OATS Reporting Technical Specifications for more information about the Reverse Linkage Summary and Statistics feedback that will be presented through the OATS Web Interface.  Please note, for the September 28, 2015 release, details will not be available via ftp.  FTP functionality is planned for a future release.