New Requirements For Electronic Blue Sheets Submissions

ACTION REQUESTED

Intermarket Surveillance Group

Executive Summary

This Notice to Members discusses new uniform provisions regarding the automated reporting requirement for Electronic Blue Sheets (EBS).

Effective August 8, 2001 all members were required to:

Effective January 7, 2002 all members will be required upon request to report via the EBS system:

All members are strongly encouraged to test their ability to provide these new categories of information with either the Securities Industry Automation Corporation (SIAC) or the NASD Form Filings system in order to be in compliance by the effective dates.

Member firms that use a "service bureau" to transmit electronic blue sheets on their behalf are required to ensure that service bureaus comply with applicable SEC and SRO rules and regulations on their behalf.

This Notice was prepared by the following self-regulatory organizations (SROs) acting jointly as members of the Intermarket Surveillance Group (ISG):

American Stock Exchange, Inc. (Amex)

Boston Stock Exchange, Inc. (BSE)

Chicago Board Options Exchange, Inc. (CBOE)

Chicago Stock Exchange, Inc. (CHX)

Cincinnati Stock Exchange, Inc. (CSE)

International Securities Exchange (ISE)

NASD Regulation, Inc. (NASDR)

New York Stock Exchange, Inc. (NYSE)

Pacific Exchange, Inc. (PCX)

Philadelphia Stock Exchange, Inc. (PHLX)

New Uniform Provisions

Recently, the SEC adopted Rule 17a-25 under Section 17 of the Securities Exchange Act of 1934 (Exchange Act).¹

Rule17a-25:

Provision 1: codifies the requirement that broker/ dealers must electronically submit to the Commission, upon request, information concerning customer and proprietary transactions via the EBS system;

Provision 2: requires broker/dealers to provide to the Commission, on request, and keep current, information concerning the firm's contact for blue sheet data; and,

Provision 3: adds three reportable data elements not currently required by the EBS system utilized by the SROs:

i. prime brokerage identifiers;

ii. average price account identifiers; and

iii. depository institution identifiers.

Provisions 1 and 2 on the previous page became effective on August 8, 2001 while Provision 3 will be effective on January 7, 2002.

As provided by SRO rules,² members and member organizations must currently provide the data required in Provision 1 on the previous page to the SROs through the EBS system. Firms also use the EBS system to respond to SEC requests for information. Rule 17a-25 requires broker/dealers to submit the required information to the Commission upon request in a format specified by the broker/dealer's designated SRO under Rule 17d-1 of the Exchange Act.

As a result of the new requirements in Provision 3 on the previous page, SIAC will add the three additional fields to the EBS system file. The chart below describes the format and location of the three new fields in the EBS system file. See Attachment A for the complete EBS system file³ layout. The fields are located in record "5" of each blue sheet transaction.

• The prime broker field is to be populated with the clearing number of the account's prime broker.



• The average price account field will be used to identify whether the account is the average price account itself or the recipient of transactions for an average price account. This field will be populated with the following values:


1 = recipient of average price transaction

2 = average price account itself


• The depository institution identifier is to be populated with the identifying number assigned to the account by the depository institution.

All members are strongly encouraged to test their enhanced blue sheet information with SIAC before sending actual blue sheet information with the new data elements. Please contact SIAC's Network Support Department at (212) 383-5401 for testing information. Firms that utilize SIAC's PC Data Entry system must obtain an updated version of the blue sheet data entry software from SIAC's PC Service Center at (212) 383-2062. Members that use the PC Data Entry system need not test. NASD members that submit EBS data via the Form Filings system should test their enhanced blue sheet information via Form Filings before sending actual blue sheet information with the new data elements. Those members should contact the CASH Help Desk at (800) 321-NASD (6273) for testing information.

To comply with Provision 2 on the previous page, updated firm blue sheet contact information can be submitted to the SEC by providing Joseph Cella, Chief, Office of Market Surveillance, or Mark Lineberry, Branch Chief with the following:

Full name, title, address, telephone number(s), facsimile number(s), and electronic mail address(es) for each person designated by the member, broker, or dealer as a SEC contact.

They can be reached by writing to:

Securities and Exchange Commission
450 5th Street NW
Washington, DC 20549-1001

or via e-mail at [email protected] or [email protected], respectively.

Questions concerning provisions of Rule 17a-25 should be directed to Alton Harvey, Office Chief, at (202) 942-4167, or Anitra Cassas, Special Counsel, at (202) 942-0089, Division of Market Regulation, Securities and Exchange Commission, 450 5th Street, NW, Washington, DC 20549-1001.

Questions/Further Information

Questions concerning this Notice may be directed to:

Endnotes

¹See SEC Release No. 34-44494.

² Amex - Rule 153A, CBOE - Rule 15.7, CSE - 8.2, 5.3, ISE - Rule 1404, NASD - Rule 8211, 8212 and 8213, NYSE - Rule 342.20, 410A, 476 (a) (11), PCX - Rule 10.2(c), PHLX - Rule 785

³ The NASD's Form Filing system for submitting EBS data is also being modified to add the three new reportable data elements. All NASD members submitting EBS data via Form Filings will be required to include all relevant information pertaining to the three new data elements with each EBS submission beginning on January 7, 2002.

ATTACHMENT A