Q102.3: When must a trade in an NMS stock or an OTC Equity security that is executed outside normal market hours be reported?
A102.3: Trades in NMS stocks and OTC Equity Securities that are executed outside normal market hours (i.e., outside the hours of 9:30 a.m. and 4:00 p.m. Eastern Time) and during the hours the FINRA Facility to which the member is reporting is open must be reported as soon as practicable, but no later than 10 seconds following execution. See Rules 6282(a), 6380A(a), 6380B(a) and 6622(a). Trades in NMS stocks and OTC Equity Securities executed during the hours the FINRA Facility to which the member is reporting is closed are not subject to 10-second reporting. Specifically, trades executed between midnight and 8:00 a.m. must be reported by 8:15 a.m. Eastern Time on trade date. Trades executed between the close of the Facility (6:30 p.m. for the ADF and 8:00 p.m. for the TRFs and the ORF) and midnight must be reported on an "as/of" basis by 8:15 a.m. Eastern Time the following business day. See Rules 6282(a), 6380A(a), 6380B(a) and 6622(a). See also the Reporting Requirements: OTC Equity Transactions Outside Normal Market Hours Chart (PDF 18 KB) and Regulatory Notice 09-52 (August 2009) for additional guidance on reporting trades executed outside normal market hours.
Q102.4: If a trade is not reported within the time period prescribed by the trade reporting rules, must it still be reported?
A102.4: Yes. If a trade is not reported within the time period prescribed by the trade reporting rules (e.g., within 10 seconds of execution), it must be reported as soon as practicable and shall be designated as late. Trades that are required to be reported on trade date, but are not reported on trade date, must be reported on an "as/of" basis on a subsequent date (T+N) and shall be designated as late. Trades that are required to be reported on an "as/of" basis the following business day (T+1) (e.g., certain trades executed outside normal market hours), but are not reported on T+1, must be reported on a subsequent date (T+N) and shall be designated as late. See Rules 6282(a), 6380A(a), 6380B(a) and 6622(a).
Q102.5: What should firms do to satisfy the requirement to report "as soon as practicable" under FINRA trade reporting rules?
A102.5: Firms must adopt policies and procedures reasonably designed to comply with the "as soon as practicable" requirement and must implement systems that commence the trade reporting process without delay upon execution. Where a firm has such reasonably designed policies, procedures and systems in place, the firm generally would not be viewed as violating the "as soon as practicable" requirement because of delays in trade reporting due to extrinsic factors that are not reasonably predictable and where the firm does not purposely intend to delay the reporting of the trade (e.g., TRF systems issues). Firms must not purposely withhold trade reports, e.g., by programming their systems to delay reporting until the last permissible second. See Rules 6282.02, 6380A.02, 6380B.02 and 6622.03. See also Regulatory Notice 13-19 (May 2013).
Q102.6: Firm BD1 must enter the details of a trade manually following trade execution, and although BD1 has established efficient reporting processes and commences to report the trade without delay, BD1 is unable to complete the trade reporting process within 10 seconds. Will FINRA take the manual nature of the trade reporting process into account when reviewing for a pattern or practice of late reporting?
A102.6: Yes. Where the details of a trade must be manually entered or typed into a trade reporting system following execution, FINRA will take such factors as the complexity and manual nature of the execution and reporting of the trade into consideration in determining whether "reasonable justification" exists to excuse what otherwise may be deemed to be a pattern or practice of late trade reporting. Among other things, FINRA will consider the complexity of a trade (e.g., a volume-weighted average trade or an options-related trade) and size of a trade (e.g., a trade that involves a basket of securities), as well as the fact that some amount of time must elapse between the commencement of the manual trade reporting process and the reporting of the trade. See Rules 6282.02, 6380A.02, 6380B.02 and 6622.03. See also Regulatory Notice 13-19 (May 2013).
Firms must maintain, and provide upon request, documentation sufficient to demonstrate that a trade was reported late due to the manual nature of the trade entry process following execution.
