Smaller trades reported within 90 seconds after close or first thing in the a.m. are late or delayed reported trades during market hours. A lot of paints at the end of the day sometimes do not make it in time for close and you see them reported within seconds after close.
The Pink Sheets follows regular market hours, from 9:30 AM until 4:00 PM ET. The Pink Sheets follows the market calendar of the Nasdaq Stock Market and is closed on the days that Nasdaq is closed. The Quotation system is available from 7 am to 5 pm every business day. However, individual traders at a market maker control when the trader's quotes are open and firm.
569 Federal Register / Vol. 72, No. 12 / Friday, January 19, 2007 / Notices 4632. Transaction Reporting
(a) When and How Transactions are reported
(1) Trade Reporting Facility Participants shall, within 90 seconds after execution, transmit to the NASD/ Nasdaq Trade Reporting Facility or if the NASD/Nasdaq Trade Reporting Facility is unavailable due to system or transmission failure, by telephone to the Operations Department, last sale reports of transactions in designated securities executed during normal market hours. Transactions not reported within 90 seconds after execution shall be designated as late.
(2) Transaction Reporting to the NASD/Nasdaq Trade Reporting Facility Outside Normal Market Hours
A) Last sale reports of transactions in designated securities executed between 8:00 a.m. and 9:30 a.m. Eastern Time shall be reported within 90 seconds after execution and shall be designated as ‘‘T’’ trades with the unique trade report modifier, as specified by NASD, to denote their execution outside normal market hours. Transactions not reported within 90 seconds also shall be designated as “T” trades.
Such “Form T” transactions not reported before 9:30 a.m. shall be reported after 4:00 p.m. and before 8:00 p.m. as “T” trades with the appropriate trade report modifier as specified by NASD. 8:00 a.m. and 8:00 p.m. Eastern Time and be designated ‘‘as/of’’ trades.
Pink Sheets and “Form T” Trades
Since OTC does not accept pre-market or after-hours trades, an OTC transaction marked as a "T" trade indicates the transaction did meet the NASD 90-second posting rule per above. If the "T" trade appears at the beginning of the day, it indicates the trade was not posted at Pink Sheets before 5:00 PM on the preceding day.
There are several types of "late" reports:
1. Those with a time stamp within a minute and a half after closing are just normal 90-second delays.
Rule 6620.1: OTC Market Makers shall, within 90 seconds after execution, transmit through ACT last sale reports of transactions in OTC Equity Securities executed during normal market hours.
In this case, the market maker may have conducted a trade within seconds of closing and delayed reporting it until just after the bell. This delay, which is permitted, is frequently misinterpreted as manipulation.
2. Then there are trades later than 90 seconds after closing. These trades fall into two categories and typically involve larger size lots.
a. The first category is sometimes used by financial institutions that are non-market makers to report larger transactions that actually occurred during market hours. However, since these institutions do not have access to ACT (Automated Confirmation Transaction Service), they use "Form T" to report.
MMs are prohibited from habitual "Off Market” transactions:
A pattern or practice of late reporting without exceptional circumstances may be considered conduct inconsistent with high standards of commercial honor and just and equitable principles of trade, in violation of Rule 2110.
These ”Off Market” trades are typically used by larger investors to trade larger lots at pre-arranged prices without risk of driving the price upward or downward.
b. The second category involves so called “ex-clearing” lots. Certain transactions may clear and settle outside of the regular clearing system ("ex-clearing" transactions), where two dealers make an arrangement to settle trades between themselves and outside the clearing system.
The process used to balance street-side transactions depends on the type of comparison generated and the settlement method for the particular trade.
Trades Comparison is accomplished in one of two ways:
1. Electronically through the use of an automated clearing house such as the NSCC. This the normal way.
2. Manually via ex-clearing. Ex-clearing is a manual comparison process that is performed by the brokerage firm’s Purchase and Sales Department. Unusual short coverings can end up settling this way.
3. See http://www.brokerage101.com for further information.