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. 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. Transactions not reported within 90 seconds also shall be designated as “T” trades.
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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.
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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. 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. 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.
