I'm going to have to explain what OATS is to answer, I suppose.
Without getting too complicated, OATS is the audit trail on trade activity. Trades are required -- first and foremost -- to be timely reported, and then flagged as the correct type of trade secondarily, along with other tertiary data that corresponds with quotes and trades.
The issue here appears to be with trade REPORTING from the point in time this new reg is implemented, not historical trade reporting. FINRA wants the data stream to be organized and reported a certain way, and compliance may have been technically too difficult or time consuming or costly for all broker-dealers to implement. That would be a reason to delay.
The past is irrelevant in the realm of this regulation, as far as I can see. So if you are thinking this would make a difference in the way PAST trades were flagged or reported (short or long, for instance), the regulation will not be retroactive -- as far as I can see.
In summary: It's a computer thing. Some broker-dealers probably haven't been able to get it right yet. So the deadline was extended.
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Here's FINRA's page on OATS if you want to read all about it.
FINRA has established the Order Audit Trail System (OATS), as an integrated audit trail of order, quote, and trade information for Nasdaq and OTC equity securities. FINRA uses this audit trail system to recreate events in the life cycle of orders and more completely monitor the trading practices of member firms. Under FINRA Rules 7410 - 7470, FINRA member firms are required to develop a means for electronically capturing and reporting to OATS specific data elements related to the handling or execution of orders, including recording all times of these events in hours, minutes, and seconds, and to synchronize their business clocks. These Rules were approved by the SEC on March 6, 1998.
The OATS Reporting Technical Specifications document covers the requirements and procedures for clock synchronization; system access requirements for supplying OATS files to FINRA; order reporting scenarios that describe, from a business perspective, responsibilities for reporting to OATS; details regarding the required layout of OATS files; procedures for providing corrections to OATS data and for receiving feedback from FINRA; and the procedures for registration, self administration, and testing and certification. It also contains a data dictionary that describes all of the data elements in OATS files; a list of report formats, including field names, data types, and lists of permissible values; examples of order reports; and a glossary.
The OATS Reporting Technical Specifications is not intended to provide information about how to develop an electronic system that reports order information; it is only intended to describe what such a system must deliver to FINRA.
FINRA released a new edition of the OATS Reporting Technical Specifications dated November 8, 2010. View more details on the OATS Reporting Technical Specifications changes. OATS Reporting Technical Specifications (11/08/10 edition)
View PDF file (PDF 1.13 MB)
View our archive of past specifications.
If you are having problems accessing these files, please contact FINRA Business and Technology Support Services at 1-800-321-6273
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