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6643. Transaction Reporting

Past version: effective from Aug 3 2009 - Oct 31 2010.
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(a) When and How Transactions are Reported
(1) Reports of secondary market transactions in direct participation programs shall be transmitted to the OTC Reporting Facility on the next business day ("T+1") after the date of execution between 8:00 a.m. and 1:30 p.m. Eastern Time, be designated "as/of" trades to denote their execution on a prior day, and be accompanied by the time of execution. The party responsible for reporting on T+1, the trade details to be reported, and the applicable procedures shall be governed, respectively, by paragraphs (b), (c), and (d) below. Member firms that have the operational capability to report transactions within 90 seconds of execution, between the hours of 8:00 a.m. and 8:00 p.m. Eastern Time, may do so at their option. If a firm chooses this option, it need not report the same transaction(s) on T+1 as prescribed above.
(2) All members shall report to the Market Regulation Department on Form T, reports of transactions in DPPs that were not transmitted to the OTC Reporting Facility, for whatever reason, either on the trade date or the next business day. Form T shall be used exclusively as a back-up mode whenever electronic entry of trade data is not feasible due to system malfunctions or other unusual conditions.
(3) 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 2010.
(b) Which Party Reports Transactions
(1) In transactions between two members, the executing party shall report the trade.
(2) In transactions between a member and a non-member or customer, the member shall report the trade.
For purposes of this paragraph (b), "executing party" shall mean the member that receives an order for handling or execution or is presented an order against its quote, does not subsequently re-route the order, and executes the transaction. In a transaction between two members where both members may satisfy the definition of executing party (e.g., manually negotiated transactions via the telephone), the member representing the sell-side shall report the transaction, unless the parties agree and contemporaneously document otherwise, unless the parties agree otherwise and the member representing the sell-side contemporaneously documents such agreement.
(c) Information To Be Reported
Each transaction report shall contain the following information:
(1) A symbol indicating whether the transaction is a buy, sell, or cross;
(2) Number of units;
(3) Symbol of the DPP;
(4) Price of the transaction as required by paragraph (d) below;
(5) A symbol indicating whether the transaction is as principal, riskless principal, or agent;
(6) Time of execution; and
(7) Contra broker.
(d) Procedures for Reporting Price, Volume, Capacity and Identification of Other Members
Members that are required to report pursuant to paragraph (b) above shall transmit transaction reports for all purchases and sales in DPPs in the following manner:
(1) Reporting Agency Transactions
For agency transactions, report the number of units and the price excluding any commission or service charge.
(2) Reporting Dual Agency Transactions
For dual agency transactions, report the number of units only once, and report the price excluding any commission or service charge.
(3) Reporting Principal Transactions
For principal transactions, except as provided under subparagraph (4) below, report each purchase and sale transaction separately and report the number of units and the price. For principal transactions that are executed at a price which includes a mark-up, markdown or service charge, the price reported shall exclude the mark-up, mark-down or service charge. Such reported price shall be reasonably related to the prevailing market, taking into such consideration all relevant circumstances including, but not limited to, market conditions with respect to the DPP, the number of units involved in the transaction, the published bids and offers with size displayed in any quotation system at the time of the execution (including the reporting firm's own quotation), the cost of execution and the expenses involved in clearing the transaction.
(4) Reporting Riskless Principal Transactions
For riskless principal transactions, report as one transaction in the same manner as an agency transaction, excluding the mark-up, mark-down, or service charge.
(5) Identification of Other Members for Agency and Riskless Principal Transactions
Any member that has a reporting obligation pursuant to paragraph (b) above and is acting in a riskless principal or agency capacity on behalf of one or more other members shall submit to FINRA one or more non-tape (either non-tape, clearing-only or non-tape, non-clearing) report(s) identifying such other member(s) as a party to the transaction, if such other member(s) is not identified on the initial trade report submitted to FINRA. Nothing in this Rule 6643(d)(5) shall negate or modify the riskless principal transaction reporting requirements set forth in Rule 6643(d)(4).
Example #1:
Member A, as agent or riskless principal on behalf of Member B, BUYS 100 shares from Member C at 40 (no mark-down included)
Member A has the reporting obligation under Rule 6643(b)
TAPE REPORT 100 shares at 40 By Member A between Member A and Member C
NON-TAPE REPORT 100 shares at 40 By Member A identifying Member B
Example #2A:
Member A MATCHES, as agent, the orders of Member B and Member C for 100 shares at 40
Member A has the reporting obligation under Rule 6643(b)
TAPE REPORT 100 shares at 40 By Member A between Member A and Member B (or Member C)
NON-TAPE REPORT 100 shares at 40 By Member A identifying Member C (or Member B)
Example #2B:
Member A MATCHES, as agent, the orders of Member B and Member C for 100 shares at 40
Member A has the reporting obligation under Rule 6643(b)
TAPE REPORT a CROSS of 100 shares at 40 By Member A
NON-TAPE REPORT 100 shares at 40 By Member A identifying Member B and
NON-TAPE REPORT 100 shares at 40 By Member A identifying Member C
Example #3:
Member A, as agent or riskless principal on behalf of Member B, BUYS 100 shares on an exchange at 40
DO NOT TAPE REPORT this leg (will be reported by exchange)
NO NON-TAPE REPORT required; however, Member A may submit a NON-TAPE REPORT as between Member A and Member B
(e) Transactions Not Required To Be Reported
The following are not required to be reported under the foregoing procedures:
(1) Transactions made in reliance on Section 4(2) of the Securities Act;
(2) Transactions where the buyer and seller have agreed to trade at a price substantially unrelated to the current market for the DPP, e.g., to enable the seller to make a gift; and
(3) Transactions executed on a national securities exchange.
(4) Transfers of securities made pursuant to an asset purchase agreement (APA) that is subject to the jurisdiction and approval of a court of competent jurisdiction in insolvency matters, provided that the purchase price under the APA is not based on, and cannot be adjusted to reflect, the current market prices of the securities on or following the effective date of the APA.
Deleted by SR-FINRA-2009-061 eff. Nov. 1, 2010.
Amended by SR-FINRA-2008-011 eff. Aug. 3, 2009.
Amended by SR-FINRA-2008-060 eff. Jan. 12, 2009.
Amended by SR-FINRA-2008-057 eff. Dec. 15, 2008.
Amended by SR-FINRA-2008-021 eff. Dec. 15, 2008.
Amended by SR-NASD-2006-120 eff. Dec. 4, 2006.
Amended by SR-NASD-2005-087 eff. Aug. 1, 2006.
Amended by SR-NASD-2004-076 eff. May 5, 2004.
Amended by SR-NASD-2004-034 eff. Feb. 25, 2004.
Amended by SR-NASD-2003-098 eff. Sept. 4, 2003.
Amended by SR-NASD-2001-36 eff. July 6, 2001.
Adopted by SR-NASD-96-08 eff. May 15, 1997.

Selected Notices: 97-8, 08-57, 09-08.

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