Tuesday, January 17, 2012

Equity Regulatory Alert #2012 - 1
NASDAQ OMX and ISG Enhance Electronic Blue Sheet Submissions

What is changing?

NASDAQ, BX, PHLX, NOM and ISG are enhancing the EBS. These changes are being implemented to improve the regulatory agencies' ability to analyze trading activities and to support compliance with a SEC rules provision.

What are the new data requirements for member firms in regard to EBS?

Effective August 31, 2012, member firms will be required by NASDAQ, BX, PHLX, NOM and the other ISG interested members to submit new data elements to EBS.

To support these new data elements, the Securities Industry Automation Corporation (SIAC) has modified the EBS record layout, as shown in Attachment A. Existing transaction type identifiers are outlined in Attachment B. Firms are reminded that failure to properly fill out the EBS fields is a violation of NASDAQ Rule 8211, PHLX Rule 785, NOM Rule Ch. 8 Sec 4 and BX Rule 8211.

What should member firms pay specific attention to in regard to Attachment A?

Member firms should pay special attention to the following areas of Attachment A:

• Order Execution Time, Record Sequence Number Five, Field Position 72 to 77
  Firms should use this record to submit the order execution time in 24-hour format and in Eastern Time formatted as HHMMSS. This information is for all EBS transactions and is not limited to transactions relating to the SEC Large Trader Reporting Rule (SEA Rule 13h-1). Please note that all firms must synchronize their time clocks to the atomic clock to maintain an accurate audit trail in connection to the reported execution time. (See Frequently Asked Question No. 3 below for more detail on clock synchronization requirements.)
• Large Trader Identification Number 1, Record Sequence Number Seven, Field Position 2 to 14
  Firms should use this record to submit the Large Trader Identification Number (LTID). This information is requested under the approved SEC Large Trader Reporting Rule (SEA Rule 13h-1) requirements.
• Large Trader Identification Number 2, Record Sequence Number Seven, Field Position 15 to 27
  Firms should use this record to submit the LTID. This information is requested under the approved SEC Large Trader Reporting Rule (SEA Rule 13h-1) requirements.
• Large Trader Identification Number 3, Record Sequence Number Seven, Field Position 28 to 40
  Firms should use this record to submit the LTID. This information is requested under the approved SEC Large Trader Reporting Rule (SEA Rule 13h-1) requirements.
• Large Trader Identification Qualifier, Record Sequence Number Seven, Field Position 41
  Firms should use this record to submit the Large Trader Identification Qualifier. If more than three LTIDs exist for a transaction, then firms should mark the field "Y" for Yes. Otherwise it should be marked "N" for No. This information is requested under the approved SEC Large Trader Reporting Rule (SEA Rule 13h-1) requirements.
• Entering Firm MPID, Record Sequence Number Seven, Field Positions 42 to 45
  Firms should use this record to submit the entering firm's Market Participant Identifier (MPID). The entering firm is the firm that entered the order on the marketplace.
• Employer SIC Code, Record Sequence Number Seven, Field Positions 46 to 49
  Firms should use this record to submit the account holder's employer SIC code. A list of employer SIC codes can be found at www.sec.gov/info/edgar/siccodes.htm.
• Executing Firm CRD Number, Record Sequence Number Seven, Field Positions 50 to 57
  Firms should use this record to submit the executing firm's Central Registration Depository (CRD) number.

What are the new data requirements for member firms in regard to LTID and Order Execution Time?

The SEC has mandated that the LTID and Order Execution Time enhancements be ready for transmission to the SEC by April 30, 2012 . From April 30, 2012 through August 30, 2012, firms should submit these new data elements only to the SEC. After August 30, firms may submit the LTID to the ISG interested members, and will be required to submit the Order Execution Time to the ISG interested members.

What are the new submission requirements for member firms?

In addition, effective August 31, 2012, member firms will be required to submit EBS, when requested, in three additional formats:

• Account number and date;
• Account number, symbol and date; OR
• Date range and executing firm CRD number or entering firm MPID

Where can I find additional information?

• Refer to the EBS FAQs document on the FINRA website.
• Contact FINRA with questions regarding EBS.
• Contact Transaction Services U.S. Market Sales at +1 800 846 0477.

^{1 The ISG interested members include the following exchanges and self-regulatory organizations (SROs): BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated (CBOE), C2 Options Exchange, Incorporated (C2), CBOE Stock Exchange, LLC (CBSX), Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Association (FINRA), International Securities Exchange, LLC, The NASDAQ Stock Market LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, National Stock Exchange, Inc., New York Stock Exchange, LLC, NYSE Amex, LLC, and NYSE Arca, Inc.}

^{2 See; Rule 13h-1 under the Securities and Exchange Act of 1934, as amended (SEA 13h-1).}