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Wednesday, July 28, 2010

Equity Technical Update #2010 - 11
NASDAQ ACT to Reintroduce Support of Short Sale Exempt Codes

Markets Impacted:

Contact Information:

What you need to know:

  • Effective November 1, 2010, the NASDAQ ACTSM System will reintroduce support of Short Sale Exempt indicators.

What is changing within ACT?

The Securities and Exchange Commission (SEC) amended Regulation SHO effective May 10, 2010 (Release 34-61595), to provide for the ability to mark qualifying short sale orders as “short exempt.”

Effective November 1, 2010, the NASDAQ ACT System will reintroduce support of the Short Sale Exempt codes ahead of the SEC compliance date of November 10th. This change applies to the FINRA/NASDAQ Trade Reporting FacilityTM (TRFTM), the Over-the-Counter Reporting Facility (ORF) and The NASDAQ Stock Market® (NASDAQ®).

What short sale exempt reason codes will be available for use?

Due to the amendments to Regulation SHO, the NASDAQ ACT System is reintroducing the short sale exempt values supported prior to the elimination of Rule 10a-1 in October 2007. The table below depicts the short exempt values that may be used:

Sell Short reasons will be accepted on all trades:
CTCI: field B/S/X
FIX: Tag 853
Sold Short Exempt
E
1
Selling Customer Sold Short Exempt
K
3
Contra Side Sold Short Exempt
A
5

Will the NASDAQ Workstation also be updated for these changes?

Yes, the NASDAQ Workstation and Weblink ACT will be updated to support these values. NASDAQ will communicate further details soon.

What do I need to do to be ready for these changes?

Refer to the updated ACT specifications on the NASDAQ OMX Trader® website.

Will NASDAQ offer testing opportunities?

Yes, firms will be able to test ACT functionality within the NASDAQ Testing Facility (NTF).

A production test is planned during the regularly scheduled Saturday testing on September 25, 2010.

Where can I find additional information?

FINRA™, Trade Reporting Facility™ and TRF™ are trademarks of Financial Industry Regulatory Authority, Inc.


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