15. Review Executions for Compliance with Trade Reporting Requirements

Question 1

For trades that occur between 8am - 9:30am…

Reporting deadline is:

Timely trade modifier is:

Late trade modifier is:

Answer 1

Reporting deadline is: 10 seconds

Timely trade modifier is: .T

Late trade modifier is: .U

Question 2

For trades that occur between 9:30am - 4pm…

Reporting deadline is:

Timely trade modifier is:

Late trade modifier is:

Answer 2

Market hours…

Reporting deadline is: 10 seconds

Timely trade modifier is: NONE

Late trade modifier is: .Z

Question 3

For trades that occur between 4pm - 8pm…

Reporting deadline is:

Timely trade modifier is:

Late trade modifier is:

Answer 3

Reporting deadline is: 10 seconds

Timely trade modifier is: .T

Late trade modifier is: .U

Question 4

For trades that occur between 8pm - midnight…

Reporting deadline is:

Timely trade modifier is:

Late trade modifier is:

Answer 4

Reporting deadline is: 8:15AM T+1 with an “as/of”

Timely trade modifier is: .T

Late trade modifier is: .U

NOTE - ACT is closed

Question 5

For trades that occur between midnight - 8am…

Reporting deadline is:

Timely trade modifier is:

Late trade modifier is:

Answer 5

Reporting deadline is: 8:15AM

Timely trade modifier is: .T

Late trade modifier is: .U

NOTE - ACT is closed

Question 6

What are the ACT hours of operation?

Answer 6

8am - 8pm

Question 7

Who must report trade data to the ACT?

Answer 7

The executing party (default: seller)

Question 8

What three types of debt that don’t report to TRACE (Trade Reporting & Compliance Engine)

Answer 8

1) municipal bonds (uses RTRS system)

2) Money market securities

3) Foreign sovereign debt

Question 9

What are the TRACE hours of operation?

Answer 9

8am - 6:30pm

Question 10

What is the reporting deadline for debt trades when TRACE is open?

Answer 10

within 15 minutes of trade

Question 11

What is the reporting deadline for debt trades when TRACE is closed?

Answer 11

8:15am SHARP the next time TRACE opens

Question 12

For debt trades, who reports trade data to TRACE?

Answer 12

BOTH buyer and seller

Question 13

True / false: TRACE data is disseminated to the public after 15 mins

Answer 13

false - it’s disseminated immediately

Question 14

Under Reg NMS Rule 605, market centers (exchanges) must make available _________ (frequency) statistics regarding…(3 things)

Answer 14

Monthly

1) speed of execution

2) execution relative to public quotes

3) price improvements (better vs. NB&BO)

Based on securities that trade during NORMAL MARKET HOURS

Question 15

Under Reg NMS Rule 606, BDs (market makers) must file ________ (frequency) reports with SEC to provide transparency into firm’s order routing and handling of ______ and ______ orders

Answer 15

Quarterly

1) Non-directed orders (customer did not dictate which exchange to route order to)

2) Limit orders

Question 16

A _______ is an exchange or alternative trading system (ATS) that facilitates the trading of securities

Answer 16

market center

Question 17

Trades on ATSs must report trades to TRF or ORF within _______

Answer 17

10 seconds

Question 18

A _______ is a trading system that is not regulated as an exchange but that is a means of matching the buy and sell orders of its subscribers

Answer 18

Alternative Trading System (ATS)

Question 19

If an ATS 1) has a significant percentage of overall trading volume in a security (or category of securities) during a certain period of time, OR 2) represents more than 5% of trading volume on a regular basis for a security (or group of securities), then it must….

Answer 19

1) establish written standards for granting access, AND

2) not unreasonably prohibit or limit access by applying those access standards in an unfair or discriminatory manner

Question 20

True / false: BDs that wish to publish or advertise trading volumes in an ATS can publish all volumes?

Answer 20

false - can only publish volumes that were also traded to a trade reporting facility

Question 21

For VWAP trades (.W modifiers), the execution time is…

Answer 21

The time that the actual price is determined

Eg if the px is based on the end-of-day VWAP and that px is determined at 430p, then the execution time is 430p (and establishes the reporting deadlines for OATS / ACT)

Question 22

True / false: requests for MM withdrawals based on vacations are available to all ADF market makers

Answer 22

true

Note - for NASDAQ, such requests are limited to small MMs with 3 or fewer Nasdaq terminals

Question 23

What is the earliest time of day a trade can be executed in a the pre-market session of the Consolidated Quotation System (CQS)?

Answer 23

7am

Goes from 7am to 930a (when mkt opens)

Question 24

The ___________ requires BDs to create a time-sequenced audit trail of all events in the life of an order

Answer 24

Consolidated Audit Trail (CAT)

Question 25

Under CAT, an order’s lifecycle information reportable includes:

Answer 25

1) origination and receipt 2) routing of the order 3) order cancellation 4) order modification 5) order execution NOTE - all order types - verbal, written, electronic - are reportable

Question 26

What is a CAT business day”?

Answer 26

begins at 415p est on one market day and ends at 415p est on the next market day

Question 27

When must CAT reports be submitted? And to who?

Answer 27

by 8am on the calendar day following the end of the CAT business day (ending at 415p et) To FINRA

Question 28

For trades marked “.P or PRP” what two times of day must be reported?

Answer 28

1) the trade execution time 2) the trade reference time PRP = prior reference price and used to indicate that the execution price is based on the price of the stock at a time other than the execution time

Question 29

On the ADF reporting system, the executing party reports trade within 10 seconds, how long after reporting does the non-executing party have to confirm the trade?

Answer 29

20 mins

Question 30

Trades marked with “.W” are either of these types of trades (2 types)

Answer 30

1) stop stock - MM will guarantee a px and allow the client to try to get a better price; if ultimately executed at the guarantee (stop stock) price it has the .W modifier 2) weighted average price stocks (VWAP) - for VWAP trades, the execution time is the time the actual price is determined