The following FAQs are being provided in addition to Q10 – Q21 in Section II of the Data Collection Requirements for Broker-Dealers FAQs published by the Plan Participants on October 12, 2015.
Q1. In the Data Collection Requirements for Broker-Dealers FAQs published by the Plan Participants on October 12, 2015 stated that a broker-dealer that is registered as a market maker or liquidity provider on a national securities exchange should include all proprietary trading activity on other trading centers that is originated in the market making account used by the firm to facilitate its market making obligations on the national securities exchange on which it is a registered market maker.My firm conducts proprietary trading activity not related to market making obligations in the same account as proprietary trading activity conducted to facilitate market making obligations. Is all of the activity in this proprietary account required to be reported regardless of whether it is conducted to support market making obligations or not?
A1: No.Only proprietary activity conducted by a firm to facilitate the firms market making obligations should be reported, with the exception of qualified block positioning (refer to Q 14 in the Data Collection Requirements for Broker-Dealers FAQs published by the Plan Participants on October 12, 2015). Other proprietary trading not related to the firms market making obligations, whether conducted through the same account as market making activity or through other proprietary accounts, should not be included.
Q2. FINRA Rule 7410(j) exempts orders originated in the normal course of market making from OATS reporting.Can my firm assume that if an order is exempt from OATS reporting under FINRA 7410(j), it would meet the definition of market making for purposes of the Tick Size Pilot Market Maker reporting requirements under both Appendix B.IV and C., and therefore must be reported to FINRA in the daily Tick Size Market Maker Transaction Reporting file?
A2. The answer is yes unless the transaction is related to the execution of a client order on a riskless principal basis.Both Appendix B.IV. and C are limited to principal trades, other than riskless principal.Therefore, any transaction related to the execution of a client order on a riskless principal basis should not be reported to FINRA in the daily Market Maker Transaction Reporting file.
Q3. If my firm voluntarily reports its market making orders to OATS, are we still required to submit a Tick Size Market Maker Transaction Reporting file to FINRA?
Q4. Should riskless principal trades executed by a market maker be reported in the Market Maker Transaction File?
A4. No. Appendices B.IV and C of the Plan state require principal trades, not including riskless principal, to be included in the market marker participation and profitability statistics.Therefore, trades relating to riskless principal executions conducted by a market maker should not be included in the Market Marker Transaction file.
Q5. Is it permissible to report trades prior to T+4?
A5. Yes.The proposed SRO data collection rule filings require only trades that have settled or reached settlement date be reported.Currently, settlement date is generally T+3.Therefore, a reporting date of T+4 is required to ensure all trades reported will have reached settlement.The reporting deadline on T+4 is 12:00 p.m. ET.However, it will be permissible for a firm to report prior to T+4, if they are certain there will be no further adjustments to the trade prior to settlement.Firms should note that linkage feedback for files submitted prior to T+4 will not be available until T+5.
Q6. If a trade that was reported on T+4 is subsequently corrected for a data element that was not included in the Market Maker Transaction File, such as an incorrect capacity or contra party in a TRF report, does anything have to be reported as a correction to the Market Maker Transaction File?
A6. rrections that are made on T+4 or beyond that do not impact any data element reported in the Market Maker Transaction File do not need to be reported.Only data that has been previously reported in the Market Maker Transaction file that is subsequently corrected must be reported as a correction in the Market Maker Transaction File.
Q7. How should a market making trade that was executed on an ATS operated within the same BD as the market maker be reported?
A7. The trade should be reported in a similar manner as an order passed between two MPIDs of the same firm would be reported to OATS. Specifically, the market maker should populate: the Trading Center Type field with R (routed away for execution), the Sent-To-Firm MPID with the MPID of the ATS, the Order Entry Firm Identifier with the MPID of the market maker and the Routed Order ID with the routed order ID that the ATS reported to OATS in its New Order Report.
Q8. When correcting unlinked records, must the corrected records be submitted with the same file name as the original submission?
A8. Yes. When submitting corrections to unlinked records, firms are required to submit the corrected records to the tick/unlink_in folder using the same file name and Unique Record ID that was used for the original submission of the records. This will allow FINRA to reconcile the corrected records against the previously unlinked records and will prevent the corrected records from being marked late. If the file is not placed in the tick/unlink_in folder, then the contents of the file will not be recognized as corrections and will instead be processed as a regular late submission.
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