The ACT / TRF systems facilitate the reporting, matching, and clearing of trades executed through NASDAQ and other OTC environments. ACT / TRF transactions include:
All ACT / TRF eligible transactions must be reported to ACT / TRF by market makers within 10 seconds of the transaction during normal business hours.
For trades that are not automatically reported to ACT / TRF through the NASDAQ Market Center Execution System, order entry firms and market makers may enter, review, accept, decline, or cancel transactions by using the ACT / TRF Trade Scan function of the NASDAQ workstation. The ACT / TRF Trade Scan function will also allow the firm to change the capacity in which it acted in the trade. The firm may enter the following qualifiers for each trade:
Trades that are reported to the ACT / TRF facility by market participants with a ".W" modifier for an average weighted price trade will not affect the last sale price.
The ACT / TRF Trade Scan function will also allow the parties to a trade to break a trade, if both sides agree. Order entry firms must enter the terms of the trade to ACT / TRF within 10 seconds of the trade when it is required to report through the order entry function of Level II or accept or decline the transaction within 20 minutes of the trade when the trade has been reported by the counter party using the ACT / TRF Trade Scan function. The ACT / TRF update feature will allow a firm to change, its capacity in the trade, short sale, no clearing and match only information reported for a given transaction. All other changes to trades must be done using the no / was feature. The ACT / TRF statistics function allows executing and clearing brokers to monitor the number of trades and
ACT / TRF is only used to match, report, and clear trades that have already been executed. It is not an order execution system.
In order to ensure that trades are not reported twice to the ACT / TRF system, the following rules have been enacted to determine who reports the trade:
The executing party in a transaction is the party to whom the order was directed or against whose quote the order was executed.
All reports to ACT / TRF must include:
When a NASDAQ trader is working to fill a large buy or sell order the trader may be required to execute multiple orders at different prices and for a varying number shares to fill the customer's order. In order to alleviate the burden of reporting each and every trade that was executed, firms under certain circumstances may aggregate the reporting of trades and report the total number of shares purchased or sold under an average weighted price with a .W modifier.
When a firm executes an order on a principal basis only to offset a customer's order it already has, it is important that the firm does not report two transactions. In a riskless principal transaction the firm may report the trade in the marketplace and not the offsetting trade with the customer to the tape.
Market maker A has an order from a customer to sell 500 shares of GHJK at the market when the market for GHJK is 34.00 – 34.10. Market maker A phones market maker B and sells 500 shares of GHJK on a principal basis to market maker B at 34.00. Market maker A fills the customer's order to sell 500 shares of GHJK at 33.75 net. As the selling market maker, market maker A must now report the trade to ACT / TRF. Market maker A may report the trade to ACT / TRF using either of the following reports: