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MSRB TRANSACTION REPORTING PROGRAMQUESTIONS AND ANSWERS Updated March 2002 These questions and answers are organized under the following topics. CUSTOMER TRANSACTION REPORTING
1. Q: What is the purpose of the requirement in MSRB rule G-14 to report each municipal securities transaction to the MSRB? A: One purpose of the requirement is to make transaction information (e.g., prices and volumes) available to market participants. This is generally known as the "transparency" function of the MSRB Transaction Reporting Program. It is being accomplished at this time through a daily report that shows information such as the high, low and average prices of municipal securities that were traded four or more times on the previous day. A second, equally important, purpose is market surveillance. Each transaction reported is entered into a database that essentially is an audit trail of transactions. This database is available only to the SEC, the NASD and other regulators charged with surveillance of the market and inspection for compliance with and enforcement of Board rules. Transparency and surveillance functions have long been in existence in other major U.S. securities markets. The MSRB is responsible to bring these functions to full implementation in the municipal securities market.
2. Q: Have the requirements of G-14 been approved by the Securities and Exchange Commission? A: Yes. The Commission approved the transaction reporting requirements described here on November 29, 1996 (Securities Exchange Act Release No. 37998; see also MSRB Reports, Vol. 17, No. 1 [January 1997] at 3-8, and Securities Exchange Act Release No. 39495, December 19, 1997).
3. Q: When does compliance with these functions have to take place? A: Inter-dealer transaction reporting began on January 23, 1995, with an amendment to rule G-14. (See MSRB Reports, Vol. 14, No. 5 [December 1994] at 3-6.) Each dealer should now be well aware of the specific requirements of reporting inter-dealer transactions. A number of notices have appeared in MSRB Reports indicating areas where attention is specifically needed to improve inter-dealer reporting. (See, e.g., MSRB Reports, Vol. 16, No. 2 [June 1996] at 9-12.) The requirement to report customer transactions to the Board became effective March 1, 1998.
4. Q: How does a dealer report municipal securities transactions to the MSRB? A: The answer to
the question differs depending upon whether the transaction is with
another dealer ("inter-dealer transaction") or with an entity that
is not a dealer ("customer transaction"). Inter-dealer transactions
are reported by submitting the required transaction information,
in proper form, to the automated comparison system for municipal
securities. Dealers achieve both the automated comparison function
and the transaction reporting function by submitting a single file
to the comparison system. For customer transactions, dealers must
produce a computer-readable file specifically for the MSRB and transmit
that file to the MSRB each night. Q: I have read all these questions and answers, but I still need assistance getting started. Whom shall I call? A: Call the MSRB's
main number (703-797-6600) and ask for a Transaction Reporting Assistant.
This person may be able to help you get started, advise on how to
report trades accurately, or assist with technical matters. CUSTOMER TRANSACTION REPORTING
5. Q: What should dealers do to prepare for customer transaction reporting, if they plan to begin effecting trades with customers? A: Dealers are required to report their customer transactions in municipal securities as soon as they begin effecting such trades. To be prepared to report the transaction, a dealer should become familiar with the G-14 requirements and either be sure its computer system has the capability to produce and transmit files of customer transaction data, or make arrangements with a clearing broker or service bureau who will do this on their behalf. The dealer should obtain from the Board, complete, and return a Customer Transaction Reporting Form. Dealers must successfully test their transaction reporting capabilities with the Board before they effect transactions.
6. Q: My firm is "fully disclosed" and acts only as an "introducing broker" on municipal securities trades. Is this considered to be "effecting municipal securities transactions" so that I must comply with rule G-14? A: Yes.
Completing the Customer Transaction Reporting Form 7. Q: In completing the Customer Transaction Reporting Form, whom should I identify as the "primary contact with the MSRB for purposes of customer transaction reporting"? Should I name our Municipal Securities Department Director or our Compliance Officer? A: The primary contact should be the individual who will be ultimately responsible for ensuring that MSRB mailings and other communications (e.g., phone calls) on this subject will reach the appropriate persons in the firm. The primary contact also will be the MSRB's initial contact regarding tests of customer transaction reporting.
Q: Who should be identified as the "point-of-contact regarding technical matters"? A: The MSRB will contact this person on computer-related matters such as the firm's telecommunications and methods for transmitting files, how many characters each field should have in the record of a trade, what headers must be included in the files, etc.
9. Q: How do the above topics differ from the person designated for questions about the "correctness of trade details"? A: In general, the contact for "correctness of trade details" will be the person whom MSRB staff will call if the question is about the substantive information being provided about a transaction. A question about trade details might arise, for example, if MSRB calculates a yield that differs substantially from the dealer-reported yield for the same trade. MSRB staff may ask the dealer what it used to derive yield from dollar price to account for the difference.
10. Q: In response to the question on page one of the form, my firm does not effect municipal securities transactions, does not intend to do so and does not intend to submit transactions to the MSRB for other dealers. I will check the appropriate box and return the form. What should I do if my firm's plans later change? A: Since all transactions
in municipal securities will have to be reported to the MSRB, if
a firm decides to begin effecting transactions or to submit transaction
data, it should immediately contact the MSRB to obtain and complete
this form and take the other steps described above. 11. Q: What is the "dial-up transmission facility" referred to in the form? A: Most dealers will send customer trade data to the MSRB through National Securities Clearing Corporation (NSCC), but some low-volume transmissions may be done by dialing the MSRB's computer directly using a personal computer and telephone modem. By checking the appropriate box on the form, you may request more information about the dial-up facility from the MSRB. In response, the MSRB will mail information that describes how to install and use the dial-up facility to report customer trades.
12. Q: Where can I find a description of the data elements that must be included in transaction records? A: The MSRB document entitled "File and Record Specifications for Reporting Customer Transactions" defines the data elements and provides format specifications for transaction records and files. 13. Q: When must a transaction be reported to the MSRB? A: Transaction information, in the correct format, must reach the MSRB by midnight on trade date.
14. Q: How is this transaction information sent to the MSRB? A: The information is formatted into electronic records which are put into a file with appropriate "header" information. The resulting file is sent to the MSRB.
15. Q: My firm is a clearing broker and will be submitting a file each day on behalf of many of our correspondents. Is there any special way in which the records in the file should be organized? A: No. As long as the header information is correct and the information in each record is correct, the records within the file can be in virtually any order. The header identifies the party submitting the file; the records may pertain to any number of executing dealers. However, if a file contains both the first report of a trade ("F" record) and a change to that trade, the "F" record must precede any change records ("A", "C" or "V" records).
16. Q: Are institutional and retail customer transactions reported in the same way? A: Yes.
17. Q: Both price and yield are required to be included for transactions on which the settlement date is known. Why is that? A: One of the most difficult problems in collecting and disseminating accurate information on municipal securities transactions is that there are approximately 1.3 million different municipal securities. Typographical errors in trade input, for example, are always possible, and since there is generally not a stream of transaction data coming in on a specific issue, it is difficult for the system collecting the information to mechanically check reported information to ensure that it is not a likely input error. This is particularly important when it is recognized that the price information collected will be disseminated and reviewed by market participants on the next day and may be used as part of trading or investment decisions. Requiring both yield and price, along with the CUSIP number of the issue being reported, will allow the MSRB to mechanically perform mathematical checks that will help to ensure that the information being reported makes sense, given the coupon, maturity date and call features of the security. Other means of checking data accuracy also will be employed. For example, the CUSIP check digit is required to guard against typographical errors in the entry of CUSIP numbers.
18. Q: What if a yield cannot be computed for a transaction done on a dollar price basis, for example, because the trade is in a variable rate security or in a defaulted security? A: The trade data may be reported to the MSRB using a dollar price only in these cases. Note, however, that if the security is not known to the MSRB system as one which is a variable rate instrument or which is in default, the MSRB may contact you to ensure that its information about the security is correct and so that subsequent transaction input in the security will not be questioned in the future.
19. Q: Should I report to the MSRB the transaction's yield to maturity or another yield -- yield to first call, yield to par call, etc.? My system calculates several yields for use in customer confirmations. A: Report the yield as required by MSRB rule G-15(a) for customer confirmations. Rule G-15(a) in most cases requires the yield to be computed to the lower of call or nominal maturity date. Exception: If the transaction was effected at par, the yield (coupon rate) should be reported to the MSRB on the customer trade record, even though rule G-15(a) allows the yield to be omitted from the confirmation in such a case. If reporting the yield is not possible because the transaction was done on a dollar price basis and no settlement date has been set for a "when-issued" security, leave the yield blank or enter zero.
20. Q: How should I report negative yield? A: Enter a negative number in the "yield" field. The minus sign may precede or follow the number, as long as it is inside the defined field area.
21. Q: What if the settlement date for a transaction is not known because the transaction is in a new issue and settlement date has not been set? A: You should report the transaction with a yield or a dollar price and without a settlement date.
22. Q: The MSRB's system sends us an error message, "AMEND RECORD (or cancel and resubmit). Settlement date not in date format," when we report a when-issued trade with unknown settlement date. Because of this "error," we must report the trade again, with the known settlement date. How can we prevent this procedure? A: Check the actual data you are transmitting to the MSRB. Your computer system may be putting in a default value such as 99999999 when it does not have a definite settlement date. Instead, in this case, your system should leave the settlement date field blank or report 00000000 as the date.
23. Q: If the settlement date for the transaction is determined after a submission is made without a settlement date, should the dealer report revised trade information to the MSRB? A: No. If the only change in the transaction information is the settlement date on a new issue, the dealer should not send an amended transaction report.
Agency/Principal Transactions and Commission 24. Q: When reporting dollar prices on agency transactions, should the effect of commissions be included in the dollar price reported to the Board? A: No. There is a separate field for reporting the commission amount on agency transactions. The MSRB will include the effect of the commission in the dollar price when aggregating principal and agency transactions and reporting price information on the public daily report. There should be no "commissions" on principal transactions so that the dollar price given on principal transactions should be the net transaction dollar price to the customer.
25. Q: How should commission be reported? A: Commission is reported in dollars per $100 par value.
26. Q: Should the effect of the commission be reported in the yield? A: Yes. You should report as yield the same "net" yield that is reported on customer confirmations. Therefore, the reported yield should include the effect of any commission (see MSRB rule G-15(a)).
27. Q: Should miscellaneous fees such as transaction fees be included in the commission field or elsewhere? A: No.
28. Q: The file format requires each transaction submitted by a dealer to have a unique "control number" (unique for the dealer) that is no longer than 20 characters and that may be composed of alpha and/or numeric characters. Why is this necessary? A: The control number reported by the dealer is the mechanism by which the dealer identifies a specific transaction to the Transaction Reporting System. The dealer chooses its own numbering system; however, the control number for a transaction must be unique for the dealer within a three-year period. For example, if a dealer submits two different transactions with the same control number, the system will reject the second transaction. Use of the control number is critical so that the dealer may correct information submitted in error to the system. The MSRB also will use the dealer's control number to report back information to the dealer about the transaction.
29. Q: How should the "Buy/Sell" code be reported? A: When the customer has purchased securities, the dealer's Buy/Sell code should be "S" (sell). Similarly, when the customer has sold securities, the dealer's Buy/Sell code should be "B" (buy).
30. Q: Why does the MSRB need the time of trade? A: This information is needed for audit trail purposes. It is not currently used in the transparency component of the program.
31. Q: How is time of trade reported? A: It is submitted in military format (e.g., 1400 for 2:00 p.m.) and in terms of Eastern time.
32. Q: If I cannot report a customer trade by midnight of trade date, should I report it later? A: Yes. Every customer trade should be reported, even though it may be late. Some dealers refer to late-reported trades as "as-of" trades. It is important. that these trades be included in the database for audit trail purposes, along with trades reported on trade date.
33. Q: Should I report the date I send the as-of trade to the MSRB? A: Report only the actual trade date and (if known) the settlement date on the individual trade record. The file header contains the "submission date," which is when all the information in the file was reported to the MSRB.
Amending and Cancelling Trades
Q: Under what circumstances would a dealer need to correct information about a transaction submitted to the system? A: An example might be a dealer who has made an input error resulting in the wrong price or yield being submitted for a transaction. Note that it is important for these errors to be corrected as soon as possible so that the audit trail and surveillance database is correct. Note also that it is important for errors like these to be minimized since the prices reported on trade date will be used for the daily reports appearing on the next business day.
35. Q: What will the MSRB do if it discovers a probable input error that has resulted in submitted transaction information? A: As part of the daily process of collecting transaction information from dealers, the MSRB will send to each dealer that submitted transaction information a receipt with messages identifying errors in transactions that failed to meet acceptance testing, together with a copy of all such input records.
36. Q: What should happen next? A: If the dealer finds that the record should be amended -- for example, because of a typographical error in the price -- he or she will submit an "Amend" record as soon as possible (i.e., a record with "A" as the "Cancel/Amend Code"). The "Amend" record must include the same dealer control number as the first report of the trade and must include all of the correct information about the trade. If the dealer finds that a "questioned" record was correctly submitted, a "Verify" record may be submitted, including the original dealer control number, to indicate that it is correct.
37. Q: How can I find out more about correcting reported trades? A: See the MSRB's notice dated April 17, 1998 on error messages. This describes categories of error messages and how to respond to them.
38. Q: What happens if I try to amend a transaction with a control number that I have not previously reported? A: If a transaction
is submitted with a "Cancel/Amend Code" of "A" and there is not
an existing transaction in the database with that control number,
the transaction information will be rejected -- that is, returned
to the dealer for correction. 39. Q: Can I amend any information about a trade that I have previously reported? A: No. The following fields cannot be amended: dealer identity, CUSIP number, trade date, and transaction control number. If you report a trade with an error in one of these fields, you should cancel the transaction report, as described below, and then report the trade using a new control number.
Q: Under what circumstances would a transaction be "cancelled" in the system and how is that done? A: There may be limited
numbers of instances in which customer transactions are reported,
but the transactions later must be cancelled with customers due
to circumstances beyond the dealer's control (for example, a new
issue is cancelled). In this case, the dealer must submit a record
with the control number of the transaction and with the "Cancel/Amend
Code" set to "C" for "Cancel." Doing so will allow MSRB to indicate
the transaction as cancelled in the surveillance database so that
the database is accurate. 41. Q: When my firm corrects a trade, our system assigns a new control number to the trade. Should I report the new control number? A: There is no need to report the new control
number if this is the only change to the data required by G-14.
If other data also changes, the recommended method is to"Amend"
the trade so that its attributes are correct. Submit an "Amend"
("A") record with the original control number in the "Previous
Record Reference" field and the new control number in the "Dealer's
Transaction Control Number" field. Note that any subsequent changes
to this trade must include the original control number,
since the TRS uses that number for all records of the trade. An
alternative method is to cancel the trade, using the original control
number, and report a new trade ("F" record) with only the new control
number. 42. Q: Isn't it possible just to change the control number of the trade? A: No. Once the Transaction Reporting System records a trade, it stores all subsequent information under the original control number. You cannot amend the control number. You must continue to submit data with the original control number, or cancel the original record and submit a new "First Report" ("F") record.
43. Q: What should I report when an issue, originally traded as "when-issued" without a settlement date, starts to trade regular way? A: If the only change is that the issue starts to trade regular way or that the issue's settlement date has been determined (or changed), there is no need to cancel or amend the trade. If possible, you should suppress the reporting of these events to the MSRB.
44. Q: For how long after initial submission is it possible for dealers to amend or cancel transactions that have been entered into the system? A: This can be done
within three months after the trade's settlement date. Note that,
while some numbers of cancellations and corrections are inevitable,
it is important for dealers to minimize the need for these types
of corrections by making sure that procedures are in place for reporting
necessary information correctly in the initial submission. 45. Q: When my firm cancels and rebills a trade, we get an error message from the MSRB system about the time of trade, even though we originally reported the time. How can we prevent this error? A: You must report the time of trade in every "first" or "amend" ("F" or "A") trade record. If you cancel an already-reported trade and report it again, you must include the time of trade on the new "F" record.
46. Q: Can I put "change" records in the same file as the record I am changing? A: Yes - you may put a change (a Cancel, Amend or Verify record) into the same file as the original record. However, to ensure that the system carries out the actions in the proper order, the "change" record must follow the original record in the file. For example, the system cannot cancel a trade record before it processes the record itself.
Changes that Should Not be Reported
47. Q: Should I amend or cancel a trade whenever I change my internal records of the trade? A: No. You should report to the MSRB only changes relevant to the Board's transaction reporting purposes, for example, a change in the price or par value of a trade. You should not report a change if it does not involve a required data item. For example, if you change the customer's account number or account representative, you should not send a second report of the trade to the MSRB. Finally, as noted above, you should not amend or cancel a trade record in a new-issue security just to change or add the settlement date.
48. Q: My organization processes thousands of customer transactions in municipal transactions each day. How can such a large file be sent to the MSRB? A: National Securities Clearing Corporation is providing its participants the ability to send the MSRB customer transaction file to NSCC along with other types of files that are sent to NSCC each day. NSCC will forward the MSRB customer transaction file to the MSRB.
49. Q: My firm uses another broker-dealer for clearing and processing municipal securities transactions. The clearing broker submits my inter-dealer transactions to NSCC on my behalf. Can the clearing broker submit my customer transaction reports to NSCC for forwarding on to the MSRB on my behalf? A: Yes. The clearing broker can submit transaction reports for dealers for which it clears transactions. Note that the dealer effecting transactions is responsible for the clearing broker's performance in this regard. You should talk with your clearing broker now to ensure that it will provide this service.
Q: My firm uses a service bureau to submit inter-dealer transaction information to NSCC. Can the service bureau also submit customer transaction files to NSCC for forwarding to the MSRB? A: Yes. As in the previous answer, the dealer effecting transactions is responsible to report the transactions correctly.
Q: Are there any special requirements for formatting the file to NSCC and getting the file to NSCC? A: Yes. You should review NSCC's April 2, 1997 Important Notice on the interface requirements for customer transaction reporting (Notice No. A-4571/P&S 4155). This and later notices are available from NSCC's Web site (www.nscc.com). Similarly, if a clearing broker or service bureau will be sending your MSRB customer transaction files to NSCC for forwarding to the MSRB, they should ensure that the files can be sent in the correct format.
52. Q: Will customer transaction records submitted to NSCC for forwarding to the MSRB be included in the automated comparison system? A: No. The MSRB customer
transaction file sent to NSCC for forwarding to the MSRB is a totally
separate file than the inter-dealer transactions and other files
sent to NSCC for clearance and settlement purposes. NSCC will not
process data in the MSRB customer transaction files, but will only
forward the files to the MSRB. The use of NSCC for this purpose
will allow dealers and service bureaus to use existing telecommunication
channels set up between dealers and NSCC and between NSCC and the
MSRB. Thus, it should provide efficiencies, especially for dealers
that have many customer transactions each day. 53. Q: May I include my inter-dealer trades in the customer trade file I send to the MSRB? A: No. All files
submitted as part of a dealer's customer transaction file must report
only customer transactions -- no inter-dealer transactions may be
included. 54. Q: My firm submits its inter-dealer transactions to NSCC through a dial-up terminal or personal computer. Can I use this method of file transfer to transmit customer transaction files to NSCC for forwarding to the MSRB? A: No; as noted in NSCC's Important Notice, all dial-up connections for transaction reporting will be directly to the MSRB.
55. Q: How is this done? A: Dealers may send
relatively small files directly to the MSRB by using a personal
computer and a standard telephone modem, such as those made by Hayes,
U.S. Robotics and others. The MSRB provides telecommunications software
to dealers who ask for this service. Please note that this software
will run only on computers using the Windows 95
or Windows NT operating systems. Also note that dealers using this
method of transmitting files directly to the MSRB will still need
a means to generate files from their own records that meet MSRB
file and record format requirements. This may be done by writing
a program to reformat the dealer's data to meet the MSRB file specifications,
or by keying in trade data to the MSRB PC software. Q: I have obtained and installed MSRB's software, but I have trouble connecting to the MSRB system. What are the most common causes of failure to connect? A: Many causes of connection failure are addressed in the "PC TRS Troubleshooting Guide," which you should review. Sometimes problems arise when a PC is used for telecommunications with other systems in addition to the MSRB system, so it is best to have the PC TRS software on a "stand-alone" PC. If your PC uses a local area network (LAN) to dial out, try connecting the PC to its own modem and telephone line.
57. Q: Perhaps my connection problems are too technical for me to resolve. Where can I get technical support? A: Ask your firm's technical support staff to check that your NetBEUI and Microsoft Client software components are present. You are also welcome to call the MSRB at (703) 797-6600 and request technical help from a Transaction Reporting Assistant.
Testing Customer Transaction Reporting with the MSRB 58. Q. What is the purpose of the requirement for dealers to test their reporting capabilities with the MSRB? A: The purpose of
testing is to ensure each dealer that its own system can produce
files containing the required information in the proper format,
that it is able to correct erroneous input, and so forth. Testing
is mandatory so that all the dealer will be ready before effecting
customer transactions, since the transactions must be reported on
trade date. 59. Q: My firm plans to begin doing trades with customers soon but we did not participate in testing during 1997. How can we test our submission method with the MSRB? A: Contact the Board's Transaction Reporting Assistants by telephone. They will inform you how to submit test trades to the Transaction Reporting System. The testing method will vary, depending upon how you submit customer trade data.
60. Q: What will happen during the test? A: First, the MSRB will request obtain information on how your organization will be submitting data, a fax number where you can receive receipt/error logs from the MSRB, and technical details. Dates will be chosen to run your test. Your firm's testing point-of-contact will arrange to send test files to the MSRB, using either NSCC or the MSRB dial-up facility, to establish that the telecommunications link is working, and to verify that the trade records meet the format specifications.
61. Q: How long will the test last? A: Each test cycle should take approximately five days. However, it may take more than one test cycle for a dealer to validate its methodology for creating files in the proper formats and for handling trade data corrections.
62. Q: Will there be special formats and test procedures for submission through NSCC? A: Yes. As part of testing the communications, dealers and service bureaus will go through NSCC's usual procedures for setting up transmission of a new data stream or "SysID" - verifying that the file header meets Datatrak specifications, etc. Details are provided in the NSCC Important Notice previously mentioned (Notice No. A-4571/P&S 4155).
63. Q: What is the format for the computer-readable file that must be sent to the MSRB each day to comply with the customer transaction reporting requirement? A: For files sent directly to the MSRB via the MSRB dial-up facility, the physical formats of transaction records, and of the file header record that must precede them, are specified in the MSRB document entitled "File and Record Specifications for Reporting Customer Transactions." Files sent to NSCC will need to be in the format specified by NSCC. See NSCC's April 1997 Important Notice.
64. Q: Can I include binary data in the customer transaction file, along with ASCII data? A:No. Binary data should not be included, even in the unused portions of the record.
65. Q: The MSRB file header record requires a "version number." What should be put here? A: This field identifies the version of the MSRB format specification that applies to the file. Initially, use '00010' here.
66. Q: The header record requires a "record count" field. What should be put here? A: Put here the number of transactions being reported in this file. (Do not count the header record).
67. Q: If the header record of a transaction file contains errors, how will MSRB inform the submitter of this fact? A: If the file has a submitter identifier known to the MSRB, the Transaction Reporting System will send a receipt/error message file or fax to the submitter. The header errors will be identified in the file in the first two records following the receipt record, using the same format as for transaction detail errors. MSRB will not accept any direct submissions by dial-up from unknown parties.
68. Q: Is the customer's identity included anywhere in the information reported? A: No. The customer's identity is never submitted in reports of customer transactions.
69. Q: Why does the MSRB need an "executing broker symbol"? A: This symbol is used for the audit trail function. It identifies the dealer that actually effected the transactions (in contrast to the dealer that submitted the trade information or who cleared the trade). It is particularly important for dealer identification when one dealer clears or submits data for several other dealers. The dealer that actually effected the transaction should be the one identified with this symbol.
Q: What symbol should be used for executing broker identity? A: The four-character symbol of the firm or bank assigned by the NASD, for example, ABCD.
71. Q: Is it permissible for my firm to use our NSCC clearing number (e.g., 1234) instead of this symbol? In our case, this would serve the same purpose since we only clear for ourselves. A: No. The four-character alphabetic symbol is required, as it is the standard identifier used in the surveillance database.
72. Q: My organization does not have one of these symbols. Should we just use the symbol of the dealer that we clear through? A: No. If your organization is a broker, dealer or municipal securities dealer and it is effecting trades in municipal securities (with other dealers or with customers), it must use its own symbol.
Q: How does a dealer obtain an NASD-assigned symbol if it does not already have one? A: If you clear inter-dealer trades through an NSCC participant, call the NSCC Marketing Department to obtain a broker symbol. (Use this symbol for both customer and inter-dealer trade reporting.) Otherwise, call NASD Subscriber Services at (800) 777-5606 and explain that you need a symbol for reporting municipal securities transactions.
74. Q: Will the NASD assign a symbol, even though my organization is a dealer bank? A: Yes.
75. Q: Our firm has an NASD-assigned four-letter "market participant ID." Do we need an executing broker symbol as well? A: No. "Market participant ID" (MPID) is a synonym for "executing broker symbol."
76. Q: Is the personal computer software (PC TRS) year-2000 compliant?
77. Q: My firm sometimes uses a temporary CUSIP numbers for trade execution. Eventually we change these to officially assigned CUSIP numbers. How can we report these trades? A: Dealers should not report trades unless the security has been assigned a CUSIP number by the CUSIP Service Bureau of Standard & Poor's. Such trades should be reported once a CUSIP number is officially assigned. Report the trade using the actual trade date, even if you are reporting it after trade date. Note that, per rule G-34(a), if trading is done in a new issue security, the broker or dealer that acquires the issue from the issuer must apply for assignment of a CUSIP number in time to ensure assignment of the number by the date of sale or award. Transfers of Securities into UITs 78. Q: My firm buys securities that we deposit into an accumulation account for ultimate transfer to a unit investment trust (UIT). At times, we purchase and hold the securities over a period of several days before depositing them with a UIT we sponsor in exchange for all of the units of the trust. The securities are valued at the purchase price when they are deposited with the trustee of the UIT. Is the deposit of the securities with the UIT trustee considered a "transaction" for purposes of MSRB Rule G-14? A: No. At this time a deposit of the type you describe is not necessarily considered a customer transaction for reporting purposes under Rule G-14. In part, this is because it appears that the price of the deposit may, or may not, represent the actual market price of a customer transaction on the day and at the time of the deposit. The Board, however, may review this interpretation in the future if the Transaction Reporting System is enhanced to allow deposits to UITs to be specifically labeled as such in the transparency reports.
INTER-DEALER TRANSACTION REPORTING
79. Q: How are inter-dealer transactions reported to the MSRB? A: Inter-dealer transactions are reported by submitting the transaction data on trade date, to the automated comparison system, in the format and manner required by that system to obtain a comparison on the night of trade date. NSCC provides this information to the MSRB to accomplish transaction reporting for those trades.
80. Q: What items are required by rule G-14, in addition to the items necessary to obtain an automated comparison of an inter-dealer trade on the night of trade date? A: Specific
items that are mandatory, in addition, to the information required
for automated comparison, are: (i) accrued interest, on any transaction
in which the settlement date is known; (ii) the NASD-assigned executing
broker symbol identifying the executing broker (e.g., "ABCD") ;
and (iii) time of trade. 81. Q: Why does the MSRB need accrued interest in inter-dealer transaction reports? A: For most transactions reported through the automated comparison system, dealers report a final money figure in lieu of a dollar price or yield. The MSRB derives a dollar price for these transactions by subtracting the reported accrued interest and dividing the result by the par amount traded. Therefore, if accrued interest is not reported correctly, the resulting dollar price may not be accurate.
Problems in Inter-Dealer Transaction Reporting 82. Q: What kind of problems has the MSRB seen in the inter-dealer transaction information submitted under rule G-14? A: For the daily report generated by the Program, only compared transactions can be used for generating price and volume information. It accordingly is very important for dealers to ensure that their procedures for reporting inter-dealer transactions are designed to submit correct information reliably to the automated comparison system. A significant number of the following types of transaction in the automated comparison system indicates that a dealer is having problems that require a review of its procedures and corrective action: (i) stamped advisories; (ii) "as of" submissions; (iii) "demand-as-of" submissions coming in against the dealer; (iv) compared transactions that are deleted using either the "one-sided delete" function or using the "withhold" function; (v) trade records without the appropriate executing broker symbols included.
83. Q: My firm clears through a clearing broker. When my firm does trades with another firm that also uses that same clearing broker, must that transaction be reported to the MSRB by submitting the trade to the automated comparison system? A: Yes. Note that the submission to the automated comparison system is also required in this instance by rule G-12(f) on automated comparison. June 1998 Back to TRS User's Manual
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