Automated Confirmation Transaction Service – ACT

What is the Automated Confirmation Transaction (ACT) service?

The Automated Confirmation Transaction Service (ACT) is an automated data system designed to document and report the clearing of transactions on Nasdaq-owned and operated exchanges, which compares transaction information entered by participants to the ACT and submits “locked” transactions to the National Securities Clearing Corporation. (NSCC) for customs clearance and settlement; Automatically transmits transaction reports to the National Trade Reporting System, if required, for public and industry dissemination; and provides participants with monitoring and risk management capabilities to facilitate participation in a “locked-in” trading environment.

Understanding Automated Confirmation Transaction Services

Designed to increase transparency, the Automated Confirmation Transaction (ACT) service is a technology platform that provides faster access to trade information, increases the efficiency of trade reconciliation and back-office transactions, and provides online access the status of all commercial entries.

The FINRA/Nasdaq Trade Reporting Facility® (TRF) is a regulatory compliance entity operated in partnership by FINRA and Nasdaq for the reporting of over-the-counter (OTC) trades in equity securities. ACT is a proven and reliable post-trade technology, and is built on the INET platform, the industry standard for over 90 marketplaces in 50 countries. For more than 20 years, the TRF has supported the reporting of OTC transactions in equity securities using ACT. ACTs are used on the Nasdaq Electronic Stock Market.

Prior to using the ACT, Nasdaq used the Trade Acceptance and Reconciliation Service, or TARS. ACT replaced TARS and became operational in the third quarter of 1998.

Participation in ACT

According to the SEC, participation in the ACT is mandatory for all broker-dealers who are members of a clearing agency registered with the Commission pursuant to Section 17A of the Securities and Exchange Act, and for all broker-dealers who have entered into a netting agreement with such broker. Participation in ACT as a Market Maker (MM) is subject to the MM’s initial and ongoing compliance with SEC requirements.

Upon execution and receipt by Nasdaq of the ACT Participant Enforcement Agreement, an ACT Participant may begin capturing and validating trading information on ACT Eligible Securities. ACT Participants may access the Service through Nasdaq terminals or workstations or through a computer interface during the business hours specified in the ACT User Guide. Prior to such entry, all ACT participants, including those with transaction reporting information submitted to Nasdaq by a third party, must obtain from Nasdaq a unique Market Participant Identifier (“MMID” or “MPID”). ), and use this trade ID for reporting and audit trail purposes.

Each ACT report should contain the following information:

1. Eligible security identification symbol (SECID);
2. Number of shares or bonds;
3. Unit price, excluding commissions, mark-ups or mark-downs;
4. Execution time for any trade in Nasdaq or CQS securities not reported within 90 seconds of execution;
5. A symbol indicating whether the party submitting the transaction report represents the Market Maker side, the ECN side or the Order Entry side;
6. A symbol indicating whether the trade is a buy, sell, short sell, exempt short sell, or cross;
7. A symbol indicating whether the trade is as principal, risk-free principal, or agent;
8. Reporting clearing broker (if other than normal clearing broker);
9. The executing broker on the reporting side as a “waiver” (if applicable);
10. Broker executing on the opposite side;
11. Introducing broker on the opposite side in the event of an “abandoned” trade;
12. Counterparty clearing broker (if other than normal clearing broker)