Questions and Answers Regarding the Real-Time Transaction Reporting System (RTRS): Trade Submission, Error Feedback, RTRS Web, and Contacting the MSRB by Phone
Exceptions from Fifteen Minute Transaction Reporting
Sales of New Issue Securities
Form RTRS
Modifying Trades
RTRS Web
Special Conditions (Special Price Reason Codes)
Error Feedback
Contacting the MSRB
Exceptions from Fifteen Minute Transaction Reporting
1.
Q A transaction is executed on the first day of trading in a new issue at the “list offering price” by a syndicate manager, syndicate member, or selling group member. What is the deadline for reporting such a transaction?
A A transaction that is executed on the first day of trading in a new issue at the “list offering price” by a syndicate manager, syndicate member, or selling group member qualifies for an exception from the fifteen minute reporting requirement and is required instead to be reported by the end of the first day of trading in the issue. Transactions executed prior to 6:30 P.M. that qualify for the end of day exception are required to be reported by 8:00 P.M. on trade date (all times Eastern). Transactions executed later than 6:30 P.M. must be reported no later than fifteen minutes after the start of the next RTRS Business Day. Since the RTRS Business Day begins at 7:30 A.M., those trades must be reported by 7:45 A.M.
2.
Q Rule G-14 says that the end of day deadline for trades effected at list price on the first day of trading in a new issue is for “syndicate managers, syndicate members, and selling group members.” May a dealer use this exemption from fifteen minute reporting if it is the sole underwriter of an issue?
A Yes. The exemption found in Rule G-14(a)(ii)(A) on RTRS Procedures applies to sole underwriters.
3.
Q Under what circumstance is a dealer allowed the three-hour exception from fifteen minute transaction reporting?
A Dealers are allowed three hours to report if all of the following conditions apply: (1) the CUSIP number and indicative data of the issue are not in the securities master file used by the dealer to process trades for confirmations, clearance and settlement; (2) the dealer has not traded the issue in the previous year; and (3) the dealer was not a syndicate manager or syndicate member for the issue. This exception will sunset January 31, 2006.
4.
Q If a dealer executes a trade that qualifies for the three-hour exception, how does the three-hour exception apply if a dealer executes multiple transactions in the same “qualifying” CUSIP during the same day?
A The three-hour exception is measured from the first transaction executed by a dealer. For example, a transaction executed at 1:00 P.M. that qualifies for the three-hour exception is required to be reported by 4:00 P.M. A second transaction in the same CUSIP executed at 3:00 P.M. on the same day would be required to be reported by 4:00 P.M. Transactions in the same CUSIP executed after 4:00 P.M. on the same day would be required to be reported under the normal fifteen minute reporting rules.
5.
Q The “time of formal award” on a new issue of municipal securities sometimes occurs late in the day or at night, making it difficult or impossible to execute and process the trades for reporting and comparison on the same day as the formal award occurs. If an underwriter does not execute any transactions in the new issue on the day that the formal award is executed, but instead chooses to execute its first transaction in the new issue on the following morning, is the end of day exception from fifteen minute reporting still available to transactions executed at list offering price by syndicate managers, syndicate members and selling group members?
A Yes. The end of day exception from fifteen minute reporting applies to transactions executed “on the first day of trading.” Since the underwriter’s first execution in the new issue occurred one day after the issue was awarded, the end of day exception would be available for trades executed the day after the award.
6.
Q Dealers often form “conditional trading commitments” with each other prior to the award of a new issue of municipal securities. Once an issue is awarded, dealers holding these executable orders execute them as “when as and if issued” transactions. Is the time of execution for these transactions required to be the same as the time of formal award on the new issue?
A No. MSRB rules prohibit trade execution prior to the time of formal award. However, MSRB rules do not otherwise state when conditional trading commitments or other orders received prior to the formal award of a new issue must be executed. If there is no agreement between the parties on when the order is to be executed after the formal award, the dealer executing the order makes the decision on time of execution. When the trade in question requires two-sided comparison and trade reporting, both dealers must take into consideration the need for each side to know the time of execution so that the trade can be reported in a timely manner by both parties.
7.
Q Some of the information originally provided by a dealer on Form RTRS has changed. How can a dealer make changes to the information provided on Form RTRS?
A Dealers must inform the MSRB of any changes to contact information, methods of error feedback from the MSRB, RTRS Web privileges, and clearing and submitting relationships. A dealer can make these changes by amending Form RTRS, which can be accessed on the MSRB web site by a dealer’s primary municipal principal (designated to the MSRB under Rule G-40).
8.
Q Is a dealer required to complete Form RTRS if it does not effect trades in municipal securities reportable under Rule G-14?
A Yes. All dealers registered with the MSRB must complete Form RTRS, even if they do not effect trades or they only effect trades in municipal fund securities (e.g. 529 plans).
9.
Q How long after trade date can a transaction be submitted, modified, or cancelled?
A While Rule G-14 requires most trades to be reported within fifteen minutes of the time of trade execution, customer trades may be submitted, modified or cancelled up to 90 days after trade date. Changes or additions can be made to the regulatory data on an inter-dealer trade up to one year after trade date. Note that on inter-dealer transactions, modifications of “match data” and cancellations of a trade are subject to NSCC rules. Thus, the rules for the comparison system will govern the methodology for modifying match data that has been erroneously submitted.
10.
Q What could prevent a dealer from seeing its trade report in the Trade Management section of RTRS Web?
A The trade may have been rejected. Check to see if the trade is listed under “unapplied messages.” For example, a trade will be rejected if it is reported with an XREF that was previously used by the dealer.
11.
Q When attempting to report a trade, the dealer receives a message that “one or more required fields are blank.” What is the most common reason for this error?
A Dealers receiving this message should check the “submitter/effecting broker” field. This field must be populated with the dealer’s submitter ID and EBS. If a dealer does not see its EBS(s) and submitter ID(s), contact an MSRB Transaction Reporting Assistant, who will be able to assign a submitter ID.
12.
Q How can a user obtain a forgotten password for accessing RTRS Web?
A Select “forgot your password” in the log-in section of the MSRB homepage and enter the username of the person that has forgotten their password. The MSRB will send an e-mail with the password to the email address on file for the requested username.
Special Conditions (Special Price Reason Codes)
13.
Q When should a dealer use the “settlement not RW impacts price” special price reason code?
A Dealers must include this special condition (M200, M210, M200, or M230) whenever (1) the parties to a transaction agree to deviate from the normal settlement date of the trade (T+3 for regular way trades and the first settlement date for when-issued trades) and (2) this deviation results in a dollar price that substantially differs from the market price.
14.
Q When are dealers required to use the “traded flat” special price reason code?
A A bond “trades flat” when the transaction has been effected on terms that do not include accrued interest. This includes transactions in securities that have defaulted as to payment of interest or principal. If a security is traded with terms that do include accrued interest, but the amount of computed accrued interest is zero, such a transaction is not considered to have “traded flat.” For example, trade reports in zero-coupon bonds should not include the special price reason code.
15.
Q What action is required when a dealer receives an MSRB error on a transaction report?
A The MSRB sends several types of errors, each requiring a different level of attention. The Specifications for Real-time Reporting of Municipal Securities Transactions (Version 4.1) contains both a list of MSRB errors (Appendix B.1) and a description of actions that dealers should take for each (page 36)
16.
Q What can a dealer do to correct a trade that is marked as “late”?
A By its very nature, a trade report sent late is not “correctable.” The dealer should investigate to determine why it sent the transaction report late (in most cases, more than fifteen minutes after the time of trade) and review its procedures to ensure that future trade reports are received within the timeframe allowed by MSRB Rule G-14 on RTRS Procedures.
17.
Q What can a dealer do to correct an ‘X’ level error?
A A transaction report with this error cannot be modified. An “X” error indicates that the trade cannot be referenced in RTRS and should be replaced by a new submission; see Specifications for Real-time Reporting of Municipal Securities Transactions (Version 4.1), page 36.
18.
Q If a dealer has a question outside of the RTRS Business Day, is MSRB staff available by telephone?
A To aid in the transition to real-time transaction reporting, MSRB staff will be available to take phone calls for additional hours. Between 8:30 AM and 5:30 PM (all times Eastern), please call the main desk at (703) 797-6600 and ask to speak to a Transaction Reporting Assistant. Starting January 31, 2005, dealers that need assistance between 7:30 AM and 8:30 AM or between 5:30 PM and 8:00 PM can reach the Transaction Reporting Assistants directly at (703) 797-6668. MSRB staff will not be available before 7:30 AM or after 8:00 PM.
*Additional Questions and Answers on RTRS were released by the MSRB on August 21, 2003 (MSRB Notice 2003-36).
