OATS for OTC Equity Securities - Foreign Securities

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Imported from previous forum

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Starting on February 4, 2008 the OATS eligible list will be expanding and member firms will need to begin capturing and reporting to OATS orders in certain foreign securities.

We have been given a list of exceptions from FINRA where there is no OATS obligation:

  1. The orders are executed on a foreign exchange; or
  2. The orders are executed OTC in a foreign country and reported to regulators in that foreign country.; or
  3. The orders are routed via a foreign affiliate
  4. The orders are routed to another member firm or exchange and that member firm or exchange routes the order to a foreign exchange for execution.
  5. If the order does not execute, there is no 6620 requirement and no OATS obligation

My question relates to #4 - is there a Fix Tag that can be used to let the sending firm know that the receiving firm has routed the order abroad for execution? The problem is that the receiving firm knows that it routed the order abroad and therefore has no OATS reporting obligation, and will not create OATS. If the sending firm creates OATS, there will be a mismatch between the sending and receiving firms. Can the receiving firm pass this information back in a Fix Tag?

Thanks in advance

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[ original email was from Ryan Pierce - ryan.pierce@lehman.com ]
> We have been given a list of exceptions from FINRA where there is no

OATS obligation:

[snip]

  1. The orders are routed to another member firm or exchange and that
    member firm or exchange routes the order to a foreign exchange for
    execution.

[snip]

My question relates to #4 - is there a Fix Tag that can be used to let
the sending firm know that the receiving firm has routed the order
abroad for execution? The problem is that the receiving firm knows that
it routed the order abroad and therefore has no OATS reporting
obligation, and will not create OATS. If the sending firm creates OATS,
there will be a mismatch between the sending and receiving firms. Can
the receiving firm pass this information back in a Fix Tag?

I think I have some good news. This tag exists, and has been in the spec since at least FIX 4.0. It’s called LastMkt, and denotes the market where the trade executes.

This isn’t the same as a boolean tag for foreign/domestic. It does assume some intelligence on the client side to know which Reuters or MIC codes (depending on FIX version) are local vs. domestic. But I would rather address regulatory issues using existing tags when possible rather than inventing new things that need adoption.

Will this address the business need?