The National Association of Securities Dealers' filing with the Securities and Exchange Commission on riskless principal trade reporting proposes the following amendments to the current reporting requirements: Market makers would be exempted from reporting riskless principal trades in the Nasdaq National Market, the Nasdaq SmallCap Market, Nasdaq convertible-debt securities, and non-Nasdaq OTC equity securities. The rule is subject to SEC approval.
The rule's proposed new language follows, and is underlined; proposed deletions are in brackets:
Exception: A "riskless" principal transaction in which a member [that is not a market maker in the security], after having received [from a customer] an order to buy a security, purchases the security as principal [from another member or customer] at the same price to satisfy the order to buy, or, after having received [from a customer] an order to sell, sells the security as principal [to another member or customer] at the same price to satisfy the order to sell, shall be reported as one transaction in the same manner as an agency transaction, excluding the mark-up or mark-down, commission equivalent, or other fee.
