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June 13, 2024


Last updated: June 29, 2024

Mastering Trade Reporting

By: Securities Institute Staff

Mastering Trade Reporting On The Series 57 Exam

Equity Trader Examination

One of the keys to passing the Series 57 exam is to make sure that you have a complete understanding of how trade reporting will be tested on the Series 57 Exam. This article which was produced from material contained in our Series 57 textbook and will help you master the material so that you pass the Series 57 exam.

Automated Confirmation System / ACT Market Center Trade Reporting Facility

The ACT / TRF systems facilitate the reporting, matching, and clearing of trades executed through NASDAQ and other OTC environments. ACT / TRF transactions include:

  • NASDAQ Global market and Capital market securities
  • NON NASDAQ OTC securities
  • Third market CQS trades
  • NASDAQ Convertible bonds
  • Internal clearable transactions

All ACT / TRF eligible transactions must be reported to ACT / TRF by market makers within 10 seconds of the transaction during normal business hours.

ACT / TRF Trade Scan

For trades that are not automatically reported to ACT / TRF through the NASDAQ Market Center Execution System, order entry firms and market makers may enter, review, accept, decline, or cancel transactions by using the ACT / TRF Trade Scan function of the NASDAQ workstation. The ACT / TRF Trade Scan function will also allow the firm to change the capacity in which it acted in the trade. The firm may enter the following qualifiers for each trade:

  • .A, for agent
  • .P, for principal
  • .R, for riskless principal
  • .Z, for a late report for a trade reported after 30 seconds
  • .U for a late report for a trade reported after 30 seconds during pre or after market hours
  • .T, for a trade executed after hours
  • .O, for a price override when the inside market price changes within 30 seconds
  • .C, for a cash trade
  • .W, for trades reported as a weighted average price or for special formula price trades
  • .PRP, for a trade that should have been executed earlier and was executed late at a prior reference price
  • .ND, for a next day trade that will settle t+1
  • .T+N for extended settlement cycles where N = the number of days for settlement


Trades that are reported to the ACT / TRF facility by market participants with a “.W” modifier for an average weighted price trade will not affect the last sale price.

The ACT / TRF Trade Scan function will also allow the parties to a trade to break a trade, if both sides agree. Order entry firms must enter the terms of the trade to ACT / TRF within 10 seconds of the trade when it is required to report through the order entry function of Level II or accept or decline the transaction within 20 minutes of the trade when the trade has been reported by the counter party using the ACT / TRF Trade Scan function. The ACT / TRF update feature will allow a firm to change, its capacity in the trade, short sale, no clearing and match only information reported for a given transaction. All other changes to trades must be done using the no / was feature. The ACT / TRF statistics function allows executing and clearing brokers to monitor the number of trades and


ACT / TRF is only used to match, report, and clear trades that have already been executed. It is not an order execution system.

Which Side of The Trade Reports to ACT / TRF?

In order to ensure that trades are not reported twice to the ACT / TRF system, the following rules have been enacted to determine who reports the trade:

  • In a transaction between two market makers negotiated over the phone the sell side of the transaction reports.
  • In a transaction between two market makers, the executing market maker reports.
  • In a transaction between two non market makers, the executing firm reports.
  • In a transaction between a member firm and a customer, the member firm reports.

The executing party in a transaction is the party to whom the order was directed or against whose quote the order was executed.

All reports to ACT / TRF must include:

  • NASDAQ symbol
  • Time of execution
  • Price, excluding commissions, markups, and fees
  • Number of shares listed in round lots only
  • If the firm bought, sold, or crossed the stock
  • If the sale was a short sale it must be entered into ACT / TRF as sell short or sell short exempt.

Average Weighted Price Trades / Reporting AWP Trades to ACT / TRF

When a NASDAQ trader is working to fill a large buy or sell order the trader may be required to execute multiple orders at different prices and for a varying number shares to fill the customer’s order. In order to alleviate the burden of reporting each and every trade that was executed, firms under certain circumstances may aggregate the reporting of trades and report the total number of shares purchased or sold under an average weighted price with a .W modifier.

Avoiding Double Reporting

When a firm executes an order on a principal basis only to offset a customer’s order it already has, it is important that the firm does not report two transactions. In a riskless principal transaction the firm may report the trade in the marketplace and not the offsetting trade with the customer to the tape.


Market maker A has an order from a customer to sell 500 shares of GHJK at the market when the market for GHJK is 34.00 – 34.10. Market maker A phones market maker B and sells 500 shares of GHJK on a principal basis to market maker B at 34.00. Market maker A fills the customer’s order to sell 500 shares of GHJK at 33.75 net. As the selling market maker, market maker A must now report the trade to ACT / TRF. Market maker A may report the trade to ACT / TRF using either of the following reports:

  • Market maker A would report the trade with market maker B as “riskless principal” and not report the offsetting customer order


  • Market maker A would report the trade with market maker B as principal and report the trade with the customer as “riskless principal” as a non tape non clearing transaction. In most cases the customer’s trade will not need to be cleared as the transaction will most likely be internalized.