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Last-Sale Reporting

Last-Sale Reporting
TradingTrading Skills and EssentialsTrading SkillsTrading Order Types and ProcessesTrading Orders

What Is Last-Sale Reporting?

The term last-sale reporting alludes to a Nasdaq requirement that states dealers must submit subtleties to the stock market in the span of 90 seconds of any completed transaction. The Nasdaq expects dealers to give the name of the stock, the number of shares, as well as the price paid by the buyer. Last-sale reporting guarantees that all traders and transactions meet the compliance regulations set by the Securities and Exchange Commission (SEC).

In the event that a dealer neglects to report the transaction in the span of 90 seconds, it is set apart as late by the Financial Industry Regulation Authority (FINRA). Assuming FINRA finds a pattern or practice of non-permitted late reporting without reasonable justification or excellent conditions, the member might be found to be in violation of Rule 2010, which states that "a member, in the conduct of its business, will notice high standards of commercial honor and just and equitable principles of trade."

How Last-Sale Reporting Works

Last-sale reporting outgrew the need to guarantee Nasdaq's computerized trading system followed regulations implemented by the SEC. To keep up with transparency across the market and drive competitive pricing among market producers, any exchange needs to make current data on sales available to all market participants.

While the New York Stock Exchange (NYSE) gets this data from the specialists who work with trades on the exchange floor, trades made on the Nasdaq host no third gathering to follow the data. Accordingly, Nasdaq expects dealers to give trade data straightforwardly to the exchange, otherwise called the last-sale reporting. To work on the transparency and the proficiency of markets, regulators require that market makers utilize real-time trade reporting to give a public record of stocks. Since Nasdaq's trades occur electronically over a network as opposed to on the trading floor, market creators are responsible for conveying trade data straightforwardly to the exchange.

According to the requirements, dealers must report the main subtleties of every transaction they execute. These subtleties remember the stock for question, the total number of shares traded, and the price per share. The data must be submitted to the Nasdaq in no less than 90 seconds of the transaction. The 90-second window for trade reporting required by Nasdaq satisfies the exchange's regulatory obligation for real-time trade reporting.

This means a trader who executes the sale of 100 shares of Company X at $75 per share must communicate every one of the relevant subtleties to the Nasdaq in no less than 90 seconds of completion to be consistent with the requirement.

The New York Stock Exchange doesn't need last-sale reporting since the exchange can get data from traders and dealers who actually work on the trading floor.

Special Considerations

In 2006, Nasdaq made the change from a stock market to a securities exchange company — the biggest in the world. At that time, the primary trading platforms depended upon specialists to work with trades utilizing a closeout based system. This is where buyers and sellers contend straightforwardly with one another to strike bargains.

The NYSE utilizes specific firms as market creators to work the floor of the exchange, reporting all bid and ask prices in a timely way, setting opening prices, and acting as a catalyst for trades. Specialists — who act as third-party facilitators — coordinate buyers with sellers to keep up the flow of trade across the market.

The Nasdaq, then again, utilizes many market creators — none of which actually operate at a fixed, physical exchange. Every one of them, however, do enter straightforwardly into trades. Investment companies that act as Nasdaq market creators additionally act as dealers in securities over the exchange's network. These organizations purchase shares of stocks to gather a inventory to use as a basis from which to sell shares to others on the network, either to investors or other market creators. Dealers likewise purchase shares from investors or different dealers, adding those shares once again into their inventories.

Highlights

  • Reports to Nasdaq are observed by the Financial Industry Regulation Authority.
  • The Nasdaq requires the name of the stock, the number of shares, and the price per share in something like 90 seconds of each completed transaction.
  • The requirement guarantees that traders and transactions are consistent with SEC regulations.
  • Last-sale reporting was put in place due to the lack of active third-party facilitators — parties that are available and can account for trades on a physical trading floor.
  • Last-sale reporting alludes to a Nasdaq requirement for all possible trades made through the exchange.