Defining last sale reports

What is the last sale report?

The term last sale report refers to a Nasdaq requirement that traders must submit details to the stock market within 90 seconds of any completed transaction. The Nasdaq requires distributors to provide the name of the share, the number of shares and the price paid by the buyer. Last sale reports ensure that all traders and transactions are in compliance with compliance regulations set by the Securities and Exchange Commission (SEC).

If a dealer does not report the transaction within 90 seconds, the Financial Industry Regulatory Authority (FINRA) marks it as late. If FINRA finds a pattern or practice of unjustified late notification without reasonable justification or exceptional circumstances, the member may be found to be in violation of Rule 2010, which states that “a member, in the conduct of business, shall observe high standards of honor. fair and equitable trade and principles of trade “.

Key takeaways

  • The last sale reports refer to a Nasdaq requirement for each and every trade conducted through the exchange.
  • The Nasdaq requires the name of the stock, the number of shares and the price per share within 90 seconds of each completed transaction.
  • The requirement ensures that merchants and transactions comply with SEC regulations.
  • Last sale reports were implemented due to the lack of active external facilitators, parties that are present and can account for transactions on a physical trading floor.
  • The reports to the Nasdaq are supervised by the Financial Industry Regulatory Authority.

How Last Sale Reports Work

The latest sale reports stemmed from the need to ensure that Nasdaq’s computerized trading system complied with regulations imposed by the SEC. To maintain market transparency and drive competitive pricing among market makers, any exchange must make up-to-date sales information available to all market participants.

While the New York Stock Exchange (NYSE) obtains this information from the specialists who facilitate trading on the exchange floor, trading on the Nasdaq does not have a third party to track the data. Therefore, Nasdaq requires dealers to provide trading data directly to the exchange, also known as a last sale report. To improve the transparency and efficiency of markets, regulators require market makers to use real-time trading reports to provide a public record of actions. Since Nasdaq’s trading is conducted electronically over a network rather than on the trading floor, market makers are responsible for delivering trading data directly to the exchange.

Depending on the requirements, distributors must report the most important details of each transaction they execute. These details include the shares in question, the total number of shares traded, and the price per share. Information must be submitted to Nasdaq within 90 seconds of the transaction. Nasdaq’s 90-second trading reporting window complies with the exchange’s regulatory obligation for real-time trading reporting.

This means that a trader executing the sale of 100 shares of Company X at $ 75 per share must transmit all pertinent details to Nasdaq within 90 seconds of completion to meet the requirement.

The New York Stock Exchange does not require last sale reports, as the exchange can obtain information from the traders and dealers who are actually working on the trading floor.

Special Considerations

In 2006, Nasdaq transitioned from a stock market to a stock exchange company, the largest in the world. At that time, the main trading platforms relied on specialists to facilitate transactions through an auction-based system. This is where buyers and sellers compete directly with each other for deals.

The NYSE employs specific firms as market makers to work on the exchange floor, reporting all bid and ask prices in a timely manner, setting opening prices, and acting as a catalyst for trades. Specialists, who act as external facilitators, match buyers with sellers to keep business flowing in the market.

The Nasdaq, on the other hand, uses hundreds of market makers, none of which actually operate on a fixed physical exchange. All of them, however, go directly into operations. Investment firms that act as Nasdaq market makers also act as distributors of securities through the exchange’s network. These companies buy shares to accumulate inventory that will be used as the basis for selling shares to others on the network, whether to investors or other market makers. Distributors also buy shares from investors or other distributors, and add them back to their inventories.

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Mark Holland

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