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Domain Time II
Version 5.2

SEC Regulation NMS (Reg NMS)


The United States Security and Exchange Commission (SEC) has established new rules governing financial market information, commonly referred to as Regulation NMS (or Reg NMS). The Reg NMS regulations include requirements for the synchronization of clocks and maintaining related audit trail information. The "Order Protection Rule" (rule 611) portion of the regulations

SEC's FAQ on Rule 611 and 610 of Regulation NMS (June 8, 2007) states that:

"In addition, a Firm should adopt reasonable policies and procedures for synchronizing its internal clocks, to the extent that it uses different clocks to assign time-stamps to its order, trade, and quotation data. For example, different trading desks or systems at a Firm potentially could use different clocks to assign time-stamps to trades executed by such desks or systems, and these clocks could be different from the clock that is used to assign time stamps to protected quotations as they are received. The Firm should synchronize these internal clocks to enable the Firm to reasonably determine through its compliance procedures that the trading desks and order handling systems are executing trades and routing orders in compliance with Rule 611. "
FINRA (NASD) has well-established procedures and policies regarding time synchronization under its OATS specifications that allow you to address the Reg NMS requirement for "reasonable policies and procedures". We recommend you use our instructions on configuring for compliance with FINRA (NASD) Order Audit Trail System (OATS) to ensure the the clocks on your various systems are synchronized and generating correct time-stamps and are collecting the necessary audit trail records to satisfy your data retention requirements.

References
17 CFR Parts 200,201,et al., Regulation NMS; Final rule
SEC Division of Market Regulation: Responses to Frequently Asked Questions Concerning Rule 611 and 610 of Regulation NMS
SEC Rule 17a-4. Records to Be Preserved by Certain Exchange Members, Brokers and Dealers

Disclaimer
This document is provided for informational and planning purposes only. The information used in compiling this document was obtained from publically available sources and no representation is made as to the accuracy of the information, nor as to the accuracy of any reading or interpretation thereof. No warranty is made or implied regarding the usefulness or suitability of this information for a particular purpose. Further, Greyware Automation Products, Inc. is not liable for any damages, real or consequential, arising from use of this information.

 

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