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April 1, 1998

OATS: What Trading Firms Need to Know

By Om Malik

The basic technical requirement for the Order Audit Trail System (OATS) is that member firms create a reportable order event record, or ROE, for each event that occurs.

A ROE must be packaged into one or more firm order report and submitted to the National Association of Securities Dealers on a daily basis.

Firms can transmit these files in one of two ways a file-transfer protocol (FTP) or an e-mail message. In addition, firms must retain the data in order to respond to regulatory inquiries.

Firms will receive feedback on the status of their files via the transmission method used for the original transmission either e-mail or an FTP.

Member firms can use the world wide web to perform administrative functions and to obtain feedback on file status, order-event rejections and reporting statistics.

Sending Data

The NASD will support two network interfaces for the OATS: a private, frame-relay-based network and an Internet gateway. (See diagram opposite.)

The NASD is negotiating with a private-network provider and hopes to set-up a frame-relay-based network to connect any order sending organization (OSO) to the NASD facilities in Rockville, Md. This network will provide 56K-bps, or T-1 access from each OSO.

The NASD has an existing Internet gateway in place and intends to enhance this interface to accommodate OATS o.m. stem users. Internet users can utilize both the e-mail and web-access mechanisms.