The Nasdaq Stock Market is now offering what it says will be a better way of centralizing and storing data for clearing of trades.
The exchange operator has created an Equity Trade Journal for Clearing service, a service providing daily and ad hoc reports on trading activity associated with a subscribing firm’s clearing number.
The service began on Nov. 15, according to a Nasdaq spokesman. Fees for the service will start to be charged on Jan. 2, 2013, according to a rule filing with the Securities and Exchange Commission.
The information service for clearers is an extension of Nasdaq’s existing Equity Trade Journal, which provides broker-dealers with reports on their trading activity.
“This is an enhancement of a pre-existing product, but it is a better way of centralizing clearing information,” according to a Nasdaq official who would only speak on background.
The market official said the ETJ Clearing service also is designed to provide clearing brokers with a risk profile of each correspondent trader with which it conducts business.
The service will provide a report on all trade activity executed by a clearing brokerage on Nasdaq, the Financial Industry Regulatory Authority’s Over the Counter Reporting Facility, and the FINRA/Nasdaq Trading Reporting Facility. The activity will be reported by the market participant’s identification code, or MPID.
The service will provide reports each day on the prior trading day’s activity and ad hoc reports for a chosen day. Reports will be stored for 30 days and retrievable by subscribers of NasdaqTrader.com.
After January 2, users will be charged on a tiered basis, Nasdaq said in its filing with the SEC.
Those brokerages in the first tier, which will receive reports for up to 10 correspondent MPIDs pay a monthly fee of $750. Each subsequent tier includes for more reports and a higher fee. For example, tier five provides daily reports for 41 or more MPIDs for a monthly fee of $1,750.
Nasdaq said it has a “low number” of clearing firms that have 40 correspondent MPIDs.
Officials of several competing exchanges declined comment. However, one official of a Nasdaq competitor said the service isn’t new, but a different way of compiling clearing information is.
“The news here is that you used to only be able to get data by MPID feed, only through your MPID and not other ways. But now clearing firms can enter their clearing numbers and get data that spans many MPIDs,” said an official with a competing exchange.
He adds that ETJ Clearing is “a much more efficient way to collect data for clearing houses.” He said that Nasdaq “has a great advantage in aggregating their data and over-the-counter bulletin-board flow.”