Established by FINRA, the Order Audit Trail System (OATS), is an integrated audit trail of order, quote and trade information for all NMS (National Market System) stocks and OTC equity securities. As part of FINRA’s surveillance activities, Rules 7400 through 7470 (OATS Rules) and Rule 4554, OATS requires electronic auditing and reporting capabilities on all stock and equity orders, quotes, trades and cancellations. According to Rule 7430 (updated from NASD Rule 6953), all computer clocks and timestamping devices must be synchronized to be regarding a time source as designated by FINRA. This data can be collected during the day and transmitted to OATS in one or more files at a convenient time; however, reports for events that occur during particular OATS Business Days must be reported by 5am EST the following calendar day.
Information collected on the OATS report includes:
- Customer or firm order
- Date and time of receipt
- Order ID
- Terms of the order (i.e. buy, sell, sell short, security, price, shares, account type and handling instructions)
- If the order was received manually or electronically
- If the order was routed manually or electronically
- Where the order was routed for execution
- If the order was an intermarket sweep order
- Any modifications to the order including the date and time of any modifications
- Execution information including partial executions, price, date, time and capacity in which the firm acted in the trade
Reporting Member firms are excluded from the OATS Rules if they meet all four of the following criteria:
- The member must engage in a non-discretionary order routing process where the firm immediately routes all of its orders to a single receiving Reporting Member.
- The member cannot direct or maintain control over subsequent routing or execution by the receiving Reporting Member.
- The receiving Reporting Member must record and report all information under NASD Rules 6954 (recording of order information) and 6955 (reporting of order information).
- The member must have a written agreement with the receiving Reporting Member specifying the respective functions and responsibilities of each party.