Series 7: 3.4.4 Trade Reporting And Settlement

3.4.4  Trade Reporting and Settlement

Once a trade is completed, the broker or dealer on either end of the transaction has 15 minutes to report it to the MSRB’s automated matching and reporting system. Interdealer trades must be reported to the Real-Time Trade Matching System (RTTM), a trade comparison system operated by the National Securities Clearing Corporation (NSCC). The Real-Time Trade Matching System time stamps, checks and formats the message, then sends it to the MSRB’s Real-Time Transaction Reporting System (RTRS). Customer trades may be reported either directly to the RTRS or indirectly through the NSCC’s system.

The RTTM performs the comparison function to match trades and then passes the information to the NSCC for clearance and settlement. Cash settlement may occur the same day as the trade. Regular way settlement, for municipals as for corporate bonds, is two business days after the trade (T + 2). At settlement, the seller will “deliver” the bond to the NSCC and the buyer will pay the NSCC for the security. The NSCC then deposits the money in the seller’s account.

Customer confirmation. Customers must receive a written confirmation of each trade from their broker-dealers at or before the settlement date. Each confirmation must describe the security in detail: the name of the issuer, maturity date of the bond, its interest rate, credit backing, whether it is callable, and its taxable status. It also must des