Automated Confirmation Transaction Service (ACT) Overview

What Is the Automated Confirmation Transaction (ACT) Service?

Automated Confirmation Transaction (ACT) Service is an automated data system designed to document and report the clearing of trades on exchanges owned and operated by Nasdaq, which compares trade information entered by ACT participants and submits "locked-in" trades to National Securities Clearing Corporation (NSCC) for clearance and settlement; transmits reports of the transactions automatically to the National Trade Reporting System, if required, for dissemination to the public and the industry; and provides participants with monitoring and risk management capabilities to facilitate participation in a "locked-in" trading environment. 

Understanding Automated Confirmation Transaction Services

Designed to increase transparency, the Automated Confirmation Transaction (ACT) Service is a technology platform that provides faster access to trade information, increase the efficiency of trade reconciliation and back-office transactions and provides online access to the status of all trade entries.

The FINRA/Nasdaq Trade Reporting Facility® (TRF) is a regulatory compliance entity operated in partnership by FINRA and Nasdaq for reporting over-the-counter (OTC) transactions in equity securities. ACT is a proven and trusted post-trade technology, and is built on the INET platform, the industry standard for more than 90 marketplaces in 50 countries. For over 20 years, the TRF has been supporting OTC trade reporting in equity securities using ACT. ACTs are used in the Nasdaq electronic stock market. 

Prior to using the ACT, the Nasdaq utilized the Trade Acceptance and Reconciliation Service, or TARS. The ACT replaced TARS and assumed its functionality in the third quarter of 1998.

Participation in ACT

According to the SEC, participation in ACT is mandatory for all brokers that are members of a clearing agency registered with the Commission pursuant to Section 17A of the Securities and Exchange Act, and for all brokers that have a clearing arrangement with such a broker. Participation in ACT as a market maker (MM) is conditioned on the MM's initial and continuing compliance with SEC requirements.

Upon execution and receipt by Nasdaq of the ACT Participant application agreement, an ACT Participant may commence input and validation of trade information in ACT eligible securities. ACT Participants may access the service via Nasdaq terminals or Workstations or through computer interface during the hours of operation specified in the ACT Users Guide. Prior to such input, all ACT Participants, including those that have trade report information submitted to Nasdaq by any third party, must obtain from Nasdaq a unique identifying Market Participant Symbol ("MMID" or "MPID"), and use that identifier for trade reporting and audit trail purposes.

Each ACT report shall contain the following information:

1. Security identification symbol of the eligible security (SECID);
2. Number of shares or bonds;
3. Unit price, excluding commissions, mark-ups or mark-downs;
4. Execution time for any transaction in Nasdaq or CQS securities not reported within 90 seconds of execution;
5. A symbol indicating whether the party submitting the trade report represents the Market Maker side, ECN side, or the Order Entry side;
6. A symbol indicating whether the transaction is a buy, sell, sell short, sell short exempt or cross;
7. A symbol indicating whether the trade is as principal, riskless principal, or agent;
8. Reporting side clearing broker (if other than normal clearing broker);
9. Reporting side executing broker as "give-up" (if any);
10. Contra side executing broker;
11. Contra side introducing broker in case of "give-up" trade;
12. Contra side clearing broker (if other than normal clearing broker)