OREANDA-NEWS. May 20, 2015. A rule change to establish a voluntary Member Accommodation Program for qualified IPO Cross orders directly disadvantaged by Nasdaq system issues on May 18, 2012 in relation to the Facebook, Inc. (FB) IPO Cross.

Nasdaq has submitted an immediately effective rule filing to the SEC to implement a limited reopening of the Member Accommodation Program.

Only members that did not submit a claim in 2013 are eligible to submit a claim at this time. Requests for accommodation will be evaluated by FINRA.

Members requesting accommodation must submit a claim by Friday, June 19, 2015.

Details regarding the information that FINRA would require can be found below:

Background on the Member Accommodation Program

In 2013, the SEC approved a Nasdaq rule change to establish a voluntary Member Accommodation Program to compensate members for qualified losses arising directly from IPO Cross system issues in FB on May 18, 2012.  Claims submitted to Nasdaq by April 8, 2013 were evaluated by FINRA, and valid claims were paid on December 31, 2013.  Rule filings that describe the establishment and implementation of the Member Accommodation Program in 2013 are available on the Federal Register/ Vol. 77, No. 148, Federal Register/ Vol. 78, No. 60, and Federal Register/ Vol. 78, No. 246.

Nasdaq has submitted an immediately effective rule filing to the SEC in order to implement a limited reopening of the Member Accommodation Program.  The new rule filing is available here. 

Eligibility to Participate in the Re-Opening of the Member Accommodation Program

Any member that submitted a claim prior to 11:59 p.m. ET on April 8, 2013 is not eligible to participate, because its claim was fully evaluated in 2013.  Likewise, any member that is covered by a release of claims that was previously executed and delivered to Nasdaq is not eligible to participate. 

IPO Orders Eligible for Accommodation

Nasdaq Rule 4626, as amended by the immediately effective rule filing, establishes specific limited eligibility requirements for orders to qualify for inclusion in the evaluation process, from which the amount of compensation to be provided will be determined.  Firms should refer to that rule, as well as the rule filings cited above, for complete information regarding the specific eligibility requirements for orders to qualify for the Member Accommodation Program.

Assessment of Claims under the Member Accommodation Program

FINRA will evaluate claims using the criteria in Rule 4626 to determine the eligibility and value of each member's claim. FINRA will make its evaluation on data provided by Nasdaq as well as the information requested below from claimants and any additional information requested from claimants by FINRA.

Process for Claim Submission and Required Information

Members wishing to submit a claim under the reopened Program must submit the claim to Christopher Cull, Nasdaq Office of the General Counsel by 11:59 p.m. ET on June 19, 2015.  When submitting a claim, members must submit the following order detail for all IPO Cross Orders for which an accommodation is sought. Order information should be entered into an MS Excel workbook with each column appropriately identified, in the order defined below. Additionally, firms should provide information for execution(s) received, if any, on the affected IPO orders. Required data elements for orders submitted to the Nasdaq IPO Cross are:

  • The number corresponding to the specific IPO Cross-eligible order category that qualifies for accommodation under the Member Accommodation Program. The corresponding numbers are:


Category 1
 IPO Cross-eligible orders to sell that were submitted between 11:11 a.m. and 11:30 a.m., that were priced at \\$42 or less, and that did not execute
Category 2
 IPO Cross-eligible orders to sell that were submitted between 11:11 a.m. and 11:30 a.m., that were priced at \\$42 or less, and that executed at an inferior price
Category 3
 IPO Cross-eligible orders to buy priced at exactly \\$42.00 that were executed in the cross but not immediately confirmed
Category 4
 IPO Cross-eligible orders to buy priced above \\$42.00 and that were executed in the Cross but not immediately confirmed, but only to the extent entered with respect to a customer that was permitted by the member to cancel its order prior to 1:50 p.m. and for which a request to cancel the order was submitted to Nasdaq by the member, also prior to 1:50 p.m.
  • Nasdaq-assigned FIX, RASH, QIX, or OUCH Account
  • Order reference number assigned by Nasdaq for the last modification (e.g., cancel/replace for FIX/QIX or modify/replace for OUCH)
  • MPID
  • Symbol
  • Date
  • Order Time
  • ClientOrderID or UserToken
  • Limit Price or blank if no limit price
  • Entered Size
  • Side
  • TIF Instruction
  • Number of shares executed, if applicable
  • Price of execution or VWAP if multiple executions on the order occurred at different prices, if applicable

Records of Eligible Off-Setting Trades and Subsequent Cancellations with Respect to Orders

Records for any offsetting trades that meet the requirements in the rule filing would also be required (or if no offsetting trades, a statement to that effect). On the same worksheet and in the row(s) of data that correspond to the IPO Cross order identified above, filers should also provide information on all trade executions (e.g., covering trades) that created a realized loss with respect to the above IPO Cross orders to the extent that they can be identified. If there were multiple executions that caused a realized loss with respect to a single IPO Cross order identified above, provide an aggregate share volume, the volume weighted average price, and the time of the first and last execution in lieu of execution information for each individual transaction. Further control and reference numbers are not required for multiple executions. If a single execution that caused a realized loss was related to multiple IPO cross orders identified above, provide one record for each IPO Cross order[1]. For qualifying orders in category (4) (and category (3) if relevant), filers should also provide cancellation information for the customer cancellation and the firm's corresponding cancellation submitted to Nasdaq.

Firms should provide the following information for offsetting trades and cancellations:

  • Executing market center (for a single execution)
  • Nasdaq-assigned FIX, RASH, QIX, or OUCH Account, if applicable
  • Order reference number assigned by Nasdaq, if applicable
  • FINRA/Nasdaq TRF ACT Control Number, if applicable
  • FINRA/NYSE TRF Control Number, if applicable
  • Other applicable exchange control or reference number, if applicable
  • MPID or applicable exchange identifier
  • Time of first execution (for a single execution)
  • Time of last execution (for multiple executions)
  • ClientOrderID or UserToken if applicable
  • Execution Price (VWAP for multiple executions)
  • Shares Executed
  • Side
  • Order Cancellation Time, if applicable
  • # of Shares Cancelled, if applicable
  • OATS Order Receiving Firm Order ID# of Customer Cancellation
  • Order Reference Number assigned by Nasdaq for cancellation

[1] For example, if there was one sell execution for 200 shares that corresponds to two IPO Cross sell orders for 100 shares, then there should be two rows of data with the offsetting sell execution data repeated in both rows.

Calculation of the Loss for Each IPO Cross Order for which an Accommodation is Sought

On the same worksheet and in the row of data that corresponds to each IPO Cross order identified above, filers should calculate the member's direct trading loss incurred using the formulas described in the rule change. Firms must identify the benchmark (i.e., actual execution price or uniform reference price) used for the calculation of the loss. Additionally, firms must indicate whether the calculated Member's Share loss with respect to category (4) was reduced by 30% pursuant to Nasdaq Rule 4626(b)(3)(A)(iv).

Format for Required Information

The required information must be provided in an MS Excel workbook as .xls or .xlsx file. The workbook should be clearly labeled to identify the filer. Contact information should be provided on the first worksheet of the workbook. No order or execution data should be included on the first worksheet.  A sample MS Excel workbook may be obtained here.

Requests for Additional Information

FINRA reserves the right, in consultation with Nasdaq, to request additional information in processing a filer's request for accommodation under the Member Accommodation Program. Filers will then be required at a later date to provide details regarding any compensation, accommodation, or other economic benefit provided or to be provided by the filer to its customers.