Update on Short Interest Reporting

NASD member firms are reminded that they are required to maintain a record of total "short" positions in all customer and proprietary firm accounts in OTC Equity Securities, securities included in the Nasdaq Stock Market, and in each other security listed on a registered national securities exchange and or not otherwise reported to another self-regulatory agency on a monthly basis, by the 15th of the month (if it is a settlement date or the prior day, if it is not a settlement date).

Ultimately, introducing firms should be aware that they can comply with short interest reporting requirement if they have made prior arrangements with their clearing firm to report on their behalf. Thus, to assure compliance with the rule, firms should insure that their clearing agreement set forth who the responsible party is for short interest reporting. Additionally a principal of the firm should request a copy of the report filed on the firm's behalf from the clearing firm. Additionally, we would recommend that such principal should review the report, evidence review by initialing the report and maintaining a copy in the firm's files for three years, two of which should be in a readily accessible place.

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