A200.7: Yes. In this example, BD1 is not a commercial party and simply facilitates the coverage of trade between BD2 and BD3. In the event of valid over-the-counter agreements (see FAQ 200.1), BD1 could report the trade that identifies BD2 and BD3 as the commercial parties. Model B clearing agreements are a kind of member compensation agreement (CMTA) used by investors and their brokers. There are a number of differences between Model B agreements and model agreements A. Q205.8: BD1 Member and BD2 member manually trade over-the-counter by telephone. Since both members could reasonably claim that they meet the definition of the exporting party, BD2, as a member representing the sales site, has an obligation to establish commercial relationships in accordance with FINRA rules. If BD2 reports trade, does the «documented agreement at the same time» requirement apply? A200.1: Yes. A member may authorize another member to notify and block transactions on his behalf to a TRF, ADF or ORF, provided that both parties have entered into an agreement (a «give-up» agreement) as defined by the FINRA (FINRA Transparency Services Uniform Reporting Agreement) and have submitted this agreement to the FINA FACILITY (or entities) for which the relationship «give-up» applies.
See rules 6282 (h), 6380A (h), 6380B (g) and 6622 (h); NASD Members` Warning: Notice to all participants in the TRF, ADF and other NASD facilities via the AGU and QSR relationships (25 January 2007). The abandonment of agreements can only be used if the member who is «abandoned» or on whose behalf the report is presented is a genuine exporting part of trade. In addition, a member who is «abandoned» must have a valid MPID that the reporting member can use if he reports trades on his or her behalf. When a report is forwarded to a FINRA facility only for audiotapes, it is not necessary for the member to be subject to the reporting requirement to identify the trading partners in the exchange report. For example, two FINRA members (BD1 and BD2) trade and, in accordance with the rules governing commercial relations, BD1 is subject to the reporting requirement. An abandonment agreement is not necessary for BD1 to identify BD2 as a counter-part of trade on a single report. In addition, the parties can meet the requirement of the «agreement at the same time documented» by the use of a previously implemented framework agreement, which explicitly alters the reporting requirement in this scenario (i.e., in a trade manually negotiated between BD1 and BD2, where it is not clear which member of the executing party is, the parties agree that BD1, as a member representing the purchase party, will have an obligation to declare it). Q205.12: Accept the same facts as FAQ 205.9, but in this example, the parties do not agree to defer the reporting requirement for trade.
Can BD1 declare the trade on behalf of BD2 in the form of FINRA`s uniform Service Bureau/Executing Broker Agreement under a previously executed «give-up» agreement? Q200.7: The BD1 member has abdication contracts with the BD2 member and member BD3.