Trade Reporting

Scope will include onsite and offsite reviews related to the six (6) phases in scope subject areas.

Scope of the six (6) phases include:

Phase 1: LOPR Reporting

Oyster will review the process for creating and submitting the Large Option Position Report to the Options Clearing Corporation (“OCC”) from end to end to ensure compliance with FINRA Rule 2360(b)(5) and exchange rules. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. This phase will include a review of written procedures related to options trading, clearing, reporting, and security master, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, previously used test scripts, LOPR reports and rejects.

Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current LOPR reporting process.

Phase 2: Short Interest Reporting

Oyster will review the process for creating and submitting the Short Interest Report to ensure compliance with FINRA Rule 4560. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. This phase will include a review of written procedures related to processing of short sales and short interest reporting, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, previously used test scripts, existing short interest reports.

Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current short interest reporting process.

Phase 3: INSITE Reporting

Oyster will review the process for creating and submitting INSITE Reports to ensure compliance with NASD Rule 3150. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. Those recommendations will be based on the fact that the firm is self-clearing, but not involved the correspondent clearing business for introducing firms. This phase will include a review of written procedures related to INSITE reporting, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, previously used test scripts, existing INSITE reports.

Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current INSITE reporting process.

Phase 4: Margin Reporting (Portfolio and Margin Balance)

Oyster will review the process for creating and submitting Margin and Portfolio Margin reports to ensure compliance with FINRA Rule 4521, NASD Rule 2520 and various exchange rules. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. Those recommendations will be based on the fact that the firm is self-clearing, but not involved the correspondent clearing business for introducing firms. This phase will include a review of written procedures related to Margin reporting, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, previously used test scripts, existing Margin reports.

If necessary, Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current margin reporting process.

Phase 5: OATS Reporting

Oyster will review the process for creating and submitting OATS reports to ensure compliance with FINRA Rule 7410 – 7470. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. Those recommendations will be based on the fact thatthe firm is self-clearing, but not involved the correspondent clearing business for introducing firms. This phase will include a review of written procedures related to OATS reporting, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, security Master identifiers of OATS eligible securities, previously used test scripts, existing OATS reports.

If necessary, Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current OATS reporting process.

Phase 6: TRACE Reporting

Oyster will review the process for creating and submitting TRACE reports to ensure compliance with FINRA’s 6700 series of rules. Oyster will document the review process and provide to the firm a written report of gaps identified, areas requiring improved controls, and recommendations for industry best practices. Those recommendations will be based on the fact that the firm is self-clearing, but not involved in the correspondent clearing business for introducing firms. This phase will include a review of written procedures related to TRACE reporting, organizational structure, supervisory controls, regulatory and internal audit findings, system documentation, security Master identifier of TRACE eligible securities, previously used test scripts, existing TRACE reports.

If necessary, Oyster will create test scripts to define scenarios and expected outcomes for each scenario to help the firm determine if there are gaps in its current TRACE reporting process.