Ameritrade Holding Corporation Comment on Notice 07-46

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Ameritrade Holding Corporation Comment on Notice 07-46

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______________________________________________________________________________ November 15, 2007 VIA ELECTRONIC MAIL Barbara Z. Sweeney Office of the Corporate Secretary FINRA 1735 K Street, NW Washington, DC 20006-1506 Re: FINRA Requests Comment on Proposed Amendments to OTC Trade Reporting Requirements for Equity Securities (Notice 07-46) Dear Ms. Sweeney: 1TD AMERITRADE, Inc. (“TD AMERITRADE” or “the Firm”) appreciates the opportunity to comment on the above referenced FINRA notice soliciting comments concerning proposed amendments of the over-the-counter (“OTC”) trade reporting requirements. TD AMERITRADE strongly supports FINRA’s adoption of the executing broker reporting structure whereby the broker executing a trade between member firms would always have the trade reporting obligation. TD AMERITRADE is an all agency broker with no market-making or trading capabilities. As such, TD AMERITRADE utilizes a Qualified Service Representative (“QSR”) trade reporting arrangement with its business counterparts. QSR provides the Firm with a transparent and simple methodology for trade comparison and trade reporting. It is unclear in the proposal if the advantages of QSR would remain and, therefore, the Firm strongly recommends that any changes continue to keep the QSR process intact. In response to FINRA’s specific requests for comment: • What are the advantages and disadvantages (if any) of the current reporting ...

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______________________________________________________________________________

November 15, 2007

VIA ELECTRONIC MAIL

Barbara Z. Sweeney

Office of the Corporate Secretary

FINRA

1735 K Street, NW

Washington, DC

20006-1506

Re:

FINRA Requests Comment on Proposed Amendments to OTC Trade Reporting

Requirements for Equity Securities (Notice 07-46)

Dear Ms. Sweeney:

TD AMERITRADE, Inc.

(“TD AMERITRADE” or “the Firm”) appreciates the

opportunity to comment on the above referenced FINRA notice soliciting comments concerning

proposed amendments of the over-the-counter (“OTC”) trade reporting requirements.

AMERITRADE strongly supports FINRA’s adoption of the executing broker reporting structure

whereby the broker executing a trade between member firms would always have the trade

reporting obligation.

TD AMERITRADE is an all agency broker with no market-making or trading

capabilities.

As such, TD AMERITRADE utilizes a Qualified Service Representative (“QSR”)

trade reporting arrangement with its business counterparts.

QSR provides the Firm with a

transparent and simple methodology for trade comparison and trade reporting.

It is unclear in the

proposal if the advantages of QSR would remain and, therefore, the Firm strongly recommends

that any changes continue to keep the QSR process intact.

In response to FINRA’s specific requests for comment:

•

What are the advantages and disadvantages (if any) of the current reporting structure

and the two structures described above?

The Firm believes an executing broker reporting structure provides a simple and transparent

structure.

Virtually all execution brokers are currently set up to report trades whereas many

agency firms such as TD AMERITRADE rely on processes like the QSR for trade reporting.

TD AMERITRADE is a wholly owned broker-dealer subsidiary of TD AMERITRADE Holding

Corporation (“TD AMERITRADE Holding”).

TD AMERITRADE Holding has a 30-year history of

providing financial services to self-directed investors.

TD AMERITRADE Holding’s wholly owned

broker-dealer subsidiary, TD AMERITRADE serves an investor base comprised of over 6.3 million client

accounts with approximately $302 billion in assets.

Ms. Barbara Z. Sweeney

November 15, 2007

Page 2

As a result, for many brokers a sell-side approach would prove cumbersome and difficult to

implement.

•

Is there another reporting structure or variation on the two structures described above

that should be considered?

Any changes should retain the current benefits of QSR reporting.

•

What are the technological implications and burdens associated with each of the

reporting structures described above?

The Firm believes that the implementation of a sell-side reporting structure would prove

difficult and costly to implement for the industry.

Based on the Firm’s experience with these

type of projects, firms that currently lack such reporting structures would be required to

spend thousands of hours developing such systems (with costs in the hundreds of thousands,

if not millions, of dollars).

As noted above, TD AMERITRADE believes it is imperative that

FINRA specifically continue to permit firms to rely upon QSR reporting.

•

How much time would firms need to make the necessary systems changes to implement

each of the reporting structures described above?

TD AMERITRADE believes that without the benefits of QSR reporting, the sell-side reporting

approach likely would require agency-only firms to expend substantial time and money to

create systems to comply.

Although TD AMERITRADE has not analyzed such a requirement

in detail, it could take certain firms at least 24 months to create such systems for reporting.

FINRA also is soliciting comment on a proposal to require that firms provide information

to link related reports when both a tape and a non-tape report are submitted to FINRA for the

same overall transaction.

TD AMERITRADE does not take a position on the merits of the two

options regarding the linking proposal.

TD AMERITRADE believes, however, that FINRA

should consider the significant benefits that providing trade identity information could have on

Section 31 fee reporting by member firms.

This benefit, however, could be offset by the possible

impact that could occur with regard to existing reporting structures like OATS.

As a result, the

Firm believes that FINRA should ensure that the linking proposal does not create unintended

costs regarding other reporting structures.

Ms. Barbara Z. Sweeney

November 15, 2007

Page 3

TD AMERITRADE appreciates the opportunity to comment.

Please contact me at

402/970-7007 or Christopher Nagy at 402/970-5656 if you have any questions regarding our

comments.

Respectfully Submitted,

/S/

Bryce Engel

Chief Brokerage Operations Officer

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