📘 Trade Type Explanation: Non-Eligible Trade

What is it?

A Non-Eligible Trade is a transaction that does not meet the criteria for regular trading or reporting on the consolidated tape. These trades are typically executed under special circumstances or agreements.

When does it occur?

Non-Eligible Trades can occur at any time but are most common outside of regular trading hours or in situations where standard trading rules don't apply.

Key characteristics:

• Not reported on the consolidated tape
• Often involves special arrangements between parties
• May be executed at prices outside the current market range
• Typically larger in size than average trades

Impact on trading data:

• Open: • No impact on opening price
• High/Low: • No impact on high or low prices
• Close: • No impact on closing price
• Volume: • Not included in reported trading volume
• VWAP: • Not included in VWAP calculations
• Other: • May affect market analysis if not properly identified and filtered

Why it matters:

Understanding Non-Eligible Trades is important for retail traders because:

1. They explain certain trading activity that doesn't appear in standard market data
2. These trades can involve significant share amounts or unusual prices
3. Awareness helps in interpreting overall market activity more accurately
4. It highlights the difference between reported market data and total trading activity

Accessibility and restrictions:

• Retail investors: Generally not accessible
• Institutional investors: May participate under specific circumstances
• Restrictions: Limited to certain market participants or special situations
• Broker-specific considerations: Not typically available through retail brokers

Example:

A large institution negotiates a private sale of 1 million shares with another entity at a price significantly different from the current market price. This trade is executed as a Non-Eligible Trade and isn't reported on the consolidated tape.

Technical details:

• SIP Mapping: Not mapped to SIP as these trades are not reported to the consolidated tape
• Reporting requirements: May require separate reporting to regulatory bodies

Related trade types:

• Block Trade: Large trades that may sometimes be executed as Non-Eligible
• Off-Exchange Trade: Trades executed away from public exchanges, but may still be reported
• Dark Pool Trade: Trades executed on alternative trading systems, which are reported differently

Common misconceptions:

1. Some may think all trades are reported and visible in market data
2. There's a misconception that Non-Eligible Trades are illegal or improper

Historical context:

Non-Eligible Trades have existed as long as organized markets, allowing for flexibility in certain trading situations. Their use and reporting have evolved with market regulations.

Regulatory considerations:

While these trades are not reported on the consolidated tape, they are still subject to regulatory oversight. Parties involved must comply with all applicable laws and regulations regarding disclosure and fairness.