Qualified Special Representative Agreement (QSR)

By
Will Kenton
Full Bio
Will Kenton is an expert on the economy and investing laws and regulations. He previously held senior editorial roles at Investopedia and Kapitall Wire and holds a MA in Economics from The New School for Social Research and Doctor of Philosophy in English literature from NYU.
Learn about our editorial policies
Updated April 29, 2022
Reviewed by
Charlene Rhinehart
Charlene Rhinehart
Reviewed by Charlene Rhinehart
Full Bio

Charlene Rhinehart is a CPA , CFE, chair of an Illinois CPA Society committee, and has a degree in accounting and finance from DePaul University.

Learn about our Financial Review Board
Fact checked by
Katrina Munichiello
Katrina Avila Munichiello
Fact checked by Katrina Munichiello
Full Bio

Katrina Ávila Munichiello is an experienced editor, writer, fact-checker, and proofreader with more than fourteen years of experience working with print and online publications.

Learn about our editorial policies

What Is the Qualified Special Representative Agreement?

The Qualified Special Representative Agreement (QSR) is an agreement between broker-dealers to clear trades without interacting with the NASDAQ ACT system. The QSR allows one broker-dealer to send trades directly to the National Securities Clearing Corporation on behalf of another broker-dealer. This method of clearing trades provides simpler processing, lower transaction costs, and extended trading hours.

Understanding the Qualified Special Representative Agreement (QSR)

The Qualified Special Representative Agreement (QSR) applies to NASDAQ trades that a broker-dealer would normally process through the ACT system. The ACT system matches trades and then communicates the transaction to the broker-dealer's clearing firm. The ACT system also reports the trade to the National Securities Clearing Corporation.

Matching and Reporting Trades

When two broker-dealers have a QSR agreement, each one can send trades to its clearinghouse on behalf of the other, and each of their clearing firms has agreed to clear the trades based on the agreement. Broker-dealers match orders against another broker-dealer by using an electronic communication network (ECN). Each broker-dealer and the ECN send a ticket file to their clearing firms with the trade details. However, each firm must still report their own trades to FINRA. Unlike the Nasdaq ACT system, which reports trades continuously to the NSCC, trades made under QSR agreements are reported only five times daily.

Article Sources
Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy.

  1. Federal Register. "Self-Regulatory Organizations; National Securities Clearing Corporation; Notice of Filing of Proposed Rule Change Relating to Trade Submission Requirements and Fees and Pre-Netting." Accessed March 24, 2021.

Take the Next Step to Invest
×
The offers that appear in this table are from partnerships from which Investopedia receives compensation. This compensation may impact how and where listings appear. Investopedia does not include all offers available in the marketplace.
Service
Name
Description