Notice2024-01395
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend FINRA Rule 6730 (Transaction Reporting) To Reduce the 15-Minute TRACE Reporting Timeframe to One Minute
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
January 25, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 17 (Thursday, January 25, 2024)</title>
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[Federal Register Volume 89, Number 17 (Thursday, January 25, 2024)]
[Notices]
[Pages 5034-5047]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-01395]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99404; File No. SR-FINRA-2024-004]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Notice of Filing of a Proposed Rule Change To Amend
FINRA Rule 6730 (Transaction Reporting) To Reduce the 15-Minute TRACE
Reporting Timeframe to One Minute
January 19, 2024.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on January 11, 2024, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission (``SEC''
or ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by FINRA. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
FINRA is proposing to amend FINRA Rule 6730 to reduce the 15-minute
TRACE reporting timeframe to one minute, with exceptions for member
firms with de minimis reporting activity and for manual trades.
The text of the proposed rule change is available on FINRA's
website at <a href="http://www.finra.org">http://www.finra.org</a>, at the principal office of FINRA and
at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, FINRA included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. FINRA has prepared summaries, set forth in sections A,
B, and C below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
(i) Background
FINRA has collected and disseminated transaction information in
fixed income securities through TRACE since 2002.\3\ Since the
implementation of TRACE, the fixed income markets have changed
dramatically, including a significant increase in the use of electronic
trading platforms or other electronic communication protocols to
facilitate the execution of transactions. With these changes, FINRA has
been considering ways to modernize the reporting rules and provide for
more timely, granular and informative data to enhance the value of
disseminated transaction data.
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\3\ See Securities Exchange Act Release No. 43873 (January 23,
2001), 66 FR 8131 (January 29, 2001) (Order Approving File No. SR-
NASD-99-65).
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FINRA rules specify the applicable outer-limit reporting timeframe
for different types of TRACE-Eligible Securities,\4\ and these
timeframes have been adjusted over time in line with changes in the
markets. A 15-minute outer-limit reporting timeframe currently applies
to most transactions \5\ in corporate bonds, agency debt securities,\6\
asset-backed securities (ABS) \7\ and agency pass-through mortgage-
backed securities (MBS) traded to-be-announced (TBA) for good delivery
(GD).\8\ The 15-minute reporting
[[Page 5035]]
timeframe has been in place for corporate bonds since 2005, and later
was implemented for agency debt, ABS, and MBS TBA GD.\9\
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\4\ ``TRACE-Eligible Security'' means a debt security that is
United States (U.S.) dollar-denominated and is: (1) issued by a U.S.
or foreign private issuer, and, if a ``restricted security'' as
defined in Securities Act Rule 144(a)(3), sold pursuant to
Securities Act Rule 144A; (2) issued or guaranteed by an Agency as
defined in paragraph (k) or a Government-Sponsored Enterprise as
defined in paragraph (n); (3) a U.S. Treasury Security as defined in
paragraph (p); or (4) a Foreign Sovereign Debt Security as defined
in paragraph (kk). ``TRACE-Eligible Security'' does not include a
debt security that is a Money Market Instrument as defined in
paragraph (o). See Rule 6710(a).
\5\ A ``List or Fixed Offering Price Transaction,'' as defined
in Rule 6710(q), and a ``Takedown Transaction,'' as defined in Rule
6710(r) are required to be reported to TRACE by the next business
day (T+1). See Rule 6730(a)(2).
\6\ ``Agency Debt Security'' means a debt security (i) issued or
guaranteed by an Agency as defined in paragraph (k); (ii) issued or
guaranteed by a Government-Sponsored Enterprise as defined in
paragraph (n); or (iii) issued by a trust or other entity that was
established or sponsored by a Government-Sponsored Enterprise for
the purpose of issuing debt securities, where such enterprise
provides collateral to the trust or other entity or retains a
material net economic interest in the reference tranches associated
with the securities issued by the trust or other entity. The term
excludes a U.S. Treasury Security as defined in paragraph (p) and a
Securitized Product as defined in paragraph (m), where an Agency or
a Government-Sponsored Enterprise is the Securitizer as defined in
paragraph (s) (or similar person), or the guarantor of the
Securitized Product. See Rule 6710(l).
\7\ ``Asset-Backed Security'' means a type of Securitized
Product where the Asset-Backed Security is collateralized by any
type of financial asset, such as a consumer or student loan, a
lease, or a secured or unsecured receivable, and excludes: (i) a
Securitized Product that is backed by residential or commercial
mortgage loans, mortgage-backed securities, or other financial
assets derivative of mortgage-backed securities; (ii) an SBA-Backed
ABS as defined in paragraph (bb) traded To Be Announced as defined
in paragraph (u) or in a Specified Pool Transaction as defined in
paragraph (x); and (iii) a collateralized debt obligation. See Rule
6710(cc).
\8\ ``Agency Pass-Through Mortgage-Backed Security'' means a
type of Securitized Product issued in conformity with a program of
an Agency as defined in paragraph (k) or a Government-Sponsored
Enterprise (GSE) as defined in paragraph (n), for which the timely
payment of principal and interest is guaranteed by the Agency or
GSE, representing ownership interest in a pool (or pools) of
mortgage loans structured to ``pass through'' the principal and
interest payments to the holders of the security on a pro rata
basis. See Rule 6710(v). ``To Be Announced'' (TBA) means a
transaction in an Agency Pass-Through Mortgage-Backed Security as
defined in paragraph (v) or an SBA-Backed ABS as defined in
paragraph (bb) where the parties agree that the seller will deliver
to the buyer a pool or pool(s) of a specified face amount and
meeting certain other criteria but the specific pool or pool(s) to
be delivered at settlement is not specified at the Time of
Execution, and includes TBA transactions ``for good delivery'' (GD)
and TBA transactions ``not for good delivery'' (NGD). See Rule
6710(u).
\9\ In 2004, FINRA (then NASD) reduced the timeframe for
reporting corporate bonds to within 15 minutes of the time of
execution. See Securities Exchange Act Release No. 49845 (June 14,
2004), 69 FR 35088 (June 23, 2004) (Order Approving File No. SR-
NASD-2004-057); see also Notice to Members 04-51 (July 2004). Agency
debt has been subject to the 15-minute reporting timeframe since it
became TRACE-Eligible in 2010. See Securities Exchange Act Release
No. 60726 (September 28, 2009), 74 FR 50991 (October 2, 2009) (Order
Approving File No. SR-FINRA-2009-010); see also Regulatory Notice
09-57 (September 2009). MBS TBA GD became subject to the 15-minute
reporting timeframe in 2013, and the reporting timeframe for ABS was
reduced to 15 minutes in 2015. See Securities Exchange Act Release
No. 66829 (April 18, 2012), 77 FR 24748 (April 25, 2012) (Order
Approving File No. SR-FINRA-2012-020); Securities Exchange Act
Release No. 71607 (February 24, 2014), 79 FR 11481 (February 28,
2014) (Order Approving File No. SR-FINRA-2013-046); see also
Regulatory Notices 12-26 (May 2012) and 14-34 (August 2014).
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Thus, today, transactions in these securities are generally
required to be reported as soon as practicable \10\ but no later than
15 minutes from the time of execution, and FINRA publicly disseminates
information on the transaction immediately upon receipt.\11\ As
discussed in more detail below, FINRA has found that 82.9 percent of
trades in the TRACE-Eligible Securities that are currently subject to
the 15-minute outer-limit reporting timeframe were reported within one
minute of execution. In light of the technological advances in the
intervening 18 years since FINRA first adopted the 15-minute reporting
requirement, including the increase in electronic trading, and
consistent with FINRA's longstanding goals of increasing transparency
and improving access to timely transaction data, FINRA is proposing
updates to modernize the reporting timeframes and provide timelier
transparency. FINRA will continue to assess its TRACE reporting
requirements and member reporting and consider whether any adjustments
to the one-minute requirement are warranted.
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\10\ In 2015, the SEC approved amendments to FINRA rules to
require firms to report transactions in TRACE-Eligible Securities as
soon as practicable. See Securities Exchange Act Release No. 75782
(August 28, 2015), 80 FR 53375 (September 3, 2015) (Order Approving
File No. SR-FINRA 2015-025).
\11\ FINRA Rule 6730(a)(1) sets forth the requirements for when
trades executed during different time periods throughout the day
must be reported to TRACE. Currently, corporate, agency, ABS, and
MBS TBA GD transactions executed on a business day at or after
12:00:00 a.m. Eastern Time (ET) through 7:59:59 a.m. ET must be
reported the same day, no later than 15 minutes after the TRACE
system opens. Transactions executed on a business day at or after
8:00:00 a.m. ET through 6:29:59 p.m. ET must be reported as soon as
practicable, but no later than 15 minutes of the Time of Execution,
except for transactions executed on a business day less than 15
minutes before 6:30 p.m. ET, which must be reported no later than 15
minutes after the TRACE system opens the next day (and, if reported
on T+1, designated ``as/of'' with the date of execution). Finally,
transactions executed on a business day at or after 6:30:00 p.m. ET
through 11:59:59 p.m. ET, or trades executed on a Saturday, a
Sunday, a federal or religious holiday, or other day on which the
TRACE system is not open at any time during that day, must be
reported on the next business day, no later than 15 minutes after
the TRACE system opens (and must be designated ``as/of'' and include
the date of execution).
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(ii) Proposed Rule Change To Implement One-Minute Reporting
FINRA is proposing amendments to Rule 6730 (Transaction Reporting)
to reduce the trade reporting timeframe for securities currently
subject to the 15-minute reporting outer limit to one minute, with
exceptions for member firms with de minimis reporting activity and for
manual trades, discussed further below. As is the case today, FINRA
would make information on the transactions publicly available
immediately upon receipt of the trade reports.
Under existing Rule 6730(a)(1), transactions in corporate bonds,
agency debt, ABS, and MBS TBA GD generally must be reported as soon as
practicable, but no later than within 15 minutes of execution.
Specifically, transactions executed on a business day at or after
12:00:00 a.m. ET through 7:59:59 a.m. ET must be reported the same day
no later than 15 minutes after the TRACE system opens. Transactions
executed on a business day at or after 8:00:00 a.m. ET through 6:29:59
p.m. ET must be reported no later than within 15 minutes of the Time of
Execution, except for transactions executed on a business day less than
15 minutes before 6:30 p.m. ET, which must be reported no later than 15
minutes after the TRACE system opens the next day (and, if reported on
T+1, designated ``as/of'' with the date of execution). Finally,
transactions executed on a business day at or after 6:30:00 p.m. ET
through 11:59:59 p.m. ET, or trades executed on a Saturday, a Sunday, a
federal or religious holiday, or other day on which the TRACE system is
not open at any time during that day, must be reported on the next
business day no later than 15 minutes after the TRACE system opens (and
must be designated ``as/of'' and include the date of execution).
To provide more timely information about transactions in corporate
bonds, agency debt, ABS, and MBS TBA GD, subject to the exceptions
discussed below and as provided in Rule 6730(a)(2), FINRA is proposing
to amend Rule 6730(a)(1) to reduce the trade reporting timeframe as
follows. Amended Rule 6730(a)(1) would provide that transactions must
be reported as soon as practicable, but no later than within one minute
of the Time of Execution.\12\ Amended Rule 6730(a)(1)(B) would require
that a transaction executed on a business day at or after 8:00:00 a.m.
ET through 6:29:59 p.m. ET must be reported as soon as practicable, but
no later than one minute from the Time of Execution, except that, a
transaction executed on a business day less than one minute before
6:30:00 p.m. ET, must be reported no later than 15 minutes after the
TRACE system opens the next business day (T+1) (and, if reported on
T+1, designated ``as/of'' with the date of execution). Any trades
executed on a business day prior to the open of the TRACE system, on a
business day at or after 6:30:00 p.m. ET through 11:59:59 p.m. ET, or
on a Saturday, a Sunday, a federal or religious holiday or other day on
which the TRACE system is not open at any time during that day would
continue to be reportable as soon as practicable on the next business
day (T+1), but no later than within 15 minutes after the TRACE system
opens (and must be designated ``as/of,'' as appropriate, and include
the date of execution).
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\12\ Under Rule 6710(d), the ``Time of Execution'' generally
means the time when the parties to a transaction agree to all of the
terms of the transaction that are sufficient to calculate the dollar
price of the trade. For transactions involving TRACE-Eligible
Securities that are trading ``when issued'' on a yield basis, the
``Time of Execution'' is when the yield for the transaction has been
agreed to by the parties to the transaction.
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(iii) Exceptions From One-Minute Reporting
FINRA is proposing two exceptions from the one-minute reporting
timeframe for: (1) member firms with ``limited trading activity'' in
the TRACE-Eligible Securities that are subject to one-minute reporting;
and (2) manual trades.\13\
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\13\ FINRA is also proposing a conforming amendment to
Supplementary Material .03 to refer to the Rule generally rather
than ``paragraph (a)'' to reflect that members reporting pursuant to
one of the exceptions in new Supplementary Material .08 and .09 are
still required to report their trades ``as soon as practicable.''
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[[Page 5036]]
Exception for Members With ``Limited Trading Activity''
New Supplementary Material .08 would provide an exception to the
one-minute reporting timeframe for members with ``limited trading
activity.'' A member with ``limited trading activity'' would be defined
as a member that, during one of the prior two calendar years, reported
to TRACE fewer than 4,000 transactions in the TRACE-Eligible Securities
that are subject to paragraphs (a)(1)(A) through (a)(1)(D) of Rule 6730
(i.e., corporate bonds, agency debt, ABS and MBS TBA GD), including any
manual trades. Supplementary Material .08(b) would require members
relying on the exception to confirm annually their qualification for
the exception.\14\ As outlined in Supplementary Material .08(c),
members qualifying for the exception would be required to report these
trades as soon as practicable, but no later than within 15 minutes of
the Time of Execution (or in the case of a trade executed outside of
TRACE system hours, less than 15 minutes before 6:30 p.m. ET, or on a
Saturday, a Sunday, a federal or religious holiday, or other day on
which the TRACE system is not open at any time during that day, as soon
as practicable, but no later than within 15 minutes after the TRACE
system opens the next business day (T+1)).
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\14\ Evidence of this confirmation should be retained as part of
the member's books and records; however, members eligible for the
exception will not need to take affirmative steps to have their
trade reports processed pursuant to the exception's 15-minute
reporting timeframe (e.g., members eligible for the exception will
not need to submit a certification of eligibility to FINRA or add a
modifier or indicator to their trade reports).
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Members that exceeded the 4,000-trade threshold two calendar years
in a row would be required to comply with the one-minute reporting
requirements of paragraphs (a)(1)(A) through (a)(1)(D) of the Rule
beginning 90 days after the firm no longer meets the criteria for the
exception (i.e., beginning 90 days after January 1 of the next calendar
year). If a member's reporting activity subsequently dropped below the
4,000-trade threshold, the member would once again be eligible for the
exception. For example, a member that reported 3,000 trades in the
relevant TRACE-Eligible Securities to TRACE in 2022 and then 4,150
trades in 2023 would continue to be eligible for the exception in 2024;
however, if the member then reported 4,100 trades in 2024, the member
would be required to comply with the one-minute reporting requirements
starting 90 days after January 1, 2025 (with January 1 being day one of
90). If the member proceeded to report 3,500 trades in 2025, the member
would once again be eligible for the exception from one-minute
reporting for 2026 under the two-year lookback. FINRA believes that the
two-year lookback period for eligibility for the exception will
accommodate fluctuations in trading activity that may be due to unusual
market-wide events or unique client demands.
Manual Trades Exception
New Supplementary Material .09 would provide an exception for
manual trades that would afford firms additional time to report
transactions that are not electronic from end to end, as described
further below. Where a trade qualifies for the manual trades exception,
a 15-minute outer limit would apply for the first year following
implementation; a 10-minute outer limit would apply for the second
year; and a five-minute outer limit would apply thereafter.
The manual trades exception would apply narrowly only to
``transactions that are manually executed'' or where a ``member must
manually enter any of the trade details or information necessary for
reporting the trade through the TRAQS website or into a system that
facilitates trade reporting to TRACE.'' Thus, a trade that requires
manual intervention at any point to complete the trade execution or
reporting process would qualify for the manual trades exception. In
that regard, while an exhaustive list cannot be provided here, FINRA
contemplates that the exception would be available for a variety of
situations that meet the specified criteria, including, for example:
<bullet> where a member executes a trade \15\ by manual or hybrid
means, such as by telephone, email, or through a chat/messaging
function,\16\ and subsequently must manually enter into a system that
facilitates trade reporting all or some of the information required to
book the trade and report it to TRACE;
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\15\ As noted above, for purposes of Rule 6730, the reporting
timeframe is measured from the Time of Execution as defined by Rule
6710(d), which generally refers to the time that the parties have
agreed to all of the terms of the transaction sufficient to
calculate the dollar price of the trade (or yield, in the case of
when-issued securities priced to a spread).
\16\ FINRA reminds members of their obligation to retain these
electronic communications as part of their books and records,
consistent with FINRA and SEC recordkeeping requirements. See, e.g.,
Notice to Members 03-33 (July 2003).
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<bullet> where allocations to individual accounts must be manually
input in connection with a trade by a dually-registered broker-dealer/
investment adviser;
<bullet> where an electronic trade is subject to manual review for
risk management or regulatory compliance purposes and, as part of or
following the review, the trade must be manually approved, amended, or
released before the trade is reported to TRACE (e.g., a firm's risk
management procedures require a secondary approver for trades over a
certain threshold; a firm's best execution procedures require manually
checking another market to confirm that a better price is not available
to the customer);
<bullet> where a member trades a bond for the first time and
additional manual steps are necessary to set the bond up in the firm's
systems to book and report the trade (e.g., entering the CUSIP number
and associated bond data into the firm's system); and
<bullet> where a member agrees to trade a basket of securities at a
single price and manual action is required to calculate the price of
component securities in the basket or to book and report the trade in
component securities to TRACE.
The above examples are illustrative of the types of circumstances
in which, due to the manual nature of components of the trade execution
or reporting process, reporting a transaction within one minute of the
Time of Execution may be unfeasible, even where a member makes
reasonable efforts to report the trade as soon as practicable (as
required). FINRA also will assess members' trade reporting in
connection with manual trades to determine whether the five-minute
trade reporting timeframe (to become applicable after two years) is
appropriate, and will be prepared to make adjustments, as necessary.
FINRA has extensive experience and data regarding members' historic
behaviors reporting transactions to TRACE under a myriad of scenarios.
FINRA will be reviewing the use of the manual trades exception--members
may not, in any case, purposely delay the execution or reporting of a
transaction by handling any aspect of a trade manually or introducing
manual steps following the Time of Execution. Additionally, in light of
the overarching obligation to report trades as soon as practicable,
members should consider the types of transactions in which they
regularly engage and whether they can reasonably reduce the time
between a trade's Time of Execution and its reporting, and more
generally must make a good faith effort to report their trades as soon
as practicable.
In addition, FINRA proposes to amend Rule 6730(d)(4) to require
that any member that executes or reports a trade manually append a
manual trade
[[Page 5037]]
indicator to the trade report so that FINRA can identify manual trades.
The new manual trade indicator would be required regardless of whether
the member reported the manual trade outside of the one-minute
timeframe in reliance on the manual trades exception, which would
provide FINRA with important insights into manual trading and the use
of the exception. The manual trade indicator would be used for
regulatory purposes and would not be included in the TRACE data
publicly disseminated.
Finally, FINRA is proposing to amend Rule 6730(f) to provide that a
pattern or practice of late reporting may be considered conduct
inconsistent with high standards of commercial honor and just and
equitable principles of trade, in violation of Rule 2010, absent
``reasonable justification'' (in addition to the rule's existing
reference to ``exceptional circumstances'').\17\ FINRA believes that
the addition of ``reasonable justification'' as a relevant factor in
FINRA's evaluation of a firm experiencing a pattern or practice of late
reporting is appropriate given the proposed reduction in the trade
reporting timeframe; \18\ for example, to enable FINRA to determine
that reasonable justification exists due to circumstances that could
not reasonably be anticipated or prevented and that could not be
resolved by the firm within the one minute reporting timeframe.\19\
However, members must have sufficiently robust systems with adequate
capability and capacity to enable them to report in accordance with
FINRA rules; thus, recurring systems issues in a member firm's or a
vendor's systems would not be considered reasonable justification or
exceptional circumstances under Rule 6730(f) to excuse a pattern or
practice of late trade reporting.\20\
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\17\ See, e.g., Rule 6623 describing ``exceptional
circumstances'' as instances of system failure by a member or
service bureau, or unusual market conditions, such as extreme
volatility in a security, or in the market as a whole.
\18\ This proposed rule change would also make Rule 6730(f)
consistent with other FINRA trade reporting rules that impose
shorter reporting timeframes. See, e.g., Rule 6622(a)(4).
\19\ As is the case today, late trade statistics regarding
trades reported outside of the applicable timeframe would be
reflected in the Report Cards available to members. FINRA would
update its Report Cards to take into consideration the proposed
exception for firms with de minimis reporting activity and for
manual trades. In addition, FINRA plans to enhance its TRACE Report
Cards to include metrics that will facilitate members' ability to
track their eligibility for the de minimis exception. While these
trade statistics will continue to be available to members on their
TRACE Report Cards, these statistics are not publicly available.
\20\ See, e.g., FINRA Trade Reporting Frequently Asked
Questions, Q206.21 available at <a href="https://www.finra.org/filing-reporting/market-transparency-reporting/trade-reporting-faq">https://www.finra.org/filing-reporting/market-transparency-reporting/trade-reporting-faq</a>.
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If the Commission approves the proposed rule change, FINRA will
announce the effective date of the proposed rule change in a Regulatory
Notice.
2. Statutory Basis
FINRA believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(6) of the Act,\21\ which requires, among
other things, that FINRA rules must be designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to remove impediments to and perfect the mechanism
of a free and open market, and, in general, to protect investors and
the public interest.
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\21\ 15 U.S.C. 78o-3(b)(6).
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FINRA believes that reducing the reporting timeframe to as soon as
practicable, but no later than within one minute from the time of
execution for corporate, agency, ABS and MBS TBA GD transactions helps
achieve the purposes of the Act. As discussed above, the 15-minute
reporting timeframe has been in place for corporate bonds and agency
debt securities since 2005. Since that time, the fixed income markets
have changed dramatically, including a significant increase in the use
of electronic trading platforms or other electronic communication
protocols to facilitate the execution of transactions. With these
changes, FINRA has been considering ways to modernize the rule and
provide for more timely, granular and informative data to enhance the
value of disseminated transaction data. FINRA believes that the
proposed rule change helps achieve the purposes of the Act in that it
will improve the timeliness of information reported to TRACE, thereby
benefiting transparency and allowing investors and other market
participants to obtain and evaluate more timely pricing information for
these securities. FINRA also believes that the proposed exceptions from
the one-minute reporting requirement for members with de minimis
reporting activity and manual trades are appropriate in that they are
tailored to balance the burdens on members with the benefits to
transparency.
B. Self-Regulatory Organization's Statement on Burden on Competition
FINRA does not believe that the proposed rule change will result in
any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act.
Economic Impact Assessment
FINRA has undertaken an economic impact assessment, as set forth
below, to further analyze the regulatory need for the proposed rule
change, its potential economic impacts, including anticipated costs,
benefits, and distributional and competitive effects, relative to the
current baseline, and the alternatives considered in assessing how best
to meet its regulatory objective.
[[Page 5038]]
As described below in more detail, approximately 83 percent of
transactions in TRACE-Eligible Securities currently subject to the 15-
minute reporting timeframe are reported within one minute of execution.
However, there is significant variation in reporting timeframes within
and across member firms of different sizes and across different
products. The proposed de minimis and manual trades exceptions balance
the benefits of timelier reporting with the potential costs of
disrupting markets and disproportionally impacting less active and
smaller participants. FINRA estimates that, as a result of this
proposed rule change, after adjusting for the proposed de minimis
exception, up to 16.4 percent of current annual trading volume, or 6.1
million trades and 20 trillion dollars in par value, might potentially
be reported faster (this represents an upper end estimate--impacted by
the extent to which firms do or do not rely on the proposed manual
trades exception with respect to such trades (manual trades are not
currently identifiable as such in TRACE data)).\22\
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\22\ See Discussion: Economic Impacts, Anticipated Benefits.
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Regulatory Need
As discussed previously, over the last 18 years there have been
significant advancements in the fixed income markets, and in
recognition of those advancements, FINRA is proposing to reduce the
TRACE trade reporting timeframe for transactions in all TRACE-Eligible
Securities that currently are subject to a 15-minute reporting
timeframe. Timelier reporting provides more timely transaction
information to the market, supporting more effective price formation
and potentially decreasing trading costs and increasing liquidity.
Economic Baseline
The economic baseline stems from current Rule 6730, establishing a
reporting requirement of as soon as practicable but no later than
within 15 minutes of the Time of Execution. Factors that may affect the
speed with which firms can report executions include, but are not
limited to, security characteristics, recency of trading in a
particular security, trading platform, execution method, reporting
process and level of automation.
Overall, in 2022 838 member firms reported trades in TRACE-Eligible
Securities currently subject to the 15-minute reporting timeframe, with
803, 443, 79, 216 and 173 member firms reporting trades in corporate
bonds, agency debt, MBS TBA GD, equity-linked notes (ELNs) and ABS
respectively.\23\ FINRA found that 83 percent of trades across TRACE-
Eligible Securities currently subject to the 15-minute reporting
timeframe were reported within one minute of execution. Examining
reporting times for these securities by individual reporters, FINRA
found that within one minute: 43 percent of reporters submitted 75
percent of their trades; 34 percent of reporters submitted 85 percent
of their trades; and 18 percent of reporters submitted 95 percent of
their trades.
---------------------------------------------------------------------------
\23\ FINRA aggregated reports across MPIDs (market participant
identifier) belonging to the same CRD (central registration
depository) number and excluded covered depository institutions.
---------------------------------------------------------------------------
Specifically, FINRA analyzed trade reporting times by dealers and
alternative trading systems (ATSs) under the current 15-minute
reporting timeframe using TRACE data from January 2022 through December
2022.\24\ The analysis measured the time between the trade Time of
Execution and report time (and in cases where reports were later
corrected or canceled, to the time of the initial report). The analysis
focused on transactions executed at or after 8:00 a.m. ET and before
6:15 p.m. ET on business days, the time window during which trades must
be reported on that day as soon as practicable, but no later than
within 15 minutes of the Time of Execution.\25\ The sample excluded
covered depository institutions' trade reports in MBS TBA GD and
agency-issued fixed income securities, as they are subject to the
Federal Reserve's rule rather than FINRA's rule.\26\
---------------------------------------------------------------------------
\24\ All analysis used this sample period unless otherwise
specified.
\25\ See supra note 11.
\26\ Covered depository institutions started to report to TRACE
on September 1, 2022. In the first three quarters of 2023, reports
by covered depository institutions represented 6.6 percent, 0.8
percent and 0.7 percent of the total MBS TBA GD, agency debt and ABS
trade reports, respectively.
---------------------------------------------------------------------------
Reporting Times Across Products
FINRA examined the distribution of trade reports from one to 15
minutes from the Time of Execution for corporate bonds, agency debt,
MBS TBA GD, ELNs and ABS.\27\ Table 1 shows that corporate bonds and
MBS TBA GD were, on average, reported the fastest among the products,
with around 83 and 84 percent of the trades reported within one minute,
respectively. Agency debt followed closely behind at 81 percent. ELNs
were at 67 percent and ABS were at 52 percent of trades reported within
one minute. Commenters, discussion with FINRA advisory committees, and
outreach to members indicated that ELNs and ABS trading and reporting
frequently involve manual handling of some aspect of the trade
execution or reporting process.
---------------------------------------------------------------------------
\27\ Corporate bond trades represented 88.9 percent of the
37,252,591 total reports in the sample while MBS TBA GD, agency
debt, ELN and ABS accounted for 7.4 percent, 2.8 percent, 0.5
percent, and 0.3 percent, respectively.
Table 1--Reporting Times Across Product Types
--------------------------------------------------------------------------------------------------------------------------------------------------------
All products
Minutes from execution (%) Corporate (%) Agency (%) MBS TBA GD (%) ELN (%) ABS (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
1....................................................... 82.9 83.1 80.7 84.1 66.5 51.5
2....................................................... 91.7 91.7 92.4 93.8 70.9 66.9
3....................................................... 96.1 96.3 94.9 95.8 74.8 75.2
4....................................................... 97.0 97.3 96.0 96.7 76.3 80.5
5....................................................... 97.6 97.8 96.6 97.3 77.3 85.1
10...................................................... 99.0 99.2 98.8 98.6 80.7 93.2
15...................................................... 99.4 99.5 99.2 99.5 81.8 97.6
Share of Reports........................................ 100.0 88.9 2.8 7.4 0.5 0.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporting Time by Trade Size
FINRA examined whether reporting timeframes differ across trade
sizes. For certain products, large trades are more likely to be more
complex or a voice trade, or otherwise require manual handling. FINRA
examined the distribution of trade reports from one to 15 minutes from
the Time of Execution
[[Page 5039]]
for trades with a par value of less than $1 million, greater than or
equal to $1 million but less than $5 million, greater than or equal to
$5 million but less than $10 million, greater than or equal to $10
million but less than $25 million, and greater than or equal to $25
million. Panel A of Table 2 shows that approximately 93 percent of
reported trades were for less than $5 million, with 74 to 84 percent
reported within one minute and 95 to 98 percent reported within five
minutes. Similarly, for trades greater than or equal to $5 million, 77
to 81 percent were reported within one minute and 95 to 96 percent were
reported within five minutes.
Panel B of Table 2 shows that, for corporate bonds and agency debt,
smaller trades were reported faster while larger trades took longer to
report. FINRA found that 84 percent of corporate bond trades smaller
than $1 million were reported within one minute whereas 62 percent of
trades greater than or equal to $25 million were reported within one
minute. For agency debt, 84 percent of trades smaller than $1 million
were reported within one minute whereas 44 percent of trades greater
than or equal to $25 million were reported within one minute. Trade
size did not appear to be strongly associated with reporting time for
other products.\28\
---------------------------------------------------------------------------
\28\ MBS TBA GD trades represented 96 percent of the trades
larger than $25M and 82 percent of them were reported within one
minute.
Table 2--Reporting Time Across Trade Size
----------------------------------------------------------------------------------------------------------------
Minutes from execution <$1M (%) $1-<$5M (%) $5-<$10M (%) $10-<$25M (%) >=$25M (%)
----------------------------------------------------------------------------------------------------------------
Panel A: Reporting Time by Trade Size (Par Value Traded)
----------------------------------------------------------------------------------------------------------------
1............................... 84.1 74.3 81.0 77.3 81.0
2............................... 92.7 83.8 89.0 87.3 91.9
3............................... 96.8 91.0 93.7 92.6 94.6
4............................... 97.6 93.3 95.2 94.3 95.7
5............................... 98.0 94.8 96.2 95.4 96.4
10.............................. 99.2 97.9 98.4 97.9 98.3
15.............................. 99.4 98.9 99.2 99.1 99.2
Share of reports................ 84.1 9.3 3.2 1.5 1.9
----------------------------------------------------------------------------------------------------------------
Panel B: Percentages of Trades Reported Within One Minute by Trade Size (Par Value Traded)
----------------------------------------------------------------------------------------------------------------
Product:
Corporate................... 84.3 73.1 65.8 64.8 61.7
Agency...................... 83.6 62.6 56.0 50.8 44.2
MBS TBA GD.................. 80.4 80.9 90.1 84.1 82.0
ELN......................... 66.6 62.8 61.0 57.9 61.5
ABS......................... 53.5 48.2 47.8 48.7 49.6
----------------------------------------------------------------------------------------------------------------
Reporting Time by Reporter Activity Level
FINRA compared trade reporting times across firms with different
levels of activity to assess how the potential burdens stemming from
the proposed rule change would be distributed across firms. The
analysis measured reporters' activity by number of trades in 2022 and
assigned them to three activity groups: where a reporter's trades
accounted for less than 0.01 percent, 0.01 through 0.1 percent, or
greater than 0.1 percent of total reported trades.\29\ Table 3 shows
that the distribution of par value traded was concentrated in more
active reporters. Eighty-four different reporters were in the most
active group (accounting for over 0.1 percent of reported trades each),
and together their activity represented 95.5 percent of the total par
value traded. There were 149 different reporters with 0.01 to 0.1
percent of reported trades each and their reports accounted for 4.2
percent of the total par value traded. The last activity group had 605
different reporters with less than 0.01 percent of reported trades each
and together their activity represented 0.3 percent of the par value
traded.
---------------------------------------------------------------------------
\29\ FINRA looked at finer distinctions of reporter activity
level, but it did not yield additional insight.
Table 3--Reporting Times by Reporter Activity Level
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reporters Reporters
reporting reporting
Market Market Trades at least Trades at least
Reporter activity level Number of share share (par reported 95% of reported 95% of
reporters (trade value) (%) within one trades within five trades
counts) (%) minute (%) within one minutes (%) within five
minute (%) minutes (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Activity Group 1--Reporters with >0.1% of Trade Counts....... 84 94.1 95.5 84.0 34.5 98.0 86.9
Activity Group 2--Reporters with 0.01 to 0.1 of Trade Counts. 149 4.9 4.2 67.7 14.8 91.7 55.7
Activity Group 3--Reporters with <0.01 of Trade Counts....... 605 0.9 0.3 50.8 17.0 86.2 48.6
All Reporters................................................ 838 100.0 100.0 82.9 18.4 97.6 53.7
--------------------------------------------------------------------------------------------------------------------------------------------------------
On average, the most active trade reporters reported their trades
to TRACE more quickly. Specifically, 84 percent of trades executed by
the most active reporters (with more than 0.1 percent of reported
trades) were reported within
[[Page 5040]]
one minute, and 98 percent of their trades were reported within five
minutes. In comparison, approximately 51 percent of trades executed by
reporters with less than 0.01 percent of reported trades were reported
within one minute, and 86 percent were reported within five minutes.
FINRA notes that even less-active reporters reported at least some
material portion of their trades within one minute.
In addition, FINRA examined the reporting times by individual
reporters by measuring the percentage of firms that reported at least
95 percent of their trades within one minute. Overall, approximately 18
percent of reporters submitted 95 percent of their trades within one
minute. When examined by reporter activity level, 35 percent of
reporters with greater than 0.1 percent of trade reports submitted 95
percent of their trades within one minute, compared to 17 percent of
reporters with less than 0.01 percent of trade reports. FINRA notes
that most firms reported some material portion of their trades after
one minute, regardless of their level of trading activity.
Reporting Time for After Hours Trades
FINRA examined trades that were executed during TRACE system hours
and compared the findings to trades that were executed outside of these
hours, which are subject to different reporting timeframe requirements.
Table 4 shows that trades executed and reported after hours represented
only 1.18 percent of total par value. In all cases, these trades took
longer to report. For instance, less than 21 percent of trades executed
between 6:15 and 6:29 p.m. ET were reported within one minute,\30\
while just over 49 percent of trades executed between 6:29 p.m. and
8:00 a.m. ET the next day or on non-business days were reported within
one minute after the TRACE system opened.\31\
---------------------------------------------------------------------------
\30\ Under the current rule, these trades can be reported either
on the same day before TRACE closes or the next business day no
later than 15 minutes after the TRACE system opens. Under the
proposed rule change, such trades must be reported as soon as
practicable on the same day, but no later than within one minute of
the time of execution.
\31\ Under the current and proposed rules, these trades must be
reported as soon as practicable, but no later than 15 minutes after
the TRACE system opens.
Table 4--Reporting Times by Time of Day
----------------------------------------------------------------------------------------------------------------
Time group 3:
before 8:00
Time group 1: Time group 2: a.m. or after
Minutes from execution 8:00 a.m. to 6:15 p.m. to 6:29 p.m. ET
6:15 p.m. ET 6:29 p.m. ET or non-
(%) (%) business day *
(%)
----------------------------------------------------------------------------------------------------------------
1............................................................... 82.9 20.9 49.2
2............................................................... 91.7 26.3 81.4
3............................................................... 96.1 36.7 90.4
4............................................................... 97.0 57.1 92.9
5............................................................... 97.6 71.9 93.9
10.............................................................. 99.0 96.2 96.6
15.............................................................. 99.4 96.2 96.8
Share of Reports................................................ 98.8 0.0 1.2
----------------------------------------------------------------------------------------------------------------
* For time group three, for trades before 8:00 a.m. ET, FINRA measured the reporting time from TRACE opening on
the same business day; for trades after 6:29 p.m. ET or on non-business day, FINRA measured the reporting time
from TRACE opening on the next business day.
Execution and Trade Reporting Scenarios
FINRA examined several trading scenarios, described further below,
where trading or reporting could involve manual processes.
When a bond starts to trade, the security may not be on the member
firm's security master (or on FINRA's security master), which requires
firms to engage in a set-up process to facilitate execution or trade
reporting. FINRA examined the reporting time for bonds when they first
start to trade in the secondary market. Table 5 shows that in the
three-day period after secondary market trading commenced in a newly
issued bond, 63 percent of trades were reported within one minute, as
compared to 83 percent for trades executed more than three days after
the first trade. Longer reporting times were associated with the
commencement of secondary market trading in newly issued bonds, but not
in cases where a firm first started to trade a bond that was not new to
market (but where the firm had not previously traded the security).
Table 5--Reporting of Trades in Newly Issued Bonds
------------------------------------------------------------------------
First three
Minutes from execution days of S1 All other days
trading (%) (%)
------------------------------------------------------------------------
1....................................... 63.1 83.3
2....................................... 77.3 91.9
3....................................... 83.5 96.3
4....................................... 86.3 97.2
5....................................... 88.0 97.8
10...................................... 92.0 99.1
15...................................... 93.5 99.5
Share of Reports........................ 1.7 98.3
------------------------------------------------------------------------
[[Page 5041]]
FINRA examined transaction reporting times for self-cleared trades
as well as those cleared through third-party clearing firms and found
that trades that are cleared through third-party clearing firms overall
took longer to report. For trades cleared through a third party, 71
percent were reported within one minute, as compared to 85 percent for
self-cleared trades. FINRA found that trades through some third-party
clearing firms were reported as fast as self-cleared trades. There were
also significant variations in trade reporting time by correspondent
firms through the same third-party clearing firm.
Table 6--Third-Party Clearing
------------------------------------------------------------------------
Third party Self-clearing
Minutes from execution clearing (%) (%)
------------------------------------------------------------------------
1....................................... 71.4 85.2
2....................................... 91.9 91.6
3....................................... 96.0 96.1
4....................................... 97.1 97.0
5....................................... 97.7 97.6
10...................................... 99.1 99.0
15...................................... 99.4 99.4
Share of Reports........................ 16.5 83.5
------------------------------------------------------------------------
FINRA examined transaction reporting times for trades that were
subsequently suballocated across multiple accounts and found that, for
allocated trades,\32\ 68 percent were reported within one minute, as
compared to 84 percent for other trades. FINRA found significant
variation in reporting time for allocated trades by different
reporters.\33\
---------------------------------------------------------------------------
\32\ An allocation flag does not exist in TRACE, so FINRA used
heuristics to identify those trades.
\33\ Five out of 29 reporters that reported allocation trades
were able to report 90 percent of their allocation trades within one
minute. Seven more were able to report 90 percent of their
allocation trades within five minutes.
Table 7--Allocated Trades
------------------------------------------------------------------------
Non-
Minutes from execution Allocation (%) allocation (%)
------------------------------------------------------------------------
1....................................... 68.2 83.7
2....................................... 86.6 92.0
3....................................... 90.6 96.4
4....................................... 92.2 97.3
5....................................... 93.0 97.8
10...................................... 97.7 99.1
15...................................... 99.0 99.4
Share of Reports........................ 5.2 94.8
------------------------------------------------------------------------
FINRA examined transaction reporting times for basket or portfolio
trades and found that overall, these trades take longer to report. For
portfolio trades,\34\ 65 percent were reported within one minute, as
compared to 85 percent for other trades. Within five minutes, 97.5
percent of portfolio trades were reported, as compared to 97.7 percent
for other trades. FINRA also examined the reporting time by portfolio
size. While larger baskets do tend to be reported more slowly, FINRA
observed a range of reporting times for portfolio trades within the
same basket size band--for example, 57.0 percent of portfolio trades in
the 300-1,000 securities band are reported within one minute and 20.1
percent of portfolio trades in the 1,000+ securities band are reported
within one minute.\35\ There were also significant variations in the
reporting time of portfolio trades by different reporters. This
suggests that other factors (e.g., the technology employed) besides the
size of the portfolio trade may be driving the reporting timeframe.
---------------------------------------------------------------------------
\34\ FINRA used heuristics to identify portfolio trades since a
portfolio trade identifier did not exist before May 15, 2023.
\35\ Over 99 percent of portfolio trades include a basket of
less than 1,000 securities and the vast majority--nearly 85
percent--are baskets of less than 300 securities. Of the nearly 85
percent of portfolio trades for baskets of less than 300 securities,
over 97.9 percent of these are reported within five minutes; 96.9
percent of portfolio trades for baskets of between 300 and 1,000
securities are reported within five minutes; and 40.0 percent of the
0.69 percent of portfolio trades larger than 1,000 securities are
reported within five minutes.
Table 8--Portfolio Trades
------------------------------------------------------------------------
Portfolio Non-portfolio
Minutes from execution trade (%) trade (%)
------------------------------------------------------------------------
1....................................... 65.3 85.0
2....................................... 83.1 92.8
3....................................... 94.2 96.4
4....................................... 96.5 97.2
[[Page 5042]]
5....................................... 97.5 97.7
10...................................... 99.1 99.1
15...................................... 99.5 99.4
Share of Reports........................ 9.5 90.5
------------------------------------------------------------------------
FINRA analyzed the number of transactions executed on or through an
ATS, which approximates a subset of electronically executed and
reported transactions. ATS trades represented 28.1 percent of total
trade reports during the sample period. Of those, 81.0 percent were
reported within one minute and 93.9 percent were reported within two
minutes. For non-ATS trades, which represented 71.9 percent of total
reports (some of which may qualify for the phased-in five-minute
reporting timeframe available for manual trades), 83.7 percent were
reported within one minute and 96.9 percent were reported within five
minutes.
Table 9--ATS Trades
------------------------------------------------------------------------
Non-ATS trade
Minutes from execution ATS trade (%) (%)
------------------------------------------------------------------------
1....................................... 81.0 83.7
2....................................... 93.9 90.8
3....................................... 98.7 95.1
4....................................... 99.1 96.2
5....................................... 99.3 96.9
10...................................... 99.7 98.7
15...................................... 99.8 99.2
Share of Reports........................ 28.1 71.9
------------------------------------------------------------------------
Economic Impacts
Anticipated Benefits
The proposed reporting timeframe reduction would require members to
adopt enhancements to their current trade reporting processes to
facilitate timelier reporting for transactions that currently are not
reported within one minute (in 2022, 82.9 percent of the trades
executed after 8:00 a.m. and before 6:15 p.m. E.T. were reported within
one minute of execution). The proposed rule change therefore likely
would result in quicker reporting and thus dissemination of transaction
information for at least a portion of the approximately 17 percent of
transactions that are not currently reported within one minute of
execution. FINRA estimates that, after adjusting for the proposed de
minimis exception, up to 16.4 percent, or 6.1 million trades and 20
trillion dollars in par value annually, might potentially be reported
faster than today (these estimates would be adjusted further to account
for manual trades--to the extent firms rely on the proposed exception
with respect to such trades--which FINRA is currently unable to
identify in the TRACE data).
FINRA analyzed the number of transactions executed on or through an
ATS, which approximates a subset of electronically executed and
reported transactions for which the manual trades exception will not be
applicable. ATS trades represented 28.1 percent of total reports during
the sample period. Of those, 81.0 percent were reported within one
minute and 93.9 percent were reported within two minutes. This
indicates that the proposed rule change will likely result in at least
an additional 5.3 percent (28.1 percent x (1-.81)) of total trades
being reported within one minute (not accounting for the impact of the
proposed de minimis exception). For the 71.9 percent non-ATS trades
(some of which may qualify for the manual trades exception), 96.9
percent were reported within five minutes. This indicates that the
proposed rule change will likely result in at least another 2.2 percent
(71.9 percent x (1-.969)) of total trades being reported within five
minutes in three years (not accounting for the impact of the proposed
de minimis exception).\36\
---------------------------------------------------------------------------
\36\ FINRA also examined the reporting time for trades that were
manually entered into the TRACE system through the TRAQS web
interface rather than through the automated messaging protocol. The
median time for web entry is four to five minutes.
---------------------------------------------------------------------------
A reduction in the time between trade execution and price
dissemination would enhance transparency in the fixed income market and
is consistent with the purposes of TRACE. Timelier reporting would
allow FINRA to provide more timely pricing and other transaction
information to the market, which supports more efficient price
formation. Timely reporting has also been shown to increase dealer
market-making activities in the municipal markets.\37\ While members
may benefit
[[Page 5043]]
directly from the expedited price discovery, investors are also likely
to benefit from better execution prices from members. In particular,
the proposed rule change would aid investors and other market
participants in obtaining and evaluating pricing and other market
information more quickly. For example, FINRA identified trades that
fell into the one to 15-minute window after a prior trade of the same
bond but executed before the prior trade was reported. These trades
could have potentially benefited from the knowledge of the material
terms of the prior (as yet unreported) trade had the prior trade been
reported within one minute instead of 15 minutes.\38\ For corporate
bonds, these trades represented 1.6 percent of the sample reports or
3.4 percent of par value (not accounting for the impact of the proposed
de minimis or manual trades exceptions).
---------------------------------------------------------------------------
\37\ In the municipal bond market, research has shown that
customer trade costs measured as effective spread decreased after
the 2005 change in the trade reporting time requirement, which was
from the end of a trading day to 15 minutes after execution. To the
extent that more timely reporting may have a similar impact on other
fixed income markets, FINRA expects that shortening the reporting
timeframe would reduce customer trading costs. Timely reporting has
also been shown to increase dealer market-making activities in the
municipal markets, indicated by an increase in the overnight and
over-the-week dealer capital committed to inventory, an increase in
the number of dealers involved in completing a round-trip
transaction, and more round-trip transactions that involve inventory
taking. No similar studies were done in the corporate bond market,
possibly due to the fact that the previous reporting timeframe
reduction for corporate bonds coincided with other TRACE rule
changes, so the effect was difficult to isolate. See Erik R. Sirri,
Report on Secondary Market Trading in the Municipal Securities
Market, July 2014 (Research Paper, Municipal Securities Rulemaking
Board), <a href="https://www.msrb.org/sites/default/files/2022-09/MSRB-Report-on-Secondary-Market-Trading-in-the-Municipal-Securities-Market.pdf">https://www.msrb.org/sites/default/files/2022-09/MSRB-Report-on-Secondary-Market-Trading-in-the-Municipal-Securities-Market.pdf</a>; John Chalmers, Yu (Steve) Liu & Z. Jay Wang, The
Differences a Day Makes: Timely Disclosure and Trading Efficiency in
the Muni Market, 139(1) Journal of Financial Economics 313-335
(2021).
\38\ The analysis excluded trades by a reporter that was also a
party to the prior trade.
---------------------------------------------------------------------------
Large trades took longer on average to report than smaller trades.
Large trades may also have a greater impact on the direction of the
market. To the extent the proposed rule change results in faster
dissemination of pricing information for large trades, the market could
benefit from earlier access to information that could be more
indicative of market movement.\39\
---------------------------------------------------------------------------
\39\ Faster reporting of large trades may also level the
information playing field in the market between dealers and other
investors. Research shows that investors obtained economically large
cost reductions on offsetting trades of a block position by dealers
that occurred after, relative to before, the report of the block
trade. See Stacey E. Jacobsen & Kumar Venkataraman, Asymmetric
Information and Receiving Investor Outcomes in the Block Market for
Corporate Bonds (March 23, 2023), available at SSRN: <a href="https://ssrn.com/abstract=4398494">https://ssrn.com/abstract=4398494</a> or <a href="http://dx.doi.org/10.2139/ssrn.4398494">http://dx.doi.org/10.2139/ssrn.4398494</a>.
---------------------------------------------------------------------------
Anticipated Costs
FINRA believes that the proposed rule change would likely result in
direct and indirect costs for members to implement changes to their
processes and systems for reporting transactions to TRACE within the
new timeframes. While members currently using a third-party reporting
service may incur less costs, as these costs will likely be borne
largely by the third-party reporting service which may spread the costs
across all of the reporting firms using its services, those firms that
do not currently use a third-party reporting service may opt to do so
if the costs would be lower than building or augmenting their own
system. However, as discussed above, FINRA proposes to provide relief
for members with respect to manual trades and for members with de
minimis reporting activity, which should mitigate these costs. All
members that execute or report a trade manually would incur costs to
append the manual trade indicator.
Most firms reported some material portion of their trades after one
minute. This is true even for very active firms that may have a more
sophisticated trade reporting infrastructure in place. For these
trades, members may incur costs to modify their reporting systems and
procedures to report more quickly and to monitor that the trades are
reported in the required timeframe. The costs may be mitigated by the
proposed relief for members with respect to manual trades and for
members with de minimis reporting activity.
Given current differences in access to trading and reporting
technologies across firms, some firms may be impacted by the proposed
rule change more than others. FINRA understands that larger and more
active firms already employ reporting services and technologies to
automate trade reporting and would be better positioned to absorb the
costs of the proposal. Any impact on competition is likely to be
limited, given the proposed exceptions described above. In particular,
the de minimis exception would provide relief for those members for
which the technological changes required may be more significant
relative to their level of activity in this space. Based on 2022 data,
the proposed de minimis threshold would provide relief to 640 (out of
838 currently active) members that, in the aggregate, accounted for
1.41 percent of trades or 0.43 percent of the total par value traded.
Additionally, given trading in the fixed income products covered by
the proposed rule change in many instances continues to involve manual
intervention at some point to complete the trade execution or reporting
process (e.g., trades executed by telephone, email, or chat or trades
subject to manual review), requiring these trades to be reported in one
minute could negatively impact market efficiency and competition. For
example, customers might participate less in fixed income markets
without the availability of voice brokerage services, or if these
trades were pushed to electronic platforms, trading may become
concentrated among fewer member firms, potentially reducing trading
opportunities and liquidity. FINRA believes that the five-minute
exception for manual trades, coupled with the phase-in period, will
allow firms relying upon some manual components in their trading or
reporting process to continue to trade in these markets while complying
with the new requirements, and therefore limit the potential for a
negative impact on these markets.
Some firms close to exceeding the de minimis threshold may choose
to reduce the number of trades to qualify for the exception. However,
this may only happen infrequently given the two-calendar year lookback
period. Coupled with the fact that members can again qualify for the
exception and that members under the de minimis threshold accounted for
only a very small portion of the market volume, FINRA expects that the
impact on overall trading will be minimal. FINRA notes that as markets
evolve or firms adjust to the new requirements, the number of dealers
meeting the de minimis exception and the par value of their trades may
change over time, even if the threshold for qualifying for the
exception remains the same.
Members qualifying for the de minimis exception will be exempted
from the one-minute requirement for all of their trade reports, and
therefore will not incur costs to modify their reporting procedures and
systems to report more quickly. On the other hand, the proposed relief
for manual trades will likely apply to only some reports of a firm.
Thus, members that do not qualify for the de minimis exception--
depending upon the circumstances--would be required to incur costs to
comply with the five-minute reporting requirement for manual trades and
one-minute reporting requirement for other trades. All members that
execute or report a trade manually would be required to append the
manual trade indicator, and members relying on the manual trades
exception would be required to document their eligibility for the
relief.
Depending on the relative costs of investing in systems to report
in a timelier manner, members may opt to change their practices around
executing and reporting trades to comply in ways other than improving
the reporting process, and such modifications might have implications
for the way in which a member operates its business and manages
competing tasks. Members may also be reluctant to conduct trades for
which it will be difficult to comply with the shortened reporting
timeframe instead of making system changes necessary to comply.
However, any indirect costs incurred as a result are bounded by the
costs of improving the reporting process. FINRA expects that members
will choose to improve their reporting process if it is more cost
effective than other compliance approaches. The cost effectiveness of
improving the reporting process through
[[Page 5044]]
direct investment is likely positively correlated with the percentage
of a firm's trades subject to the shortened reporting timeframes. Those
firms that find it less cost effective--because a small number of
trades will be impacted--are more likely to qualify for the de minimis
exception.
Alternatives Considered
FINRA considered requiring members to report trades as soon as
practicable but no later than five minutes from execution. In 2022,
82.9 percent of trades were reported within one minute after a trade
execution. By comparison, in 2022 more than 97.6 percent of trades were
reported in five minutes or less. Accordingly, reducing the required
reporting time to as soon as practicable but no later than five minutes
would enhance the timeliness of up to only 2.4 percent of the trades as
compared to 17.1 percent by moving to no later than one minute. FINRA
believes a five-minute reporting requirement would not meaningfully
advance the immediacy of information transparency for market
participants.
FINRA considered several alternatives to the threshold for the de
minimis trading exception from the one-minute reporting requirement.
First, FINRA considered basing the relief on the par value traded
rather than the number of trade reports. A par value-based de minimis
exception would require even less-active dealers to meet the one-minute
reporting requirement if they engaged in significant aggregate dollar
volume trading and thus this approach could result in more large trades
being subject to the one-minute reporting requirement. However, FINRA
believes that the number of trade reports submitted over the period is
a more appropriate measurement. The number of trade reports tracks more
closely the costs that firms incur when reporting and the necessary
investments in speeding up their reporting. Additionally, the proposed
exception (using the proposed 4,000-trade report threshold) would only
impact a de minimis percent of par value traded. FINRA also considered
a combination of the par value and the number of trades as the
threshold for the de minimis exception, but that would have
unnecessarily increased the complexity of the exception. FINRA also
considered basing the exception on different levels of trading
activity, for example, up to 10,000 trades. However, FINRA determined
that a threshold above 4,000 trades would result in the loss of more
timely information from members that trade significant volumes (74
members reporting between 4,000 and 10,000 trades traded more than $1
billion par value, with the highest par value traded being $452
billion). Accordingly, FINRA believes that the scope of the proposed
one-minute requirement will apply to firms that are active participants
in the relevant TRACE-Eligible Securities and should be required to
implement the reporting changes. Therefore, the proposed threshold for
the de minimis exception (less than 4,000 trades during one of the
prior two calendar years) will ensure that markets receive more timely
information from more active firms.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
FINRA solicited comment on a proposal to reduce the 15-minute
reporting timeframe to one minute in Regulatory Notice 22-17 (August
2022). Forty-four comments were received in response to the Regulatory
Notice. A copy of the Regulatory Notice is available on FINRA's website
at <a href="http://www.finra.org">http://www.finra.org</a>. A list of the comment letters received in
response to the Regulatory Notice is available on FINRA's website.\40\
Copies of the comment letters received in response to the Regulatory
Notice are also available on FINRA's website. Three commenters
expressed overall support for the proposal,\41\ while other commenters
expressed concerns about the proposal. The comments are summarized
below.
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\40\ See SR-FINRA-2024-004 (Form 19b-4, Exhibit 2b) for a list
of abbreviations assigned to commenters (available on FINRA's
website at <a href="http://www.finra.org">http://www.finra.org</a>). Commenters Anonymous, Barrientos,
Coker, Dapena, Kienbaum, Moise, Purpura, Rogan, Seinfeld, Sosa,
Steichen, and Tovar are collectively referred to as ``Individual
Commenters.'' Commenter Crescent expressed its support of ASA's
letter, which is referenced specifically below.
\41\ See Dimensional; FIA PTG; HMA.
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Small Firm Impact
Commenters expressed concerns that implementation of the proposal
would be costly for all member firms,\42\ but many commenters expressed
particular concern that small member firms, including many minority,
women, and veteran-owned broker-dealers, would be the most burdened by
the implementation costs.\43\ Commenters believed that these firms
would be most affected by the change (and stated that a significant
portion of their trades are not already reported within or near one-
minute) and would have fewer resources to make changes needed to meet
the new timeframe.\44\ Some of these commenters expressed concern that
many small broker-dealers would exit the market for fixed income
secondary market trading because of the high implementation and
compliance costs, harming the smaller retail investors that depend on
small member firms for access to the market.\45\
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\42\ See ASA; BDA; Beech; Colliers; Falcon Square; HJS; ICE
Bonds; InspereX; ISC; NatAlliance; RBI; SIFMA; UPitt Clinic; Wiley.
\43\ See Arkadios; ASA; BDA; Beech; Colliers; Falcon Square; IBI
1 and 2; Individual Commenters; InspereX; ISC; NatAlliance; RBI;
SIFMA; UPitt Clinic; VFM; Wiley.
\44\ See Arkadios; BDA; Beech; Colliers; Falcon Square; IBI 1
and 2; InspereX; Individual Commenters; ISC; NatAlliance; RBI;
SIFMA; UPitt Clinic; VFM; Wiley.
\45\ See Arkadios; BDA; IBI 1 and 2; Individual Commenters; ISC;
SIFMA; UPitt Clinic; VFM.
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To address these concerns, as described above, FINRA is proposing
to provide an exception for members with de minimis reporting activity.
FINRA believes that this exception, which would except firms with fewer
than 4,000 transactions in the TRACE-Eligible Securities subject to
paragraphs (a)(1)(A) through (a)(1)(D) of Rule 6730, is calibrated to
provide relief to firms that engage in limited activity in the TRACE-
Eligible Securities subject to the proposed one-minute reporting
timeframe, and therefore may not have systems in place that would
enable reporting within one minute. Member firms with ``limited trading
activity'' as defined in proposed Supplementary Material .08(a) would
continue to be subject to the 15-minute outer limit reporting
timeframe.
Reporting Feasibility
Commenters identified several circumstances under which the nature
of the execution or reporting process may make it unfeasible to report
within one minute. In particular, commenters argued that manually
executed or reported trades,\46\ including large trades that must then
be manually allocated to multiple subaccounts \47\ and some complex
transactions that involve multiple securities,\48\ cannot feasibly be
reported within one-minute. Some commenters argued that reducing the
reporting timeframe to one minute in these instances would threaten the
viability of these types of trades, negatively impacting liquidity \49\
and harming the retail investors, who may not be accustomed to
electronic trading, serviced by these firms.\50\ Commenters also raised
other scenarios that they believe present operational obstacles to
[[Page 5045]]
reporting trades within one minute, such as where the security is not
already in the firm's security master (or on FINRA's master list) due
to the set-up process (internally or with FINRA),\51\ as well as trades
executed when the TRACE system is not open that must be reported within
one minute after the TRACE system re-opens the next trading day.\52\
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\46\ See ASA; BDA; Beech; BMO CM; Cambridge; FIF; HJS; HTD; IBI
1 and 2; ICI; InspereX; ISC; Lynch; SAMCO; Seaport; SIFMA; Wells
Fargo; Wiley; WMBAA.
\47\ See BDA; BetaNXT; SIFMA; Wells Fargo.
\48\ See SAMCO; SIFMA; Wells Fargo.
\49\ See IBI 1; ICI; SIFMA.
\50\ See HJS; IBI 2; ISC; SIFMA.
\51\ See Anonymous; ASA; BDA; BetaNXT; FIF; SAMCO; SIFMA; Wells
Fargo.
\52\ See FIF; SIFMA. FINRA notes that these trades would not be
subject to the one-minute reporting timeframe under the proposed
rule change and would continue to be subject to the current 15-
minute outer limit.
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With respect to commenters' concern that certain types of
transactions cannot feasibly be reported within one minute, FINRA
believes that the exception for manual trades included in the proposed
rule change will adequately address these concerns. New Supplementary
Material .09 would phase in a five-minute reporting standard for trades
that involve manual intervention in the execution or reporting process.
This exception would address commenters' concern that reducing the
reporting timeframe to one minute would threaten the viability of
manual trades. Similarly, based on feedback from commenters and
outreach to members, FINRA understands that other types of trades
raised by commenters, such as some allocation trades and portfolio or
list trades, may involve manual intervention in either the execution or
reporting process \53\ and, if so, would therefore qualify for the
manual trades exception's extended reporting timeframe. In that regard,
96.9 percent of non-ATS trades are already reported within five
minutes; 97.5 percent of portfolio trades are already reported within
five minutes; and 93 percent of allocation trades are already reported
within five minutes. The phase-in period from implementation is
intended to provide members with time to implement a reasonable process
to comply with the reduced reporting timeframe with respect to their
manual trades. Trades that do not qualify for the manual trades
exception must be reported as soon as practical but no later than
within one minute of the time of execution. As discussed above, FINRA
has observed a range of reporting times for portfolio trades within the
same basket size band \54\ and similar variation in reporting times for
allocation trades depending on the reporter.\55\ This suggests that
even large portfolio and allocation trades can be reported within one
minute and other factors (e.g., the technology employed to execute or
report the trade) contribute to the reporting timeframe.
---------------------------------------------------------------------------
\53\ See SAMCO; SIFMA; Wells Fargo.
\54\ For example, 57.0 percent of portfolio trades in the 300-
1,000 securities band were reported within one minute and 20.1
percent of portfolio trades in the 1,000+ securities band were
reported within one minute.
\55\ Sixty-eight percent of allocated trades were reported
within a minute, with five out of 29 members that reported
allocation trades able to report 90 percent of their allocation
trades within one minute.
---------------------------------------------------------------------------
Commenters raised additional concerns that other operational
obstacles might make reporting trades within one minute unfeasible. As
mentioned above, FINRA believes many of the concerns raised should be
addressed with the proposed exceptions; however, other instances
described by commenters do not appear to warrant an exception. For
example, with respect to comments that TRACE reporting through a third-
party clearing firm presents an operational obstacle to one minute
reporting, FINRA has observed that 71 percent of third-party cleared
trades are reported within one minute (as compared to 85 percent for
self-cleared trades), and there are significant variations in trade
reporting time by correspondent firms through the same third-party
clearing firm, which suggests that other factors contribute to the
reporting timeframe. FINRA notes that many smaller members rely on
their third-party clearing firms to report trades to TRACE. Under the
proposed rule change, members with ``limited trading activity'' would
continue to be subject to a 15-minute outer limit reporting standard.
With respect to trades in securities that are not already in the
member firm's security master (or on FINRA's master list), FINRA
believes that the proposed rule change's exception for manual trades
should help alleviate commenters' concerns. FINRA understands that
setting up a security in a firm's security master (or with FINRA)
typically involves manual intervention. Thus, initial trades in such
securities--where manual steps must be taken to set up the security at
the firm or with FINRA before the trade(s) can be booked or reported--
would be subject to the phased-in five-minute reporting standard for
manual trades rather than the one-minute standard. In addition, in
response to commenters' concern regarding trades reportable to FINRA on
the next business day, FINRA is proposing to retain a reporting
timeframe of as soon as practicable but no later than within 15 minutes
of when the TRACE system opens.
Market Impact
While some commenters argued that the benefits associated with
shortening the timeframe for trade reporting have not been sufficiently
explained,\56\ FINRA agrees with other commenters that the proposed
rule change will increase transparency,\57\ which has historically been
shown to improve price discovery and reduce trading costs.\58\ FINRA
believes that the proposed rule change's exceptions for members with de
minimis reporting activity and for manual trades will mitigate the
potential for the proposed rule change to have a negative impact on
liquidity or execution quality.\59\ With respect to commenters'
concerns that the more rapid dissemination of trades could negatively
impact liquidity for block trades \60\ and benefit algorithmic traders
at the expense of retail and institutional investors,\61\ FINRA
believes the current trade dissemination caps effectively mitigate
these concerns, and note that members already have an obligation under
the current Rule to report trades as soon as practicable and are not
permitted to delay the reporting (and thus dissemination) of trades.
---------------------------------------------------------------------------
\56\ See Arkadios; ASA; BDA; Cambridge; Falcon Square; HJS; HTD;
IBI 2; InspereX; ISC; RBI; SAMCO; SIFMA; TRADEliance; Wells Fargo.
\57\ See Dimensional; FIA PTG; HMA.
\58\ See Discussion: Economic Impacts, Anticipated Benefits.
\59\ As discussed above, the proposed rule change's exception
for members with ``limited trading activity'' should address
commenters' concern that the proposal's implementation costs may
cause many small firms to exit the fixed income market, negatively
impacting liquidity. See Falcon Square; IBI 1 and 2; Individual
Commenters; InspereX; ISC; SIFMA; VFM; Wiley. Likewise, FINRA
believes that the manual trades exception should address commenters'
concerns regarding the continued viability of manual trades and the
ability to hedge large trades and trades in thinly traded
securities, which FINRA understands are often executed manually. See
IBI 1; ICI; SIFMA. Similarly, the exception for manual trades would
provide an extended reporting timeframe to accommodate manual
intervention in the trade execution or reporting process to conduct
best execution and fair pricing reviews. See ASA; SIFMA.
\60\ See ICI; SIFMA.
\61\ See BMO CM; SIFMA; VFM.
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FINRA recognizes that covered depository institutions will not be
subject to the proposed rule change.\62\ However, FINRA continues to
believe that the proposed rule change is appropriate at this time.
First, until recently, covered depository institutions did not report
transactions to TRACE at all,\63\ and they are not subject to the TRACE
reporting requirement for all TRACE-Eligible Securities. In addition,
covered depository institutions do not
[[Page 5046]]
report a significant number of trades in agency debt since they began
reporting to TRACE.\64\ While covered depository institutions are more
active in the MBS TBA GD market, this activity has historically been
concentrated in a few large institutions. FINRA believes that any
potential competitive disadvantage is speculative. On balance, FINRA
thinks the proposed rule change is appropriate and should improve the
timing of market information.
---------------------------------------------------------------------------
\62\ See InspereX; SIFMA.
\63\ Covered depository institutions started to report to TRACE
on September 1, 2022. See 86 FR 59716, 59717 (October 28, 2021).
\64\ Covered depository institutions' transactions in ABS are
limited to SBA-Backed ABS.
---------------------------------------------------------------------------
Other Issues
While the proposed rule change may lead to an increase in reporting
errors, corrections, and late reporting rates, particularly at the
outset as members adapt to the proposed rule change's new
standards,\65\ FINRA expects that the impact to members' accuracy and
late reporting rates will largely be temporary, as accuracy and
timeliness will increase as members adapt to the proposed rule change's
new standards. FINRA also intends to provide members with a sufficient
implementation timeframe to make the changes necessary to comply with
the reduced reporting timeframe (for example, approximately within 18
months from any SEC approval). As stated above, FINRA will announce the
effective date of the proposed rule change in a Regulatory Notice.
---------------------------------------------------------------------------
\65\ See Arkadios; BDA; Beech; BMO CM; Cambridge; HJS; HTD; IBI
2; ICI; Individual Commenters; InspereX; SAMCO; Seaport; SIFMA; VFM.
---------------------------------------------------------------------------
FINRA also believes that the extended reporting timeframes
available for members with de minimis reporting activity and for manual
trades will help mitigate these issues. FINRA likewise believes that
the exception for manual trades will help mitigate commenters' concern
that errors will be less likely to be corrected within the reporting
timeframe as FINRA understands that trade report corrections often
involve manual intervention (e.g., a customer calling or instant
messaging/chatting to request a change to the trade, which change is
then manually made to the trade ticket/booking entry).\66\ Under such
circumstances, the trade would qualify for the extended reporting
timeframe applicable to manual trades.\67\ Additionally, in the event a
trade report correction cannot be completed within the applicable
timeframe, FINRA has historically taken into account whether cancels
and corrections are driving untimely reporting and the reason(s) for
the cancels and corrections in monitoring members for compliance with
the Rule and assessing whether a firm has a ``pattern or practice'' of
late reporting. Accordingly, FINRA believes that potential issues
related to errors, corrections, and late reporting will not be
significant and do not outweigh the proposed rule change's potential
benefits.
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\66\ See Arkadios; ASA; BDA; Beech; BMO CM; Cambridge; HJS; HTD;
ICI; InspereX; SAMCO; Seaport; SIFMA; VFM.
\67\ To the extent the trade was originally fully electronic,
when the member amends the trade report, it should add the Manual
Trade Indicator.
---------------------------------------------------------------------------
Finally, commenters also suggested a number of alternatives to the
proposal that they believed would improve the TRACE reporting regime,
including implementing a phased-in approach to shortening the reporting
timeframe,\68\ establishing a global securities master list,\69\
improving TRACE's web-based reporting interfaces, reducing TRACE system
latencies and providing more transparency regarding systems issues that
may impact reporting,\70\ and providing additional guidance on members'
``as soon as practicable'' reporting obligation and additional TRACE
reporting metrics to members.\71\ FINRA determined to implement a
phased-in approach to reducing the reporting timeframe to five minutes
for manual trades in light of commenters' concerns. However, FINRA does
not believe that the alternatives proposed by commenters will provide
improvements to the TRACE reporting regime similar to those of the
proposed rule change. Accordingly, FINRA determined to move forward
with the proposal while it also continues to consider other ways to
provide more timely, granular and informative data to market
participants and enhance the value of disseminated transaction data.
---------------------------------------------------------------------------
\68\ See Arkadios; ICE Bonds; ICI; InspereX; TRADEliance; UPitt
Clinic; SIFMA; VFM.
\69\ See SIFMA. For corporate bonds, FINRA has proposed
establishing a reference data service for new issues. See Securities
Exchange Act Release No. 85488 (April 2, 2019), 84 FR 13977 (April
8, 2019) (Notice of Filing of File No. SR-FINRA-2019-008) (Proposed
Rule Change to Establish a Corporate Bond New Issue Reference Data
Service).
\70\ See SIFMA.
\71\ See FIF; SIFMA.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#8bf9fee7eea6e8e4e6e6eee5fff8cbf8eee8a5ece4fd"><span class="__cf_email__" data-cfemail="7103041d145c121e1c1c141f0502310214125f161e07">[email protected]</span></a>. Please include
file number SR-FINRA-2024-004 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-FINRA-2024-004. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's internet website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for website viewing and
printing in the Commission's Public Reference Room, 100 F Street NE,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of FINRA. Do not include
personal identifiable information in submissions; you should submit
only information that you wish to make available publicly. We may
redact in part or withhold entirely from publication submitted material
that is obscene or subject to copyright protection. All submissions
should refer to file number SR-FINRA-2024-004 and should be submitted
on or before February 15, 2024.
[[Page 5047]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\72\
---------------------------------------------------------------------------
\72\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-01395 Filed 1-24-24; 8:45 am]
BILLING CODE 8011-01-P
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