Notice2025-18147
Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA Rule 6730 (Transaction Reporting)
Primary source
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Published
September 19, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 180 (Friday, September 19, 2025)</title>
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[Federal Register Volume 90, Number 180 (Friday, September 19, 2025)]
[Notices]
[Pages 45283-45288]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-18147]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-103986; File No. SR-FINRA-2025-008]
Self-Regulatory Organizations; Financial Industry Regulatory
Authority, Inc.; Order Approving a Proposed Rule Change To Amend FINRA
Rule 6730 (Transaction Reporting)
September 16, 2025.
I. Introduction
On June 10, 2025, the Financial Industry Regulatory Authority, Inc.
(``FINRA'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to amend FINRA Rule 6730 (Transaction Reporting)
to maintain the currently operative 15-minute outer limit timeframe for
reporting TRACE-eligible securities covered by a previous proposed rule
change (File No. SR-FINRA-2024-004) and to provide an alternative for
reporting and dissemination in connection with specified allocations of
an aggregate order in a TRACE-eligible security to multiple managed
customer accounts (``Proposal''). The proposed rule change was
published for comment in the Federal Register on June 20, 2025.\3\ On
July 22, 2025, the Commission extended until September 18, 2025, the
time period within which to approve the proposed rule change,
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\4\ The
Commission received
[[Page 45284]]
comment letters on the proposed rule change.\5\ This order approves the
proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 103270 (June 16,
2025), 90 FR 26382 (June 20, 2025) (``Notice'').
\4\ See Securities Exchange Act Release No. 103515 (July 22,
2025), 90 FR 103515 (July 25, 2025).
\5\ Comments received are available at: <a href="https://www.sec.gov/comments/sr-finra-2025-008/srfinra2025008.htm">https://www.sec.gov/comments/sr-finra-2025-008/srfinra2025008.htm</a>.
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II. Description of the Proposed Rule Change
FINRA has collected and disseminated transaction information in
fixed income securities through TRACE since 2002.\6\ On September 20,
2024, the Commission issued an order approving proposed rule change SR-
FINRA-2024-004, as modified by Partial Amendment No. 1, to amend FINRA
Rule 6730 to reduce the 15-minute TRACE reporting outer limit timeframe
for fully electronic trades to one minute, with a later deadline for
manual trades and firms with limited trading activity.\7\ As approved
by the Commission, where a trade qualified for the manual trades
exception, a 15-minute outer limit would apply for the first year
following implementation; a 10-minute outer limit would have applied
for the second and third years; and a five-minute outer limit would
have applied thereafter.\8\ In addition, the filing provided an
exception to the one-minute reporting timeframe for FINRA members with
``limited trading activity.'' \9\ Under File No. SR-FINRA-2024-004,
FINRA also included a requirement that its members append a new manual
trade indicator to identify all manual trades. The amendments were
intended to modernize the TRACE reporting rules, while providing
additional time for reporting trades that were not fully electronic
from end to end and for firms with limited trading activity.
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\6\ See Securities Exchange Act Release No. 43873 (Jan. 23,
2001), 66 FR 8131 (Jan. 29, 2001) (``Original TRACE Order'').
\7\ See Securities Exchange Act Release No. 101121, 89 FR 78930
(Sept. 26, 2024) (Order Approving File No. SR-FINRA-2024-004)
(``2024 Approval Order''). The reporting timeframe reductions of SR-
FINRA-2024-004 would only have applied to TRACE-eligible securities
that are currently subject to the 15-minute outer limit reporting
timeframe under Rule 6730(a)(1).
\8\ See Rule 6730.09(b); see also, 2024 Approval Order, 89 FR
78930, 78931.
\9\ See Rule 6730.08; see also, 2024 Approval Order, 89 FR
78931. A FINRA member with limited trading activity was defined as
one 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, including any manual trades. Id.
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FINRA has not implemented the changes approved in File No. SR-
FINRA-2024-004. According to FINRA, ``[f]ollowing the approval of File
No. SR-FINRA-2024-004, FINRA continued its engagement with members
regarding TRACE reporting timeframes, and members raised several
additional concerns and questions in connection with aspects of the
approved reporting regime.'' \10\ Specifically, FINRA members provided
additional insights into the workflows that impact the current
feasibility of one-minute reporting for certain fully electronic trades
and five-minute reporting for manual trades.\11\ In this regard, FINRA
members discussed, among other things, challenges to reporting within
one minute fully electronic transactions with more complex workflows
(such as allocations to managed customer accounts or portfolio
trades).\12\
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\10\ See Notice, 90 FR at 26383.
\11\ See id.
\12\ See id.
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FINRA members also discussed challenges to faster reporting for
trades executed by telephone, email, or through a chat/messaging
function where some or all of the trade details must be manually
entered to book the trade or report it to TRACE.\13\ Firms' challenges
varied depending on firm characteristics, such as firm size and
business model.\14\ FINRA members further noted that the amendments
compounded compliance concerns given the rigors of the condensed
reporting timeframes.\15\ In this context, FINRA members also noted
FINRA's current approach to late report marking, which marks as late
any corrections made to a disseminated field if such corrections were
entered outside of the reporting timeframe (even where the initial
trade was reported within the reporting timeframe).\16\
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\13\ See id.
\14\ See id.
\15\ See id.
\16\ See id. In response to these comments, FINRA is updating
TRACE system logic with respect to trade corrections so that trade
report timeliness is determined based only on the time of submission
of the original trade report. Therefore, a member's trade report
will no longer be marked late if the member makes a correction to a
disseminated field outside of the reporting timeframe applicable to
the original transaction (so long as the transaction was reported
originally on a timely basis). Id. at 26384.
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In light of these further discussions and concerns raised, and to
ensure that it takes a measured and informed approach to significant
modifications to TRACE reporting requirements, FINRA determined that it
would be appropriate at this time to maintain the currently operative
TRACE reporting standard requiring its members to report transactions
as soon as practicable, but no later than within 15 minutes of the Time
of Execution \17\ of the transaction for all types of trades (i.e.,
manual, hybrid, and fully electronic trades) that are currently subject
to Rule 6730(a)(1).\18\ In addition, FINRA proposed to implement
additional responsive measures to address concerns raised to FINRA
during its engagement process.\19\ Therefore, FINRA filed this proposed
rule change to: (1) amend Rule 6730 to maintain the currently operative
15-minute outer limit timeframe for reporting transactions in the
securities impacted by File No. SR-FINRA-2024-004; and (2) adopt new
Rule 6730.08 to provide a streamlined alternative for reporting and
dissemination in connection with specified allocations of an aggregate
order in a TRACE-Eligible Security to multiple managed customer
accounts.\20\
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\17\ See Rule 6710(d). 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, as defined by Rule
6710(a), 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. See Notice, 90 FR at
n.6.
\18\ See Notice, 90 FR at 26383.
\19\ See id.
\20\ See id.
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A. Reporting Timeframes
FINRA proposed amendments to Rule 6730 to maintain the currently
operative TRACE reporting outer limit timeframe for the securities
transactions subject to Rule 6730(a)(1)--i.e., rescinding the rule
changes approved in September 2024 that would have reduced the TRACE
reporting timeframes and instead continuing to require that FINRA
members report impacted transactions to TRACE as soon as practicable,
but no later than within 15 minutes from the Time of Execution.\21\
Therefore, FINRA proposed to amend Rule 6730(a) and subparagraphs
(a)(1)(B) and (C) to delete references to ``one minute'' and replace
[[Page 45285]]
them with ``15 minutes.'' \22\ FINRA also proposed to amend Rule 6730
to: (i) delete paragraph (d)(4)(I) (Manual Trade Indicator) to remove
the requirement that FINRA members append a manual trade indicator;
(ii) delete Supplementary Material .08 (Exception for Members with
Limited Trading Activity), which would have retained a 15-minute outer
limit reporting timeframe for firms with de minimis trading activity;
and (iii) delete Supplementary Material .09 (Exception for Manual
Trades), which would have provided additional reporting time for trades
other than fully electronic trades.\23\
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\21\ See id. Certain changes that were made in SR-FINRA-2024-004
are not being rescinded in this proposed rule change These items
include amendments to: (i) FINRA Rules 6730(a)(1)(A), (C), and (D)
to require transactions in TRACE-Eligible Securities that are
executed at or after 12:00:00 a.m. through 7:59:59 a.m. Eastern Time
on a TRACE business day, less than fifteen minutes before the TRACE
system closes, or after TRACE System Hours or on non-business days
be reported ``as soon as practicable after the TRACE system opens;''
(ii) FINRA Rule 6730(a)(1)(B) to note the requirement to report
transactions ``as soon as practicable, but no later than'' for
transactions executed during TRACE System Hours, so that the
language of this provision conforms with the language of FINRA Rule
6730(a); (iii) FINRA Rule 6730(f) to add ``or reasonable
justification'' as a relevant factor in FINRA's evaluation of a firm
experiencing a pattern or practice of late reporting; and (iv) FINRA
Rule 6730 Supplementary Material .03 to refer to the requirements of
FINRA Rule 6730 generally rather than Rule 6730(a) in the context of
a FINRA member with an obligation to report a transaction in a TRACE
Eligible Security ``as soon as practicable.'' See Ex. 5 to SR-FINRA-
2024-004, available at <a href="https://www.sec.gov/files/rules/sro/finra/2024/34-99404-ex5.pdf">https://www.sec.gov/files/rules/sro/finra/2024/34-99404-ex5.pdf</a>.
\22\ See Notice, 90 FR at 26383.
\23\ See id.
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According to FINRA, in order to continue to work with its members
to support timely and efficient trade reporting, FINRA has an
established dedicated email inbox--``<a href="/cdn-cgi/l/email-protection#93f1fcfdf7e1f6e3fce1e7fafdf4d3f5fafde1f2bdfce1f4"><span class="__cf_email__" data-cfemail="91f3fefff5e3f4e1fee3e5f8fff6d1f7f8ffe3f0bffee3f6">[email protected]</span></a>''--where
FINRA members and their service bureaus can self-identify reporting
issues.\24\ FINRA states that this proactive engagement can help to
avoid late trade reporting inquiries from FINRA, reducing the time
firms spend responding to inquiries.\25\ FINRA states that self-
reporting in this manner is voluntary but continues to be
encouraged.\26\ FINRA is also exploring ways to enhance its processes
to improve the ability of FINRA members and their service bureaus to
identify different types of challenges or issues, including those that
may not be systematic or widespread (e.g., manual errors).\27\
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\24\ See id.
\25\ See id.
\26\ See id.
\27\ See id.
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FINRA states that it remains committed to encouraging timely
reporting--i.e., as soon as practicable following the execution of a
transaction--to facilitate the benefits to transparency. FINRA believes
that the proposed rule change is appropriate at this time in light of
the additional information obtained since File No. SR-FINRA-2024-004
was approved, to be responsive to its members' concerns, and to ensure
that FINRA takes a measured and informed approach to significant
modifications to TRACE reporting requirements.\28\ FINRA also
anticipates that its members who elect to avail themselves of the
proposed reporting alternative for allocation trades will benefit from
a more streamlined approach that should improve their trade reporting
processes and efficiency. In addition, the modifications to TRACE
system marking logic should provide for a focused view on the
timeliness of the initial report.\29\ FINRA states that it will
continue to engage with its members and monitor and study developments
in the market for TRACE-Eligible Securities, including changes in
reporting timeframes.\30\
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\28\ See id. at 26384.
\29\ See id.
\30\ See id.
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B. Aggregate Reporting for Allocation Trades
FINRA proposed to amend Rule 6730 to add new Supplementary Material
.08 (Reporting Allocation Trades) to permit a FINRA member that is both
a broker-dealer and an investment adviser (``BD/IA'') to report
allocations of specified orders to managed customer accounts in a
streamlined manner.\31\ Specifically, proposed Supplementary Material
.08 would provide that a FINRA member BD/IA may report allocations of
an aggregate order in a TRACE-Eligible Security to multiple managed
customer accounts in a single, aggregate TRACE trade report (in lieu of
separately reporting allocations to each managed customer account).\32\
Under the Proposal, an aggregate TRACE trade report must reflect
allocations with the same price and Time of Execution and be submitted
to TRACE within the timeframes specified in Rule 6730(a). In addition,
Rule 6730(c) would be updated to require that the aggregate trade
report include the number of managed customer accounts to which the
TRACE-Eligible Security is being allocated.\33\
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\31\ See id.
\32\ See id.
\33\ See id.
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According to FINRA, the proposed alternative approach will
streamline reporting, thereby improving efficiency and removing
unnecessary burdens.\34\ FINRA states that the proposed rule change
also may improve transparency by removing reports with low utility from
dissemination (to the extent that firms avail themselves of this
alternative), while continuing to ensure that the allocation associated
with the aggregate order is reported and disseminated to the market,
without the loss of price information.\35\ FINRA also notes that
reporting pursuant to this alternative approach would be voluntary;
therefore, depending on a FINRA member BD/IA's business and
determinations regarding burdens and benefits, such member may choose
to continue to report individual allocations as it does today or to
modify its practices to begin reporting on an aggregate basis pursuant
to this proposed rule change.\36\ FINRA member BD/IAs also would have
the flexibility on a case-by-case basis to choose whether to report a
particular transaction on an aggregate basis pursuant to proposed Rule
6730.08 or whether to report the allocations to managed customer
accounts individually.\37\
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\34\ See id.
\35\ See id.
\36\ See id.
\37\ See id.
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III. Summary of Comments, FINRA's Response, and Commission Findings
After carefully reviewing the Proposal and comment letters
received, the Commission finds that the Proposal is consistent with the
requirements of the Act and the rules and regulations thereunder
applicable to a national securities association.\38\ In particular, the
Proposal is consistent with Section 15A(b)(6) of the Act, which
requires, among other things, that FINRA rules be designed to prevent
fraudulent and manipulative acts and practices, to promote just and
equitable principles of trade, to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in,
securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system and, in general, to
protect investors and the public interest; and are not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.\39\ Additionally, the Proposal is consistent with Section
15A(b)(9) of the Act,\40\ which requires that FINRA rules do not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.
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\38\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\39\ 15 U.S.C. 78o-3(b)(6).
\40\ 15 U.S.C. 78o-3(b)(9).
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A. 15-Minute Reporting and Manual Trades Exception
The Commission received comments on the proposed rule change.\41\
Several commenters support the Proposal to maintain the currently
operative 15-minute outer limit timeframe for reporting TRACE-eligible
securities covered by File No. SR-FINRA-2024-004.\42\ Commenters point
out that the
[[Page 45286]]
vast majority of trades reported to TRACE are reported automatically
upon execution and are therefore already reported within one
minute.\43\ For those trades that are not reported within one minute,
one commenter states there are generally operational reasons why that
is not possible.\44\ This commenter also states that the one-minute
reporting initiatives would not have contributed meaningfully to market
transparency, and allowing the 2024 Approval Order to take full effect
would have resulted in negligible improvement in market
transparency.\45\ Another commenter states that it continues to believe
that one-minute reporting is neither necessary nor appropriate in fixed
income markets, would create enormous expense for little benefit, and
would be unworkable for some trades.\46\
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\41\ See supra note 5.
\42\ See, e.g., Letter from Christopher A. Iacovella, President
& Chief Executive Office, American Securities Association (July 10,
2025) (``ASA Letter'') at 1; Letter from Kenneth E. Bentsen Jr.,
President and CEO, SIFMA and SIFMA Asset Management Group (July 11,
2025) (``SIFMA Letter'') at 1; Letter from Howard Meyerson, Managing
Director, Financial Information Forum (``FIF Letter'') at 1; Letter
from Michael Decker, Senior Vice President, Research and Public
Policy, Bond Dealers of America (July 11, 2025) (``BDA Letter'');
Letter from Joanna Mallers, Secretary, FIA Principal Traders Group
(July 11, 2025) (``FIA PTG Letter''). One of these commenters also
commented on the governance practices and rulemaking processes of
FINRA. See ASA Letter at 2-5. Another commenter commented on
additional TRACE enhancements. See FIA PTG Letter at 2. Those
comments are outside of the scope of the Proposal.
\43\ See, e.g., FIF Letter at 2-3; BDA Letter at 1-2. See also
Securities Exchange Act Release No. 99404 (Jan. 19, 2024), 89 FR
5034 (Jan. 24, 2024) at 5035 (``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.'') (``2024 Notice'').
\44\ BDA Letter at 1-2.
\45\ Id. at 2.
\46\ See SIFMA Letter at 2-3.
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Other commenters oppose the Proposal to maintain the 15-minute
timeframe for reporting TRACE-eligible securities.\47\ One commenter
states that ``the current administrative record does not support
backtracking on the timeliness of trade reporting'' and that FINRA has
not met its burden of providing new data and analysis, or otherwise
factually and analytically supporting their policy reversals.\48\
Another commenter states that ``shortening the time between trade
execution and price dissemination would enhance transparency and reduce
information asymmetries in the fixed income market'' and that ``market
quality is improved when public information is disseminated evenly and
in real time to all market participants.'' \49\
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\47\ See, e.g., Letter from Tyler Gellasch, President and CEO,
Healthy Markets Association (Aug. 8, 2025) (``HMA Letter'') at 2;
Letter from Gerard O'Reilly, Co-CEO and Co-Chief Investment Office,
and David A. Plecha, Global Head of Fixed Income, Dimensional Fund
Advisors LP (July 10, 2025) (``Dimensional Letter'') at 1; see also
FIA PTG Letter at 2 (stating, ``the reporting timeframe should be
reduced for all transactions given technological developments . .
.'').
\48\ HMA Letter at 2.
\49\ Dimensional Letter at 1.
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One commenter specifically addresses the manual trades exception to
the one-minute reporting requirement, stating that it strongly supports
FINRA's decision to eliminate the manual trade exception and ``to
return to a uniform reporting standard for all transactions subject to
TRACE reporting.'' \50\ Another commenter points out that with respect
to trades that are reported manually, industry members are subject to
the obligation to report these trades ``as soon as practical,'' and
this requirement already applies for trades reported to TRACE.\51\
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\50\ FIA PTG Letter at 1-2.
\51\ FIF Letter at 3.
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As discussed below, the Proposal to maintain the currently
operative TRACE reporting timeframes requiring members to report
transaction as soon as practicable, but no later than within 15 minutes
of the Time of Execution of the transaction for all types of trades
(i.e., manual, hybrid, and fully electronic) is consistent with the
Act.\52\ In particular, after approval of SR-FINRA-2024-004, market
participants continued to provide FINRA with feedback regarding the
challenges of reporting certain complex workflows within one
minute.\53\ Comment letters submitted by various market participants
also expressed concern about faster reporting of executions that had a
manual component.\54\ As one commenter explains, even some fully
electronic trades may not be able to be reported in one minute,
including trades with large amounts of customer allocations, which are
required to be individually reported by FINRA members that are BD/
IAs.\55\ According to the commenter, these trades may simply not be
able to pass through trade processing and network infrastructure within
one minute even if done in an automated manner and can number in the
tens of thousands for a single block trade.\56\ The commenter states
that other trades may involve dozens or hundreds of CUSIPs, such as a
portfolio trade, where even if fully automated a one minute requirement
may be impossible to meet.\57\ The changes proposed by FINRA address
compliance concerns discussed above resulting from shorter reporting
timeframes for FINRA members that face more complex workflows. In
response to these concerns, FINRA reasonably determined to maintain the
currently operative reporting timelines across all types of trades that
are subject to Rule 6730(a)(1), which reflects a measured approach to
TRACE reporting requirements that avoids unintended consequences while
continuing to facilitate timely reporting.\58\
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\52\ 15 U.S.C. 78o-3(b)(9).
\53\ See Notice, 90 FR at 26383.
\54\ See SIFMA Letter at 3; BDA Letter at 2.
\55\ See SIFMA Letter at 3.
\56\ Id.
\57\ Id.
\58\ See supra notes 28-30 and 43 and accompanying text. One
commenter that supports FINRA's change to the TRACE system logic for
marking trades late states that it expects that FINRA would continue
to examine firms with a focus on identifying patterns and practices
of amendments to previously reported trades. See SIFMA Letter at 5.
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The Commission disagrees with the commenter who stated that the
Proposal is not supported by data, analysis, or facts.\59\ As an
initial matter, FINRA is not required to demonstrate that the Act
requires rescinding the previously approved changes to TRACE reporting
requirements and instead maintaining the currently operative reporting
requirements. Rather, FINRA must demonstrate that its proposal to
maintain the currently operative reporting requirements in light of
market participant feedback is consistent with the requirements of the
Act and the rules and regulations thereunder. The comment letters and
FINRA's filing detail significant, continued operational and compliance
concerns with the reduced reporting timeframes approved in 2024 despite
the exceptions crafted to address some of those concerns. In
particular, as discussed above, FINRA members provided additional
information regarding how certain, complex workflows impact the
feasibility of reporting in one minute for electronic trades and five
minutes for manual trades at this time.\60\ Additionally, FINRA members
discussed challenges associated with reporting trades executed by
telephone or email, or other means that require some or all trade
details to be reported manually within the new reporting
timeframes.\61\
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\59\ See supra note 48.
\60\ See supra notes 10-12 and accompanying text.
\61\ See supra notes 10-12 and accompanying text.
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Maintaining the currently operative TRACE reporting timeframes and
implementing other measures included in the Proposal is a reasonable
response to the significant feasibility concerns that market
participants have continued to raise, particularly in light of the high
percentage of trades already reported within one minute.\62\ Further,
eliminating the manual trade exception is appropriate given that it was
created
[[Page 45287]]
to accommodate the one minute reporting requirement that is now being
rescinded. The Proposal reasonably balances FINRA's goals of increasing
market transparency and improving access to timely transaction data
with the potential compliance burdens highlighted by market
participants and anticipated costs associated with systems changes in
support of meeting a one-minute reporting requirement and claiming a
manual trade exception.\63\
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\62\ See supra note 43.
\63\ See supra notes 10-12 and accompanying text.
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The Commission has recognized that price transparency plays a
fundamental role in promoting fairness and efficiency of U.S. capital
markets.\64\ The currently operative TRACE reporting timeframe with an
outer limit of 15 minutes of the Time of Execution and a requirement to
report transactions as soon as practicable has resulted in 82.9% of
transactions being reported within one minute of the Time of Execution
and 97.6% within five minutes.\65\ Accordingly, the Commission finds
that maintaining the currently operative TRACE reporting timeframe is a
reasonable policy choice designed to protect investors and the public
interest by continuing to provide market transparency and timely
pricing information while mitigating potential compliance burdens. In
addition, the Commission finds that the Proposal would not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act because it will maintain the currently
operative reporting timeframe that applies to all transactions in
TRACE-eligible securities, including the requirement that all
transactions that are currently subject to Rule 6730(a)(1) be reported
as soon as practicable, but no later than within 15 minutes of the Time
of Execution.\66\
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\64\ See Original TRACE Order at 8136.
\65\ See supra note 43 and accompanying text. See also 2024
Notice at 89 FR 5038-39.
\66\ See supra note 17.
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Although the Commission finds that maintaining the currently
operative timeframes is reasonable for these reasons, the Commission
continues to recognize that more timely reporting promotes fairness and
efficiency of the U.S. capital markets. In the instant filing, FINRA
makes an incremental step to enhance the timeliness of reporting. As
discussed in Section III.B., FINRA's Proposal streamlines the reporting
of allocations by permitting aggregate reporting for certain allocation
trades, which may enhance the timeliness of TRACE reporting.
Moreover, FINRA has stated that it will continue to engage with its
members and monitor and study developments in the market for TRACE-
Eligible Securities, including changes in reporting timeframes. In
light of the changes by FINRA to streamline the reporting of
allocations, which may enhance the timeliness of TRACE reporting, and
to modify the TRACE system late marking logic, which will provide a
focused view on the timeliness of the initial report, FINRA could re-
evaluate the timeliness of transaction reporting after these changes
have been implemented.
Finally, a similar proposed rule change filed by the Municipal
Securities Rulemaking Board (``MSRB'') \67\ would result in a
consistent timeframe for trade reporting for municipal securities and
the TRACE-Eligible Securities covered by the Proposal. Accordingly, the
Commission finds that the Proposal would foster cooperation and
coordination between the MSRB and FINRA by maintaining consistent trade
reporting deadlines across various classes of fixed income securities.
Consistent trade reporting deadlines for municipal securities covered
by MSRB rules and the TRACE-Eligible Securities covered by the Proposal
also may reduce compliance burdens resulting from inconsistent
obligations and standards for different classes of fixed income
securities.
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\67\ See Securities Exchange Act Release 103262 (June 16, 2025),
90 FR 26390 (June 20, 2025).
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B. Allocation Reporting Requirement
Commenters express support for allowing a FINRA member that is
dually registered as a broker-dealer and an investment adviser to
report allocations of an aggregate order through a single, aggregated
TRACE report.\68\ One commenter considers this to be a practical
change, noting that FINRA also should consider expanding it to non BD/
IA transactions, and states that streamlining will allow firms to
better serve retail investors by lowering compliance burdens and TRACE
costs, which ultimately translates into better pricing and access for
their customers.\69\ Another commenter that supports the amendment
points out the significant reporting burden, imposed by the current
requirement to report individual allocations, that does not apply to
broker-dealers that conduct the equivalent business through an
affiliated investment adviser.\70\ This commenter also states that
under the currently operative reporting requirement for these types of
allocations, the pricing for these allocations is based on a block-
sized trade, but the trades are disseminated to the market as smaller-
sized trades.\71\ This commenter also states that the proposed
requirement to identify and report the number of allocations within the
15-minute reporting timeframe could be challenging. The commenter
states that the policy goal should be to provide equivalent treatment
for broker-dealers that have an affiliated investment adviser
(``affiliated IA'') and BD/IAs.\72\ This commenter further supports the
decision of FINRA to make the proposed streamlined reporting of
allocations optional.\73\
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\68\ See, e.g., Letter from Stephen Sikes, Chief Executive
Office, Open to the Public Investing, Inc. (July 11, 2025) (``Public
Letter'') at 1; BDA Letter at 1; FIF Letter at 3; SIFMA Letter at 4
(stating, ``to the extent that advisory allocations must continue to
be reported, we support [the Proposal]''). One of these commenters
also commented on the fees charged by FINRA, which is outside of the
scope of the Proposal. See Public Letter at 1, 3.
\69\ See Public Letter at 2-3. This commenter also suggests
expanding the availability of aggregated TRACE reporting, which is
outside the scope of the Proposal. See id. at 3.
\70\ See FIF Letter at 3.
\71\ See id.
\72\ The commenter states that if a broker-dealer has an
affiliated investment adviser, the broker-dealer would report a
single trade with the affiliated investment adviser without
reporting the number of allocations by the affiliated investment
adviser; accordingly, it would be appropriate similarly to require
the BD/IA to report an aggregated allocation to the customers of the
BD/IA without reporting the number of allocations. See id.
\73\ See id.
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FINRA's proposed alternative approach to reporting allocation
trades for BD/IAs is reasonable. Allowing these FINRA members to report
allocations of an aggregate order with the same price and Time of
Execution to multiple managed customer accounts in a single, aggregated
TRACE trade report is in the public interest as it will streamline
reporting for those who choose to report aggregated reports, thus
potentially improving the timeliness of reporting. Further, aggregate
reporting of allocation trades by BD/IAs may improve transparency as it
would reduce the number of individual trade reports about allocations
that are at the same price and Time of Execution, yet continue to
convey information about the number of such allocations. This
alternative approach, and the improvements it is designed to achieve,
may enhance the timeliness of TRACE reporting and improve transparency.
Accordingly, the Commission finds that the Proposal will protect
investors and the public interest by improving market transparency and
providing the market with more timely pricing information, which may
improve price efficiency.
[[Page 45288]]
One commenter states that the allocation reporting requirement is
superfluous.\74\ Another commenter asks that FINRA reconsider why
advisory allocations are required to be reported, noting that
allocations can number in the tens of thousands for a single block
trade, creating a significant burden for these dual-registered firms
that other firms do not face, which is not fair and disadvantages these
firms based on the business model they choose.\75\ The commenter also
states that, since reporting of allocations varies depending on a
firm's business model, this results in incomplete and misleading market
data.\76\ However, this commenter states that, to the extent that
allocations must continue to be reported, they support the addition of
the option in the Proposal to allow FINRA members to report allocations
of an aggregate order to multiple managed customer accounts in a
single, aggregate TRACE trade report.\77\ In response to the comment
that identifying and reporting the number of allocations on a TRACE
trade report may be challenging, this requirement only applies if a BD/
IA chooses to report in a single, aggregated TRACE trade report. The
number of allocations is not required if a BD/IA reports each
allocation in a separate TRACE trade report. However, if a BD/IA elects
to report in a single, aggregated TRACE trade report, requiring the
number of allocations to be included on the trade report would ensure
that there is no loss of information between trade reports by BD/IAs of
individual allocations versus a single, aggregated report. In both
cases, the quantity of allocations would be reported.
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\74\ See, e.g., BDA Letter I at 2 (stating that while the
Proposal is an improvement to the current reporting requirements,
``there is no reason to report allocations to TRACE at all'').
\75\ See SIFMA Letter at 3-4.
\76\ See id. at 4-5; see also BDA Letter at 1.
\77\ See id. at 4 (the commenter further states however, that
this change will exacerbate the problem of providing incomplete and
misleading market data).
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As stated above, the Proposal streamlines the process for reporting
certain trades, thus reducing inefficiencies and eliminating the
requirement to report certain reports that have low utility to those
seeking price information.
C. Consultation With the Treasury Department
Pursuant to Section 19(b)(6) of the Act,\78\ the Commission has
considered the sufficiency and appropriateness of existing laws and
rules applicable to government securities brokers, government
securities dealers, and their associated persons in approving the
proposed rule change. Pursuant to Section 19(b)(5) of the Act,\79\ the
Commission consulted with and considered the views of the Treasury
Department in determining whether to approve the proposed rule change.
The Treasury Department did not object to the proposed rule change.
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\78\ 15 U.S.C. 78s(b)(6).
\79\ 15 U.S.C. 78s(b)(5) (providing that the Commission ``shall
consult with and consider the views of the Secretary of the Treasury
prior to approving a proposed rule filed by a registered securities
association that primarily concerns conduct related to transactions
in government securities, except where the Commission determines
that an emergency exists requiring expeditious or summary action and
publishes its reasons therefor'').
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\80\ that the proposed rule change (SR-FINRA-2025-008) be, and
hereby is, approved.
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\80\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\81\
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\81\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2025-18147 Filed 9-18-25; 8:45 am]
BILLING CODE 8011-01-P
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