REPORTING

(New) Consolidated Audit Trail (CAT)

SEC Rule 613 requires FINRA and the national securities exchanges to jointly submit a National Market System (NMS) plan detailing how they would develop, implement and maintain a consolidated audit trail that collects and accurately identifies every order, cancellation, modification and trade execution for all exchange-listed equities and options across all U.S. markets. FINRA is working with the exchanges to develop an NMS plan that meets the requirements of Rule 613.

FINRA Rule 6800: Consolidated Audit Trail

 

(New) The National Securities Exchanges and FINRA Issue Joint Guidance on Clock Synchronization and Certification Requirements Under the CAT NMS Plan

On November 15, 2016, the SEC approved the National Market System Plan Governing the Consolidated Audit Trail (Plan). The Plan, as modified by an exemptive order issued by the SEC, includes synchronization and certification requirements with regard to business clocks that capture time in milliseconds.

Finra Regulatory Notice 17-09 (March 2017):  The National Securities Exchanges and FINRA Issue Joint Guidance on Clock Synchronization and Certification Requirements Under the CAT NMS Plan

Trade Reporting

Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) Extended for Limited Period

The expiration date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps) has been extended to February 11, 2018. FINRA Rule 0180 temporarily limits, with certain exceptions, the application of FINRA rules with respect to security-based swaps.

• Securities Exchange Act Release No. 79752 (January 6, 2017), 82 FR 3824 (January 12, 2017) (File No. SR-FINRA-2016-001:  Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Expiration Date of FINRA Rule 0180 (Application of Rules to Security-Based Swaps)

 

Rule Change to Require Reporting of Transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine (TRACE)

Beginning July 10, 2017, FINRA member firms must begin reporting transactions in U.S. Treasury Securities to FINRA via TRACE. Regulatory Notice 16-39 describes the scope of the term “U.S. Treasury securities” for purposes of the new reporting requirement; the specific transactions in U.S. Treasury securities that are reportable and those that are exempt from the reporting requirement; and the information that must be reported to TRACE when reporting transactions in U.S. Treasury securities, including a new trade indicator and two new modifiers. FINRA is publishing technical specifications concurrently with this Notice, which are available on FINRA’s website. At this time, FINRA will not disseminate information on transactions in U.S. Treasury securities and will not charge transaction-level fees on transactions in U.S. Treasury securities reported to TRACE.

• FINRA Regulatory Notice 16-39 (October 2016): SEC Approves Rule Change to Require Reporting of Transactions in U.S. Treasury Securities to the Trade Reporting and Compliance Engine (TRACE).

 

Amendments to Disseminate Collateralized Mortgage Obligation (CMO) Transactions and to Reduce the Reporting Time for CMO Transactions.

The SEC approved amendments to the Trade Reporting and Compliance Engine (TRACE) rules and dissemination protocols to provide for dissemination of transactions in collateralized mortgage obligations (CMOs), to reduce the time frame for reporting transactions in CMOs executed after issuance, and to simplify the reporting requirements for transactions in CMOs executed prior to issuance. These amendments become effective March 20, 2017.

• FINRA Regulatory Notice 16-38 (October 2016): SEC Approves Amendments to Disseminate Collateralized Mortgage Obligation (CMO) Transactions and to Reduce the Reporting Time for CMO Transactions

 

Exemption from Trade Reporting Obligation for Certain Transactions on Alternative Trading Systems

On July 18, 2016, FINRA Rule 6732 (Exemption from Trade Reporting Obligation for Certain Transactions on an Alternative Trading System) became effective. Rule 6732 provides FINRA staff with the authority to grant a member alternative trading system (ATS) an exemption from the TRACE trade reporting obligations of Rule 6730 (Transaction Reporting) for transactions occurring on an ATS that meet specified conditions.

• FINRA Regulatory Notice 16-15 (April 2016):  Exemption from Trade Reporting Obligation for Certain Transactions on Alternative Trading Systems

 

Alternative Trading Systems (ATSs)

Beginning October 3, 2016, FINRA will expand its alternative trading system (ATS) transparency initiative to publish monthly information on block-size trades occurring on ATSs. The data is available free of charge on FINRA's website.

• FINRA Regulatory Notice 16-14 (April 2016):  FINRA Announces Implementation Date for Publication of ATS Block-Size Trade Data

 

Amendments to Require Firms to Identify Transactions With Non-Member Affiliates in TRACE Trade Reports

The SEC approved an amendment to the Trade Reporting and Compliance Engine (TRACE) rules to permit FINRA to implement a new contra-party type for use by firms in identifying transactions with non-member affiliates. The amendment also requires firms to separately identify transactions with non-member affiliates that occur within the same day, at the same price and in the same security as a trade with another contra-party. The amendment became effective on November 2, 2015.

• FINRA Regulatory Notice 15-14 (May 2015):  SEC Approves Amendments to Require Firms to Identify Transactions with Non-Member Affiliates in TRACE Trade Reports

 

Interpretation to Clarify the Classification and Trade Reporting of Certain “Hybrid” Securities to FINRA

Regulatory Notice 14-23 provides additional information on how trades in certain securities that have both debt- and equity-like features (hybrid securities) must be reported to FINRA. Specifically, the SEC approved an interpretation regarding the appropriate trade reporting facility to which firms should report transactions in the following three types of hybrid securities: (1) unlisted depositary shares having a liquidation preference of $1,000 or more; (2) unlisted non-convertible, preferred securities having a liquidation preference of $1,000 or more; and (3) unlisted capital trust securities (also referred to as trust preferred securities) (together, “covered hybrid securities”).

In accordance with this interpretation, on June 16, 2014, firms will be required to report transactions in covered hybrid securities to the Trade Reporting and Compliance Engine (TRACE). However, firms may request the set-up of a new hybrid security for trade reporting purposes in accordance with this interpretation prior to that date.

• FINRA Regulatory Notice 14-23 (May 2014):  FINRA Issues an Interpretation to Clarify the Classification and Trade Reporting of Certain “Hybrid” Securities to FINRA