Exam Alert: FINRA Changes TRACE Rules Regarding Trades in Asset-Backed Securities and Reduces Reporting Times

Effective April 27, 2015, FINRA will revise the definition of “asset-backed security” under its rules. Asset-backed securities will be required to be reported no later than 45 minutes from the time of execution, with minor exceptions. Continue reading

Effective April 27, 2015, FINRA will revise the definition of “asset-backed security” under its rules. The new definition will exclude mortgage-backed securities, certain SBA-backed securities, and collateralized debt, loan, and bond obligations. Dissemination of trades in asset-backed securities will be limited to this more narrow group of securities, but will include additional types of transactions. These transactions include Rule 144A transactions, list or fixed offering price transactions, and takedown transactions.

Asset-backed securities will be required to be reported no later than 45 minutes from the time of execution, with minor exceptions for transactions executed shortly before the TRACE system closes and when the TRACE system is closed.

Source: FINRA Regulatory Notice 14-34: SEC Approves Amendments to Disseminate Additional Asset-Backed Securities Transactions and to Reduce the Reporting Time for Such Transactions

This applies to the Series 7, Series 24, and Series 62.

Exam Alert: FINRA Revises OATS, ORF, and ADF/TRF Trade Reporting Rules

FINRA is revising the trade reporting rules for the Order Audit Trail System (OATS) and for FINRA facilities. The changes require… Continue reading

FINRA is revising the trade reporting rules for the Order Audit Trail System (OATS) and for FINRA facilities. The changes require:

  • reporting additional times for certain transactions
  • expressing trade times in milliseconds
  • linking reversal reports to the original trade
  • reporting trades on non-business days and trades that are over a year old to FINRA facilities
  • using a new “step-in” indicator (when a firm takes over a position from another firm)
  • keeping declined trades in the system so they may still be cancelled, corrected, or accepted

Effective April 7, 2014, FINRA has modified the rules for the Order Audit Trail System (OATS).

Effective September 15, 2014, FINRA will modify the rules for the OTC Reporting Facility (ORF).

Effective September 29, 2014, FINRA will require firms to report the time of trades in milliseconds when reporting to the Alternative Display Facility (ADF) or to Trade Reporting Facilities (TRFs).

FINRA will implement the other changes to ADF and TRF reporting rules in the first quarter of 2015.

Source: FINRA Regulatory Notice 14-21: SEC Approves Amendments to Equity Trade Reporting and OATS Rules

This alert applies to the Series 7, Series 24, Series 55, and Series 62.

Exam Alert: FINRA Revises ADF Market Participant Registration Rules

Effective February 3, 2014, FINRA has implemented changes to the requirements for registering as an Alternative Display Facility (ADF) market participant. An applying firm must now agree to submit an ADF Deposit Amount, execute a Participant Agreement with FINRA, and execute a Certification Record. Continue reading

Effective February 3, 2014, FINRA has implemented changes to the requirements for registering as an Alternative Display Facility (ADF) market participant. An applying firm must now agree to submit an ADF Deposit Amount of $250,000 into escrow (raised to $500,000 under certain conditions). The firm may lose some of the deposit if they fail to submit at least 75% of its quoting or trading volume to the ADF. The firm must also provide monthly projections of the volume of data it expects to submit to the ADF.

The rule provides for ways to earn back the deposit. The rule also specifies what happens to the deposit if the firm is sold, stops doing business, or fails to become or remain an ADF market participant.

A firm seeking registration as an ADF market participant must also execute a Participant Agreement with FINRA and execute a Certification Record. The Certification Record has the firm attest that it can comply with certain requirements of Regulation NMS.

Source: FINRA Regulatory Notice 14-04: SEC Approves Amendments to FINRA Rules 6271 and 6272 Regarding the Requirements For Firms Seeking Registration as FINRA Alternative Display Facility (ADF) Market Participants

This alert applies to the Series 7, Series 55, and Series 62.

Exam Alert: FINRA modifies TRACE trade dissemination and reporting rules

Effective July 22, 2013, FINRA will alter its rules for reporting and disseminating certain trades in mortgage-backed securities and asset-backed securities. Continue reading

Effective July 22, 2013, FINRA will alter its rules for reporting and disseminating certain trades in mortgage-backed securities and asset-backed securities. The transactions must be reported within 120 minutes of execution during a pilot period that lasts until January 20, 2014 – after the pilot period ends, they must be reported within 60 minutes. A new dissemination method for pool transactions will include various pieces of information about the pool, such as the weighted average coupon.

Source: FINRA Regulatory Notice 12-56: SEC Approves Amendments to TRACE Rules and Dissemination Protocols to Disseminate Specified Pool Transactions and SBA-Backed ABS Transactions and to Reduce the Time to Report Such Transactions

This alert applies to the Series 7, Series 24, and Series 62.

Exam Alert: MSRB requires BDs to report contractual price of inter-dealer transactions

Effective November 5, 2012, broker-dealers must report the contractual dollar price of inter-dealer transactions in municipal securities. Continue reading

Effective November 5, 2012, broker-dealers must report the contractual dollar price of inter-dealer transactions in municipal securities.  This information is reported in addition to the information currently reported for such transactions, which includes final money, par amount, and accrued interest.  The information is submitted to the Depository Trust and Clearing Corporation’s Real-Time Trade Matching System.  Note that these reporting requirements are different from those for customer trades – for customer trades, the broker-dealer must report a dollar price and yield.

This change was put in place to address situations where the MSRB Real-Time Transaction Reporting System would calculate incorrect dollar prices for trades of bonds with nonstandard par values.

This change had been announced previously, but the effective date had not yet been set.

Source: Reminder of Upcoming Changes to MSRB Transaction Reporting Requirements

This alert applies to the Series 7.

Exam Alert: MSRB changes RTRS Facility rules

On March 20, 2012, the SEC approved amendments to the MSRB’s operational rules for the Real-time Transaction Reporting System (RTRS). The amendments have varying effective dates. The changes include:
-modified hours of operation
-calculation and dissemination of yields on inter-dealer transactions
-removal of rarely-used transaction reporting requirements
-dealer submission of prices on inter-dealer transactions
-increased dissemination of customer transactions Continue reading

On March 20, 2012, the SEC approved amendments to the MSRB’s operational rules for the Real-time Transaction Reporting System (RTRS).  The amendments have varying effective dates.  The changes include:

-modified hours of operation

-calculation and dissemination of yields on inter-dealer transactions

-removal of rarely-used transaction reporting requirements

-dealer submission of prices on inter-dealer transactions

-increased dissemination of customer transactions

 

The following change is effective March 20, 2012:

-RTRS will accept and disseminate any trade reports received between 6:00 AM and 9:00 PM.  This is an increase from the prior RTRS “Window” Hours, which were from 7:00 AM to 8:00 PM.

 

The following changes are effective April 30, 2012:

-RTRS will be reprogrammed to calculate and disseminate the yield for most inter-dealer transactions.  Currently, RTRS only reports the dollar prices of inter-dealer transactions, but reports both the dollar price and yield for customer trades.

 

-MSRB rules will no longer require reporting additional details about certain trades to RTRS in two situations:

1. The identity of an “intermediate dealer” (a broker that passes trade data from an effecting broker to a clearing broker) will no longer need to be included on trade reports.

2. Trades that are reported with the “away from the market – extraordinary settlement” special condition indicator will instead be reported with the generic “away from the market” indicator.

 

The following changes are effective on a date to be announced by the MSRB, but not later than November 30, 2012:

-Dealers will be required to report the contractual dollar price of their inter-dealer transactions.  Currently, RTRS calculates a price based on the final money, par amount, and accrued interest submitted to the DTCC (Depository Trust & Clearing Corporation).  This change is to avoid RTRS errors that occur when the system tries to calculate the price of a trade and the par value of the traded bonds is a value other than $1,000.

 

-RTRS will disseminate trade reports for customer transactions if the dealer-reported price and the RTRS-calculated price are within one dollar of each other.  Currently, if there is any difference between the two prices, RTRS returns an error to the dealers and does not disseminate the trade.

 

Source: MSRB Notice 2012-15

This alert applies to the Series 7.

Exam Alert: TRACE pilot program for reporting asset-backed securities transactions to end

On November 18, 2011, a TRACE pilot program for reporting transactions in asset-backed securities will end. This shifts the old next-day reporting requirement to the new same-day reporting requirement for transactions in asset-backed securities that are executed before 5 PM ET. Continue reading

On November 18, 2011, a TRACE pilot program for reporting transactions in asset-backed securities will end.  This shifts the old next-day reporting requirement to the new same-day reporting requirement for transactions in asset-backed securities that are executed before 5 PM ET.  Transactions that happen after 5 PM ET will still be reported on the next day.

Source: Trade Reporting Notice – 11/7/11

Relevant to the Series 62 and the Series 24.

Exam Alert: SEC approves amendments to FINRA TRACE transaction reporting rules

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system. Effective May 16, 2011, these amendments cover several Continue reading

The SEC has approved amendments to transaction reporting rules for FINRA’s TRACE system.  Effective May 16, 2011, these amendments cover several specific changes.  Some of these changes address the structure of the text of the rules, as well simplifying definitions and reporting requirements.  The changes add alternative reporting requirements and notification requirements for certain asset-backed securities transactions.  They also add the Financial Information eXchange (FIX) as a method to report transactions to TRACE.

http://www.finra.org/Industry/Regulation/Notices/2011/P123566