FINRA Amends TRACE Rules to Address Portfolio Trades

FINRA adopted amendments to the TRACE reporting rules to require broker-dealers to indicate when a corporate bond transaction is part of a portfolio trade.

FINRA adopted amendments to Rule 6730 ("Transaction Reporting") to require broker-dealers to append a new "portfolio trade" modifier to a TRACE report for a corporate bond transaction that (i) is executed between only two parties, (ii) involves a basket of corporate bonds of at least 10 unique issues and (iii) has a single agreed price for the entire basket.

The new requirements go into effect on May 15, 2023. Additionally, FINRA issued Regulatory Notice 22-12 with frequently asked questions to address the application of the rule to various fact patterns.