FINRA Proposes Trade Reporting for OTC Options
FINRA solicited comment on a proposal to require daily trade reporting for OTC options transactions.
Under the proposal, broker-dealers would be required to report to FINRA any OTC option transactions with terms that are "identical or substantially similar to listed options, including FLEX options." Under the proposal, the relevant transaction data would be required to be reported to FINRA on an end-of-day batch basis. The proposal would require post-reporting corrections for up to five business days following the trade date. Broker-dealers would also be required to report any changes to terms previously reported and when an option is exercised. FINRA said that it is not planning to impose a trade reporting fee and will not publicly disseminate any collected transaction data.
Commentary
The cost-benefit analysis of the proposal should likely be an area for comment for interested firms. Trade reporting systems generally involve significant operations builds, and the FINRA proposal has a fairly generic explanation as to the potential benefits of this reporting.