FINRA Announces Implementation Schedule for Expanded Application of TRACE Reporting Requirements (FINRA Reg. Notice 16-39)

FINRA notified member firms to begin reporting transactions in U.S. Treasury Securities to FINRA via the Trade Reporting and Compliance Engine ("TRACE") on July 10, 2017. In addition, FINRA provided clarifying information on:

• the scope of the term "U.S. Treasury securities" for purposes of the TRACE reporting requirement;

• the transactions deemed reportable and those that are exempt from the reporting requirement, including codifying a long-standing FINRA interpretation that repurchase and reverse-repurchase transactions for all TRACE-Eligible Securities are not reportable to TRACE; and

• the details that must be reported to TRACE for transactions in U.S. Treasury securities, including (i) a new trade indicator for any reportable TRACE transaction in a U.S. Treasury security that meets the definition of a "when-issued transaction", and (ii) two new modifiers (a ".B" modifier if the transaction being reported is part of a series of transactions where at least one of the transactions involves a futures contract, and an ".S" modifier if the transaction being reported is part of a series of transactions and may not be priced based on the current market).

FINRA announced that the use of the new ".B" and ".S" trade modifiers will not be required when the new reporting procedures become effective on July 10, 2017; rather, FINRA will announce the implementation date of the modifiers at a later time.