FINRA Proposes Faster Reporting to TRACE on Delayed Treasury Spot Trades

FINRA requested comment on proposed amendments to FINRA Rule 6730 ("Transaction Reporting") on "delayed Treasury spot trades in corporate debt securities."

The proposed amendments would shorten the reporting timeframe for certain reporting elements for trades in corporate debt securities that are priced on a spread to a benchmark Treasury security that was agreed to earlier in the day. FINRA explained, by example, that the parties "may determine to trade a corporate bond at 10:00 a.m. based on a spread to a specified U.S. Treasury security later in the day (e.g., at 3:00 p.m.); therefore, the dollar price subsequently is determined when the parties spot the spread against the benchmark U.S. Treasury security at the later time on the same day, e.g., at 3:00 p.m."

The proposed amendments would also implement a two-step reporting process requiring firms to report the agreed upon spread and identify the associated benchmark security to TRACE no later than 15 minutes after the spread is agreed upon. Firms would then need to report the remaining trade information no later than within 15 minutes after the trade dollar price can be determined.

FINRA stated that the proposal would provide transparency "into the size and spread-based economics of delayed Treasury spot trades."

Comments on the proposal will be accepted until January 30, 2023.