FINRA Fines Firm for Inaccurate TRACE Reporting
A firm settled FINRA charges for inaccurately reporting hundreds of thousands of fixed-income transactions to TRACE and for related supervisory failures.
According to the AWC, the firm failed to timely report thousands of transactions to TRACE due to issues associated with manual reporting, including approximately 2,400 trades reported more than 15 minutes after execution. FINRA also determined that the firm failed to include the .D indicator on 242 Dollar Roll transactions. FINRA stated that the firm inaccurately included the NMA-PT indicator on 401 transactions and failed to include the indicator on 1,385 others due to coding issues. In addition, FINRA noted that the firm omitted the NR indicator on approximately 302,600 transactions executed without a mark-up, mark-down, or commission, and later failed to include the indicator on more than 18,200 additional reports.
FINRA also found that the firm failed to establish a supervisory system designed to achieve compliance with its TRACE reporting obligations. FINRA determined that the firm "had no process to review" the accuracy of TRACE indicators and failed to take reasonable action to address internal reports identifying late trade reports. FINRA stated that the firm failed to reasonably test the automated system it later implemented to address the reporting issues.
FINRA concluded that the firm violated FINRA Rules 2010 ("Standards of Commercial Honor and Principles of Trade"), 3110 ("Supervision"), and 6730 ("Transaction Reporting").
To settle the charges, the firm agreed to (i) a censure and (ii) a $300,000 fine.