FINRA Reminds ATSs and ATS Subscribers of Trade Reporting Obligations in TRACE-Eligible Securities (FINRA Reg. Notice 14-53)

FINRA published a Regulatory Notice to remind firms of their TRACE trade reporting obligations for transactions in TRACE-eligible securities occurring through an alternative trading system ("ATS").

FINRA reminded firms that FINRA Rule 6730 ("Transaction Reporting") sets forth firms' trade reporting obligations with regard to transactions in TRACE-eligible securities. Pursuant to Rule 6730, each FINRA member firm that is a "party to a transaction" in a TRACE-eligible security is obligated to report the transaction to TRACE within the prescribed period of time, which is generally within 15 minutes.

Specifically, the Regulatory Notice stated that the ATS is required to report two transactions to TRACE: (i) the purchase of the securities from one counterparty and (ii) the sale of the securities to the other counterparty. In addition, each counterparty, if a FINRA member firm, is required to report a buy or a sell, as applicable, identifying the ATS as the counterparty to each trade. Whether the ATS is involved in the clearance and settlement of a transaction does not change the TRACE trade reporting obligation for trades occurring through its system.

The Regulatory Notice also provided examples of reporting requirements for transactions executed through an ATS.

See: Regulatory Notice 14-53; FINRA Notice Announcement.