On July 2, the Financial Industry Regulatory Authority proposed to amend FINRA Rule 6730 (Transaction Reporting) to require member firms to report transactions in eligible securities that are subject to dissemination to the Trade Reporting and Compliance Engine (TRACE) as soon as practicable. FINRA Rule 6730 currently provides that each member firm that is a party to a transaction in a TRACE-eligible security report the transaction within 15 minutes of execution, unless a different time period for the security is specified in the rule. FINRA’s proposed amendment retains the current reporting window, but makes clear that member firms must report transactions in TRACE-eligible securities as soon as practicable following the time of execution.
In addition, the proposed amendment includes new supplementary material to provide guidance on the “as soon as practicable” requirement. Specifically, the new supplementary material requires member firms to adopt policies and procedures reasonably designed to achieve compliance with the requirement by implementing appropriate systems to report TRACE-eligible securities. Further, the new supplementary material makes clear that a member firm with reasonably designed policies, procedures and systems will not be in violation of the “as soon as practicable” requirement as a result of unintentional and unpredictable delays in trade reporting that are due to extrinsic factors. Also, the new supplementary material recognizes that member firms may manually report transactions in TRACE-eligible securities, which can result in slower reporting times than a member firm using an automated trade reporting system. Under these circumstances, FINRA will take into consideration the member firm’s reporting system when assessing whether its policies and procedures are reasonably designed to achieve compliance with the “as soon as practicable” requirement.
FINRA’s proposed rule change is available here.