The Financial Industry Regulatory Authority has adopted new Rule 6732, which allows an alternative trading system (ATS) to apply for an exemption from the Trade Reporting and Compliance Engine (TRACE) trade reporting obligations under Rule 6730. FINRA staff will review each application and grant an exemption so long as the following criteria are satisfied:
- the exemption is consistent with the protection of investors and the public interest;
- each exempted trade is between FINRA members;
- each exempted trade does not pass through any ATS account, and the ATS does not exchange TRACE-eligible securities or funds on behalf of the subscribers, take either side of the trade for clearing or settlement purposes, or in any other way insert itself into the trade;
- the ATS agrees to provide to FINRA on a monthly basis data relating to each exempted trade occurring on the ATS’s system;
- the ATS pays a transaction reporting fee to FINRA; and
- the ATS has entered into an affirmative written agreement with each party to the exempted trade specifying that such trade must be reported by one of the parties.
With respect to the last requirement, subscribers trading on an exempt ATS must report the ATS’s Market Participant Identifier (MPID) to TRACE. New FINRA Rule 6732 becomes affective on July 18, 2016.
More information is available here.